House of Commons

Tuesday 25th February 2014 Commons Chamber

Tuesday 25 February 2014

The House met at half-past Eleven o’clock

Prayers

Tuesday 25th February 2014 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Tuesday 25th February 2014 Commons Chamber

The Secretary of State was asked—

[David Rutley (Macclesfield) (Con)]

1. What progress he has made on improving out-of-hospital care for the frail and elderly.

[The Secretary of State for Health (Mr Jeremy Hunt)]

We will ensure that everyone over the age of 75 has a named GP, responsible for delivering proactive care for our most vulnerable older people in the best traditions of family doctors. Through our £3.8 billion better care fund, we are also merging the health and social care systems to provide more joined-up health and social care.

[David Rutley]

I welcome the steps that my right hon. Friend is taking to improve and enhance the quality of care for the elderly. Given that east Cheshire has one of the fastest-growing ageing populations in the UK, will he tell the House what specific steps he is taking to improve out-of-hospital care in and around Macclesfield? Furthermore, does he agree that it is vital that appropriate funding is in place to take care of the elderly and most vulnerable patients?

[Mr Hunt]

May I congratulate my hon. Friend on the campaigning work he does in his constituency on health matters? I commend the Eastern Cheshire clinical commissioning group for its “Caring Together” programme and for the fact that Cheshire was selected as one of the 14 integrated care pioneers. I hope that it will blaze a trail in joining up the barriers that have bedevilled our health and social care system for too long, so that his constituents are not pushed from pillar to post because of arguments about budgets and people can be discharged on time. I think his area is blazing a trail.

[Hazel Blears (Salford and Eccles) (Lab)]

The national dementia strategy has been fundamental in improving care for many frail and elderly people with dementia living in the community. The strategy is due to expire in April—in two months’ time. Will the Secretary of State give a commitment to the House now that the national dementia strategy will be renewed? I understand that we have the Prime Minister’s dementia challenge, but, like many of us, Prime Ministers come and go. We need a strategy and not simply the Prime Minister’s challenge.

[Mr Hunt]

I can assure the right hon. Lady that this Prime Minister is here to stay. Indeed, I can also reassure her that the national dementia strategy is here to stay. As she has announced that she is stepping down at the end of this Parliament, may I thank her for her campaigning on dementia, which, I think, came from a family connection with the issue? She has attended many of my dementia meetings and the G8 dementia summit. She has made a really important contribution, and I thank her for that.

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

May I follow up on the question that the right hon. Lady has just asked? The Secretary of State has said that the national strategy is here to stay and that is very welcome, but the national strategy was drafted with the intention that it would expire this year. It would be useful if he now indicated the intention to refresh and update it so that we have a clear road map for at least the next decade.

[Mr Hunt]

I know that my right hon. Friend showed great interest in this issue when he was in my Department. When I say that the strategy is here to stay, I mean that it is here to be refreshed and updated. We are subscribing to some big new ambitions, including that by the time of the next election two thirds of people with dementia will be diagnosed and have a proper care plan and support for them and their families. That is a big improvement on the 39% of people who were diagnosed when we came to office. There is much work to do, but I assure him that we are absolutely committed to delivering.

[Lyn Brown (West Ham) (Lab)]

Some hospitals are making a virtue out of quick discharge for their stroke victims. Is the Secretary of State convinced that elderly stroke victims, perhaps those without people to advocate on their behalf, are getting appropriate care and that their care and rehabilitation are not being scrimped on or rationed?

[Mr Hunt]

No, I am not convinced. We need to do much better when it comes to the discharge of vulnerable older people, especially when they leave hospital not cured and still with a long-term condition. They may be recovering from a stroke or dementia or any other condition. We need to have much better links between hospitals and GPs and to have named accountable GPs in the communities looking after those very people.

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

I was disappointed with the allocation of funding by NHS England for care around the country because it did not reflect the demands of the elderly population. People in my constituency have to do a 200-mile round trip to receive support such as cardiac care. Will the Secretary of State ask it to think again for future years?

[Mr Hunt]

My hon. Friend is right to campaign hard on that issue. I agree that the funding formula does not always do justice to people, especially those in sparsely populated rural areas. I know that NHS England is trying to do what it can to move to a more equitable funding formula, but it is not something that can be done overnight. I encourage her to keep pressing on that issue.

[Mr Jamie Reed (Copeland) (Lab)]

Welcome back, Mr Speaker. Easy access to GPs is a key part of out-of-hospital care for elderly and frail people. Days after the election, the Prime Minister scrapped Labour’s guarantee that gave patients a GP appointment within two working days, and took away funding that kept thousands of surgeries open in the evenings and at weekends. Now the Royal College of General Practitioners is warning that 34 million patients will fail to get an appointment. Will the Secretary of State listen to the Patients Association, bring back the 48-hour appointment guarantee and help older people to see their doctor when needed?

[Mr Hunt]

The reason that we got rid of that guarantee was that the number of people who were able to see a GP within 48 hours was falling in the last year in which the target was in place. It was not working, and that is why the British Medical Association and the Royal College of General Practitioners were against it. In the same survey that the hon. Gentleman quoted, the RCGP said it estimated that there had been a 10% increase in the number of GP appointments compared with when his Government were in office.

[Steve Brine (Winchester) (Con)]

2. What recent steps he has taken to improve maternity care.

[The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)]

We have made improving maternity services—so that women have a named midwife responsible for ensuring personalised care—a key objective in our mandate to NHS England. Since May 2010, the number of midwives has increased by more than 1,500 and a record number—in excess of 5,000—are now in training. Over the past two years I have set up a £35 million capital investment fund, which has already seen improvements to over 100 maternity units.

[Steve Brine]

My local foundation trust is currently exploring a major service change which would see the creation of a new acute care hospital to handle the sickest and most complex patients. It would leave midwife-led units only in Winchester and Basingstoke, and centre consultant-led services on the new site. Does the Minister feel confident that the clinical case for this kind of centralisation has been made? Would he be comfortable to see it rolled out across the NHS?

[Dr Poulter]

My hon. Friend is right to highlight the fact that such decisions are clinical decisions and need to be made at a local level to ensure safe care, both with appropriate numbers of obstetricians in obstetric-led units and to give women the choice to deliver in midwifery-led units where appropriate. I am pleased that we, as part of the fund that I outlined earlier, have been able to give Hampshire Hospitals NHS Foundation Trust £50,000 to provide enhanced facilities in birthing rooms at Florence Portal house.

[Kate Green (Stretford and Urmston) (Lab)]

In 2012 representatives of Group B Strep Support met the Minister and received a commitment that the gold standard of enriched culture medium testing would be introduced, which can facilitate preventive treatment for women in labour. Just before Christmas, Public Health England announced that the testing would not go ahead from 1 January. Can the Minister say why not and when the test will be introduced?

[Dr Poulter]

Group B strep is an important issue. I have seen in my clinical practice the devastating effect that the disease can have on newborn babies and on families, so we are doing all that we can to support work on it and ultimately to develop a vaccine to prevent the condition. I would like to correct the hon. Lady on the record. I met Group B Strep Support with the Chief Medical Officer and we undertook to investigate the applicability of the test. The clinical evidence unfortunately does not support its introduction, and we have to be guided by clinical evidence.

[Guy Opperman (Hexham) (Con)]

17. My hon. Friend has visited the Hexham midwife-led maternity unit, which provides exemplary care. Can he update the House on what steps the Department of Health is taking to prevent excessive screening of pregnant women away from midwife-led units? Surely health care is about choice, not diktat.

[Dr Poulter]

My hon. Friend is right. It was a pleasure to visit and open the new facilities at his local birthing unit. He has been a tremendous champion for the midwifery-led unit in his constituency, and I pay tribute to him for that. He is right that it is important that women have choice. These are local decisions by local health care commissioners, but I hope that it will give him some reassurance that the number of midwifery-led units has increased from 87 in 2007 to 152 in 2013 precisely because of the investment that the Government are making.

[Keith Vaz (Leicester East) (Lab)]

During pregnancy, two out of 10 women become diabetic. What additional funding is being given to train nurses to deal with this very difficult situation?

[Dr Poulter]

The right hon. Gentleman makes an important point. We need to provide additional personalised one-to-one support for all pregnant women, in particular those who have or who develop medical problems. That is why we are investing in more midwives—we have 1,500 more than in 2010—and why the Royal College of Midwives and the Royal College of Obstetricians and Gynaecologists have developed guidelines and protocols to support front-line professionals in making sure that those women get extra support and have a safe delivery.

[Karen Lumley (Redditch) (Con)]

21. As my hon. Friend is aware, we have been in a two-year battle to secure services at the Alexandra hospital in Redditch, including maternity. Will he meet me to discuss the best way forward to secure safe maternity care for all the mums-to-be in Redditch?

[Dr Poulter]

My hon. Friend has a distinguished record of more than four years of campaigning hard for local health care services in Redditch, and her constituents should be proud of what she has done on their behalf, fighting for Redditch hospital and local services. I shall be delighted to meet her to talk further about the local challenges for maternity care.

[Mark Durkan (Foyle) (SDLP)]

In the Minister’s earlier answer, was he saying that enriched culture medium testing is not a safe, simple and effective test for group B strep carriage?

[Dr Poulter]

We have had many debates in this House about group B strep and the effects of the disease. The point about enriched culture medium testing is that it takes time for bacteria to grow in culture, and the fact is that there is also evidence from the Royal College of Obstetricians and Gynaecologists. Public Health England has looked at that evidence and it has decided that it is not a test that is effective to be introduced during pregnancy. That is the medical evidence and we have to be guided by it. There are many other things that we need to do about group B strep, not least supporting the development of a vaccine, which is ultimately the best way forward.

[Mr John Leech (Manchester, Withington) (LD)]

Will the Minister tell the House what assessment he has made of the impact of the Immigration Bill on the maternity care of vulnerable women who would be expected to pay for their care?

[Dr Poulter]

Of course we need to have a health service in this country that is self-sufficient, and we have a national health service, not an international health service. However, it is right that we ensure that we look at all areas of the health service when we are applying new policies and directives, and make sure that we protect vulnerable patient groups. That is exactly what the Government are doing and we are working with the NHS to ensure that women always receive high-quality maternity care at the point of need.

[Laura Sandys (South Thanet) (Con)]

3. What progress has been made on introducing a cap on care costs.

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

Everyone will be protected against catastrophic costs by the insurance that the cap will provide from April 2016, in line with the Dilnot commission’s recommendations. We are currently putting the legislative framework for the cap in place, and will consult on draft regulations and guidance to implement the cap in autumn of this year.

[Laura Sandys]

Best behaviour, Mr Speaker.

Does the Minister agree that greater investment in pre-emptive and preventive measures, such as GP annual assessment for those who are getting older, might keep the new old just a little younger?

[Norman Lamb]

I start by paying tribute to my hon. Friend for the work that she has done while she has been a Member of Parliament. I know that she has announced her decision to stand down, and she has done excellent work campaigning for elderly people and others in her constituency and beyond. She is absolutely right. The cap will, first of all, help people to prepare and plan for old age, which is an incredible advance. Also, the £3.8 billion better care fund is the biggest ever shift towards preventive health care and GPs will play a critical role in that.

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

What is the Minister doing to encourage local authorities to provide more places for care, particularly with the reduction in costs? Is he aware that local authorities are finding it difficult, because of Government cuts, to fund those places?

[Norman Lamb]

I am conscious that finances in local government are tight, but the better care fund, which I mentioned just now, has been widely welcomed. I was with a director of adult social care last Friday, who told me that his authority was planning to pool not just its share of the better care fund but the whole of its social care budget with the local health budget. That sort of radical, innovative thinking is exactly what we want and it will ensure that we protect services for vulnerable people.

[Mr Stephen Dorrell (Charnwood) (Con)]

Does the Minister agree that the steps that the Government are taking to reform the funding of care for the elderly represent long overdue action to deal with an issue that has bedevilled this world for more than 20 years? Tony Blair promised the Labour conference in 1997 that he would deal with it, and he did precisely nothing about it.

[Norman Lamb]

I remember the quote from Tony Blair well—he did not want to live in a country where people have to sell their homes to pay for care. However, over 13 years of the last Labour Government nothing happened. There were lots of commitments—manifesto commitments and so on. However, I am proud of the fact that this coalition Government are implementing reform, and it is long overdue.

[Nic Dakin (Scunthorpe) (Lab)]

4. What assessment he has made of the role of dispensing doctors in the NHS.

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

Patients can take their prescriptions to any pharmacy where they wish to have their prescriptions dispensed, but we know that in remote and rural areas, where pharmacies may not be viable, NHS England may authorise GPs to dispense to patients, provided that certain criteria set out in regulations are met.

[Nic Dakin]

Dispensing doctors play an important part in rural areas, as the Minister said, but they face particular challenges at the moment. Will she meet me and representatives of the Dispensing Doctors’ Association to discuss these challenges?

[Jane Ellison]

I am always happy to meet colleagues. I think that Earl Howe leads on the matter in the Department, and I shall draw the hon. Gentleman’s concerns to his attention. It is for NHS England to ensure that everyone has a pharmacy available to them, and I am aware that the CCG allocation formula includes allowances for rurality, but we know that this is a particular challenge.

[Mr Geoffrey Robinson (Coventry North West) (Lab)]

5. Whether patients are able to opt out of the general practice extraction service by telephone or online.

[The Secretary of State for Health (Mr Jeremy Hunt)]

People can opt out of the care.data programme through their GP surgery. Depending on the surgery, that may well be done online or by telephone.

[Mr Robinson]

Is the Secretary of State aware that the Government’s handling of the scheme has been shambolic from the very start and that their failure to communicate is nowhere better illustrated than in Pulse, the GP’s magazine, in which an article states that only 15% of members of the public surveyed knew that they had the right to opt out? What will he do to restore public confidence in a scheme that could be very beneficial?

[Mr Hunt]

It is a pleasure—I think for the first time—to take a question from someone who might be one of my constituents in Godalming. However, I do not agree with the hon. Gentleman that the process has been shambolic. The programme has been in place for 25 years, so it is important to understand that this big public debate is happening because this Government did something that the previous Government did not do: we said that if we are going to use anonymised data for the benefit of scientific discovery in the NHS, people should have the right to opt out. We introduced that right and sent a leaflet to every house in the country, and it is important that we have the debate—[Interruption.] The right hon. Member for Leigh (Andy Burnham) complains, but he did not want to give people the right to opt out when he was Health Secretary.

[Dr Sarah Wollaston (Totnes) (Con)]

The Secretary of State will be aware of the report in The Daily Telegraph setting out how hospital episode statistics data were sold to insurance companies, which were able to match that information with credit ratings data. Nothing will undermine this valuable project more than a belief that data will be sold to insurance companies, so will he set out the way in which he will investigate how that sale was allowed to happen and categorically reassure the House that there will be no sale of care data to insurance companies?

[Mr Hunt]

My hon. Friend is absolutely right to raise that issue and I am happy to give that assurance. That incident is one of the reasons why we set up the Health and Social Care Information Centre through the Health and Social Care Act 2012, in the teeth of opposition from the Labour party. Following the establishment of the centre, the guidelines in place mean that such a thing could not happen. She is also right that it is important that we reassure the public because, let us not forget, it was this important programme that identified the link between thalidomide and birth defects, that identified that there was no link between MMR and autism, and that helped to identify the link between smoking and cancer, so it is vital that we get this right.

[Mr David Crausby (Bolton North East) (Lab)]

20. Virtually everyone wants to improve patient care in the NHS, so why not scrap the underhand way in which the care.data programme has progressed so far, and instead provide a diverse choice of ways to opt in, limit the use of medical data to the NHS and keep the public’s personal information out of the hands of the private sector?

[Mr Hunt]

May I gently tell the hon. Gentleman that the reason why we are having the debate is that this Government decided that people should be able to opt out from having their anonymised data used for the purposes of scientific research, which the previous Labour Government refused to do? When they extended the programme to out-patient data in 2003 and to A and E data in 2008, at no point did they give people the right to opt out. We have introduced that right, which is why we are having the debate.

[Dr Julian Huppert (Cambridge) (LD)]

There are of course huge benefits from using properly anonymised data for research, but it is difficult to anonymise the data properly and, given how the scheme has progressed so far, there is a huge risk to public confidence. Will the Secretary of State use the current pause to work with the Information Commissioner to ensure that the data are properly anonymised and that people can have confidence in how their data will be used and how they can opt out?

[Mr Hunt]

I will do that, and NHS England was absolutely right to have a pause so that we ensure that we give people such reassurance—[Interruption.] When we had a pause before, the result was the very good Health and Social Care Act, which is doing good things for patients throughout the NHS. This programme is too important to get wrong, and while I think that there is understanding on both sides of the House about the benefits of using anonymised data properly, the process must be carried out in a way that reassures the public.

[Andy Burnham (Leigh) (Lab)]

When he was appointed, the Health Secretary declared it his personal mission to have a “data revolution” in the NHS, but what he has presided over is a spectacular collapse in public confidence in the use of patient data. The only revolution he has created is a growing public revolt against his care.data scheme. Coming after his NHS 111 shambles and the court humiliation over Lewisham hospital, it cements a reputation for incompetence. When was he first warned about problems with care.data and what action did he take?

[Mr Hunt]

The shadow Secretary of State searches for NHS crises with about as much success as George Bush searching for weapons of mass destruction. My first contact with that programme, when I was told about it, was to decide to do something that he never did as Health Secretary: to say that every single NHS patient should have a right to opt out of having their data used in anonymised scientific research. I think that was the right thing to do. Of course we are having a difficult debate, but its purpose is to carry the public with us so that we can go on to make important scientific discoveries.

[Andy Burnham]

Again, the right hon. Gentleman never takes responsibility—it is always somebody else’s fault. Even by this Government’s standards, this is a master-class in incompetence. First, we have this useless glossy leaflet. He said that it has gone to every home, but that is not true, because homes that have opted out of junk mail have not received it. Many people report that they still have not had it through their letterbox. Secondly, when people cannot even get through to their GP practice on the phone, as we heard earlier, or get an appointment, he has made it almost impossible to opt out of the scheme. Has this cavalier approach not built an impression that the Government are taking patient confidentiality for granted in trying to force through the scheme, increasing public mistrust and putting the important scheme at risk?

[Mr Hunt]

It is intriguing that the shadow Secretary of State has chosen not to talk about a winter crisis, because it has not happened, despite the fact that he predicted it time after time. Let me tell him what was cavalier: the previous Labour Government’s refusal to give patients a right to opt out of giving their data to this programme, even though it was going on for their whole time in office. We believe that we should have a data revolution, but to do that we need to carry the public with us, which is why we need to have this important debate and give people the reassurance they deserve.

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

6. What recent assessment he has made of the number of available mental health crisis beds for young people in England.

[Ms Karen Buck (Westminster North) (Lab)]

14. What recent assessment he has made of the number of available mental health crisis beds for young people in England.

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

NHS England has a rapid review under way to identify commissioning solutions to pressures on specialist beds for children and young people. It inherited varied provision across regions and a lack of capacity in some parts of the country for particular need. For the first time, available beds are monitored weekly, and small increases in capacity have already been secured.

[Rushanara Ali]

I thank the Minister for that answer, but 1,500 mental health beds have closed since 2011, which is causing a wider crisis, and a recent Care Quality Commission report found that, in one area over the previous year, 41 children had been detained in police cells because health-based places of safety were either not available or not staffed—and one of those children was 11 years old. How can that be acceptable?

[Norman Lamb]

The reduction in the number of mental health beds has been a long-term trend—it happened under the previous Labour Government—and rightly so, because we have to move away from institutional care. However, crisis beds must always be available. I completely agree that it is intolerable for children to end up in police cells, but that is not new; it has happened for many years and did not start in 2010. When we talk about parity of esteem, we mean it. There must be absolute equality between the ways in which mental and physical health are treated. Last week we launched a crisis care concordat to ensure that children do not end up in police cells.

[Ms Buck]

The clinical director of child and adolescent mental health services in my mental health trust recently said:

“Sometimes we have to make 50 to 100 phone calls around the country looking for a bed… young people shouldn’t be shunted around the country into inappropriate facilities.”

Another psychologist dealing with a case in my constituency told me:

“It is very difficult to get young people into in-patient services at present due to the high number of cases and reductions in funding from NHS England.”

Is that not an intolerable situation in which to leave traumatised young people? How quickly will the Minister’s review be completed so that we can end that tragedy?

[Norman Lamb]

The review being undertaken by NHS England will report in March. I agree that that situation is intolerable, but I have made it very clear on many occasions that there is an institutional bias against mental health in the NHS. Interestingly, the Health Committee report on deficits in 2006-07 specifically made the point that mental health was particularly targeted, so that always happens when NHS finances are tight. However, it cannot happen, because there has to be parity of esteem, including in the way in which money is distributed in the NHS.

[Jeremy Lefroy (Stafford) (Con)]

In Stafford hospital, many young people with mental health problems are extremely well treated in normal in-patient wards. That should not be the case, but no other facility is available. What will happen if those in-patient beds are no longer there?

[Norman Lamb]

As far as possible, we should be trying to ensure that children with mental health crises can remain at home; it does not make sense, in very many cases, to put them into in-patient care. However, we have made it clear, as has NHS England and as was confirmed in the crisis care concordat last week, that beds should be locally available whenever they are needed.

[Sarah Champion (Rotherham) (Lab)]

19. Will the Minister indicate when a clear strategy for the commissioning of tier 4 mental health beds will be determined and what additional resources will be made available to support the mental health needs of children and young people? The current situation is intolerable.

[Norman Lamb]

I mentioned earlier that the rapid review that is being undertaken by NHS England will report in March. It is essential that we have sufficient beds available, as close to home as possible, for children and young people. As I also said earlier, as far as possible children should be cared for at home, and only as a last resort should they go into in-patient care.

[Liz Kendall (Leicester West) (Lab)]

The pressure on children’s mental health beds is now intolerable. Earlier this month, the 14-year-old daughter of one of my constituents desperately needed a bed but the local trust’s chief executive told me that not a single bed was available anywhere in the country in the NHS or the independent sector. The Minister has said that this is unacceptable as though it is nothing to do with him, but he voted for an NHS reorganisation that is wasting time and money as vulnerable children are forced on to adult wards or transported hundreds of miles across the country. When the review reports, what action will he take and by when will it be implemented?

[Norman Lamb]

For a start, we now have 15,000 more clinicians working on the front line than when this Government came into office in 2010. Also, in the reforms that the hon. Lady mentions, we legislated for parity of esteem so that mental health is treated equally with physical health. However, I have accepted her case and agree that the situation is intolerable. We have to make sure that beds for children and young people are available when they are needed.

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

7. What proportion of medicines prescribed in the NHS are alternative medicines; and what the annual cost is of dispensing such prescriptions.

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

The net ingredient cost to the NHS of homeopathic preparations dispensed in the community in England was £143,000 in 2012, which represents 0.002% of the overall NHS prescription cost in the community for the same period. The prescription cost analysis data from which we extract this information do not separately identify other alternative medicines.

[Mr Turner]

I thank the Minister for that answer. At the urging of Councillor John Nicholson, Isle of Wight council has asked the health and wellbeing board to recognise the value of alternative and complementary therapies and elect a representative to the board. Will the Minister and her Department work with that representative to evaluate the cost-effectiveness of such treatments?

[Jane Ellison]

I am aware that there has been interest in this matter in my hon. Friend’s clinical commissioning group. The provision of alternative and complementary therapies is decided by CCGs, which have to take into account National Institute for Health and Clinical Excellence guidance and local health needs and priorities. The responsibility is with CCGs to achieve value for money and to make sure that they are delivering improvements in the quality of care and patient outcomes, and it is against those standards that we would expect them to measure those therapies.

[Jim Shannon (Strangford) (DUP)]

In the past 12 months there has been great advancement in new medications and alternative medicines, with new drugs for multiple sclerosis, for type 2 diabetes and for hepatitis C, and advancements in heart operations, rare diseases, and so on. Will the Minister indicate the time scale for the announcement of new medications and their availability on the NHS?

[Jane Ellison]

The hon. Gentleman, who follows these matters closely, is aware that medicines go through a process by which they are approved and recommended. Once they are in that position, it is, as I say, down to CCGs to make decisions about which treatments are appropriate for their patients and to measure them against the standards that I laid out.

[David Tredinnick (Bosworth) (Con)]

I congratulate right hon. Friends on setting up the herbal working group to improve regulation of herbal medicine and its practitioners. Is the Minister aware that there is a problem of supply, in that most people have to pay for their herbal medicine and it is not necessarily available from clinical commissioning groups? Will she issue guidance? Perhaps we should have a mapping exercise in order to understand where the demand is in this country.

[Jane Ellison]

As I have just said, there is guidance for CCGs on how to operate in the area of alternative and complementary therapies and we have no current plans to add to that guidance.

[Margot James (Stourbridge) (Con)]

8. What steps his Department is taking to tackle female genital mutilation.

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

We recently announced that all NHS acute hospitals must provide information on patients who have undergone female genital mutilation, but that is just one element of a wider-ranging programme of work that is under way in order, most importantly, to improve the way in which we care for girls and women who have undergone FGM and to follow up on, respond to and prevent FGM. I will make further announcements in due course.

[Margot James]

I congratulate my hon. Friend on all the work she has done to combat this abhorrent crime since she entered Parliament. Will she confirm that the data reported to her Department will be used to mount educational campaigns to stamp out FGM in the vicinity of hospitals reporting patients who have been abused in this way?

[Jane Ellison]

We anticipate that we will be able to share the data collected with all appropriate Government Departments and partner organisations. On local education campaigns, I see no reason why requests to access the data would not be approved. We want to build a proper national picture of what is going on with FGM so that we can do all we can both to care for victims and to stamp out this abuse.

[John Cryer (Leyton and Wanstead) (Lab)]

On the issue of widening education, could the Minister encourage her colleagues at the Department for Education to write to schools to raise awareness of this abhorrent practice?

[Jane Ellison]

Fahma Mohamed, the brilliant young woman who has led the campaign on this, will meet the Education Secretary today and there is a lot of work under way across all Government Departments. There was recently a cross-Government declaration on the things that are going on to stamp out FGM and to care for its victims. The hon. Gentleman’s question is a matter for the Department for Education, but I assure him that the Government as a whole are hugely committed to wiping out FGM within a generation and to caring for its victims.

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

9. What steps his Department is taking to improve the health of veterans.

[Chloe Smith (Norwich North) (Con)]

13. What steps his Department is taking to improve the health of veterans.

[The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)]

We are rightly proud of the courage and dedication of our armed forces and it is our duty to ensure that veterans receive the best possible care. We continue to improve the health care of our veterans. The Government have invested £22 million in providing enhanced mental health and prosthetic services over the past few years.

[Julian Smith]

Alex Bentley, who chairs the Royal British Legion in Skipton and is the most incredible, passionate campaigner for our armed forces, has serious concerns about how the armed forces covenant is being applied by hospitals and local councils. Is there anything the Minister can do to champion the cause of this excellent Government scheme at local level?

[Dr Poulter]

Aside from the cash investment of £22 million directly in veterans services, we have made it a clear priority in the NHS mandate to make sure that the armed forces covenant becomes a reality in the NHS. We have now identified nine specialist prosthetic centres for veterans who have lost limbs and been injured in combat, and a massive amount of investment is going into services for veterans with mental health problems, including a 24-hour helpline. A lot of investment is being made at the national level and locally, and there will also shortly be dedicated resource for training local professionals on the ground.

[Chloe Smith]

I welcome that response. Will the Minister reassure me that he will properly join up his work with that of the Department for Work and Pensions and the Ministry of Defence? Like many other Members, I know of at least two veteran constituents who clearly need joined-up health and welfare. The voluntary sector helps—including the Matthew Project’s new “Outside the Wire” service in Norfolk—and I expect the same of the Government, who have rightly signed the armed forces covenant.

[Dr Poulter]

My hon. Friend makes an important point. This is not just about providing good health care services, but doing so in a joined-up way. We now have a seriously injured leavers protocol to help the transition of servicemen and women who leave the armed forces and return to civilian life. That is about taking a holistic view of their health and care needs, and any other needs that they may have, in providing the right support when they return to civilian life. It is being rolled out very effectively across the country.

[Andy Sawford (Corby) (Lab/Co-op)]

10. What assessment his Department has made of the availability of mental health services.

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

Our mandate to NHS England makes it clear that everyone who needs it should have timely access to the best available treatment. NHS England is currently gathering information about access to and waiting times for mental health services. We will use this information to set new national access standards for the first time, to be introduced from 2015.

[Andy Sawford]

The Safe Haven in Corby provided crisis out-of-hours support to 1,300 people with mental health problems last year. For the first time ever, it has been asked to tender for its future funding. It was eight minutes late with its tender, and the service is going to be cut. What will happen to the people who need that service in the future? Will the Minister meet me to discuss it?

[Norman Lamb]

I am very happy to talk to the hon. Gentleman about that. My understanding is that the local CCG undertook a retendering exercise with a view to maintaining and, indeed, improving mental health services locally. As he says, Safe Haven did not submit its tender in time. It had a right to appeal, and it chose not to appeal. The CCG is absolutely committed to ensuring that it improves mental health services locally.

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

Not only do mental health services not get the attention that they sometimes deserve, but the condition of individuals is often exacerbated by the inability of the benefits system to recognise episodic illness and by the insensitivity and incompetence of Atos in work capability assessments. Will the Minister talk to his colleagues in the Department for Work and Pensions so that we can have a system that is suitable and fit for people with mental illness?

[Norman Lamb]

I thank my hon. Friend for his question. Indeed, I share the concerns that he raises, and I have recently met my hon. Friend the Minister responsible for benefits specifically because I have those concerns. There needs to be much closer working between mental health services and the benefits system locally.

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

The Minister knows that early intervention therapy or talking therapies can relieve pressure not only in access to beds, but in helping individuals. He has just told the House that he will look at assessments of waiting times. Will he tell the House exactly what force or lever he will have to ensure that local trusts implement such targets?

[Norman Lamb]

I think it was a big mistake to leave out mental health when the 18-week maximum waiting time limit was introduced for physical health services. To me, that is inexplicable, so I am determined to correct it: from next year, there will be waiting times standards for mental health. Indeed, when the Care Quality Commission inspects and regulates providers, it will ensure that those access standards are met, in the same way as applies for physical health.

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

11. What reports he has received on the possible reclassification of ME/CFS by the World Health Organisation.

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

The World Health Organisation is currently developing the 11th version of the international classification of diseases, which it aims to publish in 2017. No discussions have taken place between the Department and the WHO on the reclassification of ME/CFS, but the WHO has publicly stated that there is no proposal to reclassify ME/CFS in ICD-11.

[Annette Brooke]

I thank the Minister for her answer. Many people will be greatly relieved about that. As chair of the all-party group on myalgic encephalomyelitis, I receive many representations about GPs in this country still not necessarily recognising the condition. Will she look into that, and will she work with her counterparts in the DWP on the benefits side as well?

[Jane Ellison]

I am aware that this is a very difficult, complex and emotive area. I have heard before the point that the hon. Lady makes about GPs. I am very happy to take up her points and discuss them with her.

[Ian Lavery (Wansbeck) (Lab)]

12. What recent meetings he has had with representatives of the private health care sector.

[The Secretary of State for Health (Mr Jeremy Hunt)]

In the past three months, I have had two meetings with private sector health care providers, both in China, helping them to win export orders. In the same period, I have had 20 meetings with traditional NHS providers.

[Ian Lavery]

Private health companies with strong links to the Conservative party have been awarded contracts to run NHS services worth about £1.5 billion, which surely raises serious questions about the level of influence of Conservative donors on health policy. In the interests of transparency, will the Secretary of State commit to publishing a list of private health care companies that have made donations to the Conservative party?

[Mr Hunt]

The difference between donors to the Conservative party and donors to the Labour party is that our donors do not write our policies. While we are talking about private sector health care providers, I remind the hon. Gentleman of what an unnamed shadow Cabinet Minister told The Independent last week:

“We all remember when Andy was Health Secretary and happily contracting out bits of the NHS to the private sector… You have to ask yourself what’s changed.”

[Steve Baker (Wycombe) (Con)]

The NHS diagnostic centre in Wycombe, which is operated by the private sector, does a fantastic job. Will the Secretary of State join me in congratulating and thanking Opposition Members for all that they did to extend private and independent provision in the NHS?

[Mr Hunt]

I am happy to do that. My hon. Friend may be interested to know that in the last four years of the last Government, private sector contracts in the NHS doubled—something that this Government have not been able to match. It is important to look at the facts before we start any hares running with respect to privatisation.

[Fiona Bruce (Congleton) (Con)]

15. When he plans to publish his Department’s new guidelines on sex-selective abortion.

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

The Government will publish more detailed guidance on compliance with the Abortion Act 1967 shortly. That will include guidance on sex-selection abortions and restate our view that abortion on the grounds of gender alone is unlawful.

[Fiona Bruce]

Britain’s biggest abortion provider, the British Pregnancy Advisory Service, has advice on its website claiming that the law is “silent on the matter” of gender-selective abortion. In a leaflet, it actually states that it is not illegal. How does the Minister propose to address that, and to send out the clear message that strong legal action will be taken against anyone who is involved in that wholly unacceptable practice?

[Jane Ellison]

Although the Abortion Act does not mention gender specifically, the Government are clear that abortion on the grounds of gender alone does not meet the criteria set out in the Act. If evidence comes to light that doctors or organisations are sanctioning abortions for that reason alone, we will refer it to the police.

[Nadine Dorries (Mid Bedfordshire) (Con)]

The Minister is quite right that the Abortion Act does not state that the practice is illegal. Organisations such as Marie Stopes International operate under an ethical and professional framework in which they state that they will not perform abortions on the basis of sex selection. However, the chief executive of BPAS has said that

“there is no legal requirement to deny a woman an abortion”

if she wants to abort a female. The Government commission abortion services from BPAS and Marie Stopes. Does the Minister not think it is about time to have a closer look at BPAS, which is headed by a chief executive who condones sex-selection abortions?

[Jane Ellison]

That is exactly why we want to reissue the guidance on this matter. I cannot add to what I have said. I say with complete clarity that the Government’s view is that sex-selection abortion—abortion on the grounds of gender alone—is illegal and we will report it to the police if we are given evidence of it.

[Mr Virendra Sharma (Ealing, Southall) (Lab)]

16. What assessment he has made of trends in the number of attendances at type 1 accident and emergency departments since 2009-10.

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

We have debated the hon. Gentleman’s concerns about the A and E services in his area in the past. I want to reassure him that, despite the overall growth in attendances at A and E—we know that there is pressure on A and E—the changes that are recommended for his area have enormous clinical support across all the local CCGs and trusts.

[Mr Sharma]

I thank the Minister for her response. Will she explain why attendances at hospital A and E departments increased by 16,000 in the last three years of the Labour Government, but by 633,000 in the first three years of this Government?

[Jane Ellison]

As the hon. Gentleman knows, we have often debated in this House the many reasons for the increased pressure on A and E. However, the rate of growth in the first three years of this Government has been lower than the rate of growth in the last three years of the last Government. We are responding to the pressures. That is why the Secretary of State has addressed issues such as named GPs for older patients and the integration of social care. We acknowledge that there is pressure on A and E; it is the action that the Government are taking to respond to it that really counts.

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

Ministers again deny that England’s A and E departments are in crisis. The Secretary of State did so in response to my right hon. Friend the Member for Leigh (Andy Burnham) earlier. It just will not wash any more. In the past two weeks, 10,743 patients waited on trolleys for up to 12 hours because no hospital beds were available and 52 patients waited for even longer. Does the Minister really think that it is acceptable that patients are experiencing the worst fortnight in A and E this winter while she is complacently sitting on her hands?[Official Report, 27 February 2014, Vol. 576, c. 10MC.]

[Jane Ellison]

There is no complacency on the Government Benches, and attendances are half what they were under Labour. Week after week we have heard those on the Opposition Front Bench come to the House to talk up a crisis in our NHS, but the NHS has responded incredibly well throughout the winter. I pay huge tribute to the staff of the NHS for what they have done in responding to this. The Government are taking long-term action to reduce pressure on A and E; even the College of Emergency Medicine rebuts the Opposition line that there is a crisis in A and E this winter.

[Julian Sturdy (York Outer) (Con)]

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

[The Secretary of State for Health (Mr Jeremy Hunt)]

I would like to thank Public Health England and the NHS emergency services for their extraordinary work during the recent floods, and say that this House is proud of their dedication and commitment to help those in great need. Since the previous Health questions, we have also had the first anniversary of the Francis report on Mid Staffs. As a result, I am proud that the Government have taken significant steps to restore compassionate care to all parts of our NHS, with a regulator now free from political interference, failing hospitals being turned round, and more nurses, midwives and health visitors in our NHS than at any time since 1948.

[Julian Sturdy]

The family of my eight-year-old constituent Ben Foy have been fighting for more than two years for the funding of sodium oxybate—a drug that his doctors feel could help him cope with narcolepsy and cataplexy. This is a particularly distressing condition for Ben and his family, but sadly, after all this time there is still complete confusion as to who has responsibility for Ben’s commissioning request. Will the Secretary of State look into the matter and clear up that confusion?

[Mr Hunt]

I reassure my hon. Friend that I have looked into Ben Foy’s case, and NHS England has confirmed that it is responsible for commissioning his care. The particular drug that my hon. Friend mentioned is not recommended by the manufacturer for use by children and adolescents, but I am happy to arrange for him to meet NHS England and get to the bottom of the issue.

[Andy Burnham (Leigh) (Lab)]

I want to return to care.data—an important scheme that needs to be saved from the incompetence of this clownish coalition. The Secretary of State said earlier that I was in search of a crisis, but now I will offer him a solution. If the Government work with us to introduce a series of tough new safeguards to protect patients, we will work with the Secretary of State to help rescue this failing plan. Those safeguards include tougher penalties for the misuse of data, Secretary of State sign-off on any application to access data, full transparency on organisations granted access, and new opt-out arrangements by phone or online. Will he meet me to discuss changes to the Care Bill to put that important scheme back on track?

[Mr Hunt]

The right hon. Gentleman has still not addressed the fundamental question of why he did not introduce an opt-out for the use of personal data, which this Government are doing. We have taken more steps than his Government ever did, and we will continue to work hard to ensure that this important scheme goes ahead. The right hon. Gentleman should know better.

[Penny Mordaunt (Portsmouth North) (Con)]

T2. There is great unmet need among older people in our communities, particularly for dementia care and support. In Portsmouth we are holding a community summit to join up local agencies to meet that unmet need. Will the Minister meet me to discuss what central Government can do to ensure that advice on additional funding streams is clearly and readily available?

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

I thank my hon. Friend for that question and pay tribute to the agencies in Portsmouth that are coming together to hold the summit and discuss that critical issue. The Prime Minister’s challenge on dementia has made real progress in improving diagnosis rates and the way that society treats dementia, and I would be happy to meet my hon. Friend to discuss the issue further.

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

T4. Further to the answer given earlier to my hon. Friend the Member for Wansbeck (Ian Lavery), the lobbyist John Murray and an organisation funded by large pharmaceutical companies led a consultation and co-wrote a report for NHS England on the future of commissioning for £12 billion of NHS services. Will the Secretary of State tell the House whether it is now Government policy to have lobbyists and big drug companies drafting reports that directly influence the commissioning of NHS services?

[Mr Jeremy Hunt]

Let me say this to the hon. Lady: we have very clear rules, and for people who are involved in industry and have a self-interest we have important protections to ensure there is no conflict of interest. Let us be clear: the private sector has an important role to play in the NHS, but it grew far faster under the previous Government than it has done under this one. We are not going to take any lessons about being in hock to the private sector.

[Lorraine Fullbrook (South Ribble) (Con)]

T3. As the NHS comes through another winter, when it has delivered an outstanding service to more patients than ever before, how does my right hon. Friend assess the damage done by the unfounded scaremongering talk of crisis by the Opposition and some parts of the media?

[Mr Hunt]

My hon. Friend is absolutely right. I encourage those on the Opposition Front Bench in particular to talk to a few people in A and E and ask whether they think they have been supportive, in a very difficult winter, by whipping up all these scare stories when, in fact, because of their hard work, we are seeing 2,000 more people every single day in less than four hours than when the shadow Secretary of State was Health Secretary. A and E is performing better than ever.

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

T5. There are nearly 500 UK-trained medical practitioners now working in Australia, of whom 6% never return owing to the better conditions available there. What steps will the Secretary of State and his ministerial team take to ensure that we retain those qualifying in emergency medicine this year, to keep local A and E departments open in Britain and Northern Ireland?

[The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)]

I would like to point out to the hon. Lady that it is not unusual for doctors in training to work overseas to improve their medical experience. Many of my contemporaries did that, and every one I know has returned to work in the NHS in the UK. It is a common phenomenon that benefits doctors’ experience. What we have done, unlike the previous Government, is ensure that we now have a 100% fill rate for people entering A and E common stem training.

[Pauline Latham (Mid Derbyshire) (Con)]

T6. What assessment have the Government made of the decision by the National Institute for Health and Clinical Excellence not to recommend ipilimumab as a first-line treatment for advanced melanoma, except in clinical trials? Will the Minister join me in calling on NICE to reverse this decision and ensure that patients receive earlier access to this treatment to improve their chances of survival?

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

I know that my hon. Friend is really concerned about this, but NICE is an independent body so it would not be appropriate for me to interfere in an ongoing appraisal. NICE has recommended a number of other treatments for advanced melanoma, and NHS commissioners are required to fund them where clinicians want to use them. I want to give her some encouragement: this spring a trial will begin of an awareness programme on melanoma in the south-west of England, working with Cancer Research UK.

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

T7. I am grateful to the Minister for her previous answer on female genital mutilation. With that in mind, what action will she take regarding the three Tory MEPs Nirj Deva, Sajjad Karim and Timothy Kirkhope who voted against the motion, in the European Parliament on 11 December, strongly condemning the disgraceful practice of FGM?

[Jane Ellison]

I am aware of this case. The point made is rather unfair. My colleague Marina Yannakoudakis MEP has dealt with this issue in correspondence with other Members. The motion was a composite motion. All Conservative MEPs completely condemn FGM, but there was a technical reason why they voted in that way. It is clear that the Conservative party—along, I think, with all Members—absolutely condemns this practice. I am happy to give the hon. Gentleman the detail on that vote afterwards.

[Dr Julian Huppert (Cambridge) (LD)]

T8. Papworth hospital is a world-renowned heart and lung hospital. For years, it has wanted to move to Cambridge, supported by Addenbrooke’s hospital, Cambridge university, the British Heart Foundation, AstraZeneca and many more, but it has been put on hold yet again. Will the Secretary of State make sure that this move, which will help patients, help to develop new treatments and save money, will happen?

[Dr Poulter]

My hon. Friend will be aware that local commissioners take decisions on local services. I will be happy to meet him to discuss this matter further, so we can talk through his concerns and ensure that local health care services are as strong as possible.

[Bill Esterson (Sefton Central) (Lab)]

T10. The village of Melling has grown in recent years, yet its surgery hours have been cut drastically. Elderly and disabled residents now face a four-hour round trip by public transport to see their doctor. How can cuts in surgery hours, like those in my constituency, be justified if the Government are serious about having a first-class NHS?

[Mr Jeremy Hunt]

We absolutely want to make primary care more accessible and that is why we are introducing named GPs for everyone aged 75 or more from April. This is a significant and important reversal of, I think, a mistake that everyone now agrees was made in 2004 when named GPs were abolished. Its purpose is to make GPs more accessible to the people who need them the most.

[Jason McCartney (Colne Valley) (Con)]

T9. The father of one of my constituents passed away at the weekend, one of 8,700 people who are diagnosed with pancreatic cancer each year in the UK, of whom only 3% will survive beyond five years. That survival rate has not changed in over 40 years. Will my right hon. Friend update the House as to what the Government are doing to improve patient outcomes for those with pancreatic cancer?

[Jane Ellison]

I thank my hon. Friend, and I know that many hon. Members have raised this issue because pancreatic cancer outcomes remain extremely difficult. We want to see the best outcomes for all cancer patients. There has been a big investment by the Government in diagnosis and screening—£450 million—and last year we were involved in piloting a tool to support GPs in diagnosing cancer earlier, including pancreatic cancer, in over 500 GP practices. That pilot is currently being evaluated.

[Mike Kane (Wythenshawe and Sale East) (Lab)]

The Manchester Evening News recently highlighted the enormous pressures faced by Wythenshawe accident and emergency after the downgrading of Trafford accident and emergency. Will the Secretary of State meet me to discuss this and to tell me when Wythenshawe will receive the extra funds that it has been promised?

[Mr Jeremy Hunt]

I welcome the hon. Gentleman to the House and congratulate him on representing in his constituency a fantastic hospital; I have been to Wythenshawe hospital and it is superb. Some big changes are happening in the Greater Manchester area that will lead to that part of the country having some of the best NHS care in the country. Obviously there is a difficult transition in A and E services between Trafford and Wythenshawe, and I am happy to meet him to discuss it further.

[Nicholas Soames (Mid Sussex) (Con)]

Does my right hon. Friend agree that it is unacceptable that investigations into failures in hospital services take so very long? There has recently been one in my constituency: a very sad and badly handled case connected with mental health. Does my right hon. Friend agree that the authorities need to provide answers very promptly to families who are left completely beleaguered by such behaviour?

[Mr Hunt]

I absolutely agree with my right hon. Friend. One of the tragedies that the Francis report helped us to uncover was that so many failings had been allowed to persist for so long: in the case of Mid Staffs, between 2005 and 2009. We owe it to families to be much quicker, which is why there is now a time limit on the failure regime: hospitals must be turned around within a fixed period of time or go into administration. Otherwise, we will not have safe hospitals in our areas.

[Barry Gardiner (Brent North) (Lab)]

The Minister earlier told the House that 1,500 new midwives had come on stream since the Government started, but, of course, the Government promised that there would be 3,000 delivered by 2015. Midwives are very good at delivery; how good is the Department?

[Dr Poulter]

We have trained more midwives. To go back to a previous question, it was under the previous Government that trained midwives from this country were having to go and work overseas. That is no longer the case. We now have 5,000 more in training—a record number—to make sure that we provide more midwives. I would also like to welcome the hon. Gentleman back to this country.

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

Last year I spent a busy and informative day with the East Midlands ambulance service on the road. It was clear speaking to those professionals that a large proportion of individuals taken to A and E would be better served by going to their GP or by accessing other services. However, the ambulance service felt completely disempowered to advise or even to refuse to take anyone to A and E who requested it.

[Mr Jeremy Hunt]

That is one of the things we need to be much better at—linking up the services offered by ambulance services. I would add that pharmacies have a big role to play in this, as one in 11 or 12 A and E appointments could be dealt with at a pharmacy. My hon. Friend is absolutely right that this is something we need to do better.

[David Wright (Telford) (Lab)]

A hugely expensive review of A and E services is going on in Telford, the Wrekin and Shropshire. The Secretary of State was in Telford a couple of weeks ago but did not have the courtesy to let me know. Will he say whether we will retain full 24-hour, seven-day-a-week services at Telford and whether there will be downgrade of our A and E?

[Mr Hunt]

First, I apologise to the hon. Gentleman if my office did not let him know that I was visiting, an oversight for which I take responsibility. I had a good visit to the Redwoods, a superb mental health in-patient unit where I learned a great deal. I am not aware of any plans to change or downgrade his A and E.

[Several hon. Members]

rose—

[Mr Speaker]

Order. Time is up. As usual, demand has exceeded supply. Before we come to the ten-minute rule motion, we have a point of order.

Point of Order

Tuesday 25th February 2014 Commons Chamber

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

On a point of order, Mr Speaker. I wonder whether you can advise me on how we can secure a statement from the Chancellor of the Exchequer, or another Treasury Minister, about the substantial extra sums that are being given to the leading bank executives, the most senior people: the chief executives and their colleagues. For example, the chief executive of HSBC is to receive an extra £32,000 a week on top of his salary of more than £1 million a year.

May I point out, Sir, that the annual salary in my borough is about £22,000? The sheer greed of the bankers involved is quite disgraceful. A Treasury Minister is in the Chamber now; I wonder whether he will respond.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

indicated dissent.

[Mr Winnick]

The Minister shakes his head. I can well understand his embarrassment, because we are constantly told that we are all in it together. Why can we not have a statement about what is happening in the banking industry? If the Minister is not willing to respond to my point of order, may I suggest that we should have some opportunity to raise the issue in the Chamber?

[Mr Speaker]

I am grateful to the hon. Gentleman for his point of order. I understand that Ministers from the Department for Business, Innovation and Skills, who may be thought to have some interest in the matter, will be answering questions in the Chamber next week, and that the tabling of Treasury questions will take place next Wednesday. I know that the hon. Gentleman will agree with me that it is always useful to have a bit of information, and I therefore proffer that to him and to the House.

The hon. Gentleman has made his point, and the Exchequer Secretary has certainly heard it—

[Mr Winnick]

But has remained silent.

[Mr Speaker]

He has not chosen to respond. We do not always have debates by means of point-of-order exchanges. However, the point has been registered very forcefully, and Ministers will be conscious of what the hon. Gentleman has said.

The hon. Gentleman is an extremely ingenious character. I feel sure that he will be present at business questions, and—I say this in the friendliest possible spirit—I know that when he has a bone in his mouth, he is inclined to chew on it, and to chew on it relentlessly. I feel sure that that is what he will do in this instance.

If there are no further points of order, we will come now to the ten-minute rule motion, and to the ever-patient Mr Benedict Gummer.

National Insurance (Renaming)

Tuesday 25th February 2014 Commons Chamber

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

12:36

[Ben Gummer (Ipswich) (Con)]

I beg to move,

That leave be given to bring in a Bill to make provision for National Insurance to be known as Earnings Tax; and for connected purposes.

About 102 years ago, in this Chamber’s predecessor, David Lloyd George rose to introduce national insurance. Starting just before four o’clock in the afternoon, he began one of the most detailed and complicated of speeches given from the Treasury Bench: one that would, I imagine, have tested even the stamina of those excellent Minsters— my brother from Ipswich, the Exchequer Secretary to the Treasury, my hon. Friend the Member for South West Hertfordshire (Mr Gauke), and my brother from Suffolk, the Minister for Skills and Enterprise, my hon. Friend the Member for West Suffolk (Matthew Hancock)—who are sitting there now.

Lloyd George explained the need: the harsh conditions experienced by working people around the country, and the dangers that they faced if they fell sick or could not find work. He described the insurance systems that were provided by insurance companies, employers, friendly societies and trade unions. He measured their efficacy and worth, identifying where coverage was greatest and where it was most sparse. He then set out the solution: a national insurance fund into which workers, employers and the state would pay, to provide for medical aid for sick workers, maternity cover for workmen, their wives and women workers, benefits for limited periods of unemployment, and payments in time of sickness. The provisions would be managed through the existing private institutions, except for unemployment payments, which would be provided by the labour exchanges.

All that took the Chancellor more than two hours to describe. It was after 6 pm when he concluded:

“something like 15,000,000 of people will be insured, at any rate against the acute distress which now darkens the homes of the workmen wherever there is sickness and unemployment. I do not pretend that this is a complete remedy. Before you get a complete remedy for these social evils you will have to cut in deeper. But I think it is partly a remedy. I think it does more. It lays bare a good many of those social evils, and forces the State, as a State, to pay attention to them. It does more than that. Meantime, till the advent of a complete remedy, this scheme does alleviate an immense mass of human suffering”.—[Official Report, 4 May 1911; Vol. 25, c. 644.]

Thus was made the first substantial plantation of the welfare state.

I am giving this account because I think it important to explain why national insurance was called national insurance. There was indeed a fund, one that was intended to be in surplus within 15 years of its creation, at which point Lloyd George anticipated that additional benefits would be made available, most likely to the families and dependants of workers. Well, the fund did not work out quite like that, but the scope of the scheme was expanded as he had predicted, with a major reform by the post-war Attlee Government. Further changes in the 1970s and 1980s continued the mutation of this great piece of legislation, expanding its scope, scrapping the “stamp” and complicating the rates at which insurance was paid.

At every turn, the link between contributions and benefit, which from the beginning was not entirely true, was eroded, to the point where it now barely exists. That link will become nugatory with the introduction of universal credit and the single state pension, both considerable reforms of this coalition Government. What remains of national insurance is not really a contributions-based system, but a system of entitlement whereby a certain number of years of payment entitles the recipient to additional benefits.

Let us be straight. National insurance is now a tax. It has all the features of a tax. Money paid in this financial year in national insurance contributions is used to pay this year’s costs of pensions, health care and much else besides. The surplus in the national insurance fund is transferred to other Government spending. The more robust commentators have explained that it is not an insurance system but a giant Ponzi scheme.

That is not, however, how national insurance is universally perceived. The reaction of members of the public to news of this ten-minute rule Bill illustrates well the confusion. One person e-mailed me saying:

“we have earned our pension. It is by its very own definition entitlement paid for by a total lifetime of our contributions, not a benefit paid for by someone else’s income tax.”

But that is precisely what it is. However, the fiction of contributions persists. Someone commenting on a report in the Daily Mail said:

“I’ve paid a full stamp for 44 years and never taken out of the system now they say the insurance I’ve paid all my working life is no longer valid. If this was a business they’d be sued.”

That’s as may be and therein lies the reason why so many of Lloyd George’s successors have been reluctant to come clean about what national insurance really is. As one person on Twitter said:

“Nobody likes a ‘tax’ and to call a tax ‘insurance’ is a spin coup in itself.”

Were national insurance a much smaller tax, we would call it a stealth tax. That was certainly how the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) used it, when he increased NI contributions having promised not to increase income tax. That is the principal reason why I wish to see reform. We know the struggle we have, in this place, to improve the conversation our voters have with the people sent here to represent them. I firmly believe that, if we are clearer about the amount of money we take from people in tax—if that figure were more simply presented—and if we explain equally clearly how it is spent on their behalf, we will have done something important to reconnect voters with their democracy.

A small but important part of that is coming clean about national insurance. I propose we call it earnings tax, because it is a tax on earnings, but we could equally call it additional income tax, or employment tax. Such a change would have no impact on people’s current entitlement or on the rates at which NI is currently charged. It would, however, be an important first step in the merging of income and earnings taxes, as proposed most recently by the TaxPayers Alliance, the Institute of Directors and the Chartered Institute for Payroll and Pensions Professionals. I believe that such a merger would have far wider benefits; it would not just benefit the people those organisations represent. But that discussion is for another time. All I propose at this stage is a twofold reform: first, a simple change of name, which would cost next to nothing; and secondly, the merger of the national insurance fund into general Government funds, which would save administration costs that would far more profitably be spent elsewhere. The result would be that we would have made an important move in being clearer, simpler and more transparent about how our constituents are taxed, on what and where it is spent.

I must admit to feeling some trepidation and regret at treading on ground laid so splendidly by the Welsh wizard. His presentation had the desired effect. It made less controversial a scheme that might otherwise have been opposed, as indeed it was in any case—not least by some of the trade unions. Most importantly, it did, as he thought it would, lay

“bare a good many…social evils”

and force

“the State, as a State, to pay attention to them.”—[Official Report, 4 May 1911; Vol. 25, c. 644.]

Over a century, the state has paid attention to them. The provisions were not by any means remedies, as he had hoped, but life for the millions and generations of the least privileged and the less unfortunate is much better as a result. That is a giant achievement, but we must not let romance get in the way of honesty. National insurance is no longer what it was designed to be. We now pay for the welfare state of Lloyd George’s creation out of general taxation. We should therefore get rid of the fiction of national insurance contributions and call it what it is: an earnings tax.

Question put and agreed to.

Ordered,

That Ben Gummer, Steve Baker, Mr Graham Brady, Mr Robert Buckland, George Freeman, Nicholas Soames, Mr Brooks Newmark, Priti Patel, Mr Dominic Raab, Jacob Rees-Mogg, Justin Tomlinson and Mr Andrew Turner present the Bill.

Ben Gummer accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 20 June; and to be printed (Bill 175).

Pensions and Benefits Uprating

Tuesday 25th February 2014 Commons Chamber

[Mr Speaker]

With the permission of the House, the motions on the draft Guaranteed Minimum Pensions Increase Order 2014 and on the draft Social Security Benefits Up-rating Order 2014 will be debated together.

12:46

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I beg to move,

That the draft Guaranteed Minimum Pensions Increase Order 2014, which was laid before this House on 27 January, be approved.

[Mr Speaker]

With this we shall discuss the following motion, on the draft Social Security Benefits Up-rating Order 2014:

That draft Social Security Benefits Up-rating Order 2014, which was laid before this House on 27 January, be approved.

[Steve Webb]

Let me deal first with what is an entirely technical matter that we attend to each year, and not one that I imagine we shall need to dwell on today. The Guaranteed Minimum Pensions Increase Order 2014 provides for contracted-out defined benefit schemes to increase their members’ guaranteed minimum pensions that accrued between 1988 and 1997 by 2.7%, in line with the increase in the consumer prices index to the previous September.

I should like to turn now to the Social Security Benefits Up-rating Order 2014. As part of his autumn statement, my right hon. Friend the Chancellor of the Exchequer announced the rates of tax credits for 2014-15, and today we are debating the order that will uprate those social security pensions and benefits for which my Department is responsible. As the House will be aware, we are not here to discuss the Welfare Benefits Up-rating 2014 Order, which was made on 24 January. Those rates increased by 1% under that order, and were debated in Parliament during the passage of the Welfare Benefits Up-rating Act 2013.

Turning to the benefits and pensions in the Social Security Benefits Up-rating Order 2014, I shall deal first with the basic state pension. Despite the current tough fiscal context, this Government remain committed to protecting those who have worked hard all their lives, which is why we have stood by our triple-lock commitment to uprate the basic state pension by whichever is the highest of earnings, prices or 2.5%. This year, as prices were greater than average earnings and greater than 2.5%, the basic state pension will increase by CPI at 2.7%. The new rate of basic state pension will therefore be £113.10 a week for a single person, an increase of £2.95 from last year. That means that the basic state pension is forecast to be around 18% of average earnings from April 2014, a higher share of average earnings than at any time since 1992. Our triple-lock commitment means that someone on a full basic state pension can expect to receive £440 a year more than if it had been uprated by earnings since the start of this Parliament.

On pension credit, we have continued to take steps to ensure that the poorest pensioners will benefit in full from the effect of our triple lock. Each year, the standard minimum guarantee must, by law, be increased at least in line with earnings. That means that the minimum increase this year would be 1.2%. However, to ensure that the poorest pensioners benefit from the full cash value of the increase in the basic state pension, we decided again to increase the value of the standard minimum guarantee credit, in this case by 2%, so that single people will receive an increase of £2.95 a week and couples will receive an increase of £4.45 a week. Again, consistent with our approach last year, the resources needed to pay this above-earnings increase to the standard minimum guarantee have been found by increasing the savings credit threshold, which means those with higher levels of income will see less of an increase.

Let me now deal with additional state pensions. This year, the state earnings-related pension scheme—SERPS—and the other second pensions will rise by 2.7%, which means that the total state pension increase for someone with a full basic state pension and average additional pension will be about £3.75 a week, or just under £200 a year. Unlike under the Labour party, which froze SERPS in 2010, this will be the fourth year in a row that the coalition has uprated SERPS by the full value of CPI.

In these debates, we discuss the most appropriate measure of inflation by which to uprate benefits. I have had the pleasure of such exchanges with the right hon. Member for East Ham (Stephen Timms) several times, and I want to refer him back to something he said three years ago in the corresponding debate. We were using CPI rather than RPI—the retail prices index—and it is CPI which underlies these motions. He described the move to CPI as “ideological”; that is an interesting description of a choice of price index, but he regarded it as an ideological shift. He went further in expressing his distaste for this measure, saying:

“As for the view of my party, I simply refer the Secretary of State to what the leader of my party has said, which is that the suggestion that the change should be made for a period—perhaps up to three years—would be something that we could consider. If that proposition were on the table, we would be happy to consider it.”—[Official Report, 17 February 2011; Vol. 523, c. 1187.]

So his position three years ago was that, perhaps for three years, we might use CPI because it saves a bit of dosh but that the Labour party was committed to RPI.

I therefore hope that when the right hon. Gentleman responds and gives his party’s position on these motions he will clarify whether that is still his position. He will realise, first, that RPI has now been dropped by the Office for National Statistics as an official statistic because of methodological concerns. So I would be surprised if he remained committed to going back to RPI. Perhaps he thinks we should use CPIH, as he complained that we did not have owner-occupier housing costs in the measure that we are using. If that is his position, he would obviously be arguing for a lower increase in benefits this year, because at the moment the level of CPI is above that of CPIH. Given that he was opposed to a permanent switch to CPI, given that RPI has been dropped as an official statistic and given that some of the other measures are lower than the one we are using, I am slightly puzzled by his position—I am sure that by the time we have heard his speech we will no longer be puzzled.

On disability benefits, this year the coalition will ensure that those who face additional costs because of their disability, and who perhaps have less opportunity to increase their income through paid employment, will see their benefits increase by the full value of CPI. So disability living allowance, attendance allowance, carer’s allowance, incapacity benefit and personal independence payment will all rise by the statutory minimum of 2.7% from April 2014. In addition, those disability-related and carer premiums paid with pension credit and working-age benefits will also increase by 2.7%, as will the employment and support allowance support group, and the limited capability for work and work-related activity element of universal credit. Pensioner premiums paid with working-age benefits will increase in line with pension credit.

At a time when the nation’s finances remain under real pressure, this Government will be spending an extra £3.3 billion under these orders, and related orders, in 2014-15. We will thus continue to help support those who are not currently in work, first, by increasing the main rates of working-age benefits by 1%, and by ensuring that pensions, and benefits that are designed to help with the additional costs of disability, are protected against the cost of living. Of that, we will be spending about £2.7 billion extra on state pensions, including an above-inflation increase, and more than £600 million on people of working age. Nearly £600 million will be going to disabled people and their carers. Our decisive action to limit to 1% the increases in the main rates of most working-age benefits is part of our overall economic strategy, which has substantially brought down the deficit.

In this order, we continue: first, to maintain our commitment to the triple lock, meaning that the basic state pension will reach its highest level as a percentage of average earnings for two decades; secondly, to protect our poorest pensioners with an over-indexation of the standard minimum guarantee, so they too will feel the benefit of our triple lock; and, thirdly, to protect the benefits that reflect the additional costs that disabled people face as a result of their disability, through increases to disability living allowance and attendance allowance, carer’s allowance and the main rate of other disability benefits in line with CPI. I have set out our ongoing commitment to ensure that no one is left behind, and I commend these orders to the House.

12:54

[Stephen Timms (East Ham) (Lab)]

I thank the Minister for his explanation and confirm that I do not intend to express concerns about the draft Guaranteed Minimum Pensions Increase Order 2014. However, I do wish to make some comments about the draft Social Security Benefits Up-rating Order 2014. As he has said, this is a rather thinner debate than the corresponding ones he and I have enjoyed in previous years, because a big chunk of what we have debated previously is now covered by the Welfare Benefits Up-rating Act 2013, which imposed a 1% uprating this year and next, and so is outside the scope of these orders.

One thing I have not entirely understood—the Minister touched on this and I would be grateful if he explained it—is how the corresponding order for tax credits will be dealt with. Some elements of tax credits uprating are not covered by the 1% constraint. Clearly, with so few people in receipt of universal credit, he is not the Minister responsible for in-work benefits—that responsibility remains with the Treasury—but I wonder whether he could explain how the parliamentary process dealing with those tax credits is to be handled.

This is the fourth year since the announcement of the triple lock for the basic state pension. In rhetorical terms the triple lock has, no doubt, been successful, but, unfortunately, the reality has been rather different, because, once again, the increase in the state pension is less this year than it would have been if the uprating method previously used was still in place. In RPI terms, this is a real-terms cut for the third year in a row in the value of the basic state pension. The RPI last September was 3.2%, whereas the pension uprating delivered by this order is 2.7%. So in RPI terms, this is quite a big cut of 0.5%—a full half percentage point—in the value of the state pension, which is a bigger real-terms cut than last year. If the basic state pension had been uprated in line with RPI since 2010, the weekly rate for a single person would be more than a pound higher than the figure we are debating today, at £114.21.

[Steve Webb]

Clearly RPI is bigger than CPI—that is a statement of fact—but does the right hon. Gentleman think that RPI is a good measure of inflation?

[Stephen Timms]

I will come on to deal with that. The point I wish to make is that the triple lock is frequently presented to us, as the Minister did again today, as being extraordinarily generous to pensioners. It is presented as some great superlative, whereas in fact it has delivered a lower uprating than the previous formula—the one in place before the last election—in every one of the three years when it has been used, and in the first year it was due to be used it would have delivered such a low uprating that the Minister chose to override it. He was sensible to do so, but if he had used the triple lock in that first year, the gap between his uprating and the value of the basic state pension under the old method would now be almost £3 per week. So it is important in this debate to put on the record the extent to which the triple lock has delivered less than the long-established formula that was in place until the general election.

It is worth examining the history of the triple lock. In its first year, it was announced but not actually implemented, because it would have delivered a very small increase. So at its first outing, it failed.

[Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)]

Was it not, however, the long-established formula, over the long run, that had put pensioners so far behind those earning?

[Stephen Timms]

I think the hon. Gentleman is referring to the change made by Mrs Thatcher when she was Prime Minister, and he makes an entirely fair point. However, the point I am putting to him is that he and his party, particularly the Minister, frequently present the triple lock to us as somehow being extraordinarily generous, whereas in practice it has provided less than the formula he has just criticised—the one introduced by the former Conservative Prime Minister. If that formula had continued after the 2010 general election, the state pension amount we would be debating today would be more than £1 a week more than the figure in this order.

[Mr Alan Reid (Argyll and Bute) (LD)]

The right hon. Gentleman will accept that the formula introduced by Mrs Thatcher was continued throughout the whole term of the previous Labour Government. As the economy is recovering, thanks to the coalition’s successful economic policies, will he not accept that linking pensions to earnings will mean higher pensions for people in the long run?

[Stephen Timms]

I certainly hope that that is the case, but in the short run, in the period since the general election, we are seeing a lower value for the basic state pension than if Mrs Thatcher’s formula had stayed in place. That point is not widely understood. I am sure that the hon. Gentleman understands it, but I want to put it on the record so that people are aware of the fact that the method that is currently in place has in fact delivered a lower value for the basic state pension than if Mrs Thatcher’s formula had continued to be used.

[Mr Reid]

Had the right hon. Gentleman’s party been in power, would the pension increases over the past three years have been at CPI or RPI?

[Stephen Timms]

If the arrangements in place before the last election had been maintained, the increases would have been at RPI. If they had been at RPI, we would be debating today a higher value for the basic state pension than the one in the order in front of us.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

When we have debated such issues in the past, I have been quick to highlight the fact that both CPI and RPI are not particularly good methods of measuring inflation, especially its impact on low-income groups, including pensioners. Does the right hon. Gentleman agree that the real issue at stake here is that energy prices have increased by 37% in the past 10 years and that food inflation has grown ahead of inflation every year for the past eight years? We should be talking about the impact of inflation on low-income groups and not the technical measure. We should be finding technical measures that reflect that impact of inflation.

[Stephen Timms]

The hon. Lady makes an important point. I hope she will support Labour’s energy price freeze, which will have an important benefit for people on low incomes. She is also right to draw attention to the particular difficulties of pensioners on low incomes. It is for that reason that pension credit is so important. Pension credit, which is in the order in front of us—I believe that my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) will say more about that when he responds to the debate later—is being uprated at a significantly lower rate in percentage terms than the basic state pension.

I was talking about the history of the triple lock. In the first year, it was overridden, so it failed. In its second year, it was implemented and delivered an increase in line with CPI, along with working age benefits. Last year, it was applied again and, for the first time, it delivered something better than CPI, but that was only by 0.3 percentage points. This year, the Government propose to uprate the basic state pension by CPI, which, as of September last year, was 2.7%. That is only a 0.2 percentage point increase on the absolute bare minimum that would be possible under the triple lock. Had the previous uprating RPI mechanism been in place, there would have been a larger pension increase this year, and in the last two years, than has been delivered.

It was in 2011 that the Government first uprated pensions by CPI rather than RPI. In the debate then I pointed out that this was a direct hit on the income of pensioners, and it still is. In 2011, a contributory deal, understood and signed up to by pensioners, was broken. That was compounded last year, and the Government want to do it again this year. On the other side of the coin, it is worth noting that RPI will continue to be used for the uprating of a great many other things. The Minister has correctly quoted my comments on that in the past. There could well have been a case to uprate by CPI as a deficit reducing measure for a period. However, we do not accept that Ministers should have tied themselves to CPI indefinitely, and that remains our view.

As announced in 2010, the Government have also made a permanent switch to CPI uprating. Thanks to the Welfare Benefits Up-rating Act 2013, most working age benefits were capped at 1%, with provisions for them also to be capped at 1% for the following two years, and so are outside the scope of this order. As we have said in previous years, there would have been a reasonable case for the Government to make a temporary change to the methodology, but unfortunately they went further.

[Steve Webb]

Sometimes we ask for a one-word answer. I want a three or possibly four-letter answer. Were the right hon. Gentleman introducing these motions today, which index would he use?

[Stephen Timms]

Sadly, I am not in the happy position that the Minister describes. I hope that I will be before very long, in which case I will gladly give him the answer that he seeks. However, I am not in that position today.

[Mr Reid]

If the right hon. Gentleman hopes to be in power some time in the future, will he tell us the formula that he would use for the long term?

[Stephen Timms]

I can well understand why the hon. Gentleman wants to know the answer to that question. If, as we have heard, he and his party are to be involved in the next Government, it will be in coalition with a party other than the one that they are in coalition with at the moment. I am afraid that he will have to be a little patient to get an answer to his question. None the less, I well understand why he wants to know the answer.

The Chancellor proudly told us in his autumn statement last year that the increase formula for regulated train fares was changing from RPI plus 1% to RPI plus 0%, which means that regulated rail fares would increase by no more than July 2013’s RPI of 3.1% . What is not clear is why the Government apply RPI in that case and CPI in this. The answer, as far as one can make sense of all this, is that the Government use CPI when it is useful to have a small number and RPI when they want a big number. That appears to be the principle that has been adopted. The result is that pensioners will see their state pension increased in line with CPI, but their train fares by RPI.

Part 7 of the order in front of us relates to universal credit. As the House well knows, this is becoming an appalling fiasco. The Secretary of State told us yesterday that he expected 6,000 people to be in receipt of universal credit during the current pathfinder. It was not clear by what date he expected that figure to be achieved. Will the Minister let us know? He will recall that I have been warning since November 2010 that the time scale announced by Ministers for universal credit was unachievable. Unfortunately I have been proved right. Indeed, the position is now a good deal worse than I feared when I wrote to the Secretary of State in November 2010. There is now a real danger that the entire project could collapse.

As I pointed out at the time, the time scale for the IT was always unachievable. That goes back to the July 2010 Green Paper, which included the absurd claim that the IT for universal credit would not amount to a major IT system. Replacing the whole of the benefit information technology can hardly amount to anything other than a major IT system. Ministers have failed to deliver any IT system. It now appears that, while they continue to develop late the IT system they started out with, they are also going to develop a second universal credit IT system, in the hope that they can get it right second time around. Goodness knows how many hundreds of millions of pounds that is going to end up costing. It is clear that the next Government will have a major job on their hands to salvage universal credit after May next year if, as all of us must hope, it can be salvaged.

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

Is the right hon. Gentleman at all reassured by the Secretary of State’s statement some time ago that universal credit would succeed because he believed that it would?

[Stephen Timms]

The hon. Gentleman correctly quotes the Secretary of State. He told us for a long time that universal credit was on track, then latterly he started to say that it was “essentially on track”. So one can be forgiven for not being entirely reassured.

I wonder whether the Minister can help us on another matter that has just come to light in connection with part 6 of the order on employment and support allowance. A freedom of information request by the advice service Benefits and Work revealed yesterday that the Department for Work and Pensions had issued an internal memo to staff on 20 January advising that, owing to a growing backlog at the assessment company Atos, all current ESA claimants would be left on the benefit without further medical checks until another company could be found to carry out repeat work capability assessments. The Minister of State, Department for Work and Pensions, the hon. Member for Hemel Hempstead (Mike Penning), frankly acknowledged in oral questions yesterday pressures and capacity problems at Atos and indicated that negotiations were taking place to find an alternative provider, but he made no mention of the suspension of repeat assessments in the meantime, which appears to have been introduced. The memo obtained by Benefits and Work suggests that DWP has deliberately chosen not to inform Members of the House or claimants about this change. Why has that been done? Can the Minister provide reassurances to the public about the scale of the difficulties—yet another emerging mess in his Department?

The decision by Ministers to take this action will confirm widespread scepticism about whether the system is fit for purpose. It certainly leaves an operational vacuum, apparently pending the appointment of a new provider. At this stage there is no indication of when such an appointment might be made. In the circumstances, it is surprising that the Minister did not take the opportunity to inform the House of the situation yesterday, when there was an extensive discussion on the matter and a number of questions were asked about the process for replacing Atos and the operation of the work capability assessment in the meantime. It appears that the operation has been significantly scaled back. Given that ESA is part of the order before us, I wonder whether the Minister can take this opportunity to provide us with the explanation that we were not provided with yesterday.

There is growing dismay in the country about the impact of the Government’s changes on growing numbers of people—with an extraordinary 750,000 people forced to go to food banks last year because they were unable to afford enough food for themselves and their families. The Cardinal Archbishop of Westminster expressed it powerfully last week when he said:

“Something is going seriously wrong when, in a country as affluent as ours people are left in that destitute situation and depend solely on the handouts of the charity of food banks”.

He is surely right. Something is going very badly wrong indeed, and it needs to be put right.

The increase of the state pension in line with the triple lock is worth having—I put it no stronger than that—but the Government have chosen to uprate state benefits and pensions permanently in a way that is meaner than the method used before. For that reason, we are unable to support the Government in the Lobby on the orders today.

13:14

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

Thank you, Mr Speaker, for giving me the opportunity to say a few words. I will be speaking against the orders, but I am not suggesting that we should vote against them because of course, if we were to do so, the pitiful increases that some people will receive as a result of them would not be paid. I shall be arguing that the orders should be different.

The changes that the Government have introduced, some of which are in these orders, have huge significance for millions of the poorest in our country. Both motions are of vital importance, as restricting the uprating of benefits to these pitiful amounts, which in many cases represent a real-term cut, is one of the ways in which the coalition Government have attempted to balance the books on the back of the poor. The focus today is on the change from RPI to CPI and, as the Minister has said, other legislative methods have been used in relation to some of the other changes which yet again the Government are proceeding with this year.

Under the last Labour Government, most benefits were uprated every April in line with the RPI measure of inflation and based on the RPI of the previous September. Shortly after taking office, the coalition announced that it would be changing to CPI, which of course does not take into account housing costs and is almost always a lower measure than RPI. That is why I oppose it. The hon. Member for Banff and Buchan (Dr Whiteford) has already commented that another method of uprating should be found because neither CPI nor RPI is a good way of capturing the real cost of living for some of the groups affected by the orders. However, we do know that RPI is a more generous system than CPI and the Government should return to that way of looking at things unless a better way can be found.

[Steve Webb]

I am listening with care to the hon. Lady. Just to set the record straight, one of her objections to the use of CPI is that it does not include housing costs. In fact, it does. It includes rents. Were we also to include owner-occupiers’ housing costs—the CPIH measure—we would have a lower measure than the one we are using.

[Katy Clark]

Obviously the Minister is aware that the range of factors taken into account has been smaller every year since the change was brought in. I oppose the orders not necessarily because they do or do not include housing costs—I understand the point he makes; he has made it before and we have debated it previously—but because the method does not reflect the real cost of living that people who rely on these benefits experience.

Every year since 2010 RPI has been higher than CPI and the gap between those figures has made a real difference to pensions and benefits. The danger with the change is the cumulative impact over many years. In 2010 the RPI figure was 4.6%. That went up to 5.6% in 2011, down to 2.6% in 2012, and was 3.2% last year. But the equivalent CPI figures were 3.1%, 5.2%, 2.2% and 2.7%. Every year there has been a gap, which has meant that some of the poorest and most vulnerable in our society have ended up with less money in their pocket.

The Prime Minister has made much of his decision to introduce a triple lock guarantee for the basic state pension. He has already pledged to retain it throughout the next Parliament should he have any success at the next general election. The guarantee ensures that the basic state pension will always rise in line with whatever is the greatest as between inflation, wages or 2.5%. The uncomfortable truth, however, as the Minister must accept, is that the triple lock was introduced alongside the change from RPI to CPI, so the basic state pension increases in 2012 and 2013 were lower than they would have been if the previous system had been used. By 2015, the basic state pension will therefore be £1.11 a week lower than it would have been if it had risen in line with RPI, so pensioners will be £106.60 worse off as a result.

That is how just one group is affected. If we look at other groups, such as carers, the situation is even worse. Next year, carer’s allowance will be £1.69 per week lower than it would have been under RPI, with carers £255.84 worse off by April 2015 as a result. Those receiving both the higher rate mobility and care components of disability living allowance will be £571.48 worse off by the same date.

[Mr Reid]

Does the hon. Lady accept that, with the triple lock, pensioners will benefit from an economic recovery by their pension going up in line with earnings, whereas when the economy was doing well in the early years of the Labour Government, pensioners did not share in the increased benefits, because their pension only went up in line with inflation and not in line with earnings?

[Katy Clark]

As the hon. Gentleman will appreciate, I am focusing on the change from RPI to CPI. He will be aware that in the last Parliament I strongly advocated a return to the link with earnings. However the reality, as he well knows, was that even though Labour did not reinstate that link, the increases every year were far higher than they would have been if that reinstatement had taken place. Therefore, I frankly did not understand why my Front Bench at the time would not make that change.

I support the return to the link with earnings, but as I have said, the point I am making is about the change from RPI to CPI, which I understand is a long-term policy of this Government. Some of the poorest people in the hon. Gentleman’s constituency and mine will experience a cumulative long-term reduction in their incomes as a result of that change.

From April 2013, the coalition slashed the annual uplifts to a range of benefits to 1%; I appreciate that that issue is being dealt with in other legislation. Some of the disability benefits, such as carer’s allowance and disability living allowance, are exempt from that 1% cap, but employment and support allowance, which is the primary income replacement benefit for disabled people, is not. The Government have exempted from the cap the higher rate care component paid to the most severely disabled people, supposedly shielding the vulnerable from it. Unfortunately, however, this is a sleight of hand. ESA is paid in two parts—a basic rate, plus an additional component—and although the additional component of £35.75 is exempt from the 1% cap, the basic rate of £72.40 is not. Therefore, over-25s in receipt of the care component of ESA will receive £5.11 a week less than they would have received if it had increased in line with RPI. These cuts matter, because they are having a real impact on some of the poorest and most vulnerable people in our society.

Between 1997 and 2010, the Labour Government reduced the percentage of people living in absolute poverty from 28% of the population to 15%. During that time, 2.3 million children and 2 million pensioners were lifted out of poverty. Research from the Institute for Fiscal Studies suggests that investment in the social security system was the primary factor behind that reduction in poverty. By slashing social security benefits with these orders and the other legislation that we have considered previously, the Government risk putting some of the most vulnerable people in society back below the poverty line, and that is on top of the large number of people whose incomes have already been cut as a direct result of this Government’s policy. These orders are completely inadequate and the Government should come forward with something that protects the most vulnerable in our society.

13:24

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

I do not intend to detain the House for too long. I begin by thanking my hon. Friend the Member for North Ayrshire and Arran (Katy Clark) for a powerful speech. The final point that she made is an important one, and it is worth the House’s reflecting on it, because often when we discuss these kinds of issues there is a tendency to caricature the record of the last Labour Government, but anyone who looks closely at their changes to and improvements in social security will see a record of quite substantial progress. Of course, social progress often comes slowly; it is measured in inches as well as feet, and in centimetres as well as metres. However, there was significant social progress and that is part of the context within which this debate should be understood.

[Mr Reid]

The hon. Gentleman referred to enormous social progress, but why did the last Labour Government not increase pensions in line with earnings, as will now happen over the long term thanks to the triple lock?

[Gregg McClymont]

I am pleased that the hon. Gentleman made that point, because to some degree it illuminates the difference between him and Labour; because what he discounts entirely by asking that question is the impact of pension credit. I do not know how aware he is of pension credit, but it took 1.3 million pensioners out of poverty. Is that not something that he welcomes? It reduced pensioner poverty in Scotland by two thirds, taking 200,000 pensioners out of poverty.

[Mr Reid]

rose—

[Gregg McClymont]

I will give way to the hon. Gentleman again, but I hope he will recognise that achievement.

[Mr Reid]

The defect of the pension credit arrangements, when compared with the new pension arrangements that my hon. Friend the Minister has introduced, was that people had to apply for pension credit, and a lot of people were unaware that they had to do that, whereas under the new pension arrangements everyone will get the single-tier pension.

[Gregg McClymont]

I am afraid to say to the hon. Gentleman that, although I understand where he is coming from, it is not the case that everyone will receive the single-tier pension; people must have made contributions for 35 years. He should speak to his colleague, the Minister, who everyone recognises is an expert on the state pension. There will be poor pensioners who will not receive the new pension, and they will depend on pension credit.

I asked the hon. Member for Argyll and Bute (Mr Reid) to reflect on the reality of the difference that pension credit made, particularly in a period after 1997 when there was genuine absolute pensioner poverty.

[Sheila Gilmore (Edinburgh East) (Lab)]

Is it not the case that if it had not been for the framework that was set up by the last Labour Government—particularly the introduction of pension credit, which is clearly already accounted for in budgets—it would have been far more difficult to move to the form of pension that the Minister has proposed?

[Gregg McClymont]

My hon. Friend makes an important point. The level at which the Minister appears set to place the new flat-rate state pension is just above pension credit. It is that framework, which was set for the poorest pensioners to ensure they would no longer live in poverty, that is so important. My argument is not that the hon. Member for Argyll and Bute is entirely wrong; it is that he must take account of the difference that pension credit made to the poorest pensioners in his constituency, my constituency and around the country.

That brings me to the question that I wanted to ask the Minister, which is about pension credit. Of course it is welcome that the basic state pension is rising by £2.95, and he was very clear that pension credit will also rise by £2.95, but of course as a percentage rise, the rise for pension credit is less. The danger is that those on pension credit will fall behind relative to those on the basic state pension.

The term that the Minister used was over-indexation. A little alarm goes off in my head when Ministers resort to using such terms. A more straightforward way to put things is to say that pension credit, which the poorest pensioners rely on, is not being uprated by the same percentage as the basic state pension. There may be an excellent reason for that, but I would like to hear it.

There is also a more fundamental point about the new pension system that the Minister and the Government are introducing, which relates to the point that my hon. Friend the Member for Edinburgh East (Sheila Gilmore) made. It is that, as the Pensions Bill proceeds, the new flat-rate state pension—as I understand it—is being set just above pension credit. If pension credit loses its value relative to the basic state pension in the run-up to the introduction of the new system, there is a danger that the flat-rate state pension will be pegged at a lower rate than would otherwise be the case. We must be clear not only about the implications for the poorest pensioners of a lag in the uprating of pension credit, but about the implications for the flat-rate state pension system for which the hon. Member for Argyll and Bute is such an enthusiast. We must ask these legitimate questions. If we are to have a reasonable debate, we need to recognise the progress that was made over the past decade—certainly until 2010—and consider how that will interact with the flat-rate state pension system that the Minister is so keen on creating.

[Dame Anne Begg (Aberdeen South) (Lab)]

Following its pre-legislative scrutiny of the draft Pensions Bill, my Work and Pensions Committee thought that there should be a larger gap between the flat-rate state pension and pension credit to ensure that there would be a cut in means-testing, which the Government claim will be the effect of the flat-rate pension’s introduction. However, that will not happen if the two are kept together, or if one is lower than the other.

[Gregg McClymont]

My hon. Friend is widely acknowledged as an expert in this area, and questions arise when pension credit is not uprated by the same percentage as the basic state pension. As I said, I start to get worried when I hear the phrase “over-indexation” because the Minister is actually saying, “We have decided that pension credit will be uprated by earnings unless we decide otherwise, and we have decided otherwise, so it will be uprated by the cash equivalent of the uprating to the basic state pension.” However, that represents a smaller percentage increase, so we need to be aware of the wider implications of that.

I made it clear that I would not detain the House for too long. My right hon. Friend the Member for East Ham (Stephen Timms) asked the Minister a number of important questions, to which I shall add my own. First, does the Minister agree that pension credit made a real difference to millions of poor pensioners in this country? Secondly, does he agree that it provides the basis on which the flat-rate state pension will be pegged under his new system? If that is the case, it is important that we debate the lesser uprating of pension credit, and I hope that the Minister accepts that I ask my questions in the spirit of co-operation and inquiry.

13:32

[Steve Webb]

With the leave of the House, I shall be grateful for the chance to respond to the three speeches that we have heard. I cannot help reflecting on the fact that we cannot manage to talk for even an hour about spending £3.3 billion, but I take it from that that the House thinks that we are doing a good job.

Before I respond to the detailed points that have been raised, I want to be clear about what we mean by above inflation, real terms and all the rest of it. The April increase in the basic state pension will be in line with inflation at 2.7%. Of course, we now know that CPI is below 2%, so despite the population experiencing inflation at that rate, we are putting up the pension by 2.7%—

[Sheila Gilmore]

Will the Minister give way?

[Steve Webb]

In a second.

That explains the reference at the end of my speech to an above-inflation increase although, as we have discussed, there will be years in which the trend goes in the opposite direction.

[Sheila Gilmore]

The Minister anticipates the point I was about to make. The situation to which he refers could apply in any year. People suffered greatly in previous years because the uprating was set at a low point for inflation, yet they experienced real rising prices, so the increase is hardly a great virtue on the part of the Government.

[Steve Webb]

It is interesting to look at what has happened to benefit rates over the long run. In the seven years since the 2008 crash, the rate of jobseeker’s allowance has increased by more than the growth in earnings. While people with jobs—people would obviously far rather have jobs than not—have seen their wages grow over that period, the rate of JSA, which I still quaintly think of as unemployment benefit, has risen by more than that growth.

The hon. Member for North Ayrshire and Arran (Katy Clark) talked about pitiful increases and slashing benefits, but I can tell her that the Labour Government spent £181 billion on tax credits, benefits and pensions in their final year in office, yet in the first year of the next Parliament, we envisage spending not £181 billion, but £211 billion. Spending £30 billion more than six years previously is an odd definition of “slashing”, so we need to keep a bit of perspective in the debate. I respect the hon. Lady’s sincerity and clearly she wishes that the increases were greater but, as she well knows, her Front-Bench colleagues will not vote against the orders, and that is not because of a technicality, but because they would not allocate money for larger increases. I know that she disagrees with her Front Benchers. If she ruled the world, she would put in place greater increases—she would tax people more and spend more—but that is not her party’s position.

[Stephen Timms]

What is the Minister’s response to last week’s comments by the Cardinal Archbishop of Westminster about the significant number of people who find themselves in destitution as a result of the changes that have been made?

[Steve Webb]

I have great respect for the Cardinal Archbishop, whom I met some years ago, and I do not doubt his compassion for those in need, which is shared by Members on both sides of the House. However, I do not think that anyone believes that people were not in severe and urgent financial crisis before we saw the current network of food banks; they simply went somewhere else. The idea of urgent financial need has not suddenly arisen. As the right hon. Gentleman will know, people turned to charitable sources and churches. It was not uncommon for people to knock on a vicarage door to ask for a sandwich, and that is not very different from a food bank—it is a precursor to that. There were always people in urgent financial need, and we can debate the impact of a global economic downturn on the level of need. Church leaders who comment on such matters are sometimes briefed with partial information. It is sometimes suggested to them that there is a mad slash and burn on the welfare state, but I think that they would be surprised to learn that, at the start of the next Parliament, we will be spending £30 billion a year more on benefits, pensions and tax credits than in the final year of the previous Labour Government.

[Stephen Timms]

Surely the Minister accepts that comments such as those made by the Cardinal Archbishop of Westminster and in last week’s letter signed by 27 bishops are based on actual experience of what is happening in communities. Surely he cannot maintain, as he appeared to do, that nothing has changed and that things are carrying on as they were before—clearly that is not true.

[Steve Webb]

No one is suggesting that nothing has changed. The global economic downturn was far deeper than was originally thought, and we have had to recover from that. We had to make changes to the benefits system to try to balance the books, which the previous Government failed to do.

The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) said that he felt uncomfortable when I talked about over-indexation. Let me make it clear that under the pensions legislation that the Labour Government put in force, there is a legal duty to uprate pension credit by earnings, but we are doing more than that. The hon. Gentleman implied that we were doing less and that we were somehow putting in place a worse increase, but we are paying a £2.95 increase on the basic state pension, and we do not want to follow Labour’s approach of making an earnings increase to the guarantee credit because that would give the poorest pensioners less than £2.95. In our jargon, we are passing through the full £2.95. Far from paying less than the law requires, we are paying more, because we put the biggest priority on the poorest pensioners.

[Gregg McClymont]

The Minister is well aware that earnings have been in decline, so setting out the Government’s approach as some sort of virtue is a bit like the argument that was made when he had to override the triple lock on its first day because it would have produced so little. However, does the Minister not accept that the situation has implications for the level at which the flat-rate state pension will be set?

[Steve Webb]

I would like to suggest that the colleague who just whispered in my ear was saying how much he was enjoying our debate on welfare and urging me to keep it going, but that may not have been the tenor of his remarks. What we are trying to do is ensure that we do the right thing by the poorest pensioners. Had we simply done what Labour required us to do by law, which was to index in line with the growth in average earnings—it was Labour’s law, not ours—the poorest pensioners would now be getting less. I assume that the hon. Gentleman is not suggesting that we should do that. We have therefore overridden Labour’s law and been more generous to the poorest pensioners. I do not know whether that is socialist enough for him, but it is what I think is the right thing to do.

[Gregg McClymont]

Let us be very clear that pension credit has been uprated by less than the basic state pension. That is a judgment the Minister can make, but let us be clear about what it means for the poorest pensioners: they are not getting the same increase as other pensioners. That is a judgment the Government can make, but they should at least be clear about what is happening.

[Steve Webb]

The hon. Gentleman is completely wrong, because they are getting exactly the same increase—£2.95—as in the basic state pension. He seems to want it both ways. If he is saying that the increase in pension credit should have been the 2.7% on the basic state pension, can he tell us where he would get the money from?

[Gregg McClymont]

The Minister is an intelligent man, and my point is a simple one: an increase of 2% is less than an increase of 2.7%. I think that we can all agree on that.

[Steve Webb]

I did not hear the hon. Gentleman say where the extra cash would come from—the bankers’ bonus tax, perhaps? Is he saying that it should be 2.7% or not? As a debating point he is saying that it should, but he has no idea where the money would come from. [Interruption.] He says from a sedentary position that he wants me to be straight about this. Being straight with the electorate means that if he stands up in Parliament and says that the increase should be bigger, which he has every right to do, he must say where the money would come from. That is the nature of choice in government.

The right hon. Member for East Ham (Stephen Timms) asked about tax credit. Tax credit rates will be set out in affirmative statutory instruments in the usual way and debated in the usual way, so there is no difference there. He talked about the triple lock, which we are very proud of. In fact, we understand that the Opposition are going to copy it. On one level he was mocking and deriding it, but when the Prime Minister said that he would continue it in the next Parliament if re-elected, the leader of the Labour party said that

“nobody should be in any doubt about our commitment to the triple lock”.

The right hon. Gentleman ought to have a word with his leader, who thinks that the triple lock is really a rather good thing.

I want to respond to the right hon. Gentleman’s attempted demolition job on the triple lock that is now his policy. He implied that had Labour been in office, pensions would have gone up by more. There are two possible ways that could have happened. One is if Labour had continued the RPI link. We all know that the statisticians do not think that RPI is a particularly good measure of inflation, and I refer to what the hon. Member for North Ayrshire and Arran said earlier. I entirely accept that RPI is generally, although not always, bigger than CPI, but we are not trying simply to pick a bigger or smaller number. In having these annual debates, we are trying to compensate for average inflation. If society thinks that benefit rates are too low, we can do something about benefit rates. What we do not do is just pick an inflation measure because it is bigger or smaller.

We chose CPI because it is a robust and internationally standard definition. The statisticians have dropped RPI as a national statistic because they do not think that it is a good measure of inflation. When the Secretary of State looked at the increase in the general price level this year, CPI was the only number he could realistically have used because RPI is no longer regarded as an official statistic and the other new measures have not even been properly implemented yet. It is entirely open to the hon. Member for North Ayrshire and Arran to persuade her Front Benchers that we should tax people more and increase benefits, but that should be done by making a decision, not by using a measure of inflation that even the statisticians no longer think works.

[Sheila Gilmore]

I suspect that the Minister will therefore be disappointed to learn that landlords appear to think that RPI is an appropriate measure for calculating their tenants’ rent increases.

[Steve Webb]

Clearly a whole raft of decisions are made about increases. The right hon. Member for East Ham mentioned rail fares, for example, and the train operators’ revenues and some of their costs are determined by RPI. The task that the Department for Work and Pensions has once a year is to look at what has happened to the general price level, and I have not heard a single argument in this debate that CPI is not the best single measure to use for that purpose.

[Katy Clark]

Surely the Minister accepts that benefit increases are at least in part about social justice. Since 2010 we have seen this Government take a range of steps that have increased inequality in this country. Surely he must accept that choosing CPI simply because it seems to be a smaller amount will push the poorest people even further below the poverty line.

[Steve Webb]

I fundamentally do not accept that. The hon. Lady says that we chose CPI simply because it is lower. As of the year to last September, we had only two possible measures to choose from—CPI and RPI—because the other variants of CPI and RPI were not established at that point. RPI has been discontinued as an official statistic, so how could we use it as the measure for the general increase in the price level? CPI is the target of the Bank of England and an internationally standard and accepted measure. If she thinks from a social justice point of view that benefits should be higher, which is an entirely legitimate thing to think, she should do that by setting them at whatever level she thinks is right, not by trying to pretend that inflation is something other than what the statisticians tell us it is. Those are two separate questions.

[Katy Clark]

Does the Minister not accept the point that has been made in a number of debates in recent years, which is that the inflation that the poorest experience, and indeed that pensioners experience, is far higher than CPI?

[Steve Webb]

There are clearly differences in inflation over time and between different groups. We use one number across the board. There will be years when pensioner inflation is higher than the figure we use and years when it is lower. At the moment, there are particular pensioner price indices, but they do not include all pensioners. We simply use one number that, on average and over time, captures inflation, but spending patterns differ. This Government have clearly taken steps to help people at the bottom of the pile. To counter what the hon. Lady said, inequality rose under the previous Labour Government and has fallen under this Government. [Interruption.] She shakes her head because the statistics and the evidence do not fit her presumptions, but the fact is that Labour presided over growing inequality in this country.

The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East seemed to imply that pensions would be higher if Labour had remained in government, but he knows perfectly well that before the general election the previous Government mooted moving to earnings indexation from 2012. Had they done so, we would now have a lower state pension than we have now. Would they have carried on with a prices index that nobody really thinks is a good measure of inflation? Where would they have found the billions of pounds to do that? He has implied that they would not have done that and that they would have accepted use of CPI for three years, in which case the state pension would not now be higher. There are lots of “what ifs”, but it is fairly clear.

My right hon. Friend the Deputy Prime Minister has suggested that Labour has started to get it on the public finances, but I am afraid that the right hon. Member for East Ham is still in the Brownite mode from when he was in charge of the nation’s spending. People always ask me whether the triple lock is affordable, but it is just not good enough for him. He wants something more generous. I think that we need a dose of realism in this debate. He asked some specific questions, and my right hon. Friend the Secretary of State responded to his questions on universal credit yesterday. Practically every benefit that exists is listed in these orders and we could debate them all, but that is not the focus of this debate. Suffice it to say, universal credit will lift people out of poverty, which is why I am proud to support my right hon. Friend’s plans.

The right hon. Gentleman asked about ESA. I will not comment on documents that he said have been leaked, but I can say that we are taking action to tackle the backlog in the system. I would have thought that he, when wearing his constituency hat, would want us to do that, but he is welcome to table questions to the Minister of State, my hon. Friend the Member for Wirral West (Esther McVey), for further information.

The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East asked about the role of pension credit. He hails pensions credit as some sort of salvation. Let us be clear that pension credit was, primarily, a rebranding. We had national assistance, then we had supplementary benefit, then we had income support, then we had the minimum income guarantee, and then we had guarantee credit. They were all basically the same thing—a line below which people were not meant to fall. Therefore, the guarantee credit bit was, in essence, a Brownite rebranding. The new bit of pension credit was savings credit—one of the most tortuous, complicated and obscure benefits ever created.

[Gregg McClymont]

Will the Minister give way?

[Steve Webb]

In a second; I have not finished my rant yet.

Savings credit is such a lottery that of those entitled to savings credit only, half get it and half do not. I am afraid that I do not regard a system where one tosses a coin and half the people get it and half do not as a firm foundation for security and dignity in retirement. That is why we have introduced the single-tier state pension.

[Gregg McClymont]

I have a simple question for the Minister: is it or is it not the case that pension credit took 1.3 million pensioners out of poverty?

[Steve Webb]

I do not believe that for a minute, because at the same time as pension credit was implemented, other changes were happening. For example, SERPS—the state earnings-related pension scheme—was maturing, so each successive generation of retiring pensioners was getting higher levels of state pension, thereby reducing pensioner poverty, and people had longer service in final-salary pension schemes. A whole raft of long-term trends will lead to a reduction in pensioner poverty, so to say that it was due to pension credit on its own, one would need to know what else would have happened even without it.

Clearly, savings credit is extra money, and I am sure it is very welcome to those who receive it. We have gone on indexing—in fact, as I have said, rebalancing—pension credit to give more to guaranteed credit and less to savings credit, because people claim guaranteed credit. That is why we have focused on the very poorest pensioners.

[Gregg McClymont]

Let me reframe my question. Does the Minister agree that 1.3 million pensioners were taken out of poverty during the time of the previous Labour Government?

[Steve Webb]

The hon. Gentleman will know that the level of pensioner poverty has fallen in the long run because of the factors that I have described. [Interruption.] He says that it has happened since 1997. Had the previous Labour Government done precisely nothing, the level of pensioner poverty might well have fallen anyway because SERPS was maturing. SERPS came in in 1978 and had been running for only 19 years by ’97. In each succeeding year, more and more people have got more and more state pension under SERPS as it matures, so as the oldest pensioners with no SERPS die off, the newly retired pensioners come in with bigger and bigger SERPS. That would be a long-term reason for the change, and real earnings growth would have been another factor. It is complete nonsense to say that it was due solely to pension credit, and he ought to know that.

[Gregg McClymont]

Will the Minister give way?

[Steve Webb]

One last time, because I need to conclude shortly.

[Gregg McClymont]

The Minister appears to get tense under questioning and uses the words “complete nonsense”. Is he really standing at the Dispatch Box and saying that pension credit did not make a significant difference to pensioner poverty in the UK?

[Steve Webb]

As ever, the hon. Gentleman tries to misrepresent what the record will show that I said. I am not saying that pension credit was irrelevant; I am saying that his claim that pension credit reduced the level of pensioner poverty by 1.3 million is patently false.

Where does that leave us at the end of this debate? We have a set of orders that spend an extra £3.3 billion on benefits and pensions, overwhelmingly on pensioners. This Government will deliver a state pension that represents a bigger share of average earnings than in any year under the previous Labour Government. The point of pensions is to replace lost earnings, so they cannot do their job if they have fallen relative to earnings, as they did in almost every year of the previous Labour Government, most notoriously when they thought that 75p was enough for pensioners. We do not; we think that a £2.95 increase this year is fair and appropriate. We are proud of our record in protecting the most vulnerable and, in particular, in focusing additional spending on pensioners. I commend the orders to the House.

Question put and agreed to.

Resolved,

That the draft Guaranteed Minimum Pensions Increase Order 2014, which was laid before this House on 27 January, be approved.

Social Security

Resolved,

That the draft Social Security Benefits Up-rating Order 2014, which was laid before this House on 27 January, be approved.—(Steve Webb.)

Backbench Business

Tuesday 25th February 2014 Commons Chamber

Transatlantic Trade and Investment Partnership

Tuesday 25th February 2014 Commons Chamber

13:54

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

I beg to move,

That this House has considered the Transatlantic Trade and Investment Partnership.

I am pleased to have secured this debate on behalf of the all-party group on European Union-United States trade and investment, which I chair, and to have done so with support from the hon. Members for Aberconwy (Guto Bebb), for Carmarthen East and Dinefwr (Jonathan Edwards), and for Ceredigion (Mr Williams). I am also pleased to see that the Minister without Portfolio, the right hon. and learned Member for Rushcliffe (Mr Clarke), is on the Government Front Bench and will respond to the debate. It must be rare, if not the first time, for a Cabinet Minister to respond to a debate such as this. I take that as a good sign that the Government are at last starting to put some serious political weight behind the debate about securing a very good deal for Britain in the trade negotiations between the EU and the US.

It is seven months since the House last debated the transatlantic trade and investment partnership. That debate was also secured and led from the Back Benches by members of the all-party group. It took place in July, just a week before the first round of negotiations began. Since then, there has been very strong progress, with three rounds of negotiations and a fourth round set for next month. The European Commission has taken the unprecedented step of setting up an advisory panel of business, trade union and consumer interests, and of freezing any discussion on dispute resolution while it conducts a consultation. We have seen a level of political and media attention on both sides of the Atlantic that is markedly and unprecedentedly up on that for these sorts of deals in the past. Last week, we had a top-level political stock-take led by Commissioner de Gucht and US trade representative Michael Froman on progress so far.

[Alok Sharma (Reading West) (Con)]

Like everyone in the House, I want this partnership to succeed and for us to get to an end point. On the stock-take, the EU Commissioner noted that the areas of difference between the parties are still larger than the common ground they share. Does the right hon. Gentleman share my concern that there may be slippage in the timetable?

[John Healey]

There may indeed; the hon. Gentleman raises an interesting point. He has been part of the cross-party efforts in this House in taking the debate about the potential for this deal out more widely into the country, and he spoke at a business debate in Reading in his constituency.

What I fear more than slippage in the timetable is that we are entering a period in the life cycle of any trade negotiations when the uncertainty and the risks are greatest. It is still unclear what exactly is on the table, those with specific concerns are voicing them fiercely, those with general support for the deal are still muted, and the specific tangible benefits that may come to Britain are still not really clear. This is a period of significant risk, when elections to Congress and to the European Parliament during the course of the year may detract from some of the political momentum and support. The onus on Parliaments and Governments such as ours to maintain that political support and momentum during the months ahead is therefore greater than ever.

[Steve Baker (Wycombe) (Con)]

rose—

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

rose—

[John Healey]

I give way to the hon. Member for Skipton and Ripon (Julian Smith).

[Julian Smith]

Does the right hon. Gentleman agree that we in the all-party group have been somewhat helped by George Monbiot, who wrote a barking mad article in The Guardian, to which the Minister responded in his usual robust manner, and that we require George Monbiot to keep writing these barking mad articles so that we can resist them every step of the way?

[John Healey]

The hon. Gentleman may be slightly disappointed by my response, because I do not necessarily agree with his arguments. However, I draw the same conclusion about the particular focus of the article: the case for investor-state dispute systems as part of a deal between the EU and the US. In fact, I have written my own piece in which I say that I cannot see the case for that in a deal such as that under negotiation. The case has still to be made—I will come on to this later—by those Governments who may favour it and, indeed, by the Commission, whose role it would greatly enhance.

[Julian Smith]

rose—

[John Healey]

I was going to give way to the hon. Member for Wycombe (Steve Baker), but he has left the Chamber, so I will, of course, give way to the hon. Member for Skipton and Ripon again.

[Julian Smith]

Will the right hon. Gentleman clarify how on earth Britain will be able to persuade inward investors to come here and how we will be able to do a deal with China if we cannot sign this agreement?

[John Healey]

The answer is simply because a deal with China is very different from a deal with the US. The US and the EU both have long traditions of due legal process. If the hon. Gentleman looks at the representations being made by business and investors, he will see that there is very little call for the arrangements. The strongest advocate to date has been the European Commission, which is why I think the pause it has put on further discussions is so significant, although it did so only because it was put under significant pressure by those who had concerns, perhaps including Mr Monbiot in The Guardian.

These trade negotiations are about a potential trade deal like no other. They are the biggest ever bilateral trade talks, because together the EU and the US account for 30% of global trade and almost 50% of the world’s output. They are also the best prepared talks ever, because the serious work was going on for almost two years before the talks were formally launched, and they are the most ambitious negotiations ever, because for the first time in history this would be an agreement between economic equals, without any significant imbalance in power and wealth.

This is, therefore, a deal like no other, but it is being conducted at a time like no other, because since the 2008 global financial crisis and world downturn, faith in politicians, established civil servants and big business is at an all-time low and mistrust at an all-time high. I think that heightens the sense that past trade talks have been unjustifiably conducted in secret, controlled by a few big countries and often dominated by the interests of multinational companies.

A symptom of that current suspicion led War on Want to assert in a well-written report last week:

“TTIP is…correctly understood not as a negotiation between two competing trading partners, but as an attempt by transnational corporations to prise open and deregulate markets on both sides of the Atlantic.”

I quote that not because I agree with it, but because it is a sign of the degree of opposition and hostility to—and to some extent the lack of understanding of what is really at the heart of—the negotiations, which is fashioning the debate at present.

[Lisa Nandy (Wigan) (Lab)]

I am grateful to my right hon. Friend and colleagues from across the House for initiating this debate. Does he share my concern that many of the people we represent who are on zero-hours contracts and dealing with insecurity in the labour market will look at the United States, which is among those countries to have ratified the fewest International Labour Organisation conventions in the world, and be really concerned that this agreement, which could be very good for all of us, may actually make the situation worse for them? Would my right hon. Friend welcome a response from the Minister to that?

[John Healey]

I would indeed. My hon. Friend is right: the US has failed to sign six central ILO conventions on labour standards, including freedom of association and other workplace concerns. It may be that a deal such as this could have damaging consequences for already insecure workers in the European Union and the UK, but on the other hand it might not lower standards and it might bring an economic and jobs boost that would benefit many in Britain. That is what we have to secure and we have to make sure that my hon. Friend’s concerns are set to one side and not realised.

[Ian Paisley (North Antrim) (DUP)]

We currently export more agricultural products than we import in trade with the United States, and maintaining that balance would, of course, be beneficial to primary producers across the United Kingdom, principally our farmers. Does the right hon. Gentleman agree that United States produce should meet our exacting standards in the traceability of foods?

[John Healey]

I do agree. What is interesting about the way in which the debate has progressed in the seven months since the House last discussed the issue is that the Commission has become much clearer in saying that the stance of its negotiating team will be not to lower consumer, environmental or labour standards. I will suggest later that that should be one of four central tests that we or anyone else should be able to level at the quality of the negotiations and the agreement struck.

My central point at this stage is to say that, for the first time—because of the level of interest and the level of mistrust in the establishment, politicians and big business—this cannot be a traditional backroom trade deal done by the elites in Brussels and Washington. Like justice, good trade policy must not only be done but must now be seen to be done. Any legitimate agreement must command the broadly based confidence that it will bring benefits to British consumers and workers, as well as to British business. It must be subject to the scrutiny of open debate; otherwise, there will be a risk that bad policy will remain unchanged and that fears will flourish unchallenged.

My argument to the Minister in particular is that those involved in securing and ratifying an agreement—Government Ministers, negotiators and elected politicians—will have to work much harder and more openly for a deal, and those of us across all parties who are for a deal will have to work much harder to provide support to enable that to happen.

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

I thank the right hon. Gentleman for securing such an important debate. While Ministers seem keen to keep the public in the dark, the banking lobby is so happy with the financial services proposals that it has said that the text could have come straight from its own brochure. Does that ring the same alarm bells for the right hon. Gentleman as it does for me, and does he agree that the TTIP must not allow banks to undo the crucial EU agreement limiting harmful commodity speculation in particular?

[John Healey]

I had not heard that statement and I am surprised that the financial services industry has the detailed text of what is on the table, because we are not yet at that stage of the negotiations.

I want to do two things: first, I want to spell out a progressive economic case for trade and for the TTIP, and secondly, I want to set out four tests that I think a good TTIP deal and the Governments and negotiators involved must meet. On the economic case and why it is so important to the UK at present, I think that the great depression of the 1930s was the last economic crisis that was in any way comparable to what we suffered in 2008 with the global financial crisis and downturn. The policies pursued by the UK and the US back in the ’30s are, I think, widely seen to have prolonged that slump and held back any recovery. Not only were there deep cuts in public spending; there was also a sharp rise in protectionism and a decline in multilateral trade. Therefore, part of the reason why deals such as the TTIP and, indeed, the EU’s recent agreements with Canada and Korea are so important is that they avoid that default to beggar-my-neighbour economic policies and instead look to increase global trade through international co-operation. The UK has a particular need for the economic benefits and boost of trade.

[Mr Robert Walter (North Dorset) (Con)]

The right hon. Gentleman has talked about the benefits for the Untied Kingdom of the TTIP negotiations. Has his all-party group considered how the UK would fare if it had to negotiate a similar deal with the United States outside the European Union?

[John Healey]

Quite simply, there would be no negotiations. Interestingly, our all-party group recently had the Canadian ambassador in to talk to us about the Canadian deal and what lessons it might have for the TTIP negotiations. When the question was put to him, “Look, we’ve got long-standing British-Canadian relations, so why haven’t we had a British-Canadian deal like this before?” in effect, he said, in his own diplomatic way, “You’re not big enough: it’s not worth our effort.” This sort of potential boost to our economy and jobs is available to us through these negotiations only by our being part of a European Union that is capable of conducting such talks and of reaching such a deal with the US as an economic equal.

[Ian Paisley]

Does the right hon. Gentleman accept that, strictly speaking, he is not entirely right? As I have said, we export more agri-food products to the United States than we import from it. In fact, we export more minced meat to the USA than we consume in this country. Along with other food products, that means we are very valuable to the US as a trading partner, and we could reach our own deal on that basis.

[John Healey]

We are, indeed, such a trading partner, but I have to say that we are not big or significant enough to be in that position. Obama has made that clear and his staff have been even blunter—this sort of negotiation would not be available to Britain if it tried on its own to reach such a deal with the US.

Let me come back to the case for why the UK needs the economic boost and benefits of trade at this time. The size of our UK economy is still 1.3% smaller than it was before the peak prior to the 2008 global financial crisis and recession. The production component of our GDP is still about 10% smaller than it was before the downturn. We also have a high trade deficit—£30 billion in 2013—which has remained high despite the large fall in the value of the pound compared with the euro or the dollar during the downturn. At a time when we still have a domestic demand problem, trade deficits can lead to further weaknesses as income generated in the UK is spent overseas. In turn, that puts more pressure on factors such as household borrowing or inflated regional housing to fuel growth, which cannot produce a balanced or sustainable economic recovery. I must tell Government Members that, in his speech in Hong Kong earlier this month, the Chancellor of the Exchequer recognised that the economic recovery has not so far been put on a sustainable footing. He said:

“Britain is not exporting enough.”

The TTIP alone will not of course produce the kind of long-term recovery that we need. Public investment in infrastructure and new housing, an active industrial and regional policy, and a new deal jobs programme for young people are all needed, but an ambitious trade policy will be an important part of our future economic strength.

[Julian Smith]

Does the right hon. Gentleman accept that, as I understand it, there was no debate about trade or exports in this House under Labour for about 13 years, and that the number of trade trips by our Prime Minister in the past four years is more than the number undertaken by two Prime Ministers in 13 years? Government Members do not need to take lessons from Labour on exports.

[John Healey]

I remember a series of very high-profile international trade trips led by Prime Minister Blair and by my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) as Prime Minister, but I have no idea about the figures. My point is not to offer lessons, but to make the case for the importance of trade as a part of a strengthening UK economy and of our efforts to secure a more balanced economic recovery and more sustainable growth in the future, as well as therefore to make the case for the importance of the TTIP to the UK, not just the European Union.

I suppose people may say, “Look, you’re a Labour MP. Why on earth are you making this argument about international trade and capitalism?” I have to say that I am also part of a Labour movement, which stretches back to Keir Hardie, that has a great internationalist tradition of qualified optimism about the benefits of trade. Hardie described international trade as a way of fostering shared values:

“Despite the keenness of commercial struggle there comes a time when on each side there grows up a feeling that underneath the hard bargaining…there is a human element…the dykes that separate man from man are broken down, and the waters of their common humanity begin to intermix and commingle”.

I can tell the hon. Member for Skipton and Ripon that it was the pioneering 1945 Labour Government who signed the first incarnation of the general agreement on tariffs and trade, which was of course the forerunner of the World Trade Organisation.

I do not want to labour this point too strongly in a cross-party debate, but it was in the same progressive spirit that Franklin D. Roosevelt encouraged trade as a way of dragging the US out of the great depression after the protectionism of his Republican predecessor Herbert Hoover. As a pro-trade Democrat, Roosevelt wanted clear rules and clear standards—in other words, fair as well as free trade. He said:

“Goods produced under conditions which do not meet a rudimentary standard to decency should be regarded as contraband and not allowed to pollute the channels of international commerce.”

My argument is that that progressive pro-trade case is even more important with the TTIP than with other trade deals, because a deal between the US and the EU would, as I have said, cover a third of world trade and involve countries responsible for almost half the world’s output. The size of our combined economies and the scale of the potential deal mean that it could set standards for future agreements with other countries on consumer safeguards, workers’ rights, environmental protection, trade rules and legal process.

Finally, to bring this together—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I hope that for the right hon. Gentleman “finally” means finally. The recommended time limit is 10 to 15 minutes, and he has now been speaking for more than 20 minutes. The debate is limited to three hours, and many hon. Members have indicated that they want to speak. I hope that he will not say, “Finally”, “In conclusion” and then “Finally, finally”, but that he is starting his last few sentences.

[John Healey]

I am grateful for your guidance, Madam Deputy Speaker, because I had not appreciated that the debate is limited to three hours, rather than running until the Adjournment at 7 pm.

[Madam Deputy Speaker]

Order. For clarification for all hon. Members, the debate is a timed one. It will last only three hours. It will not run any longer. That means that there may be more time for the Adjournment debate, but this one cannot last for more than three hours.

[John Healey]

Thank you, Madam Deputy Speaker. I shall resist any more interventions—I have taken plenty already—and I will rattle through my four suggested tests, about which I am happy to elaborate on other occasions.

First, any good fair trade deal must deliver on jobs and growth. There is good evidence to suggest that it could do so if we get it right. As we discussed seven months ago in the previous debate, we need from the Government a very clear area-by-area analysis of where potential benefits might come in the UK.

Secondly, we need a deal resulting from negotiations that are open and accountable to those that it will affect. The European Commission has taken significant steps on that, as has the Department for Business, Innovation and Skills.

Thirdly, we need to aim for the highest possible standards of consumer, environmental and labour protection. Commissioner de Gucht’s statement in London last week was very interesting and important. He said that

“no standard in Europe will be lowered because of this trade deal; not on food, not on the environment, not on social protection, not on data protection. I will make sure that TTIP does not become a ‘dumping’ agreement.”

He also said that

“we are happy to be scrutinised on this”.

I can tell him that he will be: that is part of our role in this Parliament and part of the role of the public.

Fourthly and finally, a good deal must allow sufficient leeway for Governments to act in their national interests. No trade deal should put at risk the vital democratic right of Governments to legislate in their national interests. Importantly, the Commission has stated:

“TTIP should explicitly state that legitimate government public policy decisions cannot be over-ridden.”

I say to the Minister that it is up to the UK Government to ensure that that means nothing less than an exemption for the NHS from any deal. We did that in the Canadian deal, which states:

“Health care, public education, other social services excluded”.

The NHS can and must be exempted in that way from the TTIP.

Finally, finally, Madam Deputy Speaker, those are the tests on which we all have a right to call negotiators, Governments and Parliaments to account. I hope that Ministers will accept them as measures of success, act to secure them in the negotiations, and account for them to the public and in Parliament at each stage of the negotiations ahead.

[Several hon. Members]

rose—

[Madam Deputy Speaker]

Order. Thirteen Members wish to participate in the debate. To clarify, the debate will end at 4.54 precisely. I ask Members to speak for 10 minutes or less. I am not setting a time limit—let us not panic. However, if speeches are long, it will be necessary to impose a time limit.

14:21

[Mark Field (Cities of London and Westminster) (Con)]

I congratulate the right hon. Member for Wentworth and Dearne (John Healey) on securing this debate.

As the right hon. Gentleman rightly pointed out, in the aftermath of the 2008 financial crisis, politicians the world over were at great pains to avoid the policy mistakes that followed the banking collapse of the 1930s. Conventional Keynesian pump-priming was continually invoked as the means of preventing a recession from turning into a depression. Depressingly, rather less interest seemed to be given to the equally important lessons that the 1929 to 1933 era taught us about protectionism. The right hon. Gentleman referred to the Smoot-Hawley Tariff Act of 1930, which raised tariffs drastically on goods that were imported into the United States in a bid to protect American jobs from foreign competition. That Act sparked a domino effect among America’s trading partners, who predictably imposed similar measures to protect their own economies. The result, as we all know, was a terrific slump in world trade that devastated economic growth and caused unemployment to soar. Only the ensuing second world war helped to get the global economy on its feet again.

In 2010, as growth remained elusive, I wrote and spoke in this House of my deep concern that we might see a new wave of protectionist measures being introduced by politicians who were under pressure to protect domestic markets. The House might recall the defensive, almost nationalistic tone of the debate as Kraft’s hostile takeover of Cadbury was going through, particularly from the Opposition Benches. I called at that time for political leadership to make the case strongly for the massive benefits of free trade and to break down the remaining barriers.

It is in that context that I am heartened, four years on, by the enthusiasm with which the transatlantic trade and investment partnership has been embraced by policy makers.

[Julian Smith]

Does my hon. Friend agree that, despite all the hassle Kraft got, its £70 million commitment to Cadbury and Bournville is another example of the great benefits that inward investment can bring to our country?

[Mark Field]

Very much so. I suspect that my hon. Friend knows more about the chocolate industry than I, particularly as he is a Yorkshire MP.

The enthusiasm that I mentioned has been seen predominantly on this side of the Atlantic. The main aims of the partnership, on which formal negotiations began last July, are to increase trade and investment between the US and the EU by reducing tariffs, particularly on agricultural products; to align regulations and standards; to improve the protection for overseas investors; and to increase access to services and government procurement markets for foreign providers.

There is no doubt that the prize is enormous and that the TTIP is highly ambitious. The US is and will remain the EU’s most important trading partner, with some $2.7 billion of trade daily in goods and services.

[Caroline Lucas]

I am sure that the hon. Gentleman is aware that the Department for Business, Innovation and Skills has commissioned a cost and impact assessment on the agreement. That research states that

“an EU-US investment treaty would impose costs on the UK to the extent that it prevents the UK government from regulating in the public interest.”

Why is the hon. Gentleman so gung-ho about such an agreement when the Government’s own impact assessment states that the investor state part of it will cause problems for us?

[Mark Field]

I look forward to the Minister destroying one or two of those arguments. I suspect that the hon. Lady has provided a selective reading of the BIS impact assessment.

Much of the media coverage of the TTIP has focused on the trade of manufactured goods. Rather less attention has been given to a sphere of commerce in which the UK economy excels globally: financial and professional services. I represent the City of London, which is a hub not only for banking, but for a range of related service businesses such as accountancy, insurance, consultancy, the law and pensions management. To put into perspective the importance of those industries to the UK, in 2012 the financial and associated professional services sector employed some 7% of the UK work force, produced some 13% of total economic output, contributed £65 billion in tax and generated a trade surplus of £55 billion.

The City of London is strongly supportive of the TTIP, but has been consistent in its belief that no industry should be excluded from the partnership’s scope, including financial and professional services. There would be benefits not only through boosted trade, but through a reduction in the potential for the kind of regulatory arbitrage that currently means that differences in the implementation of financial standards are exploited, thereby putting financial stability at risk. Some of the regulatory differences are unavoidable because of the variations in EU and US market structures and cultures. Others cannot be justified on prudential grounds.

As was demonstrated so painfully in 2008, we tend to get regulatory co-operation only in times of severe crisis, when deals are brokered at the eleventh hour to avoid market fracture. If financial services were within the TTIP’s scope, I believe that we could design a stable, long-term framework for the discussion and co-ordination of regulatory issues long before we hit the next crisis point. The other great prize is that we could create a larger, more efficient market place for EU and US financial institutions, thereby solidifying their leading role in global financial regulation—a market that will get much bigger in Asia as the emerging economies of China, India and the like strengthen.

It is for those reasons that the EU has been lobbying hard for such services to be included in the TTIP negotiations. However, there is still stiff opposition from the US Treasury, which suggests that the TTIP is primarily a trade pact, not a forum for regulatory co-operation. The fear seems to be that the US might lose its sovereignty over regulation. It must be made clear that that is not what the EU proposes. Nobody wants to undermine existing regulations, even the Dodd-Frank Act. Co-ordination is quite different from capitulation. We need sustained, high-level political engagement to bring financial services within the TTIP’s remit.

I am concerned that there is insufficient public awareness of the TTIP, including what is at stake, what the challenges and benefits are—I accept what the hon. Member for Brighton, Pavilion (Caroline Lucas) says—and what the potential benefits are. Quite understandably, given the systematic undermining of the world’s political and economic elite in recent years, which has been referred to, there is a wave of distrust at the tenor of the negotiations that are under way. There is a common perception that side deals are being brokered to benefit global corporations, posing a risk to national sovereignty that might see our independent courts being made subservient to outside arbitration. It would be helpful if the Minister clarified his position on those arguments this afternoon. I encourage the Government to run an even more visible campaign on the TTIP that allows us all to have an open, honest discussion about its potential benefits and drawbacks.

[Julian Smith]

Does my hon. Friend agree that it is not just the UK Government that should be carrying out that publicity, but the EU? Instead of focusing on Eurobarometer and the other daft publicity ideas that it has, the EU should be spending its money on promoting the benefits of this agreement to its population.

[Mark Field]

I accept that, but realistically we in the UK probably also need our Government to make clear some of the benefits of trade—some of us in the Conservative party are convinced that the best future lies within the European Union, hopefully with a certain amount of reform going on as well. None the less, it is important that our Government make that strong case.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Is the hon. Gentleman able to comment on earlier remarks by my right hon. Friend the Member for Wentworth and Dearne (John Healey) about exempting the NHS from the TTIP? Currently it is not exempt, although I have asked several questions of the Government to ensure that it is.

[Mark Field]

If the hon. Lady will allow me, I will not comment on that but will leave it to the Minister. I wanted to speak about financial services, and I appreciate that time is tight.

[David Mowat (Warrington South) (Con)]

Briefly, my hon. Friend mentions the need for an EU-US regulatory framework for financial services, which I have not heard of before. How does he square that with what, for example, the Basel agreements try to do globally at the moment? Is that really the way forward?

[Mark Field]

I say simply to my hon. Friend that given the potential huge benefits of the TTIP, it seems odd that important industries such as the financial and professional services are not included in it. Clearly we are in a state of flux about a lot of international and national regulation of financial services, but it seems that this would be a good place for us to make a robust case for open markets, particularly in an industry that will clearly develop in many other parts of the globe beyond the EU and US.

It is important that those who are proposing the TTIP show just what it can add to people’s lives in terms of trading opportunities, jobs and a better variety of consumer products. If there is a perception that the deal is being engineered in an opaque way, it is likely to fall apart and we shall lose an enormous opportunity. Crucially, the United States must do the same. In that nation, protectionist sentiment and economic nationalism are now fast replacing the wave of enthusiasm on which the TTIP initially rode.

Needless to say, progress in this field of influence will resonate strongly in the UK Government’s negotiations for reforms within the European Union. It was, of course, the wily German statesman Bismarck who observed that

“politics is the art of the possible.”

Although I believe it is sensible that the UK Government do not raise excessive expectations as to what might be achieved in negotiations with our EU fellow members, it is at least worth observing that in the aftermath of last autumn’s EU budget settlement there appears to be a new mood towards some level of reform. One hopes that some of the UK’s traditional European allies such as Poland, Finland and the Czech Republic, will not feel encumbered by a resurgent Russia from making the case for some fundamental institutional reform in the EU. Time will tell, I think.

Thank you, Madam Deputy Speaker, for allowing me to say a few words. This debate on the TTIP shows once again that the UK Government’s goal should be that we remain the most outward-looking trading nation. We have every reason to have been proud of that in centuries gone by, and hopefully we will be in the years and decades to come.

14:33

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

I welcome this debate and I am honoured to have put my name to the motion before the House. I am also pleased to be a member of the all-party parliamentary group on European Union-United States trade and investment, and I pay tribute to the hon. Member for Aberconwy (Guto Bebb) and the right hon. Member for Wentworth and Dearne (John Healey) for guiding our work. I apologise to the right hon. Gentleman for missing his opening remarks. I was at a hospital appointment and I thought the debate would start slightly later in the day.

I must be honest and admit that when I was approached to join the all-party group, I had little knowledge of the transatlantic trade and investment partnership, but I quickly gained an understanding of the potential economic significance of the deal if it goes ahead. Wales is an exporting nation and outperforms the other component parts of the UK. We have a trade in goods balance of £4.9 billion based on 2012 figures; by contrast, England has a deficit of £122 billion. Despite recent setbacks in Welsh exporting figures, this potential trade deal is hugely significant.

It is right and proper that the House of Commons debates this issue, such is the potential far-reaching impact of the trade deal for the economy and public services. If I was a Member of the Welsh Parliament, knowing what I know now I would also be demanding a debate and Welsh Government attention. I read today in the Western Mail that the First Minister is visiting the United States, and I would like to know whether he has raised the TTIP with the authorities there and the Westminster Government.

The UK Government have published a swish pamphlet promoting the positive potential of the TTIP, and we will hear many speeches in favour of it today. To add balance therefore, I will concentrate on some of the issues that I believe policy makers at Welsh and UK level, and the EU negotiating team, should focus on during negotiations.

Enthusiasm in Wales for the European Union values of the single market—one of the largest trading blocs in the world—is high, as it is for the fact that Welsh citizens are allowed to travel unimpeded and without visas within its territories, with the rights and protections that affords us in workers’ rights and human rights. I have my concerns about the privatisation obsession of the EU, but I believe the Welsh economy benefits more from being a constituent part of the EU than from being outside it. That is why my party argues for a full and equal voice for my country as a member state.

Coming from that position, it is difficult to argue wholeheartedly against building on the EU single market by developing the TTIP. The EU single market essentially offers free movement of goods, services, capital and labour, and the TTIP would extend the same principles for goods, services and capital. However, putting a Marxist cap on for a minute, the TTIP would neglect labour—[Interruption.] I had to get it in. As I will explain later, that creates a potential imbalance that worries me and on which I need reassurance from those on the Government Front Benches.

It is a further irony that the Government are trumpeting an EU-US trade deal while edging closer towards withdrawal from the EU in all their thoughts and deeds. I suspect that some Tories secretly harbour the desire to withdraw from the EU while remaining in some future US free trade area. As President Obama recently alluded to, and as common sense would dictate, why would US companies—or for that matter any other major trading country—invest here if it did not afford access to the European Union?

[David Simpson (Upper Bann) (DUP)]

Although this is a good news story in that it can create about £10 billion for the UK economy, does the hon. Gentleman agree it is important that we help and encourage small businesses to take advantage of this, and of every help given to them that the Government can afford?

[Jonathan Edwards]

I am grateful for that intervention and I will go on to agree with some of the points the hon. Gentleman has just raised.

We in Plaid Cymru support the principle of affording exporters in Wales the opportunity to further their trade with the USA. It is the largest destination for Welsh exports outside the EU and involves 23.7% of all trade, which naturally leads to the question of whether there is actually a problem to solve with the proposed trade deal. Certainly, we would support any deal that was of mutual benefit and in the Welsh national interest, and we would want guarantees that SMEs are genuinely afforded entry into the market with the chance to create more jobs and grow the economy. For example, exports from local farmers in Carmarthenshire could benefit from a favourable deal. Indeed, the Farmers Union of Wales is very encouraged by the TTIP.

However, Plaid Cymru would be opposed to any deal that ended up favouring big corporations and allowed the further hollowing out of industrial sectors of the Welsh economy. We also have grave concerns about the proposed EU-US trade deal as it currently stands with regard to investor state dispute settlement—I will talk a little more about that later in my remarks.

Much needs to be done to increase transparency in these negotiations. I am an avid follower of the Twitter account launched by the EU negotiating team, but much greater effort needs to be made by the EU and member states to explain and inform people about the TTIP. Economists at the Munich-based Ifo Institute found that a trade deal would lead to a 13.4% increase in US income per head in real terms over the long term, but an average rise of only 5% among the EU 27, now 28—we in Wales welcome our friends in Croatia to the EU table.

The figures assume that the US and EU agree on a deal that would lower transatlantic tariffs, and harmonise and ease regulations in many sectors that are often referred to as non-tariff barriers to trade. Trust in any trading partner is essential. That is why last year I read with great concern the revelations that the National Security Agency surveillance programmes had been spying on Governments in Europe, with the help of intelligence services in the UK. The spying revelations had the potential to derail the proposed deal, given the understandable outrage in some European capitals. I am amazed that there has not been more public outrage here, given the level of intrusion into private lives. I imagine that had any other foreign Government pursued such blanket intrusion, the UK Government would have armed the nukes. Their deafening silence about the NSA revelations indicates a worrying collusion aimed at sidestepping UK civil liberty protections. That is why it is incredibly important that, at every stage of the negotiations on any deal, there is full transparency and accountability, and that all groups are allowed input. This is a matter for all EU nations and regions, not just the leaders of a few select large and economically powerful states within it.

EU Trade Ministers agreed on a mandate for the European Commission to conduct negotiations with the USA on the TTIP. A lack of transparency in future negotiations is a major cause for concern, yet EU Governments insist on keeping the mandate confidential. The trumped-up excuse—that it is necessary for negotiations —does not stand up to analysis, as it will be available for the US to access. The mandate on the terms of any deal should be freely debated in the European Parliament and in European Parliaments, and not arrogantly assumed by the European Commission and state Governments.

The French Government have apparently secured the exclusion of culture and audiovisual services from the mandate. There are still many risks that deserve the same attention. There are serious concerns that negotiations could lead to investor claims that threaten core EU standards and rules on the protection of public services— such as the NHS, which was raised earlier—intellectual property, food safety, GMO crops, and health and environmental standards.

[Caroline Lucas]

The hon. Gentleman is making a very powerful case. Does he agree that it is not enough simply to plead for special exemptions to one or two sectors, such as the NHS? Corporations should not be given new rights to sue the Government for legislating in the public interest, whatever the sector. That bit of the TTIP should simply be taken out.

[Jonathan Edwards]

I fully concur with the views of my hon. Friend. I will go on to talk on that specific issue in the remaining parts of my speech.

Concerns over data protection have been completely overshadowed by the US Prism spying programme. The US is much better organised in economic and industrial policy and will have no qualms about defending its narrow interests, making the need for transparency in the negotiations imperative. Most worrying about the TTIP as it stands are the proposals for investor-state dispute settlement. This would weigh law in favour of big business, allowing them to sue Governments that attempt to defend their citizens. Secretive panels of corporate lawyers could circumvent legal protections and override the will of Parliaments.

[David Mowat]

What proposals does the hon. Gentleman have to protect British investments overseas if he is so passionately against the current structure he mentions?

[Jonathan Edwards]

I am extremely interested in that point. I was going on to say that this is a deal between two advanced trading blocs with advanced legal systems. The hon. Gentleman’s argument would stand up only if he believes that the United States is a banana republic, and I am sure that that is not what he genuinely feels.

Clauses written into trade treaties are often used when dealing with developing countries with weak legal infrastructure, so that companies can protect their investments. However, they should not be necessary in developed economies with some of the best and most highly functioning legal systems anywhere in the world. The hearings are held in secret and would undoubtedly undermine the ability of societies, citizens and communities to contest decisions that affect them. The Democracy Centre has called it

“a privatised justice system for global corporations.”

Plaid Cymru completely opposes any proposals for investor-state dispute settlements within the TTIP, and believes that they are an affront to democracy and should be removed immediately.

Concerns over free trade agreements and the potential for an unequal relationship are not unfounded. The North American Free Trade Agreement between the USA, Canada and Mexico has undoubtedly been of greater benefit to the US and the larger corporations located within it, while US jobs are being outsourced to Mexico for lower wages. On the whole, this has been to the detriment of Mexican home-grown industry, as US corporations have moved in. It has also been detrimental to manufacturing and industrial blue collar jobs in the US, which have been outsourced, and to the small businesses in local communities that such jobs supported.

When out in the States in the summer, during a meeting between the all-party group on European Union-United States trade and investment and a member of President Obama’s inner circle, we were informed that future US economic strategy will be based on three pillars. One is to make the most of the fracking boom in the States, which means that it is now a net exporter of energy. The idea is to offer energy subsidies for heavy industry and manufacturing companies to reverse the flight to the Asia Pacific rim. This will mean that US companies will be at a huge advantage in being more competitive in any TTIP deal.

[David Mowat]

The hon. Gentleman makes the point that the Mexico-US agreement was principally of benefit to the US and multinationals within the US. My understanding, however, is that since that agreement was signed the Mexican economy has grown by an average of 8% or 9%—far more than it had been growing previously. How do those factors stack up?

[Jonathan Edwards]

I think the hon. Gentleman is trying to distract me from the point I was trying to make. I would go as far as to say that the TTIP advantage available to the US could lead to the stripping of my country’s manufacturing base.

To mitigate that potential threat, Wales must have control over its natural resources and energy production infrastructure, so that we can ensure that our manufacturing base is competitive and is not put at a disadvantage. We are a net exporter of electricity, which is why my party has called for the establishment of a not-for-profit Welsh energy company to build up an asset portfolio to protect domestic consumers and our economic base.

You, Madam Speaker, will appreciate that I, the son of a trade union shop steward, am concerned that the TTIP will not include the movement of labour, hence my Marxist critique of the current proposals. As Gary Younge wrote in The Guardian in 2001:

“Our governments are trapped in a morally warped and ideologically unsustainable paradigm. They applaud the free movement of capital; they abhor the free movement of labour.”

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

We will start with a time limit of eight minutes on all contributions from Back Benchers. That may have to be revised downwards.

14:45

[Mr Robert Walter (North Dorset) (Con)]

I congratulate the right hon. Member for Wentworth and Dearne (John Healey) and the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) on securing the debate.

I want to start by saying that I believe in free trade. I subscribe to the goal of global trade that is both free and fair. Achieving that goal, however, is a slow and grinding process. In my view, it will be many decades before there is any meaningful World Trade Organisation-led, top-down framework that we could call global free trade. Why? Because the parties range from the richest to the poorest nations on the planet, from the prairie farmers of north America to the subsistence agriculture of sub-Saharan Africa. If we truly believe in free trade, however, we should use the building blocks that we have today. The European Union is the world’s largest market and we are part of it. It is the biggest building block in this equation.

Consider these numbers: EU GDP is 19.4% of world GDP, and US GDP is 18.9% of world GDP. Together that is nearly 40% of the worlds productive wealth, but between us we still maintain some of the most stringent tariff and non-tariff barriers to trade. Below the wire, under the barrier, 30% of the EU’s stock of foreign direct investment is in the United States, and 29% of the US’s FDI is in the EU. This is, therefore, a no-brainer. If we can create free trade across the Atlantic, with Canada as well of course, and have the transatlantic trade and investment partnership, that has got to be good for world trade, good for the United States, good for Europe and good for Britain. There are, however, those who want us to turn our backs on all of this and leave the EU, and so leave a trade deal representing 40% of world GDP.

The TTIP negotiations will not be easy. There are too many vested interests and we have heard about some of them already: in agriculture, the public sector, transport and financial services, to name but a few. However, the prize is so great and the balance of power so favourable to a deal that I am optimistic we can achieve it. Outside the EU, the cards are stacked against us. Heaven knows, it would be difficult enough to get a deal with the EU if we had just left it. Of course, some Eurosceptics would argue, in spite of the hard facts, that we would still be better off out and better off negotiating our own free trade deal with the US alone. That is, frankly, a fantasy. Can the UK afford to squander such a strategic and economic opportunity? I believe we cannot, and I hope we make sure that we do not.

I want to reiterate my support for the Government’s commitment to keeping our country firmly within the European Union, as a sure-fire guarantee of the UK’s best interests. I hope they will continue to hit home the point that the two issues are intimately linked and mutually reinforcing. The promise of a trade deal highlights not only the material value that the UK derives from our membership of the EU, but the leverage and influence that we can only exercise by playing the lead role within it. This is a fact. The UK has accomplished so much within the EU over many decades. UK companies already enjoy unfettered access to a single market of 500 million people. The EU has helped to create around 3.5 million jobs, one in 10 jobs in our country.

I agree that the UK wants to trade with the whole world but so do the Germans, the French, the Italians and the Americans—but here we have the opportunity of securing free access on our terms to a stable market that will represent 40% of the world’s productive wealth.

[Mr William Cash (Stone) (Con)]

In the light of his remarks, will my hon. Friend explain why, in our trading with the other 27 states, we have run a deficit, according to the last figures, of £49 billion, whereas with the rest of the world we run a surplus of around £13 billion, which is likely to rise by the end of this year to about £25 billion on the same goods and services?

[Mr Walter]

As always my hon. Friend asks an incisive question that deserves an answer, which is that if we successfully negotiate this deal—which is with another 20% of the world—it can only be advantageous to open up those markets in the United States, Canada and other countries to UK businesses.

There are other deals under discussion and in place that would mean that we would be more than halfway towards achieving our goal of world free trade. Do not let us throw that away. Our membership of the EU is too good to throw away and, in my view, the transatlantic trade and investment partnership is too good a deal to reject.

14:52

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

I congratulate my right hon. Friend the Member for Wentworth and Dearne (John Healey) and others on securing this important debate. I also congratulate him on the measured way in which he presented his progressive arguments.

The TTIP could be a good deal. It has the potential for job creation, higher wages for workers and a better deal for consumers. Trade across the Atlantic between the US and the EU is a fact of life and the US is the UK’s biggest export market. If people want to buy and sell across the water, we should do all we can to make it convenient for them to do so. But here is the key: we should have an agreement that helps ordinary people, not big corporations and big businesses. As it stands at the moment I, along with a number of my colleagues both in this House and in the trade unions, are concerned that the TTIP will allow companies to wield control over national Governments and in the long run may not help those we are told it will. The negotiations for this agreement are lacking transparency and we need more information and some people championing ordinary people’s rights before we can accept what is on the table.

We are told by the European Commission that the agreement will give an extra €545 per year to a European family of four, but only one major study has been conducted—by the Centre for Economic Policy Research, two thirds funded by investment banks, asset managers and European central banks. We need better projections to identify the economic and social impact of the deal. An average figure is not good enough. We know, for example, that while the EU motor vehicles labour force could expand by up to 1.28%, other sectors, such as communications, electrical machinery and metals, are likely to contract.

[Julian Smith]

Will the hon. Gentleman give way?

[Jim Sheridan]

The hon. Gentleman has had a good run so far today. I am conscious of Madam Deputy Speaker’s instructions.

The sustainability and employment impact assessment will not be completed until the end of the year and so we are in the dark about what we are signing up to. A much fuller study needs to be conducted as well on social, environmental and labour rights. When I was a shop steward I would never have considered negotiating without all the facts that were available to me. This agreement is on a far bigger scale and our Governments, with all the experts they have to hand, are going into this agreement without the information.

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

I agree that this could lead to protection for employees and the environment being waived. We need stringent safeguards. It could also lead to further privatisations if we are not careful.

[Jim Sheridan]

I thank my hon. Friend and he raises the concerns of many of us. It is irresponsible and I believe negotiations should wait until we have a full understanding of the implications.

I spoke about labour rights, and I can certainly say more about this. As chair of the Unite the Union group in Parliament, I have spent my career fighting for the rights of workers here in the UK. Now I see an agreement that could undermine their rights and an opportunity lost to support our friends in the unions in the US. The US has ratified only 14 of the 190 International Labour Organisation conventions, unlike EU member states who have ratified them all. I understand that with this anti-union Government and the pull of the US Republicans we are unlikely to see the inclusion of rights to organise, rights to bargain collectively or as a last resort rights to strike, but there are some rights that are applicable across the EU, such as those on information and consultation, agency and temporary workers, and health and safety, which we could and should see included. If nothing else, the deal should not lead to a watering down of workers’ rights. I am pleased that the EU is consulting an advisory group of trade unionists, non-governmental organisations and employers, and that the Department for Business, Innovation and Skills is involved in a similar process. I hope that those in charge of negotiations listen to these groups, who I am sure will be keeping a close eye on labour rights, and act on their advice.

Many of my colleagues have raised the issue of the investor-state dispute settlement, which worries a good number of people. We already live in a world where certain global corporations seem to get away with breaking the rules and going over the heads of national Governments. The tax avoidance of global companies such as Amazon, Starbucks and Google, to name just a few, is unacceptable, but a stronger UK Government could hold them to account. The ISDS sets up a system where multinational corporations can challenge and sue Governments, but neither Governments nor individuals are granted rights to hold corporations accountable.

This is not just an empty concern: we see negative consequences in other countries. In Egypt, Veolia has attempted to use this system against the Government for raising the minimum wage. In Slovakia, the Government had to pay $22 million in fines after they reversed the liberalisation of health insurance. These decisions have been made for the good of these countries’ citizens and Governments should not be held accountable by business for making decisions that are for the good of society.

We can easily imagine this happening here. Energy companies are scaremongering about my party’s “freeze that bill” idea, and they might argue that it is a barrier to free trade. We see that we need to halt the market and make sure it is fair and competitive. We are protecting consumers and, in particular, the most vulnerable in our society who are paying through the nose for their energy. A 2015 Labour Government should not and will not bow down to pressures from these energy giants, and they should not be threatened by the existence of an ISDS. In recent history we need only look at what happened with the INEOS corporation at Grangemouth and the disgraceful way it treated its workers, with its attempts to blackmail the taxpayer for money.

Equally, Governments should be able to decide if and when industries should be returned to public control. As has been said, a key anxiety is that if the NHS is not exempt from the TTIP, corporations will use the agreement to force more large-scale privatisation following implementation of the Health and Social Care Act 2012 in England and Wales. What if a future Government or local authorities decided to return transport to public ownership? These measures could limit the ability of local or national authorities to use public money to achieve social and environmental outcomes through their supply chains. Decisions such as this should not be based on free trade. We need to retain our ability to run EU member states as we see fit, rather than as multinational corporations see fit.

A question was asked earlier about the possible impact of our leaving the EU on this potential deal. I would also ask about the impact of Scotland’s pulling out of the UK. Unfortunately, not for the first time, no representative of the Scottish National party is present. [Interruption.] I see that one has turned up at the last minute.

If we are to accept this deal, there must be three certainties. First, there must be realisable growth in jobs and incomes, particularly in manufacturing. Secondly, the ISDS must be dropped and regard paid to the exclusion of public services. Thirdly and most important, there must be improved labour rights that are binding on the signatory parties.

15:04

[Mr Robert Syms (Poole) (Con)]

I congratulate the right hon. Member for Wentworth and Dearne (John Healey) on introducing the debate, and on the manner in which he did so. I think it refreshing to have a debate about first principles and about how we might create future wealth, rather than about how we might spend it. We have learnt from history that trade—and free trade in particular—has enabled us all to make ourselves richer. We do not have to be convinced about how interdependent the world is when we observe that the tsunami in Japan caused shortages in one or two of our car factories. That demonstrates how important it is for our nation to undertake international trade.

We have been through a difficult economic time, comparable in many respects to the 1930s, but in terms of public policy, politicians in most western countries have acted in a very good way, and have kept their economies moving forward. On the whole, they have done a pretty good job of tackling what I think was a major difficulty in 2007-08. A few years ago, I should have said that the forces of protection would be far more on the march today than they have been. I think that that is because the vast majority of our fellow citizens and constituents now recognise the benefits of international trade. We have seen the success of Jaguar Land Rover, which has exported 80% of its output—£13.7 billion—much of it not only to the United States but to the far east. That shows how we are creating wealth and jobs, and how the British economy can benefit from trade.

[Julian Smith]

Will my hon. Friend give way?

[Mr Syms]

I will not, because we are short of time.

There is a debate to be had about the European Union, and clearly Members have different views about it, but the key point is that it contains a major market consisting of more than 500 million people. I personally am glad that the EU is seeking trade agreements with the United States. I see nothing but benefit if we can simplify regulation, reduce barriers and increase trade.

Commentators often write off the United States as though it had had its time, but again and again it reinvents itself, with its Apples, its Googles and the fracking boom, which has had a material effect on energy prices. We are also seeing the repatriation of manufacturing jobs to the United States. I still think that the US has a very good future, and I think it vital for us, as a nation with a long history of campaigning for free trade within the European Union, to press our partners and colleagues to secure an agreement with it.

We have already heard today about the size of the combined economies of the European Union and the United States, which constitute well over 40% of the world’s GDP. If we can establish rules which will mean an increase in trade, we shall have an advantage outside that particular trade area, because other countries will have to confirm to some of the norms. It does not make sense that firms sometimes have to obtain a huge amount of authorisation for products in Washington, and then do the same across the European Union. That increases costs, especially the costs of medicines and pharmaceuticals.

I agree with my hon. Friend the Member for Cities of London and Westminster (Mark Field) that this country is tremendously good at services. In respect of general agreements on trade, what we have not been so good at is opening up markets for services. What we need to do is persuade our Government, and the EU, to push for far more inclusion and far more trade between nations in this area, because it is an area in which we as a country can do particularly well.

It is understandable that Opposition Members have worries, but I think that there is a great prize to be won. If we can boost our economic growth, this will be not a win-lose situation, but a win-win situation. Our country can be richer, our partners in the European Union can be richer, and the United States can be richer. I believe that if the world’s major trading blocs do more trade, world trade will be increased, and we will all benefit from that.

15:05

[Ian Murray (Edinburgh South) (Lab)]

I thank the Backbench Business Committee for scheduling the debate. Let me also echo the tributes paid by many other Members to my right hon. Friend the Member for Wentworth and Dearne (John Healey) and the hon. Member for Aberconwy (Guto Bebb)—who is present—for taking such an interest in the issue, along with their colleagues in the all-party parliamentary group on European Union-United States trade and investment. If it had not been for them, we would probably not have had the two debates on this subject that have taken place in the House over the past seven or eight months. They have raised the issue to the top of the political agenda, and they should be applauded for that.

The TTIP has cross-party support in the House. Indeed, it is supported by a coalition of organisations including the CBI, the TUC and consumer groups. We should reflect on that, and ensure that we get things right. However, as we have already heard today, that is not to say that the TTIP does not involve significant problems.

[Julian Smith]

Will the hon. Gentleman give way?

[Ian Murray]

I will give way once to my—hon. Friend!

[Julian Smith]

I thank my hon. Friend. Following the point made by the right hon. Member for Wentworth and Dearne (John Healey), will he confirm that it is Labour policy not to oppose ISDS as it develops in relation to this agreement?

[Ian Murray]

I shall be unpicking some of the arguments during the short time available to me. I think that ISDS is the subject of one of the most important criticisms of this process, and I shall be interested to hear what the Minister has to say.

The TTIP has huge potential. The CBI has rightly described it as a “global economic game changer”. It can create more jobs here in the UK, improve the wages of British workers, and deliver a better deal for our consumers, but only if we get it right. As we have heard, according to some assessments the potential gain to British output is between £4 billion and £10 billion, equating to between 1% and 3% in exports. We must, however, be cautious about the overall figures, as they have been questioned by some leading academics. My right hon. Friend the Member for Wentworth and Dearne has been asking for an area-by-area assessment, and I think that such an assessment would allow Members to sell the deal to their constituents. Perhaps the Minister will reflect on that.

Given that the European Union and the United States account for 40% of global economic output and that their bilateral economic relationship is already the world’s largest, the opportunities are clear for all to see. Between them, they contain more than 800 million consumers, and the TTIP has significant potential for them as well. It is clear from the helpful briefing sent to all Members by Which? that there will be big prizes for them if we can get this right. Opposition Members strongly support the principles behind the negotiations, and hope that their objectives—job creation, better wages, higher standards and consumer benefits—can be realised. That, indeed, should be the focus of all EU activity.

With the fourth round of talks scheduled to take place next month, things are moving rather quickly, but we are worried about the potential for the talks becoming derailed. Legitimate concerns raised by Members in all parts of the House about some aspects are not being taken as seriously as we would like by the Government.

[Mr Jim Cunningham]

My hon. Friend has probably heard some of my colleagues say that the agreement will be all right provided that we have the necessary safeguards, such as employment rights. Multinationals should not be able to overrule an elected Government.

[Ian Murray]

My hon. Friend is absolutely right. I shall deal with some of those issues later in my speech, and I hope that the Minister will address them robustly.

The attempt to build momentum to get the deal through is understandable, given the political realities of the European elections in May, the fact that the European Commission is to be replaced this year and the very small issue of the US presidential election in 2016. Europe and the US are our most important markets. Indeed the US is the UK’s largest export market and the UK economy attracts a significant level of foreign direct investment from across the Atlantic, but we all recognise that more can be done to make it easier to tackle barriers and to improve market access. We hope that the trade agreement will do just that.

Crucially, the benefits of any trade deal must filter down to employees, SMEs and consumers. As my right hon. Friend the Member for Wentworth and Dearne has rightly said, the business case for the TTIP must be more than a case for business. He is absolutely right and in his speech he laid out in a measured way the issues that we should be looking at in assessing any final deal. I want to reflect on the four tests that he set. They are the thread that runs through the entire debate.

The first key test is the ability to deliver jobs and growth, with which I think we would all agree. Indeed, the EU should be focused solely on that issue. Secondly, the deal should be open and accountable. That reflects some of the other issues that have been raised by Labour Members. Thirdly, the aim should be to achieve the highest possible standards in respect of social and environmental concerns, data and wages. Fourthly, the agreement must allow leeway for national Governments to act in their own interests.

Through those four key tests, we will monitor closely the negotiations between the EU and the US, and the UK Government’s input into them. Likewise, we want the benefits that businesses experience to be passed on to consumers, whether through increased choice or reduced prices. It is rather puzzling that we have a Government who extol the virtues of the opportunities that the TTIP brings, yet ironically argue at the same time that we must leave Europe. Frankly, the TTIP is a shot across the bows for Tory Eurosceptics—a gang that the Minister has never been part of, for which he should be commended. The hon. Member for North Dorset (Mr Walter), who is no longer in his place, said clearly that it is in the UK’s interests to stay in the EU. I hope that the Minister will echo that when he responds to the debate. I firmly hope, however, that the UK is in the room for the negotiations and not carping from the room next door. This issue is far too important. That is why Labour will make the hard-headed, patriotic case, founded on the national interest, both for Britain in Europe and for change in Europe. To take up the benefits of an EU-US deal fully, we must be part of the EU.

Let me turn to some of the concerns that right hon. and hon. Friends have raised. First, they raised concerns about the ISDS aspects of the proposals, which have been well publicised and documented. Labour MEP colleagues and our sister parties in the socialists and democrats group in the European Parliament voted to scrap that mechanism, but they have faced an uphill battle in the EU Parliament dominated by Conservatives and a minority of MEPs. Therefore, we will continue to push for the need for effective and necessary transparency to be included in the final deal. As the BIS study conducted by the London School of Economics found, the ISDS would have little or no economic benefit and carries significant political risks. It is welcome, then, that the EU Trade Commissioner has decided to consult on that, which will give stakeholders an important opportunity to raise their concerns and increase the transparency of the deal. My right hon. Friend the Member for Wentworth and Dearne mentioned War on Want, which has rightly campaigned on the matter and I hope that the Minister will be robust in having the ISDS removed from the TTIP negotiations. Can he update the House on his current thinking on that and whether he will press strongly for that to be removed?

Secondly, as my right hon. Friend the Member for Leigh (Andy Burnham) has said, we are clear that the NHS must not be included in any agreement. In fact, all public services should be removed. In the UK, the demands of a 21st-century care system require integration. Markets are not the answer to the delivery of today’s health care. That would deliver something unwelcome in the form of fragmentation. The Government need to be clear on that, as they have sent out mixed messages to date. In response to my parliamentary question on 12 November last year, the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon), said:

“The Government has not sought to exclude health services from the scope of the Transatlantic Trade and Investment Partnership (TTIP) negotiations.” —[Official Report, 12 November 2013; Vol. 570, c. 598W.]

That is in contrast to the response from Lord Green to the British Medical Association. He has also called for health care to be explicitly ruled out of the negotiations. He said that

“national interests, including those of the NHS, are protected.”

Those statements appear to me to be contradictory. Therefore, can the Minister set the record straight on the Government’s position on the NHS, public services and the negotiations that are ongoing? As I said, those are the areas that could result in the derailing of any agreement. If the Government would rule out the NHS now, we could move forward with more confidence and transparency in the agreement.

I have a couple of additional questions to put to the Minister. First, does he believe that agreement before the end of 2014 is possible or likely? Secondly, what representations have he or his colleagues made to the EU and its consultation on ISDS? Thirdly, what engagement are the Government having with businesses, charities, consumer groups and trade unions on the issue to garner support and involvement? Lastly, what engagement strategy are the Government planning with the public, as it is not difficult to see why organisations such as Which? and War on Want think that this deal is being negotiated in secret?

The size of the prize embodied in the agreement is considerable. It is a prize that must be shared among all—business, employees and consumers—and not just corporate interests. I hope that the Government will be able to respond positively to our concerns. I want to make it clear to the Minister that Labour Members are very much looking to co-operate. However, he should be aware that we will hold him to account and ensure that he does not give negotiators a free rein. I urge him to push for transparency so that the benefits of this major deal are clear for all to see.

15:16

[The Minister without Portfolio (Mr Kenneth Clarke)]

I too congratulate the right hon. Member for Wentworth and Dearne (John Healey) and his colleagues in the all-party group on securing the debate on this important subject. I welcome the fact that the vast majority of Members have spoken out in favour of the prospects of a trade agreement between the EU and the US, which we believe will be of great benefit to this country. I hope that the debate might serve the purpose of publicising the virtues of trade agreements between the EU and the US, as several hon. Members have said. I can assure Members that it is not for want of trying. I am afraid that the media in this country probably find the virtual consensus that exists between the main spokesmen in this debate one of the things that makes it less newsworthy. However, an agreement could be of enormous importance to the future of our economy.

The economies of most of the western democracies need a considerable boost at the moment and few things could give a greater boost on both sides of the Atlantic than a comprehensive deal that leads to a stimulus of trade in both directions. The values have been underlined. The case has been made. The figures on the potential value are speculative but there is no doubt there will be a stimulus to growth on both sides of the Atlantic, as the history of trading relationships shows. We should not forget that.

People keep going on about the fact that the agreement should be for ordinary people and not just giant corporations. What we are expecting to flow from that will be good for employment, particularly in modern, competitive sectors of our economy. It will also be good for consumers in increasing choice and keeping down prices and costs. As my hon. Friend the Member for Cities of London and Westminster (Mark Field) said, the last several decades show that the benefits of open trade are of great advantage.

[Several hon. Members]

rose—

[Mr Clarke]

I will give way shortly. I will merely say that the fact that we have this near consensus in British politics helps to give the UK a leading role in the negotiations. It is one of those areas where, despite our, at times, slightly tricky relationships with the EU, the UK is acknowledged to be the member state most in favour of open trading relationships. It is known that the UK’s position is not dependent on the position of one political party but extends way across the political threshold. My role, at the request of my right hon. Friend the Prime Minister, is to ensure that British interests and influence are brought to bear both in Washington and Brussels as the agreement goes ahead. It will be of huge value to achieve this, but let no one be too complacent about the prospects of getting a comprehensive agreement. It will not be easy, but I believe that the prospects are better at the moment than they have been at any time during my political career.

[Ian Paisley]

I fully agree with the way in which the Minister has approached this debate and the TTIP, but will he give us an assurance that he will ensure that the rights and interests of farmers and consumers are the top priority for the Government?

[Mr Clarke]

I will certainly try to address all those concerns. That is the key reservation that is being expressed. A lot of Members say that they are in favour of a TTIP but are extremely worried that it will affect our ability to set standards, and it is important that we address those fears. I genuinely believe that they are unfounded, but it is feared that people are getting conspiratorial and somehow plotting to reduce farming, food safety, health and environmental standards on both sides of the Atlantic. The fact is that the British Government are convinced that a trade deal is not the place to raise or lower standards for the consumer, for the environment, for health and safety, for employment or for farming and food safety. Those are matters for the legislative authorities on both sides of the Atlantic to decide for themselves. On neither side of the Atlantic is anyone proposing to undermine those standards.

The hon. Member for Brighton, Pavilion (Caroline Lucas) drew our attention to the matter of financial services in the United States. When I go to the US, I find myself having to reassure people that we are not trying to reduce their standards in relation to Dodd-Frank. When I meet people in the Democrat party who are close to the labour unions, I have to reassure them that our labour market standards on this side of the Atlantic are as good as, if not dramatically better than, those in the United States, even if our pay rates are not so high. The issues are not the same between us as they are between, for example, the United States and some of the Pacific rim countries. On neither side of the Atlantic is there any weakness in the lobbying from NGOs and others on all these issues. The negotiators on both sides of the Atlantic and the Governments of the European Union—certainly the British Government—have no intention of allowing our own right to legislate in the appropriate spheres to be compromised. Nor are we choosing this particular instrument to enter into a conspiracy to get round or lower the standards that we in this House and the people of this country wish to see applied.

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

Our delegation that was sent to the States saw at first hand the discussions on the time scale. As I see it, that is the main hurdle that we face in relation to any agreement. Has the Minister any up-to-date information on the likely time scale for the introduction of such a treaty?

[Mr Clarke]

The hon. Gentleman follows these matters closely, and he knows that, on both sides of the Atlantic, we broadly agree that we need to keep up the momentum and make progress. If we do not achieve this deal by the end of 2015 or early 2016, we will not get there at all because the politics will take over. That is the history of trade deals. We would all have preferred an arrangement like the Doha round, under the auspices of the World Trade Organisation, but since that has gone we have tried to move towards this kind of agreement. The pace will vary. We have made remarkable progress so far, and we are about to go into our fourth round. Some of the first offers have already been exchanged.

How quickly this goes will depend on events. The half-term elections in the United States might slow things down, for example. Also, the US is engaged in negotiations on the Pacific partnership, which is associated with our agreement and slightly ahead of it. In any event, we have to secure agreement within the present administrative term in the United States, and before the politics in any part of Europe start to go sour because a lobby group suddenly decides that vested interests can be protected by opposing the deal. We have every intention of pressing on and making progress as rapidly as possible.

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

In our negotiations with the US Government, is it not important that we should emphasise the distinction between the TTIP and deals such as the trans-Pacific partnership, on the basis that the risk of a sophisticated, regulated market such as the EU dumping inferior goods on the US is minimal, and that the fears that have accompanied other free trade deals need not exist in the TTIP?

[Mr Clarke]

I can assure my hon. Friend that I make that point, although we are not hostile to the Pacific partnership. It is perfectly reasonable for the American Administration to wish to conclude such an ambitious deal. However, people appreciate that the issues being discussed in Congress and among the American public are quite different from ours, and I think that that makes it easier for us to make progress. On the question of fast-track authority, which would determine when we eventually conclude, my hon. Friend has mentioned worries about the trans-Pacific partnership that are causing doubts in the United States. I think that we are waiting in the queue behind that agreement in that regard.

[Mr Buckland]

Is there not a danger that members of Congress who are hostile to the fast-track authority proposals could somehow bring the TTIP into the mix and withhold FTA for our deal, as opposed to the trans-Pacific partnership?

[Mr Clarke]

The answer to that is yes, there is a danger. I can assure my hon. Friend that we will do our best to minimise it, as will the commission in Washington. It would be most unfortunate if that were to happen.

That brings me to the question of transparency. No one is hostile to the idea of being transparent. The EU is a union of 28 nation states and Governments, all of whom have their own Parliament, and the desire to share information among Parliaments and the public is considerable. There is a dilemma, however, in that there is a conflict between that arrangement and the negotiating positions. There is no doubt that our American friends negotiate very hard indeed. They are pretty hard-nosed people when it comes to negotiating the detail, and we cannot send our negotiators into the chamber with all their bottom lines, their ambitions and the mandates they have received from their member states revealed. We need to get that balance right, but the instinct of Commissioner de Gucht and Commissioner Barnier—and certainly of the British Government—is to be as forthcoming as possible, so long as we are not simply feeding information to lobbies that want to try to put a spoke in the wheels. I entirely understand that getting public support—and, eventually, the smooth ratification of this deal—will depend on whether we have been sufficiently transparent with all the lobbies.

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

Will the Minister give way?

[Mr Clarke]

Let me make some progress; otherwise, I will not be able to complete my speech in the appropriate time.

The question of investor-state dispute settlements—ISDS is the acronym—has given rise to fears that the proposed deal is a plot between multinational companies that are seeking to destroy our long-established standards in labour laws, environmental laws and so on. I really do not believe that that is the case. On the other hand, the concerns are being taken seriously. I realise that we have to have substance to my assertion that we are not raising or lowering standards on either side of the Atlantic and we are not usurping the role of legislatures, which is why the Commission has said that it is going to consult. I understand some of the fears that have been expressed, but I do think that people have got the wrong end of the stick and the fears are wholly exaggerated.

[Katy Clark]

rose—

[Mr Clarke]

Let me make my point and go through the argument, and then I will give way. First, let us remember that trade deals do benefit consumers, which is why consumer groups such as Which? are in favour of this trade deal. It is protectionist providers that resist such deals. Quality, choice and the price for consumers are improved where there is a good trade deal, and those with the best products and services tend to win out in trade deals. The ISDS clause is not a novelty; it is not some new threat that has emerged. Such clauses have been put into most trade deals for years and years. I have heard the familiar examples of odd claims that have been made in actions around the world, but these clauses have not had the effect that has been described.

Apparently, there are 3,400 of these clauses inserted in trade deals globally. The EU and its members have 1,400 ISDS clauses in various trade deals, and the UK has 94 ISDS clauses in our existing bilateral treaties. We have twice been challenged under ISDS for standards alleged to break our treaty obligations, but so far no British Government have ever lost a case under ISDS. What we have done is successfully brought claims against other countries; we have had slightly more success there, because the point of an ISDS is to underline the value of the total agreement by making sure that no individual investor or business can be disadvantaged by a Government or union of Governments breaking the obligations they have entered into.

The case was cited of Slovenia—somebody, perhaps the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), said Slovakia—and my understanding is that it was lost when, as a result of local lobbying, that country went back on the deal it had just done to open up its health insurance market. That cannot be done, but no ISDS takes away the right to legislate from a Parliament; an ISDS gives rise only to a quicker and cheaper means of resolving disputes if there is some suggestion that a Government are breaking the agreement. Some say, “No European Union Government or the USA would ever do that”, but one of the big ambitions of those on this side of the Atlantic is to open up the public procurement market in the US. In some states of the US it is open, but in others it is not; some states do not measure up to WTO standards at all. Far be it from me to express the faintest doubts about the approach of politicians in some smaller US states or some EU states, but public procurement sometimes takes on a pork barrel element when the contracts are being placed, as opposed to when the tenders are being issued.

I think there could be some advantage, some reassurance and some pressure against people cheating in public procurement contracts if it is known that there is an ISDS clause. Of course it is quicker and cheaper, and it is arbitration and not litigation, but again the argument of those against ISDS is, “Why don’t you just go to law? There is a perfectly good legal system in the European countries and in the US.” I can say only that the US does have a perfectly good legal system, but it is expensive and it can be extremely long, as one sails through either the state courts or the federal courts trying to resolve a dispute. People have said that the advantages in all this agreement are as much in the area of regulatory coherence —with far more regulatory coherence stopping unnecessary convergence in our recognition of regulatory standards—than they are in tariffs, but small and medium-sized countries are not going to go into these markets if they are taking on the risk of having to go in for expensive litigation against American authorities that are plainly not complying with their terms of the treaty. Similarly, there are states in the EU where American investors would be most reluctant to sail in if they were relying entirely on the fact that they can take to the legal process in some southern European countries to challenge the bona fides of local officials over whether they were complying with the agreement. I will go no further, but the British have always put these clauses in our trade deals and the US normally puts them in its trade deals; 3,400 of them are in place and they have made a reality of free trade where it would otherwise not have happened.

[Julian Smith]

I welcome the fact that my right hon. and learned Friend is standing up for small and micro-businesses, which will really benefit from this ISDS vehicle. Is he, like me, surprised that the Labour party, while claiming to be pro-enterprise, is so against this measure?

[Mr Clarke]

Obviously, I understand the doubts being expressed, because some extremely respectable lobbies and non-governmental organisations—some consumer groups, some aid lobbies and some sections of the trade union movement—are raising all these fears. I genuinely think that they are mistaken and that their arguments, if they are too successful, will not benefit employees, consumers or anybody else, which is why I am trying to rebut them. Those who have spoken—I do not think anyone would be offended if I described them as somewhat of the left of the broad political spectrum, which does not mean that they are unacceptably or extremely left—are getting the wrong end of the stick. The ordinary man and woman have a great deal to benefit from this TTIP. To make it less effective by excluding an ISDS would not help.

[Katy Clark]

Will the right hon. and learned Gentleman therefore give us an assurance that nothing in this trade agreement would undermine the democratic ability of this House and other parts of Government in these islands to take decisions on the commissioning and organisation of public services—whether those services are in the private or the public sector?

[Mr Clarke]

I realise that a broader issue underpins those fears, which is the extent to which there is scope for private sector involvement in our national health service, and that is part of a much bigger argument that I have taken part in for 30 years. I was not aware that a distinction was drawn between British, French and German private sector participation and American participation in our national health service. I can assure the hon. Lady that nothing in the agreement would open up access to the national health service beyond what is already permitted, and what was permitted under the previous Government. Overseas suppliers are already able to offer hospital services and health-related professional services through a commercial presence here. The important thing for anyone who engages in the provision of professional health services and health care companies in this country is that they have to comply with UK standards and regulations in just the same way as British health care providers, and, as I say, those standards will remain under the sovereignty of this country.

[Mr John Spellar (Warley) (Lab)]

The right hon. and learned Gentleman was asked a question regarding the involvement of micro-businesses, but the note from the Library states that the average cost of an arbitration case is $4 million per party, about 82% of which is legal fees. The panel members can claim a daily fee of $3,000 a day plus expenses, and billing rates for arbitration lawyers run up to $1,000 an hour. Only major corporations will therefore be able to participate in this. I am not detracting from the main thrust of his argument, but this really is for major companies, is it not?

[Mr Clarke]

I am not encouraging small companies to start engaging in arbitration in major commercial disputes. That is an average. It depends on the complexity of the issues. I think the right hon. Gentleman would agree that full-scale commercial litigation—probably on either side of the Atlantic—is more expensive. This is a quicker arbitration process to substitute for the enormous costs that would be involved in challenging a public body, on either side of the Atlantic, on a commercial dispute about a breach of treaty obligation.

[Mr Cash]

Before my right hon. and learned Friend concludes, will he elucidate on the point he made earlier?

[Mr Clarke]

Which point I made earlier?

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. Is the Minister giving way?

[Mr Clarke]

indicated assent.

[Mr Cash]

It was with respect to the question of transparency and the fast-track arrangements. As my right hon. and learned Friend knows, President Obama, in his State of the Union address, called for fast-track arrangements. The next day, the Democratic leader in the Senate turned down the idea. Indeed, Nancy Pelosi, the minority Democratic Leader in the House of Representatives, turned it down only last week. Was my right hon. and learned Friend being a little sanguine in his assessment of the position, and does he have any up-to-date information to give us today?

[Mr Clarke]

I said only that the timing of fast track authority would have an effect on the timing of any agreement. I follow these matters closely. Obviously, they are utterly beyond our control. This is a political issue in Congress. There is more support in both Houses of Congress for a trade agreement with the EU than I can remember in my political career, but people have reservations and of course many people in Congress would rather see all the details before they approve it than give too early authority. The problem is that no one will ever settle a negotiation with a US Administration on the basis that Congress might be able to suggest detailed amendments to it afterwards as a condition of approval. It would be improper for me to start offering opinions about how it is going to go with the United States, but the timing of fast-track authority is a little uncertain. The doubts are more provoked by the Pacific partnership agreement than the TTIP. As my hon. Friend the Member for South Swindon (Mr Buckland) said a few moments ago, the two are slightly linked when it comes to American debate.

[Mr Donohoe]

Will the Minister give way?

[Mr Clarke]

This will definitely be the last intervention I will take.

[Mr Donohoe]

On the basis of discussions on this matter with Senators from the United States, it seems that they are concerned, as we should be, about the growth in the Chinese marketplace.

[Mr Clarke]

Well, they are, but that is, as several people have said, part of the significance of this potential EU-US deal. It covers 47% of the world’s GDP and about 30% of world trade. If we can get a proper comprehensive agreement, we will set standards that will guide future trade agreements that will inevitably involve China. The Prime Minister recently began to talk about the prospect of moving on to the big challenge of deciding how China should be accommodated in these arrangements, which are now, I am glad to say, spreading throughout the world. If we can tackle this one, we will be in a better position to contemplate how to deal with China.

The negotiations are making good progress. It gives some cause for optimism at a time when it is foolish to be naively optimistic about how rapidly we are going to recover from the worst financial crisis in modern times and how rapidly the western European countries, including the United Kingdom, will return confidently to secure normal growth in better balanced economies that are able to compete in the modern world. This agreement is going in the right direction. Needless to say, I agree with my hon. Friend the Member for North Dorset (Mr Walter) that it particularly underlines the value to this country of its being a full member of the EU. It is an illusion to believe that we would sit at these tables if we suddenly decided to leave the EU. It is a complete delusion for any Scotsman to believe that Scotland would continue to play any significant role in this kind of problem if it suddenly decided to revive the mediaeval kingdom and start leaving the United Kingdom. We live in a world where politics has never been more intimate and we live in a globalised economy where our aim must be to have a United Kingdom economy that is modern and competitive —as ever, opening possibilities for us. A confident United Kingdom will play a leading part in influencing the EU’s progress towards a comprehensive deal which there is a good chance—no more than that—will be achieved within the next year or two. The fact that it has been so widely welcomed in this House will help us give added impetus and improve British influence in the process on both sides of the Atlantic.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. The House will be aware that this is a time-limited debate and there is not very much time left. I therefore have to reduce the time limit for Back-Bench speeches to seven minutes.

15:44

[Mr John Spellar (Warley) (Lab)]

Thank you, Madam Deputy Speaker, for calling me to speak, and I will truncate my remarks.

I start by congratulating my right hon. Friend the Member for Wentworth and Dearne (John Healey) on securing this debate. I apologise for not being here in the Chamber for his comments; I was chairing a meeting elsewhere in the palace.

A number of colleagues have spelled out the considerable economic advantages of a transatlantic trade and investment partnership. The US is already our most important single market and trade with EU countries is a major part of our trade, even if—encouragingly—we are making significant advances in other markets.

An EU-US agreement would encompass more than 40% of world GDP, and along with EU agreements with Canada and Japan would encompass more than half of world GDP. Removing tariffs, however limited they are, and—more significantly—removing artificial restrictions would also provide a welcome fillip to these major economies, benefiting not only themselves but the rest of the world. The Foreign Office has made an interesting and useful assessment of the impact of such agreements on individual American states, and it would be very welcome if it did the same for both the countries and the regions of the EU as well.

However, it is clear from many of the articles that have been written and from some e-mails that we are receiving that we may have to take the debate back to first principles, starting by explaining why free trade is not only a good idea but why it has been a major driver in the removal of a massive number of the world’s people from poverty during the past two centuries, particularly during the past 30 years. The mass migration of hundreds of millions of people in China, the development of Chinese cities and infrastructure, and the raising of the Chinese people’s living standards have been awesome. That does not mean that I am oblivious to many of the faults, problems and stresses in Chinese society; given my political history, it would be surprising if I was. However, everyone must recognise the seismic shift that has happened on the back of the world’s freer trade environment.We must also consider the effects of that shift on wage distribution and the environment in other countries, and understand that generally protection does not benefit the worker or the consumer; mainly it benefits the monopolist, the corrupt bureaucrat or the profiteer and black marketeer.

As I have said previously, the argument about free trade goes back over the past two centuries. In our great industrial cities, we have monuments to the historic battles against the corn laws, and we may have to fight those battles again. If we do, the Conservatives would be particularly worried as the corn laws tore their party apart. However, we do not have the time available to us today to explore that issue further.

We must deal with three particular issues: the relationship between the EU and the US; the broader strategic approach of that relationship; and the vexed question of the dispute system, which is causing considerable agitation.

Too often, the debates on this subject have been focused on and posed as a choice between either the US or the EU. This agreement clearly shows that the US is not interested in having 28 separate agreements; it is interested in doing a deal with the EU—and not just about trade. A lot has been made in the defence field of the so-called “pivot” of the US between the Atlantic and the Pacific going from 50:50 to 60:40 in favour of the Pacific—by the way, that is still a huge presence from the world’s only superpower. The transatlantic alliance has served us and a stable world extremely well, and reinforcing it would be important in its own right. Agreements between the EU and the US, Canada and Japan make a much better context for maintaining a liberal trading and political environment, because although I have acknowledged the huge Chinese achievement I would not wish to see the economic and political muddle of China dominating the international trade scene. In particular, I would not wish to see the arbitrary use of state power against workers and citizens.

However, there are legitimate concerns about whether some trade deals can undermine the terms and conditions of workers; my hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan) raised that issue. That has been the particular concern of the American unions about the impact of the North American Free Trade Agreement, including the agreement with Mexico. However, having met representatives of those unions, I know that they have considerably fewer reservations about a deal with the EU, because of the higher level of protection for workers, consumers and the environment that we have in the EU. Indeed, the level in the EU is higher than in some southern states in the US. Only recently, we have seen a massively funded and vicious anti-union campaign against representation in Volkswagen’s plant in Tennessee. This time it was not even the employer, but feral right-wing Republicans—the buddies of some in the Conservative party—who were behind that action. The American Federation of Labour and the TUC have therefore gone into the matter in considerable detail—I congratulate them on their realistic appraisal—to seek reassurance about the impact of any deal on workers’ wages and conditions, as well as on the public provision of health and education, although such provision is not so much about the trade deal as the policies of the elected British and American Governments.

The Minister rightly drew attention to the impact of particular clauses. We have about 92 investment agreements with other countries, but only two have led to cases, neither of which related to public policy. We welcome the result of the World Trade Organisation agreement in Bali, yet the WTO has many arbitration provisions, several of which impact on such issues as tobacco packaging, which we have already considered in relation to investor-state dispute settlements. We need to be clear that investment must be encouraged, but both countries have mature judicial systems, so we must consider whether it is worth the argument about this to achieve the greater goal of what will be a beneficial agreement.

15:51

[Zac Goldsmith (Richmond Park) (Con)]

It is good news that we are discussing the TTIP which, as far as I am aware, is the most ambitious free trade agreement ever attempted. On these complex agreements, national legislators, in their worthy pursuit of job creation, growth and trade, do not always pay attention to the finer details.

Some years ago when I interviewed Ralph Nader, the consumer activist and occasional presidential candidate, about the North American Free Trade Agreement, he told me that even though Congress was set overwhelmingly to back the treaty, he was convinced from his discussions with members that few of them, if any, had bothered even to read the text. He eventually offered a substantial prize to any member who was willing publicly to answer 12 simple questions about NAFTA. Following a long pause, a strongly NAFTA-supporting Republican, Senator Hank Brown of Colorado, accepted the challenge and reserved the Senate Foreign Relations Committee room for the ordeal. The cameras and journalists were there and, to everyone’s amazement, he answered each of the 12 questions correctly, but when he had finished, he turned away from Ralph Nader to the cameras and said that having read the treaty, which he had not previously done, he realised just how awful it was, so he chose to do a U-turn and to vote against it.

At this stage, we do not have a huge amount to go on regarding the TTIP but, whatever one thinks about it, it clearly has serious implications and it merits close scrutiny. On the whole, free trade agreements are about lowering barriers to trade—that is their purpose—but, compared with the situation in other countries, there are relatively few barriers to trade between the EU and the US, so the main focus must be standards and regulations, with the goal of trying to harmonise them. However, it is hard to imagine that the process will involve any key standards going up; on the contrary, I suspect that we will see a spiral downwards. We only have to read several of the publications put forward by some of the most substantial big business lobby groups to see that they are openly talking about removing under the TTIP whole rafts of standards and regulations that businesses believe hinder their activities. One does not have to believe in a conspiracy theory; one just needs to read the communications of some of the companies that are playing an active role in the process.

We are already seeing an emphasis on lobbying with regard to food, about which several hon. Members have spoken, and it is difficult to imagine the harmonisation of food standards working in our interest. Europe believes that providing clear labelling for genetically modified food is a consumer right, but such practice is absolutely opposed by the vast majority of states in the US.

[Jim Shannon (Strangford) (DUP)]

On the subject of food, two companies in my constituency wanted to export to the United States, but the border controls and financial conditions to which they were subjected ensured that they could not be competitive there. They therefore had to franchise out in the United States, which meant that the company back home could not grow or create jobs here, which shows the unfairness of the system.

[Zac Goldsmith]

I thank the hon. Gentleman for that intervention.

There are so many differences between the US and the EU, and not only in the quality of standards, but in the approach to developing them. I cannot imagine a situation in which harmonising standards and regulations would work in the interests of the consumer. I have given the example of GM food labelling, but there are many others. A number of countries around the world, and indeed the EU as a whole, have chosen not to allow the import from the US of beef from cows fed a diet that includes the hormone ractopamine, because of the fairly grave health concerns. I suspect that most British consumers would support that position. Would that be challenged? Well, there is already plenty of talk among agribusiness in the United States that it should be.

Most worryingly, US agribusiness is strongly opposed to EU attempts to limit endocrine disruptors. The links between the use of such chemicals and the alarming increase in precocious puberty among young girls are not disputed. Will those standards that we have set across Europe be adhered to and maintained? That remains to be seen, but we know that plenty of lobby groups in the United States have their sights set on reducing those standards.

It is easy to imagine that regulatory convergence will mean chasing the lowest common denominator. It is worth noting that, according to a whole raft of freedom of information requests conducted by the Corporate Europe Observatory in the context of the TTIP, the Commission has met civil society groups just eight times over the course of those discussions, whereas it has met corporate lobby groups—I do not know how they are defined and am only repeating what has been reported—119 times.

I suspect that most Members across the House would agree that removing or simplifying unnecessary regulations, removing barriers to entry, particularly for small firms, and encouraging free trade are all laudable aims, but they need not happen at the expense of democracy. My concern is that the proposed ISDS mechanisms, which we have already heard a great deal about, will undermine democracy. Under those mechanisms, companies wishing to challenge a national regulation could effectively bypass the usual process and go straight to an investment tribunal. Often hugely important outcomes therefore rest on the shoulders of just three arbitrators—one is chosen by the company, another by the state and the third is a compromise of the two. It is hard to understand how this country would want or need such a system.

My right hon. and learned Friend the Minister was asked recently—

[Mr Kenneth Clarke]

rose—

[Zac Goldsmith]

He is about to intervene, but I am going to quote him anyway, because he might be about to repeat this. When asked why that would be useful for this country, and indeed for Europe, he stated:

“Investor protection is designed to support businesses investing in countries where the rule of law is unpredictable, to say the least.”

There have been so many requests to this Government and to the European Commission for examples of countries in the EU that are beyond the pale along the lines of the description he offered, but not one country has so far been listed, so why do we need this process? Why do we need these tribunals for countries where the rule of law is adhered to more or less across the board?

[Mr Clarke]

As I understand it, an investor who has access to this process would not be able to start arguing in favour of reducing standards in any regulation that has been passed by the legislature. Regulating will remain the responsibility of the authorities that already regulate. The only claim that can be made through the ISDS is that the state has gone back on its treaty obligation. Therefore, unless in the course of negotiations some agreement has been entered into to change regulatory standards on either side of the Atlantic, there is no way our existing rules on food standards or anything else could be challenged by some American company that suddenly decides that now that we have signed a TTIP it has the right to try to change the rules. What we are trying to get rid of is unnecessary regulation and the duplication by regulators on either side of the Atlantic of processes designed to reach the same public objective. That is the kind of thing that can be eliminated, to the huge advantage of companies on both sides of the Atlantic.

[Zac Goldsmith]

I very much appreciate my right hon. and learned Friend’s intervention. At this stage it is very hard to know how things will pan out. Much will depend on the terms of reference, but there are plenty of examples from around the world—as he pointed out, this is not a new concept—of companies using similar provisions in other trade agreements in order to undermine domestic legislation.

The North American Free Trade Agreement is a good example. According to a succession of polls in the past year, just 15% of US citizens want to remain in NAFTA. It has become one of the most unpopular free trade agreements of all; it makes the Euroscepticism that my right hon. and learned Friend talked about earlier look like a joke. A striking example in relation to NAFTA concerns Canada being sued via one of these dispute mechanisms by Ethyl Corporation—he is probably familiar with the case—for banning the chemical MMT, which Canada considers to be a highly dangerous toxin. Canada had to settle; it paid millions of dollars in compensation and eventually had to reverse its ban. Incidentally, the ban still stands in the United States, which makes the decision even more perverse. There are many more examples, and I was going to rattle off hundreds, but time is short and Members will be pleased to know that I will not.

As this treaty unfolds, it is essential that we remain mindful of who it is designed to serve. A guard needs to be erected against the voracious lobbying by big businesses that have a direct interest in undermining a number of the standards that I cited and have been cited by other Members. I personally do not trust the Commission to balance those competing interests, for all kinds of reasons, some of which I have hinted at in my short speech. I strongly believe that it falls to legislators like us to apply scrutiny throughout this process, and I very much hope that we do.

16:01

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

It is a pleasure to follow the hon. Member for Richmond Park (Zac Goldsmith). I congratulate members of the all-party group on securing this debate. They have done a huge service to the House in the work that they have done to draw attention to this matter. This treaty could have massive consequences for all of us, many of which are good. However, many concerns have been raised that the Government need to address and to provide a lot more detail on as we move forward.

There is absolutely no doubt that this trade deal potentially has huge significance for all of us. I therefore congratulate the mover of the motion, my right hon. Friend the Member for Wentworth and Dearne (John Healey), on the four tests he set out in relation to which we should consider it. The three points put by my hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan) go to the heart of many of the concerns that Labour Members have about aspects of the treaty.

A great deal of concern has been expressed about multinationals, particularly their ability to use investor-state dispute settlement procedures where the nation’s regulatory framework is deemed to be a barrier to free trade. There is a huge amount of concern that this treaty could be yet another device that is used to thwart the wishes of Parliaments, as democratically elected bodies, to make decisions, particularly in relation to public services. We have heard a number of references to the health sector, which, in England in particular, is very politically contentious at the moment because of this Government’s attempts to open the health service up to enable private providers, many of which may well be US multinationals, to enter the sector. However, the concerns raised about these provisions in relation to the health service are equally valid in relation to many other aspects of the services and utilities on which the public rely, whether they are currently in the public sector or the private sector.

We have to recognise that this treaty will simply be a piece of international legislation that sits alongside a range of other legal obligations that we have in place. I am very aware of that because in North Ayrshire and Arran the Scottish Government have spent many millions —indeed, tens of millions—of pounds in restructuring the ferry services that serve my constituency so that CalMac, a publicly owned body in Scotland, could take part in a tendering exercise that some private organisations also took part in. At the end of that procedure, we ended up with exactly the same ferries providing exactly the same services between the ports in my constituency. That example is relevant because of the European procurement regulations.

Many of the concerns raised today could already be seen as problems when it comes to decisions being made by democratically elected bodies about public services. Genuine concerns are being raised about the ability to use public procurement to achieve social and environmental outcomes, and about whether the provisions of this partnership treaty could restrict the ability of Governments —whether they are the UK Government, the Scottish Government, the Assemblies or local authorities—to make decisions about not just health, but other sectors, including transport.

Will it be possible for local authorities to retain provisions relating to public transport and public ownership? Will it be possible to bring public transport back into public ownership, if that is what democratic bodies decide to do? That is why the CalMac issue is relevant. Many of the restrictions may already be in place because of our pre-existing commitments, but this Government owe this House and, indeed, the British public the highest levels of transparency.

The British public do not want to be told by multinationals how we should organise our country. We have fought for democracy and we want those bodies for which we have fought and which exist to protect the individual and our communities to have the democratic ability to make decisions. I say to the Minister that that goes to the heart of many of the concerns being raised by Opposition Members about whether we are signing up to something that, while it may result in huge benefits for this country, may have a lot of devil in its detail and may cause huge problems and restrict the democratic ability of this House and, indeed, the British people to make decisions about how we want to organise our society. I hope the Minister will provide assurances that the treaty will not do any of those things, that it will have positive consequences and that the concerns raised are not justified in any way.

16:07

[Guto Bebb (Aberconwy) (Con)]

It is a pleasure to follow the hon. Member for North Ayrshire and Arran (Katy Clark). It is difficult to try to make a speech after the Front-Bench speeches have been made, because many of the points I wanted to make have already been eloquently made.

Prior to this debate, I received a number of e-mails from constituents who are finally becoming aware of the issue of the TTIP, and that is no bad thing. The all-party group, which has been in existence for almost nine months, has held two debates and conducts regular meetings, so at least it is making sure that the issue is debated in a transparent manner in this Parliament. It is important that we discuss such issues as regularly as necessary and that we touch on the serious concerns that have been raised by a number of Members. It is clear that those who have spoken reflect a spectrum of opinion on this very important issue. I might not necessarily agree with everything that has been said by many a Member, but it is important that we have this open debate.

Given the current situation, this is an opportune moment for this second debate. A stock-taking exercise is taking place and there are question marks over the possible threat to the fast-track process, which will come as no surprise to those of us who travelled to Washington in October and early November, where the confidence of the British embassy was not reflected in our discussions with American Congressmen, who were very concerned about signing or agreeing any fast-track procedure prior to the mid-term elections this November. This is, therefore, an opportunity for us as parliamentarians to take stock as well.

We also need to be aware of the need to maintain momentum, because I am concerned at the number of scare stories I read in the press and certainly in my e-mail inbox. We need to address them, because it is important to make sure that our discussion is not just open, but honest. One of the scare stories I received in an e-mail said that the treaty would create no jobs or economic development, which is a risible claim. We have received evidence from the TUC, the CBI and the Federation of Small Businesses, all of which highlight the treaty’s potential. More importantly, individual companies, including small businesses and farming unions in Wales, see the real opportunities for job creation and economic benefit from such a treaty. It is therefore important, whatever the views of Members, that we highlight the fact that the potential for job creation is very real.

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

My hon. Friend the Member for Richmond Park (Zac Goldsmith), who is no longer in his place, raised the issue of unfair competition from America in food production, which might arise not only from genetically modified and synthetic hormones, but from lower levels of animal welfare. I am sure that my hon. Friend the Member for Aberconwy (Guto Bebb) agrees that those issues must be resolved before we can wholeheartedly enter into this trade agreement.

[Guto Bebb]

I accept that we must ensure that a treaty requires a level playing field for food producers. The Farmers Union of Wales and the National Farmers Union in Wales have certainly been very supportive of such efforts. Indeed, Hybu Cig Cymru, which promotes Welsh meat, has been to Washington in anticipation of the potential impact of the treaty on the Welsh food sector.

We need to make sure that there is a level playing field, but it is worth recalling the words of the Governor of Delaware when we were in America. That state is a huge producer of chickens, which it cannot export to the EU marketplace. He made a very fair point when he highlighted the fact that 96% of Members of the European Parliament have voted for a ban on American chickens, but that he had not met a single MEP visiting Delaware who said no to a club sandwich. When we talk about a safety issue, it is important that the issue is genuinely one about safety, not about a regulatory requirement that damages free trade.

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

Is that not the key point? Without agreements such as this one, we will not have a level playing field, but will go backwards to having more barriers across the piece.

[Guto Bebb]

I could not agree more. It is a shame that my hon. Friend the Member for Richmond Park (Zac Goldsmith) is no longer in his place. On the regulatory burden in relation not to the food industry but to the automobile sector, which would undoubtedly benefit from a TTIP agreement, Jaguar Land Rover—a huge investor in our manufacturing base—has highlighted the regulations on airbags. It has to insert different panels and dashboards in its vehicles for the American market, because airbags in America have to work on the basis of people not wearing a seatbelt, while those in the European Union do so on the basis of people wearing a seatbelt. That leads to extra cost, and it is a disincentive for trade. We could certainly benefit consumers by dealing with such regulations, which seem to have no purpose whatever, except to add cost and possibly to create extra employment for health and safety experts on either side of the Atlantic.

Another scare story that I should mention is the one about these agreements bringing no advantage to consumers. Anybody who has listened to Which? would be hard pressed to conclude that no consumer would benefit from such a trade agreement. When people argue that consumers will not benefit from free trade, there is something important to bear in mind: I find it very odd that the very people who make that argument do so by sending me e-mails from iPads manufactured in China or from Samsung telephones manufactured in Korea. They are quite willing to use the advantages of free trade to communicate their concerns about free trade, which puts them in a very odd position.

Another key issue about which I am seriously concerned is how the national health service is again being used as a political football in this debate. I want to state on the record that nobody can outflank me in supporting the concept of a health service free at the point of use for those in need. Somebody whose family has needed the support of the health service, as mine has, would never not support the concept of a free health service. However, the mere concept that American companies accessing the health sector in the United Kingdom is somehow different from European ones doing so is very odd.

I simply do not get another of the arguments in relation to people being so concerned about the involvement of private companies in our health service. Ever since the instigation of the NHS in 1948, the most respected part of the health service has been the traditional GP surgery. That is a robust private sector initiative within the health service. The issue is not about whether doctors make a profit because of their work, but about whether they offer patients a good service. I would be very comfortable with American companies delivering medical services, provided that those services are of a very high standard, are in tune with United Kingdom regulations and, more importantly, are delivering good patient care. Surely that is the issue. It is a pedantic view that any private involvement is simply wrong. We need to challenge that view. We need to be honest about the way in which the private sector adds value to the health service. We should reject the use of the health service to attack the TTIP.

[Katy Clark]

Will the hon. Gentleman give way?

[Guto Bebb]

I have to conclude my remarks, because I have only two minutes left.

We have talked about investor-state dispute settlement. The United Kingdom has been signing such agreements for an extremely long time and some 94 agreements are in place. As yet, not a single challenge has been made on the basis of public policy and not a single case has been lost by the United Kingdom. I genuinely believe that this matter is being used by those who are lobbying against a trade treaty to make people feel opposed to it.

I have some sympathy with the argument that if such scaremongering is a danger to the treaty, we should ask ourselves whether we can compromise on that issue. We must acknowledge that the US and the EU have well-established, mature legal systems. I say that not because I agree with the arguments that are being made, but because I want to ensure that as few obstacles as possible get in the way of the treaty, which I genuinely believe would make a significant difference to our economic performance.

I have talked about food. It is crucial to my constituency that we have access to other markets. Farmers in the Conwy valley believe that they could export more than £30 million-worth of Welsh lamb to the US. The deal is therefore extremely important.

The key point is that any treaty must take into account the needs not just of large corporations, but of small businesses. Economic recovery in Wales is dependent on small businesses and this treaty must work for them as well.

16:16

[Ian Lavery (Wansbeck) (Lab)]

A number of people have said that there must be a good business case for the transatlantic trade and investment partnership. I think that we need much more than a good business case. I am concerned that there are huge inherent dangers in the TTIP for many working people and for public services in the UK. My major concern is that the trade agreement has the potential to dilute workers’ rights.

The hon. Member for Aberconwy (Guto Bebb) said twice that people are scaremongering with regard to the TTIP. He must not mix up scaremongering with people taking a different view from him.

There are two major problems with the TTIP. The first is labour rights and the second is investor-state dispute settlement, which we have discussed a lot this afternoon. I listened carefully to the Minister. He said, basically, that ISDS is ineffective. If it is ineffective and has not been used as much as everybody thinks it has, why is it in the agreement at all? That is a simple question. Why do we have ISDS if we do not need it?

The proposal is that the TTIP would establish in law the right of multinational corporations to sue nation states in a special court through investor-state dispute settlement if the nation’s regulatory framework is deemed to be a barrier to free trade. Of course that is concerning. It should concern everyone in this House. ISDS is a one-way street by which corporations can challenge Government policies, but neither Governments nor individuals are granted comparable rights to hold corporations accountable. Opinions suggest that these clauses could thwart attempts by a future Government to bring a health service back towards public ownership—again, that issue has been discussed at great length today.

It has been said time and again that there are major concerns about the impact the TTIP could have on the future of the NHS, and on the way the wider public sector is organised in the UK. There should have been a clear exemption, particularly for the NHS but also for the public sector more widely, in the negotiated mandate agreed by the European Council. Given the implications of the Health and Social Care Act 2012 for the commissioning and organisation of health services in the UK, there is a clear danger that major private health care corporations will be looking for opportunities within any TTIP agreement to force further large-scale privatisation.

There is an additional danger in the proposed inclusion in any TTIP agreement of an ISDS. Both the EU and the USA have respected and strong legal systems, and there is no justification for creating a mechanism to allow corporations to bypass the usual legal process to launch expropriation litigation should a UK Government attempt to bring elements of the health service, or other parts of the public sector, back under direct public control.

Labour rights are also extremely important. As I think has been mentioned, the US has ratified only 14 of the 190 International Labour Organisation conventions —among the lowest in the world. It has ratified only two of the eight core conventions dealing with forced labour, child labour, freedom of association and discrimination. It has not ratified conventions 87 or 98, and is almost certainly in breach of both, according to the ILO freedom of association committee.

The Wall Street Journal is not a newspaper that I normally acquire in the morning, nor want to read, but on this occasion I read a report that stated:

“Congressional Republicans are only willing to agree TTIP if extending EU labour standards…to the US is ruled out in advance.”

It basically states that congressional Republicans will agree to a TTIP only if the extension of any workers’ rights is ruled out before the TTIP is agreed in its entirety. If that is the case, it will be interesting to see what the EU has to say. I would have thought we understood that discussions would take place without any preconditions, and if there are preconditions—if that is what the Republicans are saying—perhaps we in the UK have little to concern ourselves about.

Many of those in US unions see a labour chapter in the TTIP as potentially opening up a European-style social model and worker dialogue with employers, which in some parts of the USA I think would be seen as a huge advantage. That has been explained clearly by the Communication Workers of America and the United Steelworkers. Organisations that have been terribly supportive of a TTIP that would enhance labour rights within the framework include the American Federation of Labor and the Congress of Industrial Organizations. The American Federation of Labor has a loud, clear voice and a mandate of 11 million workers.

16:23

[Mark Pawsey (Rugby) (Con)]

It is a great pleasure to speak in this important debate and I add my congratulations to the all-party group on EU-US trade and investment, and to the right hon. Member for Wentworth and Dearne (John Healey) and my hon. Friend the Member for Aberconwy (Guto Bebb) on securing this debate. I am pleased to contribute to this debate because, along with other Members from across the House, I had the opportunity to visit the United States in November as part of the British-American parliamentary group, on a visit focusing on the TTIP negotiations. I confess that prior to that visit, like many Members and people across the country, I had a lack of awareness about the negotiations. I was aware that something was taking place, but frankly I could not have said what TTIP stood for. On the visit I was particularly interested in the impact on small businesses, having run a small business before coming to this place. I represent a constituency in the west midlands with a resurgent motor industry, so I was also keen to see the impact on that sector.

It takes two parties to make a deal. Across the House, I think we have seen broad enthusiasm for the TTIP, and that is reflected across the UK and the EU. Generally, I think there is less enthusiasm in the US. Part of our role is to understand the anxieties and fears of people in the US and consider how we might persuade them to come to a deal. In Washington, we met politicians from both parties. We also went beyond Washington to meet officials in places such as Philadelphia and Delaware. We raised with the Governor of Delaware the possibility of public procurement being included in the TTIP and becoming available for countries outside the US. I have to confess that the Governor’s principal concern was jobs. Indeed, we heard concerns about jobs across the piece from all the organisations we spoke to.

We met the American Farm Bureau Federation and spoke about the opportunities for its produce in the UK. It expressed concern over geographical indicators: it would not be able to call its hard cheese “parmesan” in the UK market, as it is able to in the US. It also has concerns regarding the accessibility of its largely genetically modified foods in the UK. We met the American Federation of Labor and the Congress of Industrial Organizations. Perhaps I might reassure the hon. Member for Wansbeck (Ian Lavery), who has just spoken, that labour organisations in the US see the TTIP as an opportunity to bring Europe’s higher labour standards to the US, rather than allowing for transit in the opposite direction.

Throughout our discussions we heard about the need for a fast-track authority in the US that provides an unamendable resolution. The Minister talked about whether the granting of the fast-track process would affect the timing of a deal. I think it goes further than that. In the absence of fast track, it is highly unlikely that any deal will ever be made, because without a fast-track process any vested interest that believed it was threatened by the TTIP could derail an agreement. President Obama has made it clear that he would like to see a fast-track negotiating authority, but this remains unresolved. Indeed, we were shown a letter from 22 Members of Congress addressed to the President stating that they would not agree to cede constitutional authority to the Executive through the approval of a fast-track authority.

We found a real shortage of awareness about the TTIP in the US. It is important to recognise that in November, when we were there, the US Government had just had their first shutdown as a consequence of the stand-off between the parties on the budget. That in itself had led to the postponement of talks. There was also a preoccupation with the Affordable Care Act, otherwise known as Obamacare. More than once in meetings we heard people say that Obamacare was sucking the oxygen out of all other policy discussions in the US.

My impression of how Americans see the TTIP talks is that they are bothered that they have more to lose than they have to gain. They have a massive prize that they believe they are being asked to give away: access to the biggest and most successful market in the world. They need reassurance that if they allow access to their market, there will be something in it for them. There is a feeling that in earlier trade agreements—perhaps the agreement between Canada and Mexico—US negotiators had given too much away and that that had led to “Buy American” campaigns. The concern of opponents is that the TTIP might give too much away and that that will lead to labour losses.

[Guto Bebb]

On the “Buy American” strategy in America, is it not the case that the concern lies more with politicians than businesses? One business in Philadelphia said that “Buy American” often means paying more for lower quality, and that they do not have their own businesses to develop it.

[Mark Pawsey]

My hon. Friend makes a fair point, but the perception of politicians was that the “Buy American” policy kept jobs in the United States and prevented them from being lost. As politicians, they wanted to ensure that employment in their states was being maximised.

The US does not always give things away and there is not a gung-ho attitude to the free market. Regular reference was made to the 1920 Merchant Marine Act, otherwise known as the Jones Act, being a great example of how America can be protectionist when it wishes to be. That is the legislation that requires all goods transported by water between US ports to be carried on US-flagged ships constructed in the US, owned by US citizens and crewed by US citizens. So the US can be protectionist and prevent other countries from gaining access to its markets. We heard more than once the quote from Benjamin Franklin:

“No nation was ever ruined by trade.”

The TTIP provides massive opportunities for US goods and produce in the EU.

In the UK there is broad support, as we have heard from both Front Benches today, and why would there not be, when we are talking about 50% of world GDP and 30% of international trade? This is an opportunity for us only if our economy, our industry and our service companies are in shape to take advantage of it. That is why the broader policies of this Government to increase our competitiveness and our skills agenda are important. If those are right, we can take advantage of an additional £10 billion to the UK economy.

I am pleased that the Federation of Small Businesses here in the UK welcomes the TTIP negotiations and looks forward to a resolution. A fifth of FSB members are exporters, and the US is the second most important destination for small businesses that export. It is believed that the TTIP could add 400,000 UK jobs. The FSB has set out a wish-list for the TTIP, including a pledge to promote entrepreneurship and a pledge of smart regulation on both sides of the Atlantic.

This has been a very important debate. There are big opportunities for both the EU and the US in growth and jobs. There needs to be a timetable. One of the concerns that I was left with as I came away is that there are rather more serious consequences of not doing a deal than there would ever be of doing a deal.

16:29

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

I begin by congratulating my right hon. Friend the Member for Wentworth and Dearne (John Healey) and others and the Backbench Business Committee on scheduling this important debate.

If we want to achieve the permanent rebalancing of the economy more towards manufacturing and export-led growth, expanding markets for our goods and services and removing barriers to trade are essential. According to the OBR, two thirds of all UK growth between mid-2010 and 2015 was expected to stem from rising exports and business investment, but the most recent estimates indicate that less than a fifth of the growth over that period will come from those sources, and there are 300,000 fewer people working in our manufacturing industries, compared with 2008. This is adding to the United Kingdom’s growing problem with productivity. The proposed transatlantic trade and investment partnership that this House is considering today is vital to realising the vision of a higher wage and more highly skilled economy. As we know, this is an agreement that will expand global trade, not take trade away from other parts of the world.

We know that exports are likely to rise by 6% in the EU and by 8% in the United States, but we must recognise that this agreement has to benefit all in our societies, not just those at the very top. Reducing tariffs, securing regulatory convergence and aligning technical trading standards could make a family of four in the EU up to €545 a year better off. It could boost GDP in this country by up to £10 billion a year, according to the Government’s own impact assessment, and create up to 400,000 jobs.

As Which? found when preparing a briefing for Members before this debate, average import tariffs are 4%, but clothing imported from the US is subject to a tariff three times higher. Reducing roaming charges for communications and data services across the Atlantic and improving the co-ordination of food traceability would be tangible benefits for consumers from this agreement, but there will be areas where retaining separate regulatory systems, such as in financial services, will be absolutely vital without prejudicing the overall aims of the negotiations.

The right hon. and learned Member for Rushcliffe (Mr Clarke) used his formidable powers of advocacy to try to persuade the House that there was nothing in the proposed investor-state dispute mechanism about which Members ought to be concerned. I fear that, on this occasion at least, he was not entirely successful. He was right to point to the 91 agreements of a similar nature in bilateral investment agreements that we have signed with other countries, but perhaps he missed an important point. This agreement would bind 28 member states, which at the moment may have different standards in all these areas. We should do nothing in these negotiations to undermine the crucial role that the European Court of Justice plays in ensuring equal standards across the European Union.

We know that article 226 of the EU treaty permits member states that have breached treaty requirements to be brought before the ECJ for infraction proceedings, which bind all member states. The problem with the arbitration anticipated in some drafts of the negotiations is that it would not bind all member states: it would simply bind the parties to that individual dispute. We should emphasise that, in these discussions, the ECJ should be the final arbiter—the binding and conclusive arbiter—of whether member states have breached their commitments. We should do nothing to upset its position.

Removing barriers for EU exporters should not mean removing hard-won protections in the workplace. There should be a levelling up of standards, not a race to the bottom. We know that US workplace fatalities are three times as high as those in the EU. Simply by having a system of mutual recognition without recognising the protections we have at EU level could lead to concerns among workers. Neither should there be an expansion of competition into the national health service or other public services as a result of the TTIP.

The maximum benefits of this deal to British business and consumers flow from the strength that the European Union possesses in negotiating on behalf of all member states. Bilateral agreements between the US and each of the 28 member states, or with clusters of member states, would not be achievable, would not have the same worth and would not provide the same potential boost to living standards or to trade. Those who envisage the United Kingdom’s destiny as outside the European Union must address this point: why remove ourselves from the clear advantages to consumers and manufacturing exporters of this potential deal, or believe we could achieve as good a deal bilaterally with the United States, when the US Administration have said that they are interested in securing only an EU-wide deal?

It took more than 30 rounds of negotiation to secure the trans-pacific partnership, so I hope that the fourth round of TTIP negotiations, due to begin next month, can, given the important politics behind this issue, proceed at a more accelerated pace. We know that there will be elections for the European Parliament this May, the installation of a new European Commission later this year and the US presidential election in 2016. I welcome the fact that the chief negotiators gave a press conference last year on the progress of the talks, but stronger mechanisms must be developed to ensure that national parliaments—which, after all, have to ratify any agreement—are more properly consulted and have an opportunity to comment on or shape the context of the discussions.

In conclusion, let us hope that an eventually concluded deal can lead the way to further such agreements across the world. We have to bring down barriers to trade if we are to rebalance the global economy. Our exporters expect no less, consumers expect no less and future generations of manufacturing and service workers will expect no less either.

16:39

[Ian Paisley (North Antrim) (DUP)]

Let me say at the outset that I am pro-trade. I want our export industry to increase, and I want everything possible to be done to ensure that that can happen—and happen successfully. I think that we should approach the TTIP with confidence, but I agree with the Minister that we should also be alert to the needs of our community and our businesses, and ensure that they are given as much protection as possible in the negotiations.

I congratulate the hon. Member for Paisley and Renfrewshire North (Jim Sheridan) not only on the fact that he represents the finest-named constituency in the House, but on his agility in rightly focusing Members’ minds on the dynamics of the Scottish debate and how important it is to us. The Minister responded to the hon. Gentleman’s comments robustly, but I think that the issue should be a priority for us as well, and that we should remind our neighbours and friends of its importance to them.

I want to focus on farming, food production and consumer rights, because they affect my constituents dramatically. As I said to the Minister in an intervention, a good deal will be marked by how we ensure that the rights and needs of our farmers—our primary producers of food, and of excellent food—are protected, aided and abetted in the negotiations. There is no doubt that we produce the best traceable food in the world. It is a £20 billion-plus industry and an essential trade, and in my part of the United Kingdom it is the most essential trade. It is a mainstay of business and employment. It is the one sector in which our productivity is increasing annually. I believe that last year our food production increased by an average of about 12%. That is a Chinese-style proportion of growth. We need to keep a careful eye on it, and ensure that it continues.

The fact that we produce the best food in the world makes that food not just worth protecting, but worth exporting. It is clear that people want to buy our food and drink products. In my constituency, for example, the Bushmills distillery produces what I am told is the finest whiskey in the world. The Minister will have sampled it many, many times. That distillery employs 102 people in my constituency, but 90% of what it produces is exported, and the vast majority goes to the United States of America. Last year, its trade increased by 14%. Such growth must be encouraged, and must be seen as a major opportunity in the TTIP negotiations.

[Jim Shannon]

Not teetotal!

[Ian Paisley]

No, not teetotal, but TTIP.

I urge the Minister to think of the 85,000 people in our community who are involved in agri-food production, and to ensure that they and their rights are put at the top of the agenda, because that affects consumer confidence. We can say to our consumers, with strength and authority, that we know what they are consuming because it is traceable. That is one of the advantages that we have as an island nation, and we must use it to our advantage, because it makes our food a very desirable commodity. We need to ensure that food that is imported to the United Kingdom meets the same exacting standards as the food that we produce here. One way in which we can do that is to ensure that labelling is accurate, so that when we, as consumers, go to the supermarket, the local butcher or another local shop, we can see for ourselves what has been imported and where it has come from.

I think that farmers in the United States have a significant cost-of-production advantage over many farmers in the European Community. US farmers bear a lighter regulatory burden; they have a different approach to animal welfare, and they have a very different approach to animal traceability in their food production. They use hormones, and their environmental legislation is very different from ours. We must take cognisance of that in any trade negotiation. Trade must mean ensuring that imports are produced to equivalent standards, and that product labelling clearly distinguishes between different production methods in a way that is meaningful and not misleading. The Minister spoke about red lines. We do not have to reveal all the red lines; this should be a priority, and we should be aware of that.

The US is very competitive in beef production. Our prices are at crisis levels. Given the significant cost and production advantages in the US through the use of hormone growth promoters, if any changes are made to the EU hormone rules and tariffs are eliminated, it is likely that the US would be in a position significantly to increase the volume of beef exported to the UK. That could damage our significant industry. We need to be alert to that and to ensure that we get the best deal for our primary producers.

The poultry sector should be treated as a sensitive sector. Why do I say that? Since 1997, American poultry has not been allowed to be imported into the European Community because of pathogen reduction treatments. Those treatments mean that we do not believe that consumers should eat American poultry. If changes to the PRT rules result in an increase in poultry imports to the EC from the US, we need to take a careful line on that and ensure that we put our poultry industry, which is one of the biggest in the world and is associated directly with Brazil, first in the negotiations.

Those are key issues that will determine business direction in our country. I hope that the Minister will, as he has said, be alert to those issues.

16:34

[Jeremy Corbyn (Islington North) (Lab)]

Thank you for calling me, Madam Deputy Speaker. I apologise to the House for not being able to be here for the first part of the debate. I will end my remarks in time for my right hon. Friend the Member for Wentworth and Dearne (John Healey) to conclude the debate.

We should be extremely cautious about the whole process that has been put before us. If anyone has looked at the experience of the free trade agreement between the US, Canada and Mexico, they will quickly see who benefits and even more quickly who loses as a result of it. The people who lose out are those who are on the margins of society, those who are vulnerable and those who are open to great exploitation. Thus, farm workers in Mexico have lost their jobs in favour of high-tech farming imports from the US; and US companies have moved across the border to Mexico to exploit lower wages. Mexican trucks are not allowed to drive into the US beyond a short distance from the border. There are a lot of restrictions. It is not an equal power relationship. It is a very damaging power relationship. The agreement is unpopular in the US and Canada, but it is also unpopular with many people in Mexico, who see themselves losing out as a result of that.

I give that as an example. We should be extremely cautious about the claims that are made. When the North American Free Trade Agreement was reached, it was claimed that there would be several million new jobs as a result. The result has actually been the loss of about 1 million jobs. The same exaggerated but unsubstantiated claims about jobs and the profits that will be made by particular companies are being made about the transatlantic agreement.

There are specific concerns. Why is there such secrecy surrounding the negotiations? Why are all the documents not on the table? Why are the demands made on European public services by the American negotiators not made public? Why are the demands made in the other direction not also made public? I suspect that, if the agreement ever comes to fruition, every Parliament in Europe and the US system will be presented with a fait accompli: they will be told that they have to accept it.

There are huge concerns. Many of my colleagues have raised concerns about the NHS. We all, I hope, support the principle of a health service free at the point of use. What we do not support is the destruction of our health service in favour of a series of companies coming in to take over very efficient services delivered by public sector workers.

[Debbie Abrahams]

Is my hon. Friend not concerned that the Government still refuse to say that the NHS will be exempt from the TTIP negotiations?

[Jeremy Corbyn]

Absolutely. It seems strange that we cannot say that we are going to exempt the NHS from discussions. I am sure plenty of pressure will be put on to exempt cultural industries, particularly from France, which will probably be accepted. The same thing should apply to the NHS.

There are a couple of other issues that I want to mention. The first relates to our ability to decide the future of our own public services. At the moment, Britain’s railway system is a combination of a state-owned rail company and privatised services. The European directive on railways envisages a totally privatised system across the whole of this continent. I suspect that, under the kind of agreement we are discussing today, privatisation would be foisted on everyone on both sides of the Atlantic.

Secondly, concerns have been raised about working conditions, health and safety at work conditions and environmental protection. I am sure that all those companies that are busy lining up to destroy union organisation in the USA would want to do exactly the same on this side of the Atlantic. Various Members have mentioned environmental protection and environmental conditions. In the US, there are far fewer environmental protection measures—there is much more genetically modified food on sale and in regular supply, for example. Are we to destroy many of the hard-fought and hard-gained social advantages across Europe in relation to farming systems, to animal protection and welfare and to health and safety, in favour of a free-for-all for those big companies? We need to be very careful. Democracy is the issue, and democracy ought to be the means by which we decide these issues, rather than secret negotiations resulting in a fait accompli being presented to us.

16:51

[John Healey]

We have had a good debate, with very good speeches from both sides. Notwithstanding the contribution from my hon. Friend the Member for Islington North (Jeremy Corbyn), the debate has provided confirmation of the strong cross-party support for an ambitious deal, as well as confirmation of the concerns that will need to be dealt with if we are not to risk derailing that support. The House will have been glad to hear the Minister without Portfolio, the right hon. and learned Member for Rushcliffe (Mr Clarke), say that such cross-party support helps to strengthen our influence and the leading role that Britain can play in the negotiations. I hope that he will also see this debate as a demonstration of the House’s desire to hear more about what the Government are doing to increase public debate and understanding, to involve legitimate interest groups in the discussions and to use our leading influence in the negotiations to secure a successful deal. I am sure that the whole House will look forward to a further debate on this issue, perhaps even in Government time.

Question put and agreed to.

Resolved,

That this House has considered the Transatlantic Trade and Investment Partnership.

EU Funding

Tuesday 25th February 2014 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(John Penrose.)

16:52

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

I welcome the Secretary of State for Business, Innovation and Skills to the Front Bench, and I hope that his presence will presage a more balanced approach to the decisions on the EU funding period than has been the case to date. I hope that that hope will not be dashed.

Eight months ago, I led an Adjournment debate on two decisions that Ministers had made on EU regional funding. The first, announced on 26 March, was on the allocation of funds between the four UK nation states. The second, announced on 27 June, was on the allocation of funds between the English regions. I argued then that those decisions were unfair and unjustifiable. I was supported then, as now, by colleagues from South Yorkshire and from Merseyside. Two weeks ago, in the High Court, Mr Justice Stewart stated that

“the decisions of 26 March 2013 and 27 June 2013 are quashed”.

The Ministers were wrong. Their decisions are unfair, unjustifiable and unlawful. They take funds from South Yorkshire and from Merseyside to top up support for Scotland, Wales and Northern Ireland, to limit their losses to 5% while cutting our support by more than 50% compared with the figure for the current full EU funding period. They undermine the very purpose of EU structural funds, which of course is to boost the jobs, skills, businesses and economies of the regions lagging behind.

Documents disclosed for the first time to the Court show just how far Ministers are cheating South Yorkshire and Merseyside. They show that the Government have calculated that the European Commission’s intended allocation for South Yorkshire would be €236 million—€58 million more than Ministers plan. They show Merseyside’s intended allocation from the EU to be €318 million—€116 million more than Ministers propose. I suspect the Secretary of State may say that the allocation methodology was not found by the Court to be flawed, even though the judgment found that the allocations were unlawful. They were unlawful because Ministers: failed to comply with the public sector equalities duty; failed to avoid discrimination against those in our ex-industrial areas; and failed to consider the consequences of using criteria that took no account of the respective economic needs in all UK regions—in other words, we are talking about equality of funding.

I say to the Secretary of State that that is a concern to me, to my Labour colleagues, to our councils and to our business organisations in South Yorkshire and Merseyside. It will also be a concern to the European Commission, because the principle of equality is a general principle of EU law and a right conferred by it. By protecting Northern Ireland and allowing Scotland to protect the highlands and islands, the Government have completely distorted the funding purpose and the budget for the nine English transition regions, resulting in some wealthy, more developed regions receiving significantly more funding from the EU in this proposed seven-year period than the transition regions, which have a much lower GDP.

[Bob Stewart (Beckenham) (Con)]

I am slightly surprised that European funding, when allocated, can actually be interfered with by Ministers if it has already been agreed. I presume that is legal, but is it?

[John Healey]

The allocations are made to the United Kingdom, whose Government then have a degree of discretion about the distribution of those funds within the UK. What was at stake in the Court challenge and is at stake in this debate is whether those decisions were fair, whether they were justifiable and whether they were lawful. That is the point at stake and it is where things have changed since the debate I introduced about eight months ago.

[Jim Shannon (Strangford) (DUP)]

The right hon. Gentleman has mentioned Northern Ireland. Does he accept that Northern Ireland’s fuel costs are the highest in the whole UK, its levels of unemployment exceed those in other parts of the UK and its educational standards do not match those of some areas of the UK, and that allocations of EU moneys are based on the criteria of need and Northern Ireland falls into that category? I would be happy to see Yorkshire getting its true worth, but I would hate to see it happening at the expense of those in Northern Ireland.

[John Healey]

I understand that. Northern Ireland, South Yorkshire and Merseyside all face similar problems, and under this funding period arrangement they have all been designated as transition regions. I must say to the hon. Gentleman that the GDP—the wealth, product and income—in Northern Ireland is in fact higher than it is in South Yorkshire and in Merseyside, yet the decisions the Government have taken mean that Northern Ireland will be protected, with its drop in funding for these seven years compared with the previous seven years being limited to just 5%, whereas we face a funding cut of more than 50%. I think he would agree that that simply is not fair.

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

I apologise to my right hon. Friend for the number of interventions, but he is so well informed. A few moments ago, he referred to the protection of the highlands and islands of Scotland. Will he offer advice to me and perhaps to the people of Scotland as to what might happen in the event of Scotland voting for independence?

[John Healey]

My right hon. Friend poses a bigger question than I would have imagined from the terms of this debate. Clearly, Scotland would have to become a part of the European Union and then to lay its claim for any potential structural funding support in the way that this programme is designed to deliver.

[Paul Blomfield (Sheffield Central) (Lab)]

I congratulate my right hon. Friend on the work that he has done in co-ordinating the concern of the South Yorkshire region over this issue. Does he agree that the perverse impacts of the way in which the Government have brought together their formula are illustrated by the fact that Cheshire, which happens to include the Chancellor’s constituency, has been allocated 34% more per head than South Yorkshire, even though its GDP is 19% above the EU average while ours is 16% below? What conclusion does he draw from the way in which the Deputy Prime Minister, although supposedly representing our region, has strongly defended the formula, which took money intended for areas such as ours and other poorer regions and gave it to wealthier areas?

[John Healey]

First, the Deputy Prime Minister was asleep on the job when the decisions were taken in government. Secondly, he is allowing the arguments that we have heard from other Ministers in this Chamber to pull the wool over his eyes. He has not been standing up for South Yorkshire, and I see this as a Forgemasters mark 2 against the card of the Deputy Prime Minister.

A more measured reflection on the figures that my hon. Friend has just given allow me to continue to develop my argument, which is that the Government’s approach to date does not apply the principles of equality and proportionality. Similar regions were treated differently, and allocations were not proportionate to their needs. I say to the Secretary of State that we will not let this matter rest. We will take it all the way. Our councils will take the case to the Appeal Court to ensure that the principles are taken into account by the UK Government, just as the EU does in designing and allocating the structural funds in the first place. We will also take the case to Commissioner Hahn, who has to approve UK Ministers’ plans to ensure that those principles are taken into account.

The High Court judgment two weeks ago requires Ministers to review, but not necessarily to change, the funding decisions. I urge the Secretary of State to take a fresh and deep view of this set of decisions. He should revise those decisions now rather than being forced to do so later.

Let me take the Secretary of State back to what his junior Minister, the right hon. Member for Sevenoaks (Michael Fallon), said in the first debate. He rightly said:

“The aim of the funds is to provide EU member states and regions with assistance to overcome structural deficiencies and to enable them to strengthen competitiveness and increase employment.”—[Official Report, 1 July 2013; Vol. 565, c. 725.]

The EU funds are designed to give a boost to the economy of flagging regions. It is an outrage that areas of the UK with more jobs, wealth, businesses and prosperity are also getting more European funding in the period ahead. South Yorkshire is one of those 11 transition regions in the UK, which means that our GDP is between 75% and 90% of the European average. All the more developed regions have a GDP of at least 90% of the European average. Nine of them will receive more, not less, funding than the Sheffield city region. They include Worcestershire and Leicestershire. As my hon. Friend the Member for Sheffield Central (Paul Blomfield) has said, they also include Cheshire and Warrington, which have a GDP not of 84% like South Yorkshire but of 119% of the European average and will get EU funding not of €117 per head like South Yorkshire but of €157 a head.

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

I thank my right hon. Friend for highlighting this Government’s lamentable record on the transparency and fairness of previous funding allocations. Does he agree that there is no justification for this latest round of gerrymandering whereby the richer regions will benefit over and above areas such as Merseyside and his constituency and area?

[John Healey]

I do indeed. The judge at the hearing described the situation as bizarre. He rightly said that the decision to protect Northern Ireland and Scotland was what got the Government into this mess and skewed the budget for the nine English transition regions.

Let me illustrate the point about the flaws and the unfairness just by looking at the highlands and islands of Scotland, which like South Yorkshire is an ex-objective 1 area and, in the current funding period, has phasing status—in other words diminishing and tapering funding during the seven years. It is a transition region in the next period and has a GDP exactly the same as that of South Yorkshire—84% of the European average. But unlike South Yorkshire it is set to get not €117 a head but €478 for every man, woman and child in the region. In other words, it is similar in economic status but will receive more than four times the European funding for the seven years ahead. The Chief Secretary was clearly doing a job for his area. The Deputy Prime Minister was clearly not doing a job for ours when the Government were blatantly making such bad and damaging decisions for South Yorkshire.

[Kevin Barron (Rother Valley) (Lab)]

I congratulate my right hon. Friend on getting this debate. Does he think it ironic, after the 20 years or more of changing South Yorkshire’s infrastructure as a result of the coal mining programme, that we see a succession of members of this Government coming to the Advanced Manufacturing Park? The last Government used structural funds to build it, and these Ministers now all get their photo shots done there. It is attempting to turn the South Yorkshire economy around, yet the same people appear to be putting the boot into South Yorkshire through the structural funding.

[John Healey]

My right hon. Friend is right. We know how to use funds well in South Yorkshire. We have plans to use them well in the future. The Secretary of State himself has regularly visited the Advanced Manufacturing Park. He will know what a contribution it is making to overcoming some of the structural weakness in the South Yorkshire economy. We will fight this all the way because the Government are making decisions not just for next year’s funding. These decisions set the funding for a full seven years—for the whole of the next Parliament and the next Government and beyond. That is why they are so important. The Secretary of State has agreed to meet me and my hon. Friend the Member for St Helens North (Mr Watts). I hope that the review that the Court judgment has forced on Ministers will mean that he will lead the Government in thinking again and making good the funding shortfall for South Yorkshire and Merseyside that the allocation decisions so far have caused.

17:09

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

I congratulate the right hon. Member for Wentworth and Dearne (John Healey) on securing the debate. I welcome it because it gives me the first opportunity to set out in the House how we want to respond to the High Court, because we are dealing essentially with the legal implications of that ruling.

Let me start with the legal particulars before getting on to the wider policy question. On 7 February 2014, the High Court indeed quashed two decisions that I made last year. The first allocated EU funds to England, Scotland, Wales and Northern Ireland, and the second allocated funds to local enterprise partnerships within England. Two arguments were put forward by the claimants—the LEPs representing south Yorkshire and Merseyside—in the judicial review case. The first was that the allocations were irrational and unreasonable, which is the case the right hon. Gentleman has developed again today, and the second was that insufficient regard had been paid to the public sector equality duty.

On the first point—and this is absolutely crucial to the debate—the Court found that the methodology and allocations were rational, proportionate and permissible, and the claimants’ arguments on these points were dismissed. That is relevant, because it was not so much the right hon. Gentleman in his speech but some of his colleagues in their interventions who talked about gerrymandering, or the arbitrary attempt to include the Chancellor’s constituency. It is very clear that the Court found that the decisions were not arbitrary in that way. They may not have produced the satisfactory political outcome from Opposition Members’ point of view, but the Court did not uphold the argument that there was any form of irrationality or disproportionality in the decision.

[John Healey]

The Secretary of State is factually correct, as I said in my remarks, but does he regard those decisions as fair and consistent with the purposes of the European structural fund?

[Vince Cable]

Well, we do, because we have been trying to reconcile a whole series of different issues. I was going to make this point to the right hon. Gentleman later: he has been a Local Government Minister in his earlier capacity. I remember petitioning on behalf of my own council. He knows the problems of allocating resources when there is a fixed pot of money; some people will be happy and some people will be unhappy. These are difficult decisions, and we derived a methodology that we believed to be fair. These decisions were not based on arbitrary allocations; they were based on a methodology. That is very important—these were not arbitrary decisions.

The judge ruled—the ruling was very clear—on the sole ground that our public sector equality duty was not met, even though an equality impact assessment was completed and it concluded that it was unlikely that having regard to such a duty would have made any difference to the original decisions by the Department for Business, Innovation and Skills.

[Steve Rotheram]

Taken in isolation, perhaps the argument stands up in regard to what is perhaps a quirk of the formula. However, the moral argument may not be about the methodology; it is certainly about the poorer areas being penalised by the richer areas, which are the only beneficiaries from the formula.

[Vince Cable]

It is simply not true that richer areas are the only beneficiaries. There was a redistributive effect in some of the poorer areas of the country. If I remember correctly—I may be incorrect—the north-east of England, or many parts of it, benefited from this reallocation, but I will check that.

Let me go to the central point. Following the ruling, we have to follow the law. That is obviously our duty, and I now have to take a fresh decision on the allocations, having regard to the public sector equality duty. We are now doing further work, which we will take into account in making a new decision. However, I have to be clear about this point: on the basis of the Court ruling, the new decision will be limited to reconsideration of allocations in light of any impact on equality. We are not planning to reconsider the methodology, unless the equalities assessment highlights the need to do so. Obviously, we will need to be legally compliant and we will be legally compliant.

We want to announce the decisions in the next few weeks and it is very important that we move quickly, because we want to end the uncertainty about the allocation, which affects jobs and growth across the UK. I also want to make it clear that of course I regard it as absolutely essential that we pursue policies that are equal and fair. I have set out on many occasions my vision that equality, diversity and inclusion be embedded in what the Department does, so we will be working hard over the next few weeks to ensure that we meet our obligations under the public sector equality duty.

The right hon. Member for Wentworth and Dearne confirmed that Liverpool and Sheffield are seeking permission to try to overturn the High Court ruling on methodology. While they have every right to do so, I am obviously disappointed that they feel the need to take such action, not least because it risks delaying the allocation of funding. However, clearly the matter must be tested in the courts.

Let me say a little about the wider context regarding Liverpool and Sheffield, because the right hon. Gentleman is right that we must be balanced when looking at this in the round. It is fundamental that we take account of regions’ need and relative prosperity. Given his history in government, I am sure that he understands that Sheffield and Liverpool will not be alone—this is the nature of such allocations—in thinking that they would like more money. However, the EU sets the overall budget and we must address the needs of all UK regions.

The Liverpool and Sheffield decisions were reached after a great deal of thought and in recognition of the areas’ history, with which the right hon. Gentleman will be familiar. Between 2000 and 2006, Liverpool and Sheffield were both objective 1 regions, meaning that they were among the parts of the country with the greatest need, which was reflected in their higher funding. In 2007, they were reclassified as phasing-in regions because the indicators showed, although the levels were relatively low, that there had been considerable economic progress. Their recategorisation as phasing-in regions between 2007 and 2013 was designed to avoid the steep and sudden cut in EU funding that would have followed from relatively high levels of economic activity.

As I am sure the right hon. Gentleman knows, the phasing-in regions received a tapered reduction in funding between 2007 and 2010—given that he was in government, I am sure that he followed that process closely—and then received the same amount of annual funding between 2011 and 2013. The crucial point in this argument is that the phasing-in regions were fully aware of their changing status, so they must have anticipated a significant drop in funding between 2014 and 2020. The right hon. Gentleman must have helped to negotiate the current programme when he was in government, and it states categorically:

“Because of its phasing-in status South Yorkshire’s financial allocation annual profile is heavily weighted towards the first four years and tapers off towards the end of the programming period”.

The transition is clearly awkward for the areas affected, but it was fully anticipated and had nothing to do with a change of Government, as it was going to happen in any event.

South Yorkshire and Merseyside are now categorised as transition regions and must be treated in the same way as other such regions. The original BIS decision gave each transition region a 15% funding increase against an overall drop of 8% in European structural funds, with an across-the-board formula applied.

To give a wider context, I want to say a little about the support that we are trying to give through regional growth, some aspects of which have fairly been mentioned. It needs to be emphasised—this was missing from the right hon. Gentleman’s speech—that about half the funding in the period between 2007 and 2013 was retained for allocation by central Government, but we have tried to change to a more locally-based allocation system, with local areas, through their LEPs, determining how 95% of structural funds will be used. While some areas might have had more funding in the past, they did not have their current power to direct resources to their own priorities.

EU funding is only one aspect of official funding. The right hon. Gentleman will know about some of the schemes we have going, which I will run through quickly. The Sheffield city region has been granted enterprise zone status to extend the capability of advanced manufacturing technology, including £14 million to develop the Markham Vale site—I visited it some time ago following a suggestion by the hon. Member for Bolsover (Mr Skinner)—which we expect to generate just under £100 million in private investment and create 2,000-plus new jobs.

Sheffield’s city deal is expected to bring in £72 million in public and private investment over the next three years. The transport fund alone could be worth £500 million. Not every transition region has a deal of that kind. In addition, under the first three rounds of the regional growth fund Sheffield was allocated £57 million, including £25 million in support to the LEP’s business investment programme to unlock £100 million in direct investment, and £9 million has gone to three bids in round 4, although they are still going through due diligence.

Finally, the advanced manufacturing research centre, which I have taken a personal interest in—I met several Sheffield colleagues early in my period in office to try to help facilitate it—has now been allocated £37 million for development and manufacturing research in the civil nuclear sector. The centre is proving brilliantly successful and expanding rapidly. It is the source of the world’s most advanced research factory through the £43 million Factory of the Future project, to which we have granted £10 million.

A similar story can be told about Merseyside. I do not think that there are any Merseyside MPs here, but—[Interruption.] Sorry, I failed to pick up the accent of the hon. Member for Liverpool, Walton (Steve Rotheram), which I thought was from the north-east—I should have learnt from “Match of the Day” and not made that mistake. I profoundly apologise. As he will know, we have granted enterprise zone status to Liverpool and Wirral Waters. The city deals are extensive. The Liverpool and Liverpool city region deals have led to a £75 million economic development fund. The regional growth fund has a programme of £10 million, leveraging £50 million for private investment and safeguarding 1,200 jobs directly and £35 million for the new container port. Other major investments include the £470 million Government contribution to the Mersey Gateway bridge and the redevelopment of Liverpool Royal hospital.

If we take the position in the round, a great deal of thought has been given to how to support two parts of the country that undoubtedly have real economic needs. I restate our position that we must obviously act lawfully in respect of the Court’s judgment, which we will now do.

Question put and agreed to.

17:22

House adjourned.