Westminster Hall

Wednesday 12th February 2014 Westminster Hall

Wednesday 12 February 2014

[Sir Roger Gale in the Chair]

Rail Services (South-East England)

Wednesday 12th February 2014 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Mark Lancaster.)

09:30

[Gareth Johnson (Dartford) (Con)]

It is a pleasure to serve under your chairmanship, Sir Roger. Such is the strength of feeling about rail services in the south-east of England that quite a number of people have contacted me in advance of the debate. I have had assistance from Passenger Focus and from a community magazine in my constituency called Dartford Living, which has passed on the concerns and frustrations of my constituents about train services in the south-east. Good train services are not only desirable but vital to keep the economy improving and ensure that commuters in the south-east can access employment in London and the surrounding commutable areas. I hope that colleagues will forgive me if I concentrate on rail issues that affect Kent and my constituency. Of course, the debate covers the entire south-east and many of the issues that I raise will apply equally to the whole region.

In my experience, people use trains not for the fun of it but because they have to earn money to feed their families, pay their bills and keep the country going. We are talking, therefore, about an essential service that must work well. Good rail services are vital for the economic strength of the nation. I am a commuter and I experience the challenges and difficulties that my constituents face, which gives me some understanding of the frustrations that people experience travelling into and out of London.

It is inevitable that in a debate about rail services in the south-east, I will speak about Southeastern, the company that holds the franchise for the services on which my constituents and I commute. I have some observations and criticisms about the company, and I am frustrated by its lack of innovation. Several train companies—including Chiltern Railways, East Midlands Trains, Greater Anglia and at least six others—provide wi-fi on their trains to enable commuters to use portable internet devices, but Southeastern does not. I hope that the company is considering changing that in the near future.

When we think of commuter routes, we usually think of peak services during rush hour, but off-peak services are just as vital. When Southeastern proposed to reduce the number of off-peak services that stopped at Longfield in my constituency, local commuters rightly objected. I pay tribute to my hon. Friend the Member for Gravesham (Mr Holloway), who worked hard to persuade Southeastern not to cut off-peak services to Meopham and Longfield stations.

Perhaps the most frequent complaint that I hear from constituents about Southeastern is that they want better communication from the company. Good communication is vital to ensure that commuters are aware of the options open to them when things go wrong on the railway. We all accept that things can go wrong with any form of transport, and some of the problems that my constituents face are the fault not of Southeastern but of Network Rail, but it is incumbent on Southeastern and other rail providers to communicate those problems to their passengers. We have had numerous delays and cancellations as a result of poor weather, but Southeastern’s website has claimed that services are running on time. People have arrived at the station only to find that services were disrupted. That practice needs to stop.

After I secured the debate, I received a letter from Mike Gibson, the public affairs manager of Southeastern. He is a good man, who came down to Longfield to meet my constituents and hear their concerns about the rail service. In his letter, he made the point that several incidents that caused difficulties for commuters, such as a fire in October last year at London Bridge station and problems at New Cross and Hither Green, were completely out of Southeastern’s hands. I do not dispute the fact that problems have been caused to rather than by Southeastern, but that underlines the necessity for it to communicate well with its customers, which all too often it fails to do.

I hope that Southeastern will improve on its lack of smart card technology. The Treasury has provided extra money for such technology, but no smart card system has been forthcoming, despite many requests. Oyster cards work well across London. Has Southeastern asked Transport for London to extend their use into Kent? I doubt it. Even if not, we could have our own system in Kent, preferably one that works with the Oyster card system; we do not need TfL to take over Kent’s train stations in order to have smart card technology. Despite the fact that the money and the technology are available, that has not happened yet.

Each rail company must meet the punctuality targets set out in its franchise, and Southeastern is no exception. However, the company combines its mainline punctuality figures with those for high-speed services, which produces a distorted figure for people who travel only on mainline services. We need complete transparency on punctuality figures, because a perception exists that in the past, trains were sometimes cancelled or stations were missed simply to ensure that those targets were met. I have not been able to establish whether that is the case, but commuters in my constituency generally hold that view. If that is true, it must never happen again.

To be fair to Southeastern, it has worked hard to tackle some of the problems that we have witnessed on our railway systems, such as crime. Its safer stations scheme has been a success, and crime on the railway has dropped. Southeastern staff are often very capable, but they have to deal with flawed communication systems and challenges that are beyond their control. Many other issues frustrate me about services into and out of my constituency, including the lack of a fast service from Dartford, the cost of parking at Ebbsfleet high-speed rail station and the increase in fares on busier routes, and I hope that Southeastern will listen to its customers and act on those issues.

I pay tribute to the Government for their assistance in improving the commuting experience for many of my constituents, and for the £45 million investment made available by the Treasury for smart card technology. I pay tribute to the innovation behind the search for a flexible approach to ticket pricing, which I hope will result in products such as flexible season tickets that can be used by off-peak travellers as well as those who travel at peak times. That is very much to be welcomed and I hope that it will help off-peak commuters in future.

Ensuring that we have good-quality rail services in the south-east will always be a challenge. It is not an easy task for any train operator, yet many improvements are required before commuters in my constituency and around the south-east feel that they have been given value for money. I ask the Minister to consider the concerns that I have raised today when he deals with Southeastern, and when he is looking to award any new franchises.

09:40

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

It is a pleasure to serve under your chairmanship, Sir Roger, and I congratulate the hon. Member for Dartford (Gareth Johnson) on securing such an important debate. I want to look at some of the fundamental issues relating to the financing of rail and commuter services. Governments of any party face major challenges in trying to bring a fair and just approach to rail fare financing in the south-east. As I am sure the shadow Minister, my hon. Friend the Member for Nottingham South (Lilian Greenwood), will set out, until the Chancellor was forced to act last summer, commuters faced a series of above-inflation fare increases.

It is worth looking at some of the figures. I have looked at the increases in train fares—season ticket prices—highlighted by Passenger Focus on a number of south-eastern routes. Sadly, my constituency is not included, but a number of others are. The increases in fares are compared with the increase in wages of the people living in the relevant areas. For example, in Gillingham in Kent—not too far from the hon. Member for Dartford—in the year from January 2010 to January 2011, the cost of a season ticket rose by 8.3% and wages by 2.1%. The following year, season tickets rose by 6% and wages by just 1.2%. In the next year, season tickets went up by 4.2% and wages by just 0.2%. In the year up to January 2014, season tickets went up by 3.1% while wages went up by just 0.7%.

A similar pattern is repeated across the south-east. In Portsmouth, from January 2010 to January 2011, fares went up by 7.2% and wages by just 2.1%. Fares went up the following year by 6.1%, but wages by just 1.2%. In 2012-13, season tickets went up by 4.2% and wages by 0.2%. In the past year, fares have gone up by 2.7% and wages by just 0.7%. Right across the south-east, year after year, we have had increases in season ticket prices that massively outstrip the real increases in wages earned by our constituents and many others in the region.

The annual season ticket from my constituency in Southampton is now more than £5,200, and commuters have faced many additional costs. I have not checked it on any websites, but I use the station and, as I recall, the parking charge at Southampton airport parkway has gone up from £10 to £14 a day in just the past three years. That is, of course, outside the regulated system; costs are being piled on to commuters wherever we choose to look.

It is easy just to list statistics and say that there is a problem, but we must look at some of the railway financing fundamentals that are driving the increases. We have a good opportunity to do that this morning. I take an unashamedly south and south-eastern view of the problem. The system operates in ways that are particularly unfair for our constituents in the south-east, and we must be prepared to face up to and challenge that.

What are the essential financing issues? We must look at two flows of money. The first is the money paid by the train operating companies—that is, the passengers who travel on their trains—to the Treasury. Some companies, almost all clustered in the south-east, are paying substantial amounts of money out of their fares in payment to the Government. In other parts of the country, it is the other way around: a subsidy goes from the Government to the train operating companies and their passengers. The second flow of money is the grant that train operating companies receive from Network Rail to train companies.

We must look at each flow in turn, and when we do we see an extraordinary situation. As I said, my constituents in Southampton pay £5,200 a year for a season ticket. For every mile they travel—every single mile from Southampton to London and from London back to Southampton—they are paying 8.7p to the Treasury. That is the highest rate in the country, but they are by no means the only set of passengers paying substantial amounts to the Treasury—not towards the cost of their rail service—for every mile that they travel.

These figures are from 2012-13, because this debate came up suddenly and I did not have a chance to see whether Passenger Focus has updated its analysis. The following figures were accurate in December. Passengers on Southern were paying 7.9p per mile to the Treasury; First Capital Connect passengers, 8.2p per mile; c2c passengers, 2.7p per mile; and for Greater Anglia, feeding into London from the other side, passengers were paying 5.5p per mile to the Treasury. Those train operating companies, clustered around the south-eastern commuter services, are between them paying more than £1 billion to the Treasury through such contributions. South West Trains paid £314 million, Southern paid £215 million, First Capital Connect paid £187 million, c2c paid £176 million, and Greater Anglia paid £139 million, all in the last year for which figures were available.

By contrast, in other parts of the country the payments went in the other direction—I will come on to the extent to which such payments are justified or not. Northern Rail received a subsidy from the Treasury of £152 million, Arriva Trains Wales received £140 million, First Trans- Pennine Express received £41 million and CrossCountry received £21 million. The only London commuter services that attracted a significant subsidy were Southeastern, which received £82 million, and Chiltern, which received £21 million.

I am probably the only person who has done so, but I have dubbed these payments a “commuter train tax” that our constituents—including yours, Sir Roger—pay to get to work in London. Of course, people say, “That is not the full picture,” because train operating companies receive a payment from the Government through Network Rail that must also be taken into account. However, if we do that, we discover an interesting pattern. The lowest subsidy per mile through Network Rail is for First Capital Connect, at just 5.3p per mile. Southern gets 7.3p per mile, c2c gets 7.1p, and South West Trains gets 7.6p.

If we look at other parts of the country, the Network Rail grant is worth 29.1p per mile to Northern Rail, 13.9p for East Midlands Trains, and 12.3p for First TransPennine Express. In other words, the same broad pattern is shown: not only are our constituents paying more per mile to the Treasury in one direction, but they are receiving less back per mile through the Network Rail grant. That is a major problem.

I must acknowledge that the architecture of the current system was introduced by the previous Labour Government. We are looking, therefore, not at some fundamental change that has been introduced in the past three years, but at the implications of simply rolling forward an approach that was put in place a number of years ago. I would argue that for my constituents the system is getting completely out of hand and completely unfair.

In the last year for which figures are available, the south-east commuter train companies were collectively paying more than £1 billion to the Treasury—or rather, their passengers were. That has quadrupled under the current Government—it was just £230 million in 2009. One might argue that, as part of a general shift towards putting greater pressure on passengers to pay for the rail services—my party, Labour, did that in government, and it has continued—some move in that direction was fair. However, we must now ask whether putting such a big weight on the pockets of commuters in the south-east is really fair.

There are a number of reasons for saying that we are producing real injustice, as regards the extent of the burden that passengers are expected to bear. We can look at two measures. The first is season ticket price as a percentage of salary. A season ticket on a medium-length journey is about 20% of the income of an operative who commutes to London, according to the Hay Group. For a professional, it is about 12%. That is twice the proportion of income paid by people commuting to Bristol, Cardiff, Birmingham, Manchester, Leeds, Glasgow or Edinburgh. In other words, commuters from our constituencies are paying a much higher proportion of their incomes to get to work than commuters do in comparable cities around the country. There is a similar pattern—not quite as marked—for people making long journeys to London from our constituencies, compared with those in other parts of the country. That is one indication of unfairness.

[Heidi Alexander (Lewisham East) (Lab)]

Is my right hon. Friend aware of the figures from the Campaign for Better Transport, which show that for a couple with two children in London, rail fares and child care costs can amount to 40% of their income? Does he agree that it is the cumulative impact of such outgoings—fares, child care, rent—that have such a devastating impact on many families in the south-east?

[Mr Denham]

My hon. Friend is right to raise that point; there is a cumulative impact. Another recent study, published a couple of weeks ago—I forget what it was called—showed that the increase in rail fares in various towns and cities in the south-east has now offset the apparent benefits of living outside London, where there are lower house prices. Fares have risen so much that, despite the disparity between London prices and those in other places, the costs are extremely high.

The other indicator of unfairness in the system is the fact that customer satisfaction with value for money, as measured by Passenger Focus, is lowest on the London commuter services. The hon. Member for Dartford talked about Southeastern, where only 31% of customers believe that they get value for money. On First Capital Connect, it is 32%; on South West Trains, 33%; on Southern, 36%. Perhaps we are not surprised that the more highly subsidised services, like Northern Rail, get a customer satisfaction rating of 54% on value for money, and Arriva Trains Wales 54%.

Westminster Hall debates are meant to raise issues, rather than to say there are simple answers to problems. The architecture of the subsidy and cross-subsidy system has been in place for some time, but it is now getting out of hand. It is perhaps comparable in some ways to measures such as the fuel duty escalator, which was originally introduced with cross-party support. It is sometimes amusingly referred to as Labour’s fuel duty escalator, even though it was introduced by a Conservative Government. Although there was cross-party support when it was introduced, the point came, as has been recognised by all parties, where simply rolling ahead with it became politically and financially untenable for many of our constituents. Those of us who are speaking up for the south-east must say that we cannot simply roll forward the current way of doing things without questioning it.

The Campaign for Better Transport recently published a consultant’s report, which said that even with fares capped, as the Chancellor has just done, by 2018 the Government will be making a profit out of running a rail system. In other words, passenger revenues paid to the Treasury will exceed the money paid out. That means that our constituents—commuters in the south-east whom we represent—will be paying the entire cost of subsidising railways in other parts of the country, and making a profit for the Government to boot. That is not tenable; we have to do something.

There are no easy answers. There is clearly no pot of public money sitting there that can be sloshed into a greater subsidy. I am not familiar with all the railways serving London, but there are lines where the quality of the rolling stock and track in the south-east is significantly better than in other parts of the country. A backlog of investment needs to be addressed in some areas, so it is not a matter of simply saying, “Let us tilt the balance in another direction”. However, looking forward, we have to try to set out a long-term strategy—hopefully one that can be agreed by all parties—for getting some basic fairness and justice back into the system, and for putting a cap on what our constituents are expected to pay, not only for their journeys to work, but for the cost of funding the rail system as a whole.

09:55

[Heidi Alexander (Lewisham East) (Lab)]

It is a pleasure to follow my right hon. Friend the Member for Southampton, Itchen (Mr Denham), who has put some very thoughtful points forward, and I congratulate the hon. Member for Dartford (Gareth Johnson) on securing the debate. I should say at the outset that I have a meeting that I need to chair at 10.30 am, so I hope Members will forgive me if I cannot stay for all of the debate.

Most people think that people who live in London travel by tube or bus to work. That is not strictly the case. In south-east London, we have swathes of the capital where people rely wholly on the rail network to get to work. The tube map barely reaches the boroughs of Lewisham, Bromley, Bexley and Greenwich, so the overland rail services, provided predominantly by Southeastern, and also by Southern in some areas, are essential for people’s daily lives. In Lewisham, 38,000 people travel to work by train—nearly a third of all the people who work. The figures are comparable for the other London boroughs that I have just mentioned.

If anyone had stood at any station in my constituency this morning, they would have seen thousands and thousands of people trying to cram themselves into horrendously overcrowded trains operated by Southeastern. One of the problems for my constituents living in Lewisham is that when the trains arrive at our stations—Blackheath, Grove Park or Lee Green—they are already packed full of people travelling to central London. For that pleasure, my constituents are asked to pay astronomical amounts of money. For a journey that should be about 10 minutes, from Hither Green to London Bridge, a zone 1 to 3 annual season ticket now costs £976. It has gone up by £216 since 2010. That is a 28% increase in four years. As my right hon. Friend the Member for Southampton, Itchen said, wages have simply not kept up with that increase. Ministers might want to tell themselves that they are being tough on rail fare increases, but it certainly does not feel that way to many people in Lewisham.

To add injury to insult, the service is not getting any better. In fact, many would say it is getting worse. Ms Mulvey, who wrote to me last year, said that her problems with Southeastern are a “daily source of frustration”. She went on:

“This week my train to work has been cancelled twice, and this is not an unusual occurrence. My annual season ticket from Grove Park costs me £1,368 and rises significantly every year, even though the service does not get any better...It is quite embarrassing to be regularly late for work. Luckily my current employer is understanding and flexible, but I would not be confident of always having such an understanding employer.”

Alternatively we could take Mr Jolly, who is a frequent correspondent on matters to do with Southeastern. He says:

“Generally speaking, over the last quarter of 2013 the service offered by Southeastern rail has been mediocre at best, appalling at worst. It has markedly deteriorated recently, not that it was ever up to standards.”

These comments are not one-offs; I suspect that they are echoed by virtually every person who boards a Southeastern train during rush hour in my constituency.

The sentiments expressed in those letters and e-mails to me are borne out by industry surveys. I think that my right hon. Friend the Member for Southampton, Itchen, referred to the national rail passenger survey. When it asked people last autumn about satisfaction levels, 42% of those asked thought that Southeastern services offered poor value for money. If we expect people to pay huge sums to travel, surely they should be able to expect a basic standard of service.

What are the problems and what needs to be done? The first main problem on Southeastern relates to overcrowding. I know that significant work has been done at stations in south-east London to lengthen platforms, so that they can take 12-car trains. As I understand it, at the moment, none of the rush hour trains are 12-car trains; they may be 8-car or 10-car trains. Can the Minister tell me today when my constituents can expect to see 12-car services on all rush-hour trains stopping in my constituency? I am conscious that discussions are taking place between Southeastern and the Department for Transport, but I want to know by which date my constituents can expect to see longer trains on the services they use.

Can the Minister also say what action he is taking to ensure that Network Rail properly manages engineering works and has robust plans in place to deal with episodes of signal failure? In December last year, there was an almost farcical situation whereby no trains were running out of any of the mainline stations that serve south-east London when there was a fire at a signal box at London Bridge. It created absolute chaos on the travel network. Many of my constituents contacted me at that time to ask what the problems are in getting Network Rail to address such one-off incidents speedily. However, we experience such problems time and again when engineering works overrun, meaning that on a Monday morning there are delays on the network. That just adds to the sense of frustration that people feel when they are being asked to pay exorbitant amounts of money for the service.

I echo the point made by the hon. Member for Dartford about the need for better communication in, and better contingency planning for, times of bad weather. I understand that the challenges of providing a rail service, especially when the weather is as it is at the moment, must be huge; it is very difficult to run a rail service at such times. However, when a company’s website is not updated in real time, we can understand why people just feel so frustrated that they are not receiving timely and adequate information about the services that will be available to them. Also, can the Minister say whether he believes there is an adequate compensation regime in place for the occasions on which people cannot access the services that they have paid for?

I will conclude by saying that London is a fantastic city to live and work in, but we have to get to grips with rail services that are failing, and failing badly. With the franchising chaos that the Government have managed to create, it seems that Southeastern will continue to limp on and deliver services for a number of years to come, before a new franchise is let. There is merit in exploring whether Transport for London should become the franchising authority for rail services in London. I know that there is some pushback against that idea from some local authorities in Kent. However, TfL has been the franchising authority for the East London line on the London overground, and there we have seen services of a high quality, with high standards and good reliability. My constituents, who live in London, would like the same standards applied to their services.

I ask the Minister to assure me that in his discussions with the senior management of Southeastern and Network Rail, he will raise the matters that I have brought to his attention; that he will do all he can to ensure that our rush-hour trains in south-east London are lengthened to 12 cars; and that he will do all that he can to ensure that my constituents, who make a huge contribution to the London economy, get the sort of rail services that they deserve.

I will give the last word to my constituent, Mr Jolly, whom I quoted earlier, because he encapsulates the challenge for us politicians in Parliament. He says:

“Ultimately, if Southeastern rail is incapable of running an acceptable service over an extended period—and I am talking about 25% of the year here, but the service is mostly poor or very poor all year round anyway—isn’t it time to set up a commission of enquiry as to why, and try to find lasting solutions beyond the DIY approach that appears to prevail?...At present, and against a background of rising fares across the board, I have the feeling there is a complete lack of accountability and an inability to take action at a political level, which I find disturbing and depressing, to say the least.”

10:06

[Lilian Greenwood (Nottingham South) (Lab)]

Thank you, Sir Roger, for calling me to speak. It is a pleasure to serve under your chairmanship today.

I congratulate the hon. Member for Dartford (Gareth Johnson) on securing this topical debate. All the hon. Members here in Westminster Hall this morning have ably described the challenges facing individual commuters and the vital role that rail plays in the wider south-east region. As we have heard, too often commuters face overcrowded trains and disruption, and season tickets have risen by an average of 20% since the election in 2010 while on many routes punctuality figures have stagnated or declined.

My hon. Friend the Member for Lewisham East (Heidi Alexander) emphasised the importance of the train to her constituents. Rail accounts for 45% of journeys into central London, a figure that rises to 79% of journeys if we include the underground and the Docklands Light Railway. Rail also serves the expanding leisure and freight markets, not only from the channel tunnel but from the region’s growing ports, such as Southampton.

The severe weather encountered in recent weeks has exposed the fragility of some of that infrastructure. Much attention nationally has focused on the enormous disruption in the south-west, but passengers are also facing cancellations and delays in the Thames valley, which has seen extensive flooding. The line between Oxted and Woldingham in Surrey is due to close for up to a week, and the line between Eastleigh and Fareham is not expected to reopen until the end of February. Landslips are causing misery for commuters in Hastings, as there have also been closures on the line to Tonbridge. The Minister should say today what assessment Network Rail has made of the stability of trackside banks along this route, and whether more maintenance work should have been done to secure them.

Even when closures are inevitable, clear information and decent alternative rail or bus replacement services are vital, but unfortunately they are often lacking, as both my hon. Friend the Member for Lewisham East and the hon. Member for Dartford confirmed. To go back to one of the cases I mentioned before, as one passenger told the Rye & Battle Observer:

“As a regular commuter I am used to disruption but this is the worst I’ve ever seen in 27 years of commuting.”

Another passenger said that the operator was

“not talking with the bus company. There are scenes of chaos.”

The operator advised passengers to make use of its “delay repay” scheme, but Sarah Owen, Labour’s prospective parliamentary candidate for Hastings and Rye, has been contacted by passengers who have not received a prompt reply after contacting the company.

Train operators receive substantial compensation from Network Rail if the weather causes disruption, and when commuters are paying more than £4,000 for a season ticket—as my right hon. Friend the Member for Southampton, Itchen (Mr Denham) said, some commuters pay more than £5,200 for a season ticket—they expect and deserve better when there are problems.

Those problems are not limited to one particular line or operator. During last week’s debate secured by the hon. Member for Enfield North (Nick de Bois) about the Hertford loop line, which runs from Alexandra Palace to Stevenage, the Minister spoke about the timetable improvements that could be delivered when the new Thameslink, Southern and Great Northern franchises were let, although he did not go into detail on that occasion. However, the Minister should recognise that this Government’s actions have led to concerns on the part of passengers and communities.

For example, Milton Keynes is a rapidly growing town that relies on its strong rail links to London. The hon. Member for Milton Keynes South (Iain Stewart) is in the Chamber. The collapse of the west coast main line franchise competition, which, of course, has cost the taxpayer at least £55 million, has led to uncertainty about future services. The franchising debacle has put orders on hold, hurting the supply chain and threatening jobs and skills, including at the Railcare maintenance company in Wolverton. Commuters from Milton Keynes Central to London have seen the cost of their season tickets increase by £940 and are now paying 25% more than they did four years ago, well above the average increase of 20% in season ticket prices. They are paying the cost for the Government’s failure to impose a strict cap on rail fare rises, which Labour has called for. As my right hon. Friend the Member for Southampton, Itchen and my hon. Friend the Member for Lewisham East rightly recognised, when commuters are already spending a large proportion of their income on transport costs, such increases in fares, far outstripping salary increases, are a real drain on family living standards.

My right hon. Friend highlighted passenger concerns about value for money, which reflects not just the amount that they are paying, but the quality of services that they are able to attract. Two main operators serve the station in Milton Keynes—Virgin west coast and London Midland—and both have been offered franchise extensions until the middle of 2017, as a direct result of the fiasco on the west coast main line. Is the Minister able to offer local commuters reassurance that the Department is planning at least to maintain current service frequencies when it re-lets that franchise, and will train operators be able to vary the current definition of peak time, under which some commuters could be paying even more? The Minister needs to answer such questions about problems directly caused as a result of extensions to timetables.

The Minister should also explain how he will tackle the aspirations of the constituents of the hon. Member for Dartford for wi-fi and smart ticketing and those of my hon. Friend the Member for Lewisham East, including Mr Jolly, when the re-letting of the south-east franchise is delayed by more than four years.

Questions about service frequencies cut to the heart of one of the most pressing issues facing the railways: the lack of available track capacity. We have debated this issue many times in this Chamber and I do not intend to revisit those arguments in depth now, but it is a fact that passenger numbers have doubled over the past 20 years. Some lines that 50 years ago were deemed incapable of paying their way now form vital commuter arteries. For example, the link between Cambridge and Marks Tey in Suffolk was condemned in the Beeching report, although a short stub was eventually saved. The surviving route, which is sometimes known as the Lovejoy line, after the TV series, now supports bustling services during the morning peak. How many former routes might be similarly used today—reflecting some issues that hon. Members have raised today—to provide a better quality service?

As the capacity constraints on our existing network become increasingly apparent, it is right that we have to look at ways of enhancing the capacity of our existing lines, as well as exploring the opportunity for reopening old lines where there is a compelling case for doing so. This is particularly important in light of the severe disruption caused in the south-west by the storm damage at Dawlish. That is why Labour supported High Speed 1, which has enabled greatly enhanced commuter services from many communities in Kent, including those on the line itself, and those which benefit from Javelin services, which transfer to and from the conventional rail network. These trains have created commuter routes that previously would not have been feasible for many travellers, including the high-speed services from Deal. I pay tribute to the local campaigners, including Labour’s parliamentary candidate Clair Hawkins, who have put real pressure on the operator and the Department for Transport to secure those services, despite timetable extensions putting those at risk.

Labour is also committed to the £6 billion Thameslink programme, which represents a huge investment in new rolling stock and infrastructure improvements that will substantially increase capacity on one of the most intensively used routes in Europe. Unfortunately, the programme was paused after the election and it took an unacceptable two years to reach financial close on the contract for the new rolling stock. Given the limited number of officials working on Thameslink, the Public Accounts Committee has warned that

“we remain sceptical about whether the Department has the capacity to deliver the remainder of the programme by 2018.”

It is vital for rail services in both London and the south-east that Ministers get this project back on track and deliver it on time and within its budget.

Labour also oversaw the devolution of rail services in London to Transport for London, as my hon. Friend the Member for Lewisham East mentioned. The Campaign for Better Transport has provided compelling evidence of the improvements made since 2007: the new rolling stock secured and stations transformed from the drab, unstaffed stops that characterised the old Silverlink franchise. As a result, passenger numbers and passenger satisfaction is up, bringing in more revenue for the service. I am sure that hon. Members who represent communities along the West Anglian suburban lines to Enfield and Chingford hope for similar improvements when services are devolved to London Overground next year. I understand my hon. Friend’s aspirations in asking for further devolution to be considered.

Labour also passed the legislation for Crossrail and committed funding to make a project that had been discussed since the 1940s into a reality. Crossrail will radically improve rail connections and capacity in London and the south-east, while supporting the wider UK manufacturing industry and the supply chain. The previous Government also took the important step of safeguarding potential future routes to Reading and Gravesend, which could include extending the service to the constituency of the hon. Member for Dartford.

The previous Government took action to address the growing constraints on the rail network in the south-east, and the important work of my right hon. Friend the Member for Southampton, Itchen focused minds on the challenges facing ordinary families in the south. Today, Labour’s candidates are taking the lead when it comes to campaigning for better services in Hastings, in Dover and Deal and in Milton Keynes, and across the region as a whole. Labour is the only party campaigning for a strict cap on rail fares to benefit commuters facing the cost of living crisis, and we are committed to improving rail services for passengers.

My right hon. Friend is right to raise the issue of fairness. We are the only party willing to take a fresh look at our rail industry to secure a better deal for passengers and taxpayers from the billions of pounds that are invested every year.

10:17

[The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)]

I congratulate the hon. Member for Nottingham South (Lilian Greenwood) on keeping a straight face during that last bit of her speech. I also congratulate my hon. Friend the Member for Dartford (Gareth Johnson) on securing this debate on Southeastern services. As always, I am pleased to engage with him on issues that affect his constituents. Indeed, yesterday, we had a meeting about the introduction of free-flow on the Dartford crossing, which will deliver better reliability there. He is a champion for his constituents. Indeed, one of his constituents sent me a text while he was speaking to me, to ask why he did not mention that the toilets are dirty and often locked on the service from Lewisham. I am sure that that is another issue that he will be keen to campaign on.

It is clear that if we are to continue the strong growth in rail travel over recent years, passengers must be confident that the service that they receive is reliable, quick and comfortable. That is why the Government have invested billions of pounds in railway infrastructure improvements over this Parliament, and we have set out our plans to continue doing so. The Thameslink programme is one of those key investments, and we are committed to funding and delivering it in its entirety. On completion in 2018, the Thameslink programme will virtually double the number of north-south trains running through central London at peak times.

[Heidi Alexander]

The Minister just said that he believes that all passengers should have services that are reliable, quick and comfortable. He will know, from my contribution, that none of those adjectives applies to services experienced by my constituents. What will he do to improve the quality of services for the people travelling in on Southeastern trains from south-east London?

[Mr Goodwill]

The hon. Lady is right. The situation has not just developed in the past four years; there has been a backlog in investment in our rail, particularly in rolling stock. Northern Rail has some very old rolling stock. Indeed, a couple of weeks ago, we had a debate in which my hon. Friend the Member for Stevenage (Stephen McPartland) suggested that the rolling stock on his line is older than he is. There is a lot to be done, but that is no reason for not continuing with the investment that we have announced and with the projects that we are continuing to deliver. I often hear the criticism that we are spending far too much in London, when other parts of the country are being neglected.

[Mr Denham]

I am familiar with that north-south argument that suggests that all the investment is going to the south-east. Does the Minister accept my concern that my constituents, who are paying so much over the odds for their rail journeys, are no keener than constituents in the north of England to subsidise a railway in another part of the south-east? We have a situation in which we are asking a relatively small part of the country to pay the bill for all the railway investment that is taking place, whether in the north or the south.

[Mr Goodwill]

I suppose that my constituents would counter that by saying that the east coast main line is the line that contributes to the Government’s coffers, whether through a franchise operation or its current nationalised express, as I think someone called it the other day. A lot of investment is going into London and the south-east because that is where we see the most congestion and overcrowding. The £6.5 billion investment in Thameslink will link Kent, Sussex and Surrey, through central London, with Hertfordshire, Bedfordshire and Cambridgeshire. The Thameslink programme will deliver up to 1,140 carriages of high-capacity, next-generation rolling stock, in addition to some 600 new carriages that are being provided as part of the Crossrail project, which is a significant enhancement of the rail network’s capacity. I do not need to mention that Crossrail is the biggest engineering project in Europe. I was down there yesterday morning to see how work is progressing, and it is expected to be delivered on time.

My hon. Friend the Member for Dartford referred specifically to the service provided by Southeastern. As one would expect, the Department closely monitors rail performance, and I will spend a moment providing a little more detail on some of the recent performance trends. The key headline indicator for rail performance is the public performance measure, which measures the percentage of services that arrive between one minute early and five minutes late of their timetabled time.

The most recent period data available, from April 2013 to 1 February 2014, show a total average PPM score for the Southeastern network of 89.8%, which is 2.4 percentage points below the target agreed between the operator and Network Rail. Southeastern’s PPM score positions it in the lower mid-table when compared with all other train operating companies. Compared with similar operators in the region, Southeastern has a higher PPM score than Southern Railway, which is at 86.8%, and a slightly lower PPM score than South West Trains at 90.2%.

Southeastern’s franchise agreement, in keeping with all franchise agreements, includes operator performance benchmarks for delay minutes, cancellations and train capacity. Those benchmarks are a contractual requirement, which, if breached, can result in actions against the operator, such as additional passenger benefits at no cost to the Department or, in the case of extreme poor performance, franchise termination. Southeastern is currently performing within its contractual benchmarks and has been doing so for the duration of its franchise. My officials assure me that swift action will be taken if performance benchmarks are breached.

[Lilian Greenwood]

Those figures indicate that, for many passengers, one in 10 services will be delayed, and the franchise has been extended by more than four years. How can passengers feel confident that the system is on their side when, effectively, the franchise will continue for a long period without passengers seeing any improvement in performance?

[Mr Goodwill]

As the hon. Lady knows, not all delays are due to the actions of the franchisee. Network Rail sometimes has some explaining to do, particularly on overrunning engineering works, which can be a problem. I will address that later in my speech.

[Heidi Alexander]

I am grateful to the Minister for giving way again; he is being very generous. He talks about Southeastern’s contractual obligations, with specific reference to delays and cancellations. Can he tell me what proportion of trains on the Southeastern network have been shorter than they are contractually obliged to be? One of my constituents’ main complaints is that a six-car train turns up when an eight-car train should arrive. How often is that happening?

[Mr Goodwill]

I confess that I do not have that figure in my head, but I will drop the hon. Lady a line to give it to her. She is right that if a train is shorter than expected, it will result in either more people standing or, in some cases, many people not being able to get on the train and having to wait for the next service. In fact, the person who texted me recently has always made the point that living in Dartford is good because the trains are usually fairly empty when they get there. As people get closer to London and go through places such as Lewisham, the trains get fuller and fuller and it becomes more difficult either to get a seat or, in some cases, to get on the train.

Of the total delay minutes for the Southeastern network, around one third are attributable to Southeastern. That is within Southeastern’s contractual benchmarks and 1.6 percentage points outside its improvement target set with Network Rail. The most significant amount, almost two thirds of all delay minutes, are attributable to Network Rail. Network Rail remains cumulatively 37.9% adrift of its targets, which is clearly influencing the downward PPM trend.

Delays attributable to Network Rail, however, include significant and, to a large extent, unavoidable delays. The St Jude’s day storm, for example, caused widespread disruption, as has the sustained severe weather we have been experiencing since just before Christmas. It is inevitable that some disruption will occur in such extreme weather. On a number of occasions Network Rail has been forced to order the suspension of rail services until a full route inspection has taken place, which has caused major disruption on many routes. I gave evidence to that effect to the Select Committee on Transport before Christmas.

Safety must remain the highest priority, and it is in no small part due to Network Rail’s performance on safety that the UK now has one of the safest, if not the safest, railways in Europe. However, adverse weather should not be allowed to overshadow risk factors that can be controlled. Indeed, it is noteworthy that the High Speed 1 line did not experience any problems due to the recent bad weather. Lines built to that standard, such as the new High Speed 2, should also not encounter such problems.

[Gareth Johnson]

The Minister mentions the High Speed 1 statistics, which are relevant to the punctuality targets that Southeastern has to meet. Southeastern amalgamates its main line statistics with the High Speed 1 statistics to create the overall figure. To my knowledge, Southeastern is the only company in the country that does that, so it gives a distorted impression of punctuality to the communities that use its services.

[Mr Goodwill]

I note that point. Commuters use High Speed 1 to access London, so it would probably be unfair to exclude the line from the figures. I merely note that the figures are skewed because of the excellent performance of High Speed 1, which is built to a much higher standard. The angles of embankments, the engineering and the standard of the overhead lines are of a higher standard than the third-rail service used by many other trains, which can be disrupted by bad weather.

Southeastern is keen to influence improvement in Network Rail’s performance, and it recently requested a formal review with the Office of Rail Regulation, given several periods of missed delay minute targets. There are particular concerns about trees on the track, which can be mitigated through good vegetation management. There is also concern about landslips, which are controllable through targeted drainage management. Network Rail has its own views on the reasons for the disappointing drop in its performance, which it primarily puts down to extreme, unprecedented weather. Network Rail does, however, accept that performance must improve significantly, and it is engaged in open dialogue with Southeastern. We have told Southeastern that it must continue to challenge Network Rail to improve its performance on the Southeastern network. I await with interest the outcome of the formal review and expect to see both parties working together on targeted improvement strategies in the coming months.

Although Network Rail’s performance on Southeastern’s network has been unsatisfactory recently, investment has not been neglected. Major programmes of investment completed or started in the past 12 months include a £16 million upgrade of Gravesend station, a £7 million upgrade of Dartford station and a £6 million upgrade of Denmark Hill station.

[Lilian Greenwood]

The Minister is generous with his time. Returning to the point he made a moment ago, is he satisfied with the work that Network Rail has done to assess the stability and resilience of its railway? Has it been doing enough maintenance work to ensure that the network can cope with the difficult weather conditions that we have seen in recent weeks?

[Mr Goodwill]

I have already said that a full assessment needs to be done on how the adverse weather might have affected the stability of some tracks and on how vegetation management could contribute to fewer instances where lines are blocked by fallen trees. It is, however, often difficult to predict these weather situations. With the St Jude’s storm, the trees were in leaf, so trees that normally would not have succumbed to the high winds were brought down. I am sure that the hon. Lady would not suggest widespread desecration of the green corridors, which many rail lines offer and have environmental and ecological benefits.

In the near future, a new station at Rochester will be built, with completion in the winter of 2015. Nationwide, Network Rail has invested and will continue to invest billions of pounds in maintaining and improving the rail network. Between 2009 and 2014, it invested more than £37 billion, and more than £38 billion will be invested in the next five years.

Although the operational performance on the Kent route as measured by PPM has been disappointing over recent months, there is some positive news from the autumn 2013 passenger survey results, which were published by Passenger Focus last month. That independent survey of passengers’ views showed that 84% of passengers are satisfied with Southeastern’s service, matching the company’s record performance achieved off the back of the Olympics success in 2012. The result was also better than the national average of 83% and the average for London and south-east operators of 82%. That is an industry-leading result and is very encouraging, particularly given the severe weather experienced during that period. I suspect that some of that result is down to passengers understanding that severe weather causes disruption and not blaming the rail company specifically for that.

In further positive news, Southeastern’s performance on the provision of information about trains and platforms rose significantly to 83%, from last year’s score of 78%. That is a London and south-east sector-leading result. Southeastern’s performance did, however, decline on punctuality, reliability and rolling stock condition. Southeastern remains relatively close to the London and south-east average, and it exceeds the sector average on punctuality. In fairness to Southeastern, it is hardly surprising that customers’ ratings on punctuality and reliability have fallen, given the severe weather experienced and the escalating delay minutes attributable to Network Rail. Even given those relatively positive results, there is no complacency in the Department. My officials have discussed the issues with Southeastern and have received assurances that it is committed to driving improvements in the national passenger survey variables. Indeed, the future franchise will link financial reward to NPS performance.

On the specific points raised in the debate, I was pleased that my hon. Friend the Member for Dartford mentioned the safer station scheme, which has been such a success. I hope that we will build on that progress. He also mentioned the cost and availability of parking at stations. We need to build more cycle parking. I have been to a number of cycle parks at stations around the country and know that providing cycle parks facilitates the use of more environmentally benign ways to get to stations, and we are keen to build on that progress.

The right hon. Member for Southampton, Itchen (Mr Denham) discussed how the rise in fares and season tickets affected his constituents. A season ticket from Southampton costs £5,200 and the hon. Member for Lewisham East (Heidi Alexander) mentioned that a season ticket from Hither Green costs £976. People planning their commute might look at alternatives, and purchasing and running a car for £5,200 would be a challenge, particularly if the congestion charge was included. A season ticket from Hither Green costs less than paying the congestion charge for a car for a year. We are aware of the real issues that people face in paying for their commute and how it affects their decisions on where to live. People might find that they cannot afford property in central London, but also that they cannot afford the commute from further afield.

The fares that we collect enable us to secure investment in the rail infrastructure, and the fare box must play its part. Passengers on Southeastern trains have experienced large fare rises because of the retail prices index plus 3% fares cap, which was put in place when the franchise was let under the previous Government. The hon. Member for Nottingham South drew attention to those rises, but did not volunteer to take any of the blame for them. Members will be aware that the Chancellor announced that we would lower the cap on regulated fare rises, and that includes most season tickets. On average, those rises will be no more than RPI. That applies not only to Southeastern trains, but to all franchises for which the Government are responsible. It is the first time in 10 years that that has been the case.

Mention was made of other franchises around the country and the level of satisfaction with them, despite large subsidies. In my constituency, the Northern Rail franchise does not receive very high customer satisfaction ratings, and a lot of that is down to the regularity of the services. The first train from Whitby to Middlesbrough, for example, does not arrive at its destination much before 10 o’clock in the morning, and much of the rolling stock is old indeed.

[Lilian Greenwood]

I am reluctant to ask the question, given that the debate is on rail in the south-east, but the Minister mentioned rolling stock on the Northern Rail franchise. The Pacer trains are extremely old and rather uncomfortable. What plans do the Government have to update the rolling stock on that franchise?

[Mr Goodwill]

I fear we are digressing, Sir Roger, but my point was that I share the pain, given the level of ridership on those trains. The hon. Member for Lewisham East mentioned the 12-car trains and called for longer trains through her constituency. She will be aware that discussions are ongoing on a new Southeastern franchise, and I will ensure that her views are fed into that discussion, to see what can be done, although it is a busy stretch of railway and there are limits on the amount of rolling stock available. She also mentioned overrunning engineering works, which are a perennial problem that affect a number of lines up and down the country. We are aware of the possession overruns by Network Rail, but one cannot plan for unexpected situations, such as fires at signal boxes, suicides and copper theft, which result in disruption on the railway and Network Rail has little control over them.

The shadow Minister made a number of points and was very good at mentioning many prospective candidates, and I wish them well. It is true that Southeastern has cancelled many more trains than usual, particularly in December 2013. Cancellations for the previous five months were ahead of plan, and Southeastern has admitted that the problems in December could have been managed better. The spike in cancellations was due to staff and drivers not working overtime, as is normal, due to the poor weather. In addition, many drivers could not get to work due to disruption to roads and rail infrastructure. Southeastern said that it has learned lessons from the incident.

On the Thameslink upgrade, the plans are completely on track and it will be a phenomenal success, delivering a step change in capacity through central London from 2018.

As my hon. Friend the Member for Dartford will know, the Department is planning a four-year direct award contract with Southeastern from October 2014, in accordance with the refranchising programme borne out of the Brown and Laidlaw reviews. As he will understand, I cannot go into the specifics, as we are due to enter negotiations with Southeastern in the coming months. I can, however, outline some of the expected service and performance benefits.

The new Kent franchise has been specifically designed with customer satisfaction at its heart. For that reason, an innovative performance regime, which contractually requires operator-funded investments where national passenger survey targets are not met, has been included. In addition, a financial incentive regime will be linked to the standard operator benchmarks of delay minutes, cancellations and train capacity, which are the contractual measures that I mentioned earlier. Attaching financial reward to customer satisfaction and operational performance is an essential element of the new franchise and is designed to drive passenger benefits and, ultimately, continued strong growth in rail travel.

Making performance more transparent is another aim of the new franchise. Southeastern currently reports an average monthly public performance measure, but in the new franchise, it will be required to publish PPM performance data by route, which addresses my hon. Friend’s point, in addition to its overall PPM average. We will discuss with Southeastern what other information can be published about customer experience. I expect that increased transparency will help passengers to make better-informed travel decisions and allow improvement strategies targeted by the operator on the worst-performing routes. Greater transparency will also enable my officials more effectively to challenge the operator’s delivery.

On timetable enhancements, Southeastern has consulted on a number of improvements for the new franchise, including extending Victoria to Dartford services later into the evening and all-day services between Deal and Sandwich and St Pancras. There is, of course, no guarantee that the proposed enhancements will be accepted by Network Rail, but they are under active consideration and demonstrate that Southeastern is responding to customer demand. Southeastern is also in discussions with Transport for London about extending Oyster services to Stratford International, Dartford and Swanley. Again, I cannot guarantee that the proposals will be realised in the current franchise or the direct award period, but they are under real consideration. Indeed, when I last met the Mayor of London and Sir Peter Hendy, they said that they were keen to roll out cashless payments for journeys into London, but I note my hon. Friend’s comment that that need not be facilitated by extending TfL’s empire into Kent.

In conclusion, we are aware of the issues that my hon. Friend has raised about this important commuter area. I assure him that we will maintain pressure on the operator both to exceed performance targets and to work with Network Rail to facilitate a step change in their performance. I am currently satisfied that Southeastern is committed to driving improvements, as evidenced by its efforts to secure an Office of Rail Regulation formal review with its industry partner, Network Rail. I hope that by outlining some of the Department for Transport’s plans for the four-year direct award period, I have shown that the Department is committed to driving real improvements in transparency, performance and customer satisfaction. I am grateful to my hon. Friend for bringing performance on the Southeastern network to the attention of the House.

[Sir Roger Gale (in the Chair)]

Order. With the leave of the House and as we have the time, I will make an exception—this is exceptional—and invite Mr Johnson briefly to reply to the debate.

10:43

[Gareth Johnson]

Thank you, Sir Roger. This has been a constructive debate that was borne out of the contact that I have had with several constituents. They were critical of the service that they have experienced and are frustrated at the service on their lines when trying to go about their work in London and when travelling further into Kent. The complaints and concerns that have been brought to my attention—as a commuter, I have experienced similar things myself—follow a pattern. A lack of communication, innovation, value for money and reliability are the core concerns of commuters in the south-east. I ask the Minister to take those comments on board when dealing with Southeastern and other rail operators.

10:44

Sitting suspended.

Atos

Wednesday 12th February 2014 Westminster Hall

10:55

[Mr Mark Williams (Ceredigion) (LD)]

I am grateful, Sir Roger, for the opportunity to begin my speech a few minutes early, because I hope to participate in Welsh questions in the main Chamber later. I thank the Minister for his co-operation.

I am not unique in having concerns about the work of Atos. I am sure that there is such concern throughout the country. Last year citizens advice bureaux helped with some 450,000 problems to do with employment and support allowance, and 58,000 of those related to work capacity assessments carried out by Atos. Some 94,000 cases related to appeals. The Department for Work and Pensions is currently retendering for new contracts, and I hope that as part of the process the Minister and the Department are examining some of the failures of past contracts. Above all, I appeal to the Minister—he is a Minister who listens—to ensure that whatever conclusions are reached, and whoever gets the contracts, they will be held to account for poor quality assessments and bad customer service. That is the reason for the debate, and I shall give examples—I hesitate to use the word “anecdotes”; many Members of Parliament have constituency experience of the problems.

I am concerned that Atos may not be asking the right questions, and I encourage DWP to introduce regular independent scrutiny of its customer satisfaction surveys. It has asserted that 85% of clients are satisfied with the assessment process, but I question that figure. Citizens Advice has long-standing concerns about the accuracy of work capacity assessment reports provided to DWP as part of the Department’s decision-making process. Citizens Advice asserts that two thirds of reports have a medium level of inaccuracy, and that 40% have had a serious lack of accuracy, which could lead to the wrong decision being made. Those concerns are not confined to the issue of ESA; they could be replicated with respect to personal independence payment assessments.

[Jessica Morden (Newport East) (Lab)]

Does the hon. Gentleman see the stress that multiple processes cause to people who are battling against serious conditions, such as the constituent I recently saw who has severe epilepsy? She waited months for a tribunal on a work capability assessment, and she won; but in the meantime, she lost her disability living allowance. She appealed and while she was waiting had to put in a claim for PIP, and is still waiting for a decision. I know that that is not all because of Atos, and that there is another debate to be had about Capita; but does the hon. Gentleman often see, as I do, people who are coping with worry and stress because of the system, in addition to their illness?

[Mr Williams]

I thank the hon. Lady for that intervention, which she had notified me she wanted to make. She talked about multiple processes, and she is right; in particular she is right about the delays and the anxiety they cause.

There are reports of some disabled people waiting more than six months for face-to-face assessment; scheduling problems; last-minute cancellations; and difficulty in getting to assessment centres. I represent a large rural constituency in the west of Wales and access to assessment centres is a critical matter. We must factor in the lack of public transport and people’s difficulties in getting to their interviews.

That should all be seen in the context of the fact that many claiming benefit are doing so for the first time, after experiencing a catastrophic, life-changing event such as an accident, the sudden onset of disability or the deterioration of an existing condition. They face an urgent need for support, given the sudden extra costs. Everyone in the Chamber acknowledges that delay is unacceptable, although of course new systems have teething problems. I should emphasise, however, that not one of us, of whatever political persuasion, has a monopoly on empathy with the problems, which are understood by the Government, the Opposition and all parties. Nevertheless, I question the capacity of existing providers to carry out the work. The Minister is in a difficult position, because the tendering process is being embarked upon, but I hope that he can allay my fears.

I sought the debate because of the increasing numbers of constituents who are coming to my surgeries, writing to me and e-mailing me, and are facing the stress and anxiety of going through work capability assessments carried out by Atos for the DWP. That is perhaps inevitable given the increased pace of assessments but, as a result of, some would argue, the inappropriate system and process, many of our constituents are told that they do not qualify and are indeed fit for work. The constituent then appeals, but can be left in a state of limbo while this process takes place—delays take months or even years. One of my constituents had an assessment two years ago, but the case is still not resolved.

In response, local agencies such as Jobcentre Plus, Citizens Advice and the DWP itself have been advising my constituents to contact me to assist with their appeal or the speed of their claim. I would never turn a constituent away on any bit of casework, however big or small, because that is our duty and our function, and I am supported by excellent staff here in London and in Aberystwyth, so we will help in any way. There is something wrong, however, if DWP staff are themselves referring people to their MP. In one case, a DWP member of staff told my constituent to contact me to complain about the service. As such, it is my duty to bring these matters to the Minister’s attention.

[Jim Shannon (Strangford) (DUP)]

This is such an important issue, not only for the hon. Gentleman, but for every one of us in the Chamber and for many outside. In addition to the examples he has rightly mentioned, I have a constituent who has ulcerated colitis and has been retired medically as a civil servant. Her doctor and her physiotherapist support her. In the appeal, however, she was declared fit for work. There is something seriously wrong with a system that ignores medical opinion and suggests that people can work, when they clearly cannot. Should the Minister take that on board?

[Mr Williams]

The hon. Gentleman highlights a mismatch between the appeals process and the initial adjudication or assessment. I will come on to that. I am sure the Minister is mindful of it, although the hon. Gentleman is right to highlight it. As I said at the start of the debate, the situation is not unique to my constituency; it is commonplace in every constituency in the country.

[Richard Graham (Gloucester) (Con)]

My hon. Friend is making an important case, which should be heard, and we all have examples from our constituencies, as he says. Does he agree that the situation is difficult, given that the contract was a monopoly one—awarded by the previous Government—and is therefore awkward and possibly expensive for this Government to get out of?

[Mr Williams]

My hon. Friend is right. I am not approaching the subject on a particularly partisan basis, because the problems are experienced in all constituencies, but he is right to talk about the circumstances in which this Government are dealing with the legacy of decisions taken under the previous Government. He is right to highlight that. I have every sympathy with many of the campaigning groups, on behalf of which I will talk in my later remarks, but we need to remember the origins of the decision, which the Labour Government made.

I want to talk specifically about delays. I met Atos representatives yesterday, so I know that they recognise the length of time taken to complete the process. One of my constituents, who I will call Mr P, had his Atos assessment two years ago and was failed. He appealed, and the appeal took eight months to be heard. The appeal judge took only three minutes to uphold the appeal. His backdated benefits were paid, but two months later he received a letter summoning him to another Atos assessment, because the process had taken so long from start to finish that the 12-month period before reassessment was almost up. At the second Atos assessment, my constituent was unable to complete some of the tests without causing himself considerable pain and anguish, so they were stopped halfway through. This went down on his medical report paperwork as a refusal.

The case, now complete, has gone to the ombudsman, and I would like to quote a section from my constituent’s letter to the ombudsman:

“I have paid my NI contributions and taxes all my life believing I would be protected by the welfare system should anything untoward happen to me. For 2 years I was afraid to open my post in case it was another letter stopping money...or another assessment. During this time I have been in pain, had needles...surgeons knives, ligaments removed, bones cut and metal plates inserted into me but I am still made to look like some kind of scrounging criminal by a system that was meant to protect me.”

I condemn certain sections of the press for the way in which they have characterised benefit claimants. A gentleman who is genuinely seeking support from the welfare state, into which he has paid all his life, is seemingly being let down.

In many cases, our constituents want to get on with the process of recovery and do not see benefit claiming as a long-term situation, but the delays make their condition worse. Another constituent who I am dealing with—she, too, will remain anonymous—said:

“I am currently receiving treatment and therapy and my therapist is not keen to discharge me yet. My health is not improving and is in fact being made worse by the anxiety caused from this void of information. I was feeling quite positive at one time that I may be put into the Work Related Activity Group…as this would be a great stepping stone to getting back into work from sickness, but I currently feel so low because instead of being helped forward towards getting back into work, I am stuck in an uninformed place that is not helping me recover at all.”

That indicates to me that the process for some conditions —by no means all of them—is making situations worse and adding anxiety to something that is already causing considerable stress to people.

In developing the debate, I am talking about some of the principles that I believe—I am sure people in all parties believe—should be governing our assessment system. My concern in addition to the delays is that the work capability assessment is not fit for purpose. Indeed, the charity Mind informs me that around 40% of people who are found fit for work appeal against the decision; of those who appeal, almost 40% win their appeal. As we know, capability to work is about not only those suffering with physical disabilities—it might be easier for ATOS assessors to see and report on a tangible factor—but those suffering with an invisible illness. This is true in particular of constituents who are suffering with mental health issues, or conditions relating to autism, which is an especially interesting example.

In my constituency, I was pleased that an excellent charity, Autism Cymru, developed a project to train people in the DWP to have greater understanding of the condition of autism. I used to be a primary school teacher and we had minimal training on this, but one thing that impressed itself on me was one particular feature of autism: asking a direct question gets a negative response. That is the nature of the condition, and it needs to be borne in mind in the assessments. The charities Rethink, Mind, the National Autistic Society and Citizens Advice have all made that point to me. I therefore ask the Minister to reiterate the Department’s concern and to ensure that, whichever providers undertake the work, the assessors are appropriately trained in complex conditions such as autism and mental health, so that the clients may be—and see themselves to be—assessed fairly and comprehensively.

Last autumn, with other Members, I undertook a mock assessment organised by the charity Rethink, to give MPs the experience of taking a work capability assessment. At that meeting was a Rethink campaigner, the retired vicar Dick Acworth, whose son has bipolar disorder and yet was deemed fit for work. People such as Dick’s son with a supportive family are lucky to be able to face the appeals process together, but there must be concern about the number of people who do not appeal, because they cannot face it, or simply do not know how to go about it, and they are very much left to struggle alone.

[Jim Shannon]

Does the hon. Gentleman agree that when someone has medical evidence from GPs, consultants and physiotherapists—people who know about the medical condition of their patient—it is important for Atos and for the Department itself to take greater cognisance of that medical evidence? It seems that that is not always the case.

[Mr Williams]

I thank the hon. Gentleman for making, once more, that point. It is critical that all due consideration is given. I do not agree with the characterisation of constituents as simply going down to their doctor’s surgery, presenting a letter to the doctor and saying, “Sign this”, and then that letter being presented as part of a package for an assessment, or indeed a tribunal. Doctors are the experts. They know their patients and the situations in which they operate, and we need to give them all due consideration.

Concerns have also been expressed about people suffering from progressive illnesses such as cystic fibrosis, multiple sclerosis, Parkinson’s disease and rheumatoid arthritis. It has been asked whether the work capability assessment is fit for purpose for them. I am not sure whether the Minister has received it yet, but I recently signed a letter to him from colleagues from across the House—it is on its way—raising that concern. Organisations working on behalf of people with progressive conditions have found that that 45% of people with those conditions who put in a new claim for ESA between 2008 and 2011 were placed in a work-related activity group and deemed able eventually to return to work. The placement of those individuals represents the Department’s recognition that they were unable to work at the time of the assessment, yet some were given a recommendation for a return to work in few months’ time. But that directly contradicts the definition of a progressive condition, which of course can get worse over time. The letter is on its way, and I am sure that the Minister will respond to it even if he does not do so today.

I will move on to the flexibility of descriptors. I understand that Atos and Capita are under contract to the Department—I was going to raise at this point the point made by my hon. Friend the Member for Gloucester (Richard Graham) about the origins of those contracts—but Atos does not set the descriptors; they are set by Government. Given the concerns that many organisations in the third sector have about the descriptors, will the Minister tell us—I suspect I know the answer—what dialogue he has had with the third sector and what opportunities the third sector has to raise such concerns?

[Richard Graham]

On that precise point, does my hon. Friend agree that Citizens Advice is probably the charitable organisation that has the greatest experience of dealing with the most serious and, often, heartbreaking experiences of people who have really struggled with the assessment and appeal process for WCA?

[Mr Williams]

I agree, and I am sure that the Gloucester citizens advice bureau is as affected as the Ceredigion citizens advice bureaux in Cardigan and in Aberystwyth—although I am sadly not sure how much longer that CAB will remain open. Citizens Advice has that body of expertise, which is hugely important.

I have received an almost endless series of representations. I am mindful of the time, and that I have already spoken for 18 minutes—albeit that I have been generous with interventions—so I will simply make the general point that there are concerns about the extent to which the employees of assessment providers are being wholly sympathetic, about the huge backlog of cases that is leading to delays and, frankly, about the instances there have been of administrative incompetence.

I will give a final case study. One constituent I have been dealing with was assessed recently. He felt that the Atos assessor was completely apathetic to his conditions, and also felt under immense pressure to complete tasks put before him. He self-harmed considerably following the assessment. Several of the tasks he was unable to perform have now been put down as “refusals” on his medical report form. He gets very angry, has suicidal thoughts and is prone to paranoia—I am not being emotive in presenting such cases, as I think that they are replicated more generally. Shortly after the initial assessment, he got in touch with me to start the appeals process. Someone from the DWP phoned him to tell him that his appeal of the Atos decision had been unsuccessful, but we had not even started the appeals process at that point. They then called 10 minutes later to say they had made a mistake and he could appeal.

A simple mistake like that can have huge ramifications for people’s lives. A section of the decision maker’s letter to my constituent, whom I will call Mr Z, says that although it is accepted that Mr Z

“experiences pain and discomfort it should be remembered that activities do not have to be performed without any discomfort or pain.”

It goes on to say that the decision maker had chosen the descriptor that reflected Mr Z’s

“level of functioning for the majority of the time.”

If we look at the Government’s website, there is a contradiction, as that site says:

“The approved healthcare professional will consider all the information and exercise clinical judgement to reach an opinion on the nature and severity of the effects of the disabling condition. They will also take full account of factors such as pain, fatigue, stress and of the possible variability of the condition.”

My constituents—people such as Mr Z, Mr P and the lady I mentioned who is desperate to get back into work—are being let down by the system.

Finally, I reiterate the point mentioned by the hon. Member for Strangford (Jim Shannon). A number of my constituents have failed Atos assessments, but, after a long appeals process, that decision has been overturned by tribunal judges. The judges involved in the appeal are given the same descriptors as the Atos assessor, the same reports and the same medical information from the person’s GP, so why is it that judges who are upholding appeals and the Atos assessors are reaching such wildly different conclusions? For example, a constituent of mine had her Atos medical last March. She was given zero points, but her appeal was upheld and full points were awarded.

To me, that sounds like a system that is making those in our society who are vulnerable and unwell, sadly, more vulnerable and unwell. I look to the Minister for reassurance. I know that his role is in a tentative phase at the moment, but I hope that I have established some of the principles that some of us expect to see in our system of assessment.

11:16

[The Minister of State, Department for Work and Pensions (Mike Penning)]

It is the first time I have served under your chairmanship since you were knighted, Sir Roger. I congratulate you on receiving your knighthood from Her Majesty, and look forward to serving under your chairmanship in the future. I also congratulate my hon. Friend the Member for Ceredigion (Mr Williams) on securing this debate on an issue on which I receive correspondence as a constituency MP; indeed, in the four months that I have had this job, I have met colleagues from across the House about this issue.

On that note, I will explain a little about the role of the Minister of State with responsibility for disabled people. It is a completely new role. For the first time in the 40 years that we have had a Minister for this area, a Minister of State is responsible for it. Although I am based in the Department for Work and Pensions, I have a considerable role across Government in bringing Departments together, to break down some of the silos and see how we can go forward for a better future and with better aspirations for people with disabilities and long-term illnesses.

My hon. Friend has concentrated specifically on Atos and the WCA. I spoke to him before the debate, and I will concentrate most of my comments, if I may, on the WCA for ESA, and on Atos, which is in the title of the debate. Many matters he has raised this morning are not points with which anyone from across the House or any Minister could disagree. There is real concern out in the community, in the lobbying groups that represent so many of the individuals who are so worried about the assessment, and across the House. I noticed that before I came to this role, and have seen it since.

I have tried to be as open and pragmatic as possible in the past four months, meeting not only colleagues from across the House but the relevant specialist stakeholder groups that have asked to see me. I have been frank—I am often too frank—in saying that if those stakeholder groups want to help and to work with us to make the situation better, I have an open-door policy. If they want to throw abuse—and frankly some of my colleagues have faced abuse that has been absolutely appalling and reprehensible—I will not meet those groups, because that will not help the people whom those groups say they are trying to help. But I have had a completely open door; for instance, this afternoon I will again meet representatives from Macmillan to discuss its particular area of expertise. Although I agree that Citizens Advice has done and continues to do fantastic work, it is not the only organisation that is doing such work in representing the people affected. I pay tribute to colleagues across the House—who, believe me, write to me on a regular basis—for doing exactly what they should be doing in representing their constituents.

I am not a party political animal in ministerial terms, and colleagues in Departments that I have worked in previously know that, but I must be honest and ask whether we inherited the work capability assessment. Was it introduced by the previous Administration? Yes, it was. Do I agree with it? Yes, I do, but I do not agree with the way in which the contract was formulated with Atos as one single provider. That was a flawed decision. Sadly, under ministerial rules, I am not allowed to see the evidence that was put before Ministers in the previous Administration. Due diligence is not possible, as it would be if a company were taken over. That is rather strange. Although I have been in three Departments, I am not allowed to see that evidence, but I cannot understand why that decision was made. There was a move from a predominantly paper-based assessment, in which people were often written off. When I had my accident in the fire service, my certificate stated “until further notice”. I was written off, but I have been lucky and have come back to reasonable health and stability from my injuries. However, many people do not recover and there are many areas that we need to work on.

If people want to work, we want to give them all the assistance we can. If people could work but perhaps do not have the confidence, ability, skills or help to get back into the work place, the scheme will help them. Do I accept that mistakes have been made? Yes, I do, and it would be foolish to deny that. That is why, when the coalition Government came to power, Professor Harrington was asked to carry out a review. We accepted all his recommendations. The new review by Litchfield has just been produced, and I can tell the Chamber that we can accept almost everything that is recommended. We have not yet made a formal decision, but it contains many sensible suggestions that need to be in place.

I have attended some tribunals, which are public and not secret courts. I have sat there quietly and listened to what goes on. Do I agree with Citizens Advice and others that many cases should never have gone to a tribunal? Yes, I do. I am taking action to ensure that all the cases that are waiting to go to a tribunal are reviewed, and if senior case workers have got them wrong, we will prevent them from going forward. However, we tend to hear one side of the argument—when mistakes are made—but millions of people have gone through assessments and are back in the workplace. Under the previous Administration’s regime, people really struggled to get back into work. We want to help people to get back into the workplace and to be as self-sufficient as possible.

There are areas that I still have grave concerns about, and we are working on those. My hon. Friend the Member for Ceredigion alluded to mental health issues, and I often talk about hidden disabilities. One of the great things that came out of the Paralympics was that the public’s understanding of people with disabilities across the spectrum was vastly improved, and we need to build on that legacy. However, the parameters of mental health disabilities, learning disabilities and hidden disabilities are difficult.

My constituency has problems with misuse of blue parking badges for disabled people. Only the other day, a young man and his father got out of a car and walked off down the road as though they were fit and able-bodied. I know that family, and I know how poorly the young man is, but I heard the abuse from a member of the public who thought he was abusing the parking scheme. That abuse from the member of the public was wrong, but frustration arises from abuse of the system, and we must work with the Department for Transport on that. At the same time, we must address ignorance and lack of understanding among the public

[Jim Shannon]

I understand exactly the point the Minister is making. It is good to get people back to work, and many people want to go back to work, but as hon. Members in the Chamber have said, some people cannot work. The Minister indicated that he accepts that some change is needed. In the criteria for Atos, will more emphasis be given to the medical evidence?

[Mike Penning]

My hon. Friend—he has been a good friend, especially during my time as a Northern Ireland Minister—has read my mind, as usual. That is exactly what I am coming to. We are working closely on the descriptors to ensure that what we ask is exactly relevant to the conditions reported. Atos does not make decisions on diagnoses; evidence for those diagnoses will already exist. We are trying to ensure that the right decision is made based on the evidence provided, and descriptors are important in that.

Turning to why so many decisions are overturned by judges at tribunals, I have admitted that that is sometimes because we got them wrong. However, sometimes, on the day of the tribunal, new evidence, which we have never seen, is put before the judges. Within the rules, that is technically unacceptable, but the judges are allowed to use their discretion in allowing that to happen. I saw that the other day, and if we had seen the evidence that was put before the judge at that tribunal, the case would never have gone to the tribunal.

[Mr Williams]

I am grateful to the Minister for his last point. Charities have contacted me about progressive diseases and illnesses, and I know that he is working with them. With regard to his discussions about the descriptors, how satisfied is he that concerns about slowly progressive diseases and illnesses will be factored into any new descriptors?

[Mike Penning]

That is exactly what we are working on with the stakeholder bodies. I have asked them to sit down and work with us to address that. I completely agree that the descriptors must be fit for purpose. The matter is enormously complicated because of the sheer amount of different diagnoses across the medical spectrum.

I turn to the negotiations with Atos. I must be careful, because they involve contractual and legal issues. We have announced that we want more capacity. Otherwise, the backlog of people waiting for their assessment will increase, and the time they wait is increasing. We have said publicly that we want more capacity in the system. The balance is between quality of decision and throughput. One reason why so many cases go to a tribunal is that we based the system on throughput and we got too many wrong. I say “we” because I am the Minster responsible and the buck stops with me. Too many cases ended up in the appeal process and went to a tribunal. We have now improved the quality and ensured that our people spend time with the applicants, but that has caused a backlog. We are addressing that capacity issue.

[Mr Williams]

I welcome what the Minister says about the backlog, which is causing the huge delays and problems that I alluded to. May I plead for areas such as the one I represent—rural, sparsely populated west Wales—and raise the problem of people needing physical access to the assessments we are talking about? The position in south Wales and the cities of England, Scotland and Wales is very different from that in rural Ceredigion.

[Mike Penning]

I have a list of things I wanted to bring up, and if I have missed anything that hon. Members have raised, I will write to them after the debate.

During a meeting only the other day, my hon. Friend the Member for Gloucester (Richard Graham) raised the issue of access. There are two sorts of access issues: distance, and the suitability of the building for people with disabilities. I am the Minister with responsibility across Government for disability, and it seems ludicrous that I receive complaints about buildings that Atos and other companies use on my behalf and are not suitable. We are working on that. The problem is not just distance, but the sort of buildings being used.

When someone has been told that they are fit for work and then appeals, they can apply for jobseeker’s allowance while they are waiting for their appeal to be heard. If their GP believes that they are unfit for work, they will provide a sickness certificate. Everyone accepts, as did the previous Administration, that there should be an independent review of people’s capability because of the relationship between GPs and their patients. That relationship is very personal, as I found with my GP all those years ago after my accident. He would say, “Well Mike, you can’t carry on being a fireman,” instead of saying, “What can you do?”

11:30

Sitting suspended.

Currency in Scotland after 2014

Wednesday 12th February 2014 Westminster Hall

[Mrs Linda Riordan in the Chair]

14:30

[Ian Murray (Edinburgh South) (Lab)]

It is a great pleasure to serve under your chairmanship for the first time, Mrs Riordan, for a very important debate. Over the past couple of weeks, we have seen a watershed in the referendum debate in Scotland. The Governor of the Bank of England’s non-partisan and technical intervention on the currency has been critical in debunking the false assertions that the Scottish National party has been peddling about keeping and using the pound. I will come back to those revelations later and to some of the latest news on that issue.

We can sum up the Governor’s intervention by reflecting on a quote from renowned economist Keynes:

“He who controls the currency controls the country”.

And which eminent economist said that a country without its own currency is a country not only without a steering wheel, but also without brakes? No, it was not Keynes, Adam Smith, or even Marx, but the lesser-known SNP Education Secretary, Mike Russell. There is little doubt that the Governor was saying exactly that when he stated:

“It is no coincidence that effective currency unions tend to have centralised fiscal authorities whose spending is a sizeable share of GDP.”

He went on to say:

“In short, a durable, successful currency union requires some ceding of national sovereignty.”

The central message of the Governor’s speech, of course, was that currency union requires fiscal, economic and political union to avoid financial crisis.

[Graeme Morrice (Livingston) (Lab)]

I congratulate my hon. Friend on securing this important debate. As he will know, the Select Committee on Scottish Affairs, of which I am a member, has conducted an inquiry into the consequences of Scottish separatism. Last week, we were taking evidence from a number of eminent academics. One in particular, Professor MacDonald of the university of Glasgow, who is an expert in economics, said, in the context of price shocks regarding Scottish oil production:

“If you had a separate currency, your exchange rate would take up the adjustment, but, of course, if you are part of a monetary union, you won’t have that…That, for me, is one of the key deciding issues as to why, whatever we want to call it, a currency union or a monetary union would not work.”

Does my hon. Friend agree with that assessment?

[Ian Murray]

I do, and I think that is the assessment that many economists, academics and politicians have been making over the past few weeks. The Governor of the Bank of England made the very same assessment, and the Scottish Affairs Committee deserves great credit for the amount of work they are putting in on the issue.

Let me go back to the central message of the Governor’s speech. He said that currency union requires fiscal, economic and political union to avoid financial crisis. It is precisely that fiscal, economic and political union that the SNP seeks to dismantle with its obsession with independence. When the First Minister met the Governor of the Bank of England a few weeks ago, there was one person in that room who would control Scotland’s fiscal, monetary and spending policies in a currency union after independence, and it was not the First Minister.

A key test that the Governor set for any currency union is that a centralised fiscal authority would need to control about 25% of that fiscal union’s GDP. That is about 50% of the spending in Scotland. The SNP immediately responded by saying that they would have 100% control over taxes and spending in an independent Scotland, so by default, it is the SNP that has ruled out a currency union by completely ignoring the central warning of the Governor’s full analysis.

We do not have to look too far back into history to see that the Governor was correct. The euro created sovereign debt crises, financial fragmentation and large divergences in economic performance. That clearly illustrates the risks and challenges of creating and maintaining a formal currency union across different states with differing economies.

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

People in my constituency have said that they should be entitled to a say on the terms on which an independent Scotland might continue to use the pound, for the very reason that they fear that, if the conditions are not sufficiently strict, they could end up with a Greek euro situation, with workers in one country paying to prop up the financial circumstances in another. Does my hon. Friend agree that people in Selly Oak, and indeed, in England, have a point on that?

[Ian Murray]

My hon. Friend has hit the nail on the head. A currency union is a question not only for Scotland, but for the rest of the United Kingdom, because the stabilisers that require a currency union would be stabilisers that England or the rest of the United Kingdom would have to use, as well as Scotland. It is a question for the rest of the United Kingdom, and that is a very valuable intervention from my hon. Friend, who is from an English constituency. [Interruption.] I can hear SNP Members chuntering, “Scaremongering”. Well, I hope that they go back and tell their constituents that the SNP disregards what they are saying as scaremongering rather than as raising legitimate issues about the currency and jobs.

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

Will the hon. Gentleman give way?

[Ian Murray]

I will make some progress, then I will give way. I was talking about the euro. Let us reflect on what is happening now with the euro area: it is seeking very significant steps to expand the sharing of risks and pooling of resources to create a more homogenous currency union to make it work properly—exactly what the UK in its current state now provides for the pound sterling.

I know that the First Minister said that we should ignore experts, but John Cridland, the director general of the CBI, emphasised last week:

“As the Governor highlighted, successful currency unions need strong fiscal agreements and a banking union, with common supervisory standards and resolution mechanisms. The negative effects”—

this point is critical—

“of not having these structures in place have been starkly illustrated by the Eurozone crisis.”

There is a very positive case for staying with the United Kingdom as part of this currency debate and I would like to run through three points that are particularly relevant to the currency and the economy.

First, Scotland benefits from being part of the UK economy, which is the third largest economy in Europe and the sixth largest in the world. Being part of the larger, more diverse UK economy brings strength, stability and security, not only to Scotland’s finances, but to those of the United Kingdom.

Secondly, being part of the UK offers us protection from financial shocks. During the financial crisis, banks based in Scotland took advantage of the protection offered to UK banks. Since 2007, the UK has committed £1.2 trillion to bailing out the banks. At its peak, the Edinburgh-based Royal Bank of Scotland received £254 billion in support from the UK Government. That pooling and sharing is critical.

Thirdly, the rest of the UK is Scotland’s biggest trading partner. Scottish businesses buy and sell more products and services from the rest of the UK than every other country in the world combined. In 2010, 70% of Scotland’s exported goods and services went to England, Wales and Northern Ireland, accounting for a massive 35% of Scottish GDP. Likewise, 70% of Scotland’s imports are estimated to come from the rest of the United Kingdom.

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

Turning that argument on its head, based on the very ill-thought-out and ill-judged comments of the Chancellor of the Exchequer overnight, what assessment has been made by the no campaign, the Treasury and the Labour party of the impact on Welsh jobs should Scotland not be allowed to use sterling as currency? [Interruption.]

[Ian Murray]

I did not quite catch the end of what the hon. Gentleman said about Welsh jobs—[Interruption.] The impact on Welsh jobs would be the impact described by my hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe). Losing Scotland from a single currency in the United Kingdom is very dangerous indeed—[Interruption.]

[Mrs Linda Riordan (in the Chair)]

Order.

[Guy Opperman (Hexham) (Con)]

Will the hon. Gentleman give way?

[Ian Murray]

Let me make some progress, then I will give way. The attitude you have just seen from the nationalists in the Chamber, Mrs Riordan, sums up exactly the argument we are having. When challenged on legitimate questions about legitimate issues to do with people’s jobs and the economy of this country, all they can do is shout, “Scaremongering”, and shout down the people who are asking those legitimate questions.

This is not just a technical or political issue; it is also a significant issue for the Scottish public. I say to the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) that I am sure the attitudes of the Welsh are exactly the same. The recent Scottish social attitudes survey said that 79% want to keep the pound with only 11% wanting their own currency—no doubt the Greens and the chair of the yes campaign are included in that 11%—and 7% want Alex Salmond’s previous obsession, which was the euro.

The First Minister has gone from saying that the pound is,

“a millstone round Scotland’s neck”

to making it the currency of choice for the SNP, but not all the yes camp believe that that is right. The SNP’s own fiscal commission was not even in favour of an informal monetary or currency union.

[Guy Opperman]

I congratulate the hon. Gentleman on securing the debate. On the specific issue of jobs—I am speaking as an MP whose area has a border that divides Scotland and England—my local businesses, the North East chamber of commerce and the local authorities have all indicated that there would be a negative impact on jobs, growth and the development of our respective economies in Scotland and England were the referendum to go ahead. Does the hon. Gentleman agree that that point, as always, is totally ignored by the Scottish nationalists?

[Ian Murray]

I am grateful for that intervention. That point is ignored because it is convenient for the nationalists to ignore it. They do not care about the rest of the United Kingdom. They do not care about businesses and employment across the rest of the United Kingdom. [Interruption.] If they did, they would put their efforts into ensuring that that worked for businesses and for employment across the United Kingdom, rather than being obsessed with the constitution.

I will try to make significant progress. There is a banking museum in the old HBOS headquarters on the mound in Edinburgh. It says that people think of money today as banknotes and coins, but that the currency used to be things such as tea, shells and even feathers. That has been used in the past. We may need to go back to that, because people need to know what the money will be in their pockets. We cannot run a modern economy on empty ginger bottles. Incidentally, people can press their own coins at the museum. There is a little press that kids can use to press their own coins. Perhaps that will become the Scottish Government’s plan B when they have to decide to print their own coins.

This is too important an issue for the SNP and the yes campaign not to be honest with the Scottish people and businesses about the way forward. The overwhelming weight of opinion is now against a currency union. It is little wonder, as any agreement would mean that our interest rates would be set by a foreign bank and include strict instructions on how much Scotland could tax and spend. Scotland would have no control at all over monetary policy. It would also mean the loss of our UK central bank, which acts as the lender of last resort. The Secretary of State for Business, Innovation and Skills raised the lender of last resort issue last week in relation to the large Scottish financial institutions perhaps being forced to move south to be by the central bank, for the reasons that I highlighted earlier, from the crisis in 2008.

[Lindsay Roy (Glenrothes) (Lab)]

Would keeping the pound not make Scotland a neo-colonised state?

[Ian Murray]

My hon. Friend makes that point rather well. Let me go on to talk about something that has been mentioned already. Scotland’s relationship with the rest of the United Kingdom, in terms of having a currency union in the way that the SNP envisages, would be exactly the same relationship as the Greek Government currently have with Germany, but it is not just an issue for Scotland.

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

rose—

[Mel Stride (Central Devon) (Con)]

rose—

[Ian Murray]

Let me make a little progress. I know that other hon. Members want to speak, but I will allow hon. Members to intervene.

It is not just an issue for Scotland. The rest of the UK—this is an important point, which other hon. Members have made in interventions—would have to agree. It appears from speculation in the press today—perhaps the Treasury Minister can indicate whether it is speculation—that there will not be an agreement on currency union, as it is undeliverable. If an agreement is not possible or is ruled out by the Treasury, what will be the Scottish Government’s plan B? [Interruption.] The nationalists are chuntering away about what they would do. I am happy to take an intervention if they want to tell the people of Scotland now what the Scottish nationalists’ plan B is for the currency should Scotland vote yes for independence. [Interruption.]

[Mr MacNeil]

I am very glad that the hon. Gentleman has given way; he promised to give way. Has he informed the people of England of what his policy would mean for them if he managed to go hand in hand with Osborne and keep Scotland out of sterling? What would it mean for the balance of payments? What would it mean for the value of sterling? What would be the price of holidays for English people going abroad without Scotland’s contribution to sterling? The hon. Gentleman knows full well that Labour keeping Scotland out of sterling would make things far more expensive for English people.

[Ian Murray]

I apologise to everyone in the debate. I allowed the hon. Member for the Western Isles to intervene to tell us what the SNP’s plan B is, and he chuntered on about something to do with holidays that I could barely hear because his colleagues were chuntering over him. I have no idea what he said. [Interruption.]

[Mrs Linda Riordan (in the Chair)]

Order. The hon. Gentleman must be heard. The other hon. Members will get the same respect under my chairmanship.

[Ian Murray]

Thank you, Mrs Riordan. I will give the nationalists one more opportunity if they want to intervene to tell us what the SNP’s plan B would be should people vote yes for an independent Scotland and there is no currency union. No?

[Mr MacNeil]

rose—

[Ian Murray]

Go on. Tell us what plan B will be.

[Mr MacNeil]

The hon. Gentleman did not hear because of the chuntering beside him, but the point is that we know full well what we are doing—we are keeping sterling. But if his policy was—[Laughter.] If his policy was put in place, what would happen to people in England as the balance of payments worsened and sterling weakened? Imports would be more expensive. Holidays would be more expensive. Labour’s policy is irresponsible to the people of England as it is to the people of Wales.

[Ian Murray]

Mrs Riordan, I apologise again for wasting another intervention through the nationalists not telling us what plan B would be. Let me tell them what the currency will be in England and Wales. It will be the pound sterling. That is what they will keep.

[Anas Sarwar (Glasgow Central) (Lab)]

The former deputy leader of the SNP, Jim Sillars, said that the SNP’s currency union plans were “stupidity on stilts”. After listening to the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), does my hon. Friend think that Mr Sillars might have been speaking about him?

[Ian Murray]

My hon. Friend is absolutely right: it is stupidity on stilts. Economist after economist, academic after academic, politician after politician and business after business has said that the SNP’s currency union plans are completely barking on stilts.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

Is not the former deputy leader of the SNP on to something? The fundamental fact is that if the Scottish National party wishes to keep the economic and social union, there also has to be a political union; otherwise democracy is lost. Does my hon. Friend agree?

[Ian Murray]

I absolutely agree, because what the SNP wishes to do is cherry-pick what it wishes to have in an independent Scotland. It cannot have the economic and social union without having that political union. Let us just reflect on a hypothetical situation in which Scotland either is an independent country or has its own currency. After the eurozone crisis of 2008 and beyond, it would probably be in negotiations with the UK Treasury to get more of a fiscal pact and more of a monetary union to ensure that those stabilisers were in place to ensure that it did not happen again.

Let me go back to where I was—challenging the SNP on whether it had a plan B. It is quite clear that it has barely a plan A, and it will not tell us what its plan B is. The Scottish people deserve to know before they go to the polls. It is clear that leaving the UK means losing the security of the pound. The yes camp cannot even tell us what money we would have in our pockets. How can they ask us to vote to leave the United Kingdom?

The pound is one of the most trusted and secure currencies in the world. The eurozone crisis has shown us how important it is to have a strong and stable currency, and this is not just about what money is in your pocket; it is about what it will buy you. Losing the pound means more expensive mortgages, more expensive credit card bills and more expensive car loans. Anyone who banks, anyone who saves and anyone who borrows will be hit with higher bills.

[Ann McKechin (Glasgow North) (Lab)]

I congratulate my hon. Friend on the debate. He will be aware that the Deputy First Minister has indicated in the broadcast media today that the Scottish Government are now minded to default on their debt in the event of a yes vote. Can my hon. Friend give any indication of what he thinks the interest rates would be on our residents’ mortgages or on debts and savings if such a scenario occurred?

[Ian Murray]

That is a very timely intervention, because there is no doubt about this. Everyone in this room, everyone watching this debate and everyone in Scotland and the rest of the United Kingdom will know what happens when people do not pay their bills. When people default on their bills, they end up in a situation whereby the bills get higher. Interest and credit get higher and more difficult to get. Indeed, they are punished for ever more with an incredibly bad credit rating. In the context of an economy and a country, that is devastating for jobs and public services at the very least.

[Mel Stride]

Will the hon. Gentleman give way?

[Ian Murray]

I will give way once more, but I do need to move on.

[Mel Stride]

The hon. Gentleman rightly highlights the problem of any two countries that go into a currency union and therefore have to get their budgets, spend and tax agreed between them, which in itself will be deeply problematic with an independent Scotland under SNP leadership certainly, but will he also recognise that the situation is even worse than that? In the event that, in that situation, Scotland overspent, it would in effect be down to London to decide that it was going to have to row back on that expenditure and cut expenditure north of the border.

[Ian Murray]

I am grateful for that intervention. Again, I can only emphasise what the Governor of the Bank of England said. It was a non-partisan speech; it was a technical speech about currency unions and that was the point that he made: those monetary, fiscal and spending stabilisers have to be in place; otherwise a currency union does not work.

What about business? We sell twice as much to the rest of the UK as we do to the rest of the world combined. Losing the pound would mean that every time a Scottish company sold to or bought from somewhere down south, they would incur the cost of exchanging money. That would result in higher prices for us all, as the supermarket bosses—again, we have been told by the First Minister to ignore them—warned us last week. We should listen to business. In a strong criticism of the SNP White Paper, the Institute of Chartered Accountants of Scotland has warned that there is

“a high degree of uncertainty as to what the currency of an independent Scotland will be.”

ICAS states that no alternatives have been set out in case the negotiations are unsuccessful, and warns:

“The choice of currency will have a very significant impact across the pensions sector, the economy and the country generally, and this will inevitably remain as a major uncertainty for the time being.”

We should listen to that warning from Scotland’s accountants. The SNP must tell us what currency it would use instead. Will it set up an unproven currency or rush to join the euro?

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

I congratulate my hon. Friend on securing this important debate on a matter that has got my constituents, and probably his, worried. Not so long ago, the nats wanted to join the euro; indeed, that was a slogan of theirs. It is very strange—it is a consequence of all that has happened in mainland Europe—they are now trying to hitch up to the pound, which would also be a foreign currency.

[Ian Murray]

My hon. Friend hits the nail on the head. The SNP has ditched its euro credentials and its wish to join the euro in favour of a currency union with the United Kingdom that it is already in. I believe its slogan was “independence in Europe” but it now seems to be “independence in the UK with the pound.” Will it rush to adopt the euro—indeed, will Scotland actually be in the EU—or will it join the only other two countries in the world that tie their currency informally to another? This is a great quiz question: which countries are those? The answer is Panama and El Salvador, which use the dollar. [Interruption.] I can hear the hon. Member for Perth and North Perthshire (Pete Wishart) chuntering, “Greece”, and that is exactly the point that I have been making.

The First Minister and Deputy First Minister of Scotland this morning made the unedifying assertion that Scotland will default on its debt if no currency union is forthcoming. That ill-thought-through, toys-out-of-the-pram threat is a recipe for economic crisis and political conflict. It is reckless and irresponsible, to say the least.

[Fiona O'Donnell (East Lothian) (Lab)]

My hon. Friend is making an amazing speech. Is not that statement—that throwing of the toys out of the pram—proof that the SNP would be incapable of conducting normal relationships with the rest of the UK post independence?

[Ian Murray]

My hon. Friend is absolutely right. A currency union requires some kind of political co-ordination to ensure that the stabilisers make the currency work. What better political stability could we have than being the United Kingdom, with a strong Scottish Parliament as part of that overall economic and political framework?

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

I apologise for missing the start of the debate; I have just come from a debate on a statutory instrument that affects my constituency. My hon. Friend is making a powerful contribution. According to the International Monetary Fund, none of the 64 largest economies in the world operates without a central bank. Does he agree that if Scotland were forced into the position, which was denounced by the SNP’s fiscal commission, of using the pound without a central bank, the consequences for business and ordinary people throughout Scotland would be devastating?

[Ian Murray]

I could not have put it better myself. I look back to 2008, when hundreds of billions of pounds were poured into Scottish banks to keep the economy afloat, and to keep my constituents, many thousands of whom work in such banks in Edinburgh, in jobs. Without such action, the whole financial structure would have collapsed.

[Mark Lazarowicz]

Will my hon. Friend give way?

[Ian Murray]

I will give way one last time.

[Mark Lazarowicz]

I see that the Scottish Government’s White Paper on independence asked the question:

“What about bank bail-outs if there is another financial crisis?”

The Scottish Government responded:

“If in the future wider support from governments is required to stabilise the financial system, this would be coordinated through the governance arrangements agreed between the governments of the Sterling Area.”

In other words, they would have to rely on negotiations with the rest of the UK Government. Contrast that with the situation in the recent financial crisis when, as part of the UK, the Scottish banks were able to call on the resources of the UK.

[Ian Murray]

That is precisely the argument about pooling and sharing, and it is why the UK is such a powerful political, social and economic union. The larger and more stable economy of the UK can deal with such shocks.

Experts such as Professor MacDonald and Professor Armstrong are clear that defaulting on debt would be a reckless move with negative consequences for the people of Scotland for many years to come. That threat shows that the SNP accepts that Scotland cannot keep the pound if it leaves the UK. Defaulting on our debts as a nation has the same impact as if someone defaults on their debts as an individual, and I have already mentioned what happens if someone does not pay their bills. Our credit rating would be terrible, and we would have to pay more for absolutely everything, which would be a disaster for ordinary individuals and families up and down Scotland. Any Scot who borrows money or who has a mortgage, a credit card or catalogue payments will have to pay more. That is not scaremongering, but basic economics.

The SNP has said in its fantasy White Paper that Scotland would have to rely on the rest of the UK to collect our taxes and to pay our pensions and benefits for many years after independence until it sorted out its own systems. The SNP cannot threaten to dump the debt one minute and ask to share everything else the next. That is a recipe for crisis and disaster. How would those UK institutional systems work with a separate currency? Can the Minister tell us whether the systems used by the Department for Work and Pensions and Her Majesty’s Revenue and Customs are capable of working in a currency other than sterling? I doubt it. The White Paper is underpinned by and predicated on the pound. Perhaps it will turn into an actual white paper when it has been so heavily Tipp-exed that it contains nothing but Tipp-ex.

Scots have an international reputation for being prudent and thrifty. To default on its debts would irreparably damage Scotland. Even to threaten to default on debts has significant consequences for interest rates, borrowing and international reputation, which the National Institute of Economic and Social Research put at a minimum of 1.5%.

[Mr MacNeil]

Will the hon. Gentleman give way?

[Ian Murray]

I will not give way again to the hon. Gentleman, because he refused to answer my last question. To summarise, losing the pound would result in a higher cost of living, with higher mortgage repayments, higher credit card and store card bills, and more costly car loans. Scotland would start out as a separate state with no credit rating, or one that had been hugely damaged by threats of default. There would be fewer jobs, because of the cost of changing money every time Scottish firms bought or sold from our biggest customer, which is the rest of the United Kingdom. There would be deeper cuts or higher taxes because the Scottish Government would pay more to borrow money, which would result in more debt and lower public spending. There would be risks to benefits and pensions as payments were converted from sterling to a different currency.

There would be risks to the economy. Without the back-up of the rest of the UK, Scottish banks would have gone under during the financial crisis, and families and businesses across the country would have lost everything. Scotland would have an unproven and weak currency with a poor credit rating and high borrowing costs. The SNP’s proposition may be summed up as this: we should go from a proven and respected single currency backed by a strong lender of last resort as part of the United Kingdom to a promise from Alex Salmond that he is simply not in a position to deliver. That is not good enough for the Scottish people or Scottish business.

I can say this afternoon without doubt, argument or contradiction that the currency of Scotland post 2014 will be the pound, but only if we stay in the United Kingdom. It is now clear that the most positive case that we can make for the Union is the pound in our pockets. We must do all we can, today and for the next seven months, to protect it for future generations.

[Mrs Linda Riordan (in the Chair)]

Order. The wind-ups will begin at 3.40 pm, and several hon. Members have indicated that they wish to speak. I would like all those who wish to speak to be able to do so, so I intend to impose an initial time limit of five minutes.

14:59

[Guy Opperman (Hexham) (Con)]

I congratulate the hon. Member for Edinburgh South (Ian Murray) on a very impressive speech. This is an issue of finance, but also of the heart. As with all matters of finance and long-term matters of the heart, pragmatism and practicality must hold sway. Listening to SNP Members chuntering—when they are not on their mobile phones—and not listening to the debate, one is struck by the fact that their basic argument is that they want to have their cake, eat it and then still call the cake Scottish, not British. Last autumn, when I was campaigning with the Better Together campaign—a cross-party campaign that is doing a fantastic job—one Scot put the situation to me in this way: “The prospect of an affair is always more glamorous than the work of saving a marriage.” I suggest that that is the situation in which the Scottish people now find themselves.

I strongly support the desire of the Scottish people to be together as part of the United Kingdom.

[Pete Wishart (Perth and North Perthshire) (SNP)]

On a point of order, Mrs Riordan. Is it entirely fair that, in a debate as important as this one, 95% of the time is given to one side and we are now restricted to five minutes? How could that possibly be fair? Can you look into that so that we get more time to put the other side of the case so that the people who are watching this get the opportunity to hear it?

[Mrs Linda Riordan (in the Chair)]

The Member in charge of the debate gets as long as they want for their first speech, and then the time allotted is down to the number of Members who wish to speak. Rather a lot of Members wish to speak in this debate.

[Guy Opperman]

I speak as a Brit, a mongrel Englishman, a lover of Scotland and an MP whose constituency borders Scotland. Were there to be Scottish independence, I have no doubt that tourism and trade would continue, but it would be naive not to accept that trade on a cross-border basis would unquestionably be affected. That is not some Conservative Member of Parliament speaking; that is the opinion of the chambers of commerce, local authorities and business groups I have spoken to on both sides of the border.

Some of the key questions have been raised by the hon. Member for Edinburgh South, but I have some others. On what basis would Scotland get to keep the pound? Would it be used informally, just as some Latin American countries, Greece and Montenegro use other currencies? Why should the Bank of England take notice of Scotland in setting monetary policy? Why should the Governor travel to Edinburgh and be interrogated by Scottish MPs in such an event? After independence, surely the Governor would owe his appointment entirely to a rest-of-UK appointment system? At that stage, would the First Minister come to London seeking an audience to negotiate? The arguments that have been put forward are, respectfully speaking, a farce.

I also suggest that, when one goes through Mark Carney’s speech and looks at the currency options, it would seem that the SNP proposes to keep the pound as part of a formal sterling currency union agreed with the rest of the UK. However, the SNP seems not to have contemplated the fact that that would involve giving up huge amounts, as Mark Carney made very clear, as well as requiring the agreement of all other parties. The SNP seeks independence but would require and accept greater control by a third party.

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

Does my hon. Friend agree that the phrase “sterling area” used in the Scottish Government White Paper is wholly misleading? The sterling area that used to exist with the Commonwealth and Ireland was all about pegging exchange rates; the SNP actually wants full currency union, with all the concomitant controls that that would require.

[Guy Opperman]

I entirely endorse my hon. Friend’s point. I looked at the Scottish Government White Paper, and it states that

“a monetary framework will require a fiscal sustainability agreement between Scotland and the rest of the UK”—

that is, if independence goes ahead—

“which will apply to both governments and cover overall net borrowing and debt. Given Scotland’s healthier financial position”,

after independence, presumably,

“we anticipate that Scotland will be in a strong position to deliver this.”

With respect, that is complete comedy.

[Mark Garnier (Wyre Forest) (Con)]

My hon. Friend is raising some important points. Does he agree that trust in the institutions that used the currency in an independent Scotland would be a necessary part of currency union? That raises significant questions about the regulation imposed in Scotland. Is the SNP proposing that the Financial Conduct Authority continue to be the prime regulator for such institutions? If so, how does it propose that the regulator will have proper oversight so that we can trust such institutions not to fail?

[Guy Opperman]

The arguments on fiscal regulation might appear dry and unexciting, particularly when addressed in the press, but they are utterly key to the future prosperity not only of the whole existing United Kingdom, but especially of Scotland if it were to become independent. Such aspects of fiscal regulation as my hon. Friend mentioned—how a bank would function; how a currency would be managed; what sort of interest rates would be managed; who is in charge of such matters—are totally unaddressed by the SNP. Frankly, they must be addressed if anyone is to have any faith in the SNP’s fiscal approach to the argument.

[Mel Stride]

My hon. Friend is making a powerful case. Does he agree that full currency union could have a devastating impact on the financial services sector in Scotland as banks migrate south to get the protection of the Bank of England as the lender of last resort?

[Guy Opperman]

I have no doubt that that would be the case.

I am mindful of your instructions, Mrs Riordan, so I must finish. If keeping the pound would not be possible as part of a formal sterling currency union; if the SNP no longer wishes to join the euro, which one can see; and if there is no prospect of an independent country with border control—my constituents are somewhat concerned that there might be a rerun of Hadrian’s wall—where are we? We will have a new Scottish currency. The expression that is used is “sterlingisation.” In its briefing on an independent Scottish currency, not part of a fiscal union, the House of Commons Library—I can assure the hon. Member for Perth and North Perthshire (Pete Wishart) that it certainly is independent—states that such a

“policy is often used by countries which have a poor economic record.”

I could not have put it better myself. It is the currency situation in Greece, Panama, El Salvador and Montenegro; it is not what we should be pursing.

15:06

[Stewart Hosie (Dundee East) (SNP)]

It is slightly disappointing that we cannot have a longer, more detailed debate on this issue. There is a great deal to say to answer the points that have been raised.

I congratulate the hon. Member for Edinburgh South (Ian Murray) on securing this debate, although from what we have heard so far, it is less of a debate on currency and more of a quick canter through some of the no campaign’s scaremongering. I would like to address one or two of the points that he made. He suggested that the Scottish economy would be run on ginger bottles—that is, old lemonade bottles. What a patronising and insulting way to look at a modern, productive economy.

[Fiona O'Donnell]

Will the hon. Gentleman give way?

[Stewart Hosie]

No. I have only five minutes.

The hon. Member for Edinburgh South suggested that so much money had been put into Scottish banks. I draw his attention to chapter 1, paragraph 1 of the report by the Parliamentary Commission on Banking Standards. The cash cost at peak is reported to be £133 billion—that was £47 billion to Royal Bank of Scotland in return for 82% of the stock, around £25 million into Lloyds, and smaller amounts to the Icelandic and other financial institutions. Where taxpayers are still on the hook is the near £50 billion owed to them from Northern Rock and Bradford and Bingley, which may be many things, but they are not Scottish banks. The notion that the argument was ever about Scottish banks bad, English banks good, must be knocked on the head.

The old chestnut about Scotland in a sterling currency zone being like Greece was also raised. Greece’s problem had nothing to do with being in a currency union and everything to do with appalling productivity. As we know, Scottish productivity is nigh on identical to that of the rest of the UK. That would avoid such problems entirely.

[David Mowat (Warrington South) (Con)]

Will the hon. Gentleman give way?

[Stewart Hosie]

No. I do not have time.

The hon. Member for Edinburgh South rightly and understandably prayed in aid Dr Carney’s recent speech, which he said did not pass judgment on the relative merits of the different currency options for Scotland, but instead drew attention to the key issues. However, Dr Carney did point out that any arrangement would be negotiated and that the Bank of England would implement whatever monetary arrangements were put in place. That is to be welcomed, not just by me, but by the 71% of people in the rest of the UK who support the continued use of sterling after Scottish independence. The same proportion—71%—of Labour voters in Scotland also support the continued use of sterling after independence.

The hon. Member for Edinburgh South and the no campaign seem to fail to understand what Scotland brings to the table. Of course we recognise the constraints—I will come on to them—but we bring export revenue receipted in sterling. The impact on the sterling balance of trade would be immediate and significant were Scotland somehow—impossibly—forced not to be able to use sterling. The same applies to trade—the rest of the UK sells £60 billion into Scotland. If we were forced to use a foreign currency and transaction costs were applied, that would imply a catastrophic loss to English businesses: additional costs that the no campaign never mentioned.

Let us put the matter into context. In 2012, the rest of the UK sold into Scotland more than it did into Brazil, South Africa, Turkey, Russia, India, South Korea, China, and Japan combined, yet we hear from the no campaign that they do not want us to use sterling, even though that is impossible, which would imply massive transaction costs and the loss of jobs in the rest of the UK. I am sure that is not something they intend to do.

[Mr MacNeil]

Will my hon. Friend give way?

[Stewart Hosie]

No, I do not have time. So where would independence while keeping sterling leave us? It would not imply a foreign currency controlling our economy, because the central bank does not control the economy. It works to a single 2% inflation target, which we think is sensible.

[Mark Garnier]

Will the hon. Gentleman give way?

[Stewart Hosie]

No, I do not have time. It would effectively leave us in Scotland in the same place as the rest of the UK, accepting the discipline of an independent Monetary Policy Committee, while leaving Scotland, along with the rest of the UK, in complete control of the rest of its social and economic levers. We would have parity.

[Mark Garnier]

Will the hon. Gentleman give way?

[Stewart Hosie]

I do not have time. I have barely a few seconds left. I do not even have time to comment on the Chancellor’s supposed intervention tomorrow. However, if a Tory toff Chancellor goes to Scotland to bully and to scaremonger, it will be looked on very badly indeed by the Scottish people.

15:11

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Riordan. I follow the hon. Member for Dundee East (Stewart Hosie) from the Scottish National party, and I hope that, in the words of Bill Clinton, he will feel our pain in Scotland. This is the level of debate that we have to put up with day in, day out in the separation campaign. It is full of bluster, assertion and very little detail.

In the short time available, I want to pose the argument in the language that the ordinary man and woman on the street understand. We face the biggest decision we will ever make on 18 September 2014, and I had high hopes that the debate would deal with all the big issues. A business man—a friend of mine in my constituency—told me about a meeting that he had with the SNP treasurer in charge of finances for the campaigning. He asked the SNP treasurer how he would deal with the big issues such as currency, and he replied that they would make lots of promises, spend money before the campaign and that hopefully that would get them through. I did not believe that statement, but I do now, because I have read the Scottish Government White Paper. It contains no facts and no detail and threatens the future of my country.

We should also realise that the people who support a separate Scotland are largely cultural nationalists who believe that, irrespective of the economic damage that separation would do, Scotland must be a separate nation. I do not have a gripe with people who believe in that particular brand of nationalism, but the rest of the people are Jerry Maguire individuals—if I can use that term—when it comes to the debate, because they want someone to show them the money. They want someone to say they will be better off if Scotland separates and is not part of the UK.

After last week’s debate about the future of the UK, I would put the debate into three different boxes: first, things that we know will not change; secondly, things that we know will change; and thirdly, things that we will have to negotiate on. The SNP is trying to put as many issues as possible out of the negotiation box and into the “will not change” box. That is why we will keep the Queen, although MSP Christine Grahame wants Annie Lennox to be the Head of State in Scotland.

[Ian Paisley (North Antrim) (DUP)]

The unintended consequences that the hon. Gentleman raised were touched upon last week in a speech by the leader of Sinn Fein when he said that the United Kingdom hangs by a string. Is that not a very worrying statement that shows how important the referendum is for everyone in the United Kingdom?

[Mr McCann]

Absolutely. We have been in this Union for 307 years. It has served us well, and I want to make sure that it continues after 18 September 2014. We have loads of statements about what will not change and all the contradictions: we have the Queen and we have NATO; we want to be a member of NATO, but we do not want nuclear weapons. We had the fiasco over Europe: we will waltz in—presumably a Vienna waltz—and we will keep our rebate, and be delighted when everyone welcomes us in as a member of the European Union.

[Ann McKechin]

My hon. Friend will be aware that the Scottish Government said that universities in Scotland will be better off under separation, but the EU education commissioner has confirmed today that their proposed policy on tuition fees for students in the rest of the United Kingdom is illegal. Does my hon. Friend believe that yet again they have been proven unsuccessful?

[Mr McCann]

Absolutely. It is a significant nail in the case for separation. All those things make a mockery of the debate, because people in Scotland want a truly open and honest debate with all the big issues discussed, flaws and all, but we do not get it. It reminds me of the quote from Groucho Marx, who said:

“I don’t want to belong to any club that will accept me as a member.”

Alex Salmond says that he has to set the rules before he decides to join the NATO, European Union or currency clubs. In terms of what happens in the street and what people talk about, we should simply retrace our steps in the currency debate.

Alex Salmond’s first position on the euro made a lot of sense when he presented it, because we would leave the United Kingdom, become a separate state, apply for membership of the EU, and, as part of applying for membership as a new state, we would have to accept the euro as our currency. However, as we know—my hon. Friend the Member for Edinburgh South (Ian Murray) exposed the argument cruelly—the debate on the euro currency caved in when the crisis came. The arguments have been well set out by my hon. Friend. The SNP then brought us back to the pound as our currency, which, as has been mentioned, Alex Salmond had described as a millstone round Scotland’s neck.

If Scots vote for independence, there will be massive uncertainty, because negotiations will be required on all those issues. At the moment, we have the pound as our currency. The Bank of England is our lender of last resort, which means that when we pool and share risk, interest rates will be the same in Land’s End as in John O’Groats. We know that the SNP proposed that we have the currency of a foreign state and we know that there will be no political and fiscal union, so, in the event of separation, Scotland then becomes—this is really important for the man and woman on the streets of Scotland—a higher risk. As a result, our interest rates will increase, which means that we will have to spend more money on mortgages, loans, and credit cards. The cultural nationalists will accept that, because they will pay any price for separation, but most canny Scots will not.

15:18

[Mr Iain McKenzie (Inverclyde) (Lab)]

It is a pleasure to serve under your chairmanship today, Mrs Riordan. I congratulate my hon. Friend the Member for Edinburgh South (Ian Murray) on securing this important debate. The choice of which currency to use is perhaps the single most important economic decision a country can take. That is why Scotland is asking, as we close in on the independence referendum in September, why the yes campaign does not seem to know what currency it wants. We hear that the SNP wants and favours a currency union with the rest of the UK, keeping the pound. However, the other members of the yes campaign want either the euro or a new currency altogether. This leaves us in Scotland very confused and worried. What currency does the yes campaign want for Scotland?

The people of Scotland want a straight answer about the currency from those who support separation, with a guarantee of which currency we would use if a yes vote should transpire in September. But today all we have on currency from the nationalists is a wish list at best, wrapped up and qualified with ifs, buts and maybes. We now know that keeping the pound in a currency union would require the agreement of the rest of the UK; but what if agreement could not be reached on that? What is plan B? Even if a separate Scotland wanted to continue to use the pound, and agreement was reached with the rest of the UK, it would mean that there was no control over our interest rates and how much Scotland could tax and spend. I do not believe that even the nationalists would accept that as independence.

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

Is not the bottom line the fact that there is a fundamental contradiction at the heart of the yes campaign—that on one hand the SNP and the yes campaign want national sovereignty to be transferred to Edinburgh, but on the other hand they want to give it away almost immediately in a currency union?

[Mr McKenzie]

The right hon. Gentleman makes the point clearly and we have been highlighting that throughout the debate on Scotland’s future.

If Scotland carried on using the pound regardless, we would have no control over our economy and we could lose our central bank, which acts as the lender of last resort. The nationalists are now suggesting that Scotland should default if they do not get their way on a currency union; the Deputy First Minister has said that Scotland might not take its share of national debt if it is not agreed. That is wildly irresponsible and would jeopardise an independent Scotland’s creditworthiness. The people of Scotland have every right to worry about the future of the money in their pocket, when they hear bullying threats, such as the threat of reneging on our share of the debt. What tone would that bring to other negotiations about separation? It is hardly the way to make friends and impress people.

[David Mowat]

The hon. Gentleman is right to say that the Scottish Government cannot default on the debt, but can only refuse in the negotiation to take their share; the debt is already underwritten by the UK Treasury. What I do not understand about that position is that all the cash collection systems operating in the UK—Her Majesty’s Revenue and Customs, benefit systems and all the rest—will continue to be operated centrally. It is a mess.

[Mr McKenzie]

The hon. Gentleman makes some good points; but the main thing is that the Scottish Government believe they can do anything they want.

Losing the pound would mean a higher cost of living, with higher mortgage repayments, higher credit card and store card bills and more costly loans, because Scotland would start out as a separate state with no credit rating. There would also be an unnecessary threat to jobs: what would the exchange rate be? The cost of changing money every time Scottish firms were to buy from or sell to our biggest customer—the rest of the United Kingdom—would be an issue. There would be deeper cuts or higher taxes as the Scottish Government paid more to borrow money, leading to more debt and lower public spending. There would be risks to benefits and pensions as payments were converted into a different currency. Many people worry about what currency they will be paid in and what their savings will be worth.

There would also be risks to the economy. Without the back-up of the rest of the UK following the world banking crisis, Scottish banks would have gone under and families and businesses would have lost everything. Let us remember that billions were pumped into our banks following the world banking crisis. In my constituency alone, more than 400 jobs were saved. Time is running out for those who want a separate Scotland to give an answer and provide an assurance on currency. The Scottish people cannot be expected to go on any longer with “Don’t worry—it will be all right on the night.” It is not scaremongering to want a direct answer from the nationalists, incorporating a guarantee on currency in Scotland after 2014.

[Jim Shannon (Strangford) (DUP)]

Members representing constituencies in Northern Ireland, which borders another country with a different currency, can attest to the difficulties with prices and services. Does the hon. Gentleman agree that retention of the pound sterling is essential for the continuation of trade, but also for the continuation of the United Kingdom of Great Britain and Northern Ireland?

[Mr McKenzie]

I fully agree. What is scary is the attitude of the nationalists and the yes campaign—an attitude of casually and arrogantly waving off any challenge to their supposed plans. Those plans do not stand up to scrutiny—as we find now on the matter of currency; they would deliver not so much independence as isolation.

The question to the nationalists is simple, but the options are limited. Can they deliver a currency union? All the indications are that the answer is no. Will they go it alone and just use the pound, with the result that they will have no control over the economy? Will they go for a new currency, and will that be pegged or floating? The Scottish nationalists are keen to get closer to the Nordic regions, nations of a comparable size; they always cite Norway, Finland and Sweden, or anywhere in that supposed arc of success, as it fluctuates. In the past 10 years, Norway’s currency, which was pegged against the euro, has fluctuated, and there has been a high degree of movement, and cost implications, as a result. Alternatively, will the nationalists adopt the euro—if and when Scotland can gain entry to the EU?

Those questions are as yet unanswered. Scotland needs to know from the yes campaign what currency—guaranteed—would be used after 2014. We who want to remain part of the UK can guarantee Scotland’s currency after 2014; it will be the pound, and all that is necessary for that to happen is to vote no in September.

15:25

[Anas Sarwar (Glasgow Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Riordan. I thank my hon. Friend the Member for Edinburgh South (Ian Murray) for securing the debate and for his powerful and passionate speech. I also thank the hon. Member for Dundee East (Stewart Hosie), who in stating the successful trade statistics between Scotland and the rest of the UK made the case for Scotland to be part of the United Kingdom, not independent.

The currency that Scots would use after separation goes to the heart of the independence debate and cuts to the core deception in the SNP’s argument. There can be few more important issues than the currency in our pocket, the money that our businesses trade in, the cost of borrowing money or, indeed, how much money individuals, businesses and the country have to spend. It is not just a matter of what we spend in shops; it is about what people’s pensions and benefits are paid in, what businesses across the common UK market trade in, and what we borrow more of to buy a house or a car.

The proposals on currency put forward by the nationalists are rooted in assertion and baseless opinion, and in a determination to bluff and bluster their way to 18 September, when every credible expert on the issue has exposed the flaws in their currency union proposals. They used to be very clear about what sterling meant to them. We all remember when Alex Salmond said that

“sterling has been a millstone around Scotland’s neck”

or that it

“is costing Scotland jobs and prosperity.”

However, now that those arguments do not suit the cause, they have been conveniently dropped and he says:

“Retaining the pound under independence is something I believe is in Scotland’s interests”.

The nationalists have made those shameless U-turns and about-faces because they are determined to win the vote on 18 September.

[Jonathan Edwards]

My party shares with the SNP many of those criticisms. They are not about currency but monetary policy: the way that the Bank of England’s monetary policy has been directed towards pushing the financial sector in the south-east of England, rather than promoting the manufacturing-based economies of Wales and Scotland.

[Anas Sarwar]

The hon. Gentleman fails to realise in making that criticism of how the Bank of England has operated and the effect on Scotland and Wales that the nationalists’ currency union plans after independence would have exactly the same effect. Decisions about the interests of the people of Scotland would still be taken in this place; the choice is whether we should have a voice here at the same time. The hon. Gentleman is undermining that voice.

[Mr Bain]

Scotland’s First Minister wants to frame the debate as him against the elite, but perhaps I can share the views that a voter in my constituency expressed to me in Edgefauld road in Springburn on Saturday afternoon. She said, “If you get the details about the currency wrong, it is ordinary working people like me who suffer the biggest hit.” Is not that right? Is not that what happened in Ireland when living standards declined by 20% between 2007 and 2011, and is not my hon. Friend right to campaign in favour of the pound?

[Anas Sarwar]

I could not have put it better. Yes, this has an impact on business and big institutions, but the price will always be paid by the poorest and most vulnerable people. I and my Labour colleagues stand shoulder to shoulder with those people throughout the United Kingdom. The nationalists will throw everything into this debate—every assertion, opinion, myth, allegation, contention and baseless claim—so that they can win on 18 September. They do not have any recognition of reality; they are much more the Walter Mittys of Scottish politics. The only thing that they have been clear on is the willingness to hand over control of monetary policy to another country; in the words of the Governor of the Bank of England, they would “cede sovereignty”.

It is important to look at the first letter sent in May 1997 by the then Chancellor, my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), when he made the Bank of England independent. In paragraphs four and five of that letter, the point is made that

“The Bank is there to fulfil the objectives of the UK Government, as set out by the UK Government and not as determined by the Bank.”

So the Bank is there to support the economic policy of the UK, and after Scottish independence, it will be there to support the economic policy of the rest of the UK, not that of the Scottish Government. The Bank of England would go by the political will of the Chancellor of the Exchequer—whether the current Chancellor or the future Chancellor, the current shadow Chancellor, my right hon. Friend the Member for Morley and Outwood (Ed Balls). The Bank will follow that remit and not the remit of the current Scottish Government or, indeed, a future Scottish Government.

What does that mean for Scots? If someone has a mortgage, their interest rate will be controlled by the central bank of a foreign country, with no input or influence from Scots, no accountability and no say on inflationary targets or the cost of money supply. Likewise, if someone has a car loan, a credit card or an hire purchase agreement for a new suite or a new washing machine, all those things will be controlled by a foreign Government, with Scots having no say or influence, and with no accountability.

[Margot James (Stourbridge) (Con)]

I thank the hon. Gentleman for giving way. He is making a very passionate speech. In addition to the points that he is making, there are the lessons from the European currency union and the debate within that union about the central bank having pre-budget approval of all the budgets proposed by member states. Can he envisage that applying to Scotland as well if those plans should unfold?

[Anas Sarwar]

I thank the hon. Lady for that intervention. What I envisage is Scots making a confident and passionate no vote on 18 September and working together with our friends and colleagues in the UK to create the right kind of economy that works for everyone right across the UK.

The reality is that the cost of borrowing money would be in the hands of an institution over which the people of Scotland would have no say—none. If a Scottish business wanted to invest, the cost of borrowing that money would be controlled not by the Scottish Government but by the Government of Scotland’s biggest competitor and trading market. That is like British Airways setting the trading conditions and pricing policy of Virgin Atlantic. There would only be one winner in such an arrangement.

Is it any wonder that business organisations are horrified at these proposals? It is not that long ago that the SNP would churn out press release after press release attacking the UK Government, UK politicians or the Monetary Policy Committee, saying that the interest rates being set were not suitable for Scotland. What on earth does the SNP think would happen after independence?

The reality is that what the SNP is offering Scotland is neither right nor fair for Scots. That is the real democratic deficit on offer in this election. The other reality, and the reason why the SNP does not want to outline plan B, is that it knows that its entire White Paper is based on the assertion that sterling is kept. If sterling is lost, the entire White Paper comes into disrepute.

[Mrs Linda Riordan (in the Chair)]

Order. Before I call the last Member to speak, I remind her that I will call the shadow Minister to speak at 3.40 pm.

15:33

[Katy Clark (North Ayrshire and Arran) (Lab)]

Thank you very much for calling me to speak, Mrs Riordan. It is a pleasure to have the opportunity to speak in this debate. I expected more Members to put their names forward to speak in this debate, and I would have liked to have seen more Members from the Scottish National party. I know that they have complained about lack of time, but this is the third debate on Scottish issues in the last week in which the SNP has not put many speakers forward. I have been in this place since 2005—[Interruption.]

[Mrs Linda Riordan (in the Chair)]

Order.

[Katy Clark]

I am very grateful to you, Mrs Riordan. As I was saying, I have been a Member since 2005 and I am very aware that, frankly, it is often far easier for a member of one of the minority parties to be called to speak than someone from one of the larger parties, because of the way that the rules in this place operate.

[Fiona O'Donnell]

On a point of order, Mrs Riordan, I am very sorry to interrupt the flow of the debate, but it would be helpful if you could clarify something. The hon. Member for Perth and North Perthshire (Pete Wishart) has made serious allegations about the conduct of this debate. Could you clarify whether any hon. Members from the SNP asked to speak in it? Have they been prevented from speaking in it? Have they ever even requested a debate on the issue of the currency in Scotland?

[Mrs Linda Riordan (in the Chair)]

That is not a point of order. I call Katy Clark to speak.

[Katy Clark]

Thank you, Mrs Riordan. As I say, I agree with the hon. Member for Dundee East (Stewart Hosie): I would have liked a longer, more detailed debate. I hope that this is just one of a series of debates in this House on these kinds of issues.

[Pete Wishart]

The hon. Lady is a fair and reasonable woman, and she has accepted that we have very little time to address the other side of the argument. This really important debate must, of course, be heard in the House of Commons; will she work with us to try to ensure that when we debate these issues in future, we get a more equitable division of the time, so that both cases are made?

[Katy Clark]

I suggest to the hon. Gentleman that perhaps the first step would be for his colleagues to put in requests to speak.

[Mrs Anne McGuire (Stirling) (Lab)]

Does my hon. Friend accept that yesterday, we had a six-hour-and-four-minute Opposition day debate, promoted by the Scottish National party and Plaid Cymru, in which all these issues could have been aired?

[Katy Clark]

Indeed, and we had a debate last Thursday on Scotland’s place in the Union. Those were the kind of events that we should use to explore these issues.

There is a great deal of debate on the subject in Scotland, but the decision taken there in September will have massive implications for the whole United Kingdom. I regret that in the two and a half years that we have been having this debate in Scotland, the quality of debate has not been higher. I hope that getting more people involved in the discussion, and getting more information and facts on the table, will improve the debate’s quality. I hope that today the UK Government will give their perspective on some of the questions, because that is part of what is required to continue the debate, which should be taking place here, in the Scottish Parliament, and communities up and down Scotland.

One of the most important decisions that an independent Scotland would take, if we voted for independence in September, would be on the currency, so I strongly congratulate my hon. Friend the Member for Edinburgh South (Ian Murray) on his choice of subject for debate, but currency is only one of the many economic issues that will be central to people’s decision making. To be honest, I never believed that I would see a referendum on Scottish independence in my political lifetime. It was not something that many people in Scotland argued for, historically. It is really only as a result of the electoral success of the Scottish National party—we can perhaps discuss the reasons for that on another occasion—that we are in this position. I also honestly do not believe that colleagues from the Scottish National party in this room ever believed that they would have a referendum on independence in their political lifetime.

Many people in Scotland are in the same position: when we go from door to door and speak to people, many genuinely have not finally made their mind up on the issue—particularly, I think, because of the economic turbulence that we have been living through in the past few years. It will not be simply an emotional choice that people make in September. Historically, many people who are sympathetic to independence have made that choice on emotional grounds, and grounds to do with identity and culture, but in the coming months, economic issues will be central to people’s decision-making processes.

I welcome the debate and some of the statements that have come forward in the past few weeks from people at UK level. I am a member of the Select Committee on Business, Innovation and Skills; we had the Secretary of State for Business, Innovation and Skills before us last week, and he gave some of his views on the issue. We still need to get a lot more information to make decisions.

I have always looked at things from an economic point of view, and considered decisions on the basis of how I think we can improve the democratic accountability of our economy. I have always considered how we can take economic decisions that are more central to how we run our economy in the interests of ordinary people, rather than elites. That will be central as we go forward.

[Mrs Linda Riordan (in the Chair)]

Order.

15:40

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

It is a pleasure to see you in the Chair in this important debate, Mrs Riordan. It has been lively at times, and there has been more heat than light on occasions, but none the less it is about trying to ensure that we have the opportunity to discuss the important issue of currency.

I congratulate my hon. Friend the Member for Edinburgh South (Ian Murray) on his superb opening contribution. He laid out clearly and articulately the issues that we have to discuss. We then heard useful contributions from my hon. Friends the Members for East Kilbride, Strathaven and Lesmahagow (Mr McCann), for Inverclyde (Mr McKenzie), for Glasgow Central (Anas Sarwar), and for North Ayrshire and Arran (Katy Clark).

I want to pick up on a couple of points made by my hon. Friend the Member for North Ayrshire and Arran, because she articulated clearly that although many people in Scotland may have an emotional attachment to the idea of Scotland being an independent country, they none the less recognise the importance of the political, social and economic union that has existed over the years, and what an important decision this is for the people of Scotland to make in September. The Scottish National party would sometimes have us believe that everything will stay the same and nothing will change, but at the same time it tries to advance the notion that everything will change. That is not so. Increasingly, people are beginning to see through that false prospectus. A number of hon. Members spelled that out in some detail.

Increasingly, people are beginning to realise that the currency issue is important. For them, it is not just about the macro-economics, because some will, perhaps, not take an interest in that. However, they will take an interest in the money in their pay packets and in their pockets, in their ability to pay their way in the world, and in the impact on their mortgages, credit arrangements, store cards and car loans.

[Fiona O'Donnell]

My hon. Friend is summing up the debate in her usual excellent fashion. Is she struck by the views of young people, who will live with this decision far longer than any of us, particularly the youngsters in Fife who, having heard my hon. Friend the Member for Glasgow Central (Anas Sarwar), voted no yesterday?

[Cathy Jamieson]

My hon. Friend makes a valuable contribution, as always. I recognise that this is of huge importance to young people in Scotland. Obviously, young people aged 16 and 17 are, for the first time, have the vote in an important election. Of course, there are many young people here today in Parliament, including some members of the Scottish Youth Parliament, who are here to lobby on votes for 16-year-olds. I am struck by the intelligent way that young people have approached this debate. When it comes to the independence cause, they have not simply rushed to the barricades, as the SNP may, at one stage, have thought they would. They have thoughtfully debated, considered and put forward the arguments, and will come to their own conclusions, as indeed the rest of the people in Scotland will.

I have to say to the SNP that it is becoming rather tiresome to hear, every time anything is said that is not in agreement with the First Minister or his team, that we are somehow scaremongering. It is right and proper to scrutinise the proposals, including the White Paper and all the policies. [Interruption.] Indeed, the hon. Member for Dundee East (Stewart Hosie) is agreeing with me. He is an intelligent and articulate man who takes a close interest in all Treasury, banking and financial services sector issues; I gently say to him that it is rather odd that despite that, he continues to trot out the SNP line the whole time, without giving that degree of scrutiny to the proposals made by his political party.

On that point, Professor John Kay, former economic adviser to the First Minister and professor of economics at the London School of Economics and Political Science, said:

“If I represented the Scottish government in the extensive negotiations required by the creation of an independent state, I would try to secure a monetary union with England, and expect to fail…So Scotland might be driven towards the option of an independent Scottish currency.”

He also said:

“Alex Salmond has said I think rather stupidly that there is no plan B. The trouble with having no plan B is you don’t have any negotiating power if you don’t have a Plan B. So there has to be a Plan B. And Plan B has to be an independent currency.”

We are not getting that honesty in the debate, as far as the people of Scotland are concerned. That is important.

[Mr Bain]

My hon. Friend is correct to talk about scrutiny, but of course the Institute for Fiscal Studies and the National Institute for Economic and Social Research have scrutinised the White Paper and concluded that under any of the possible currency options, the pressure on fiscal policy would mean that taxes would have to rise or spending would have to fall. Would not that create more pressure on public services and the social security system in Scotland?

[Cathy Jamieson]

Again, my hon. Friend makes an important point. Perhaps the Minister will shed light on whether there has been any discussion on these issues. The SNP’s current argument seems to be that, in an independent Scotland, it will not take any of the difficult decisions that go along with that. It is not entirely clear yet what will happen to all the benefits and pensions arrangements, and all the rest of it, for some time into the distance. The idea that it will be all right on the night is simply not good enough, as was said earlier.

People have lined up to criticise the SNP’s scenario, including Brian Quinn, former executive director of the Bank of England, Owen Kelly of Scottish Financial Enterprise, Iain McMillan, director of CBI Scotland, the chair of political economy at the university of Glasgow, and the chief European financial economist, who is from a key financial institution. All those people—I do not have time to quote them—have criticised it.

I was told, although I did not hear it personally and will look closely at the transcript, that the Deputy First Minister implied, on “Good Morning Scotland”, that if an independent Scotland did not get its own way on the currency union, it would simply default or walk away from a debt. My hon. Friend the Member for North Ayrshire and Arran said that she never thought that she would see a referendum in her lifetime. In all the years I was in the Scottish Parliament, during some of which time I served as a Minister, I never thought I would hear a Deputy First Minister of Scotland shirk responsibility and say that they would walk away from a debt and put Scotland’s economy at risk. I hope that that report from this morning is not entirely accurate. If it is, I hope that the Deputy First Minister now regrets those remarks and looks again at them.

[Stewart Hosie]

Will the hon. Lady give way?

[Cathy Jamieson]

I will, briefly, just to show that I am a fair person.

[Stewart Hosie]

One of the few who is fair. In relation to the assertion that the hon. Lady and many of her colleagues have made about the Deputy First Minister—who, of course, cannot defend herself here—I am sure that the hon. Lady would agree that, if we are talking about negotiating a share of assets, which includes the central bank, we need to talk about negotiating a share of the liabilities, so we can take our responsibility for them. The UK Government and their allies cannot have it both ways. They cannot expect Scotland to take on a share of the liabilities while refusing even to negotiate on a share of the assets. Surely, as a reasonable person, the hon. Lady would agree that that makes no sense.

[Cathy Jamieson]

I have listened closely to what the hon. Gentleman says. Again, I gently suggest that if it is so important to have those parts of the United Kingdom that the SNP seems to want to retain, why on earth are we looking to break it up in the first place? Why are the Scottish Government and the Scottish Parliament not spending more time looking after the issues for which they have responsibility? Only at the weekend, there were reports about what was happening in the health service in Scotland; about the justice system—we have a proud record of a different legal system in Scotland—being dismantled, bit by bit, by the Scottish Government; and about a range of issues to do with social justice that are simply not being tackled by that Government. It would be better for the hon. Gentleman to reflect on that.

We have had an important debate. There has not been enough time, perhaps, to consider all the issues in detail, as we would have liked. I am sure that there will be further opportunities to do so. I wish to hear what the Minister has to say on this occasion; I am sure that I am more likely to agree with some of it than on other occasions, when I would be looking to put him under the kind of scrutiny that the hon. Member for Dundee East should be under today.

17:49

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

I welcome you to the Chair, Mrs Riordan. It is always a pleasure to serve under your chairmanship, and it is good to see my right hon. Friend the Under-Secretary of State for Scotland here today. I congratulate the hon. Member for Edinburgh South (Ian Murray) on securing this debate, on his excellent, thoughtful speech and on giving all hon. Members an opportunity to discuss this important issue. The debate has been lively and passionate. Indeed, it has been the liveliest and most passionate Westminster Hall debate that I have yet seen, which shows how important the issue is not just to the people of Scotland but to the people of the entire United Kingdom.

It is no exaggeration to say that the currency that we use affects everyone every day, whether they are individuals buying food or paying off loans, businesses paying their employees or trading across borders or banks protecting savings or providing mortgages. Currency is one of the most important issues in the Scottish referendum debate. Members may be aware that last April the UK Government issued a comprehensive paper exploring an independent Scotland’s possible currency options. Members will be aware—many hon. Members have referred to this today—that just last week the Governor of the Bank of England, Mark Carney, set out his views on currency unions in measured and, as he describes it, technocratic terms. Members may also have read that the Chancellor plans to give a speech on the matter later this week.

[Pete Wishart]

In the past few days, the Prime Minister and the Chancellor have been playing good toff, bad toff with Scotland. The Prime Minister is love-bombing us from London, and the Chancellor will be threatening us on currency in his speech in Scotland in the next two days. Which one does the Minister support—the good toff or the bad toff?

[Sajid Javid]

That goes to show that the SNP is not interested in a serious debate on one of the most important issues facing the Scottish and British people. That speaks for itself.

The Government have consistently stated throughout the debate that the current economic arrangement—one currency in one United Kingdom—is in the best interest of everyone. We have also consistently stated that it is highly unlikely that a currency union between an independent Scotland and a continuing UK could be made to work. I will use the remaining time to remind hon. Members of our analysis, which explains why that is the case.

First, the lessons of the eurozone crisis are there for us to see. Currency unions do not work without close political and fiscal integration. As a result of the crisis, those countries that use the euro are moving towards ever greater integration to address the challenges that they face. Scottish independence, though, is all about disintegration and would inevitably mean that the continuing UK and Scotland move further apart. The Scottish Government’s proposal for a currency union without fiscal or political integration lacks any credibility and makes one wonder whether the Scottish Government actually understand what the word “independence” means.

Secondly, we know that the economies of an independent Scotland and a continuing UK would be very different and would diverge over time as a result of different laws, different regulations and different industries. One industry that we know would be important for Scotland is North sea oil. A significant portion of an independent Scotland’s economy would depend on oil revenues. Were a change in oil price to affect the two countries differently, a one-size monetary policy with one currency for two separate nations would simply not be suitable.

Thirdly, despite the Scottish Government’s claim, we do not believe that a currency union would be in the interest of an independent Scotland. Such a union would inevitably constrain Scotland’s own economic policies because the remaining UK, to manage the risks of the union, would need to set interest rates and maintain oversight of an independent Scotland’s tax and spending plans. Indeed, a currency union would also be likely to undermine an independent Scotland’s economic resilience and credibility. If, for example, the financial markets sensed that the Bank of England’s monetary policy did not suit Scottish circumstances, they might doubt Scotland’s commitment to the currency union, which would, in turn, lead to financial market speculation. In such circumstances, if markets were not calmed, there would be a very real possibility that Scotland would be forced to adopt its own currency in a time of crisis. One is reminded of the recent situation in Cyprus when there was plenty of talk of the country potentially leaving the euro. Members will know that that was prevented only after a huge bail out from other eurozone members, which came at a significant cost to Cypriots, many of whom lost up to 40% of their deposits in domestic banks.

Fourthly, just as a currency union is not in Scotland’s interest, it is hard to see how it could be in the interest of the remaining United Kingdom. Such a union would involve the remaining United Kingdom giving up an element of its economic sovereignty, as we have heard from many hon. Members today. The public would feel very strongly about that. It would increase the risk of having to bail out Scottish banks, and the idea of putting the remaining United Kingdom’s economy at risk because of another country’s banks just as we are getting our own banks in order would make no sense.

Before I come to an end, I will address some of the questions that have been raised. I listened carefully to the speech of the hon. Member for Dundee East (Stewart Hosie) and what he has to say on this issue is very important. I agree with the shadow Minister that he is an intelligent person who makes valuable contributions in the House, but from what I have heard today, he does not seem to want facts to get in the way of a good argument.

The hon. Gentleman and other hon. Members mentioned the banking bail outs of 2008. I remind him that the cost of recapitalising the Royal Bank of Scotland was £45 billion, which is the largest banking bail out the world has ever seen, plus an additional £275 billion of state support through guarantee and funding commitments. That sum is more than 200% of an independent Scotland’s GDP.

[Stewart Hosie]

Presumably, the Minister does not disagree with the Banking Commission that the total cash cost of the entire financial bail out of all the systems was £133 billion. Of the other figures that he talks about, £220 billion was made up of the asset protection scheme, which was a paid-for insurance guarantee. The scheme made the taxpayer a profit and was never called upon; it has since been shut down. Will the Minister confirm that that is correct?

[Sajid Javid]

Again, that is a good demonstration of how the hon. Gentleman would like to twist the facts. Just because a guarantee is not called upon does not mean that it has not done its job. The guarantee provided confidence and ensured that the banking system did not collapse. Our analysis shows that Scottish banks, even when we focus only on their assets in Scotland, would have assets equal to 10 times the GDP of an independent Scotland. That shows that it would be difficult for an independent Scotland to give depositors confidence in its domestic banking system.

The hon. Gentleman also mentioned trade between the UK and Scotland. The UK accounts for 70% of Scotland’s total trade, whereas Scotland accounts for 10% of the UK’s trade. Scottish trade is important to the UK economy, but it is not clear that it is important enough to risk recreating in the British isles the problems that we have seen in the euro area.

In conclusion, a fiscal and currency union pursued by two diverging nations would put significant limits on an independent Scotland’s economic freedom, and it would put an independent Scotland at severe risk of losing economic resilience and credibility. Such a union would undermine a continuing UK’s sovereignty and would increase the risk of bank bail outs. That is why we have consistently said that it is highly unlikely that a currency union would be agreed and that it is highly unlikely that a currency union could be made to work.

Stansted Airport

Wednesday 12th February 2014 Westminster Hall

16:00

[Mr David Lammy (Tottenham) (Lab)]

I am pleased to have secured this debate on an important issue that cuts to the heart of growth and success in our country. Stansted airport began life as a United States air force base during world war two. More than 600 planes took off from that air strip on their historic journey to the French coast in the first hours of D-day in 1944. In the 70 years since then, the small air base has grown rapidly into a thriving modern airport, the fourth busiest in the United Kingdom. Last year, it served nearly 18 million passengers and flights to more than 150 destinations. Its passenger numbers are constantly increasing and are set to rise further in the coming years. Stansted is one of the infrastructure successes of our time, and that is the context in which the future of the airport must be considered. I am pleased to see the right hon. Member for Saffron Walden (Sir Alan Haselhurst) here. He represents the area and has taken up the issues over many years. I am also pleased to see other colleagues who have taken an interest.

[Robert Halfon (Harlow) (Con)]

As the right hon. Gentleman knows, my constituency is next door to Stansted. Does he agree that the new owners of Stansted airport have already made a huge difference to the running and management of the airport? I have huge praise for their work. Does he agree that for any expansion or development of the airport to take place, the employer should do everything possible to include local people and ensure that they get the jobs that are there?

[Mr Lammy]

The hon. Gentleman is absolutely right that the next few years should see Stansted continuing to grow from strength to strength. Since being sold by BAA, its prospects have been strong. The new owner, Manchester Airports Group, has committed to building and improving Stansted. He is also right about the importance of local people. He will understand that unemployment in the region around the airport is fairly low, certainly when compared with my constituency. One reason why I am pleased to co-chair the group of MPs that supports the Stansted corridor is our shared interest in growth and employment in the region, as well as in the concerns of local people.

[Zac Goldsmith (Richmond Park) (Con)]

I am pleased to back the right hon. Gentleman in his ongoing campaign on Stansted. Does he share my view that the liberation of Stansted and Gatwick from the monopoly has worked wonders for both those airports? I know more about Gatwick than Stansted. Gatwick has done things that we were told were not possible, such as opening up flights to Vietnam and Indonesia. The beneficial consequences of competition between airports should be borne in mind as we talk about the bigger issues of airport capacity. Some of my colleagues seem keen to recreate what would effectively be a large taxpayer-subsidised, foreign-owned monopoly at Heathrow.

[Mr Lammy]

The hon. Gentleman’s persuasive tones are seductive. He is certainly right that the nature of competition in this market has been hugely important, although I suspect that we might disagree on other points. It was important that the monopoly in the system with BAA was broken. We are seeing a flourishing as a consequence of that monopoly being ended.

[Guy Opperman (Hexham) (Con)]

Will the right hon. Gentleman give way?

[Mr Lammy]

It is wonderful to see so many interventions in a short debate. Because the subject is so important, I give way.

[Guy Opperman]

I support what the right hon. Gentleman is doing, and I congratulate him on securing the debate. To follow on from the point made by my hon. Friend the Member for Richmond Park (Zac Goldsmith), is part of the ability to prosper as an economy that we allow regional airports—I obviously speak for Newcastle airport—to thrive, just as Stansted and Gatwick have been allowed to thrive? Does he agree that that should be the direction of travel from the Treasury and the Department for Transport?

[Mr Lammy]

I agree that that is one direction of travel. It has been interesting to see Newcastle airport recently open up huge new routes with huge new carriers, including flights to Dubai. That supports the hon. Gentleman’s point on regional airports.

The new owners have already signed up new airlines at Stansted, announced an £80 million redevelopment of the airport, launched a campaign to attract long-haul carriers to Stansted and signed deals that will add more than 11 million passengers in the next 10 years. That underlines all that has already been said. With ever increasing use and committed and forward-looking new owners, the future of Stansted looks bright.

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

There is no doubt that Stansted is doing well, but does my right hon. Friend agree that the Davies report has not given Stansted a fair analysis, because the analysis stops at 2030? If the Davies report had looked at runway capacity and airport capacity in the south-east until 2050, as we wanted, it might have given a different view on Stansted’s future, which is thriving.

[Mr Lammy]

My hon. Friend cuts to the chase. Long-term aviation strategy has been handed to the Davies commission, but it will not report until after 2015, so I do not want to stray too far into second-guessing what it might say. I am sympathetic to what my hon. Friend said, because I was somewhat surprised that the new runway at Stansted was not even included in the Davies report’s preliminary shortlist. Given the scope for development there, the predicted increases in passenger numbers and the airport’s ever-evolving success, it is surprising that that runway did not warrant further consideration as an option. I understand that that was in part due to Davies not taking into account the full passenger forecasts or the recent deals that have been signed under the new ownership at Stansted.

I am pleased that the commission, in highlighting the possible need for a new runway at Stansted by 2050, indicates that it at least accepts that the airport has long-term value. Either way, Davies has concluded that the choice over a new runway by 2030 is effectively between Heathrow and Gatwick. My priority for this debate is not what happens in 2030 or 2050, but what happens now. Regardless of what Davies eventually recommends, we have an immediate problem, which is that London urgently needs more air capacity. The prospect of any new runway is at best 15 years away, and those are 15 years that we do not have. London cannot afford to wait and should not sit by as the likes of Frankfurt, Schiphol and Charles de Gaulle surpass us and steal the benefits that accompany better connectivity.

[Jim Shannon (Strangford) (DUP)]

Talking about now and the need to have increased capacity and better facilities at Stansted airport, I encourage the right hon. Gentleman to take note of the impact that an increased number of flights can have on other parts of the United Kingdom. For example, that can increase the number of flights to Belfast City airport and Belfast International airport. That increases competition and drives down prices, and that can encourage more people to take up air travel. We can feel the dividends of what happens to Stansted in Belfast if it is done correctly.

[Mr Lammy]

I am grateful to hear that, as will be my many Irish constituents.

Last year, Germany overtook the UK on new investments, which is hardly surprising when it has many more connections to developing markets in China, India and Latin America. Heathrow has nearly half as many flights to China as Frankfurt. In fact, London has fewer weekly flights than its European rivals to most of the emerging market economies. All that comes despite the fact that British trade increases by up to 20 times when there are direct flights to a country. That is why short-term measures are crucial if we are to prevent yet more business from being lost to our competitors.

Much more can be done in the short term to boost Stansted’s success and to alleviate pressure on London’s other airports, the core of which is urgently improving rail links to Stansted airport. Given the current state of the links, 34 million people in Stansted’s catchment area avoid the airport and catch flights elsewhere.

[Mr Andrew Smith (Oxford East) (Lab)]

I congratulate my right hon. Friend on securing this debate. He is being generous in taking interventions. I underline the importance of what he says about rail links and want to emphasise importance of high-speed coach links from places such as Oxford and elsewhere to the west and north-west of London, because the length of journeys to Stansted diminishes its ability to fulfil its undoubted regional potential.

[Mr Lammy]

I am grateful to my right hon. Friend for making that important point. All these factors put unnecessary pressure on Gatwick and Heathrow, which are already operating at full capacity. In fact, Stansted is the only London airport with spare capacity. As a medium-term solution to our aviation problem, why are we not utilising the Stansted’s 50% unused capacity?

The problem is that the West Anglia main line—the main access route to Stansted—is in a dire state. It has suffered from year after year of underinvestment, and, as a result, it is slow, unreliable and inefficient. It takes 53 minutes to get to Stansted from a London rail terminal, compared with 37 minutes to Luton, 30 minutes to Gatwick and 21 minutes to Heathrow. Reliability, meanwhile, is well below the national average. The rail link is a real impediment to Stansted’s growth and future success. The Davies commission noted that in its interim report, which stated that there are substantial arguments in favour of enhancing the link, which merits urgent consideration. I want to press the Minister on that urgent consideration. Like Davies, Transport for London, Network Rail, the Government and London business groups have all voiced their support for the improvements. There is a consensus that four-tracking the line between Coppermill junction and Broxbourne is vital. I welcome that consensus, although it has been long enough in coming. We need urgent action.

Timing remains a real issue, however. It is a growing concern that the work may be delayed further and further. Network Rail has suggested that the improvements, despite being described by Davies as urgent and vital, may be pushed back into control period 6, which does not even begin for another five years. Similar delays have occurred several times already. I hope that the Minister’s response will outline concrete steps that the Government will take to improve the West Anglia main line. Following Davies stressing the need for urgency, I hope that the Minister will tell us how the Government will complete the work in the shortest time possible. If he is unable to give such a response now, will he assure me that it will be included in the Government’s response to Davies’ initial report, which is due to be published this spring? I see no reason why a commitment to proceeding with the upgrades could not be included in this year’s autumn statement, with the start of enabling work being included in next month’s Budget.

London First has reported that four-tracking could be completed by 2021. That should be our aim. There is a minority view that four-tracking is unnecessary, but there are no alternatives. We need to act now. Even if we do not take anything else into account, we cannot ignore that four-tracking is a crucial prerequisite to the development of Crossrail 2. The Minister will be familiar with the undertakings given not only by the Chancellor, but by the Mayor of London to move towards Crossrail 2 over this next period.

I acknowledge the time and know that the right hon. Member for Saffron Walden (Sir Alan Haselhurst) wants to speak, but I want to emphasise the importance of the region to our country as a whole. The London-Cambridge corridor is an essential component of growth in a recovering economy. Cambridge is essential to the region and we need growth in this region akin to that of Boston and the eastern corridor of the United States. That cannot be achieved without a thriving airport with high-speed links to London. A York Aviation study published on Monday found £53 million-worth of journey time savings could be made by improving the quality of the line. A recent report by Oxford Economics concluded that investing in four-tracking could unlock economic benefits to the tune of £4.5 billion by 2021 and £10.7 billion by 2031. Development is also important for jobs in the region. My constituents in Tottenham rely heavily on the success of the Upper Lee valley corridor and on jobs at Stansted. West London accounts for 17% of all jobs in London, for example, and Heathrow supports 230,000 jobs.

The future of Stansted is hugely important to the UK’s whole economy. It pains me that we are still discussing upgrading the West Anglia main line. It is important that this region of London is put on the map. I have been opposed to the Mayor’s idea of Boris island, largely because of where it would leave west London’s economy and the huge loss of jobs that would be a consequence of Heathrow’s closure. Stansted is a key component of the rebalancing of London’s economy to the east and north-east, so I look forward to what the Minister has to say.

16:17

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

I am grateful to the right hon. Member for Tottenham (Mr Lammy) and the Minister for agreeing that I can make a small contribution to this debate. It is always interesting to hear from other colleagues about the airport that lies wholly in my constituency. It is a subject about which I have spoken in the House on many occasions over the past 36 years.

The title that the right hon. Gentleman gave this debate raised some eyebrows in my constituency and elsewhere in Essex, almost to the point where briefing was coming in on the basis that we would this afternoon be deciding the future of Stansted airport, but that is perhaps a little optimistic. The reality is accepted by my constituents, who were opposed to the development of Stansted into a major London airport. It currently has an agreed capacity of up to 35 million passengers per annum and it could go further than that on a single runway. It currently handles 7.8 million passengers per annum, so there is a long way to go.

I do not decry the importance of the subject to the right hon. Gentleman’s constituency, but he must recognise that when he talks about job creation in my constituency, he is talking about a constituency with 1.3% unemployment. For all the jobs that will be created at the airport, even with its existing planning permission, a great many of those will be taken by people who will then want to migrate to my constituency, which is essentially a rural area that is already bearing a great burden of demand for more housing. He must understand why there are concerns about the extent to which Stansted can grow.

[Mr Lammy]

I want to reassure the right hon. Gentleman about the nature of my constituents, many of whom have migrated to Harlow. I am sure that, if some of them left, he would welcome them.

[Sir Alan Haselhurst]

We have a common position on the improvement of the railway line, so that people from north London can come to find jobs in the area and commute back again conveniently.

There is resistance in my constituency to the development of Stansted beyond one runway and certainly to its becoming a hub airport, because people see the down side of what could happen. As they see it, there is little up side if development on that scale can take place. Had it been possible to say that there would be a first-class rail line as a result of the original decision to expand Stansted, that might have been seen as a benefit, but the service has got worse. I absolutely agree with the right hon. Gentleman that it is important for us soon to have a four-track railway on the West Anglia line.

The blame has to be shared. It starts with the Government of Mrs Thatcher, who agreed the development, but not the infrastructure. It went on through the years of the Labour Government, who wanted not only to expand Stansted, but to put more houses in the M11 corridor, yet they still did nothing about the infrastructure. Under the present Government, we are now waiting for a sign that action will be taken. In that sense, the right hon. Gentleman and I may make common cause, but please do not go away with the thought that my constituents welcome the idea that Stansted should be the hub airport with two, three or four runways. London needs a hub airport, but it does not need it in the Essex countryside.

16:21

[The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)]

I am pleased that we found time to squeeze in my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst). Sadly, however, I suspect that I will not be able to take any interventions, so that I may answer the points made by the right hon. Member for Tottenham (Mr Lammy), who I congratulate on securing the debate.

I am well aware of the right hon. Gentleman’s ambitions for improving the economic prosperity of the London-Stansted-Cambridge corridor, which includes his own constituency. I applaud his efforts. Stansted airport is clearly of central importance to those aspirations, and the Government also recognise the important role that the airport has to play in maintaining the UK’s international connectivity.

In that light, it is worth while to take a few minutes to consider the future of Stansted airport in the context of the Government’s wider aviation policy. The Government are well aware of the important contribution of aviation to the economy, but we also recognise the need to take a balanced approach. Last year, therefore, we published our aviation policy framework—a long-term strategy to enable the UK aviation sector to flourish and support economic growth, while addressing issues such as aircraft noise and carbon emissions.

The Government believe that maintaining the UK’s status as a leading global aviation hub is fundamental to the country’s long-term international competitiveness. We appointed Sir Howard Davies to chair an independent commission to identify and recommend to Government how best to achieve that. The commission published its interim report on 17 December 2013, concluding that, while the UK remains well connected, additional capacity will be needed to support competitiveness and prosperity in the medium and longer term. The commission will undertake further detailed analysis of proposals for new runways at Gatwick and Heathrow airports. It will also examine further the Isle of Grain, or Boris island, option to reach a view before the year’s end on whether it should be considered alongside the shortlisted options.

We welcome the interim report as a major milestone for the commission. It represents a significant step forward in its work of assessing the options for meeting the UK’s future aviation needs. As I am sure Members appreciate, the Government have no intention of commenting on any of the long-term options that were, or were not, shortlisted while the Airports Commission continues its work. The Government, however, intend to respond to the commission’s short-term recommendations and will do so as soon as possible. The commission will provide its final report by the summer of 2015 for consideration by the Government and Opposition parties—whoever they may be.

I will experience first hand Stansted airport, and surface access to and from it in particular, when I visit the airport next month.

[Robert Halfon]

We have discussed the railways, but does my hon. Friend agree that if the airport is to be expanded, expansion of the M11 is also needed? Does he support the necessity of an extra M11 junction, in particular into Harlow, to speed up the traffic to and from the airport?

[Mr Goodwill]

I have something to say on road connectivity, but I rather suspect that I will not get to that bit of my speech, so I will show it to my hon. Friend later if I do not reach it. In addition to rail connectivity, however, the roads in the area are important.

Stansted airport is London’s third busiest airport and the UK’s fourth busiest, but it is still only half full. The airport therefore has an important role to play in growing connections between the UK and the rest of the world, now and in the future, as noted by the Airports Commission in its interim report. Recently, we have seen a number of developments at Stansted that help the airport to fulfil its potential and to fill its spare capacity, including its acquisition by Manchester Airports Group.

At the end of the month, it will be one year since Manchester Airports Group purchased Stansted airport. I welcome the significant investment in Stansted by its new owner, which I am familiar with through Industry and Parliament Trust activity when I was in opposition. In less than 12 months, we have seen huge improvements to the terminal, as part of an £80 million investment programme. I am pleased that the airport has already committed to further investment in the infrastructure to improve all aspects of the customer journey.

In the past year, the airport has announced long-term deals with its major airlines that will see passenger numbers increase substantially over the next 10 years. This summer alone, the airport will introduce 12 new routes and a substantial increase in services to key destinations. It is excellent to see passengers benefitting from the increased competition between airports around London.

The Government are also playing their part in making the airport more accessible and attractive to passengers. For example, since 2010, the Stansted Express has benefitted from a brand new fleet of trains, the Bombardier class 379 electric multiple units, which were assembled right here in Britain. Those modern, spacious and comfortable trains now operate for all Stansted Express services—a change that has been warmly received by users.

It may be helpful if I explain that the West Anglia main line, which serves the airport, is a busy, two-track railway. It provides metro-style services for passengers within Greater London; longer distance and commuter services to towns in Essex and Cambridgeshire; and the Stansted Express airport services. Network Rail and train operators must ensure that all users are properly served. Government investment will support future growth on the route and improve reliability. The Government’s 2012 rail investment strategy confirmed an £80 million scheme to deliver three and four-tracking of the southern section of the route, including a contribution from the Mayor and Transport for London. In the longer term, I am aware of stakeholder aspirations for further capacity enhancements—an issue to which I will come shortly.

The Stansted Express service provides a frequent connection between the airport and London. During the day, services run every 15 minutes to London Liverpool Street station, thereby providing direct connections to the City of London and making Stansted an attractive airport for business travellers from around the world. Liverpool Street of course benefits from good onward connections, including links to four London underground lines and, from 2019, connections to Crossrail.

In addition, all Stansted Express services stop at Tottenham Hale station, which is in the constituency of the right hon. Member for Tottenham and is well served by the Victoria line. That is a convenient route for many airport travellers who wish to gain access to parts of north and west London. Looking to the future, east London is experiencing significant growth and, in addition to having the Olympic park and the Westfield shopping complex, Stratford is becoming a major transport interchange with connections to two underground lines.

Stansted passengers of course do not only want to travel between the airport and London. West Anglia in particular is a thriving region, and its economy is supported and enhanced by its proximity to Stansted. At present, an hourly service runs to Birmingham, providing connections to Leicester, Peterborough and Cambridge—a market that we see as extremely important and one that we wish to support. The Government are already working with Abellio Greater Anglia, Network Rail and the airport to introduce new early morning trains from Cambridge to cater for the first wave of outbound flights.

We recognise that there is a desire for more early morning and late night trains to and from Stansted. The Government are working with train operating companies and Network Rail to see whether some rail services can be made available at night or in the early morning, which is when a great many flights arrive or depart from Stansted. That of course is also the time when essential maintenance needs to be undertaken on the line, but if a solution can be found, that will benefit both the airport’s passengers and the work force.

In the interim report, the Airports Commission proposed improvements to surface access to airports. The Government set out their initial response to the recommendations in the national infrastructure plan, published in December. It included accepting the need to study possible rail improvements at Stansted airport and their interactions with other growing areas, as identified by the commission. We have instructed Network Rail fully to consider the needs of the airport as part of its Anglia route studies, currently due to report in the summer of 2015. In conclusion, as I am sure the right hon. Gentleman agrees, taking all that into account, the future of Stansted airport looks very promising indeed.

Mid-Wales Connection Project

Wednesday 12th February 2014 Westminster Hall

16:30

[Glyn Davies (Montgomeryshire) (Con)]

I look forward to speaking once more under your always sympathetic chairmanship, Mrs Riordan.

I will make a few initial comments about how I want to approach today’s debate. I could have tackled this issue, the effective industrialisation of the uplands of central Wales, from several different directions, but I want to focus completely on the direct implications of the mid-Wales connection project—the 400 kV line that will run from north Shropshire to the middle of my constituency. I assure the Minister that I have no intention of making any reference to the public inquiry currently taking place at the Royal Oak hotel, Welshpool, into the six proposals that have been refused and are to go to appeal. I know that he would not be able to comment on that, and I intend to refer to it only tangentially.

Normally when my thoughts turn to the appalling consequences of this project for the people of mid-Wales, I find it difficult not to become over-emotional—I become pretty angry and tend to lose my grip completely. That is fine when I am speaking to 2,000 people in Welshpool livestock market who all share my view and are protesting, or to the 1,800 people who have come with me on a three-and-a-half-hour bus journey to Cardiff to make their views known outside the National Assembly. Today I want to be calm, cool and rational, and to speak with understanding for the position of the Minister, who of course has to make his response in the context of Government policy.

[Mr Mark Williams (Ceredigion) (LD)]

I congratulate my hon. Friend on securing this debate. Before he leaves his point about the passion with which he has directed this campaign—or crusade, as I guess he might regard it—I remind him that the concerns that he has voiced are felt very much to the immediate east of his constituency, across the border in England, but also to the west in Ceredigion. Mercifully, we have seen a project abandoned, temporarily at least, in Nant-y-Moch, but does he agree that the natural environment that he is keen to defend and protect is under threat in my constituency as well?

[Glyn Davies]

Indeed I do. I am glad that my hon. Friend intervened, in part because he is a Liberal Democrat, which shows that the feeling in mid-Wales is cross-party. If my hon. Friend the Member for Brecon and Radnorshire (Roger Williams), another Liberal Member, were here, he would take exactly the same view. The people of mid-Wales as a whole, along with all their representatives, share the view that I intend to express today.

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

Will my hon. Friend give way?

[Glyn Davies]

It is the same in Shropshire as well.

[Daniel Kawczynski]

I am grateful to my hon. Friend for including Shropshire in the title that he gave to the debate. We had to fight tooth and nail to prevent the power lines coming through my constituency—they will now, as he knows, be going through north Shropshire—and for a long time, there was tremendous anger and fear among residents in the western part of my constituency: the proposed lines might have been coming through the area where their homes are and they feared the impact of that. I completely concur with him on the devastation and misery that the project has caused.

[Glyn Davies]

I thank my hon. Friend for those remarks. There is quite a large part of the country in which the feeling is comprehensively the same.

I have two overall objectives today. I want to lay out the full appalling reality of what the mid-Wales connection project means for mid-Wales and Shropshire. Many people do not understand what the project is. Clearly, there is the 400 kV line, about 50 km long, from north Shropshire to the middle of my constituency, travelling up the beautiful, narrow Vrynwy valley. But because that line is dedicated to onshore wind farms, it is more than reasonable to conclude—in fact, it is blatantly obvious to anyone—that that will mean that there will be about 500 extra turbines in mid-Wales on top of what we have already; there are about 240 wind turbines now. On top of that, there will be about 100 miles of 132 kV cable criss-crossing Montgomeryshire all over the place, from the wind farms themselves to the 20-acre hub station in the middle of the county.

By any description imaginable, that is the industrialisation of the central uplands of mid-Wales and the Cambrian mountains. To many of us, it is an absolute abomination; I cannot believe that anybody with any sanity or appreciation—I am sorry, I am starting to go off on my usual rant. I will draw myself back.

[Jonathan Lord (Woking) (Con)]

I have come here to support my colleagues from Shropshire and Wales, a part of the country I happen to know extremely well. Does my hon. Friend agree that the cables are going to go through some of the most beautiful countryside in our two countries?

[Glyn Davies]

I could not agree more. That was the inspiration for my taking an interest in the issue, as I have since 2005. I will come back to why that date specifically is important.

My second objective today is to ask the Minister to agree publicly that enough is enough and that it is time for a moratorium on onshore wind farms. Much as I would like him to, I do not expect him to be able jump up and say, “Yes, I absolutely agree—as from today, there will be no more.” But it is important to put on the record that a huge and increasing number of people think that there is a strong case for that.

I want to put the case that I myself feel there is for a moratorium. I have never been convinced that onshore wind power was the right way to go to solve the UK’s energy demands, but I have always accepted that it had a part to play in the mix, which is what Government policy usually says. The mid-Wales connection project became an obvious likelihood in 2005 when the Assembly adopted a policy the consequences of which very few people understood. I am deeply grateful to Peter Ogden, the director of the Campaign for the Protection of Rural Wales, who explained it to me in 2005. I became the president of that organisation three years before I came to this place because I so appreciated his understanding of what the impact of the policy would be. It was only then that I realised quite how bad the situation was.

It is not, then, that I have always been against onshore wind power in principle, but mid-Wales has 240 turbines already. Another 500 on top, with all the power lines as well, is simply beyond the scale of anything that is reasonable. I wanted to look at the Government’s policy, so I asked the Library about the issue. I know that the Government have an overall target of 15% of energy coming from renewable sources by 2020. I understand that there is no direct policy for targets within that on specific types of renewable energy, but the Government have expectations and aspirations, or whatever word we want to use, and the sort of total that is being looked at is 10 GW to 15 GW for wind power—that is the figure the Library told me in November. Now, 7 GW have already been installed, a further 6.63 GW are through the planning process and another 6.33 GW are already in planning. We have already reached anything that could reasonably be described as the Government’s expectation. There is no case for taking it any further.

If we look at Governments in Europe—Germany, Spain and the European Union itself—they are identifying that the cost of the subsidies is unsustainable. Indeed, those countries are all looking to cut back. We might find that we are committing ourselves in the United Kingdom to a massively expensive project in mid-Wales, but in 10 years time the policy behind it will have been abandoned, and we will have stranded assets. The cost of the project is huge: 10% of the capital investment will be added on to the cost of everybody’s electricity for the next 30 years. That is the scale of what happens with such a hugely expensive project. The only reason National Grid is going forward with it is because it has a statutory obligation to do so. It makes no sense at all.

[Daniel Kawczynski]

Does my hon. Friend agree that one crazy aspect of the matter is how far the site is from the national grid, and that the Government must provide some advice and management about where the pylons will be sited so that the countryside is not plastered over to connect places to the national grid?

[Glyn Davies]

My hon. Friend will not be surprised to know that I agree with that point.

I want to spend a little time on the impact on democracy in central Wales and perhaps wider. Democracy is the principle on which the Government and the House of Commons operate, and people believe they can have some influence on policy through their elected Members of Parliament. That is particularly apt, because the Government are committed to the principle of localism and legislated for that in England, although there has been no such legislation in Wales. Localism is a key part of the Government’s policies.

I receive dozens of e-mails, and I have one here from someone who says that National Grid is now at their door with a legal right of access to conduct a walk-over service for the forthcoming pylon route corridor, and that they feel the rope tightening around their necks but powerless to fight against it. That is standard. A research paper from Aberystwyth university referred to the hopelessness and helplessness felt by the people of mid-Wales when they see what is happening. They do not want the pylons, but they believe that they can do nothing about it. They feel helpless.

I have spoken before about National Grid’s behaviour, which makes me cross. I received a letter yesterday from Llansantffraid community council about the way National Grid behaves. Not only that, an 86-year-old woman contacted me after going to her county councillor. She had been subject to process service, whereby heavy-duty bailiffs turned up at her door and terrified her. The chairman of the council told her straightforwardly to agree with them and to do what they say for the sake of her health. That has happened umpteen times throughout my constituency. My point is not about proper behaviour, but about the attitude to our right to influence what we can do.

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

I pay tribute to my hon. Friend for his fantastic campaign here and elsewhere on behalf of his constituents. Does he agree that localism means many things, but if it is to mean anything it should take account of local constituents’ views on major projects?

[Glyn Davies]

I do, and onshore wind is not the only area where there is an uprising of local opinion. I am not saying that the Government ignore that, but there is a feeling in mid-Wales that we are being ignored. The area does not have a huge number of people living there. Shropshire is more populous, but the main impact is on mid-Wales. There is a feeling that we are being forgotten and ignored, and that is dangerous because any Government who behave like that will lose people’s support for democracy and disengage them from the process. They will start to ask why they should vote if no one in the world takes any notice.

Last Saturday morning, I went to a bring-and-buy sale at the Royal Oak in Welshpool. There were stalls selling pot plants, books and bric-à-brac to raise money to resist these developments. People had paid taxes on that money, which came from their own pockets, and they were raising it to try to obtain proper legal advice to fight the cause. At the inquiry, lined up against them, will be a row of barristers employed by wind farm companies and National Grid. Those people paid money from their own pockets to defend mid-Wales from something they believe is wrong, but in a supposedly equal position will be a row of barristers representing the companies and paid from the public purse—from subsidy. That is where the money comes from. Not only do people have to pay from their own pockets to try to defend themselves, they must pay for the other side to have the most professional advice imaginable to defend their corner.

I know the Government’s policy, and I hope that they will review it and start to take on board the general view. I have spoken about the matter before, and if we ignore the overwhelming views of the people of mid-Wales and cover the place in wind farms, it will be an abomination in one of the most beautiful parts of Britain, and a great risk to the democracy that we all hold so precious.

16:45

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

I congratulate my hon. Friend the Member for Montgomeryshire (Glyn Davies) on securing this debate. The need for and the impact of electricity network infrastructure is an important and sensitive issue. I welcome the opportunity to explain the need for upgrading our existing electricity network, to clarify the approach when deciding where and how new infrastructure is delivered, and how that relates to the proposals for Montgomeryshire and Shropshire. I understand, not least because my hon. Friend champions them so articulately, his concerns about the impact that onshore wind development can have on communities.

We have made it very clear that onshore wind farms must be appropriately sited and that local communities should be properly engaged and see real benefits from hosting them if they choose to do so. My hon. Friend knows that I cannot comment further on individual applications, but to accommodate the new generation, irrespective of onshore wind, but including nuclear power and offshore wind, the existing transmission network needs to be expanded. Before I turn to the proposed electricity connections in Montgomeryshire and Shropshire, it might be helpful if I explain the wider approach to how we decide on new network infrastructure.

Under the current regulatory framework, it is for the network companies to submit proposals for new infrastructure to the regulator, Ofgem, and to the relevant planning authorities. The proposals must be based on a well-justified need case, such as new generation connection or maintenance of a safe and secure network. The companies also propose routes and types of infrastructure, and in doing so they are required to make a balanced assessment of the benefits of reducing any adverse environmental and other impacts of new infrastructure against the costs and technical challenges of doing so following extensive consultation with stakeholders. Those requirements are set out in their licence obligations under the Electricity Act 1989 to develop economic and efficient networks and to have regard to the preservation of amenity and the mitigation of effects that their activities might have on the natural beauty of the countryside.

In addition to the legal requirement to consider the wider impact of new infrastructure, Ofgem published in July 2013 information for stakeholders on how that should be taken into account. That clarifies the fact that network companies are required to consider wider impacts and alternative solutions to overhead lines. That regulatory approach is reinforced by the Government’s energy national policy statements. They set out the framework for factors to be considered when consenting to an infrastructure project of national significance. They make it clear that for electricity networks cost should not be the only factor in determining the type of network technology used, and that proper consideration should be given to other feasible means of connection, including underground and subsea cables.

[Glyn Davies]

I thank my right hon. Friend for making that point, but all I can say is that when people in mid-Wales speak to National Grid or SP Energy Networks, who will do the 100 miles of cable between the hub, they say that it would cost six times as much to build a line from Shrewsbury to north Shropshire, so it will do that on only a small portion of it. They will not do the rest of the lines purely because of the cost back to the wind farm companies. That is what they tell us. That is what they tell me.

[Michael Fallon]

I understand my hon. Friend’s frustration and how his constituents feel about it. In a few moments I will turn to the specific issues in Montgomeryshire and Shropshire. I was explaining how we have reinforced the framework and laid the additional duty to consider both the impact on the countryside and alternatives such as underground or subsea.

Within that framework, National Grid, which owns the transmission network in England and Wales, published a new approach to building new transmission infrastructure, putting greater emphasis on mitigating the visual impact of new electricity lines while balancing that against the need to manage the impact on costs, which ultimately are funded through our constituents’ energy bills. I hope that that balanced approach provides more reassurance to areas potentially affected by cables and pylons that alternatives to new overhead lines are considered fully and very thoroughly. Since the costs and technical difficulties vary so much from project to project, it is also important that each one is assessed on a case-by-case basis to ensure that the right planning decision is taken each time.

The Government consider that the costs and benefits of undergrounding electricity lines are important. That is why my Department supported an independent study to give clarity on the practicality, whole-life costs and impacts of undergrounding and subsea cabling as alternatives. That report was published in January 2012 and its findings are generally consistent with the comparative costs that National Grid has quoted when evaluating options on current projects. It should provide a useful point of reference to inform the planning process.

Let me turn to the potential need for and development of network infrastructure in Montgomeryshire and Shropshire. The application to connect the proposed wind farms in mid-Wales will be decided by the appropriate planning authorities and Ministers, and it would not be appropriate for me to give a view on the particulars of the project or on the proposed wind farms, which are, as my hon. Friend the Member for Montgomeryshire said, currently subject to a public inquiry. However, I certainly recognise that many people feel very strongly about overhead lines and other network infrastructure, and about the impacts they can have on the landscape. Effective consultation with local communities and other interested parties is a vital part of the planning process. When making proposals for new infrastructure, network companies have to demonstrate that alternatives were considered and why the preferred option is justified. That consideration must show that stakeholders have been engaged effectively.

National Grid has been undertaking a pre-planning applications consultation within the framework that I set out earlier. Last year, it sought views on the preferred route option and substation site, including some undergrounding of lines. National Grid has received more than 200 replies to its latest consultation, which closed in November, and more than 500 people attended drop-in events that it hosted. That demonstrates the very strong local interest in the proposals and in their potential impacts. It also shows that National Grid is engaging with local communities as it develops its proposals.

National Grid plans to publish its final proposed design for the connection towards the end of this year for further consultation. After that, it expects to submit its applications for consents in 2015. I am encouraged by the greater stakeholder engagement and consideration being given by National Grid to alternatives to overhead lines since the new planning framework was introduced. That is the behaviour that the planning and regulatory frameworks now require.

I thank my hon. Friend for raising the subject again. It is important that we understand that although our challenge is to build a low-carbon economy, based on an energy mix that meets our environmental targets and security of supply needs, that, in turn, requires an expansion in the transmission network to accommodate the required new generation. However, deciding where and how that infrastructure is delivered requires informed and balanced consideration of a number of factors, including not only costs, but the environmental impacts and the needs of local communities, as well as the needs of the country as a whole.

The planning and regulatory approval processes for new electricity network infrastructure require that stakeholders are properly consulted on those important decisions, and that their views are demonstrably taken into account when the proposals are finalised for final consultation. That process is now under way in Montgomeryshire and Shropshire, where National Grid is consulting stakeholders in developing its proposals. I strongly encourage those with an interest to continue to engage with National Grid in that process and to help ensure that the right decisions are made. I again thank my hon. Friend for drawing the House’s attention to this important set of proposals.

Question put and agreed to.

16:55

Sitting adjourned.