House of Commons

Monday 24th March 2014 Commons Chamber

Monday 24 March 2014

The House met at half-past Two o’clock

Prayers

Monday 24th March 2014 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Monday 24th March 2014 Commons Chamber

The Secretary of State was asked—

[Martin Vickers (Cleethorpes) (Con)]

2. What progress he has made on speeding up the adoption process.

[The Parliamentary Under-Secretary of State for Education (Mr Edward Timpson)]

Major reforms in the Children and Families Act 2014 will help to speed up the legal adoption process for children, support quicker matching and ensure the earlier placement of children with foster families who may go on to adopt them. We have also implemented a new adopter approval process and, in 2012-13, the number of adopters was 34% up on the year before.

[Martin Vickers]

I thank the Minister for his reply and welcome improvements that have been made to the system, but may I draw his attention to a Canadian couple who have been trying to adopt a child from north-east Lincolnshire to whom one of them is related? The process started in December 2012 but has still not been completed, and the child is now three. If the complications have arisen because the couple are from abroad, can anything be done to speed up the process?

[Mr Timpson]

My hon. Friend is right to highlight the fact that some adoption cases take far too long. The average time from care to placement is 22 months, which is why we have streamlined the approvals process and introduced regular scorecard data to show local authorities’ timeliness with adoptions. It is also why we have put more than £200 million into the adoption system to try to rip out unnecessary red tape and ensure that everyone keeps their efforts firmly fixed on children who badly need stable homes.

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

Adults who become special guardians face the same difficulties as parents who adopt, yet receive less support. My experience is that overburdened social workers are more likely to pursue a special guardianship order because the process is less intensive, but sometimes that lack of rigour leads to breakdown. Will the Minister try to bring the processes for SGOs into line with those for adoption so that children are protected by arrangements that are appropriate for them?

[Mr Timpson]

Of course, any special guardianship order must be signed off and approved by the court in the same way as a placement or adoption order. There has been a significant increase in the number of SGOs throughout the country in recent years, which is why we have commissioned for the first time proper research not only into the prevalence of the orders, but into who is taking them forward and what the breakdown rates are, as well as what is available to ensure that children who find themselves in such permanent situations get the support that they need. If the hon. Lady wishes, I will be happy to talk to her about that further.

[Mr Julian Brazier (Canterbury) (Con)]

I congratulate my hon. Friend on his astonishing record and success on expanding adoption, but may I echo the comments of the hon. Member for South Shields (Mrs Lewell-Buck) by saying that there is still more to be done to speed up the process? One of the easiest ways of determining where the blockages in the system are is to compare neighbouring authorities that have similar socio-economic bases, but very different adoption rates. We must get out the message that speed matters when dealing with young children.

[Mr Timpson]

I completely agree with my hon. Friend that we must bring as much transparency as possible to the adoption process, which is why we have introduced the scorecard data and a national adoption register that is more open and available to prospective adopters. It is also why we have put such a strong emphasis on ensuring that local authorities’ artificial barriers do not get in the way of children finding a loving, stable family home, if adoption is right for them. I welcome his support for what we are doing but, of course, we must continue to exert pressure so that all the 6,000 children who are in care and waiting to be adopted this very day get the opportunity that they deserve.

[Keith Vaz (Leicester East) (Lab)]

I also welcome the improvements, but may I remind the Minister that, in England alone, 16% of all children put up for adoption are black, Asian or from the ethnic minority communities, and that adoption still takes three times longer for a black child than for a white child? What steps is he taking to ensure that more prospective parents come from the ethnic communities and that that difference is brought to an end?

[Mr Timpson]

The right hon. Gentleman is correct to raise that issue, of which I am conscious from the statistics that he shared with the House. That is why we have made it clear—not only through the Children and Families Act 2014—that although ethnicity is an important consideration when matching for adoption, it should not be the single guiding principle that determines whether prospective adopters take on a child with a different ethnic mix from theirs. It is also why we are helping to fund local authorities, in partnership with independent fostering agencies, to examine how they can recruit more widely across our communities so that we ensure that we have a good cross-section of people coming forward to adopt.

We need to make people aware that some of the myths and barriers that they think prevent them from adopting do not exist. We want more people to come forward, so we should do everything that we can to encourage them to do so.

[John Glen (Salisbury) (Con)]

3. What plans he has to create a national register of foster carers.

[The Parliamentary Under-Secretary of State for Education (Mr Edward Timpson)]

We have no plans to introduce a national register of foster carers. Foster carers are approved locally by their fostering service, which helps ensure a good match between the foster carer and children. Introducing a national register would add an unnecessary layer of bureaucracy and make the approval process less responsive to foster carers’ and children’s needs.

[John Glen]

I thank the Minister for that response, but does he not agree that it seems somewhat counter-productive to restrict outstanding carers to one authority or agency, forcing them, in effect, to go through that additional bureaucracy and vetting procedure should they move? What plans does he have to make the system less bureaucratic so that, particularly in neighbouring authorities, they do not have to repeat that process, wasting a lot of time?

[Mr Timpson]

I agree that we need to make transferring from one agency to another, or from one local authority to another, as streamlined and as simple as possible. That is why we have changed the regulations to make it easier for new fostering services to access the foster carer’s record, including the training that they have received, and why, more recently, fostering services have also been required to share relevant information about a person’s suitability to foster.

We have seen a 6% rise in the number of approved foster carers, as well as a 9% rise in the number of approved foster placements, but we need to go further and do anything we can to ensure that those who want to foster and want to continue to foster really get the chance to do just that.

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

I recognise the Minister’s concerns, and I suppose that the issue depends on what the register is intended to achieve, but the Department has had to address issues over the adoption register very similar to those to which he just referred. That register is managed by the British Association for Adoption and Fostering. How would a fostering register differ dramatically from the adoption register, on which the Minister has been rightly lavishing praise?

[Mr Timpson]

There are more than 71,000 approved foster carers, so there is already a scalability issue. We also have a much more deeply entrenched local system in relation to the recruitment of foster carers. That is why we have given the fostering network £250,000 to try to boost recruitment at a local level to try to meet local need, but we also need to do everything that we can to ensure that the latent capacity in fostering across the country is utilised. Hundreds of thousands of people would consider fostering and we need to find them. That is why we are also funding Fosterline—an independent, free advice line—so that people can get the guidance that they need to come forward and, hopefully, foster.

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

4. What guidance his Department has issued to head teachers on what constitutes the exceptional circumstances in which children may be granted leave of absence for holidays during school term time.

[The Secretary of State for Education (Michael Gove)]

My Department has not issued any specific guidance on this matter.

[Mr Turner]

There have been examples on the Isle of Wight, and I am sure elsewhere, of parents being told that the Government have banned all term-time holidays, which is particularly difficult for those who work during the holidays. Will the Minister confirm that the definition of exceptional circumstances is made by the head teachers, and not the Government, the council or even the governing body, and that the normal use of language should be sufficiently clear for heads to make those decisions?

[Michael Gove]

As ever, my hon. Friend is absolutely right: the decision as to what constitutes exceptional circumstances is a matter for the head teacher. It is important, however, to stress that children wherever possible should be in school and learning, and a drive to reduce truancy and push up the number of days and hours that children spend in school is at the heart of our long-term plan to raise standards in our state schools.

[Ann Coffey (Stockport) (Lab)]

In 2013, Ofsted estimated that more than 10,000 children were missing from education—children more likely to have special educational needs and to be more vulnerable to child sexual exploitation. Will the Secretary of State look at ways in which the extent of the problem and the risk to the children involved can be better monitored, such as asking local safeguarding children boards to include in their annual reports information on children missing from school?

[Michael Gove]

The hon. Lady makes a very good point. The work that she has done on emphasising how much better a job we can do to help vulnerable children and young people has been exemplary, and I very much take her point to heart. I stress that local safeguarding children boards have had a bad press recently but it is important that we use all the agencies at our disposal to try to ensure that the most vulnerable are in school, where they can benefit from great education and appropriate pastoral support.

[Sheryll Murray (South East Cornwall) (Con)]

5. What steps he is taking to improve mathematics education.

[The Parliamentary Under-Secretary of State for Education (Elizabeth Truss)]

We are raising expectations in mathematics, in line with top-performing countries. We are strengthening the primary school curriculum to focus on core arithmetic and removing calculators from primary school tests this summer. We expect secondary schools to increase teaching time, with a more challenging maths GCSE that will, for the first time, be double-weighted in the performance tables. We are also providing £11 million to build a network of maths hubs across the country.

[Sheryll Murray]

Will my hon. Friend join me in praising my constituent Mr Kevin Bennett, who is helping local schoolchildren to learn maths through real-life applications, using astronomy at his Caradon observatory in South East Cornwall?

[Elizabeth Truss]

I congratulate my hon. Friend’s constituent, Kevin Bennett. It is really important that young people understand not only how to do maths, but how it can be applied, from astronomy to business. We know that maths qualifications command the highest earnings in the workplace, and it is really important that all our young people understand how valuable they are.

[Kelvin Hopkins (Luton North) (Lab)]

The Minister seems to agree that our primary problem in maths education is pre-GCSE, not post-GCSE. Does she therefore agree that it is unfair and unwise to press students to take mathematics beyond GCSE if their pre-GCSE performance is not sufficiently strong?

[Elizabeth Truss]

I agree that we have a lot to do to improve our performance in primary schools mathematics, but we have the lowest proportion of students studying maths from age 16 to 18 in the developed world. We need to do something about that, because it affects all kinds of things, such as the future supply of maths teachers and the number of people going into business and industry. What people in business tell me is that everything, from fashion to farming, now depends on having a good level of mathematics.

[Sir Peter Bottomley (Worthing West) (Con)]

It has been said that MPs can be divided into three groups: those who can count and those who cannot. Can my hon. Friend tell us whether the people now going into primary school teaching are people who have enjoyed mathematics and are good at it and can pass on their enthusiasm and skills to those they teach?

[Elizabeth Truss]

I agree with my hon. Friend. I am not proposing an entry requirement for Parliament, but perhaps that is something he might put forward. We have new maths and English skills tests for primary school teachers. We are also giving bursaries to maths teachers for primary school. One of the things we have been looking at in Shanghai is having specialist maths teachers in primary schools, which is an interesting model.

[Nic Dakin (Scunthorpe) (Lab)]

Are the Government meeting their targets for recruiting teachers into maths?

[Elizabeth Truss]

I thank the hon. Gentleman for his question. I think that we are at about 90% of our target for this year. It is vital that we get more people into maths teaching, so we have removed the cap on maths teacher recruitment and we are awarding the highest level of scholarships and bursaries to maths. Importantly, we also need more people doing maths at A-level, and we now have record numbers under this Government. We also have record numbers doing further maths at A-level and doing maths degrees. That will increase the supply of maths teachers in future.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

6. What progress has been made on the Shakespeare schools festival.

[The Secretary of State for Education (Michael Gove)]

I am delighted to be able to support and fund the Shakespeare schools festival. We have provided nearly £500,000 to give students the opportunity to prepare and perform an abridged version of a Shakespeare play. More than 1,000 schools—over 62,000 students—have already benefited, and 50,000 more students should benefit this year.

[Nadhim Zahawi]

In this special anniversary year, the Shakespeare Birthplace Trust’s fantastic Shakespeare week has brought the works of the great bard to thousands of children across the country. Will the Secretary of State join me on 29 April to watch the talented students of Stratford-on-Avon mark the 450th anniversary of the bard’s birth in a special performance in the Speaker’s state apartments?

[Michael Gove]

Mr Speaker, to visit your apartments,

“Let me not to the marriage of true minds

Admit impediments.”

Yes is the short answer to my hon. Friend.

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

There is evidence that Shakespeare poorly taught can put children off English literature for a very long time. Do our children not need a broad diet, which might even include our famous poet John Clare this year, the 150th anniversary of his death?

[Michael Gove]

Any author poorly taught can put children off for life, but more and more lessons are being taught well in our schools. As the chief inspector has pointed out, we have more good and outstanding schools than ever before. I had the opportunity recently to see children from a special school, a primary school and a secondary school—Burlington Danes academy—all perform Shakespeare productions in the Chancellor of the Exchequer’s flat. I was blown away by the quality of their verse speaking. I believe that Shakespeare has the power to move and touch every child, and I know that John Clare would have thought exactly the same. That peasant poet understood that he stood in a tradition of great literary figures, of whom Shakespeare was another grammar school boy made good.

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

7. What steps he is taking to ensure more employers offer apprenticeships to 16 to 18-year-olds.

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

Apprenticeship reforms are putting employers in the driving seat of designing world-class standards for apprenticeships, and making it easier for them to offer apprenticeships in the future. I can announce to the House today that David Meller of the Meller Education Trust has agreed to become the new chair of the apprenticeship ambassadors network, with a brief of expanding and encouraging that network further and boosting apprenticeships once again.

[Iain Stewart]

I recently visited SMC Pneumatics in my constituency to meet its apprentices. It has an excellent apprenticeship programme, run in conjunction with Milton Keynes college. One suggestion made to me was that to get the most out of their apprenticeship, apprentices need a good mentor to support them. Will the Minister assure me that his Department will do all it can to facilitate a network of voluntary mentors?

[Matthew Hancock]

Yes, I absolutely will. I have visited Milton Keynes with my hon. Friend and seen some of the excellent work on apprenticeships there. Of course, from time immemorial an apprenticeship has been not just a skills programme but a mentoring programme that shows people what it takes to work and succeed in a career. Modern apprenticeships do that too.

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

I have heard what the Minister has told the House, but in my area of south Yorkshire the number of apprenticeships available is down by 15% over the past year. Will the Minister consider taking special steps in areas where the number of apprenticeships is falling?

[Matthew Hancock]

As the right hon. Gentleman knows, the number of apprenticeships has risen sharply over the past few years, but at the same time we have to drive up the quality of the programme. Of course, all steps that can be taken must be taken in all areas, and I will ensure that the issue of south Yorkshire is raised specifically at the next meeting of the apprenticeship ambassadors network.

[Stuart Andrew (Pudsey) (Con)]

A number of businesses in my constituency have been reluctant to take part in apprenticeship schemes, fearing that they are bureaucratic and do not address individual needs. Does my hon. Friend agree that the only way to bring true benefit to young people is to train them in the skills that business and industry actually need, which will also help to fill the skills gap?

[Matthew Hancock]

I could not have put it better myself, and I agree strongly with my hon. Friend. That is what we are trying to do, by having a three-click programme for an employer to take on an apprentice and through wider reforms.

[Mr Speaker]

I think the Minister was intending, at any rate, to offer extravagant praise.

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

The number of 16 to 18-year-olds undertaking apprenticeships dropped by nearly 14% in the first quarter of the 2013 academic year. With 900,000 young people out of work, is it not time the Minister admitted that his boastful rhetoric does not match his hopeless record of failure?

[Matthew Hancock]

Funnily enough, I do not agree with that one, Mr Speaker. The number of full apprenticeships—those longer than a year—has more than doubled for under-19s. In 2010, a 17-year-old could claim that they had an apprenticeship when they had a three or six-month programme. We do not think that is a proper apprenticeship. Funnily enough, nor does the Labour party policy review, so perhaps the hon. Lady should talk to some of her colleagues.

[Chloe Smith (Norwich North) (Con)]

8. What estimate he has made of the take-up of free child care for two-year-olds in Norwich.

[The Parliamentary Under-Secretary of State for Education (Elizabeth Truss)]

It was a pleasure to visit the Magdalen Gates pre-school with my hon. Friend and see Norwich two-year-olds benefiting from our programme. I am pleased to tell her that 1,537 children in Norfolk are now part of that programme. Across the country, by the end of February we had more than 100,000 two-year-olds in the programme, which represents 77% of available places.

[Chloe Smith]

I welcome those numbers and all the recent announcements on child care because they give parents choice and support. I welcome—as, I know, does my hon. Friend—good-quality early-years education, because it can help children develop social skills and vocabulary, as we heard at that pre-school. What is the Minister doing to raise quality for all the children we have just heard about?

[Elizabeth Truss]

I thank my hon. Friend for her question, and I congratulate Paula Watts and her team in Norwich on their excellent work. We have seen a 25% increase this year in the number of people enrolling to be early-years teachers, which I think shows the level of confidence in our programme. Those trainee teachers have to pass the same skills tests in English and Maths as primary school teachers, and we know that children, particularly those from low-income families, benefit from high-quality teacher-led provision at that age, which can help them close the gap with their richer counterparts.

[Mr Speaker]

As the Minister herself widened the subject matter courtesy of her answer, I think we can safely make the journey to Reading.

[Mr Rob Wilson (Reading East) (Con)]

A new Sutton Trust report states that 40% of children are missing out on the parenting they need to succeed in life. International evidence finds that under-threes who do not form strong bonds with a parent are more likely to suffer from aggression and hyperactivity when older, and they do less well in their education. In the light of that, is the Minister happy that parents are getting the full picture when making choices about the right balance of time spent in nursery and child care settings, as opposed to with their parents?

[Elizabeth Truss]

My hon. Friend is absolutely right about the importance of parenting and early attachment, and that is why we increased funding for early intervention and child care from £4.3 billion to £4.5 billion over this Parliament. One of the key roles of children’s centres, which are being used by a record number of parents this year—more than 1 million parents are now using children’s centres—is to communicate best practice. Our new early-years teacher qualifications have a focus on attachment.

[Lorely Burt (Solihull) (LD)]

9. What steps he has taken to implement fair school funding for Solihull.

[The Minister for Schools (Mr David Laws)]

Past school funding levels have been very unfair to some parts of our country, and we have announced that we will significantly boost funding in 2015-16 by more than one third of a billion pounds for the 60 least fairly funded local authorities.

[Lorely Burt]

The formula funding protection for Solihull sixth-form college, as with all sixth-form colleges, runs out in 2015-16. What advice would my hon. Friend give to the principal and governors in developing their strategic plans?

[Mr Laws]

My hon. Friend will know that funding after 2015-16 will be determined in the next spending round, and we cannot make precise commitments now about funding in that period. We have been considering the options for funding large programmes such as those containing five or more A-levels, the international baccalaureate, and large vocational programmes, and we plan to announce how those will be treated after 2015-16 in the near future.

[Mr Robin Walker (Worcester) (Con)]

I welcome enormously the real progress made on fairer funding, and I salute the Minister and the Secretary of State for delivering in this Parliament on an issue that went unaddressed for decades. May I encourage the Minister to keep on engaging with the F40 campaign, which includes Solihull, Staffordshire and the East Riding of Yorkshire, and to ensure that all areas that have suffered from unfair funding for too long can hope to benefit—as Worcestershire and Buckinghamshire already have—from fairer funding?

[Mr Laws]

We will certainly remain engaged in that debate, and I am delighted to congratulate my hon. Friend on the leadership that he has given to this campaign over a sustained period. That has led to our recent announcement, which has sought to resolve the issue in those parts of the country that have traditionally been very badly funded.

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

10. What assessment he has made of the adequacy of provision of primary school places.

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

12. What assessment he has made of the adequacy of provision of primary school places.

[The Minister for Schools (Mr David Laws)]

We have more than doubled the allocation of money for basic need to more than £5 billion in this Parliament, and 260,000 additional places were created between May 2010 and May 2013, including 212,000 primary places.

[John Woodcock]

May I declare my interest as a student working towards a level 3 teaching assistant qualification? I am currently undertaking placements in Victoria junior school in Barrow, and Oasis Academy Johanna in Lambeth. Barrow is one of the few areas of the country that has a surplus of places as a result of population decline in recent years, yet too many pupils are still being denied their first choice of school. If the Government were serious about making the education system work for pupils, and not for the convenience of producers, would they not give parents the right to send their child to the school of their choice, and place a duty on that institution to expand?

[Mr Laws]

We are so serious about this issue that we have doubled the amount of basic need funding going to the hon. Gentleman’s local authority compared with the period under the Labour Government. We are seeking not only to improve the quality of existing schools but to make sure that parents can exercise their choices effectively.

[Gavin Shuker]

In Luton we are 630 primary places short of the number we require—a situation that would be much worse had a free school not been built by an arms-length council body that had to jump through all the hoops of the free school system. Is it not perverse that local authorities are not allowed to build schools?

[Mr Laws]

Local authorities are allowed to build schools. We have allocated £37 million to the hon. Gentleman’s local authority to do precisely that.

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

Does my right hon. Friend agree that it is quite right to give local authorities the freedom to decide how to allocate this extra funding for places based on local need and local knowledge?

[Mr Laws]

I entirely agree with my hon. Friend. Local authorities do have that knowledge of local need, and they have the money from us to address this issue.

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

I recently attended a meeting with all the head teachers from the Otley family of schools, which covers Otley, Bramhope, Pool-in-Wharfedale and Adur, and they expressed concern about the chronic shortage of school places at primary level. After the debacle of Labour-run Leeds city council closing schools a number of years ago, and now that we need some, what work is going on to have discussions with the Department for Communities and Local Government about how this problem can be avoided in future?

[Mr Laws]

My hon. Friend is exactly right. One of the reasons there are pressures in some parts of the country is that under the previous Government over 200,000 primary school places were eliminated after 2003. He will be aware that Leeds is one of the areas to which we have given significant amounts of basic need funding, and it is now using that money effectively. I will be happy to meet him if it would be helpful to discuss this in further detail.

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

20. Acre Hall primary school in my constituency is growing, and it is well placed to expand its offer of small specialist classes for special educational needs pupils. However, the school is in a very poor state of repair and is in desperate need of rebuilding. Will the Minister urge the Education Funding Agency to reach a decision at the earliest possible opportunity on its application for capital grants?

[Mr Laws]

I will certainly look into that particular case as a consequence of the hon. Lady’s question and write to her about it.

[Kevin Brennan (Cardiff West) (Lab)]

The Local Government Association recently warned that there is a need to create 130,000 new places by 2017-18. It also warned that because of the Minister’s ideological insistence that these places have to be in free schools and academies, they will not be created where they are actually needed. On what evidence does he believe that community schools and local decision making are always bad?

[Mr Laws]

We do not believe that. Indeed, local community schools are expanding right across the country; the difference between the situation under this Government and under the previous Government is that they have the money to do so.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

11. What plans he has for regional school commissioners.

[The Secretary of State for Education (Michael Gove)]

Regional schools commissioners will act on my behalf to support the national schools commissioner.

[Mr Thomas]

The Secretary of State will recognise that Al-Madinah and IES UK Breckland schools have not been the greatest advert for his policy agenda. How will these rather Soviet-sounding commissioners help to ensure that academy chains and free schools are properly overseen so that no more children have their education damaged in future?

[Michael Gove]

I have nothing against anything that is redolent of a better past in Russia. In fact, the Office of the Schools Commissioner was introduced by the previous Labour Government. We are merely building on it to ensure that we have great head teachers and others who can ensure that the superb innovation that is occurring in academies, free schools and community schools across the country is supported, and that wherever school failure occurs we can take swift and rapid action.

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

13. What steps he plans to take to improve vocational education.

[Paul Blomfield (Sheffield Central) (Lab)]

15. What steps he plans to take to improve vocational education.

[Mr Gordon Marsden (Blackpool South) (Lab)]

16. What steps he plans to take to improve vocational education.

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

Driving up the rigour and responsiveness of vocational education is a critical part of this Government’s mission to give everyone the education they need to fulfil their potential.

[Steve Rotheram]

How does the Minister respond to the Government’s own consultation, which proposes that an employer’s contribution for a hairdressing apprentice should be about £1,700, whereas for science, technology, engineering and maths trades such as engineering it should be more than £5,000, and construction specialisms would cost £7,000? Will he rethink these mad proposals?

[Matthew Hancock]

I do not recognise any of those figures, but I do recognise the need to make sure that apprenticeships are driven by the skills that employers need, so that they remain high quality and increasingly fill the skills gaps that have been left by an education system that was far too divorced from the world of work.

[Paul Blomfield]

What would the Minister say to Richard Wright, who speaks on behalf of Sheffield business as chief executive of the local chamber of commerce and who wrote to the Secretary of State saying that the funding cut for 18-year-olds in further education would remove money from where it can have the most effect in equipping young people with maths and English, and with the technical and vocational skills that are modern and relevant, to ensure that they are work-ready?

[Matthew Hancock]

The first thing I would say is that we have ameliorated the change so that no institution will lose more than 2% in the coming financial year. The second thing I would say is that we had to make this change because of the mess left in the public finances by the Labour party. [Interruption.] Labour Members do not like it, but it is the truth, and until they get used to admitting their fault, nobody will trust them with the economy again.

[Mr Marsden]

Which does the Minister think causes most damage to vocational education in Blackpool—his 17.5% cut in college funding, which is capped for only one year at 2%, or his abject failure to promote or offer any properly financially supported traineeships for young people?

[Matthew Hancock]

Of course, there would not be traineeships were it not for this Government. I would say that the most damaging thing to young people’s futures is a Labour Government.

[Guy Opperman (Hexham) (Con)]

In Northumberland we have doubled the number of apprenticeships and have outstanding vocational education at Northumberland college and at the Egger academy, which I opened last year. When I visited Release Potential in my constituency, people there stressed the success of traineeships and how they need to be promoted, not denigrated, as the hon. Member for Blackpool South (Mr Marsden) has just done. Does the Minister agree that traineeships are part of the future that we need?

[Matthew Hancock]

Absolutely. Traineeships are provided by good and outstanding institutions, because we want them to be a high-quality product to make sure that everybody gets the skills they need and the capability and character they need to hold down a job. They are filling a gap that was left before.

[Mr Christopher Chope (Christchurch) (Con)]

14. When he last discussed education policy with leaders of independent schools.

[The Secretary of State for Education (Michael Gove)]

I regularly enjoy meeting the heads of our leading independent schools.

[Mr Chope]

Does my right hon. Friend appreciate the important role that independent schools play in raising education standards in this country, and does he applaud the enormous contribution that fee-paying parents make in investing in our education system?

[Michael Gove]

I take a close interest in the success of England’s independent schools. In particular, I reinforce the point that my hon. Friend makes. Those parents who support independent schools are supporting not just a great education for their own children. In many cases—for example, with schools such as Wellington and Eton college—they are also supporting improved state education by sponsoring free schools, which would not exist if Labour came to power. I stress that the head teachers of independent schools appreciate the changes being made to the state sector. Only this weekend the headmaster of King’s College school in Wimbledon pointed out that the state sector “has really improved” under this Government—so much so that it is totally different from the situation that prevailed 10 years ago under Labour.

[Mr James Clappison (Hertsmere) (Con)]

I declare an interest as a governor of an independent school. Will my right hon. Friend in his various discussions promote the placing of looked-after and vulnerable children in boarding-school education, not least because this produces better results for them in examinations and better outcomes in life, and it is also considerably cheaper than the alternative?

[Michael Gove]

I absolutely agree. The role that independent schools play in making sure that children from vulnerable backgrounds have access to boarding education is to be applauded, but it is vital that we stress that there are superb state boarding schools as well, and that there are a growing number of state schools providing excellent facilities for children from the most fragile of circumstances to flourish. It is important that we should recognise that whatever the type of school helping a vulnerable child, the actions of those who lead it should be applauded.

[Mr Iain Wright (Hartlepool) (Lab)]

17. What steps his Department is taking to encourage girls aged 16 to 18 to consider taking up engineering apprenticeships.

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

Since 2010, the number of women starting engineering and manufacturing apprenticeships has increased threefold.

[Mr Wright]

The Institution of Mechanical Engineers says that 92% of girls choose not to take triple science as a subject beyond the age of 14, which effectively disbars them from a career in engineering. EngineeringUK says that 83% of all young people do not have access to STEM-related work experience. How on earth do the Government’s policies of ending face-to-face careers advice and downgrading work experience help to encourage girls into engineering?

[Matthew Hancock]

I recognise the situation that the hon. Gentleman describes as the situation of a few years ago. Fortunately, a record number of girls are studying triple science at GCSE and a record number of girls are studying physics. That does not mean that there is not more to do for the Government in sorting out the problems that were left behind. We must ensure that people are given inspiration and mentoring through careers guidance, which was not available in the past. We must promote the highest-quality careers to boys and girls, and ensure that everybody knows how to fulfil their potential.

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

I congratulate the Government on their work in the STEM sector, and particularly in engineering. How many women have finished engineering apprenticeships and how many girls go on to gain a job in engineering? Will the Minister join me in recognising that women engineers are climbing to the top of the tree, since we have had a female president of the Institution of Civil Engineers?

[Matthew Hancock]

I will. A very high proportion of those who go into apprenticeships, and STEM apprenticeships in particular, stay on in a job or continue into a higher-quality apprenticeship. That progression is one reason why apprenticeships are such a valued institution.

[Julie Hilling (Bolton West) (Lab)]

19. We know that girls and young women like to try before they buy. They therefore need practical experience of engineering before they will apply for it. Among other companies, MBDA in my constituency has a great programme through which it goes into schools and takes pupils on work experience placements. What is the Minister doing to ensure that every young person has a similar opportunity?

[Matthew Hancock]

I pay tribute to MBDA, which I visited to see its work on apprenticeships. The apprentice of the year was a young woman from MBDA. It does great work, but there is much more to be done so that all employers can engage in schools and colleges to show young people what they can do.

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

When I visit engineering and manufacturing companies in my Bury North constituency, they often say that not just girls, but boys find the idea of taking up trades off-putting because they are noisy, dirty and sometimes smelly. Does the Minister agree that the teachers in our schools need to do more to encourage people of both sexes to take up such jobs?

[Matthew Hancock]

Absolutely. The very best people to do that are the people who are in those careers themselves and who can show what a modern engineering workplace looks like. They tend to be problem-solving institutions that are exciting and that pay well, which I find is a message that goes down particularly well with apprentices.

[Mr Andy Slaughter (Hammersmith) (Lab)]

18. What assessment he has made of the effects of the cost of child care on parents who want to work.

[The Parliamentary Under-Secretary of State for Education (Elizabeth Truss)]

According to the recent Family and Childcare Trust survey, the cost of child care in England has started to fall in real terms for the first time in 12 years, whereas in Scotland, the cost of nurseries has gone up by 8% and in Wales, which is run by Labour, the cost of nurseries has gone up by 13%. That is because the Government are reducing red tape and enabling good providers to expand.

[Mr Slaughter]

That was pure fantasy. One of the best and most effective child care solutions for working parents is Sure Start. Is the Minister ashamed that 600 Sure Start centres have closed under the Government and that some Tory councils, such as Hammersmith and Fulham, have cut their budget by half?

[Elizabeth Truss]

I am afraid that the hon. Gentleman has got his figures wrong. In fact, Sure Start provides fewer than 4% of places. In London, which he represents, 45% of early-years places are in school nurseries. I suggest that he join the Mayor of London’s programme, which he is running with me, to encourage school nurseries to open for longer hours. What the hon. Gentleman says about children’s centres is absolute nonsense. We have increased the investment in those as well.

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

Unfortunately, the expansion of free places has resulted in the headmaster of Carterhatch children’s centre in Enfield asking fee-paying parents to take their children out of the centre to make way for those who are on the new scheme. What advice does the Minister have for the headmaster, who has chosen to discriminate against working parents, and for the parents who are fighting to keep their children at the centre?

[Elizabeth Truss]

I thank my hon. Friend for that question. We are working with London providers and local authorities to get them to expand the number of places. We have made it easier for private sector providers to expand without planning red tape, and we have made it easier for good and outstanding providers to expand without red tape. We also want to see school nurseries and children’s centres open from 8 am to 6 pm to provide flexible child care.

[Lucy Powell (Manchester Central) (Lab/Co-op)]

We welcome the fact that finally families will receive some much needed help in meeting their child care costs. However, does the Minister accept that by the time the tax-free scheme comes into effect in 2015, the support that families have already lost plus the increases in costs over this Parliament will mean that the vast majority of families will still be worse off? Can she also tell the House what assessment she has made of the impact on price inflation, given the chronic shortage of places?

[Elizabeth Truss]

I do not think that the hon. Lady heard my first point, which was that prices are falling in real terms in England for the first time since the Family and Childcare Trust study began. Under Labour, they went up by 50%. On Thursday, I visited the excellent Medlock primary school in her constituency, which offers places to two, three and four-year-olds. Staff told me of their plans to open from 8 until 6 to provide parents with more care. That is happening across the country—[Interruption.] I hear what the hon. Lady says. At present, most nurseries in Manchester are open from 9 to 3. If they opened from 8 to 6, that would be more than 60% extra.

[Lorely Burt (Solihull) (LD)]

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

[The Secretary of State for Education (Michael Gove)]

Thanks to the success of our long-term economic plan, my right hon. Friends the Prime Minister and the Deputy Prime Minister were able last week to announce not just an extension of tax-free child care, but the extension of the pupil premium to the early years, marking a step forward in making this country not only more economically efficient, but more socially just.

[Lorely Burt]

I warmly welcome the additional money announced in the Budget to support early education for children from low-income families. What will that mean for nursery providers in Solihull?

[Michael Gove]

We are consulting on exactly how we should distribute the additional cash in order to ensure that it goes to the very poorest families, but I am aware that in the west midlands generally—and in Solihull particularly—there are families in desperate need of support, and I hope we will be able to extend that to them as quickly as possible.

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

More and more research shows the importance of early-years development in a child’s education. The Labour party’s Sure Start programme was focused on supporting those vital infant years—a policy of prevention, rather than cure. We know that the Tories do not support Sure Start, but in 2010, the Secretary of State pledged to create 4,200 new health visitors. Can he tell the House how far he is from meeting that target?

[Michael Gove]

We extravagantly support Sure Start and I am a great advocate of the great work that Sure Start children’s centres do, but the provision of additional health visitors is a matter for the Secretary of State for Health.

[Tristram Hunt]

That is exactly the problem with this Government—no cross-departmental thinking about having health visitors focus on early-years development. [Laughter.] The Tories may laugh at the impact that health visitors have on early-years education, but the Opposition think that the early years are vital. As the hon. Member for Reading East (Mr Wilson) suggested, research published by the Sutton Trust on Friday reiterated the impact that good parenting has on school readiness, educational attainment and progression into continued education and work. Will the Government’s commitment to 4,200 new health visitors be matched this Parliament, or is it another broken promise, like Sure Start centres?

[Michael Gove]

The early years are indeed very important. That is when children often learn to spell. It is important that the Secretary of State can tell the difference between education, e-d-u-c-a-t-i-o-n, and health, h-e-a-l-t-h. Responsibility for health visitors, like responsibility for doctors and nurses, is for the Secretary of State for Health, and I suggest that the hon. Gentleman address those questions to my right hon. Friend.

[Guy Opperman (Hexham) (Con)]

T3. Last summer the Minister visited Northumberland, where schoolchildren have, historically, been chronically underfunded, compared with those in other areas, by central Government. May I welcome the 6.4% increase in early 2015 and the ongoing consultation, and observe that the case for fairer funding is absolutely overwhelming? The Minister should prepare for a lot of representations from my head teachers.

[The Minister for Schools (Mr David Laws)]

I am grateful to my hon. Friend for his welcome of our announcement. I congratulate him on his robust campaigning over a period of time to ensure this fairer funding settlement. As he knows, under our plans Northumberland’s per pupil funding rate will increase by around £269 per pupil per year, which will mean over £10 million more for schools in his area.

[Mr Tom Watson (West Bromwich East) (Lab)]

T2. Following a special educational needs tribunal ruling that children were unsafe in January 2013, at a ministerial meeting in March 2013 parents of abuse victims told a Minister that Stanbridge Earls independent school remained unsafe. I wrote to the Secretary of State in the same month to warn him that the situation was urgent. Despite this, a further child was sexually abused in July 2013. The school has now closed. Ofsted has apologised for its failures. Will Ministers now urgently consider adequate research into the funding of mandatory reporting in regulated settings?

[Michael Gove]

I take these issues incredibly seriously and I am very grateful to the hon. Gentleman for raising them. I have had the opportunity, in a different context, to talk to one victim of abuse who, I have to say, made a compelling case for mandatory reporting in a regulated setting. I had hitherto been concerned that mandatory reporting might create more work for children’s services departments than it would generate safety for children, but the specific case for reporting in regulated settings is one that we are actively reviewing.

[Mr Stewart Jackson (Peterborough) (Con)]

T4. Ministers are to be commended for their work to drive up educational standards for pupils in receipt of free school meals, and in particular for the appointment of John Dunford as pupil premium champion, whom we saw on his recent visit to Peterborough. What further work are Ministers doing to focus on this area of work with children in receipt of free school meals?

[Mr Laws]

I entirely agree with my hon. Friend. We are doing two things in particular. As my hon. Friend is aware, we announced in the Budget that we are extending the pupil premium into the early years, which I think has been widely welcomed. We are also ensuring, through Ofsted, that while schools have the freedom to spend that money in the most sensible way they think appropriate, they will be held to account and fully supported by Ofsted and the Education Endowment Foundation.

[Mr Andy Slaughter (Hammersmith) (Lab)]

T5. The Minister is, I hope, concerned about the literacy levels of prisoners, 40% of whom have an average reading age of 11. Does he think that the policy of the Lord Chancellor and Secretary of State for Justice to ban sending books to prisoners will make that better or worse?

[Michael Gove]

I take a close interest in ensuring that we deal with the problem of literacy. I am hoping to visit the prison education programme in Wormwood Scrubs in the hon. Gentleman’s constituency next week. We should do everything possible to support literacy in prisons and in the justice system. If he looks closely at the work the Justice Secretary is undertaking to ensure that in secure settings for young people an appropriate emphasis is placed on education, he will appreciate that the Justice Secretary is more committed than anyone to ensuring that those who are incarcerated have the chance to educate themselves out of the path they have taken.

[Mark Menzies (Fylde) (Con)]

T8. Does my right hon. Friend agree that academies turn around some of the worst-performing schools in our country? Will the Government redouble their efforts to create the conditions to allow academies to thrive in Lancashire?

[Michael Gove]

My hon. Friend makes a very powerful point. It is incumbent on the Labour leadership of Lancashire county council to do as other enlightened Labour, Conservative and Liberal Democrat local authorities have done and support academy providers in turning around underperforming schools.

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

T6. In a reply slipped out on Budget day, Ministers confirmed the hitherto secret list of 14 academy chains that have been barred from taking on further schools, and other unnamed chains are causing concern. Does the Secretary of State agree that such secrecy not only wasted months of work by Woodlands school in Southampton in abortive discussions with Academies Enterprise Trust, but is damaging public confidence? Is it not time to allow Ofsted to inspect academy chains, as it does local authorities?

[Michael Gove]

Ofsted already inspects academy chains. It has inspected both E-ACT and AET.

[Robert Halfon (Harlow) (Con)]

T9. Is my right hon. Friend aware that a very important event will take place in September 2014, namely the opening of Harlow’s Sir Charles Kao university technical college following millions of pounds of Government investment? Is he aware that the UTC is proving to be incredibly popular among pupils and their parents, and that it will increase the choice that is available to many people in Harlow? Will he come to Harlow to visit it, and to see for himself how it will improve the quality of education?

[Michael Gove]

Any opportunity to visit Harlow is always welcome, any opportunity to visit a UTC is always a joy, and the chance to combine both with the opportunity to meet my hon. Friend again is an offer that is simply too good to be true.

[Mrs Linda Riordan (Halifax) (Lab/Co-op)]

T7. Does the Secretary of State agree that every classroom in every school should contain a qualified teacher who is able to provide the best possible education for children, and that to deliver anything else is to deliver education on the cheap?

[Michael Gove]

I agree that every classroom in every school should guarantee that children are receiving high-quality teaching, but I think it instructive to note that the hon. Lady’s attempts to breathe new life into the policy of her party’s Front Benchers has come a little too late. Nowadays, when the shadow Education Secretary is interviewed on the BBC, he is reduced to saying that our policies are a success, and when it comes to Question Time he cannot think of any education questions, and has to ask some health questions instead.

[Priti Patel (Witham) (Con)]

T10. This morning I attended the launch of “Get Tiptree Reading” at Tiptree Heath primary school in my constituency. This local reading initiative is led by some outstanding head teachers in the constituency, and is intended to inspire a love of reading among schoolchildren. Will the Secretary of State commend the leadership of that school and other local schools which are going the extra mile to support reading and literacy among the young?

[Michael Gove]

Absolutely. I had the opportunity to visit Essex twice last week; sadly, I did not manage to make it to my hon. Friend’s constituency, but I hope to do so before too long.

The leadership being shown by primary head teachers, and teachers across the country, in helping us to eliminate illiteracy is inspiring. The introduction of the phonics check, which was the idea of my hon. Friend the Member for Bognor Regis and Littlehampton (Mr Gibb), has really raised the level of ambition, and the new primary curriculum which will be introduced in September will help to reinforce that.

[Bill Esterson (Sefton Central) (Lab)]

The Secretary of State said a moment ago that Ofsted could inspect academy chains. If that is the case, why is the head of Ofsted asking for the power to inspect them?

[Michael Gove]

The chief inspector of Ofsted said some lovely things about me on the radio on Friday, and now I have an opportunity to say some great things about him. I think that the recent changes in Ofsted inspections that he had a chance to announce on Friday, in a wholly independent way, are wise and right, as he is himself in relation to every issue.

[Simon Wright (Norwich South) (LD)]

I welcomed last week’s announcement of an early-years pupil premium. Schools have benefited from access to the Education Endowment Foundation toolkit to use the pupil premium to best effect. Will the Department consider how best to make early-years pupil premium research available to providers?

[Mr Laws]

I entirely agree with my hon. Friend. We will ensure that early-years settings have the necessary information about interventions that make a difference, so that the new money that is going into the system can have an effect, especially for some of the most disadvantaged pupils.

[Jenny Chapman (Darlington) (Lab)]

The Under-Secretary of State rightly says that she is worried about the number of girls taking A-level maths, given that two thirds of A-level maths students are boys. Is she also worried about the fact that level 6 key stage 2 entrants are consistently more often boys than girls? She has announced changes in the maths curriculum, but what elements of that curriculum, or of teaching, will help to deal with this issue?

[The Parliamentary Under-Secretary of State for Education (Elizabeth Truss)]

I agree that that is an issue. Information provided recently by the OECD’s programme for international student assessment showed that girls have as much confidence as boys at the age of five but begin to lose that confidence as they proceed through the education system, and that that contributes to feelings of anxiety about mathematics. One of the things that we must all do is end the culture in which saying “I am rubbish at maths” is acceptable, whereas it is not OK to say “I am no good at reading.” What is needed is a “can do” approach to mathematics. Our new maths hubs programme—there are 30 hubs across the country—will promote best practice in teaching, so that we can close the gap between girls and boys.

[Damian Hinds (East Hampshire) (Con)]

The Secretary of State recently saw basketball being taught in Mandarin at Bohunt school in my constituency. Will he join me in commending Bohunt on its immersion programme, and how can we get more people studying this strategically important language?

[Michael Gove]

I hugely enjoyed my visit to Bohunt school, an absolutely outstanding school. When the Financial Times visited it, it said that it was easily better—like so many state schools—than independent schools. One of the great things I saw today when I visited Chobham academy in Newham was a year 7 class being taught Mandarin through total immersion. The transformation of modern foreign language teaching over the last couple of years is a wonder to behold, and the commitment of so many of our modern foreign language teachers to extending Mandarin, Spanish and French teaching is vital to ensure that this country escapes the insularity that, sadly, afflicted us in the Labour years.

[Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)]

The Secretary of State referred earlier to the reforms in Ofsted announced by the chief inspector last week. Does that mean he is now prepared to call the dogs off and reaffirm his support for a genuinely independent national inspectorate completely free from political interference?

[Michael Gove]

As the Secretary of State who was delighted to appoint a Labour baroness to chair Ofsted, I think my commitment to the independence of the inspectorate is beyond question.

[Richard Fuller (Bedford) (Con)]

In Bedford the transition from three-tier to two-tier education remains stalled, and there is still no coherent strategy to resolve it. In the circumstances, will my right hon. Friend take a particular interest in applications for funding from schools seeking to achieve coherent change for their pupils?

[Michael Gove]

I absolutely will.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

Earlier the children Minister talked about the increase in places at school nurseries. Is she aware of the challenge that faces many working parents who cannot secure more than the 15 hours a week they are guaranteed and cannot buy extra hours in a school nursery, which reduces the choices for working parents?

[Elizabeth Truss]

That is why we are making it very clear to school nurseries that they are able to charge for extra hours and they can open from 8 until 6 to provide parents with that service. As I said, 45% of all early-years places in London are in school nurseries. There is huge potential there to get better service from our existing assets.

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

I welcome the new advice on the summer-born starting school at age 5 in a reception class, but are Ministers aware of just how varied the response to parental requests is between different school admission authorities, and what action will they take?

[Mr Laws]

We are keeping the matter under close review. If my hon. Friend has any information on the way in which schools are implementing their responsibilities, I would be keen to hear from her, because we will take action if we find that schools are not paying attention to parental demand.

[Mr Speaker]

Last but not least, Andy Sawford.

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

Thank you, Mr Speaker. Many people in east Northamptonshire are worried by a council consultation on a move from the three-tier system to a two-tier system. May I ask the Secretary of State to impress it on the county council that any changes, especially the disruptive closure of schools, must be driven by compelling evidence that they will lead to a better education for local children?

[Michael Gove]

I am grateful for the point the hon. Gentleman makes. Education standards in Northamptonshire have been low in the past. Reform is necessary, but reform always needs to be driven by evidence. That principle governs every single decision the coalition Government make.

Inherited Social Housing Tenancies

Monday 24th March 2014 Commons Chamber

[Mr Speaker]

Before I call the hon. Member for Rhondda (Chris Bryant), to ask his urgent question I would emphasise to the House that its terms are narrow. It relates specifically to the question of inherited tenancies and the treatment thereof. I am sure the House had not been planning on a Second Reading-style debate on the merits or otherwise of the spare room subsidy/bedroom tax, but that is not the subject matter. It is a narrow matter and will be treated accordingly, and we are, of course, time-constrained.

15:33

[Chris Bryant (Rhondda) (Lab)]

(Urgent Question): To ask the Secretary of State for Work and Pensions if he will make a statement regarding the exemption of those who have inherited social housing tenancies from paying the under-occupancy charge.

[The Minister of State, Department for Work and Pensions (Esther McVey)]

The issue raised by the hon. Member for Rhondda (Chris Bryant) is not a new matter, but is part of the 1996 provisions which impacted on the spare room subsidy legislation 2012, and which we have debated in the House before. Upon investigation early in the year, it would appear that some claimants have been unintentionally protected from the effects of the removal of the spare room subsidy, including those who have been in receipt of continuous housing benefit since 1 January 1996 and who have lived in the same property since that date unless the move was due to natural disaster such as fire and flood. There is a grace period of four weeks, or 52 weeks if the claimant or their partner is a welfare to work beneficiary. For example, housing benefit would be classed as continuous if the break is fewer than four weeks, or 52 weeks for a welfare to work beneficiary. Where a claimant dies, the partner or an adult child can inherit the protection, but it must be in respect of the same dwelling and they must qualify for housing benefit.

The issue of the inheritance of housing benefit has always formed part of the understanding of what the loophole meant, and this was part of the guidance issued to local authorities a few weeks ago. The loophole derives from a very narrow but complex set of regulations dating back to 1 January 1996, when the local reference rent rules were introduced. In January 1996, transitional protection was offered to existing claimants, which could, and still can, be inherited if the claimant dies: for example, by a partner or, where there is no partner, by an adult child. The protection applies only in respect of the same dwelling—therefore, partners or adult children must continue to live in that property—and only if they qualify for housing benefit. This protection ends if housing benefit ceased or they moved address.

With hindsight, the protection offered by the regulations could have been time limited. Because it was not, it has lain dormant for 17 years, the effect being that it has now unintentionally been applied to a group of people who were not financially affected by the local reference rent rules. During February’s debate, my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley), who was Secretary of State at the time the regulations were introduced, clearly stated that this exemption was never intended to come into force.

This matter was fully debated, and voted on, on 26 February 2014, to approve amended regulations to close the loophole. Clearly, the House has already spoken on this issue, and guidance was sent out a few weeks ago to inform local authorities. I am pleased to announce that most local authorities are following that guidance and delivering this policy.

[Chris Bryant]

That was all very interesting but not to the point, because this is actually about inherited social housing tenancies. The Minister just said that this only applied to the partner or the adult child of somebody who had been holding the tenancy, but in her advice to local authorities of January this year, she included the following highly ambiguous footnote:

“it may be the case”—

only may—

“that the transitional protection has been inherited by a claimant and if so they should be treated the same.”

Yet a separate e-mail from the Department for Work and Pensions includes

“any member of the claimant’s family”

and says,

“if the claimant is a member of a polygamous marriage”—

I am not making this up; this is actually what the Minister has written—

“any partners of his and any child or young person for whom he or a partner is responsible”,

a much bigger number, would be included.

In what circumstances does a tenant inherit the right to be exempted? Does that apply to any member of the claimant’s family or specifically just a partner, as the Minister referred to? How many people does that apply to now? What is the total cost of repayments of these illegal charges? How many people who have received refunds for being wrongly charged the bedroom tax have also received discretionary housing payments, and will they have to pay them back? The DWP advice suggests that in assessing whether someone is exempted, local authorities should

“err on the side of caution”.

What on earth does that mean: err on the side of caution to exempt, or not to exempt?

The bedroom tax always had the air of a policy dreamt up in an ivory tower. I know the Minister would love to put this sorry saga behind her, but she should know that before absolution there always has to be confession. So will she now confess that the bedroom tax has been a fiasco from the beginning, that the figures she has given the House were simply plucked out of the air, and that far more than 5,000 people will be affected? Should she not just repeal the bedroom tax? Because if she won’t, we will.

[Esther McVey]

It is clear that the hon. Gentleman was not listening to the statement that I made and did not understand what the inheritance was or what he was voting for on 26 February. Obviously, we do not necessarily want to have to put this policy in place. It is something that we are having to deliver—

[Chris Bryant]

It is your mistake.

[Esther McVey]

No. It is something we are having to deliver because of what we inherited from the previous Government, including a benefit, the cost of which had doubled in 10 years, and a policy that had left nearly 2 million people on housing waiting lists and 400,000 in overcrowded houses. It was a skewed policy under which people living in private rented accommodation could have their spare room subsidy removed but people who lived in the social rented sector could not. And as for people giving out wrong numbers, I would remind the hon. Gentleman that, when he plucked numbers from the air in the last debate, St Helens said that he had got his numbers wrong. Now, in response to his citing a figure of 2,100 cases, Birmingham has put up on its website this statement:

“We haven’t finished identifying them at Birmingham so can’t give you an exact number, but the number of possible cases has dropped substantially below the 2,100 that was reported in the papers”.

We have trebled the discretionary housing payments. We have also said that we will cover the differences involved for people who are exempt and that we will help local authorities with the administration charges. We have answered these points and we have voted on them. I suggest that the hon. Gentleman look again at the debate we had on 26 February.

[Mr John Redwood (Wokingham) (Con)]

How many people are affected by this problem?

[Esther McVey]

The number so far, on best records, is about 5,000. However, the cases are having to be manually checked at the moment, because of a change of computer system, and everybody is going through that. Also, a person has to be in continuous receipt of housing benefit and has to have lived in the same home since 1996.

[Mr David Hanson (Delyn) (Lab)]

I know that the Minister can see Wales from her constituency, but has she discussed the matter with the relevant Welsh Assembly Minister? Can she tell me today how many properties and individuals in Wales are affected, and what will happen if any of those individuals have been wrongly charged?

[Esther McVey]

We are looking through all that at the moment, and anyone who can prove that they are covered by this loophole is of course getting that funding back. That is what we have said people should do, as well as paying towards the administrative charges.

[Sir Tony Baldry (Banbury) (Con)]

Is it not a fact that we inherited more than 1,000 pages of regulations on housing benefit and that there would inevitably be some lacunae while we sought to simplify the system? The real question, which still has not been answered, is why Labour wants to treat people on housing benefit in the social rented sector differently from those on housing benefit in the private rented sector. We still have not had an explanation for that.

[Esther McVey]

My right hon. Friend is quite right. At the moment, the Opposition say that they would like there to be a difference between the people in the private sector and those in the social rented sector. Actually, they had had discussions about introducing this policy too, so they were going to align the policies and do exactly the same as we have done. The only question that they have never asked, as they have sought to reverse what is happening in the social rented sector, is this: should there be a legal challenge by those in the private rented sector against whom they were discriminating, would they reverse the rules for those people too, so as to have fairness and equality for everyone?

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

Scottish ministers have written to Lord Freud five times since January regarding discretionary housing payments, including for those with transitional tenancies, but they have yet to receive a reply. The Deputy First Minister will be in London on Wednesday. Will Ministers from the Department for Work and Pensions commit to meeting her to discuss these issues and will she give me that commitment today?

[Esther McVey]

I know that the Secretary of State is in discussions with the Deputy First Minister, and obviously we will do the right thing and speak with her.

[Philip Davies (Shipley) (Con)]

Given that we are talking about inherited social housing tenancies, may I urge the Minister to stick to her guns to ensure that the welfare state is about being a safety net for people in need and that it is rebalanced to make sure that it is just as fair for taxpayers as it is for people claiming benefits? May I also give some free advice to the Opposition? Given their lamentable response to the Budget last week, they need to do better than to keep flogging this particular dead horse.

[Esther McVey]

As my hon. Friend knows, we are ensuring that welfare works and we have a benefits system that works for the 21st century. We know that we are reaping rewards from that: the number of people living in workless households has fallen; the number of people in employment is at a record level; and youth unemployment has fallen for six consecutive months. What the Government are doing is correct, and in the future the Opposition will no doubt follow.

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

The Minister has said that we do not yet know the number of people affected by this. Given that she has said that each case has to be individually checked and that this mess is hers, will her Department be paying for these checks?

[Esther McVey]

I have already said that—of course we will.

[Lorely Burt (Solihull) (LD)]

Is not the crux of the problem that far too many families are waiting for social homes, that there is too much overcrowding in our social housing and that more than 400,000 houses were lost under the previous Government? Is not the answer to build more social housing for everyone who needs it?

[Esther McVey]

My hon. Friend is correct; we have to look at those on housing waiting lists and those in overcrowded accommodation, not that the Opposition seem to care about those people. We have committed to £4.5 billion of spending to ensure that we have another 177,000 social homes by 2015.

[Wayne David (Caerphilly) (Lab)]

The Minister has accepted that because of the Government’s cock-up, local authorities are having to do a great deal of extra work, and she said that they will have more money. How much more money will they have?

[Esther McVey]

We will be covering the costs—that is what we will be doing. So when we receive that, we will have it, just as we trebled discretionary housing payments to support people and just as we did when we put in an extra £20 million to support local authorities, which, in fact, they did not need—they needed only £13 million. We have been supporting them all the way.

[Dame Angela Watkinson (Hornchurch and Upminster) (Con)]

Given that nearly 400,000 families in the social housing sector are overcrowded, can the Minister think of a single reason why any individual should be allowed to under-occupy simply because their tenancy is inherited?

[Esther McVey]

My hon. Friend is right; no, I cannot. It is only when we meet people who are living in overcrowded accommodation, or who are on a waiting list with their children, and we look at the conditions they are living in, that we realise what a lamentable mess we had been left with and how we have to clear it up. How can we justify 1 million spare rooms when other people are sometimes crammed together in a room? So my hon. Friend is correct in what she says.

[Sheila Gilmore (Edinburgh East) (Lab)]

As the Minister has been able to expand on a possible policy area, I would point out that nobody in the private rented sector was ever expected to find £14 or £28 out of their pocket, each week, retrospectively. The Office for Budget Responsibility has said that housing benefit spend will continue to rise. Has the additional spending from this loophole been factored into that, or is that going to be another increase that is not in this Government’s forecast?

[Esther McVey]

The money is obviously in the forecast; I mentioned that we put £20 million in place for local authorities but they did not need it—they needed only £13 million—and so that will come into play. As I also said, we all need to get the housing issues for people across the country right, and we are dealing with them in a way that is fair and proportionate.

[Nicola Blackwood (Oxford West and Abingdon) (Con)]

I was surprised to read today in my local paper, The Oxford Times, that Oxford city council has spent only two thirds of its discretionary housing funds for 2013-14, leaving £200,000 meant for the most vulnerable unspent. May I therefore ask for the Minister’s guidance on how this fund can be better applied to inherited social housing tenancies and others?

[Mr Speaker]

An exceptionally interesting question, but its relationship with the urgent question tabled is, to put it kindly, tangential. However, let us hear the Minister as the product of her grey cells may prove me wrong.

[Esther McVey]

My hon. Friend is right that there are quite a few local authorities that have not spent the full amount, and it is that money that can be utilised here for those who have inherited a house or a property in that way. This is what the money is there for.

[Toby Perkins (Chesterfield) (Lab)]

A few moments ago, the Minister described this policy as “reaping rewards”. The people who are victims of the bedroom tax fiasco in my constituency would not consider that they are reaping rewards. Does she have any idea of how out of touch those on the Government Benches sound when they stand up at the Dispatch Box and tell my constituents, who have been plunged into poverty by their actions, that they are reaping rewards?

[Esther McVey]

Unfortunately, the thing that Opposition Members never did was to look at this issue in the round, in the full 360°, including looking at those living in overcrowded accommodation and those on waiting lists. Yes, there are people who want to remain in their houses, and that is why discretionary housing payments have been made. Equally, there is support for people to move and to house swap. Many people have said to me, “Actually, downsizing is something that we should have done a lot earlier. We never did that, and by downsizing we have a house in which our bills are cheaper and the cost of keeping it tidy is cheaper. In fact, everything is cheaper. We can now live within our means, which is something that we never did before.” We can help people in many different ways.

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

Does the Minister agree that it is ironic that on the day that the Opposition claim that they want to cap welfare spending, they are yet again in this House demanding to spend more and borrow more?

[Esther McVey]

If there is one thing that is clear, it is the sheer deficiency of the Opposition. They really do not know what to do with any of the benefit changes. Each time I pick up a newspaper, I read about something that they are doing or not doing, were thinking of doing or of reversing. If they have spent that tax once, they have spent it 20 times.

[Mr Gordon Marsden (Blackpool South) (Lab)]

Has the Minister made any assessment of how much time local authorities, such as my own in Blackpool, will have to spend clearing up this mess, which the right hon. Member for Banbury (Sir Tony Baldry) charitably referred to as “her lacuna”?

[Esther McVey]

Does the hon. Gentleman know how much time local authorities spend trying to find houses for people who are either on a housing waiting list or in overcrowded housing when houses have not been freed up? We have said that we will pay for any extra administrative charges. What we now need to do is move this debate on and think about the families and the individuals who need to live in accommodation that suits their purposes.

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

Will the Minister write to me to tell me how many people in the metropolitan borough of Tameside are affected by the change? From the intimations given to the House so far, identifying these people sounds like quite a time-consuming process. What cost has she estimated to her Department of this announcement today?

[Esther McVey]

I fear that I have answered this question many times, but people keep coming back to it. We know that a very small proportion of people will be affected by this. When the administrative work has been done and costed, we will provide the funds. That is something we will work on.

High-speed Rail

Monday 24th March 2014 Commons Chamber

15:53

[The Secretary of State for Transport (Mr Patrick McLoughlin)]

The past few days have brought important proposals to make the most of High Speed 2. They will help us to build the line better, bring benefits to the north sooner and support job creation and economic growth. I wanted to update the House at the first opportunity and I am sorry that, for unavoidable reasons, I was unable to do so last week.

The proposals are welcome, because HS2 is a vital project. It can do for future generations what the Victorian railways did for previous generations and what the motorways did for ours. That is why it has the strong support of the Government and why cities in the midlands and the north are calling for its benefits to be spread as widely as possible. We must heed that call, but if that is to happen, we must also get the basics right, stick to the cost, plan well, listen, respect the environment, build what really works and what we need for the future, and ensure that people get the benefits as quickly as possible.

I know, too, that HS2 is just part, although a vital part, of our long-term economic plan—one that will see better infrastructure for all parts of our country. It is a clear and ambitious plan that is already paying dividends, as shown by last week’s welcome decision by Hitachi, the company that invented the bullet train, to move its global rail headquarters to Britain. That is the sort of opportunity presented by HS2.

First, let me respond to the report by Sir David Higgins. He began work as chairman of HS2 in January and the first task I set him was to consider how to maximise the benefits of HS2 and manage the costs. Last year, Parliament backed the principle of a high-speed rail link to the north with 350 votes in favour and only 34 against. It is now up to us to make that happen and, given his great track record, there is no one better suited to the job than Sir David Higgins. Let me turn to his proposals.

First, on costs, Sir David has reviewed the cost estimates for constructing phase 1 and confirmed that they are realistic. The budget set by the Government in 2013 stands. As experience shows, in Britain we can build great projects on time and on budget, such as High Speed 1, Crossrail and the Olympics. At this early stage, however, before Parliament has considered the hybrid Bill, we must include a proper contingency. Of course, for popularity’s sake, one option would have been to slash the contingency and claim that as a saving. Sir David said that that would be wrong and I agree, but, as he also says, with growing certainty comes growing confidence. That will be the stage at which we can bring down the contingency.

Let me turn to Sir David’s second proposal. I have heard many hon. Members asking why we cannot build in the north sooner. I agree, and we can. Sir David’s report suggests opening the new line to a new hub station in Crewe six years earlier than planned. Direct trains will of course be able to run off HS2 lines to serve places such as Stoke, Liverpool, Manchester, north Wales and Scotland, and faster too, and the line to Crewe sooner would mean journeys that are shorter than they would be under phase 1—journeys that are quicker to Manchester, quicker to Liverpool and quicker to Scotland. That is a welcome proposal and I am commissioning HS2 Ltd to undertake the work to allow it to be considered in detail, but that must be an acceleration of phase 2 and not an alternative. Sir David says that we must make the most of this investment so that as many towns and cities as possible benefit. I agree, and we will make sure that that happens.

Let me turn to Sir David’s third proposal, for the south-eastern end of the line. Our priority must be to get the benefits to the midlands and the north as soon as possible. In short, we must put the money and time where they can do the most good. Sir David is clear that he does not think that the existing proposals for a HS1-HS2 link meet the test. The HS1-HS2 link proposed in the hybrid Bill has not secured consensus. It requires too many compromises in terms of its impact on freight, passengers and the community in Camden. I therefore intend to remove the link from the hybrid Bill and withdraw safeguarding as soon as possible. I will also commission a study of options for ways to improve connections to the continent, which could be built once the initial stages of HS2 are complete.

I also agree with the report that much more can be made of Euston station, not just to build something of which we can be proud but to maximise the economic potential of the line, to use a site that has been neglected and to generate private sector investment that can reduce the overall burden on the taxpayer. I will therefore ask HS2 and Network Rail to develop comprehensive proposals for the redevelopment of Euston.

Our ambitions for Euston must not, however, conflict with our commitment to control costs. I want to see a substantial private sector investment to ensure that. Let me therefore turn to the report from the HS2 growth taskforce, published last week. It comes from an impressive panel including business leaders such as Sir John Rose, Alison Nimmo and Ray O’Rourke, city leaders such as Julie Dore from Sheffield and the general secretary of the TUC, Frances O’Grady. I thank everyone involved, and especially the commercial secretary for his committed leadership. Their message is clear: we need HS2, and we need to act on how to squeeze the most jobs, skills and growth from it. The taskforce’s recommendations are plain common sense. They are things that business, the Government and cities can do together, and must start doing now: on skills, proper training to make sure that our young people get the best jobs on the project; on planning, ensuring that the line brings new strength to our cities; and, on transport, making sure that we link the existing road and rail network properly to HS2 and plan investment to bring them together.

Regeneration and economic growth are vital parts of HS2. City leaders have already started to put plans in place, but the Government have a role to play, too. That is why I am asking HS2 Ltd and London and Continental Railways, which developed the King’s Cross-St Pancras site, to come forward with proposals for a regeneration company that will respond to the growth taskforce’s recommendations on regeneration. This matters because, as I have said before, HS2 is a project that will be built over many Parliaments—and no doubt Governments, too—and will serve many people through the generations. It is not the only answer to our transport needs, but it is a central part of the answer, and that means designing it carefully and building it right. It is about something that works, something of which we can be proud, and something that benefits as many people and places as possible at the lowest cost.

We are on schedule to open the line in 2026 which, by the way, is exactly the date that the previous Government set in 2010, or ahead of time in the case of the Crewe proposals. The Government are keen to rise to the challenge and I hope that hon. Members on both sides of the House will do the same.

16:02

[Mary Creagh (Wakefield) (Lab)]

I thank the Secretary of State for advance notice and early sight of the statement. May I also congratulate Sir David Higgins and Lord Deighton on their substantial and thorough reports?

Transforming rail capacity south of Birmingham and improving connectivity north of Birmingham are vital and will transform our great cities. We support HS2 because of the capacity constraints that too many commuters on our railways face. We will continue to hold the Government to account for keeping costs down on the project. We will vote in support of the hybrid Bill when the Government finally bring it to Parliament.

David Higgins has made it clear that there are significant savings to be made if Ministers get a grip of this project and stop the delays. He says:

“a lower budget for Phase One could be set at some point...but only when the legislative timetable becomes clearer and more certain.”

What steps is the Secretary of State taking to ensure that the phase 1 hybrid Bill is put before the House as soon as possible? The Government must now act so that the scheme can be delivered under budget.

Sir David recommended, and the Secretary of State has acted, scrapping the link between HS1 and HS2. That is welcome because the link was set to cause huge disruption to large parts of Camden. At Euston, Sir David proposes central London’s biggest regeneration site, with a mix of retail, office and residential units. Given the acute affordable housing crisis in Camden, a significant proportion of any new housing must be social housing. Does the Secretary of State agree that the community and council must be fully involved in those plans?

At Old Oak Common, where significant regeneration is planned, there is as yet no decision from the Government about the relocation of the First Great Western and Heathrow Express train depots. When can we expect a decision about linking HS2 and Crossrail into the west coast main line at Old Oak Common? That is key to maximising the development potential of the area and to improving the capacity for commuter services into Euston, which is crucial if there is to be a longer construction phase at Euston. When will those three important decisions be made? What contact has the Secretary of State had with the Mayor about setting up a development corporation to take regeneration plans for Old Oak Common forwards?

Sir David has listened to concerns from cities such as Milton Keynes, Northampton, Rugby, Stoke, Leigh and—yes—my city of Wakefield about how the line will connect to the current railway network and how their services into London can be improved. When can we expect the Government’s response to those significant issues in Sir David’s report?

On phase 2, we are glad that HS2 will link to future Network Rail classic rail investment and that the connections between our great northern and midland cities that we have called for have replaced the Government’s previous take-it-or-leave-it approach. We want a coherent transport plan for the north and the midlands, which have been historically underfunded, and for proper east-west links between Liverpool and Manchester and Leeds and Hull. A rebalancing of railway investment into the regions to close the economic divide: that is how we maximise the benefits for the whole country from this project.

We welcome the faster construction of phase 2 to bring benefits more quickly to the northern cities and north Wales. Will the Minister tell the House when the hybrid Bill for phase 2 would need to be completed in order to get to the north-west by 2026, as Sir David recommends? Sir David also recommends that discussions between council and business leaders and the Government should be conducted on a regional rather than a bilateral basis. When do the Government envisage such meetings starting, given the imperative to work fast to reduce costs? When will the Government announce their response to the phase 2 route consultation in order to get it started more quickly?

I turn to Lord Deighton’s growth taskforce report. He is correct that HS2 must become the spine for jobs, growth and regeneration in our country. His report wants cities to set up locally led delivery bodies to maximise the regeneration that High Speed 2 will bring. He warns:

“Even the very best authorities will be stretched to manage a project as complex and large as HS2”.

What help will the Government give councils whose budgets have been cut by 40% over this Parliament in order to do that? He says that land for development should be bought early before land prices rise and to reduce blight around the station sites. When will the Secretary of State set out which costs will be included in the costs of the High Speed 2 railway and which are excluded, so that councils can budget accordingly?

On transport, Lord Deighton wants the Government to set out their plans for commuter rail in non-high speed areas by the end of the year. Will the Secretary of State undertake to publish such a plan?

On skills, Lord Deighton warns that the railway work force are ageing. Some 10,000 new people are needed to work on the railways in the next five years alone, and he also states:

“Railways have an image problem.”

How does the Secretary of State plan to transform that image to entice young people of both sexes to work on the railways?

When will the site of the High Speed 2 skills college be announced? Wherever it is located, it must not be a stand-alone institution; it must reach out to cities and towns across the UK that have young people who want to work on High Speed 2. Which Minister is overseeing that skills work and how can procurement processes drive up the number of apprentices on the project?

On small and medium-sized enterprises procurement, the Minister must learn lessons from Crossrail, where SME contract numbers are high on volume, but the total value of those contracts is uncertain. We must ensure that the High Speed pound reaches all parts of the UK. It is vital that we maximise the opportunities that the new north-south line brings to our country. We are behind the project. We wait for the Government to rise to the challenge.

[Mr McLoughlin]

I thank the hon. Lady for her support. I am not sure how many questions she asked me, but I will try to answer the vast majority of the points she raised. There will be other points on which I shall respond to her in due course.

The right hon. Member for Holborn and St Pancras (Frank Dobson) has been a long-time critic of the HS1-HS2 link. It is right that we needed not only to listen to what local communities said, but to look at how we get a better link between the two stations of Euston and St Pancras. We are talking about a fundamental redevelopment of the whole of Euston station, which I think is the right thing to do. Anybody who has looked at those three stations over the past 20 years will have seen stations, particularly St Pancras and King’s Cross, where one would not really have wanted to spend any time at all. Today, they are destinations in their own right and show what can be done with proper work and careful consideration. That is why I think that a complete regeneration of Euston is necessary. I hope that we can address those problems. With regard to Old Oak Common, the Mayor has already announced his intention to set up a development corporation. I have regular meetings with him. In fact, I have one coming up this week.

It is right that we look at the overall cost, which of course is an important consideration. There is a £14 billion contingency built into the current budget of £42 billion. It has been left in place because at this early stage that is thought to be the right thing to do. One of the reasons why costs have gone up—it is important to reflect on this—is that we have taken exceptional steps to try to meet some of the environmental concerns that have been raised by many hon. Members, their constituents and communities. I do not apologise for that, because it is right that something that will be there for the next 150 years is built correctly and properly, as it will be.

The hon. Lady made an important point about skills development and the opportunities that that can bring, for example through apprenticeships. I will be looking at Crossrail, which I think has done incredibly well in trying to spread the benefits across the country, even though it is a London project. It benefits London in particular, but it also brings great benefits to the United Kingdom and the regions. I will also be looking at how Crossrail has tried to improve apprenticeships and develop skills across the industry. By the time it ends, the shovels will be on the sites for HS2, so hopefully there will be some cross-over.

This should send out a message to young people that the railway industry has a great future. What has happened to the industry over the past 20 years, with the number of passenger journeys rising from 750 million to 1.5 billion and continual growth each year, shows people who want a long-term future that the industry certainly offers good opportunities and work prospects. That is why it is important. I will write to hon. Lady in due course on the other points she raised.

[Mr Simon Burns (Chelmsford) (Con)]

The Higgins report is excellent and fully justifies Sir David’s appointment. However, can my right hon. Friend give the House a categorical assurance that the money that is to be spent on High Speed 2 will in no way affect the record billions being spent in control period 5 on the conventional railway and what is likely to be spent in control periods 6, 7 and 8?

[Mr McLoughlin]

May I first put on the record my appreciation for the contribution my right hon. Friend made to this project? He was also the last Minister to meet Hitachi in Japan and so might have had a great influence on its decision to move its rail headquarters to the UK. I congratulate him on that. He is absolutely right: some £38.5 billion will be invested in the rail network over the next five years, excluding the money being spent on HS2. It is absolutely essential that we make that long-term investment in our railways.

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

The reports from Sir David Higgins and the taskforce are very important documents. However, following the question from the right hon. Member for Chelmsford (Mr Burns), how can the Secretary of State demonstrate that investment in High Speed 2 will go together with investment in the existing classic line so that the whole network benefits?

[Mr McLoughlin]

The hon. Lady, as Chair of the Transport Committee, has spent a lot of time looking at that, and indeed has taken evidence from me, Network Rail and Sir David Higgins over recent months. She will know that there is huge investment. In her city, for example, in May this year we will see the first express train running from Liverpool to Manchester, which I welcome. It is part of the northern hub, with over £500 million of investment linking Liverpool, Manchester, Leeds and, eventually, Hull.

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

It is a reflection of the poor genesis of the project that, four years down the line, the Secretary of State is still making fundamental adjustments to the plans for HS2. It does not matter how many studies or justifications he puts forward, he needs to understand that for many of my constituents, it is like putting lipstick on a pig. However glossy the lipstick, HS2 is still a pig.

I am sad that the Secretary of State can stand at the Dispatch Box and say that he respects the environment when we are still not to have full tunnelling under the whole area of outstanding natural beauty in the Chilterns and when neither Front-Bench team has had the decency to talk about compensation. My constituents, and many people up and down the line, still do not know what the compensation package is, and it is about time that he came to the Dispatch Box and announced the generous and fair compensation that the Prime Minister promised.

[Mr McLoughlin]

I hope very soon to be able to make announcements about the Government’s proposals for compensation. I would just say to my right hon. Friend that on the one hand I am attacked for listening to people, and then on the other hand I am attacked for not listening to people. I suppose that is just one of the problems of dealing with big infrastructure projects—wherever we take them, there will always be people who are directly affected, and they will not be convinced of the necessity of them. However, I am convinced of the necessity of high-speed rail for our cities in the north.

[Frank Dobson (Holborn and St Pancras) (Lab)]

I welcome the Secretary of State’s decision to abandon the ridiculous proposal for the High Speed 2-High Speed 1 link across Camden Town, and I also welcome Opposition Front Benchers’ support on that matter. However, I cannot say the same about the proposal to go ahead with an even bigger redevelopment of Euston than was proposed before. It will mean that the homes of more than 500 people will be destroyed, and that the lives of about 5,000 people will be subjected for a decade to the noise, filth and disruption of the biggest engineering project in Europe. I hope that, even at this stage, at a time when looking back, looking forward and coming to different decisions is apparently still on the cards, the Government will at least consider having the initial London terminus at Old Oak Common.

[Mr McLoughlin]

The right hon. Gentleman has been consistent on the HS1-HS2 link. I do not need to tell him about the difference that has been made to the area around King’s Cross and St Pancras in his constituency—it is plainly there for all to see. Those of us who use St Pancras station faced a lot of inconvenience at the time when that development was going on, but given what we see today, it was worth it.

[Michael Fabricant (Lichfield) (Con)]

My right hon. Friend will know that Lichfield will be badly affected by HS2, with phase 1 ending and phase 2 beginning in the constituency. As a consequence, a line running from east to west will join what was to be the end of phase 1 with the west coast main line. That work will transform the leafy lanes of Lichfield into the marshalling yards of Lichfield. What hope can he give my constituents that the temporary east-west line will no longer have to go ahead, and that there will be significant improvements in the environmental plans proposed for Lichfield?

[Mr McLoughlin]

I am always ready to listen to my hon. Friend’s comments and points on these matters. I believe that, overall, HS2 will bring great benefit to the midlands, including Birmingham, which is an important city close to his own city of Lichfield. It is a matter of ensuring that areas such as his can also benefit from high-speed rail.

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

The Higgins report specifically highlights poor east-west connectivity as a problem on the rail network, such as that between Manchester and Leeds, to which I would add that between Manchester and Sheffield, which is directly relevant to Stalybridge and Hyde. Will the Secretary of State go into more detail about how he plans to integrate Network Rail’s existing investment plans with the relevant phase of HS2, specifically to address the east-west connectivity issue?

[Mr McLoughlin]

The hon. Gentleman mentions the rail line that goes through the top end of my constituency, so I am familiar with his points. Our plans for the northern hub will greatly enhance the services he receives, as will ensuring that we build them in to benefit from HS2, which is possible. On Thursday a number of parliamentary colleagues will come on the high-speed Javelin line. It goes to Ashford and continues to service other parts of Kent, and it has been very successful.

[Sir John Randall (Uxbridge and South Ruislip) (Con)]

I thank my right hon. Friend for making the statement to the House. My constituents and residents in the London borough of Hillingdon look forward eagerly to the statements on compensation. As I am sure he is aware, the borough of Hillingdon still has some outstanding matters, and the most pressing—which I ask him to look at urgently—is the relocation of Hillingdon outdoor activities centre. That is a valuable asset, and we must resolve its future shortly.

[Mr McLoughlin]

My right hon. Friend has never lost an opportunity to make that case for Hillingdon, and I assure him that I will look into it. I reassure him that I hope to say something about compensation in the very near future.

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

These are two excellent reports, and the Secretary of State is right to talk about ensuring that rail links help to provide the economic benefits from the high-speed links. When lines in the north of England are electrified, can he guarantee that, following the fiasco of the TransPennine Express, there will be electric trains to run on them?

[Mr McLoughlin]

Before we start talking about fiascos and the TransPennine Express, I chide the hon. Gentleman for not pushing a bit further and getting more electrification when he sat on the Government Benches, and getting more rolling stock—[Interruption.] He says he did, but he did not succeed. We are doing it, we are succeeding, and we will order the rolling stock.

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

I support linking our northern cities with high-speed rail, but does the Secretary of State understand the concerns on the east side of the Pennines about the announcement of the Crewe hub? All along we were given assurances that the link to Sheffield and Leeds would happen at the same time as that to Manchester. Will he commit to looking at the “High Speed UK” proposal that links more cities more quickly and for considerably less cost?

[Mr McLoughlin]

There is a recommendation on the Crewe hub and I have not made a full decision on it yet. A consultation is going on about the Y section from Birmingham to Manchester and Birmingham to Leeds. It is important I do that properly, which is exactly what I will do.

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

The recommendation for the line to reach Crewe by 2026 is welcome, but does it allow for any possibility of the other sections of HS2 further north being completed earlier—and if not, why not? How does the Higgins study impact on the study being carried out by the UK and Scottish Governments to ensure that the benefits of HS2 reach Scotland as soon as possible?

[Mr McLoughlin]

The extension to Crewe will have a positive impact on Scotland. As I have said, trains will be able to continue running on, and the fact that they will go further up will have a positive benefit. That should reassure the hon. Gentleman.

[Mr William Cash (Stone) (Con)]

As the Secretary of State knows, my constituents are completely against these proposals and have been from the beginning. Furthermore, they are looking for proper compensation on principles that he knows I put forward in amendments to the project. Will he consider increasing compensation in line with the criteria that have already been provided to him in my amendments?

[Mr McLoughlin]

The full consultation process for the part of the line that goes through my hon. Friend’s constituency is ongoing, and no final decision has been made. I hope to be able to say something about the compensation relating to phase 1 very shortly.

[Mr Jack Straw (Blackburn) (Lab)]

May I thank the Secretary of State for the report and congratulate Sir David Higgins on it? Does the Secretary of State accept that the data on page 8 of Sir David Higgins’s report, which show that investment per head in London and the south-east has been running at least three times that of any other region, emphasise his point that this is not a zero-sum game between HS2 investment and investment in other services but rather the reverse—that this investment, properly co-ordinated with control period 6, should beget further investment in rail services across the north?

[Mr McLoughlin]

I am grateful to the right hon. Gentleman; I think he is right. I will not chastise him about when this huge extra expenditure in London was first committed to—we will leave that to one side. What is important is getting the long-term investment in infrastructure right for all the northern cities. That is vital to all of us who care about those cities, and those connections, and about making sure that they have the right opportunities. As I said in my statement, this kind of project does not happen over one Parliament but runs over several Parliaments. That is why it is so important to have as much cross-party support as possible for such a big scheme. I believe that this will be an evolutionary change in transport. As I said, it will do for future generations what the motorways have done for today’s generation.

[Sir Tony Baldry (Banbury) (Con)]

My right hon. Friend will clearly come to the House in due course with a statement on compensation. Will he give an undertaking that during the proceedings on the hybrid Bill he and ministerial colleagues in the Treasury will be willing to listen to suggestions on how the compensation scheme can be further refined, improved and targeted?

[Mr McLoughlin]

Of course I am always prepared to listen; that is partly what we have been doing in consulting on the existing scheme. People often come forward with proposals that increase the cost and then complain that the cost has been increased, so it is quite important that we get the balance right on these projects.

[Joan Walley (Stoke-on-Trent North) (Lab)]

In view of the Secretary of State’s commitment on Government funding to look at the prospects for opening up the line to Crewe that much earlier, what are the implications for the alternative proposal made by Stoke-on-Trent?

[Mr McLoughlin]

Sir David has made a recommendation to me and I am asking for work to be done on it. It is right that I then consider that alongside the representations that have been made by other cities in the north as part of the final consultation process. I am still engaged in that process, and I will do so.

[Mark Reckless (Rochester and Strood) (Con)]

I am all in favour of better links with Europe, at least in this context. Does the Secretary of State accept, however, that most of the demand for an HS1-HS2 link will be domestic? Will he learn from the sub-optimal interchange at Stratford and consider installing a travelator to get people quickly and easily between St Pancras and Euston?

[Mr McLoughlin]

One of the problems at the moment is that people cannot get to the northern cities by high-speed trains, yet they can get to Europe in that way. I want the people of Birmingham and Manchester to have the same opportunities as those who wish to travel from London to Paris or London to Brussels. My hon. Friend is absolutely right about the need to have a good link between Euston and St Pancras. Sir David says in his report, and has said to me, that that can be done at a much more efficient rate than what is currently planned under the High Speed 1-High Speed 2 link, which will now be removed from the Bill.

[Mr Andy Slaughter (Hammersmith) (Lab)]

I welcome the Government’s continued commitment to the Old Oak Common interchange, but I am alarmed that they are handing control of the whole area, including Wormwood Scrubs, to the Mayor of London, with instructions that any development must exclude separate funding schemes. Some 24,000 new homes are planned for Old Oak. How will the Government ensure that some of these are affordable homes for Londoners, and not the empty luxury flats for foreign investors that the Mayor prefers?

[Mr McLoughlin]

The hon. Gentleman is wrong about what the Mayor prefers. I think I am right in saying that he was one of the supporters of a Mayor for London. Perhaps he just does not like the democratic outcome and the Mayor he has today. I think the Mayor knows exactly what is needed at Old Oak Common and will act on it.

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

As someone born in Crewe, I add my gratitude for any proposals to improve this transport renaissance. Will the Secretary of State clarify whether the connection to the west coast main line at Crewe will obviate the need for a connection at Wigan, as was proposed earlier? I do not wish to restrict the shadow Health Secretary’s future freedom of manoeuvre in this regard.

[Mr McLoughlin]

I did not realise that my hon. Friend originally came from Crewe, which given its connections is a very important railway town, always has been and always will be. I will want to consider his point about the later connections on to the west coast main line in the light of Sir David Higgins’s recommendations.

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

Given that Coventry will not benefit from high-speed rail, what will the Secretary of State do about the potential investment vacuum in Coventry and similar cities, and what will he do about negative equity?

[Mr McLoughlin]

I very much believe and hope that HS2 will be beneficial to Coventry. The entire west midlands benefits from HS2 and Coventry is certainly part of that wider west midlands conurbation. I want to see greater interconnection between the cities, and we have the time to plan and get that right. In this control period and the next one for Network Rail, we will be able to build on certain proposals that I know Coventry wants. Representatives of Coventry have been to see me and made recommendations about certain line improvements that they want to see.

[Mr Robin Walker (Worcester) (Con)]

KPMG predicts benefits of more than £200 million for Worcestershire’s economy from HS2, so I broadly welcome the statement, but can the Secretary of State reassure my constituents that nothing in it precludes investment in faster trains between London and Worcester to address the absurdity that a journey of 130 miles, which took under two hours in 1910, takes more than two and a half hours today?

[Mr McLoughlin]

My hon. Friend is right. One of the problems that HS2 addresses in a way that no other proposals put before us will address is capacity. I very much hope that it will free up other journeys so that we can have faster journey times from cities such as Worcester.

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

The Minister will be aware that concerns have been expressed about the time for redevelopment at Euston and the potential impact on the west coast main line from Glasgow. Will he say more about that and about any impact on the Caledonian Sleeper service, which is important to the Scottish economy?

[Mr McLoughlin]

I fully accept that while huge works are going on at a station, there is disruption, so one of the questions that must be asked in the planning phase that HS2 is currently going through is how we minimise that. Inconvenience was caused at St Pancras for a number of years while redevelopment was going on, but, as I said earlier, nobody doubts that it was worth going through the pain as we have a far better station than we had previously, and I very much hope we can do the same for Euston.

[Martin Vickers (Cleethorpes) (Con)]

As the Transport Secretary knows, my constituency is a major hub for the rail freight industry. The growth taskforce suggested that the Government should invite the rail freight industry to set out how best it can take advantage of extra capacity on the existing network. Can my right hon. Friend outline what plans he has for this?

[Mr McLoughlin]

One thing that is curtailing growth in the freight market in the UK is the capacity problems. I hope that, by freeing up capacity, we will see a lot more freight travelling on our railway lines. I urge the freight industry to come forward with proposals on how we can improve the situation, which I think we can.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

In the light of the taskforce’s recommendations, will the Secretary of State confirm when he will set out the Government’s plan for how HS2 will affect the rail services of cities that are not on the route, such as Newcastle?

[Mr McLoughlin]

Newcastle will benefit from faster trains running up to Leeds and being able to continue on their current routes. The hon. Lady is right that more work needs to be done on that. It will be done and I will come to the House when it is complete.

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

I welcome the report and the Secretary of State’s statement. Opponents of HS2 in the north-west have claimed that although it might be beneficial for Manchester, it might suck investment out of other towns and cities in the north-west. Does my right hon. Friend agree that a new regional hub at Crewe will allow the benefits of HS2 to roll out to places such as Liverpool, north Wales and, of course, Chester, and support economic growth in those areas?

[Mr McLoughlin]

My hon. Friend represents a great city, which I have visited on many occasions. It will receive benefits from Crewe. The Under-Secretary of State for Education, my hon. Friend the Member for Crewe and Nantwich (Mr Timpson), who joins me on the Front Bench, has made it clear that the station will not only be very important for his constituency, but will serve the whole of the north-west, including the great city of Chester.

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

The Labour Welsh Government recently changed their view on the Barnett consequentials from HS2, following questions from the Financial Times on why they were not backing Plaid Cymru’s position on a fair share for Wales. What representations has the Secretary of State received from the Welsh Government or the official Opposition to demand a fair share for my country?

[Mr McLoughlin]

There is no doubt that Wales will benefit from HS2. North Wales, in particular, will benefit from the proposals in Sir David’s latest report to build the line faster further north, because Crewe is a major interchange that serves north Wales.

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

If I understand the Secretary of State’s announcement correctly, high-speed rail will get nearer to Lancashire earlier, which obviously is a good thing. What implications does that have for earlier planning for an HS3 that goes beyond Manchester and Leeds?

[Mr McLoughlin]

If my hon. Friend does not mind, I think that that is a debate for another occasion. He is right that HS2 will have a major impact on the cities it serves and that we will have to go further as a result.

[Helen Jones (Warrington North) (Lab)]

Despite the reports, it remains the case that the initial preferred route for the second part of HS2 will devastate parts of Warrington, with the loss of businesses and jobs, and will possibly give us a worse service in the long run. Does not the proposal of a regional hub at Crewe give more impetus to the suggestion by Warrington borough council and others of a preferred route that would be of huge benefit to the western part of the region?

[Mr McLoughlin]

As I have said, a period of consultation is going on and I am listening to the representations. No firm decision has yet been taken. The Higgins report states what Sir David believes would be the best way forward at the moment. I will certainly consider that, but I will also consider other recommendations and representations.

[Jason McCartney (Colne Valley) (Con)]

I very much welcome the cross-party support for this transformative project. On the Higgins report and the proposed new Crewe interchange, will the Secretary of State do everything he can to give clarity and certainty to the Yorkshire leg of the Y, so that we can crack on with investing in and regenerating the areas around the proposed new stations at Leeds and Sheffield, and along the branch lines, such as the one from Huddersfield to Sheffield which goes through my constituency, that will bring better connectivity?

[Mr McLoughlin]

I am grateful to my hon. Friend. He is asking us to take on board the wider implications of HS2 across the area that it serves. I will certainly do that.

[Lucy Powell (Manchester Central) (Lab/Co-op)]

The Secretary of State echoes Sir David Higgins’s call for the benefits to be brought to the north-west and north of England faster. Other than the Crewe interchange—which I welcome, but which should not be seen as the only solution—what other avenues is he looking at? Will he speak to leaders of local authorities in places such as Manchester to bring forward funding and proposals sooner rather than later?

[Mr McLoughlin]

I am in touch with Sir Richard Leese, the leader of Manchester city council about the issues. Manchester has made some imaginative proposals on how the station should be built alongside Piccadilly station, and they are being looked at. There are good communications between the northern leaders and the Government on this issue.

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

My right hon. Friend knows that the people of the far south-west do not speak much about high-speed rail: our focus is simply on rail and getting reconnected to London after the storms of the winter. Can he assure us that, at the same time as spending all this money on the north and midlands, he will have sufficient to invest in an alternative or additional route between Plymouth and Exeter as soon as it has been identified by Network Rail?

[Mr McLoughlin]

My hon. Friend has long been an advocate of better rail services in the south-west. Following the storms, I said that I had asked Network Rail to do some detailed work on possible alternatives for the south-west, and that is happening. Network Rail is doing a huge amount of work to ensure the swift reopening of the Dawlish line, which is on course to happen on 4 April.

[Stephen Pound (Ealing North) (Lab)]

In congratulating my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) on his tenacity and hailing the relief of Camden as a consummation devoutly to be wished, may I tell the Secretary of State that the dispassionate observer would still feel that the lack of connectivity between HS1 and HS2 represents a problem for the future? Will he give thought to the possibility of an underground connection from Old Oak Common?

[Mr McLoughlin]

Many suggestions have been made for the connection between HS1 and HS2. First, all the high-speed trains are likely to stop at Old Oak Common, which will also be served by Crossrail, and secondly Euston and St Pancras stations are not that far apart.

[Sarah Newton (Truro and Falmouth) (Con)]

HS2 could have real benefits for Cornwall, especially if the First Great Western train depot at Old Oak Common were relocated to Penzance. My right hon. Friend has received proposals from me, First Great Western and the local enterprise partnership. When will he let us know his decision?

[Mr McLoughlin]

My hon. Friend raises one of the many issues that need to be considered and resolved, but Old Oak Common is likely to become a major new transport focus for future generations, and will have an important role to play. Getting the maximum development in that area will also be very important.

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

I thank the Secretary of State for his statement and declare my interest, in that HS2 phase 2 will go directly under my house. Will he confirm the future journey times from Euston to Manchester airport in my constituency, now that phase 1 has been extended to Crewe?

[Mr McLoughlin]

I welcome the hon. Gentleman to the House. I am delighted to see him in his place, but I wish that his predecessor was still there—as I am sure we all do. He was a big supporter of HS2 and believed that it would bring tremendous benefits to his city of Manchester—I agree.

If we build to Crewe, as suggested by Sir David Higgins, it will result in immediate time improvements for Manchester, but I know that what people want to see is the connection to Manchester airport as well as to the city itself.

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

Speeding up delivery for this major infrastructure project for the north is to be welcomed, but—as my hon. Friends the Members for Leeds North West (Greg Mulholland) and for Colne Valley (Jason McCartney) suggested—deep concern is felt in west Yorkshire that economic advantage may come for the west side of the Pennines earlier than it will in Yorkshire if the extension goes beyond Birmingham before it goes to Manchester and then Leeds. I urge my right hon. Friend to engage more with the west Yorkshire councils to ensure that they have a strong, positive and simple message about the advantages of HS2, as their colleagues on the west side of the Pennines did, and which I am sure has influenced Sir David Higgins in his recommendation to extend on that side first, rather than ours.

[Mr McLoughlin]

I hear what my hon. Friend says. There has, rightly, been involvement: Julie Dore, the leader of Sheffield city council, was a member of the taskforce. The taskforce has stated that cities need to prepare, so that we can consider the long-term consequences of overall transport investment. They need to prepare for the benefits that HS2 will bring to their areas.

[Mr David Hanson (Delyn) (Lab)]

I welcome the fact that the Secretary of State used the two words “north Wales” in his statement. He will have my support for the speedy development at Crewe to link to north Wales. Does he accept that this is about not just speed, but capacity? What steps will he take to increase capacity to north Wales, and, by extension, to Ireland?

[Mr McLoughlin]

The right hon. Gentleman is absolutely right. Too many people talk about high-speed trains as though they are just about speed. They are not just about speed. When Lord Adonis launched the initial plans he talked a lot, as I have done since I have been Secretary of State for Transport, about the need for additional capacity. One of the biggest reasons for the new railway line is capacity on links between north and south, and the extra capacity we need at Euston. The right hon. Gentleman is absolutely right: we need to ensure that that capacity serves north Wales well.

[Guy Opperman (Hexham) (Con)]

The success and efficacy of HS2 in the north-east would be greatly improved if we reopened the Leamside line in future control periods. Will the Transport team look at this crucial improvement, and consider creating the HS2 skills academy in the north-east?

[Mr McLoughlin]

Surprisingly, my hon. Friend is the first Member today to mention locating the skills academy in his region. That is probably because other Members have been asking questions on the details and might have felt that they would be testing your patience, Mr Speaker, if they also made a bid for the academy. The skills academy is essential to getting the message across to young people that engineering and the railways offer good opportunities for them in the long term.

[Jenny Chapman (Darlington) (Lab)]

My constituency of Darlington is the indisputable birthplace of the railways—I do not think there are any Members for Stockton present—and my constituents currently enjoy a very good service to London. They are delighted that people in Leeds will soon be able to enjoy a good service too, but are concerned that that must not be at the expense of investment in the east coast main line. Will the Secretary of State commit to that not being the case?

[Mr McLoughlin]

Indeed I will. We are committed to providing brand new rolling stock for the east coast main line: one of the biggest orders placed for the railways has been signed off by the Government. I am delighted we have done that.

[Sheila Gilmore (Edinburgh East) (Lab)]

Sir David Higgins stresses the importance of existing lines and HS2 working together. Will the Secretary of State reconsider the current plans for trains from Scotland to Birmingham and London to bypass Manchester and Leeds? Is this an opportunity to reconsider the possibility of linking them up?

[Mr McLoughlin]

It is essential that all these suggestions are considered. HS2 will fundamentally change capacity on our railway lines. It will give us many more opportunities not just for passenger numbers, but for more freight. In the past 10 years, there has been a 60% increase in freight. The issue of capacity is what is holding back a further increase. The west coast main line is the busiest railway line in Europe. An increase in capacity will free up a lot of other services and opportunities.

[Mr Speaker]

I am pleased to be able to advise the House that 37 Back Benchers were able to contribute in 37 minutes of exclusively Back-Bench time. I suggest that the Secretary of State issue his manual on pithy replies to all members of the Cabinet, who would profit greatly from reading that text. The journey time was very satisfactory.

Contaminated Blood (Support for Infected and Bereaved Persons)

Monday 24th March 2014 Commons Chamber

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

16:49

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

I beg to move,

That leave be given to bring in a Bill to establish a committee to advise on haemophilia; to make provision in relation to blood donations; to establish a scheme for NHS Compensation Cards for people who have been treated with and infected by contaminated blood or blood products; to make provision for the financial compensation of people treated with and infected by contaminated blood and blood products and their widows, dependants and carers; to establish a review of the support available for people who have been treated with and infected by contaminated blood or blood products; and for connected purposes.

Let me first pay tribute to the late Lord Morris of Manchester, who not only campaigned on this highly disturbing issue, but persuaded another place to pass a Bill similar to mine, which I sought to promote in the House of Commons but which ran out of time. As well as paying tribute to Alf Morris for his huge commitment to those who suffered from problems arising from haemophilia and contaminated blood—he was indeed a tenacious fighter—I want to mention his successor in Wythenshawe and Sale East, our late and dedicated friend Paul Goggins, who held the most recent debate on this matter in Westminster Hall on 29 October last year. I also thank the Haemophilia Society as well as Members in all parts of the House for the support that they have given to an ongoing and thoroughly necessary campaign.

Let me say first that although the Bill applies to this Parliament, it is entirely appropriate for a Scottish Member to feel comfortable about advocating its provisions. I want to see an end to injustice throughout the United Kingdom, and I believe that the Bill runs in tandem with our expectations of the Penrose inquiry, which is currently taking place in Scotland, where similar injustices simply have to be put right.

I ask the House to consider a measure that was drafted to give recognition and support to one of the most needful minorities in Britain today. A group of nearly 5,000 people disabled by haemophilia—a rare lifelong blood disorder requiring continuous medical treatment—have been infected by contaminated blood and blood products used in their NHS treatment. Ninety-five per cent. of those people were infected with hepatitis C, and 25% were infected with both HIV and hepatitis C. Sadly, of those almost 5,000 people, at least 1,757 have since died from the effects of the viruses.

Apart from the obvious impact on health, such conditions have implications for people’s ability to work full time, if at all. They face many burdens, and extra costs that are far too high for many of them to cope with. People who are suffering in these dreadful circumstances—and we should also bear in mind the impact on their families—have waited far too long for the remedies that I believe are in my Bill.

In January 2011, two years after the independent inquiry led by the late Lord Archer, the Government concluded their review of the support available. Although we welcomed the lump sum and annual payments that were awarded to the 20% of sufferers who had reached stage 2 of hepatitis C—which is, essentially, cirrhosis of the liver—that clearly did not go far enough, given the 80% of patients who are not supported and who carry very painful physical burdens.

John Prior, a 39-year-old who lives in Moodiesburn in my constituency, contracted hepatitis C from contaminated blood in 1994, when he was just 20 years old. When I spoke to him at the weekend, he told me of the difficulties and stigma involved in having hepatitis C. He had been told for many years that he did not have hepatitis A or B, and was lucky not to have HIV. Information on his particular case was withheld for long periods. He and so many other people are clearly being penalised again and again. They had the misfortune to find themselves with haemophilia, and their condition was then made worse when they approached the NHS.

Philip Dolan is a former vice chair of the UK Haemophilia Society. He has haemophilia himself. He explained to me that he asked his consultant in 1991 whether he had hepatitis C and was told that in 1978 he had been tested without his permission for hepatitis. His doctors informed him that “We knew in 1978 that you had non-A and non-B hepatitis,” so he sadly had been diagnosed with hepatitis C but not informed.

Like many others, Philip recently received a letter from the NHS and was told that he may have received a blood donation from an individual who later died from variant Creutzfeldt-Jakob disease. That raises profound questions for Philip and those others, given that there is no known cure for that condition.

It cannot be right that 80% of the sufferers involved receive no financial support. It cannot be right that many are left without counselling and that there is such an absence of transparency. It cannot be right that in Yorkhill children’s hospital in Glasgow many of those who received contaminated blood were infected with HIV and that a large number of those patients’ medical notes were simply lost. It cannot be right that 365 patients throughout the UK have had the same experience.

Too much has been hidden for too long. That is why I am proposing to establish a committee to advise on contaminated blood; I believe it should have comprehensive powers and the right to ask whatever questions it feels are appropriate. My Bill seeks to establish a scheme for NHS compensation cards that would allow those affected to receive freely, if needed, prescription drugs, counselling, physiotherapy, occupational therapy and other therapies allied to medicine and home nursing.

It is essential that we create a better and more comprehensive screening programme to establish what viruses the patients may or may not have contracted. It is essential to make provision for financial compensation for people treated with, and infected by, contaminated blood or blood products and their widows, dependants and carers. It is essential to establish a review of the support available to people treated with, and infected by, contaminated blood or blood products.

The truth is that Britain compares very unfavourably in these matters with other countries—the Irish Republic, for example. It, too, had an inquiry, as a result of which comprehensive and substantial support was given, including the underwriting of mortgages and travel insurance. It also gave upwards of €300,000 in one-off payments to each of the patients affected. The comparisons are bad enough, but those decisions were taken 13 years ago. The truth is that sufferers in Britain have been incredibly patient and are now rightly telling us that they have waited for far too long.

It is important that we address the unmet needs of infected patients and bereaved families. We have to be honest about highly disturbing administrative shortcomings, serious omissions and a failure to inform Parliament of the facts as to why provision made in other countries is so much better than here in Britain.

For us, justice postponed is justice denied. I very much welcome the fact that Lady Morris has been following our proceedings this afternoon, and I hope my Bill does justice to her husband’s memory and the people whom he spent a lifetime serving.

Question put and agreed to.

Ordered,

That Mr Tom Clarke, Mike Kane, Mr Nicholas Brown, Sandra Osborne, Mr Jim Cunningham, John Healey, Alistair Burt, Ann McKechin, Jason McCartney, Mr Charles Kennedy and Joan Walley present the Bill.

Mr Tom Clarke accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 6 June and to be printed (Bill 187).

Ways and Means

Monday 24th March 2014 Commons Chamber

Budget Resolutions and Economic Situation

Monday 24th March 2014 Commons Chamber

amendment of the law

Monday 24th March 2014 Commons Chamber

Debate resumed (Order, 20 March).

Question again proposed,

That,—

(1) It is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.

(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting a supply, acquisition or importation;

(b) for refunding an amount of tax;

(c) for any relief, other than a relief that:

(i) so far as it is applicable to goods, applies to goods of every description, and

(ii) so far as it is applicable to services, applies to services of every description.

17:01

[The Secretary of State for Communities and Local Government (Mr Eric Pickles)]

Before I start, may I say what a pleasure it is to see the right hon. Member for Leeds Central (Hilary Benn) replying to the debate? The House had an opportunity last week to express its great affection for his father. But no matter how distinguished or old a person is when they depart, to lose a parent, as those of us who have lost a parent understand, is a bitter blow. I just wanted the right hon. Gentleman to know that we express our deep condolences to him and his family at this very difficult time, and we wish him very well.

By sticking to our long-term economic plan, we have brought the deficit down by a third, we have helped a record number of people into work and we are continuing to boost Britain’s resilient economic growth. This is a Budget that literally places new pounds in the pockets of taxpayers. It is creating opportunity and putting Britain on a path to a secure future, and it will reward pensioners, savers and hard-working families. It has drawn a clear distinction between a coalition Government doing everything in their power to bolster Britain’s recovery, and a Labour party that just offers more borrowing, more debt, and more taxes, and ducks the major challenge.

We want to see a fair and fast recovery across the country. This can only be achieved by galvanising all forms of growth—whether inside a local enterprise zone or on a building site—and by firing up businesses and home builders, getting them investing, exporting and creating jobs. Local economies are providing the solid foundation for a national recovery. The economy is stronger and more resilient, and is rewarding the hard-working British public.

The Budget has recognised those who were so badly affected by poor winter weather. Some £300 million has already been announced to support the individuals, businesses and councils that were hardest hit by the flooding and storms. The Chancellor has made available an additional £140 million—money that will go towards immediate repairs to, and maintenance of, damaged flood defences across Britain. The £200 million pothole challenge fund will fill holes in the road that have already been a blight to road users.

Getting these communities back on their feet after such a devastating period of weather remains a high priority across government.

[Mr John Redwood (Wokingham) (Con)]

Those are very welcome announcements. Is my right hon. Friend also going to take action to stop rapacious councils making a misery of the lives of normally law-abiding motorists who slightly overstay their welcome at parking places and are then treated as if they were criminals? I am sure it would lift confidence if they were spared some of the excess.

[Mr Pickles]

My right hon. Friend and I are as one on that matter. He will recall that the Government have consulted on this and on other issues related to parking, and that the consultation period has recently ended. We hope to make an announcement in the very near future.

New measures in the Budget will also help to support the building of a further 200,000 new homes for hard-working people, on top of the work we have already done to kick-start house building. New house building and construction output in England is now at its highest level since 2008, and new housing construction orders are at their highest levels since 2007. More than 170,000 affordable homes have been delivered since 2010, and £20 billion has been invested in affordable housing over the spending review period.

More council housing has been built under this coalition Government than in all the 13 years of the previous Government. I honestly do not understand why Labour Governments do not build council houses. Since the last quarter of the last century, the two really big builders of houses have been the Thatcher Administration and this coalition Government.

The number of first-time buyers is at its highest since 2007, and mortgage arrears at their lowest since the Bank of England’s figures began in 2007. The number of empty homes is at its lowest rate since records began and, in the last year, new housing registrations rose by 30% in England and by a massive 60% in London. In fact, the number of new homes registered in London last year was the highest since electronic records began more than 26 years ago.

By contrast, new home registrations fell in Labour-run Wales. House builders have shifted their business across the border to England because of the Welsh Government’s anti-business policies. This is due to Labour’s extra red tape, and to its botched implementation of home ownership schemes. By contrast, thanks to this Government, more than 17,000 people have already bought a home through Help to Buy. Overwhelmingly, these are first-time buyers, and they are mainly outside London and the south-east. This shows how we are supporting all parts of the country, north and south. Help to Buy is a key part of our long-term economic plan, giving thousands more people the security and independence that comes from owning their own home.

The Budget’s pension reforms will offer freedom of choice for people who work hard. It would be helpful if the right hon. Member for Leeds Central could clarify whether the Opposition support these reforms, or whether some ambiguity still exists. Our pension reforms, such as allowing the newly retired to pay off their mortgage and be liberated from the banks, will also lead to greater security in old age. I do not agree with the doom-mongers who say that this will somehow lead to a problem with buy to let. This Government are dramatically expanding the opportunities for institutional investment in the private rented sector, through guarantees and our build to rent schemes. These offer the opportunity for savers to invest in new built rented accommodation and to receive long-term, stable returns from the property market.

[Sheila Gilmore (Edinburgh East) (Lab)]

I have a genuine question for the Secretary of State. If someone used their ability to draw down their pension to pay off their mortgage, have the Government considered the impact that that might have if they were to require social care assistance in the subsequent years?

[Mr Pickles]

We have to understand that people who save up for their retirement have worked hard to put together a nest egg and are therefore unlikely to squander it. We should trust people to put together their own schemes. This move has been widely welcomed across the industry and by pensioners groups. Indeed, it has been widely welcomed by everyone but the hon. Lady.

[Sheila Gilmore]

rose—

[Mr Pickles]

No, the hon. Lady has had her chance. That’s it.

We are also ensuring that small and medium-sized house builders get a share of our housing revolution. A new £525 million finance fund will deliver 15,000 houses on smaller sites. We are cutting red tape, too. Today, we have published our proposals for scaling back section 106 charges on small home builders. We are introducing an exemption from section 106 tariffs for self-builders and extensions, building on our exemptions already delivered from the community infrastructure levy. Yet again, the Labour party has not been clear about whether it supports cutting these stealth taxes on self-builders. Self-builders will also benefit from further steps to free up land for self-build; a £150 million investment fund for custom-build plots; and a new right to a plot and to build from councils. Further planning reforms will help get empty and under-used buildings back into use. Those build on the success of our “office to residential” planning reforms, measures the Labour party opposed, despite the fact that they are providing new homes on brownfield sites in our towns and cities.

We are also supporting the first garden city for a generation, at Ebbsfleet—decisive action and investment that Labour failed to deliver. The original announcement was made in John Prescott’s 2003 sustainable communities plan, but the Labour party failed to build at Ebbsfleet.

[Nicholas Soames (Mid Sussex) (Con)]

Does my right hon. Friend agree that the good thing about Ebbsfleet is that it commands the near unanimous support of the local community—of Members of Parliament, councillors and local citizens—which is very important for a project of this size? Does he also agree that speculative developments such as those in my constituency and in Arundel and South Downs produced by Mayfield are entirely unwelcome and command no local support at all?

[Mr Pickles]

My right hon. Friend has carefully, and with his customary style, signposted where developers should go, from his constituency to parts of Kent. The top-down eco-towns built nothing but resentment, but this Government are working with communities to support large-scale development. As he said, this works only if local councils are in favour, and we work with local developers and with the local community to build something together in a proper partnership.

[Mr Redwood]

My right hon. Friend might like to know that about a decade ago I wrote a pamphlet called “Thames Reach”, recommending a new town in the Ebbsfleet area. I recommended it to the Labour Government, as I am full of generous good ideas and thought they might want to take it up. I think they agreed with it, but they did absolutely nothing. Can he explain why?

[Mr Pickles]

No, I cannot explain why. I suspect that my right hon. Friend’s reputation as a scourge from the right may have put the Labour Government off. I suspect they never got further than the title page, but had they gone on they would have seen some very sensible suggestions. We are free from that prejudice and, of course, he is an inspiration to us all.

Further support will come in due course from the second round of the local infrastructure fund and a prospectus on support for locally led garden cities. Increased output, increased supply and increased jobs, with stable recovery, low interest rates, and support for firms and sites of all size—we have got Britain building again. Labour’s threats of land grabs and a new development tax on house builders would cut the level of house building and undermine investment in complex land assembly projects. Against a backdrop of anti-business sentiment, perhaps epitomised by the Labour Department for Communities and Local Government team’s campaign against free Waitrose coffee, it is no surprise that this week’s Investors Chronicle warns savers to sell their shares in house builders if Labour were to win the election. That is not going to build more homes; it is a recipe for stagnation and for unemployment. As Wales shows, Labour’s anti-business dogma will have a chilling effect on jobs and the economy.

By contrast, this Government welcome enterprise and the free market. Enterprise zones have led the way in creating jobs all over the country, as well as helping the UK to become a world leader in a range of technologies and for inward investment.

[Mr Brooks Newmark (Braintree) (Con)]

On the subject of jobs, my right hon. Friend might be interested to know that not a single Labour Government have left power with more jobs than when they came in. Not only have this Government created 1.7 million jobs in the past four years, but the Red Book is predicting another 1.5 million jobs in the next five years.

[Mr Pickles]

I am not sure whether I was aware of that. I am surprised but not shocked by the revelation. It is a good job that we have had an opportunity to make that difference to the British economy.

Enterprise zones have led the way in creating jobs all over the country as well as in helping the UK to become a world leader in a range of technologies and for inward investment. The existing 24 zones have created 7,500 jobs, and multinational companies have been tempted to the UK thanks to our business rate and simplified planning offers and other financial benefits.

To sustain that momentum, we have extended the business rate discount to 2018, offering up to £55,000 off business rates a year for five years, and extended the enhanced capital allowances incentive for those zones that have it. That includes Northern Ireland’s first enterprise zone, which is being established close to the university of Ulster campus near Coleraine. That measure comes on top of the business rates announcement in the Budget for small firms and local shops. By backing new and developing businesses and offering exclusive packages to entice new investment, we are confident that enterprise zones will carry on creating jobs and specialist local economies.

[Mark Menzies (Fylde) (Con)]

I thank my right hon. Friend for the work that his Department has put in on the Warton enterprise zone to ensure that there has been joined-up thinking in Government with regard to the Preston city deal. Will he assure me that Lancashire and Warton will remain at the forefront of his Department’s thoughts?

[Mr Pickles]

I can assure my hon. Friend that, as an ethnic Yorkshireman, Lancashire is rarely out of my thoughts. That is also true of the enterprise zone, and I look forward to visiting it very soon and seeing him there.

The Budget has ensured that areas all around the country will benefit from steady growth. The Mersey gateway bridge has been guaranteed to the tune of £270 million, the Cambridge city deal will accelerate 33,000 houses, and the second phase of city deals will bring improved transport links and employment opportunities to 15 places around the country.

The Budget will build a more resilient economy. Working through our long-term economic plan is the only way to deliver what the British people want, which is the economic security that comes with a good job and the prospect of a better future for all. That plan has delivered economic stability and low mortgage rates for hard-working families, and it has laid the foundations for a sustainable economic recovery. I commend the Budget to the House.

17:18

[Hilary Benn (Leeds Central) (Lab)]

Let me say how grateful I am to the Secretary of State for his very kind words of condolence, which mean a great deal to me personally and to the rest of our family.

We have a chance today to discuss the impact of the Budget on families and communities when it comes to their chances of getting a home, deciding where that home will be built and by whom and whether the policy the Government are pursuing meets the simple test of fairness. Those are the things that I want to address in my remarks.

We know that housing is at the heart of the cost of living crisis facing many of our constituents. Parents worry about whether their children will be able to afford a home. Young people who want to get a foot on the housing ladder see house prices disappearing into the distance. People who are renting worry about the impact of rents that are going up faster than their wages. As I think the whole House will acknowledge, that is the result of a housing crisis that has come upon us over many years, as successive Governments have failed to build enough homes. Let me just say before anybody jumps up that it is a fact that, despite all the words we have heard from the Secretary of State and his colleagues today and on previous occasions, housing completions were higher in every single year of the previous Labour Government than they have been in any year under this Government. That puts into context what the Secretary of State had to say. Although I recognise that the previous Labour Government and our predecessors from both parties did not do enough to build homes, I would take our record over his any day.

[Jonathan Evans (Cardiff North) (Con)]

The right hon. Gentleman suggests that the Government before the previous Labour Government had a similarly poor record, but in fact theirs was better.

[Hilary Benn]

I am very proud of the record of the previous Labour Government: 2 million new homes, including 500,000 affordable homes, and a huge number of social homes that were brought up to decency standard. One thing that the previous Conservative Government bequeathed the previous Labour Government was a lot of council houses that were in poor condition because they had not invested any money in improving them. When the Secretary of State is next having a conversation with the Prime Minister, he might point out that the next time he walks down that famous staircase in No. 10 past the photographs of his predecessors, he will have to get all the way to Stanley Baldwin to find a Prime Minister with a worse record of building houses than the current occupant of that office.

In his 2011 Budget speech, the Chancellor told us that he would deliver an economy

“carried aloft by the march of the makers.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]

Although, as the Secretary of State says, housing starts are now finally up, what has happened to construction output overall? It has fallen by 4.2%. I do not know how many marches the Chancellor has been on, but the general idea of a march is that one goes forwards rather than backwards.

Although the Government’s record of building houses has been poor, they have intervened in the mortgage market through Help to Buy, and last Wednesday the Chancellor made an announcement about extending the equity loan scheme to 2020. As I have said before from this Dispatch Box, we support help for people, especially first-time buyers, to realise their dream of home ownership, but if the Government simply increase demand and do not do enough to increase supply, all that will happen is that house prices will rise further out of reach of the very people we are seeking to help. That is why the Treasury Committee and the International Monetary Fund express concerns about Help to Buy. I presume that the Chancellor has now finally acknowledged that, as he told the House last week that he has asked the Bank of England

“to be particularly vigilant against the emergence of potential risks in the housing market.”—[Official Report, 19 March 2014; Vol. 577, c. 783-84.]

That is progress, but could the Minister tell us when he replies exactly what that means in practice and how we and the public will be kept informed of how that vigilance is operating?

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

First, I offer my condolences to the right hon. Gentleman, as a fellow Leeds MP, for the loss his family has suffered. As a fellow Leeds MP, he will know some of the pressures of development in Leeds, with some 70,000 units to be built in the city, despite talk in the Leeds core strategy. Does he agree that we must be careful about where these large-scale developments are built? If we are massively to change the shape of the village of Scholes in my constituency, say, that would have the unfortunate effect of lowering house prices and putting people into—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I think that the right hon. Gentleman, as he knows the area so well, has the message.

[Hilary Benn]

I am grateful to the hon. Gentleman for his kind words. If he will bear with me, I shall directly address his point about where the houses should go in a moment.

We need to build more homes. Everybody recognises that. That is why, for example, we called for a help to build fund supported by Treasury guarantees to assist small and medium-sized builders in accessing finance to build some of those homes. I welcome the fact that the Government have listened and set up a builders’ finance fund, but history teaches us that we need to do more if we are successfully to change the way in which the market works.

Let me reflect on that for a moment. In the 1930s, when we reached the highest level of private house building ever achieved in the UK, the top 10 house building companies had a market share of 6% or 7%. In 1988, firms completing fewer than 500 units a year produced about two thirds of UK housing but by 2012 that had fallen to less than a third. In other words, as the number of small and medium-sized builders has declined and the big firms have grown larger, it has become easier for the more dominant firms to buy up the land. That is why small and medium-sized builders and custom builders say that it is hard for them to get access to land, so I agree that it is about helping them with finance, but it is also about enabling them to get the soil they need to build on.

The Secretary of State spoke about self-build and the House will remember that the former Housing Minister, now the chair of the Conservative party, promised a self-build revolution and pledged to double––double––the self-build sector. But the facts show that, last year, far from doubling the size of the sector, the number of self-build homes fell to the lowest level for 30 years. That is some revolution.

[Gareth Johnson (Dartford) (Con)]

The right hon. Gentleman talks about the lack of house building. Will he therefore use this opportunity to support without reservation the development corporation that is being introduced to build houses in Ebbsfleet in my constituency?

[Hilary Benn]

I certainly support all measures that will help us to get housing supply up because that is an objective shared across the House. I shall have something more to say about Ebbsfleet in a moment.

We have also called for local authorities to have a higher proportion of small sites in their five-year land supply and to give guaranteed access to public land for small firms and custom builders, something to which the Secretary of State referred and that was also in the Budget. That is also why we have said that a proportion of homes in new towns and garden cities should be built by smaller firms and custom builders. The truth is that if we are going to make progress, we have to change the way in which the housing market and the building market work, which is something that Ministers have not yet acknowledged. Why? We know that the high cost of housing is driven by the cost of land. We know that not enough land is being released for housing development. We know that by the time that land is given planning permission, it is often prohibitively expensive and we know that this can create an incentive to bank, rather than build on, the land.

As the Planning Minister told me in a written answer earlier this year, as of January there were 538,000 units with planning permission that had not yet been completed. About half had been started and the rest were working towards a start or were on hold. He says that land banking is not an issue. He says that in many an answer to a written question, but he forgets that a 2008 Office of Fair Trading survey found that strategic land bought with options, which accounted for about 83% of land banks, was worth 14.3 years of production. That is about enough land to build 1.4 million homes.

What is more, under the current system, there is very little that local authorities can do about it, because existing compulsory purchase order powers are legalistic, expensive, time-consuming and complex. Authorities are in a weak position to try to get the land brought forward. That is why we have argued for and will deliver much greater transparency in the system by ensuring that developers register the land that they own or have options on. We will give councils the power to charge developers escalating fees for sitting on land with planning permission to incentivise them to actually build the homes they said they wanted to build.

The idea is denounced by the Secretary of State but it is supported by the International Monetary Fund and by the hon. Members for Rossendale and Darwen (Jake Berry) and for Stratford-on-Avon (Nadhim Zahawi) and indeed it was supported by the Planning Minister before he got his job. As a last resort, we will give local authorities proper compulsory purchase powers so they can, in the right circumstances, buy, assemble and grant planning permission on land that is being held back from development.

What is the purpose of this? It is to address the current imbalance in power between communities and developers. This is the point the hon. Member for Dartford (Gareth Johnson) raised. Where communities decide where new housing needs to go, which is what neighbourhood planning is all about and why I strongly support it, and when permission has been given, they should be able to do more to ensure that the houses actually get built. But there is a problem here, and it is the reason why the Planning Minister gets a lot of stick from many of his Back Benchers. When a five-year land supply has been identified, all the cards are stacked in the developers’ favour. They can look at one site and say, “That’s brownfield, too expensive to develop, there is contamination. We are not going there.” They can look at another site and say “That’s not viable.” They do not explain their measure of viability but just end the conversation by saying it is not viable. They look at a third site and say, “Okay we can do about 100 houses a year on that site”, even though, physically, it could take 250, 500, or say, 1,000 houses. Then, at the end of the process, when the numbers are added up against the council’s assessment of its annual housing need, what happens? Lo and behold, developers say, “Your five-year land supply is inadequate and therefore, we would like to build there and there and there.” That is what is going on up and down the country.

I think the deal is that communities have to take responsibility for identifying sufficient land for housing supply, but they then have to be able to ensure that the houses that are needed are built on the land that they have identified. What we have at the moment is a system in which communities and their local authorities have very little power and that is why change is required.

[Sir Edward Garnier (Harborough) (Con)]

What does the right hon. Gentleman mean by community? How does he identify the community in this context?

[Hilary Benn]

First, the community is represented by the local authority, and, secondly, I think the community has a really important part to play by joining in the process of neighbourhood planning. We have seen from some parts of the country—Thame is probably the best example—that the community took responsibility. It consulted and had a referendum and, from memory, 73% of people voted in favour of the plan. It identified sites for housing development. I think that is the right approach, because for too long, we have had a system where no one has taken responsibility and everyone has pointed the finger at somebody else when it comes to housing supply. That is why we need change.

[Mary Macleod (Brentford and Isleworth) (Con)]

Will the right hon. Gentleman join me in urging the Labour Hounslow council in west London, which has development sites of 900 units, to include some affordable housing?

[Hilary Benn]

I am very strongly in favour of affordable housing—I was not aware that we had any county councils in west London, but I think that the hon. Lady was referring to something else. We need more private housing, more housing for rent and more social housing at a price that people can afford.

We also need new towns and garden cities, so what about what I would refer to as the great mystery of the highly reclusive new towns and garden cities prospectus? Just to remind the House, two years ago, the Prime Minister announced that he would be publishing a consultation by the end of the year on garden cities—does everyone remember that?—but 2012 came to an end and it did not appear, and 2013 happened and it still did not materialise. We then read reports in the newspapers that the Prime Minister was suppressing a document and had gone cold on the whole idea. Then, in January, the Housing Minister said that he was not aware of a report that was supposed to have been published, but the Deputy Prime Minister said that there was a prospectus and that the Government should be honest about their intentions. Then the Secretary of State contradicted his Housing Minister and said that he had been told by his Department that there was a report, but not a report from the Department for Communities and Local Government—I do hope the House is keeping up.

Then, last week, the Chancellor announced that there would be a new garden city at Ebbsfleet with 15,000 homes. The only trouble is that that is 5,000 fewer homes than the 20,000-home development announced for Ebbsfleet in December 2012. Only this Chancellor could proclaim a smaller development as a triumph—backwards not forwards. We look forward to the publication of that prospectus, hopefully before Easter, and if the Secretary of State has not already seen a copy, I trust he will ask for it. After such a lengthy gestation, I hope that it does not disappoint him or the rest of us.

That episode shows that there has clearly been fighting within the Government—within the Cabinet—about what should be in it. We now know, thanks to the Yorkshire Post and the Under-Secretary of State for Communities and Local Government, the hon. Member for Bristol West (Stephen Williams), that the same thing is happening inside the Department for Communities and Local Government.

I feel very sorry for the Under-Secretary, whom I notice is not in his place today, because he does not always look entirely happy and that may be why he decided to unburden himself at the Lib Dem conference recently. He said that being compared to the Secretary of State—I think it was a joke—was

“the most grievous possible insult”

that anyone could deliver. I think that is unfair and unkind to his boss. He was complimentary about the Planning Minister but said that he was

“hated by many Tory MPs”.

That is possibly true, but I think it is also unfair, and since then, the hon. Gentleman seems to have been given all the pretty unpleasant jobs in the Department, defending the indefensible. I hope the fact that he is not here today does not mean that he is being held hostage in the Department by the Secretary of State and I hope that he retains his independent streak.

The most damning comments from the Under-Secretary were about a flagship policy of his own Department:

“The new homes bonus… I’m not a fan of. I don’t think it’s an incentive, necessarily, for local authorities to give planning permission. I don’t think it’s actually driving decision-making on the ground.”

He is in good company, because the National Audit Office agrees. As we are already aware, the Housing Minister does not seem to know what it is meant for either, because he has told the House:

“I am afraid the new homes bonus is not about encouraging people to build homes.”—[Official Report, 25 November 2013; Vol. 571, c. 11.]

We have now had it from two Ministers—it is not effective.

The new homes bonus is also profoundly unfair. It is given to councils according to the number of homes that happen to be built in their area and it is top-sliced from formula grant, which is distributed according to need. Therefore—surprise, surprise—the areas that are getting most of the money are those where the homes will probably be built anyway, which tend to be better off, while the areas that are losing funding are those where there is less demand for housing, which tend to be worse off. It is yet another example of this Government, in tough times, taking most from those who have least, and in so doing they fail that basic test of fairness.

The Government just do not get it. At a time when real wages are falling, as was confirmed by the Office for Budget Responsibility document published last week, they think that the most important thing to do is give millionaires a tax cut. They think that councils in the most deprived areas with the greatest need should face the biggest reductions, while some of the wealthiest councils get an increase in the money they have to spend.

There are 10 Members of Parliament lucky enough to have councils in their constituencies that will be better off in terms of spending power per household—the Secretary of State’s preferred measure—by 2015-16 than they were in 2010-11. Four of them are in the Cabinet. Two of them are Government Whips. Under this Secretary of State, the 25 most deprived local authorities in England will lose 10 times as much spending power per household as the 25 least deprived.

Not only are we seeing the biggest reductions in spending power in the areas with the highest need while there are increases in spending power in the wealthiest areas, but before long, the funding difference between those areas, having eroded, will in some cases be reversed. Within four years, under this Government, local spending power per household will be higher in Wokingham—I am sorry that the right hon. Member for Wokingham (Mr Redwood) is no longer in his place—than it will be in Leeds, Sheffield or Newcastle, even though those cities face far greater pressures.

Most people would say that that is extraordinary. Most people would regard it as unfair and impossible to justify. So why does the Secretary of State think that areas in greater need should actually receive less? We know what he thinks already, because in tough times for councils some services are becoming unviable, with entitlement to social care disappearing in some cases, and libraries, the arts, Sure Start centres and women’s refuges going. What does he say to councils? He says, “What’s your problem? These cuts are really quite modest. What are you complaining about?”

It is not just communities that are being hit; it is the people in the greatest need in those communities. What has the Secretary of State done? He has forced up council tax bills for people in work on the lowest incomes: carers, the disabled, injured veterans and war widows. Summonses have been issued and bailiffs are knocking on doors, because people are poor. That is why they are being affected.

The Government are forcing people to pay the hated and immoral bedroom tax, undermining community, neighbourliness and a sense of place. Once again, that hits people on the lowest incomes, most of whom are disabled. Let us consider for a moment a family receiving housing benefit, a mother and father with two children living in a three-bedroom council house. If one of the children leaves home to get a job, the Government are telling that family, “Move.” Two years later, the second child leaves home and gets a job elsewhere. What do the Government say to that family? They say, “Just move again”, leaving mum and dad in a one-bedroom property. Then, three years later, the father’s mother becomes ill and needs to come and live with them so that they can care for her. What do the Government say? “Oh, just move again.” I cannot think of a policy more calculated to undermine family life, and you know what? That family will not even have a spare bedroom so that their grandchildren can come and stay. That is why people are so angry about the bedroom tax and why, if we win in 2015, we will abolish it.

[Alec Shelbrooke]

Will the right hon. Gentleman give way?

[Hilary Benn]

The hon. Gentleman has had a go. I am going to bring my remarks to an end, because many people want to speak.

Only last week, when the Chancellor had the nerve to get up in the House and say, “Oh, well, we are all in this together”, and the OBR confirmed that real wages were falling, what did we discover? That some Cabinet Ministers had been giving hefty pay rises—to whom? Their special advisers. The architect of and chief apologist for the bedroom tax, the Secretary of State for Work and Pensions, gave his special adviser a 36% pay increase in one year alone. If that is not proof that this Government stand up for the wrong people, I do not know what is.

This is a Budget that provides too little, too late to deal with either the chronic shortage of houses or the cost of living crisis, and the Chancellor and the Secretary of State for Communities and Local Government have shown once again that they do not really understand, and are not prepared to take the action that we need to make life better for the British people.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. There will be a six-minute limit on speeches—I have increased it by one minute.

17:41

[Nicholas Soames (Mid Sussex) (Con)]

May I join in the expression of condolence to the right hon. Member for Leeds Central (Hilary Benn) and say how sad I was to hear his news?

I want to welcome the Budget and reflect for a moment on the Chancellor’s considerable achievement. Fortified by a coalition and stronger for it, with the most appalling legacy left by the last Government, he has managed to turn things around so that our country is now well on the path to better days, with a growing economy, a remarkable number of new jobs emerging and an exciting future about which we can all be optimistic —in particular, I hope, our young people, many of whom are having a tough time of it.

I want especially to mention the Chancellor’s wise decision to freeze fuel duty, which is now 20p lower than it would have been under a Labour Government. Together with a well judged freeze in the council tax, on which I congratulate my right hon. Friend the Secretary of State for Communities and Local Government, that will make a real difference to hard-pressed families in Mid Sussex and elsewhere. I want particularly to congratulate the Chancellor on the welcome plans that have been set out for supporting exports, science and innovation, and of course on the game-changing package of support for savers and pensioners, which has undoubtedly commanded the broadest support possible, and rightly so.

I hope that people now realise—I truly think that they do—the profound difference between the wilful, almost grotesque irresponsibility of the last Labour Government and the steely, genuine determination of the current Administration to get on top of the serious difficulties with a long-term economic plan whose success is now quite clear for all to see. However, the new networked world in which we in this country have to make our way, and for which it must be said we are ill prepared, is manifesting every day a global flow of ideas, innovations, new collaborative possibilities and new market opportunities, not only here but all over the world. To be frank, if we get it right, the world should be our oyster.

There are plenty of businesses and people who understand that. They understand that by tapping into the global flow of new ideas and opportunities, they can become the key to something that we badly need in this country: far greater productivity. It is nowhere near good enough here, and it is the key to growth and increasing prosperity.

All of that will inevitably, and sadly, involve seismic change. I congratulate the Government on the announcement in the Budget of £42 million for the new Alan Turing institute and £74 million for the cell therapy manufacturing centre and the graphene innovation centre, all of which will greatly increase our chances of helping to export our way out of financial difficulties by accessing the fastest-growing markets around the world, particularly in the life sciences, agricultural products, science, medicine, energy and of course services.

My great anxiety is how our country will cope as we try to respond to changes in technology, globalisation and markets that have, in a very short time, made the decently waged, medium-skilled job increasingly unavailable. That is very serious for an economic model such as that in our country, and it is my firm belief that in not too short a time, most of the decently paid jobs will inevitably be those where high skills are at a premium.

I applaud the work of my right hon. Friend the Education Secretary and the Department for Business, Innovation and Skills as they try to answer those challenges, but we must now acquire a new level of political imagination, a combination of further, large education reforms, and an unprecedented collaboration among schools, businesses, universities and the Government, to change fundamentally how people are trained, and enable them to keep on training and learning throughout their working life. That will require major tax reforms and for us to consider in a more careful manner—I say this very deliberately—some of the immigration changes that are under way, in the interests of our economic growth.

Those ideas need to come from across the political spectrum. They will not be the prerogative of any one party, and there will need to be a willingness to meet people half way. We need to attract and enable the kind of talent to come to this country that can constantly spin off new ideas and start-ups, which are undoubtedly already the cause of most new, good jobs. It makes perfect sense: if we are to have more employees, we need more employers. Although that huge transformation, driven by the networked world and all that it involves, takes place—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order.

17:47

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

The right hon. Member for Mid Sussex (Nicholas Soames) spoke of the importance of high skills, so let me consider the Government’s record on higher education. The Government’s approach to funding higher education is scandalously irresponsible. It is bad value for taxpayers, and wilfully makes graduates pay far too much for their degrees. By relying on unsustainable financial mechanisms, the Government threaten the long-term health of our universities.

Under their latest plans, each year the Government will borrow £14.6 billion to fund student loans, and each year they will write off, at taxpayers’ expense, £6.6 billion—a liability of £300 for every household in England, every year, and year after year. On every major judgment the Government have got their figures wrong. They said that fees above £6,000 would be exceptional, but most are at or near the maximum of £9,000. Last year the Government got their projection of student numbers in private colleges so expensively wrong that they had to step in to block recruitment. They said that debt cancellation rates would be 28%; last week they admitted that they are 45%. The public financing of higher education has been out of control since high fees were introduced for purely ideological reasons.

The immediate damage to public finances may be hidden by accounting conventions, but no public accounting convention should be allowed to disguise what is going on. As loans are not repaid in years to come, the cost of today’s higher education is put not just on graduates but on all future taxpayers, and this is from the Chancellor who said:

“We have always understood that the greatest unfairness was loading debts on to our children that our generation did not have the courage to tackle”.—[Official Report, 26 June 2013; Vol. 565, c. 303.]

A high-fee, high-debt cancellation policy forces up everyone’s fees and institutionalises waste. Of today’s public spending on higher education, £7.50 is spent on debt cancellation for every £1 spent on teaching students. If more were spent on teaching, fees would fall, as would the level of loans, the amount the Government had to borrow, the level and rate of debt cancellation, and the liability on the taxpayer. As a result of fees being lower, we would enjoy the virtuous outcome whereby all graduates would pay back less on their loans and more graduates would fully repay what they had borrowed.

There are many ways of modelling such a change. I set one out myself a few weeks ago at the Royal Society of Arts; it includes some wider changes to the delivery of higher education that are desirable. This is just an illustration of the scale of change that is possible. I am grateful to the House of Commons Library for modelling the figures that I am about to share with the House. With a different approach to higher education, whereby we spent money on teaching, not debt cancellation, Government borrowing would fall from £14.6 billion a year to £9.8 billion a year. Public sector net debt—that is, borrowing less the repayments made—would be about £10 billion lower after eight years and £30 billion lower after 20 years. The cost of debt cancellation each year would fall from £6.6 billion to £3.4 billion. The annual fees for a three-year degree could fall to £3,400 a year —pretty much the same as they were in 2010.

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

I am very interested in the figures that my right hon. Friend is reading out. What does he think the implications are for the Government’s policy to sell the student loan book?

[Mr Denham]

If I may, I will come to the student loan book in a moment, because that is a serious point.

One final point from the model that I have outlined is that the average amount paid back by each graduate would fall by £5,000 in total. On this model, usable university income would rise by at least £650 million a year.

The current approach is astonishingly wasteful in terms of public money and private graduate contributions —and that is not the end of it. As he said in the autumn statement, the Chancellor wants to encourage an additional 90,000 students, funded by the sale of the income-contingent student loan book. I do not object to the principle of selling the loan book. I tried to do it myself for two years when I was a Minister, but I became convinced that value for money was impossible to achieve. Buyers face such unknown risks on future inflation, earnings and the level of evasion that either the loan book has to be sold at a massive mark-down on face value or the buyer’s income has to be guaranteed through taxpayer subsidies—the so-called synthetic hedge, which is not so much plastic privet as guaranteed private profit. Selling a capital asset to fund hypothecated revenue spending is a short-term fix that exposes higher education to unsustainable costs when the money runs out. The Public Accounts Committee has said that it has no confidence in the ability of the Department for Business, Innovation and Skills to work out what is value for money.

This cannot go on. Universities are pressing for higher fees, and Ministers have refused to rule out an increase, but the financial futility of that is now clear. Every time fees go up, the cost and rate of debt cancellation will increase. Graduate repayments will rise, yet fewer and fewer graduates will repay their debts. The Prime Minister’s former head of policy, Paul Kirby, recently suggested closing 25% to 40% of all university courses—all those where graduate incomes are not enough to repay fees. Higher education is not simply a private benefit; it is a public benefit and a private benefit. It is now clear that we can reset the system so that there is a fair partnership between the state and the student. As my modelling has shown, we could have lower fees, lower borrowing and lower debt cancellation, with higher usable incomes for universities, within the current envelope of public spending. Only the ideological dogma and blinkered embarrassment of this Government stands in the way of doing just what is needed.

17:54

[Mr Charles Kennedy (Ross, Skye and Lochaber) (LD)]

I wish to deliver a few remarks on the two broad themes that have been outlined for today’s Budget debate—families and communities.

May I add my condolences to those expressed to the right hon. Member for Leeds Central (Hilary Benn)? I first met his late father when I was at Glasgow university and on a train going to Bristol. He was with the late Eric Heffer. We were in the final of a debating tournament at Bristol, with Eric Heffer as the guest speaker on our side which was against proportional representation—and we won. David Steel, who was on the other side of the argument with the Bristol team, was none too happy about that. The right hon. Gentleman’s father was always very kind to me throughout the following 35 years of respect and, indeed, friendship that we enjoyed.

I have been critical of the welfare cap in the past, and I remain anxious about it. I have opposed the bedroom tax. I share the concerns expressed by the right hon. Member for Southampton, Itchen (Mr Denham) about student finance issues, and voted against such provisions earlier in this Parliament. Nevertheless, it would be churlish not to welcome the progress indicated in this Budget as regards families. Looking at the figures from my own constituency, this Budget represents an £800 tax cut for some 27,390 people—a significant achievement. The pensions overhaul is leaving pensioners £650 better off. Alongside the tax-free child care initiatives, that means that both ends of the age spectrum are being addressed. That is the mark of a society heading in the right direction. I think we would all agree that the emblem of a decent society is that it gives a sense of opportunity to people in their youth and a sense of security, dignity and comfort to people at the other end of their lifespan. All those measures are welcome.

I also welcome the measures on fuel duty, which are particularly important in my area of the highlands and islands of Scotland, which, geographically, is the largest constituency in the UK. The cost of fuel permeates everything in an area where the motor vehicle is not a luxury but an absolute necessity, and where, in days gone by, we have seen punitive increases. Fuel prices remain pitched at punitive levels in many parts of the highlands, particularly in the more remote—and therefore, by definition, more vulnerable—communities for whom access to fuel and transport is absolutely fundamental. The fuel duty freeze confirmed by the Chancellor is welcome, although, as he would expect, many of us would argue instead for a real-terms cut, which we would see as social fairness on a UK-wide basis.

When I first started out 31 years ago, the state of the Scotch whisky industry was dire. Distilleries were being mothballed and people were being made unemployed. The industry did not have a long-term, viable global future; it was losing out to the white spirits industry, in particular. An amazing turnaround has taken place, to the extent that there are now plans in progress, in my constituency alone, for the building of two new distilleries —one on the Isle of Skye and one on the Ardnamurchan peninsula. That is a remarkable development. The freezing of the duty on whisky is welcome for this industry, which is vitally important for the well-being of the whole UK economy.

My next point is about start-up support for regional airports. Transport links, and the communications arising from them, are vital to an area such as the highlands and islands. Dalcross, Inverness’s airport, is located in the constituency of my right hon. Friend the Chief Secretary to the Treasury, but it serves as the hub for us all. He has worked hard on achieving the start-up support that has been announced, which removes red tape on new routes and develops the social and commercial arteries that regional airports are. That must be welcomed, although I would go one step further and give Treasury Ministers a nudge about the developments afoot to reopen the airstrip at Broadford on the Isle of Skye, as we have gone backwards in one respect. Thirty-plus years ago, I could leave central London on a Friday morning, take the British Airways shuttle, as it then was, to Glasgow, connect to a Loganair flight, and be in Portree on the Isle of Skye ready to hold a surgery by Friday lunchtime. Thirty years later, I can no longer do that. Things have gone back in that respect, so if the Government are thinking imaginatively about our airports, I hope they will not just look at existing airports, but consider revitalising some of the airstrips and airports that previously existed and served such a good purpose.

In general I welcome the Budget. Scotland should welcome the Budget. That is a message that those of us who want to keep the United Kingdom better together will convey not just in the House, but across the whole country.

18:00

[Robert Flello (Stoke-on-Trent South) (Lab)]

I am grateful to the right hon. Member for Ross, Skye and Lochaber (Mr Kennedy) for his comments on fuel, to which I, too, shall refer.

What we have seen is a Budget from a failed Chancellor reaping a growing economic reward that he did not sow—an economy that is improving despite what the Chancellor has done over the past four years. The Chancellor said that the deficit would be gone by the next general election, but there has been a reduction of only a third so far, with a year left. There was talk about pulling rabbits out of a hat, but that is quite a rabbit to pull out, with one year to go and two thirds of the deficit still to reduce. Debt has risen, and the growth that there is in the economy is based on delicate consumer spending—consumers spending their savings or money that they might have saved. Growth was stronger back in May 2010.

In the time available to me, I turn to some of the things that should have been in the Budget. As the right hon. Member for Ross, Skye and Lochaber said, what was needed was a fuel cut. FairFuelUK is one of many organisations suggesting that a 3p cut in fuel duty would kick-start businesses. Hauliers and others throughout the country were relying on some sort of cut because for them that is the difference between making a profit or a loss.

Four years on, we have heard many times, and will no doubt continue to hear, Members on the Government Benches referring to what the position would have been if Labour were still in government. What nonsense! What about the fuel duty escalator introduced by the present Minister without Portfolio, the right hon. and learned Member for Rushcliffe (Mr Clarke)? What would it have been if we had kept that going?

My right hon. Friend the Member for Leeds Central (Hilary Benn) referred to councils’ ability to assemble land. That should indeed have been possible. In my constituency, in the rest of Stoke-on-Trent and in the rest of north Staffordshire I frequently see pieces of land that have been held by one developer sold to another developer, then sold to a third and to a fourth. I think of one piece of land in particular where basic infrastructure—drainage and cabling—was put in, but that was it. Nothing moved after the economic tsunami hit, and the land has been changing hands ever since at higher and higher prices. Now the economy would have to be racing away for there to be any possibility of that land being developed. I can think of example after example where a small number of wealthy developers are sitting on land until they get their own way.

Other points should have been dealt with in the Budget. Businesses, especially in the haulage sector, have been calling for a stable view, six or seven years out, of the duty on biofuel, and ideally a reduction in that duty, so that they can make the investment and put the infrastructure in place for heavy goods vehicles that run far more efficiently on our roads.

Energy-intensive manufacturers such as the ceramic industry in Stoke-on-Trent are losing out as a result of energy speculators trading on the price of gas and speculating that what is happening in Crimea might have a negative impact on prices. Who pays? It is the manufacturers who have to buy their energy, not the speculators buying and selling.

Another of the things not in the Budget was the massive cuts to the finances of Stoke-on-Trent city council, which has been the third hardest hit for three years running. That is likely to continue for a fourth year because of the hit to our local authority, which means that services for real people are being taken away.

Of the things that were in the Budget, I shall concentrate on pensions and the removal of the annuity obligation. Giving people more choice in respect of the money they have worked hard to put aside for their pension is, on the face of it, a good thing, but around 80% of people who already do not shop around for the best annuity are losing out. People who need to buy annuities will find them far more expensive. As for the free and impartial guidance, it is advice that is needed, and who will pay for that advice or guidance? It is another mis-selling scandal being lined up to hit in a few years’ time, and, mark my words, it will come back and hit whichever Government happen to be in office at the time.

Who wins? The financial advisers might win, the Treasury will certainly win in the first few years, and insurance companies will bring out complex new products. Or, as the Pensions Minister suggested, is it Lamborghini salesmen who will benefit from the changes?

Let me end by referring to the economic hit on places such as Stoke-on-Trent from HS2. KPMG accountants identified an £80 million potential loss for Stoke-on-Trent as a result of HS2 if it happens as predicted. No Budget could make up for such massive damage to our economy.

18:06

[John Howell (Henley) (Con)]

I shall not follow the hon. Member for Stoke-on-Trent South (Robert Flello) in his comments about the Chancellor. Instead, I congratulate the Chancellor on a first-class Budget, for the reasons given and expounded on by my right hon. and hon. Friends in earlier debates. For reasons of time, I shall not repeat them.

I would like to comment on the new garden city planned for Ebbsfleet. That is not in my constituency, but it holds an attraction for all those who see a new garden city as a way of meeting expectations to provide the number of houses required by tomorrow’s inhabitants. It represents a good way of bridging the gap or squaring the circle between making planning and development local and providing for the future. As part of the Budget, as we have heard, the Chancellor set out an ambitious plan and up to £200 million of public investment for a major new development around the high-speed rail station in Ebbsfleet in Kent. That is only 19 minutes from central London, and the 15,000 new homes it will provide are to be welcomed.

The excellent transport links to London will make Ebbsfleet a very attractive commuter location, but development at Ebbsfleet will also provide tens of thousands of new jobs, many of which, it is expected, will be taken up by local residents. I make two points about this. The first is the involvement of local people. The Royal Town Planning Institute commented:

“The Government’s announcement of a ‘new Garden City’ in Ebbsfleet is a welcome, if limited initiative.”

The word “limited” is misguided. It fails to recognise the new localist age we are in. This is not a case of central Government imposing a solution. It must be driven by local councils.

In this context I was pleased to see the right hon. Member for Leeds Central (Hilary Benn) comment on neighbourhood plans, and particularly the neighbourhood plan in Thame in my constituency. The most important thing about that is that in the referendum that was held on the same day as the county council elections, one in 10 people went into the polling booth and voted for the neighbourhood plan, but did not vote for their county councillor. One in 10 people did that because the neighbourhood plan is a crucial way of determining the future of their town. The Government want local people to be involved in towns such as Ebbsfleet. That is crucial as part of the consultation, to make sure that it is going to be a good place for people to live, and for us to make the necessary investment to turn derelict sites that are currently local eyesores into green places to live.

The relevant local councils usually sit on the boards of development corporations. It is vital that urban development corporations are democratically accountable. It is therefore necessary to ensure that local councils are represented, including the county council, which will be crucial in providing much of the infrastructure.

Urban development corporations are designed to be time-limited local vehicles that drive major development forward, especially when the scale of change is significant. The experience since the 1980s suggests that UDCs work best when they channel their efforts into the development of specific major sites, where extensive capacity and resources are required. The Government are determined that this UDC will learn the lessons from previous ones. Therefore, it will have a clear focus on the accelerated delivery of large, strategic sites; there will be significant local buy-in, with members of the relevant local authorities playing an important role on its board; and there will be strong transparency about costs to ensure that taxpayers’ money is used effectively.

A key element of Ebbsfleet must be an emphasis on design. It is essential that it is an attractive place where people want to live. Design must play a key role because of the importance that the project will have in the minds of other people who are thinking about having a garden city. We do not just want rabbit hutches and boxes to be built. All eyes will be on this city in determining whether communities are willing to participate.

In my last few minutes, I will say a few words about the planning reforms. I encourage the Government to take a good look at the general permitted development order. The simplification of the planning system is essential, not just to support the case for development now, but for the future. It is not in anyone’s interests to have a complex system, except for the socialist antecedents of the planning system. I am glad that the Government have set out their three-tier approach to general permitted development, with permitted development for small-scale changes, prior approval rights for larger changes and planning permission when the scale is even larger. The changes that we have made to residential planning are being followed through with the proposals on warehouses and light industry. Such things are already happening in some places, which is very much to be welcomed. This is a great extension of the changes.

18:12

[Mr Ronnie Campbell (Blyth Valley) (Lab)]

Sometimes I get a bit sick of hearing about the mess that the last Labour Government supposedly left. [Interruption.] Wait a minute. Perhaps it is America that should apologise to my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), because when Lehman Brothers crashed, it brought down the American economy. Northern Rock and all the other banks were investing in the sub-prime market to get a fast buck, and that brought down the banks here. I looked the other day at how much that cost the British taxpayer. It cost our economy £70 billion. When Members talk about the last Labour Government—

[Kwasi Kwarteng (Spelthorne) (Con)]

Spend, spend, spend.

[Mr Campbell]

No, we did not. When Members talk about the last Labour Government bringing down the economy, they are wrong. Let us have some truth and honesty about what happened to the economy at that time.

[Robert Flello]

My hon. Friend will remember as well as I do that when we were on the Government Benches, Conservative Members used to stand up and say, “Can we have a new this? Can we have a new that? Spend, spend, spend.”

[Mr Campbell]

According to the Conservatives, we should have wrapped the banks in red tape and nailed them to the floor. Would they have done that? Of course not. They would have done exactly what we did.

I want to get to the meat of the problem, so I will start with pensions. I am not a believer in a nanny state and never have been. If Members look at my record, they will see that I have voted against many such proposals. I looked at the pensions proposal carefully. I know a lot of pensioners who are not getting what they should be getting out of their pensions after they have bought an annuity.

The proposal reminds me of when I was a coal miner. When all the coal mines were closing, the Government decided that the miners could pull their pension out of the National Union of Mineworkers pension fund and put it into something else if they got a better deal. Of course, all the Scrooges came around, knocking at the doors of the miners. They said, “Will you organise a meeting?” Would I hell! They were there to grab the miners’ money. I am pleased that the Secretary of State for Transport is here, because he knows what I am talking about.

A lot of the men were bought. They pulled their money out of the miners’ pension scheme and put it into all sorts of finance companies that offered them a better deal. That did not last two years. Before long, they were all trying to get back into the scheme. The other schemes were a disaster. There was mis-selling on a big scale. The miners’ pension scheme had to be opened again so that the men could put their pensions back into it. They were given two years to do it. If they did not do it in that time, they were left with the company that they had gone with.

We have to be careful that that sort of mis-selling does not happen. I understand the problem. It is good that people can have control of their own money. I have no problem with that, but we might be stirring up a hornets’ nest. I do not trust the institutions one little bit.

On wages, we all know—it is a fact that is on record—that people who are working have lost out by £1,600 a year. People in two or three industries—especially those who work in local government, which we are talking about tonight—have not had a rise for three or four years. According to the latest figures that I have, £39 billion has been taken out of the economy since the austerity programme started because people have not got wage rises. It is no wonder that the economy is sluggish. If money is taken out of the economy, it will be sluggish. All that some workers have to look forward to is zero-hours contracts and food banks.

People do not realise what the welfare cap means or what it includes. Child benefit is capped. Incapacity benefit is capped. Winter fuel allowance is capped. Income support is capped. People do not realise what the cap means. There is a big figure, but people do not realise what is under it and what it means for them.

[Alec Shelbrooke]

Will the hon. Gentleman give way?

[Mr Campbell]

No, I do not have time.

I got hold of a letter from the Department for Work and Pensions. It says that before the austerity measures were brought in, an average of 12,530 people on jobseeker’s allowance were sanctioned each month in north-east England. Under the new arrangements brought in by this Government, that has gone up to an average of 29,000 people a month. People are being sanctioned and do not have any money. That is why the food banks are increasing. People have no money and do not know where they will get their next meal, so they have to be sent to the food bank.

Some people are sanctioned fairly and some are rightly sanctioned. Like other Members, I have had many people come to my office who have never looked for a job. I tell them that they have to go out and look for a job—that even if it is a job as a brain surgeon, they should apply for it. A lot of people are not doing that, but a lot of people are and they are being sanctioned unfairly.

The borrowing requirements are a bit of a joke. In this year alone, the Government will borrow £50 billion. Perhaps that is where all the money is going. That will leave us £111 billion in debt. That is the situation that this country is in. If that is the economy getting better and if that is the country reducing the deficit, I will eat my hat. Quite honestly, I think that we are heading for the rocks or for a car crash—one or the other.

18:19

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

It is always a pleasure to follow the hon. Member for Blyth Valley (Mr Campbell). I was not going to make some of these points, but I cannot resist.

In 1997, some 17 years ago, many of us were not yet Members of Parliament. I remember the Labour party coming into office to the theme tune “Things Can Only Get Better”. The electorate will judge that claim in times to come. Labour likes to talk about the Conservatives’ 26 tax rises, but the inconvenient truth is that under all Labour Governments the burden of taxation increases dramatically. The sun rises in the east and sets in the west; Labour will always raise taxes and spend our money. Those are the truisms of life, and they always will be.

An increase from 10% to 11% in employees’ national insurance may not sound like much, but it amounts to an increase of 10%; in the case of the employer, the rise was a shocking 28%. No wonder Conservatives recognise national insurance contributions as a tax on jobs. Labour can talk all it wants about tax rises, but the people of Britain have long memories and will remember 13 years of a Labour Government during which the Treasury regularly raided people’s pay packets, and created a system in which businesses faced increased pressures and costs when creating jobs.

[Alec Shelbrooke]

Can my hon. Friend explain why some people think the banks caused all the borrowing, when Labour borrowed £80 billion in 2006?

[Paul Uppal]

My hon. Friend makes a reasonable point. Labour took its eye off the ball when it came to borrowing, and no one can deny that.

Thankfully, today things are different. Taxes on business were too high under Labour and corporation tax was 28% when this Government came to power. As the new tax year approaches, businesses will feel the impact of several important tax cuts. Corporation tax will fall to 21%, help on business rates will come in, and the landmark employment allowance will take up to £2,000 off employers’ national insurance bills.

Politics is always about being local, and in my constituency the Government’s changes are translating into new jobs and opportunities for my city. I have spoken regularly in the House about the positive impact that the arrival of Jaguar Land Rover will have on the city, but I have not so far spoken about the impact of the new Sainsbury’s store on Raglan street, which will create nearly 200 jobs. The sprawling Raglan street site stood empty for 10 years; it was a blight on the city and a sad symbol of our lack of progress. One of my first priorities was for that to change and, thankfully, ground was finally broken at the site last October.

This morning, it was a pleasure to welcome my right hon. Friend the Chancellor of the Exchequer to Marston’s, a valued employer and brewery in my constituency. The company, which employs around 1,000 people at its brewery and headquarters, invests in opening dozens of new pub-restaurants every year, creating hundreds of jobs nationwide. I met the chief executives of three breweries, all of whom concurred with the view that the Budget was good news for jobs and growth.

The third and final piece of good news for the city came two weeks ago, when I visited the Woodthorne development by David Wilson Homes on Wergs road in Wolverhampton. Local jobs have been created to provide new homes in the city. The Woodthorne development will provide 58 new homes over the coming months, underpinning nearly 120 jobs for local people. It is great news that new homes are being built in the city and that a local work force is being used to build them. Support for small and medium-sized developers to access development finance through the builders finance fund will provide more than £500 million for two years from 2015-16 to deliver up to 15,000 homes.

The Help to Buy loan scheme has already helped 25,000 people to buy their own homes when they could not previously afford the deposit, and it has helped to build more houses. Owning one’s own home should always be one of life’s biggest aspirations, and the Government will help even more people to achieve that dream.

People who have worked hard and saved hard all their lives will now be trusted with their own finances. The Government will completely change the tax treatment of defined contribution pensions to bring it into line with the modern world. From March 2017, the Government will cut the income requirement for flexible draw-down from £20,000 to £12,000, raise the capped draw-down limit from 120% to 150%, and almost double the total pension savings people can take as a lump sum to £30,000. I am really heartened by that initiative because it constitutes a clear blue line and political divide: we trust people with their own money.

I have been poor in my life—to be honest, I have been dirt poor. What got me and my family out of poverty was taking responsibility for myself, making my own choices and taking my own risks—not a Government body or quango. The Government will empower people by trusting them with their own money, and the changes on annuities encapsulate that sentiment.

The Budget also shows that we are on the side of manufacturers, creating a Britain that makes things again. We are cutting the cost of manufacturing by cutting the cost of energy bills for manufacturers. We are doubling the annual investment allowance to £500,000 and delivering the most competitive export finance in Europe by doubling the Government lending available to exporters to £3 billion, and cutting the typical interest rate on it by more than a third.

Boosting savings, putting the public finances on a stable footing and making it easier for companies to invest were the key themes of this year’s Budget, and I support wholeheartedly the Government’s efforts to continue to rebuild our once broken economy. It is interesting to reflect on those key themes and what we remember from 1997 onwards—golden economic rules, prudence and, more recently, “cutting too far, too fast”. We do not hear those words any more. At least this Budget will build an economic inheritance that we can pass on to our children.

18:26

[Ann McKechin (Glasgow North) (Lab)]

I welcome the comments made by my hon. Friend the Member for Blyth Valley (Mr Campbell), who recommended a precautionary approach to the proposed changes to pensions. They are huge changes with many unanswered questions. At the weekend, the Chief Secretary to the Treasury was quoted in the papers as saying that intuitively he did not foresee undue harm to the public purse. Rather than his personal rose-tinted view, we need hard facts and well researched analysis to allow Parliament to make an informed decision about the proposals.

Many questions arise, in particular about the level and quality of the financial advice that will be available to people to enable them to make proper decisions. How will pensioners be protected from the scams that my hon. Friend mentioned? If people choose not to take the annuity route, they will require active management of their investment over a prolonged period, at a time when many of them will experience increasing incapacity. It is vital that we have full consultation on the changes, and that any legislation is considered in draft format by the Work and Pensions Committee before it is presented to the House.

[Jonathan Evans]

As the hon. Lady will know, on Thursday the Government published a consultation paper and said that the consultation would be open until June. No doubt she will make her proposal as part of the consultation.

[Ann McKechin]

I welcome the fact that we will have a proper consultation. The depth of it, and the analysis that will be required before people can provide their opinion, will also be vital. I also expect draft legislation to be put before the Work and Pensions Committee to be considered line by line in close detail.

While the Budget focused on pensions, many significant challenges were either ignored completely or—at best—addressed only superficially. To name just a few, they include stagnating incomes; the lack of business investment compared with our international competitors, a matter addressed by the Civitas report published today; high personal debt levels; and a distorted housing market.

The Resolution Foundation’s annual report on living standards, “The State of Living Standards 2014”, points out that

“it has become harder to live a comfortable life on a modest or even typical income in modern Britain”.

The biggest increase in poverty is now among those already in work, trying to make ends meet with average wages consistently falling over the last five years. Before Conservative Members claim that the latest Office for Budget Responsibility figures show that we are coming to the end of that fall in income growth—even though the timeline keeps moving backwards—I should say that the situation is not as positive for a huge swathe of our population. The wage growth figures are based on the CPI index, which excludes housing costs. When the figures are recalibrated on an RPI-adjusted formula, as the Resolution Foundation report shows, the picture is much gloomier. For those on median earnings, there will have been barely any wage growth for more than a decade up to 2018.

Currently, the bounce we are witnessing is based primarily on increased consumer spending and greater levels of personal debt. Scottish Widows reported only last week that there are now 1 million more people than last year who have no savings at all—9 million people. Given the slow to negligible wage growth, that level of spending cannot continue forever. We risk returning to the problems that were at the root of the global collapse in 2008. Putting an extra 17p on the minimum wage rate and having approximately 1 million workers stuck on zero-hours contracts is not the way to increase incomes. That will simply push more people into a debt that will become increasingly unaffordable when interest rates start rising again.

The biggest omission in the Budget is the complete failure to tackle the causes of the housing crisis. Land prices are still far too high in comparison with average incomes and they take money away from our productive economy, yet the Government are perfectly happy to advertise in the Red Book, on page 107, that they forecast house prices to increase by 8.6% in the next year against an inflation rate of 1.8%. You would never guess, Madam Deputy Speaker, that an election was due.

Week after week, I hear from desperate young people, often with young children, about their fruitless search for stable and affordable housing. Last month, I met a young mother with two children who was looking for her fourth private tenancy in as many years. It was not that she wanted to move—either the landlords wanted their houses back to live in or to sell on, or, in the latest case, they had failed to pay their own mortgage. She is currently in overcrowded housing simply to ensure that her eldest child can remain in the same school. She faces a sector with perverse incentives, such as Help to Buy, which in its latest format is not even linked to house building. No attention has been given to reconstructing a rapidly growing but highly fragmented private rental market that could provide greater security of tenure and better service levels. The stubborn failure to boost house building, which is now at pre-war levels, is made worse by the slashing of investment in social housing, with the result that prices are kept high.

The right hon. Member for Mid Sussex (Nicholas Soames) made some very good comments on the rapid changes occurring in the manufacturing sector. If we make the right choices now, we can benefit from the revolution in manufacturing; I agree entirely with his comments. We need to invest in skills, not just for young people but for the existing work force. In too many factories across the land, we will find Jimmy and Johnny aged 69 or 70-plus, because companies have no one younger with the right skill sets. The Government continue to be complacent about the rise in inequality and about wasting talent.

18:33

[Mary Macleod (Brentford and Isleworth) (Con)]

It is a pleasure to follow the hon. Member for Glasgow North (Ann McKechin). Glasgow has been a European city of culture and I spent many happy years there as a student. She was much more negative than I plan to be. She forgot to mention the £63 million that Scotland will get out of the Budget, although I think we agree that Scotland is better together with the United Kingdom given the forthcoming referendum in September.

The Secretary of State laid out very clearly how the Budget will help hard-working people and put Britain on a platform to a secure future. In my few remarks, I want to concentrate on how the Budget will impact on families and local communities in London and in my constituency of Brentford and Isleworth.

I thank the Chancellor for his support for London air ambulance. In his statement, he said:

“I will also relieve VAT on fuel for our air ambulances…and provide a new air ambulance for London, all in response to huge and heartfelt public demand and the campaigns of my hon. Friends the Members for Hexham (Guy Opperman), for Brentford and Isleworth (Mary Macleod) and for Argyll and Bute (Mr Reid).” —[Official Report, 19 March 2014; Vol. 577, c. 786.]

London air ambulance is an incredibly important cause. Because of the hard work of Dr Julian Thompson, Graham Hodgkin and the team at London air ambulance, it is saving lives around London. A new helicopter was needed because there was only one helicopter in London for 10 million people. Across the rest of the country, there is one helicopter for every 1.5 million people. The service in London has treated more than 30,000 high trauma cases and it saves lives across London. The Budget will help it to save more lives.

The Budget will help brewers, such as Fuller, Smith & Turner. Its Griffin brewery is in Chiswick in my constituency. It is London’s last remaining traditional family brewer—a great brewer it is, too. The 1p duty cut on beer and the scrapping of the escalator rise in alcohol duty will benefit 4,200 pubs and the more than 50,000 people the industry employs across the country, as well, of course, as its customers. That is another benefit of the Budget.

We have not heard much mention of the increase in the personal tax allowance. The right hon. Member for Leeds Central (Hilary Benn) said that the Government were standing up for the wrong people. How wrong can he be? I believe that increasing the personal tax allowance is standing up for the right people. Increasing the personal tax allowance to £10,500 in April 2015 will lift 31,000 hard-working people across London out of income tax altogether, and 3.3 million people will see an average real-terms gain. That is what is meant by standing up for the right people and hard-working people.

Tax-free child care is helping families and hard-working people across London and elsewhere. The scheme will be extended to up to £2,000 per child and extended up to 12-year-old children more quickly. The scheme will benefit more than 500,000 London children in working families.

Housing is a big issue in London and we have already heard much about it today. I welcome the extension to 2020 of the Help to Buy scheme, which will create stability for families. It was good to see that 85% of those on the Help to Buy scheme are first-time buyers. That, too, helps hard-working people and is standing up for the right people across London and the United Kingdom.

There is a strong hub of creative industries in west London—television, film, IT and so on—and I am very proud of it. The changes to film tax relief from 1 April will make it easier for these industries to export further around the world, creating more jobs and growth for the future.

Locally, the Government are making a real difference, with record numbers of people in work, including record numbers of women in work. Some of the local achievements I have seen in my constituency include being in the top 10 for business growth, lots of new companies moving into the area, current businesses expanding and growing, the creative industries hub becoming even stronger, and a record number of apprenticeship starts. That is what this Government have done as a result of the measures we have taken. Unemployment in my constituency is at a record low of 2.6%, down by 21.3% since May 2010. Youth unemployment is down by 29.5%, which is something to be proud of. For those who are unemployed, I invite them to Aspire, the jobs and apprenticeships world skills fair at West Thames college, which, with the support of Heathrow and others, is there to help people to get work.

This is a Government who are helping hard-working families—the people who need it most. This is a Government who believe in aspiration. This is a Government who are turning the country around to growth and prosperity for the future.

18:39

[Phil Wilson (Sedgefield) (Lab)]

I will first touch on the housing market and the role of housing benefit, and then move on to the Government’s proposals for pension reform, because they are linked.

According to the Office for Budget Responsibility report, the largest driver in the growth of housing benefit has been a growing case load in the private rented sector. The share of housing benefit spend in the sector is projected to increase to 40% by 2018. The trend towards renting from private landlords and away from owner-occupation is accelerating. The increase in the proportion of the private renting population who claim housing benefit is a consequence of low wages and a rise in rent inflation. The recent rise in housing benefit in the private rented sector has been accounted for by people in work, and the fall in owner occupation since the recession has been particularly marked among young people. I ask Members to bear that in mind when they hear what I am about to say about the Government’s pension proposals.

I agree with the Chancellor that we should trust the people. I do not have a problem with trusting the people; I have a problem with trusting the financial services industry. I understand why the Chancellor made his announcement on Wednesday, but I feel that his proposals are treating the symptoms and not curing the disease. The Government say that they trust the people, as they rightly should, but what are they doing to ensure that the people can trust the financial services industry? What are they doing to ensure that 40% of the retirement or savings pot will not be lost in hidden fees in the future? Some savers can lose as much as £230,000 in the value of their pensions when a 1.5% fee is charged over their working lives. What are the Government going to do to ensure that those fees are transparent, and what are they going to do to ensure that the financial services industry does not come up with mis-sold financial products, as it has in the past? I say all this because we should not forget that the insurance companies that are selling annuities now will start to present what they will call “innovative and creative products” to fill the chasm left by the collapse of annuities.

There are three measurements by which these proposals should be gauged. First, when is “advice” advice, and not guidance? The Chancellor said that £20 million was to be set aside over the next two years for the right to advice, but the Treasury consultation document calls it a right to financial guidance. There is a big difference between the two: advice means telling people what is in their best interests, whereas guidance means informing them of their options and then sending them on their way. Secondly, there should be a test to ensure that those with low and middle incomes are not disadvantaged but are offered the certainty that they need in retirement, especially at a time when the average pension pot is about £36,000. Thirdly, the Government should ensure that reforms do not result in extra costs to the state as a result of, for instance, higher social care bills, and force pensioners to fall back on benefits. We should not set up a system that socialises the risk and ensures that only the private sector reaps the benefits.

The Chancellor said in his speech:

“People who have worked hard and saved hard all their lives, and done the right thing, should be trusted with their own finances”.—[Official Report, 19 March 2014; Vol. 577, c. 793.]

I agree that we should trust the people, but we should also be able to trust the financial services industry. For many people, their pension investments are not just about trust, but about faith. They want to have faith in those who look after investments, and to know that they are doing right by them.

The mis-selling of future financial products must be a big worry. It has happened time and again in the industry, which is why I have demanded, in the House, that a fiduciary duty be placed on those in the financial services industry who look after the trillions of pounds in the existing pension funds. Every practitioner must be able to put his hand on his heart and say that he acted in the best interests of those whose funds he has invested. That should be at the core of the Government’s proposals. I believe in “trust in the people”, but, in this instance, trust must be earned by the Chancellor and the financial services industry.

That brings me back to my original point. As a result of the Government’s reforms, we will see an explosion in the number of buy-to-let properties, inflating house prices and further diminishing the opportunities for young people to own their homes. The challenge for all of us is not the abandonment of the pension system, but the building of a system that actually works, under which money is given to someone who can be trusted to use those savings wisely to generate a retirement income. Holland and Denmark have private pension systems that are collectivist and large, so that risk is shared and fees are low. If a typical Briton and a typical Dutch person save the same amount, have the same life expectancy and retire on the same day, the Dutch saver’s pension will be 50% higher than that of the Briton. There is much to be said for the collectivist approach to pension provision, and it should not be deserted.

The question is not “Should we trust the people?” Of course we should. The question is “Can the people trust the Government and the industry to get this right?” Given the long history of mis-selling by the industry, I believe that the jury is still out.

18:44

[Jonathan Evans (Cardiff North) (Con)]

Let me begin by saying to the hon. Member for Sedgefield (Phil Wilson) that I wish to draw attention to my entry in the Register of Members’ Financial Interests, and my specific interests in the life insurance industry, because later I shall say a few words about the annuity market changes. Before that, I want to talk about the impact of the Budget on my constituency. The House will be delighted to know that I do not intend to trawl through all the provisions; I shall merely mention three specific headline issues that my constituents raised with me after the Budget, and were very pleased to raise with me.

The first of those issues, which has already been mentioned, is the increase in the personal tax allowance. That increase is significant, and I think it a mistake for any Opposition Member to talk it down. The allowance used to be £6,500, and next year it will be £10,500. That is a measure that will help the lowest paid: it will take 3 million people out of tax altogether. I am amazed that some Opposition Members are still shaking their heads over that proposition.

Secondly, my constituents were delighted by the announcement about child care costs that was made the day before the Budget. It will mean real help for people who want to get back to work. Thirdly, although this too will not be popular with Opposition Members, my constituents have told me how pleased they are that there is now petrol price stability—a stability that will be underpinned by the continual fuel duty freezes that we have seen.

Let me say something about the impact on the business community in my constituency. When I went to my constituency business club on Thursday evening, three items were mentioned specifically. The doubling of the investment allowance to £500,000 a year has been warmly welcomed, and there has been a widespread welcome in Wales for the announcement of a package for heavy users of energy. The right hon. Member for Neath (Mr Hain), who is present, will know how strongly Tata argued for that, and Celsa in Cardiff is delighted as well. There has been a universally positive response to the Government’s determination to lower corporation tax to 20% from the Welsh chambers of commerce, the Institute of Directors and the Federation of Small Businesses and others.

Let me now say something about the pension changes. The pensions landscape has changed dramatically since the 1990s. The shadow Secretary of State, the right hon. Member for Leeds Central (Hilary Benn), told us that he was very proud of the last Labour Government—the Government who scrapped dividend tax credit, which cost pensioners £5 billion each and every year from 1997 onwards. Subsequently, we have seen Government policy pursue low interest rates and quantitative easing, which have driven down the value of our pensions. No one has mentioned that so far. Annuities are on the floor in comparison with their level in the 1990s: they are down to a third of that level. The fact is that those on both Front Benches are responsible for that. Between 2009 and 2012, the Bank of England and members of the Monetary Policy Committee claimed that £375 billion of quantitative easing would have a neutral effect on annuity holders. However, in a report published two weeks ago, Ros Altmann made it clear that it was monetary policy that had driven down annuity rates.

One of the strengths of the Government’s announcement is the positive response not just from those approaching retirement, but from savers more generally. Along with the announcements of an increase in the amount that can be held in individual savings account and the National Savings & Investments pensioner bonds, it has lifted interest among savers. However, I think that we need to concentrate on two other issues. First, the Government’s changes apply only in relation to direct contribution pension schemes. They have no relevance to, for instance, direct benefit schemes in the public sector, including those applying to Members of Parliament. Currently, however, it is possible to convert one to the other, and the Government have already signalled that they intend to block that conversion. If we want pensioners to be trusted with their own money, how can we easily restrict that principle to people who have direct contribution rather than direct benefit pensions?

Secondly, there is the potential negative impact on infrastructure investment. On Thursday, the Government signalled that they were aware of it. Insurers will undoubtedly be less interested in purchasing long-dated Government gilts if the long-term liabilities of those companies are cut to the extent that has been estimated by Barclays, which has said that in 18 months’ time the annuities market in the United Kingdom will be down to a third of its present level, and by investment advisers Panmure Gordon and accountants Grant Thornton, which have predicted that it will fall to a fifth of that level. Whichever may be true, that is a significant reduction in the demand on the part of the industry for those long-term infrastructure projects that back so many of the demands that are made by Members on both sides of this House. We all want to see that public sector investment, but the reality is that the pensions landscape is being changed. It is crucial that the Government consider the impact of this in order to ensure that this reform does not produce unexpected or unanalysed impacts.

18:50

[Mr Peter Hain (Neath) (Lab)]

I agree with the hon. Member for Cardiff North (Jonathan Evans) over Tata, but the one thing that cannot be said about the economy under this Chancellor is that it has recovered quickly from the shock of the global financial crisis. Total output still has not reached pre-crisis 2008 levels, quite unlike in the USA and Germany, both of which passed their 2008 peak back in 2011. What took them three years to achieve is taking the British economy under this Chancellor six years, and the reason is the savage cuts since 2010, a far tighter squeeze than in the USA or the eurozone. Under Labour, recovery was already well under way in the first half of 2010 when the Chancellor came into office. It was his policies that choked it off and the British people have been paying a heavy price ever since.

Today we have an unsustainable, out-of-balance recovery. The Chancellor acknowledged that neither investment nor exports are high enough. We already knew that higher consumer spending has come out of reduced savings, not out of higher incomes, because real incomes have been stagnating for years. It is a short-term recovery that cannot last. The ex-chair of the Financial Services Authority and ex-director general of the CBI, Adair Turner, said so in January at Davos when he warned:

“We have spent the last few years talking about the need to rebalance the economy away from a focus on property and financial services and towards investment and exports. We are now back to growth without any rebalancing at all…If you chuck enough monetary stimulus at an economy something happens. It is as if we have had a cracking great hangover, had a stiff drink and off we go again.”

A second factor making the situation unsustainable is that UK productivity has been flat for years. This pushes up unit costs and keeps our export prices higher. Our export predicament is dire. On top of that, we are witnessing a housing bubble again, with property prices rocketing in London in particular. In short, nothing fundamental has changed to avoid a rerun of a financial crisis brought on by a debt-financed consumer boom and a Government-backed housing bubble that sooner or later will burst, because bubbles always do burst.

Yes, the economy is recovering faster than forecast last year, but growth is forecast to be slower next year than this. The Chancellor expects the economy to run out of steam almost as soon as it starts to grow again, yet there is plenty of scope for much faster growth, and faster growth would mean less need for spending cuts and a quicker reduction in the Budget deficit.

The austerity programme, which this Budget continues to drive forward is based upon what I call the big deceit of British politics: that Labour “overspending” left the country with the mountainous levels of debt and borrowing which the Tory-Lib Dem Government inherited after the 2010 election. [Interruption.] The idea that the global credit crunch was caused by Labour’s public investment in Britain is risible. [Interruption.] The proposition that by building new hospitals and new schools, and by recruiting tens of thousands of extra nurses, doctors, teachers and police officers in Britain, Labour caused the sub-prime mortgage defaults in the US that ricocheted throughout the world’s financial institutions is preposterous. [Interruption.]

[Robert Flello]

It is amazing to hear the laughter from the Government Benches. Does my right hon. Friend recall, as I do, Conservatives standing up time and again saying there was far too much regulation of the banks and that they needed to reduce it?

[Mr Hain]

Absolutely.

It was not Labour’s public spending that triggered Britain’s or the world’s economic crisis; it was the global inter-dependency of reckless banking that the Conservatives wanted to be less regulated that in 2008 triggered an economic meltdown in Britain and right across the globe. [Interruption.] Labour responded by boosting public spending and borrowing to offset the catastrophic collapse in private sector spending, and the £90 billion spent on bank bail-outs plunged the public sector into record annual deficits, but these were deficits that stopped a shocking slide into a fatal slump and laid the basis for recovery from the biggest shock to hit the world economy in peacetime since the 1930s great depression. [Hon. Members: “Give way.”] If I have time at the end, I will.

Contrary to right-wing free market mantras and Tory-Lib Dem history rewrites, it was the banking crisis that caused debt to rocket, the deficit to rise and borrowing to rise as well. The low yields on UK Government bonds before, during and after the credit crunch under Labour bore eloquent testimony to the fact that the international markets had full confidence in its policies, and that they were not clamouring for the right-wing dogma subsequently visited upon Britain. Indeed, so desperate was the right hon. Member for Witney (Mr Cameron) to identify with Labour’s success on spending, investment, jobs and growth that he pledged to match Labour’s spending plans for three further years in September 2007 up to 2010. [Interruption.] Members on the Government Benches shake their heads, but that is what he did. If we had spent too much—if all the charges made by the Conservatives were true—why on earth would the current Prime Minister have backed our spending plans for three years ahead? It would help the quality of this debate and the quality of assessment of the Chancellor’s Budget if the Conservatives and the Liberal Democrats had the decency to acknowledge that essential fact, including this Prime Minister’s support for our spending programmes, instead of ploughing on regardless, with no end to austerity in sight.

[Mr Redwood]

Why did the new and very expensive and complicated regulators the Labour Government introduced fail to control the banks when people like me were telling them they did not have enough cash for capital?

[Mr Hain]

I agree with the right hon. Gentleman to this extent: we did not regulate the banks well enough or carefully enough, but his party—not necessarily he, but his leadership—was saying that there should be less regulation of the banks at that time, yet now they have the temerity to attack our spending plans when we brought borrowing down. [Interruption.]

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. All other speakers have been heard in silence. The right hon. Gentleman has livened up the debate, but he also ought to be heard.

[Mr Hain]

It is interesting how those on the Government Benches do not like to hear the truth, Madam Deputy Speaker. The level of debt under the Labour Government before the banking crisis was lower than we inherited from the Conservatives in 1997. We brought borrowing down and we brought the deficit down compared with what we inherited, and yes we invested in repairing the desperate state of our public services—people dying on trolleys in hospitals, schools crumbling, the railways decaying. We repaired all of that and then the banking crisis came along and blew it out of the water. There was a failure by every Government right across the world to recognise the seeds of that banking crisis, but it was not caused by Labour overspending, and not caused by Labour high borrowing or high debt, because none of those things was going on prior to the banking crisis. If we had not dealt with the banking crisis in the way that we did, the whole of the economic and banking system in Britain would have collapsed. We need decency and honesty from Government Members and acknowledgement of that central fact.

18:58

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

I am very glad to contribute to the Budget debate and in particular to be following the right hon. Member for Neath (Mr Hain) because I want to pick up on a couple of the themes he introduced. Before I get on to that, however, I would just remind him that the Office for National Statistics revised downwards the depth of the recession that happened under the Government of which he was a member, which perhaps explains why it has taken us a little longer than we thought to get our economy back on track: the scale of the damage was that severe.

I want to start by welcoming a Budget measure that I hope will be applauded across the House: the Chancellor’s announcement to set up an Alan Turing institute. Thankfully, Alan Turing finally had his name cleared just before Christmas and justice was finally done. I am very proud that Bletchley Park, where he did much of his outstanding work, is in my constituency. Now that we have been able to draw a line under that injustice, it is absolutely right that we concentrate on celebrating his enormous achievements. The establishment of an institute that will further research into cyber-security, algorithms and a whole load of things I will not even pretend to begin to understand will be a wonderfully fitting tribute and legacy. If I may, I will make a gentle bid for Milton Keynes to be the host of that institute. I am sure there will be competition from Manchester, Cambridge and elsewhere, but we would make a very fitting home.

I also welcome the announcement of a new garden city at Ebbsfleet, and I invite the good people of Ebbsfleet and Kent to look at how we in Milton Keynes planned our city. I am sure they could draw many lessons from the design of Milton Keynes and the understanding that went into its creation, inspiring designs of new cities as far afield as China. We would be delighted to advise the good people of Kent.

I welcome the measure in the Budget to extend Help to Buy, a very welcome initiative that has helped many people in my constituency to get on to the housing ladder who would not otherwise have been able to do so. Reference has been made to the housing supply, and I can assure Members that in my constituency, it is growing. The number of letterboxes and doorsteps I have to campaign on is growing at a far faster rate than I am able to cope with. There has rightly been a long-established cross-party agreement in Milton Keynes that such expansion—20,000 new houses over the next couple of decades—should be balanced development consisting not just of owner-occupied houses but of affordable housing in all its forms: some council housing, some housing association properties, some shared ownership properties, some key worker housing.

However, it is not just the numbers and the tenure of housing that is important, but the type. Under previous housing targets, the only thing that was important was the number of houses or flats built, and too many of the wrong type were constructed. There was a glut of apartments, which are fine, but the balance was out of kilter; we did not build enough family-sized dwellings. I am delighted to see some of the planning reforms introduced by this Government, backed up by the neighbourhood planning process. The Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Grantham and Stamford (Nick Boles), who is in his place, has been to Milton Keynes a number of times to see the strength of the neighbourhood planning process locally. That will underpin a more balanced and sustainable approach to housing development.

Housing has to be underpinned by good infrastructure, and this Government’s investment in projects such as East West Rail will ensure that these new houses are. Most of all, housing expansion must have a solid business base. I am delighted to report that Milton Keynes is leading the country in its economic development. New business start-ups are up by 20% over the past few years. Survey after survey from independent bodies such as Experian, Centre for Cities and the Financial Times place us at or near the top of the national growth league.

Our economic growth is also balanced: it is not just in the service sector, but in high-tech research and development. Last week, I had the great privilege of visiting Red Bull Racing, the Formula 1 team, where the level of engineering research and development is enormous. Budget measures such as the investment allowance, R&D tax credits and the seed enterprise investment scheme all underpin that growth, as do the extra grants for apprenticeships. Without a strong skills base, the economic recovery will not be permanent.

The economic recovery must be soundly based, but so must our long-term financial future. That is why the measures in the Budget on savings and investment were, for me, the most welcome. For too long we have had a culture of instant gratification: if we want something, just borrow and get it. That is not sustainable, and encouraging savings and pensions will help us get back to a secure future in the long term.

19:04

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

The Chancellor told the House last week that his policies had been vindicated. His basic case is that austerity is working so well that we need it for two Parliaments rather than one, as was planned. Of course, it is welcome that we have economic growth after so many lean years, but the inescapable fact is that the targets in the growth and spending plans set out at the beginning of this Parliament have been missed by huge margins. The cumulative effect is that cuts will last years longer than planned, and an extra £190 billion is being borrowed, compared with the figure in the plans set out after the election. If Labour had borrowed £190 billion more than was planned, I am not sure how Government Members would describe it, but I doubt whether they would be reaching for the term “success”. The return of growth cannot hide the fact that the outcome of the strategy pursued in the past four years is that one of the Government’s fiscal targets has been missed, and the other—the five-year rolling target—continues to be pushed into the future.

The increases in investment allowances are welcome, but let us be in no doubt: this is a U-turn from the Conservative manifesto and from the 2010 post-election Budget. At that time, when the Chancellor was talking about the “march of the makers”, he cut support for investment in manufacturing by £3 billion a year, and called it getting rid of complex allowances and reliefs. Rhetoric and policy were pulling in entirely different directions. I therefore welcome the U-turn, and on this point at least, rhetoric and policy are now pulling in the same direction, although needless barriers were placed in the way of investment by the policy previously pursued.

[Frank Dobson (Holborn and St Pancras) (Lab)]

Does my right hon. Friend agree that when the investment allowance was reduced, corporation tax was reduced, which did not benefit manufacturing but benefited the banks?

[Mr McFadden]

That is absolutely right: a cut in support for manufacturing was used for business as a whole.

Although it makes sense to support investment decisions through the tax system, we should not kid ourselves that investment allowances alone will be enough. The UK’s export performance has been routinely described as disappointing in report after report by the Office for Budget Responsibility. Speak to any manufacturer and they will most likely say that their key challenge is skills. If companies cannot get the right people with the right skills, they cannot innovate, they cannot meet orders in time and they cannot operate as efficiently as they want.

If the Government are really serious about supporting UK manufacturing, they should heed the call coming from their own Back Benches today to stop chasing UKIP and putting in place policies that stop the brightest students and workers from around the world coming to the UK. The Government’s arbitrary net immigration target is a barrier to our accessing the best talent in the world, and the exclusion of such talent is not in the interests of UK businesses or the economy; nor is the threat of withdrawal from our biggest export market, the EU. It is no good supporting investment decisions through the tax system with one hand, and threatening to pull away from our biggest market with the other. The stance the Government have adopted on this is a complete failure of leadership: it is party management first, and the interests of the country second. No amount of support through investment allowances would undo the damage that pulling out of our biggest market would do. I am glad that my right hon. Friend the Leader of the Opposition made the announcement he made a couple of weeks ago, exercising leadership on this issue and rejecting the option of following the Government down this path.

Perhaps enough has been said about beer and bingo in recent days. As someone whose father was a labourer and whose mother worked in a local authority children’s home, the only thing I would add is that a more serious working-class aspiration is an education system that opens up opportunity to all; social mobility that is not based on but challenges closed elites; and a path to rising living standards that has been sadly absent in recent years. I suggest to the Government that a poster based on those things might have been truer to the heart of working-class aspiration than the one that was produced.

I echo some of the sentiments expressed by my hon. Friend the Member for Sedgefield (Phil Wilson) on the pension changes. There has been an attempt to reduce this proposal to the question of whether people can be trusted with their own money. Of course people can be trusted in that way, and empowering them to make their own decisions is a good thing. It is something that we should support in politics. Choice in public services empowers people. It has worked well in the area of personal payments for social care, for example. As my hon. Friend said, however, what is in question is not trusting people but trusting the financial services sector that sells people these often complex financial products. I serve on the Treasury Select Committee, and we have seen many mis-selling scandals in recent years, ranging from endowment mortgages to payment protection insurance. We should have learned the lesson that there is often a serious information mismatch between those selling those financial products and those buying them, and that customers are not well served when things go wrong.

How do the Government propose to address that issue? Simply shouting that we should trust people with their own money is not enough, given that the PPI compensation alone has had to be set at £20 billion; and nor is it the philosophy that has been pursued on a cross-party basis for auto-enrolment into the pensions systems. If customers are to be well informed, they need good advice and alternative products in which they can trust. It is perfectly reasonable—indeed, a duty—for a responsible Opposition to ask questions about how that is to be achieved, and to point out the dangers if it is not.

The recent economic growth is welcome, but if it is being funded by consumer spending, people will rightly ask how can we ensure that it has solid foundations and is not simply the froth from another unsustainable housing boom, and how we can ensure that Britain remains engaged with the world and does not turn away from the trade and exports that we need.

19:12

[Sir Edward Garnier (Harborough) (Con)]

I agree with a certain amount of what the right hon. Member for Wolverhampton South East (Mr McFadden) has said. I am delighted to hear from him and other Opposition Members a gentle—or, in some cases, not so gentle—movement towards accepting that the saving public, the pensioners, should be allowed to choose their own vehicles to finance their retirement income.

I introduced a private Member’s Bill in 2003, entitled the Retirement Income Reform Bill. It was designed to lift the compulsion to purchase an annuity at the age of 75. The then Government opposed it, but it so happened that I got a majority of more than 100 on that Friday in the spring of 2003. These things happen on Fridays when Government Members are elsewhere. Eventually, however, the Government talked the Bill out. It was defeated on the basis that the public were unable to make their own decisions on the funding of their retirement. It was said that they would waste the money, or simply not do what the Government wanted them to do with their retirement funds. I happen to take the view that the Government are a poor parent, a poor business man and a poor manager of people’s old age. I was disappointed, but not surprised, that the then Government talked out my Bill. The number of private Members’ Bills that get talked out is too big to worry about.

I was interested to hear my right hon. Friend the Chancellor of the Exchequer announce in the Budget statement last week that he intended to liberalise the way in which we deal with pension income. I was even more interested when the shadow Secretary of State for Work and Pensions, the hon. Member for Leeds West (Rachel Reeves), announced that her party and her Front Bench were coming round to accepting that the public should be trusted with the management of their own financial affairs in retirement. She made that announcement rather half-heartedly, but she made it none the less. I think that that is practically and philosophically the right thing to do.

In the course of this afternoon, I have smelled the burning rubber of handbrake turns from Labour Back Benchers who are beginning to realise that they need to catch up with those on their Front Bench, who in turn are deciding that they need to catch up with those on our Front Bench and with public opinion that is in favour of greater liberalisation of the pension and retirement income system. The fact that criticism has been made of the banking system and of the financial services sector does not undermine the practical and philosophical benefits of liberalising the system.

[Frank Dobson]

I agree that those criticisms do not undermine the philosophical side of things, but it is the practicalities that people are bothered about. Most of the concern arises from the fact that the various institutions have been giving people a bad deal on annuities and that, unless they actually go out of business, they are likely to be offering the products that are the alternative to annuities. Does the hon. and learned Gentleman really believe that those self-same institutions will be offering people a good bargain, if they have not done so in the past?

[Sir Edward Garnier]

Yes, I do. I find that view deeply depressing, although not in the least surprising. The right hon. Gentleman is a good old-fashioned socialist and I respect him for that. I wish that more of his colleagues were as clear in their views as he is. I happen to take the view, however, that Mr and Mrs Retirement Person should be allowed to do what they like with their pension funds and that if the financial services sector misconducts itself, we should prosecute it or take regulatory action against it. We should not act to prevent the vast majority of individuals from doing what they think best for their financial future, either pre-retirement or post-retirement, simply because we fear that there might be one or two bad hats in the financial services sector. If those of us who are about to retire wish to invest our pension funds in property or in stocks and shares—

[Mr McFadden]

rose—

[Sir Edward Garnier]

I fear that I am limited to one free hit, and the right hon. Gentleman may not have one. Perhaps he should see his financial adviser instead.

If those of us who are about to retire wish to invest our pension funds in property or in stocks and shares—or in buying an annuity—let us do it. Let us be allowed to make informed, adult decisions. Yes of course we must build protections into the system to prevent people from being mistreated or misled, as the Chancellor made clear in his Budget statement, but we must allow them to make their decisions from a position of knowledge. For goodness’ sake, let us not imagine that Mr Whitehall Man, or even Mr Labour Cabinet Minister, is better able than anyone else to decide how I should lead my life. I really object to that form of nanny state—

[Bill Wiggin (North Herefordshire) (Con)]

Quite right!

[Sir Edward Garnier]

I used that expression in order to encourage my hon. Friend. I do not like the kind of jargon that we are forced to use in these short, time-limited debates.

If there is one thing in the Budget that we ought to appreciate, it is the liberalisation of the pension and old-age retirement income. My private Member’s Bill was defeated by the then Government. I think that Ruth Kelly was the Treasury Minister who organised its destruction. I hope that, were she here in the House now, she would welcome the statement made by my right hon. Friend the Chancellor last week. I hope, too, that Opposition Members will come to realise that they need to catch up with public opinion and to acknowledge the desire of all people, whether they vote Labour or Conservative—I dare say one or two might even vote Liberal Democrat—to support their own independence and to make their own decisions. I congratulate the Chancellor and I wish him all good speed with this measure.

17:12

[Angela Smith (Penistone and Stocksbridge) (Lab)]

I do not intend to reflect on the broader points about the Budget in relation to deficit reduction and borrowing figures, because my hon. Friends have articulately made those points this evening. My right hon. Friend the Member for Wolverhampton South East (Mr McFadden) did so particularly well in an excellent contribution. I wish to focus on the package of support that the Chancellor promised energy-intensive industries last week.

Before I discuss that, I wish to comment on how the Chancellor intends to balance the books in relation to his tax proposals. The Institute for Fiscal Studies has already raised that question, because the Budget is, of course, not quite as neutral as it looked at first glance. The measures on personal tax allowances and the doubling of relief for business investment, welcome as that is—I do support it—are apparently paid for by forecast savings within the budget from Whitehall itself, but they are not identified clearly in the Red Book. In addition, these things are apparently to be paid for by extra income from measures to reduce tax avoidance. Paul Johnson of the IFS has said:

“A set of definite and permanent tax cuts look to have been matched by more unspecified spending cuts, some changes in the timing of tax receipts, and our old friend tax avoidance measures.”

It is incumbent on the Government to explain to the House just how robust their plans are for reducing tax avoidance and, just as importantly, to give us clear details about exactly how these spending cuts will be made to balance the books and pay for those increases in the personal allowances. It is important that the House is made aware of exactly where the money is going to come from to pay for all this, and it is just showing respect for the House to set out those details.

I wish to discuss in detail the measures designed to help foundation industries, particularly those on the carbon floor price and the renewables obligation. The measures are welcome; my constituency is home to Tata Steel, ceramics companies, British Glass and the paper industry, in the form of SCA, so it is incredibly important to my local economy that these measures go through. However, we must put on the record the fact that the carbon floor price and its freezing from 2016 reflects changes to a policy that was introduced by the Chancellor and which became operational only a year ago. So we are, in effect, seeing a reduction in a tax that was introduced by this Government and which is already levying significant damage to manufacturing industry. It was a unilateral tax not felt anywhere else in Europe. Even when the freeze takes effect in 2016, UK manufacturing will still be paying more for carbon than is paid in any other country in the European Union. Even with the levy freeze in 2016, INEOS at Runcorn will face annual costs of £4 million as a result of the carbon floor price. With UK manufacturers facing wholesale prices for electricity 45% higher than those faced in France and 70% higher than those faced in Germany, the Government have to commit—I would like this from Ministers tonight—to ongoing support for foundation industries in this country, because of course the game is not over. The work that needs to be done to make manufacturing industry cost competitive is not finished, and we need to see much more from the Government. These industries are crucial for jobs and wealth creation in the future.

I wish to make a couple of other brief points. First, we need to hear whether the backdating of the compensation already announced for the carbon floor price will actually be decided. The decision date has already been delayed to 9 April and manufacturing deserves clarity about it. Secondly, we need to know the extent to which compensation for both the carbon floor price and the renewables obligation levies will apply: how many sectors of manufacturing industry will be included in that package? We know that the European Union state aid guidelines are restricting the number of industries that can benefit from that compensation. I want Ministers to say whether they will commit to going to the Commission to argue rigorously for an extension to the number of sectors that will be included in that compensation package. The points made about the EU were relevant; we need to see the Government batting for UK manufacturing within the EU and trying to ensure that we get as comprehensive a compensation package as possible, agreed within the Commission as soon as possible.

19:25

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

It is a pleasure to speak in this year’s Budget debate and a special pleasure to follow the hon. Member for Penistone and Stocksbridge (Angela Smith), who spoke with such expertise, knowledge and passion about the future of energy-intensive industries. I am delighted to hear that she welcomes the thrust of what the Chancellor is proposing in his Budget. I just wish that all Labour Members had that same attitude, because some forget what it was like four years ago, when this country was on its knees: our families were being squeezed by high unemployment and falling wages; our high streets had been devastated by the biggest dip in consumer spending in a generation; and our young people found they had the will and passion to succeed, but not the opportunities.

What a difference four years can make: unemployment is down across the country—in Chester it has fallen from 3.5% at the time of the last general election to just 2.2% now; our small businesses are reviving—locally, we have seen new business start-ups increase by 300%; and our young people are starting to get their hope back. In Chester, youth unemployment has fallen from 610 in 2009 to just 295 today—it has more than halved. We have seen a record number of apprenticeships, with 870 created in Chester in the past year alone—that is three times as many as were being created under the last Government. People know what they get with a Conservative-led Government: more jobs; great opportunities; and a better future for our country and its people. It is not just in this place that we are helping hard-working people.

[Lilian Greenwood (Nottingham South) (Lab)]

If the hon. Gentleman is so confident that things are so much better under this Government, can he explain why in my constituency the claimant count for over-25s has increased from 185 in May 2010 to 450 the last month and why for young people it has increased from 100 in May 2010 to 145, peaking at 205 last March?

[Stephen Mosley]

I would hope that the hon. Lady stands up, champions her constituency and goes to employers and investors saying, “Look this is what we have to offer. Come and invest here. Come and create jobs here. Come and employ people here. We want you.” My constituency is great—Chester is great—and I want to sell it the whole time; we have jobs fairs and business fairs, and we get the investment and the jobs— I am proud of that.

But it is not just in this place that Conservatives are doing a good job: up and down the country, in town halls and city halls, our councillors are freezing council tax, and in some cases cutting it, while protecting front-line services. My local Conservative-run Cheshire West and Chester council is doing all it can to help my constituents, and it is freezing council tax for the next two years. Over the five years of this Parliament, council tax payers in Chester will have seen just a 1.65% rise in their council tax bill, which of course compares massively favourably with what happened under the previous Government, when council tax bills more than doubled. This means that band D council tax payers in Chester are £131 a year better off. It is this Government who have given my local council the funds to freeze council tax. My council knows that it has to do more than always look to central Government for more money and that the way to improve local services is to make them more efficient. That is why it is now sharing its back-room services with other local authorities. A recent deal with Labour-run Wirral borough council will see council tax payers in West Cheshire and Wirral saving some £69 million. Management costs have been cut by 33%, saving tax payers £3.2 million. At the same time the council is improving local services, as can been seen in its fostering and adoption services. Working with two more Labour councils, Halton and Knowsley, it is sharing expertise, experience and costs to improve the services offered to children. Adoption figures are now the best in the north-west, with the time taken to place children half the national average.

By making local services more efficient, the council is making them more effective as well. It is using the savings to keep taxes low and to invest in our residents and in Chester's future. Work is currently progressing on a new £37.5 million theatre, replacing the old Gateway theatre that was shamefully closed by Labour in 2007. I was therefore delighted to hear the additional support that the Chancellor announced for regional theatre in his Budget on Wednesday. Cheshire West and Chester will be knocking on his door.

I was also delighted to hear about the new £20 million to support our cathedrals in this anniversary year of the start of the first world war. Chester cathedral stands at the heart of our beautiful city. It was recently voted by American readers of USA Today the fifth prettiest city in Europe. The cathedral also hosts memorials, and has a memorial garden, to the soldiers of the Cheshire Regiment, 8,420 of whom died serving our country between 1914 and 1918.

On 5 April, the new tourist attraction Cathedral at Height will open, allowing people to climb to the top of the cathedral tower to see the panoramic views across the city and the inside of the cathedral. The cathedral has massive plans to boost the Chester visitor offering, and it will be keen to explore the opportunities that this new money provides.

As we reflect on the Chancellor’s Budget, let us look at the reality for my constituents. A four-year transformation of our country’s economy has delivered more jobs, better services and a council tax freeze. Every step of the way, Labour has opposed our long-term economic plan that is making all that possible. What a clear choice for the people of Britain. They can have more borrowing, more taxes and more debt from the Labour party, or more pounds in their pockets with the Conservatives. Bring on the election!

19:32

[Dr Alan Whitehead (Southampton, Test) (Lab)]

My constituents will be very disappointed about a number of things that were not in the Budget—the lack of real support for new house-building, for young people and long-term jobs, and for small businesses in my constituency. Furthermore, there is no break in the cloud as far as the continued savage attacks on local government services are concerned.

However, I want to talk about something that clearly is in the Budget, and has been in Budgets for the past two or three years. As my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) mentioned, it is a policy that has nothing to do with what happened under the previous Labour Government; I am talking about the Chancellor’s own policy—or policy mess—on carbon price support.

When the Chancellor announced that he was freezing the carbon price support at £18 to about 2020, I was not too upset; in fact, I was interested to see this latest development in his astonishing zigzag policy. After all, in the 2011 Budget, when the Chancellor invented that particular policy, he said that the carbon price support was designed to

“encourage further investment in low-carbon generation by providing greater support and certainty to the carbon price.”

The figure was revised wildly upwards in Budget 2013, and then radically downwards in Budget 2014. The Chancellor’s steering of the carbon price support, which started last April and supposedly goes on to 2020, has been rather more “Keystone Cops” than keystone policy.

Essentially, support for energy intensive industries, which my hon. Friend the Member for Penistone and Stocksbridge mentioned, is coming out of the money raised from the policy being steered wildly upwards in Budget 2011 and onwards. I have always thought that the right thing to do is to support the EU emissions trading system and get it into good order for the long term. However, when the level was revised wildly upwards in Budget 2013, as a result of the then perceived crash and the possible long-term inertness of the EU ETS, I thought that that level of unilateral levy was likely to be unsustainable.

What this policy mess demonstrates is that we cannot do things unilaterally and in isolation without there being consequences. After all, in the Energy Bill, the carbon price floor was prayed in aid as giving out a long-term signal that would render changes in the emissions performance standard superfluous. Even at the end of the Energy Bill, when the Opposition moved an amendment to include existing coal-fired power stations in the EPS, the same argument was used—the floor price would have long-term continuity, which would mean that we could rely on it as an instrument to ensure that there would be little or no unabated coal in the system in the 2020s. We did not need any other instruments.

Now, with the freeze on carbon price support, it is likely that coal will trade allowances far further forward into 2020, and measures in the Budget to support carbon capture and storage are, ironically, less likely to be taken up as a result of that calculation. It is also likely that the reliance that gas has put on the consequences of carbon price support to make coal prices over the period less competitive will mean that advance gas investment will be dampened, which has consequences for the extent to which additional funding for the capacity payment market may also be necessary. It is an additional amount of money coming on the back of trying to make sure that there is less money available over the period of this particular policy.

Furthermore, it is not really true that, as the Red Book says, the buying power of the levy control framework, which sets out the amount of support available for low carbon and renewable investment until 2020, will be unaffected by other Budget decisions. It directly means that renewable obligation buying power, part of the levy control framework system, will be changed because the obligation was based originally on 2011 assumptions about the level of carbon price over the period. The relationship between the strike price and the reference price for contracts for difference will change, which means that we will be paying more out of a fixed fund to make up the difference between strike and reference price. The buying power of the levy control framework will certainly be reduced and there will be a smaller quantum support to go into new entrant projects for renewable energy over the period.

The Government should state to the House what they consider to be the consequences of their decision on carbon price support and set out measures that will need to go alongside it to maintain the position that they themselves had previously said was dependent on the trajectory of the carbon price. Above all, what all this shows is that non-joined-up government has consequences.

19:39

[Gareth Johnson (Dartford) (Con)]

I want to discuss the proposed garden city at Ebbsfleet in my constituency. Provided that certain assurances and safeguards are put in place, it will be welcomed by the local people.

Ebbsfleet is as much a concept as a place where we can build houses and development can take place. The proposal is not new; there have been other attempts to build houses in the Ebbsfleet valley. The first proposal was made back in 1996, and seven years ago Dartford council granted planning permission for thousands of homes to be built. What is new this time is the creation of the development corporation and, crucially, up to £200 million of investment in infrastructure in the area to complement the house building. The scheme is bold and forward thinking and, if implemented correctly, will enhance the local area and help ease some of the pressure on housing in the south-east.

The former Housing Minister, my right hon. Friend the Member for Welwyn Hatfield (Grant Shapps), endeavoured to kick-start the housing project by getting all parties around the table, but to no avail. For some reason, landowners have always been reluctant to get on with building houses in the area and consequently the Ebbsfleet valley is now a muddy quarry. The Chancellor suggested in his Budget that fewer than 300 houses had been built in the area, but I would put the figure far lower. The experience has been frustrating, so I am pleased that we are witnessing the beginning of some action on the site.

The development is on a brownfield area some 20 miles from this Chamber and represents a great opportunity to bring jobs and investment to my constituency. It is next to the High Speed 1 line station at Ebbsfleet, 17 minutes from central London and less than two hours from both Paris and Brussels. It is also adjacent to some of the most beautiful countryside in Kent and to the villages of Betsham and Southfleet, which must be protected under the scheme. I am pleased that reassurance was given to my hon. Friend the Member for Gravesham (Mr Holloway) and me that the green belt area surrounding Ebbsfleet garden city will be protected from any building under the proposed development.

It is also crucial that local people form part of the decision-making process. There must be a role for Dartford council, which has proactively tried to make the development happen in recent years. There must be opportunities for local people to input their thoughts and suggestions, as the concept simply will not work if the development is imposed on local residents. The Red Book makes it clear that local residents will be involved in the consultation process for any decisions made by the development corporation, which is a welcome announcement.

The importance of infrastructure’s complementing house building has not been lost on local residents or the Government. That is why the £200 million figure cited by the Chancellor is so important. Families will not move to a muddy quarry without transport infrastructure, school places or medical provision. The development needs to work with the residents and the local council to be successful, but it must also work with the private sector. The site is adjacent to the Bluewater retail complex, which views the announcement as a positive step, and it is also next to a proposed Paramount theme park, the developers of which have also welcomed the idea.

The announcement is pro-enterprise, bold and ambitious. It will create thousands of jobs in the area, help alleviate some of the housing pressures in the south-east and kick-start a faltering project. The possibilities are endless. I have always recognised the huge potential in the area, which, in my biased opinion, adds to what makes it the area with the most exciting prospects in the country.

19:44

[Roberta Blackman-Woods (City of Durham) (Lab)]

I hope that the hon. Member for Dartford (Gareth Johnson) gets a genuine garden city. The 15,000 houses are welcome, although the number has reduced since the original plans, but they need to be underpinned by garden city principles if Ebbsfleet is going to be a garden city.

There are some things to be welcomed in the Budget, such as the increase in the personal tax allowance, the rise in the tax-free ISA allowance and the Government’s decision to expand the tax on residential properties worth more than £2 million to those worth more than £500,000. Overall, however, the Budget delivers very little for people in my constituency.

The key question for people across Durham and the north-east is whether they are better off than they were when the coalition came to power back in 2010. For the overwhelming majority of my constituents, the answer would be a resounding no. Julia Unwin, chief executive of the Joseph Rowntree Foundation, said:

“This is a Budget for the people who already have, not for the people who need to benefit most from the return to growth. It is a lost opportunity for the 13 million people…who need active intervention to tackle the structural barriers that keep them in poverty.

People on low incomes are unlikely to see the welcome benefits of growth unless there is targeted help with household and housing costs, with child care and with the nature of jobs and training. The expense and inefficiency of high levels of poverty continue to put a drag on growth.”

I agree with her and would emphasise that neither the Chancellor nor any Government Member today has shown any recognition of the need to rebalance growth in our economy. Significantly, there is a real need to reduce regional inequalities.

Many people in my constituency simply earn too little to benefit from the Chancellor’s tax cuts and can only dream of earning the £1,250 a month that can now be saved tax-free in ISAs, let alone being able to save that amount.

People in the north-east and my constituency hoped that the Chancellor would offer help to do something about the fact that they experience the highest unemployment levels in England. Last month, unemployment in my constituency fell by just 17. Although I welcome that fall, the Government must do more to get people back into work. I have found the Government’s rather triumphalist approach to unemployment quite disturbing. Worryingly, in my constituency youth unemployment has risen in the past two months and more than 900,000 young people are out of work across the country. That is not something to celebrate. It is clear that tens of thousands of young people are not experiencing any recovery at all.

The Government should have used last week’s Budget to introduce Labour’s compulsory jobs guarantee to get young people and the long-term unemployed off benefits and back to work. The compulsory jobs guarantee would be funded by a repeat of Labour’s successful tax on bank bonuses and by restricting pensions tax relief for people earning more than £150,000.

We know that working people are already £1,600 worse off under the coalition Government than they were before the general election, but the situation is exacerbated in the north-east by wages that are about £50 a week less than the UK average and almost £200 a week less than wages in London. Beth Farhat, regional secretary of the northern TUC, has criticised the Budget for failing to tackle the living standards crisis that is the fundamental concern of workers across our region and for the Chancellor’s failure to show any real support for the living wage or fair pay. According to the TUC, north-east workers are much worse off in real terms, and that is equivalent to about 23 average weekly shops, a year’s worth of energy bills for the average household or 88 tanks of fuel.

The regional secretary of the northern TUC has also questioned the quality of jobs being created in the region. Many are precarious and based on zero-hours contracts. She has also drawn attention to the fact that eight out of 10 private sector jobs that have been created have been in the south of England. The few jobs that are being created in the north-east are predominantly in low-paid sectors and leave many families on low incomes struggling to cope with the rising cost of living and increasingly reliant on payday loan companies or food banks. That is unacceptable and it is particularly worrying that the Government have brought forward no strategies to invest in the north-east of England.

The regional growth fund is not strategic. It is not directed towards areas of greatest need or the parts of the north-east’s economy that are most likely to grow. We need from the Government an approach that will direct funds to the areas of greatest need. To respond to the hon. Member for City of Chester (Stephen Mosley), it is not the case that we are not championing our region, because many people in my area are highly skilled and would welcome the opportunity to work, but what they need is support from the Government, for them and for industrial growth in the area.

19:50

[Bill Wiggin (North Herefordshire) (Con)]

I am sorry to be following the hon. Member for City of Durham (Roberta Blackman-Woods) because there are good things in the Budget. She should encourage her constituents to enjoy—responsibly, of course—cider and beer.

Wednesday’s Budget was the latest in a series of announcements from which my constituents will directly benefit. I strongly welcome the Chancellor’s measures to assist the cider industry. I was delighted by the removal of the escalator and the freezing of duty on almost all ciders, which will provide much needed relief for an industry that represents a real success story for British business. Cider production is powered by British raw materials and British workers making a product for British consumers. The average pint will now be 3p lower than under Labour’s previous proposals.

I am glad that the Chancellor recognises that this has been a testing time for the 7,500 people employed by the cider industry. The impact of heavy flooding on this year’s crop of cider apples is yet to be seen, but I know that many fear the worst because prosperous growing areas were some of the worst hit by the floods. I hope that we will see continued support for this industry, which is one of the biggest employers in my constituency and an essential contributor to the pub sector.

North Herefordshire boasts 132 pubs and 11 breweries. The pub sector is a great supporter of local communities. It invests approximately £1.1 million locally and provides various employment opportunities, including 254 direct jobs for 16 to 24-year-olds.

The fact that pubs and many other businesses in North Herefordshire are taking on new employees is a clear indication that our long-term economic plan is working. Beer is 8p a pint cheaper than it would have been under the previous Labour Government’s plans. In February, the number of unemployed claimants in North Herefordshire was 862, which is 282 fewer than in February 2013. That means that 282 people are now working thanks to the Government’s measures.

A further testament to progress is the success that the apprenticeship scheme is achieving in rural businesses. The benefit brought to local businesses by new apprentices in North Herefordshire has been a boost of more than £1.7 million in the last year. The benefits from the scheme are twofold: each business that hires an apprentice experiences an average benefit of £2,207; and youth unemployment in North Herefordshire is down, with just 250 18 to 24-year-old jobseeker’s allowance claimants.

I also welcomed the news from the Chancellor of the doubling of the annual investment allowance, which will be warmly welcomed by the farming community. Farming is a highly intensive industry that requires expensive specialist gear. I hope that the announcement will provide an incentive for investment in equipment so that British farms can remain as efficient as our competitors.

Despite those improvements, I appreciate the frustration of farmers in my constituency who still feel that they face an uphill struggle for similar funding to that enjoyed by urban businesses. Their unincorporated businesses are not able to benefit from the Chancellor’s corporation tax reduction. I have previously voiced my concerns in the House about the raw deal that rural communities receive on Government funding. Sparsity of population makes it far more expensive to provide services in areas such as North Herefordshire, yet urban areas still receive 50% more funding per head. The Government need to recognise there that is still a disparity in the calculation of local government finance but, to give credit where it is due, I am delighted that the disparity in school funding has been addressed. The change to allocating funds on the basis of individual schools’ needs and character is a common-sense measure that is greatly to be welcomed. The previous Labour Government based funding only on historical levels of spending, and the fact that that mechanism was allowed to continue for so long was detrimental to thousands of pupils in my constituency. However, our schools will now receive £2.6 million more per school year, so I thank my colleagues who have campaigned hard on this, especially my hon. Friend the Member for Worcester (Mr Walker). Unfortunately, in several other ways, rural communities still require far more Government funding to provide essential services.

Road maintenance is a key concern for all rural constituencies and I know that such areas will be delighted with the extra £200 million that has been allocated to that in the Budget. Potholes are a menace and a danger, especially to those who live in isolated areas. The extent of the damage to roads in North Herefordshire is reflected by the fact that it received the highest allocation of repair funds in the west midlands. The damage has been aggravated this winter, but the overall standard of rural roads is very poor. I hope that the Government will maintain the new funding to address widespread pothole problems. I also look forward to the publication in the near future of the Government’s guidance on council applications for more highways funding.

I have set out just a snapshot of how the Government have made positive progress for my constituents, including the Exchequer Secretary’s mother-in-law. The Budget continues the already good progress that has been made to address the imbalance between rural and urban communities. I urge the Government to continue to bear in mind the specific needs of our hard-working rural communities when they allocate future funds. We cannot afford to allow our vital countryside communities to be ignored and underfunded purely because of their rural location.

19:56

[Frank Dobson (Holborn and St Pancras) (Lab)]

I wish to speak about a huge sum that was not mentioned in the Budget statement, but that will loom large over Chancellors of the Exchequer in years to come: the £50 billion that is committed to the building of High Speed 2. To put that amount in perspective, it is about what we spend on our entire school system each year.

Both the Higgins and Deighton reports on HS2, which were recently produced for the Government, demonstrate that, whatever was wrong with the Government’s original plans, they were amateurish and ill thought out. Most importantly of all, they show that massive additional investment will be needed in the areas that HS2 is supposed to serve if its promised benefits are to come about. The Government have agreed to a huge saving by abandoning the preposterous proposal of a High Speed 2-High Speed 1 link. That link, which would have run through my constituency, was opposed by local people and businesses, as well as Transport for London, the rail freight industry and the Institution of Civil Engineers, but it is still included in the hybrid Bill and was supported by the House when it voted through the paving Bill. Fortunately, now that the Higgins report has said, “Dump it,” the Secretary of State has, to his credit, agreed to dump the link, but I wonder whether any of the people and businesses that spent a lot of time, effort and money opposing the idea will get any compensation.

The other proposition that affects my area involves the redevelopment of Euston station and its use as the terminus for HS2. Long before HS2 was dreamed up, there was an outline proposal to redevelop Euston station, which is awful, on its existing footprint. That proposal would have involved building more than 1,000 new homes. HS2 originally said, “We could incorporate that in our scheme and it would be 1,500 new homes,” but then the masterminds behind the proposition concluded that as the cost of the scheme had increased from £1.2 billion to £2 billion, it was unaffordable and they would drop all the planning gain and extra housing and industrial premises, and replace that with a lean-to shed approach. However, while speaking in Hong Kong, the Chancellor of the Exchequer suggested that there should be a reversion to something like the original scheme, which is what the Government now propose. The proposal is still awful, but it is better than what is included in the hybrid Bill.

Other investment will be needed beyond the budget for HS2 if its benefits are to flow. According to HS2 itself, Euston will not be able to cope with the extra passengers and it will therefore be necessary to build—God help us—Crossrail 2, at a cost of anything between £16 billion and £20 billion, but that is not included in anyone’s budget at the moment. So much for the idea that HS2 will transfer transport spending from London to the north, because although that has already been identified as necessary expenditure, similar expenditure will be necessary in Birmingham, Manchester, Sheffield, Leeds and in the east midlands if the benefits from HS2 are to flow. There is no money in the Chancellor’s Budget for that investment, nor is there money in anybody else’s budget.

My constituents’ great fear now is that, after the announcement that there will be a huge redevelopment at Euston, all sorts of property speculating vultures will descend and want to build a huge office city there and not provide the housing that people desperately need. When we consider that the biggest problem in London for Londoners is the fact that average Londoners are being priced out of the city—and average Camden dwellers are being priced out of Camden—we want to make sure that if the redevelopment of Euston goes ahead, it includes housing that ordinary people can afford and does not include a lot of speculative blocks of penthouses to be bought, but not occupied, by Russian oligarchs. They are the people who are driving up the cost of housing in this country, and as a final offer to the Government, I suggest that if they want a sanction, they should stop the oligarchs buying residential property and take back what the oligarchs have bought up to now if they are not occupying it.

20:02

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

It is a pleasure to follow the right hon. Member for Holborn and St Pancras (Frank Dobson).

Constituents in Romsey and Southampton North have welcomed what they regard as an excellent Budget, aimed at improving the lot of doers, makers, savers and hard-working lower earners. It was a Budget that raised the income tax threshold and further shifted the burden for Government spending away from those who can afford it least and on to those who can afford it most.

The Budget also provided help to manufacturers struggling with the costs of energy, including companies in my constituency such as Michelmersh bricks, which welcomed the £7 billion support package that my right hon. Friend the Chancellor announced. Those of my constituents who enjoy a pint also noted the 1p reduction in beer duty. I join members of the all-party save the pub group and hope that cut will be passed on to the consumer, not kept by the pub companies. Those in Romsey and Southampton North who drive a car are relieved that the hated fuel duty escalator was abolished last year and that we have seen a further freeze in fuel duty, meaning a saving of 20%, given the rises that would have taken place under the Labour party.

I was delighted to hear my right hon. Friend’s announcement on changes to annuities. His proposal struck me as a policy that is as radical as the right-to-buy scheme was in the 1980s. That scheme saw the largest ever transfer of wealth from the state to the individual and enabled people to take control of their future and wealth through property ownership. This policy does exactly the same with taxed income that responsible people have chosen to save, yet are restricted from accessing because of the hand of the state. I have always believed that if someone has been responsible enough to save for their own retirement, they should have the absolute right to access their money as they wish and to reinvest or spend it as they see fit.

On the subject of pensioners, Hampshire sees 1,000 more people every year reach the age of 80, and the health and social care requirements of an ageing population are a challenge faced both by central and local Government. Local authorities such as Hampshire county council face significant challenges. The Care Bill, which I welcome, places an additional burden on local government, and estimates indicate that just assessing the eligibility of Hampshire’s residents for the new provisions of the Care Bill will run into many millions of pounds. That is not money delivered in front-line services to the elderly, but merely to assess whether they are eligible. Even for a prudent local council, that bill is large and unexpected. Counties such as Hampshire currently have a significant number of self-funders—in the region of 60%—and under the terms of the Care Bill, all of those might apply to the council to see whether they are eligible.

I am relieved that the Budget has not led to further reductions in central Government funding for local authorities, but there is no doubt that the next two years will be tough. Particularly in Romsey and Southampton North, there has been a significant problem with flooding over the past few months—perhaps not on the scale of Somerset or the Thames valley, but it is none the less devastating for the affected residents and businesses.

We know assistance is available, but what Romsey residents want to know, and quickly, is what measures will be put in place to prevent a recurrence in future. Flood defence measures do not come cheap, nor are they easily engineered and installed. We have to be as alert to inland flooding as to coastal flooding and remember that people’s lives and homes do not fall easily into mathematical equations to assess the wider benefit. I suspect that the burden of the winter’s floods will fall on local government, such as the careful, prudent Conservative authorities of Test Valley and Hampshire, and I seek reassurance from the Treasury that they will not be left to shoulder that burden alone.

That brings me to potholes. I welcome the additional funding for pothole repair, but the estimate for Hampshire’s roads is that this winter’s weather will have brought about a bill of £35 million extra, even before the water level has gone down completely and prior to any assessment of damage to bridges. I welcome the £11.5 million that the Chancellor has already committed to Hampshire and I am grateful to him for making £200 million more available in the pothole challenge fund, which local authorities are invited to bid for. I sincerely hope that he will look favourably on an application from Hampshire.

20:06

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

What a pleasure to follow such a well delivered speech. I only wish that the hon. Member for Romsey and Southampton North (Caroline Nokes) had more time so that she could go into more detail about the reaction of pub dwellers in Romsey or Southampton North when she went in and said, “We have an amazing new offer: buy 300 pints and get one free!” I am sure they were absolutely overwhelmed.

We were told that this Budget would be for savers, and yet the Office for Budget Responsibility says that it will be followed by a sharp drop in the savings ratio. It was supposed to be a Budget for exporters, but the OBR predicts that export volume growth will be less than half what is needed by the Chancellor to meet his targets. It was also supposed to a Budget that learned lessons from the past, but estimates of household debt have now been revised up to near the levels they were at before the global crash. This is not a Budget for the long term. They are not a Government who are thinking of the country’s long-term future. They are an Administration doing, I am afraid, what Tory Administrations always do: trying to manufacture a pre-election splurge, whatever the long-term consequences, and rarely, if ever, intervening in a market, regardless of whether that market happens to be working in the interests of the country and its citizens.

This Government came to power and delayed infrastructure decisions. They told skilled manufacturing workers in sectors such as defence that Ministers were only really interested in buying off the shelf from abroad. They may have changed their tune now, but the world is moving so fast and we will rue these years of stagnation. I am afraid that the ambition remains limited and the delivery too often feeble. Where there is investment, there is little sign that the Government are willing to act to lever in the maximum possible benefit to the community.

In my constituency and in those neighbouring it in south and west Cumbria, we are about to see a scale of industrial investment in the area that will exceed that of the 2012 Olympic games. That includes new civil nuclear capacity; GlaxoSmithKline’s first factory in the UK for 40 years; and the work to enable Barrow shipyard to build the next generation of nuclear submarines. All those are extremely welcome and are a result of the consensus that we forged in government, which—thank goodness—at least one of the Government parties is now on board with taking forward.

When we saw high levels of investment in the area during the 1980s, that coincided with a time of growing divisions in our communities—wealth for a few, destitution for many others. The investment came via a Government who celebrated the concept of trickle-down economics. Yes, Barrow grew in the 1980s, but so did hardship and hopelessness. When recession and mass redundancies came to the shipyard on their watch the last time, it was truly devastating. We still bear the scars of those days.

Look at the parallel now, when rising employment sits alongside an explosion of food banks and desperation. With Olympic-scale investment coming our way, the Government should be doing so much more in Cumbria, helping us to ensure that those massive projects can be delivered simultaneously, which is a big challenge in itself, and, equally importantly, that they will lead to sustained jobs, skills and prosperity for as many people as possible. Unfortunately, there is little sign of that so far, and the expertise that would have been best placed to do much of the work—the Northwest regional development agency—is long gone.

Therefore, as the Government parties stand back, we will step in. My hon. Friend the Member for Copeland (Mr Reed) and I will work with Cumbria’s local enterprise partnership to bring together the employers, investors, schools, colleges and councils to work our how best to make this succeed for all of us for the long term, and to do better than the last time they were in charge.

The Chancellor needed to up his game on long-term infrastructure planning in this Budget, but there was precious little sign of that. He needed to show that he understood how Governments of all colours had damaged the country with stop-start infrastructure spending. Rather than being determined to micro-manage every mile of road in the Budget statement, a truly radical Chancellor would take have taken infrastructure planning off the political merry-go-round. We need a binding, independent body that can lock in a long-term infrastructure plan, making it much harder for today’s—I am sorry to have to break it to them—transient Ministers to unpick.

Instead, we have had the inevitable re-announcement of the ever-hardy perennial, the prospective garden city in Ebbsfleet, but nothing that will fundamentally solve our housing crisis. This Budget was as great a missed opportunity as much of the past four years has been. The Prime Minister can tweet the rhetoric, but he and his Chancellor are just not up to the job. It will be up to us to put that right.

20:12

[Mark Pawsey (Rugby) (Con)]

It is a pleasure to follow the hon. Member for Barrow and Furness (John Woodcock), although he seemed unable to find a single positive thing to say about the Budget, notwithstanding the remarks of his colleagues about the support for energy-intensive industries. That is in complete contrast to the country as a whole because, as the opinion polls published over the weekend indicate, the general public seem quite supportive of what we are doing.

Rugby is the fastest growing area in the west midlands, with a very positive attitude to growth and development. My constituents will benefit substantially from our long-term economic plan. They are keen to look at the measures in the Budget that will contribute to growth, which are very welcome. The British Chambers of Commerce stated:

“Budget 2014 passes the business test.”

The Federation of Small Businesses stated that its measures

“will maintain increasing confidence in the construction sector”.

The Home Builders Federation called it a

“Budget that builds for the future”.

The Federation of Master Builders stated:

“Government intervention to finance small house builders welcomed”.

The Building Societies Association referred to

“welcome proposals to boost house building, especially Help to Buy.”

That sounds to me like a pretty ringing endorsement for the measures the Chancellor announced last week.

Many of my constituents have already benefited from the Help to Buy equity loan scheme and will be pleased to see it being extended to 2020. It was announced today that already 17,000 people have been able to realise the dream of owning their own home. In my constituency 75 loans have already been completed and there are 77 “scheduled out” sales, meaning potential completed loans following the reservation of a property in the scheme. That is the 18th highest level in the country. It is enabling people to start on the housing ladder with a 5% deposit. Many of those buyers would otherwise still be renting.

In Rugby we are proudly building more homes, with 320 completions last year. Work is currently taking place on development sites across my constituency, the largest being Eden park, where 1,400 new homes are coming forward, with outline consent granted in the last couple of months for a sustainable urban extension on the old BT mast site. The continuation of Help to Buy will speed up the site’s development. It will not be built overnight—it is anticipated that it will take over 15 years—but it will reduce the build-out time, as well as providing many of the houses our country needs.

However, the majority of new build is now done by major-volume house builders, as smaller builders were hit hardest by the downturn, so I am rather disappointed that the Chancellor did not accept recommendations to reduce the VAT rate on improvements and extensions, which attract VAT at the standard rate while new build attracts zero VAT. That work is often carried out by smaller, family-owned building companies, which have been hardest hit over the past few years. I was therefore very pleased to see the £500 million builders finance fund, which will enable small builders to deliver 15,000 housing units. The market share of 100-unit builders has halved since 1995, from 30% to 14% of the market. This is a very welcome incentive for that sector.

I was delighted by the proposal for Ebbsfleet, and there is such support within the community there. We heard my hon. Friend the Member for Dartford (Gareth Johnson), who represents Ebbsfleet, speak about the virtues of the development site. The critical difference between that proposal and the previous Government’s eco-towns is that they failed through a lack of local support. In Ebbsfleet the development is being welcomed by local people. It is entirely right for the Government to bring forward incentives for local authorities to consider how garden city proposals, such as those in Letchworth and Welwyn garden city, can be brought forward. At a time when the national planning policy framework sets out the principle that planning is no longer something that people see as being done to them, but something in which they have a real say, it is vital that any proposals for substantial new development have real public support and consensus.

I welcome the pensions reform, which means that pensioners will finally be treated as adults, but there are those who are concerned that use of the pension pot might encourage people to invest in buy-to-let properties or to support the next generation to buy their homes, which will add upward pressure on house prices. Opposition Members talk about a bubble, but we cannot have a bubble when, as today’s BBC report reminds us, 8% of households in the UK are in negative equity, and the figure rises to 16% in the north of England. We would need a very substantial rise in house prices across the country for there to be any form of problem.

I welcome the support that the Government are bringing forward for energy-intensive industries, which of course will support manufacturing, including cement manufacturing, which is so important in my constituency. We have seen a Budget that is good for business, good for development and good for individuals across our country.

20:18

[Mr Iain Wright (Hartlepool) (Lab)]

It is a pleasure to follow the hon. Member for Rugby (Mark Pawsey). He mentioned negative equity. I fear that when interest rates rise, as they may well do over the next few months, there will be an awful lot more people across the country— including many of his constituents and mine—in negative equity. That is a massive concern for this country’s long-term sustainability.

I want to focus my remarks on productivity. Productivity remains the vital element of Britain’s competitiveness. If British makers and doers are to compete in world markets, our productivity has to match or better that of our rivals, yet we are falling behind our competitors. Last month the Office for National Statistics released data showing that output per hour in the UK was 21% below the average of the other G7 countries—the widest productivity gap our country has seen since 1992. Output per worker in the UK fell year on year, while it rose for the rest of the major industrialised nations. That is probably one reason why our share of exports is falling and expected to fall further, as per the Red Book, which means that we will not meet the target that the Chancellor set of doubling our exports by 2020.

Without productivity growth, Britain cannot increase its competitiveness and there will be no long-term improvement in living standards. Wage inequality will increase and in-work poverty will worsen, which will mean that my constituents in Hartlepool, who saw a year-on-year actual—not relative—fall of 6.1% in average full-time wages in 2013 will see further real falls in their wages. That is on top of the fact that Hartlepool has lost £28.9 million since 2010 as a result of public sector cuts—a drop of 24.5% since 2010. That means that spending power in Hartlepool has diminished by £680 a household since the general election. The cost of living crisis in my community will get worse if the Government do not address the issue of productivity.

The Chancellor did not mention the word “productivity” once in the financial statement. Without business investment in innovation and technology and better skills for workers, our living standards will fall over the long term. In his first Budget, the Chancellor forecast that business investment would rise by 8.1% in 2011, 10% in 2012, 10.9% in 2013, 9.5% in 2014 and 8.2% in 2015. The actual out-turn figures to date have been 3.1% in 2011 and, as this year’s Red Book shows, 3.9% in 2012. The forecast is an actual fall in business investment of 1.2% in 2013. I hope that I am wrong and that pent-up demand for investment will be unleashed in the next few months, but given the record of the past four years, the figures in this year’s Red Book suggesting business investment growth of 8% in 2014 and 9.2% in 2015 seem widely exaggerated and optimistic.

This Budget also marked the time when the Government gave up any ambition for this country’s becoming a leading player in the future of global low-carbon technology. The CBI report “The Colour of Growth” found that investment in the low-carbon economy could have accounted for more than a third of all growth in 2010-11 and had the potential to halve the UK trade deficit by 2014-15. It seems a long time since the Chancellor stated in his first Red Book in June 2010:

“The Government is committed to playing its part in moving to a low-carbon economy. The transition will change the shape of industry, growth and jobs. As part of this, the UK needs £200 billion of investment to 2020 to provide secure low-carbon energy.”

This Budget provided nothing to help realise that ambition, and in certain ways, such as the ending of the renewable energy enterprise investment scheme, it actively worked to deter investment in the low-carbon economy. That target of £200 billion of investment in a decade, which would have helped manufacturers such as those in wind turbine supply chains in my region, the north-east, and my constituency, will now be difficult to realise.

The fact that the Government will exempt from the carbon floor price fuel used in combined heat and power plants for electricity generated to supply manufacturing firms is welcome, and I have asked parliamentary questions about that. Mitigating actions for energy-intensive industries might also help manufacturing, but not immediately, because the announcement in the Budget does not kick in until 2016-17. As my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) said, it only reverses something that happened on the Chancellor’s watch last year.

Business rate reform, which would help manufacturing, was not mentioned in the Budget. Expanding capital allowances might help incentivise business investment, but again, as my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) mentioned, that measure only reverses the cut that the Chancellor made to such allowances in his first Budget. The tax relief to boost North sea oil and gas investment will only remedy the damage that he did to the sector in his Budget of 2011.

Those matters all show a wider problem in the Government’s economic and industrial policy. Businesses want long-term policy stability and a stable framework that gives them the confidence to plan and invest for the long term. Those oscillations in policy, with a measure in one year’s Budget reversed in a subsequent Budget a year or two later, do not give companies the stability and certainty that they need. It is little wonder that business investment has flatlined and our productivity has fallen behind that of our rivals. That is a real weakness of the Budget that the Chancellor shows little appetite to resolve for the long-term good of the British economy and the good of my constituents.

20:24

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

I shall aim to achieve a balance between despair and euphoria in my contribution.

There is a great deal to commend in this Budget, against a background of rising employment, falling inflation and rising economic growth, which is now expected to be 2.7% in 2014 according to the Office for Budget Responsibility. The OECD forecasts that the UK will grow faster than any other G7 economy in the first half of this year, and further forecasts show that real wages are set to rise over the years ahead. Of course, that has been accomplished with some tough decision making, which has had an impact on many people, and there is still much to do to ensure that we have both a sustained stronger economy and a fairer society.

I am particularly pleased about the increase in the income tax threshold, a key Liberal Democrat manifesto pledge. A £700 tax cut for more than 20 million people has been delivered by April 2014, with the 2.7 million lowest-paid people taken out of tax altogether. Now the threshold is set to rise to £10,500, benefiting working families, along with the increased support for child care.

I welcome greatly the measures to help pensioners—I am not sure whether I should declare an interest. I am proud to be part of a Government who will be remembered for having done so much to reform pensions—single-tier pensions, the triple lock, auto-enrolment and now the change in the Budget. The help for savers is to be welcomed, as are more measures to clamp down on tax avoidance.

I also welcome the Government’s adding to the measures that have previously been announced to support business, such as increasing tax incentives to invest in new equipment and carry out research and development, and increasing the level of financial support for exporters. As other Members have mentioned, ensuring that business has skilled labour is all-important. Some 1.5 million apprenticeships have already been created, and now there is new money to create even more.

Local government clearly has an important role to play in supporting businesses to grow and create jobs, which of course are also related to tackling our housing crisis. Many council leaders of all political colours fear that by 2015, the successive cuts to local government expenditure might result in a cliff edge, with serious further cuts to the local services that they can provide. There are also likely to be more increases in regressive charges, despite the innovative and transformative work that is taking place and the extra money that has been pledged for the integration of health and social care services.

The proposed changes to councillors’ pensions are deeply unpopular. I simply do not understand why, for example, council leaders of working age should be seen as volunteers, when in today’s world they are working full time and using many professional skills. I understand that local social fund money has been transferred from the Department for Work and Pensions to the Department for Communities and Local Government, and that it may be removed from council budgets in 2015. That would cause me great concern, as it is a vital safety net.

We are faced with a deep housing crisis, and there are heartbreaking situations, typified in my constituency mailbag, involving families in unsuitable accommodation. Although I welcome the measures to address the crisis announced in the Budget and previously, and although I acknowledge the Government’s record on building houses, particularly social houses, I have two main questions. First, will the measures be sufficient? Secondly, although I appreciate that we must have both demand and supply measures to increase the number of homes delivered each year, what monitoring will there be of the Help to Buy scheme, given the fears that it might result in undue upward pressure on house prices, particularly in London and the south-east?

I welcome the moves to allow garden cities—or perhaps towns, if we are talking about 15,000 homes—to be developed with a local trigger, providing much-needed housing and offering an alternative to filling in every space in existing urban areas. I welcome any moves to bring forward publicly owned land for development, and I wonder what progress there has been on community land auctions. We have heard further calls for “brownfield first” today, and I am sure that there is much publicly owned land that would meet that criterion. I welcome the pilot study on development benefits. The new town option provides the opportunity to capture community benefit to provide long-term facilities and infrastructure for a settlement and its surroundings, and potentially to provide affected individuals with a share in any benefits.

With any development it makes sense to include self-build and building by smaller and medium-sized companies. That introduces competition and, I hope, will stimulate good design—something much needed, as a previous speaker said. I note further measures to support social housing—again, so much is needed—and I believe that neighbourhood plans are really important, although they need more resources. Planning should be bottom up; we should be working with our communities to help tackle our housing crisis, allocating sites within our local community, and delivering when we truly understand our local community’s housing needs. Finally, I welcome the announcement of the extra money on potholes, which I believe will deliver real change very quickly.

20:30

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

Yet again, this Budget benefits those on the Treasury Bench and their millionaire donors far more than the millions of ordinary people who have borne the brunt of this Government’s decisions so far. This Budget showed that although Ministers might try, they will never understand ordinary people.

The Chancellor said a lot about beer duty—it was as if he had given people a free pint. As we heard earlier, however, the trouble with saving a penny a pint is that someone has to drink around 300 pints before they get a free one—hardly a healthy message. He also said a lot about cutting tax on bingo. What he did not say is that that will benefit bingo operators, not bingo players. The Chancellor made big play of allowing people to save up to £15,000 a year tax free. He might be able to squirrel away that kind of money, but at the moment many of my constituents would consider themselves very lucky even to earn £15,000 a year, and even luckier to take home that amount, never mind being able to save £15,000 in their lifetime, let alone in a year. Should not a responsible Chancellor who wanted to build a broad-based recovery and improve living standards concentrate more on helping those people rather than wealthy savers? If he wanted to know what ordinary people wanted from the Budget, he should have read the excellent Sunderland Echo, as I do every day. A reporter went out and about in Sunderland last week to ask people exactly that question.

Thomas and Elizabeth Dunn wanted the Chancellor to do something to tackle the cost of living crisis, which is becoming difficult for them. They are not alone. Working people are on average £1,600 a year worse off in their pay packets under this Government; that is even more the case if we add in the 24 tax rises that the Government have snuck in, causing the cost of living crisis that is devastating people across the country. How many mentions of the cost of living were in the Red Book, and how many new policies were there to ease it? Absolutely none.

The Sunderland Echo reporter also spoke to new parents Chris and Lisa Mann. Lisa wants to return to her job as a community nurse after having her son, Harry, who is now eight months old, but the cost of child care is prohibitive. Chris said:

“We both want to work but the cost of child care is a problem, it really is. We have to rely on Lisa’s mum a lot.”

Parents across the country are similarly prevented from working because of the triple whammy that the Government have hit parents with. Costs are up 30% since the election, there are thousands fewer child care providers, and tax credits have been cut. Did the Budget mean that Lisa will be able to return to work at the end of her maternity leave, thanks to increased support for child care? No, it did not. Yes, there will be some support, but in 18 months’ time, not now. What about now? The fact remains that over this Parliament, the Government have cut, not increased, support for parents in accessing child care. Parents will remember that, and they will see Labour’s offer of 25 hours a week of child care free at the point of use as the biggest help to their family budgets.

Of course, the No. 1 concern in my constituency is finding decent jobs. On the face of it, there was some good news for my constituency in last week’s employment figures, but when we dig down we see that very long-term unemployment for adults is rocketing. In my constituency, there was a 76% increase in just one year, and 12 of the 20 constituencies with the biggest increases on that measure are in the north-east. Twelve out of 20 constituencies are in one small region, yet there is only one in the whole of the south—more evidence of the widening north-south divide under this Government. Those people are clearly being left behind by this Government, and by a Work programme that is worse than doing nothing. They need a way back into employment—something to give them their confidence back and to sharpen their soft skills. What did we see from the Chancellor to help those people? Absolutely nothing. Only a Labour Government would guarantee those people a job for six months, with training and intensive support to find employment afterwards.

In summary, the Chancellor should not believe his own hype or a few good headlines from his friends in the press—people who probably benefit from this Budget. Come the election, real people will be asking themselves, “Am I better off thanks to this lot?” We know who will be able to answer yes: the Chancellor, those on the Government Front Bench, the Prime Minister and all the millionaires the Government have prioritised support for. However, millions of people on low and middle incomes—those who have been hit hardest by the Government’s cost of living crisis—will answer no, and it is they who will show this lousy Government the door in 15 months’ time.

20:36

[Mr Brooks Newmark (Braintree) (Con)]

This was a Budget for savers, for pensioners, for businesses, and for hard-working people, and most importantly of all it ably demonstrates that our long-term economic plan is working. Only last year, we were talking about a triple-dip recession, but in fact there was no triple-dip recession, or even double-dip recession. The Office for Budget Responsibility is now forecasting growth for this year to be 2.7%—the biggest upward revision in 30 years—and the Bank of England is forecasting growth to exceed 3%.

[Kwasi Kwarteng]

Will my hon. Friend tell the House who exactly was predicting the triple-dip recession, and pleading with the Government to go to plan B?

[Mr Newmark]

My hon. Friend makes a good point, and I think it was the shadow Chancellor who predicted 1 million people unemployed—I will get to that point in a moment.

More growth means more jobs, and over 1.5 million more jobs are forecast over the next five years, on top of the 1.7 million new jobs created in the past four years. Indeed, today we have more men and women in work than ever before. In Braintree, unemployment has dropped by a third since the general election, with general unemployment down from 3.4% to 2.3%, and youth unemployment from 6.3% to 4.1%. Last Friday we had a successful jobs fair in Braintree with more than 30 businesses and 450 local people attending. I thank Braintree Freeport and Amtek for sponsoring the event, and Braintree district council and Ignite—especially Liz Storey and her team—for their support.

Getting young people back into work is vital, as Councillor Stephen Canning, the youngest councillor in Braintree, keeps reminding me. As a founder of the Million Jobs campaign, I am delighted that the Chancellor has abolished national insurance contributions for employers hiring a young person under 21.

Apprenticeships, too, have been a great success, giving over 1 million people a first step on to the jobs ladder. In particular, I congratulate Braintree district council, especially Councillor Chris Siddall, cabinet member for prosperity and growth, on its apprenticeship programme, and Essex county council on supporting over 2,700 apprentices in the past five years.

The deficit is now down by one third and is due to fall to 5.5% next year. That is 50% of what we inherited in 2010. Yes, the Government’s long-term economic plan is indeed working.

This is a Budget for savers, with the raising of the annual limit on ISAs to £15,000, the abolition of the dreaded 10p rate on savings income helping over 1.5 million lower-income savers, and the new pensioner bonds offering up to 4% return on a three-year bond. This is a Budget for pensions and pensioners, with no one being forced to buy an annuity and no punitive 55% tax rate if people try to take more of their tax-free lump sum. This Budget puts pensions back in the control of pensioners, taking them away from the diktat of Government.

This is a Budget for business. At this point, I draw the House’s attention to my entry in the Register of Members’ Financial Interests. The annual investment allowance, which increased tenfold from £25,000 to £250,000, is now doubled again to £500,000. With the business confidence index at an all-time high, I hope that this will encourage businesses, including farmers in my area, to invest more in plant and machinery and to hire more people.

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

Today I visited a company in my constituency, Cube Precision Engineering, with the Chancellor. We could already see the immediate impact of the raising of the investment allowance to £500,000, which is allowing that company to place an order for a new machine that will enhance its competitiveness and allow it to take on new people.

[Mr Newmark]

That is a fine example of exactly why raising the allowance from £25,000 to £250,000 was an important decision that created jobs. As my hon. Friend has indicated, doubling it again will create even more jobs.

This is a Budget for hard-working people, with petrol duty frozen; a penny off a pint of beer, again; and, most importantly, the personal allowance raised to £10,500, cutting taxation for over 25 million people and lifting 3.2 million people out of tax altogether.

[Alec Shelbrooke]

rose—

[Mr Newmark]

I can give way only twice; I am sorry about that.

A typical taxpayer in my constituency of Braintree will pay £805 less in tax than they would have done before.

This Budget continues the drive to reform local public services and get value for money for local people. Braintree district council, under the leadership of Councillor Graham Butland, has reduced council taxes by 1% this year and 1% again next year, yet the council continues to invest in our town centres with initiatives such as the new jewellery village, supporting 12 new traders in Braintree town, and the pop-up shops generating four new retailers such as Chic Décor, started by Emma Jane Jarvis.

Essex county council, under the leadership of Councillor David Finch, is also to be congratulated. It has frozen its council tax for four years in a row, yet at the same time invested £3 million in flood prevention, £1 million in youth facilities, and £1.4 million to support vulnerable older people. Of course, the extra £2.7 million of funding in this Budget to address the blight of potholes on our roads throughout Essex, but especially in our rural areas, is also more than welcome.

This is indeed a Budget for hard-working people: for the makers, the doers, and the savers. Our long-term economic plan is slowly but surely beginning to pay dividends. I am delighted to support the 2014 Budget.

20:42

[Paul Blomfield (Sheffield Central) (Lab)]

I do not know whether you, Madam Deputy Speaker, or other Members of the House caught the recent BBC programme “Mind the Gap”. It was not about the perils of travelling on the underground but the growing problem of our country’s two economies—the way in which London and the south-east are sucking economic activity away from the rest of country. Judging by their policies over the past four years, this Government clearly do not mind the gap; indeed, they have widened it. It is not just a north-south problem; it is London versus the rest. The Chancellor’s Budget fuels the gap.

Let us spend a moment looking at two-economies Britain under this Government. Public funding has been diverted from areas where it is needed most by their local government finance settlement, as highlighted by my right hon. Friend the Member for Leeds Central (Hilary Benn). Regional development agencies were scrapped as soon as this Government got through the door.

[James Morris]

Can the hon. Gentleman remind us of what happened to regional inequalities when the RDAs were in existence under the previous Government?

[Paul Blomfield]

I would cite the extremely successful advanced manufacturing research centre, which is a pioneering collaboration between the university of Sheffield, Boeing and Rolls-Royce. It has been highlighted by the Government as a model of industrial innovation. However, it simply would not be there if it had not been for RDA investment.

London also thrives with arts and culture funding, with subsidies worth £68.99 per head, while the rest of England gets just £4.58 per head.

The Budget does not just ignore those issues; it is making them worse. Research by Sheffield political economy research institute has exposed the Chancellor’s flagship increase in the income tax personal allowance as not benefiting the lowest paid and not addressing regional inequality. In many ways, it has made that inequality worse.

This situation is not inevitable. We simply need the political will and the policies to reverse the trend. Let us build on our regional assets, such as our universities, which are uniquely positioned around the country to drive growth through innovation. Let us ensure that there is effective investment in research and development across the higher education sector.

We need an active industrial strategy that does not simply pick winners but supports growth in key sectors across the country, such as the nuclear sector. Of course, one of the early actions of the Government was to undermine that sector in my city by scrapping the loan to Sheffield Forgemasters.

We need a fairer distribution of public funding that puts need at the heart of funding allocation and that recognises the role of public investment in stimulating local economies. The Government should use the levers of public sector employment to address the regional imbalance. They should move Departments, not just minor agencies, out of London. Why can the Department for Education not move lock, stock and barrel to Sheffield? Let us move the Department of Health to Leeds. Let us take the Department for Work and Pensions to Hull.

Government Members have raised concerns about the impact of what they describe as “generous public sector pay” on private sector employers in the regions. However, we cannot accept the argument that there must be a race to the bottom on pay and conditions for there to be regional growth outside London. All regions benefit from decent, well-paid jobs. They fuel our local economies and put money in people’s pockets that will be spent in local businesses. Moving Departments out of London would be good not only for the regions, but for London. For evidence of that, we need only ask those who are struggling to rent or buy in the overheated housing market in the capital.

Moving Departments of State to the regions would not just provide economic benefits, but would ensure that policies were no longer shaped by people who live and work in London, and who see everything through the prism of the metropolis. One of my constituents, Amy Hall, who is a biophysicist, wrote to me last week and said:

“We need to be less London-centric as this seems to be blinding some of the key policy makers to the situation elsewhere.”

Amy was right. There are things that we can do to make that happen.

Moving Departments out of London is not a new idea. It was pioneered by the Labour Government in the ’70s. I remember the Manpower Services Commission coming to Sheffield as a result of a Government decision in 1976. More progress was made under the last Labour Government in moving civil service jobs out of London. According to the information I have been given by the House of Commons Library, that progress has halted under this Government.

We need to take action to achieve a one nation economy, not a one city economy.

20:48

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

I rise in support of a Budget that really gets down to doing the job.

Let me start with a constant bugbear of my constituents: the state of the roads. The additional funding to repair the potholes and road damage that came about over the winter is hugely welcome to my constituents. The funding for my city of Leeds is £949,426—almost £1 million of extra money. Altogether, the Government will have spent £4.5 billion on road repairs in this Parliament, which is £800 million more than the last Labour Government spent in their final term in office.

We need to keep a close eye on where the Labour party on Leeds city council spends that money. It has almost revelled in making cuts to front-line services in our city, purely for politically motivated reasons. That is the only explanation for why, when cutting front-line services, it has spent £1.8 million on a website, £600,000 on furniture and hundreds of thousands of pounds on union time and facilities. We must ensure that the £1 million that goes into Leeds is spent as extra money on the roads, and is not the only money that is spent on the roads. Unfortunately, we have a Labour council in Leeds which governs in its own political interests, not in the interests of those who rely on its services. Even outside the financial issues, the council is too slow to get anything sorted out, such as housing and land supply.

It is massively welcome to cities such as Leeds and constituencies such as mine that a £500 million pot is now available for SME developers. With the inclusion of windfall—and my hon. Friend the Member for Pudsey (Stuart Andrew) and I lobbied very hard for Leeds to be included in the land supply—it means that we should be able to relieve the pressure that villages in my constituency feel to take some of the 12,500 houses that Leeds city council has designated for the area. The time taken to identify major areas of sustainable development, such as Headley Fields in the north of my constituency and Makins Farm in Garforth, is ridiculously slow, but the proactive stance that we are taking in the city is much better than the Labour policy of building 200,000 new homes and seizing the land to build them on—a frankly Stalinist policy. Labour leaflets talk proudly of that policy, but fail to tell local communities that they would effectively lose any say in the location of that development.

I am sure that my hon. Friend the Minister will be interested to hear a few other gems from Labour’s latest newsletter on economic policy. Top of the list is a pension triple lock, so that any increase would never be lower than 2.5% and would also be in line with the higher of earnings or inflation. One can only guess how Labour thought that policy up—it sounds like a winner. I would suggest that we adopt it if we had not already done so three years ago. It certainly beats the 75p rise of a few years ago. Labour also voted against our triple lock when we introduced it.

Labour also says that it will cut taxes for 24 million people by introducing a 10p rate, but in office it doubled tax on the lowest earners. We did not double that tax: we abolished it. Effectively, that is a watering down of the policy of abolishing tax for the lowest paid. Labour says that it will back small businesses by—wait for this—cutting the rates in 2015 and then freezing them. We gave £1,000 back to businesses with under £50,000 of rateable value, which had a huge impact on the SMEs and small shop owners in my villages of Wetherby, Garforth and Rothwell—a real investment after years of non-investment.

Labour also says it will strengthen the minimum wage: we are doing that. What we are not doing is chasing easy headlines on the living wage, which has already risen by 40p since the argument started a few months ago. We cannot chase wages with an inflation-led policy: we have to make sure that we cut taxes on businesses so that the money goes into the pockets of hard-working people such as my constituents. That approach is sustainable in the long run and that is what we are doing. I want to see the minimum wage reach at least £7, when we are able to afford it by cutting taxes and making sure that what businesses are not giving to the Government goes directly into the pockets of the people who are doing the work.

Compare our approach to Labour’s compulsory jobs guarantee scheme, which no firms have signed up to. It would subsidise public sector jobs and create non-jobs. There is nothing more demoralising than being sent to a workplace with nothing to do. Do not patronise my constituents: do what the Government are doing and ensure that we have strong economic growth, leading to real jobs for people. Apprenticeships in my constituency are up 63% since the election, and that is making a real difference. I have had enough Labour shadow Ministers coming to my constituency recently to hear that from people on the doorstep. Clearly they have their ears closed to them, as they seem to listen only to the Labour candidate with all her ideas from Tooting, where she lives. Perhaps those ideas work well around the dinner tables in London, but in my constituency they would not work at all. My hon. Friend the Minister should take heart from the fact that the Opposition’s economic policies have either already been put in place by the Government or have no traction outside the north London kitchen tables in the multi-million pound houses of Labour Front Benchers.

We froze council tax: that is why hard-working people have seen their taxes cut. But this year Labour has raised it by 1.99%—a disgraceful attempt to hoodwink the electorate.

20:55

[Barry Gardiner (Brent North) (Lab)]

Many Government Members, both this afternoon and in the preceding days of this debate, have said that it has been a Budget for savers. That is an irony, coming from a Government who have pumped more than £375 billion into the economy to buy Government bonds. That has been singularly responsible for reducing the yield to savers. The Bank of England working paper 442, on the impact of quantitative easing on the economy, states that the 8% increase in money holdings is estimated to have depressed yields by an average of 150 basis points. That was in 2012. Quantitative easing now is not £122 billion, or 8%; it is more than £375 billion.

[Mr Newmark]

Unless the hon. Gentleman is suffering from selective amnesia, he will know that it was the Labour Government who separated responsibility for QE from the Treasury and the Government and gave it to the Bank of England.

[Barry Gardiner]

I am not suffering from amnesia, selective or otherwise. I do recall that the process started in 2009 under the Labour Government, so I accept the hon. Gentleman’s point. Equally, we have to accept that the Bank of England’s own figures show the impact that that has had on savers over the lifetime of this Government. Elderly savers have had to bear the brunt of that. The Chancellor is trying to win them back with changes to the rules on individual savings accounts, and, for those approaching a decision on their pension pot, the prospect that they need not purchase an annuity. It is, however, QE that has in large part kept savings rates so low.

Government Ministers need to reflect on the changes to ISAs. They are a boost to mid-caps and the alternative investment market. Alternative investments are riskier. In the 2013 Budget, the Chancellor abolished stamp duty on AIM shares. By uniting share and cash ISAs, the Chancellor has boosted what is inevitably a riskier element of the City and is encouraging people to undertake less secure investments with their savings. It is important that that sort of incentivisation should be considered most carefully by Treasury Front Benchers. My hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) spoke of it being beyond the capacity of ordinary people, who include most of Labour Members’ constituents, to accumulate £15,000 in one year to put into an ISA. That suggests that the Government, in framing the Budget, have again been out of touch with the reality for many people.

I am deeply concerned that unfettered access to pension pots undermines the whole basis for tax relief on pension contributions in the first place. We give people tax relief on pension contributions precisely because we want to ensure that they do not become more of a burden on the state in old age. We may well be seeing the birth of the next great financial mis-selling crisis. Independent financial advice is all well and good, but in the past many advisers have shown themselves to be better at ensuring that their clients’ money serves their own purposes and interests rather than the interests of the clients whom they are supposed to be advising.

I am even more worried that the ability to access one’s pension pot should not become a way for the Government to tip people over the threshold of £23,500, where they will have to start contributing to their care costs. At today’s rates, a £25,000 pension pot would generate an income from an annuity of approximately only £1,500 a year. On top of the state pension, and even a modest works pension, an elderly person in need of care would not normally be pushed over the contribution threshold in such circumstances. Previously, the pension pot could be used only to purchase an annuity. Now that it can be converted into cash, I fear that a local authority could insist, under the rules, that it is converted into cash, thereby forcing someone to contribute to their care costs. I ask the Minister to give us a clear reassurance about that. Greater freedom for savers should not be a back-door way of enabling Governments to get their hands on people’s pension pots.

Nearly one in five of our young people is now without a job. The pity—and, I hope, the shame—of this Government is that they preferred giving tax cuts of £42,500 to the very richest in our society to giving a job guarantee to the young and long-term unemployed. Do the coalition partners truly believe that the families of this country would rather see bankers keep their exorbitant bonuses than see their children assured of quality training and serious jobs?

[Mr Newmark]

I am listening carefully to what the hon. Gentleman is saying. He should at least give the Government credit for abolishing national insurance contributions for employers who hire people aged under 21, to give young people a chance on the jobs ladder. That has brought youth unemployment down.

[Barry Gardiner]

The hon. Gentleman has made a reasonable point. It would be a very strange Budget if all its measures were objectionable to the Opposition. My purpose is to flag up the areas of disagreement, and the areas that I believe will pose serious problems to the economy in the future.

The reality for my working constituents is that they are earning less, and earning less in jobs that are less secure. As their real wages have fallen, they have had to rely all the more on housing benefit. That is why the welfare bill under this Government is rising rather than falling. More people are having to claim housing benefit because their wages have simply failed to keep pace with inflation. No wonder the Government are spending £13 billion more on welfare than the Labour Government did in 2010, and no wonder they are spending £30 billion more than the Chancellor himself predicted in 2010. Is it not incredible that a coalition Government who came to power saying that borrowing was the problem have borrowed more in three years than the Labour Government did in the 13 years during which they were in office?

People do not forget that it was this Government and this Chancellor who said that they would balance the books by 2015. Now, in the Budget, the Chancellor has had to admit that in 2015 there will be a £75 billion deficit, and that, in addition, he will be borrowing £190 billion more than the amount promised in 2010.

The Government need to answer the single question that should be asked about all Budgets. Cui bono? Who benefits? We are asking about more than mere distribution. We are asking about fairness, about equality and about justice. On that question, the Government have failed.

21:03

[Kwasi Kwarteng (Spelthorne) (Con)]

I am much obliged to you, Madam Deputy Speaker, for calling me at this late hour to speak about what I consider to be an extremely effective Budget. I think that it is a Budget about business, about aspiration, and about savings. I also think that it recognises what everyone else has recognised in the last six months: that the country is back on its feet after a very poor period of stagnating growth, and that we have stuck to the plan and put Britain back on track.

It is particularly paradoxical to hear Opposition Members say that the recovery is unbalanced. A year ago, they complained that there was no recovery. A year ago, they were talking about triple dip. A year ago, they were talking about trying to go back to plan B and ditching the original plan. Today, when we have the strongest growth in the OECD and the strongest growth among our European partners, they complain about the nature of the growth. It is true that the growth could be more balanced, but I certainly prefer some growth to no growth whatsoever.

I want to talk about the general fiscal position of this country. We have heard a lot of arguments today, especially from the right hon. Member for Neath (Mr Hain), suggesting that Labour had nothing to do with the debt crisis and the deficit this Government inherited in 2010. Nothing could be more absurd. If we look at the fiscal position in 2001, we will see that the Budget was balanced. In fact I think the first Labour Administration were pretty good in terms of the fiscal position—I have said that publicly before, although I was not endorsed by the Whips for doing so. For those four years the Budget was either in balance or in surplus and it was a very good fiscal record.

[Alec Shelbrooke]

During the first four years of that Labour Government, which were fiscally very good, they were following the plans adopted by the previous Chancellor, my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke).

[Kwasi Kwarteng]

Absolutely, but I think we should, in this very partisan place, give credit where credit is due. That Labour Government ran a very good, tight ship for four years, but then of course the demons of their worst nature took over and they reverted to type, and from 2002 right through to the crisis we ran deficit after deficit after deficit. That was the inexcusable part of that Government. It was bad Gordon as opposed to good Gordon—prudent Gordon—that took over after 2001, and the previous Prime Minister himself, the then Member for Sedgefield, has suggested that they spent too much money. He has admitted that while he was Prime Minister the Government spent too much money, and that is clearly the case. In the Budgets from 2002 right up to 2007, before the banking crisis was even an issue and before Lehman Brothers went broke, the Government were continually running deficits.

[Mr Newmark]

Was not the flaw of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) the fact that he had never run anything? The fact is one can never beat the economic cycle, but he never put any money aside just in case things did not work out.

[Kwasi Kwarteng]

That is absolutely right. The right hon. Gentleman’s principal fault was that he thought he had abolished the business cycle—no more boom and bust. He essentially believed—and it is incredible to think he did believe this—that he had discovered perpetual motion and that the laws of economics and of economic gravity had been suspended or abolished. That was the problem we were in: we were borrowing money even when the economy was growing. In 2004 I recall the economy grew at 3%, yet we ran a deficit of 3%. There is no Keynesian in the world who would suggest it was a good policy to borrow 3% of GDP when the economy was growing, yet the previous Government persisted in doing that.

[Phil Wilson]

rose—

[Kwasi Kwarteng]

It is quite true that the economic and financial crisis that hit in 2007-08 was a global phenomenon, but our country was in the worst position of any in the OECD to deal with that problem because of the poor management of our public finances in the six years before the crisis hit.

Germany is not a bastion of hard right-wing fiscal conservatism, yet it managed to reduce its spending right through the first decade of this century. It started to reduce public spending in 2004 and 2005. Today the Federal Government have a balanced Budget because of the prudent housekeeping and fiscal management of the previous German Government, first under Schröder and the Social Democratic party and then continued under Merkel. By contrast, in this country at that time we saw a total dereliction of duty by the Government.

[Phil Wilson]

Will the hon. Gentleman give way?

[Kwasi Kwarteng]

We saw an expanding public sector, big public expenditure and tax revenues which frankly could never meet the expenditure that the Government were embarked upon. So talking about what happened in 2010 can never be repeated enough times and must never be forgotten: in 2010 this coalition Government inherited the biggest deficit in our peacetime history.

[Phil Wilson]

rose—

[Kwasi Kwarteng]

I can see that Members opposite are eager to intervene and rightly so, because that was a shocking record of public financial management, and they are absolutely right to be indignant about what I am saying because it is the simple truth. They fell asleep at the wheel and left this country with an enormous deficit.

[Phil Wilson]

If what the hon. Gentleman is saying is true and he has the answer to everything we did wrong, why did the current Chancellor—the then shadow Chancellor—agree with our expenditure plans in 2008?

[Kwasi Kwarteng]

I have publicly said that I think that was a mistake. It was a mistake to stick to Labour’s spending plans when we were running six or seven years of straight deficits. I do not understand how that makes any sense in financial management terms.

[Phil Wilson]

Will the hon. Gentleman give way?

[Kwasi Kwarteng]

No. The hon. Gentleman has had his say and I want to finish my speech, given that I have little time left.

It is very important that we remember exactly what the last Government did. In 2010, as everyone remembers, we had a deficit of £160 billion, which was the largest peacetime deficit. It is a remarkable testament to this Government that they have managed to reduce it by a third and at the same preside over economic growth. That is an extraordinary record, and I am very happy to meet my constituents and seek re-election on that basis.

I know that we should not be too obsessed with polls, but the one consistent thing emerging from the polling evidence over this whole period is that the British people consistently blame the last Government for the deficit and for the economic crisis we are in. There is an intuitive understanding that the Labour Government spent too much money, and that this coalition Government have been elected with a mandate to sort out the mess that Labour made. Intuitively, people across our constituencies get this, and that is why the Labour party, even through all these difficult times, continues to perform very poorly in the opinion polls and has yet to win the confidence of our countrymen and women.

21:11

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

It is a pleasure to follow the apolitical speech of the hon. Member for Spelthorne (Kwasi Kwarteng).

The Chancellor got it completely wrong. Ebbsfleet is not the first new garden city in 100 years: he is welcome to visit Wythenshawe, which was built in the 1930s and ’40s, any time. He should cross his border and see it in all its glory. I also say to the hon. Member for Dartford (Gareth Johnson) that there are possible twinning opportunities for us; he knows where my office is.

I give a cautious welcome to the reform in the Budget of air passenger duty. The current rules are crazy and unjust, as the Chancellor rightly said. He said that there would be support for new routes from regional airports, but we need more detail. His statement did not go far enough. The Government could go further and grant exemptions for new long-haul services from regional airports. That would make a huge difference at Manchester airport, in my constituency, attracting flights from cities such as Beijing. Eventually, that would link up with High Speed 2 and with the £800 million Chinese investment in the new airport city we are building in my constituency. It is an important measure, and I will challenge the Chancellor further on it in the weeks and months to come.

We are facing a cost of living crisis, and Labour Members will keep pointing that out. No one could have fought the by-election that I have just fought without speaking to the many people who had stories to tell in that regard. As was pointed out earlier, real wages are down by £1,600 a year compared with 2010, and the OBR has confirmed that all our constituents will be worse off in 2015 than they were in 2010. To compound the problem, people’s energy bills have risen by almost £300, on average, since the election. It is no wonder that many of my constituents are increasingly reliant on food banks such as that run by the Dandelion Community, which I visited on Friday.

I want to focus on three key things that would benefit my constituents, the first of which is freezing energy bills. I am reminded of the story of a former Member of this place, Richard Cobden, a Liberal campaigner from Manchester who was part of the Anti-Corn Law League. He stood up against the Peel Government of the time and brought working people and intellectuals together because the landed aristocracy who were running this place controlled the price of wheat bushels by not allowing external competition and free trade. He eventually won that argument, because millions of poor working people across the country were going hungry. Our energy providers are doing exactly the same thing today. The big conglomerates are controlling the markets. It is not a free market; it is not fair. The prices go up, and the energy providers never lose. The hon. Member for Spelthorne goes on about business, and he is right to do so, but those businesses take no risks. Whenever their costs go up, the prices go up. We would freeze those bills—

[Kwasi Kwarteng]

Will the hon. Gentleman give way?

[Mike Kane]

Of course I will. This will be the first intervention that I have taken in the House, so I ask the hon. Gentleman to be gentle.

[Kwasi Kwarteng]

I will bear that in mind. I was just wondering what the hon. Gentleman thinks Richard Cobden would have thought about the proposed energy price freeze.

[Mike Kane]

Poor working people were going hungry, and he campaigned for them, so I think he would understand that poor working people are now cold, and that he would campaign for them as well.

[Barry Gardiner]

Will my hon. Friend give way?

[Mike Kane]

Do I get an extra minute? Yes? Then I will give way.

[Barry Gardiner]

My hon. Friend is making an excellent speech. May I assist him by saying that Richard Cobden might have thought the price freeze less important than the restructuring of the vertical integration in the market, which it was buying time in order to do?

[Mike Kane]

I agree with that, even if I do not quite understand all of it. It was very good. I am very proud that Richard Cobden ran his campaign from Manchester and changed the world. Once he had won, the campaign eventually brought down the Peel Government, so there is hope for us on these Benches.

My second point is that we should put young people back to work. Nearly 900,000 young people are out of work in this country, and many are in my constituency. Their parents are very worried about their children’s future. Nearly 1,000 young people under the age of 24 in my constituency are in that position. We could pay for measures to address that with a tax on the bankers bonuses. In 1997, the new deal did an immense amount for the estates in Wythenshawe. In my opinion, it did even more than the introduction of the national minimum wage. It transformed the estates and got people back into work, which makes a great difference to the cohesion in our communities.

Finally, it would make a real difference to the standard of living in my constituency if we were to extend free child care for working parents to 25 hours a week for their three and four-year-olds. That would help more young women to get back into the workplace. The lack of affordable child care is a real obstacle for working poor families, but we could achieve that change in the next Parliament while balancing the nation’s books in a fairer and more equitable way.

21:17

[David Rutley (Macclesfield) (Con)]

It is a pleasure to follow the hon. Member for Wythenshawe and Sale East (Mike Kane), a near neighbour of mine. I was pleased to hear his upbeat assessment of airport city in Manchester; I share that assessment and look forward to working with him, just as I did with his esteemed predecessor, whom many of us in this House admired and respected.

It is important that this Budget has further underlined the Government’s commitment to putting our public finances back in order. It has also highlighted the action that is being taken to address cost of living challenges, including the increase in the personal allowance to £10,500. Government Members have pointed out repeatedly that the Chancellor has gone further in this Budget by taking bold, radical steps, the better to support the aspirations of savers and pensioners. Those steps have been welcomed by many of the constituents in Macclesfield I have spoken to over the weekend, and they are popular across the country because they give power to the people. That is not something that Citizen Smith said in the 1970s; it is the Conservative way, the right way, and we welcome this approach.

Another positive theme in the Budget is the continuing action that is being taken to deliver sustainable economic growth after the boom and bust of the Labour years. The evidence is clear to see in the 2.75% growth forecast for this year and the 2.4% growth forecast for 2015. In addition, we have the 1.7 million jobs that have been created. Perhaps Labour Members could remind us who said that just could not be done—where is the right hon. Member for Morley and Outwood (Ed Balls) when you need him?

I welcome the positive progress that has been made, but clearly more needs to be done to take forward our long-term economic plan and our growth agenda, and that is what I want to say more about this evening. It is refreshing and good to see that the Federation of Small Businesses and the British Chambers of Commerce also warmly welcome this Budget. With so much new news in the Budget, it might be easy to overlook the fact that the Government have dramatically reduced corporation tax. It has fallen from 28% under the previous Government to 21% this April, and is set to fall further with a cut to 20% in 2015-16—that is the joint lowest rate in the G20.

On the employment allowance, it is crucial that we get to a lower tax environment, so that businesses have the confidence to invest, and the desire and appetite to take on more workers. I am pleased that the growth we are seeing is spread across all the regions—just about—as that is vital in our task of rebalancing the economy. In recent months, we have had positive reports about what is going on in our local economy in north-east Cheshire. In November, AstraZeneca invested £120 million in its packaging and manufacturing site in Macclesfield. The recent announcement of the sale of AstraZeneca’s Alderley Park plant to Manchester Science Parks is crucial to ensuring that there is a sustainable future at the site, which has been a centre of innovation, research and discovery for decades. This new approach means that there will be further innovation and success in decades to come. Although AstraZeneca may have decided to take its research and development facilities to Cambridge, I am pleased to be working with the company and with the Alderley Park taskforce to make sure there is a lasting legacy. The Chancellor, as a local Member of Parliament, is also championing that important start we are making. With the new owners, our aim and ambition locally is to make sure that we create a counterweight to Cambridge up in the north-west. Who knows, AstraZeneca may live to regret the day it decided to relocate—I hope it does, as that is certainly our plan.

That case study demonstrates again that the state cannot and should not seek to rebalance the economy on its own. Government Members know that making areas dependent on public sector jobs is not a panacea, despite the protestations of the hon. Member for Sheffield Central (Paul Blomfield), who is no longer in his place. The Government are right to focus on getting the economic fundamentals in place so that businesses across the regions can thrive and flourish, without the excessive competition in the labour markets from public bodies.

The Government also recognise that they have a crucial role to play in investing in infrastructure. Connectivity will be the key to rebalancing the economy, and this is not just about HS2, which I am pleased to hear will now have a hub station in Crewe six years earlier than planned; in the north-west, there are ambitious plans for the Atlantic gateway, the northern hub and, let us not forget, further rail electrification, with 800 miles planned by 2019, compared with just the nine miles put in place during the Labour years in government.

The bidding process for the £2 billion growth deal fund, involving business-led local enterprise partnerships across the country, will be another catalyst for change. I am sure I am not the only Member seeking to draw attention to major projects in their area, but in Cheshire and Warrington we are supporting an innovative cross-border science corridor, which builds on initial progress we are making at Alderley Park. So let the competition begin—just let us not forget our science corridor in Cheshire to move things forward. I support this Budget and the contribution that this Government’s long-term economic plan is making to the economy in this country.

21:24

[Lilian Greenwood (Nottingham South) (Lab)]

In his statement on Wednesday, the Chancellor evoked an image of Britain that thousands of my constituents will simply not recognise. This Budget ignored the 2,882 people in Nottingham, including 1,092 children, who needed to use a food bank in the past year. This Budget ignored the nearly 5,000 households in Nottingham affected by the bedroom tax, which has left thousands of my constituents with a debt they have no prospect of paying off. This Budget failed to offer any hope whatever to thousands of families in Nottingham whose living standards have plummeted. The Government are yet again making the poorest in our society bear the burden of their failures, and the Chancellor’s silence on any measures that will help young people and lift the long-term unemployed back into work has been deafening.

Nottingham is a young city, with almost a third of its residents aged 18 to 29. Many of them are students, but too few stay and obtain jobs once they graduate, even though many would like to. Long-term youth unemployment in Nottingham South is 45% higher now than in May 2010, demonstrating that the recovery is leaving too many behind. It is not just an economic cost, but a human one too. This wasted potential matters not just to those young people who are affected but to their parents, grandparents and the wider community, yet it has been glossed over by Ministers. The Government continue to betray a generation of young people who, decades after the Chancellor has left office, will be the ones who continue to pay the price for his misguided policies. The slowest recovery for 100 years is hitting those new to the jobs market more than most, and many of my younger constituents feel that they are not even being given a fair chance right at the start of their working lives.

Cities such as Nottingham simply cannot afford a lost generation of unskilled and under-developed employees. We cannot afford to see residents demoralised and humiliated by unemployment. Something must be done, but the Government continue to dismiss Labour’s jobs guarantee that would use revenue from a tax on bankers’ bonuses to ensure that there is a paid job for every young person who has been out of work for a year.

Instead of setting aside additional funding for our cities, which are struggling to deal with the fall-out from a global recession, the Government have made places such as Nottingham bear the brunt of their cuts. Our city is the 20th most deprived local authority area in England, yet it has been targeted for some of the deepest cuts. It has been estimated that by 2017-18 Nottingham city council will have lost £848 per person as a result of Government funding cuts and welfare reform, compared with a loss of £117 per person in wealthier Windsor and Maidenhead.

Alongside the cuts, people in Nottingham continue to deal with the greatest cost of living crisis in a generation. They face soaring gas and electricity bills, real wages that have fallen by 5.6% and, of course, the housing crisis. The Chancellor’s unbalanced economic recovery means little to those struggling to make ends meet in places such as Clifton in my constituency, which has already seen its energy company obligation-funded solid wall insulation programme scrapped after this Government, panicked by Labour’s plans to freeze energy prices, did a deal with the energy companies.

We have already heard during this debate that one of the major causes of the current cost of living crisis is the housing shortage. The Government are doing too little, too late to tackle the chronic shortage of homes being built and are presiding over the lowest levels of house building in peacetime since the 1920s.

In Nottingham, 70% fewer homes are being developed since the coalition came to power, despite new affordable homes being built by our local arm’s length management organisation, Nottingham City Homes. Demand for housing is increasing, but the Government are doing nothing to address supply and the banks continue to withhold finance from smaller construction companies that know the local market and could make a huge difference. The Government seem to be passively reliant on developers to bring forward planning proposals, even in inappropriate locations, when too many brownfield sites lie empty. It is an abdication of responsibility.

The Government’s failure on housing means that an entire generation in Nottingham could be locked out of home ownership entirely, left to cope with the insecurity offered by the private rented sector and facing rents that are expected to soar by an average of 39% by 2020. It is shameful that homelessness has risen every year under this Government. According to local homelessness charity Framework, around 40% of its service users are between the ages of 16 and 25. Despite the increased demand for homelessness intervention services, councils hit by this Government’s unfair cuts have been forced to cut tenancy support services. Yet again it is younger, vulnerable members of society who bear the burden of this Government’s ideologically driven cuts agenda.

We need real action to tackle the housing crisis. My constituents need a Government who are on their side, but, instead, people in Nottingham feel let down—let down by a Prime Minister who is happy to hand a tax cut to those at the top while doing nothing to ease the cost of living crisis that leaves everyone else worse off than they were in 2010.

21:30

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

The shortage of housing, particularly affordable housing, about which many of my hon. Friends have spoken affects Scotland as much as it does the rest of the UK. We, too, have seen a reduction in house building. Indeed, the figures for last year show a 46% drop in house building in Scotland since its peak in 2004-05. There is a great shortage of affordable housing, as I know from experience, particularly in my constituency.

Much of the responsibility for housing in Scotland is, of course, devolved. It says something about the priorities of the Scottish Government that, since the Scottish National party took power, there has been a 29% drop in the capital housing budget, but the problem is not all the responsibility of the Scottish Government. The Help to Buy scheme operates in Scotland as it does in England and Wales, and although the limit on the value of houses eligible for support under the scheme in Scotland is £400,000 rather than £600,000, it has the same fundamental deficiency in that it benefits those on higher incomes more than those on whom it should be targeted—that is, those on more average incomes, particularly first-time buyers. The other drawback of the Help to Buy scheme, as many people have pointed out, is that it is likely to stimulate another property price boom. We all know the damage that such booms have done in the past and there is every indication that the scheme is having such an effect in London at the moment.

I welcome the commitment from Labour to build 200,000 houses a year across the UK. Such a policy provides a real answer to the housing shortage, an answer that can certainly not be found in the bedroom tax, as the Government seemed to suggest today. Members who were in the Chamber earlier will have heard the Minister of State, Department for Work and Pensions, the right hon. Member for Wirral West (Esther McVey), saying that 1 million people were in social housing that was too big for their needs. Of course, many of those who are in social housing that the Government say is too big for them have no possibility of moving into smaller housing. In Edinburgh, for example, demand for one-bedroom social housing, depending on availability from week to week, can sometimes be 100 times larger than supply. That is typical of many cities across the country.

The Government know that the bedroom tax is not working. They desperately argue that the fact that there has not yet been a 100% take-up of the discretionary housing payment in some areas is evidence that the policy is working, but we all know that in many cases it has not been taken up because the addition of extra funds during the year has made it difficult to get funding out to the people who need it. I am glad that the Scottish Government, after a lot of pressure from Labour, have agreed to provide cash from their own resources effectively to end the bedroom tax in Scotland. I wish they had done so earlier, but better late than never.

If the Government want to reduce the cost of housing benefit, they should be putting the effort into providing new housing so that people do not have to depend so much on the more expensive rented sector. It is also important that the housing benefit system and the provision of housing should be integrally linked as far as possible. That is why I welcome the Scottish Labour party’s commitment, through our devolution commission, to devolve housing benefit as part of our proposals for further devolution to Scotland.

I want to spend a couple of minutes discussing the abolition of the requirement for 75% of the private pension pot to be spent on annuities or similar arrangements. As many of my colleagues have pointed out, Labour recognises the need for reform of the annuity system, but although the principle that people should have more control over the allocation of their pensions is fair, a responsible Government should recognise difficulties and problems as well. My hon. Friend the Member for Brent North (Barry Gardiner) highlighted some of them in his speech, so I shall simply observe the contrast between the Government’s proposal to remove any requirement for people to spend a certain amount of their pension fund on long-term pension provision and their approach to contributions to private pensions. All parties, including those in government, have supported auto-enrolment into pension schemes—not compulsory enrolment, of course, but a pretty strong nudge towards it—but there appears to be no wish to encourage people, other than through that device, to take steps to assure their long-term security. As proposals for changes to private pension schemes are developed, it is vital to implement measures to encourage people to ensure that they provide for their long-term security in retirement because if they do not, as many Members have pointed out, we are merely building up problems that will be faced by future Governments and will seriously affect the living standards of many who retire in years to come.

21:35

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Our passionate and wide-ranging debate was excellently opened for the Opposition by my right hon. Friend the Member for Leeds Central (Hilary Benn), whom I commend for the deeply moving and insightful tribute that he paid to his father in the House last week. Tony Benn had close links with the north-east, not least through his regular appearances at the Durham miners gala. His loss is felt keenly by many people of all ages throughout the region and, of course, by hon. Members on both sides of the House.

The many excellent speeches that we have heard today have served to illustrate once again which side of the House is in touch with the reality of the lives of people up and down the country. Labour Members know that, despite the Chancellor’s continued complacency, for most people in Britain living standards are not rising but falling year on year. Indeed, the Institute for Fiscal Studies makes it clear that working people will be worse off in 2015 than they were in 2010—and little wonder with average real-terms earnings more than £600 a year lower than in May 2010, and with households having faced 24 Tory tax rises since then, including the increase in VAT. Labour Members believe that the Chancellor should have used his Budget to take urgent action to support families through the cost of living crisis now, not after the general election.

I pay tribute to the contributions made by Labour Members: my right hon. Friends the Members for Southampton, Itchen (Mr Denham), for Neath (Mr Hain), for Wolverhampton South East (Mr McFadden) and for Holborn and St Pancras (Frank Dobson); and my hon. Friends the Members for Stoke-on-Trent South (Robert Flello), for Blyth Valley (Mr Campbell), for Glasgow North (Ann McKechin), for Sedgefield (Phil Wilson), for Penistone and Stocksbridge (Angela Smith), for Southampton, Test (Dr Whitehead), for City of Durham (Roberta Blackman-Woods), for Barrow and Furness (John Woodcock), for Hartlepool (Mr Wright), for Sheffield Central (Paul Blomfield), for Washington and Sunderland West (Mrs Hodgson), for Brent North (Barry Gardiner), for Wythenshawe and Sale East (Mike Kane), for Nottingham South (Lilian Greenwood) and for Edinburgh North and Leith (Mark Lazarowicz). They all spoke about concerns on behalf of their constituents—yes, those people who live in the real world out there—and businesses throughout the country.

Despite the pressing nature of the cost of living crisis that my right hon. and hon. Friends carefully articulated in the debate, what mention was there of that critical issue in last week’s statement by the Chancellor or any of the Budget documents? Absolutely none. What urgent measures were announced for parents facing child care costs that have increased by 30% on this Government’s watch while the value of their wages has fallen? Absolutely none at all. What extra support will be available now to parents struggling with those costs and to pensioners struggling with the cost of heating their homes? Not a penny. What help will the Budget provide for the millions of small firms whose business rates will increase by an average of £430 next month? Zero. What about the tens of thousands of young people who have been out of work for 12 months or more? The number has doubled under this Government, but they did not even receive a mention.

Just as we thought that the Chancellor might have completely lost touch with the lives of people up and down the country, however, we learned this weekend that he actually is on the side of the working man and woman. It is now clear that he knows what the ordinary working people of this country—very occasionally, he even gets to speak to them—want out of life: a game of bingo; and, if they buy 300 pints, to get one free.

We were all under the impression that it was the Chancellor’s right hon. Friend, the right hon. Member for Welwyn Hatfield (Grant Shapps), the chair of the Conservative party, who was the one with the common touch, but we were wrong. Who needs lower energy bills, lower child care costs or lower business rates, higher wages or even a job when people can spend their time being patronised by the Chancellor and his hapless colleagues instead? Who cares that women are being hit four times harder than men as a result of the Chancellor’s tax and benefit changes since 2010, when the move on bingo taxation, welcome as it is, has been spun in this Budget as a woman-friendly measure?

I am sure that Britain’s women will be thrilled to know that the Chancellor failed to take up the Opposition’s proposal of scrapping the discredited marriage tax allowance—84% of the benefit of which will go to men—in order to introduce the 10p rate of tax that would benefit 24 million low and middle-income households up and down the country. I am sure that they will be delighted that the Chancellor continues to defend his £3 billion tax cut for the top 1% of earners in this country—85% of whom just happen to be men—rather than adopting our proposal to reverse it in order to ensure that those with the broadest shoulders bear the greatest burden of deficit reduction.

So what did the Budget have to offer? Let us take a moment to remember the Chancellor’s record. His 2012 Budget was going to raise billions of pounds through tackling tax avoidance, yet his flagship Swiss tax deal had more holes than Swiss cheese and has brought in just a fraction of the amount that was originally promised. His 2011 Budget was a Budget for growth, yet he has had to revise his growth figures down. Of course, there was his 2010 Budget—the one in which he first made the decision to slash Labour’s annual investment allowance from £100,000 to just £25,000 from April 2012, on the grounds that 95% of firms would not be affected. He continued down that path, despite being warned widely of the hugely detrimental effect that it would have on businesses and job creation. We then had two autumn statements and two Budgets before, lo and behold, the Chancellor announced in the 2012 autumn statement that he was going to increase the allowance temporarily—the one he had cut to £25,000—to £250,000 from January 2013. On making that announcement, he described it as

“a huge boost to all those who run a business and who aspire to grow, expand and create jobs.”—[Official Report, 5 December 2012; Vol. 554, c. 881.]

That would imply to anyone that his decision to slash it just two and half years earlier was entirely the opposite.

[Mr Newmark]

Notwithstanding the hon. Lady’s criticisms, it was her shadow Chancellor who predicted that 1 million more people would be unemployed. There are now 1.7 million more people in jobs today than there were in 2010. We have taken 3.2 million people out of tax altogether by raising the personal allowance. Those are the achievements of the Government.

[Catherine McKinnell]

I caution the hon. Gentleman, given that long-term youth unemployment in his constituency has gone up 125% under this Government; he should check the figures.

However, back to the annual investment allowance, the slashing of which has cost jobs. Cutting the allowance from £100,000 to £25,000, then announcing a temporary increase to £250,000 with the expectation that it would then fall again to £25,000, before then increasing it to £500,000 in last week’s Budget, although welcome, does not really inspire confidence in the Government’s long-term strategy for supporting business growth and investment—businesses that desperately need stability and certainty, rather than continual chopping and changing over the years.

[David Rutley]

On that point, does economic growth of 2.7% inspire confidence in the hon. Lady?

[Catherine McKinnell]

The growth figures are a fraction of what the Chancellor promised back in 2010. I urge caution on the hon. Gentleman, who has seen long-term unemployment in his constituency go up 600% under this Government.

Indeed, that whole sorry saga just about sums up the Government’s haphazard and cavalier approach to backing economic growth and job creation. Clearly, it is welcome news that the economy is growing again—undoubtedly, after three years of flatlining—but as we all know, in 2010 the Chancellor predicted that our economy would have grown by 8.4% by now. Instead, we have seen growth of just 3.8%, lower than the US and lower than Germany. Indeed, GDP growth this year is still expected to be lower than the OBR forecast in 2010. This is now the slowest UK recovery for 100 years, with our economy still 1.4% behind its pre-crisis peak.

How many more businesses could have grown, and how many more jobs could have been created, had the Chancellor not slashed the annual investment allowance at the first opportunity? How many jobs and how much new investment have been lost as a result of his carbon price floor, about which the Opposition have consistently raised concerns and on which he finally used last week’s Budget to take some action?

Had the Chancellor acted before last week’s Budget, how many firms could have been given the support and finance they need to export, thereby helping to ensure that any economic recovery is driven not just by consumer spending? It is little wonder that he is so unlikely to achieve his target of doubling UK exports to £1 trillion by 2020, given that the Government’s export enterprise finance guarantee scheme helped just five firms before folding, and their export refinancing facility is still not operational, despite being announced back in July 2012.

Of course, three years of a flatlining economy have meant that the Chancellor’s much hailed deficit reduction plan has been an abject failure, with the coalition now set to borrow £190 billion more than originally planned. Indeed, the Government have borrowed more in three years than Labour borrowed in 13 years. The Prime Minister and the Chancellor previously promised to eliminate the deficit and balance the books by 2015, but now they will not be able to do that until 2018. As a result of their failed policies, the Government, who like to talk tough on welfare spending, will actually spend £1 billion more on welfare this year and next than Ministers were planning only last December to spend. They will spend £13 billion more than they planned.

[David Rutley]

It is interesting to hear the hon. Lady’s comments on the debt, the deficit and so on. Does she agree with the IFS that the Labour party would be spending £29 billion more under the plans it has in place?

[Catherine McKinnell]

I agree with the IFS that families are, on average, £891 worse off as a result of this Government’s tax and benefit changes. Once again, Government Members want to ignore the cost of living crisis that households are facing up and down the country as a direct result of this Government’s failure to deal with the deficit and help ordinary families.

Last week was the Chancellor’s final opportunity to introduce policies to provide the real help that people need now and to cement the recovery after choking it off when the Government first came to office. The key question that people across the UK will be asking is whether they are better off now and in the coming months than they were when the coalition came to power in 2010. With the exception of a very few of the Chancellor’s friends at the top, for most the answer is a resounding no. Last week’s Budget did absolutely nothing to reverse that.

21:44

[The Economic Secretary to the Treasury (Nicky Morgan)]

Let me begin by thanking hon. Members on both sides of the Chamber for their contributions this evening. I will do my best to respond to as many of the points raised as I can.

I will start by saying this: of course the Government, and everyone in the Chamber, want to see our economy growing and our living standards rising. The best way to achieve that is by ensuring that more people are going to work every morning and that those people are keeping more of the money they earn. That is exactly what last week’s Budget will help everyone to achieve.

Let me turn to the comments made in this wide-ranging debate. My right hon. Friend the Member for Mid Sussex (Nicholas Soames), in setting out his support for the Budget, mentioned the fact that we need more productivity. He also mentioned the need for investment in skills, as did other hon. Members. The right hon. Member for Ross, Skye and Lochaber (Mr Kennedy) talked about a sense of opportunity for the youth of this country and a sense of security for older people. He welcomed the freezing of whisky duty. My hon. Friend the Member for Henley (John Howell) set out his support for the development at Ebbsfleet and mentioned neighbourhood plans, which he said were key, explaining that it was Thame in his constituency that launched the neighbourhood plan.

My hon. Friend the Member for Wolverhampton South West (Paul Uppal) talked about Labour always raising taxes—how very observant he is—and set out the help for businesses that the Chancellor announced last week and the successes in his constituency.

My hon. Friend the Member for Brentford and Isleworth (Mary Macleod) talked about the support that the Government are giving air ambulances, as well as the support for tax-free child care, for which 1.9 million families will be eligible. She also mentioned the record numbers of people in work, including women.

My hon. Friend the Member for Cardiff North (Jonathan Evans) talked, as other Members did, about the support that the Government are giving energy-intensive industries, and my hon. Friend the Member for Milton Keynes South (Iain Stewart) made a bid for the Alan Turing institute to be based in Milton Keynes. I am sure that my right hon. Friend the Minister for Universities and Science will have noted that plea. My hon. and learned Friend the Member for Harborough (Sir Edward Garnier) said that he was in favour of freedom for those with pensions to make decisions that are right for them, which was a key cornerstone of last week’s budget.

My hon. Friend the Member for City of Chester (Stephen Mosley) made a terrific speech about falling unemployment in his constituency and the great work that he has done on jobs fairs. My hon. Friend the Member for Dartford (Gareth Johnson) welcomed the Chancellor’s announcements about Ebbsfleet, of which I know he will be a great champion.

My hon. Friend the Member for North Herefordshire (Bill Wiggin) talked about the cuts in cider and beer duty, which he rightly said were good news for pubs and brewers. He also mentioned that the mother-in-law of my hon. Friend the Exchequer Secretary to the Treasury lives in his constituency. I am not sure whether there is any connection with cider and beer, but perhaps that is how those in Herefordshire like to spend their time.

My hon. Friend the Member for Romsey and Southampton North (Caroline Nokes) mentioned funding for flood defences and the repairing of potholes. The Government have introduced a £6.5 million severe weather recovery scheme to support local authorities, including for highway infrastructure repairs. The scheme is now paying 100% of local authority costs above the threshold, rather than the usual 85%, and the threshold has been reduced for all county councils and unitary authorities to make it easier for them to claim support. Of course, we have also provided a further £140 million to help repair roads hit by weather damage and, in the Budget, £200 million for repairing potholes.

My hon. Friend the Member for Rugby (Mark Pawsey) talked about the importance of new homes and, like other Members, rightly pointed out that the rise in house prices is not universal across the United Kingdom. There is a particular impact in London and the south-east. My hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) mentioned the rise in the personal allowance, which the Government are proud to have delivered, and financial support for exporters.

My hon. Friend the Member for Braintree (Mr Newmark), the founder of the Million Jobs campaign, talked about the work that he has done, including on the Braintree jobs fair, and said that more growth needs more jobs. My hon. Friend the Member for Elmet and Rothwell (Alec Shelbrooke) mentioned the Labour newsletter put out in his constituency about Labour’s economic policy. I wonder whether he would like to share it with Opposition Members, particularly the shadow Treasury team, because we did not hear much about that today.

My hon. Friend the Member for Spelthorne (Kwasi Kwarteng) mentioned the recovery, as the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) just has. He reminded us that a year ago the Opposition said that there was no recovery. Now, of course, it is the wrong kind of recovery. To say that it is hard to please them would be an understatement. My hon. Friend the Member for Macclesfield (David Rutley) talked about the important reductions in corporation tax and employment allowances.

I turn to the speeches that Opposition Members made. I must congratulate them on one thing—at least most of them talked about the Budget. That is remarkable given last week’s Budget response speech by the Leader of the Opposition, in which I think he failed to mention a single Budget measure. I have to say that listening to Opposition Members is like watching arsonists making a call after they have started a fire and saying, “Please, the fire’s not being put out quick enough.”

The right hon. Member for Leeds Central (Hilary Benn) asked various questions. I probably do not have time to go through all of them, but it is interesting to note that Tower Hamlets, one of the poorest boroughs in London, has received £49 million from the new homes bonus, compared with £6 million for Wokingham, so he is not entirely right to say that money has been taken from the poorest authorities in the country. He also asked about the Financial Policy Committee’s remit on monitoring the housing market. The latest remit was published last week, on 19 March, and, as the FPC has said, it will monitor in particular developments in house prices,

“relative to indicators of affordability and sustainability.”

The right hon. Member for Southampton, Itchen (Mr Denham) talked about student loans and debt. I do not think he is in his place now, but—[Hon. Members: “Yes, he is.”] I am sorry, I missed him. I ask him just what Labour’s policy is on student loans. I represent a large university in Loughborough, and the vice-chancellor would like to know.

The hon. Member for Stoke-on-Trent South (Robert Flello) spoke about fuel price cuts. Average pump prices under this Government’s policies will be 16p per litre lower than under the plans of the previous Government. The hon. Member for Blyth Valley (Mr Campbell), who sadly is not in his place, blamed the entire financial crash on Lehman Brothers, but I point out to him that Northern Rock collapsed before Lehman Brothers.

The hon. Members for Glasgow North (Ann McKechin), for Edinburgh North and Leith (Mark Lazarowicz), and for Sedgefield (Phil Wilson), talked about protecting pensioners from themselves, which I think is deeply patronising.

[Mr McFadden]

Will the Minister give way?

[Nicky Morgan]

No, I will make some progress. The right hon. Member for Neath (Mr Hain) talked about exports. Exports to countries outside the EU continue to grow, rising by 23% since 2010. The right hon. Member for Wolverhampton South East (Mr McFadden) talked about the referendum on the EU damaging investment. That is a common theme on the Labour Benches, but the Government believe it is time to trust the people and ask them about important issues. Labour Members clearly do not.

The hon. Member for Penistone and Stocksbridge (Angela Smith) talked about support for energy-intensive industries, which she and I have discussed before. She encouraged us to make strong representations to the European Commission for the extension of compensation, and I take those points on board. The hon. Member for Southampton, Test (Dr Whitehead) spoke about the carbon price floor, and the hon. Member for City of Durham (Roberta Blackman-Woods) talked about the north-east needing more support. The right hon. Member for Holborn and St Pancras (Frank Dobson) talked about Euston station.

The hon. Member for Barrow and Furness (John Woodcock) talked about Olympic-scale investment under this Government, and the hon. Member for Hartlepool (Mr Wright) mentioned productivity. He is right; the job is not yet done. That is why we do not think that anyone should entrust the keys to those who crashed the car. The hon. Member for Washington and Sunderland West (Mrs Hodgson) missed the fact that this Government are already spending £5 billion on child care, before we get to tax free child care.

I welcome the hon. Member for Wythenshawe and Sale East (Mike Kane) to the House. I know this was not his maiden speech, but if he can raise a laugh after five hours of a Budget debate he is a welcome addition to the House. He mentioned reform of air passenger duty. That is what I was discussing with his predecessor just before Christmas, and I look forward to continued discussions on that.

My hon. Friends the Members for Wolverhampton South West and for Brentford and Isleworth said that we need greater business investment, and they are right. Investment has been too low for too long, and it has held back growth. Had business investment increased by just 10% in 2012, the level of GDP would be £12 billion higher. We must create an environment that encourages business to invest.

[Barry Gardiner]

Will the Minister answer the question that I put to her in my speech about whether local authorities will be able to insist that pension pots are converted into cash to put people over the threshold for care costs?

[Nicky Morgan]

I am sure we do not want to see that, but we will look at it in more detail as we go through the scheme. The Government have set out a clear intention to help people with their care costs, and nothing in last week’s announcement should diminish the fact that we want people to have affordable care costs, and not to be worried about getting older and being able to afford their care.

The most important point about business investment was the extension and expansion of the annual investment allowance, which means that from next month 99.8% of businesses will get a 100% investment allowance. Almost every business in Britain will pay no upfront tax when it invests. We have already mentioned the policies on pensions and savings, and the Government believe that we will give people the opportunity to save now, and to control their finances better in the future. The Government believe that responsible people who have worked hard and saved sensibly all their lives should have the freedom to decide how to use their own savings. The changes we announced last week recognise that, and act on it.

My right hon. Friend the Secretary for Communities and Local Government spoke earlier about some of the other Budget measures that will boost our communities. He spoke about Ebbsfleet, the enterprise zone in Coleraine, and the Cambridge city deal. I wish to put on record how pleased I was to be at the launch of the Leicester and Leicestershire city deal this morning. Many hon. Members will already have seen the difference those schemes can make in their areas, and I pay tribute to all those in Leicester and Leicestershire who worked so hard to secure that deal. It will boost the economy of our city and county.

This Budget will ensure that more people have jobs to go to at the start of the day and can return to their own homes at the end of the day. It will give people a greater amount of their earnings at the end of the month, and greater access to their savings at the end of their careers. Of course there is more work to do, but this Budget represents another sensible step to get our country back on its feet, and I commend it wholeheartedly to the House.

Ordered, That the debate be now adjourned.—(Harriett Baldwin.)

Debate to be resumed tomorrow.

Safety of Electrical Appliances

Monday 24th March 2014 Commons Chamber

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

22:00

[Mike Wood (Batley and Spen) (Lab)]

I hope, Mr Speaker, that you will consider that, on the first day of United Kingdom home safety week, it is appropriate that I raise the concerns of my constituent Martin Squires, who on 6 January 2012 did what hundreds of thousands of families in this country will undoubtedly be doing this very evening—he went to bed having first programmed the dishwasher sited in his kitchen. The dishwasher caught fire, and Martin believes that it is only by chance that he and his young family were not burned to death as a result.

That is bad enough, but in his attempt to come to terms with what happened to him and his family and to get to the bottom of its causes, Mr Squires has since become much more concerned with the safety of all those of us using white goods. I think it is true to say that he feels extremely let down both by the manufacturers and by the recall system for faulty and dangerous goods. In his own words,

“I purchased a product in good faith with hard earned money from a reputable company, which with hindsight was a potential death trap that they planted in my family home. As each month goes by I feel angrier with Hotpoint and the UK recall system. Hotpoint knew they had a problem with this product before my fire and whilst they started to contact customers in October 2012 they did not make the problem public until April 2013.”

He has found the system for recalling faulty products to be piecemeal, inflexible and designed, in essence, more to secure the profits of the producers than to protect the public. In fact, we know that the system is entirely in the hands of the manufacturers who produce the faulty and potentially lethal goods in the first place.

The Electrical Safety Council, which, as one might imagine, has done an enormous amount of work in this area, suggests that Mr Squires’ experience is far from unique, with such appliances causing over 17,000 domestic fires and 40 to 45 deaths in this country each year. Yet over 1 million appliances that are known to be faulty may remain in use in UK homes as we speak, every one of which has the potential to start life-threatening fires, as in my constituent’s case, or to emit gas, poisoning people as they sleep, as happened to Richard Smith and Kevin Branton, two young men who, as reported to this House in a recent debate and as shown in the Official Report of 11 March 2014, died in their sleep when a Beko cooker gave off carbon monoxide. This is a serious situation which it might be felt the Government of the day would want to play a part in mitigating. Perhaps I may come back to what I think the Government could and should do to improve matters.

First, I would like to look at the recall system that is supposed to operate when a safety risk to customers is discovered. It appears, at best, to be extremely flawed. The onus is on the manufacturer who produced the faulty product to initiate and organise the process, which, on average, leaves 80% of these defective and dangerous goods unreturned or unrepaired. Underfunded local trading standards services are responsible for enforcement and even have powers to order recall, but they rarely use them. Such other sanctions as there are appear to be derisory. Why is that the case when 1 million recalled goods are still in use in customers’ homes, and when 17,000 fires and up to 45 deaths a year result from that fact?

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for bringing this important matter to the Chamber for our consideration. I have sought his permission to intervene. In Northern Ireland, a new scheme has been brought in by the Department of Enterprise, Trade and Investment to retrain electricians periodically to make them aware of new regulations and the safety of electrical appliances so that they can use their expertise to advise their customers. If that scheme has not been introduced on the UK mainland, does the hon. Gentleman think that it should be?

[Mike Wood]

The situation is so bad that any scheme that could make a positive contribution and improve it would be welcome. I am grateful for that information, because I did not know about that scheme.

Things appear to be much better in product areas as varied as motor vehicles and food. I cannot speak for the Minister, but I understand that the Government say that the difference is due largely to the lack of traceability in electrical goods, as opposed to motor vehicles. Apparently, neither the manufacturer nor the retailer has sufficient information about the vast mass of people who purchase white goods. How, then, can we have a customer safety system that depends on exactly that knowledge? If traceability is the key to stopping fires and deaths, a quite different system must be introduced.

In my view, we need a third-party organisation with which people can register when they buy white goods. That would overcome the reticence of customers in giving their personal information to manufacturers or retailers, no doubt for fear that the data will be used or abused to bombard them with advertising and for other commercial purposes. Will the Government consider such a development? Will they consider a much more radical model that takes the process of recall out of the hands of the manufacturers altogether, so that it can be undertaken entirely in the interests of the consumer and their safety, rather than in the commercial interests of the producers?

I point the Minister to the American system, where the Consumer Product Safety Commission does just what I have suggested. As far as one can tell, it produces much better results for the consumer and their safety than we manage. I am not known for advocating the wonders of American practice generally, but our system is failing UK consumers and they have a right to expect better. In our system, commercial interest is allowed to determine how, at what pace, by what means and, indeed, if at all a manufacturer meets its responsibilities to recall defective products.

The trading standards service in my area reported to me at least one recent example of a manufacturer refusing to issue a recall notice at all, even though the trading standards service and the local fire service considered that it should. Neither of those agencies, whether individually or collectively, had the ability to force the company to act. The Chief Fire Officers Association says that it is

“very concerned about the number of faulty products in people’s homes.”

There is little wonder in that if the situation nationally is the same as the situation in my area of west Yorkshire, where the number of house fires is decreasing, in large part due to the professionalism, expertise and work of the fire service, but the number of fires caused by electrical goods remains stubbornly high. Chief fire officers have also said that they believe the recall system to be “unsuccessful and inadequate”.

The situation is that tens of thousands of dangerous and defective goods are left in people’s homes, causing 17,000 fires and up to 45 deaths a year. The responsibility for those goods obviously rests with the manufacturers, the importers and the retailers. The system to reduce the threat and protect the public safety is diffuse, unclear and too open to conflicts of interest.

I have some questions for the Minister about what the Government might do in the face of this threat to the public. First, will the Government ensure more traceability for electrical goods and consider a third-party agency to overcome the customer reluctance to provide details at point of sale? Secondly, will they investigate systems such as that in the US, where the onus for recall is essentially out of the hands of manufacturers? Thirdly, will they greatly increase the penalties, which are currently derisory—fines of £5,000 for multinational companies—given that the lives of my constituents and many others have been put at risk? Fourthly, will they start to collate data—it is ludicrous to me that they should need to start to do this—from, for instance, the 200 or so trading standards services and the fire services about the full extent of the dangers posed by these electrical products? Fifthly, will the Government listen more to people such as my constituent Martin Squires? He has had enormous difficulty in getting anybody to listen to the dangers that his family were put in and the lessons that he thinks should be learned. He wants the interests of consumers to be considered, not just those of producers, so that people’s lives are put less at risk.

Finally, to be helpful to the Minister, perhaps I might suggest that she introduce some of those suggestions as amendments to the Consumer Rights Bill which is making progress through the House.

22:13

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

I apologise for my voice being about an octave lower than normal: it is part of the tribulations of having small children who breed germs.

I congratulate the hon. Member for Batley and Spen (Mike Wood) on choosing this subject for debate: it is a very important issue. As he said, it is an important consumer issue, and I am replying to the debate as the consumer affairs Minister. The specific case that he raises clearly illustrates how serious it can be when things go wrong, and shows how important it is to get this area right. We all want to ensure that the electrical appliances that people buy in the UK are safe, and that people know they can trust what they are buying. The evidence shows that modern appliances from reputable sources are inherently safe, and they are much safer than older appliances.

As the hon. Gentleman said, for the more than 26 million households in the UK the fire statistics for the latest year available show that there were 21 fatalities related to electrical appliances and cables. It is a small number, but clearly each case is a tragedy and we cannot be complacent. We need to make sure that we reduce the fatality rate further.

The hon. Gentleman highlighted the Consumer Rights Bill, and we had a lengthy debate on this issue in Committee. It was a very interesting debate, and the hon. Member for Foyle (Mark Durkan), who is in his place, tabled a new clause on the subject, so it is an issue that has been considered quite recently. I know it is of interest to a number of Members across the House, including the two Members from Northern Ireland who are in their place, the hon. Members for Foyle and for Strangford (Jim Shannon).

The way people buy electrical products is changing, and this was debated during the passage of the Consumer Rights Bill. Traditionally, people bought electrical goods by going into physical shops on the high street. Consumers were able to look at the products, see clearly what was being offered and ask questions of the retailer to assure themselves that the product was what they needed. They were more likely to know the sort of shop it was, the price and whether they could trust the retailer. That is a very different market from the one that is emerging.

The wider use of the internet has meant that distant selling has become more common, and that brings a number of issues with it. Many reputable manufacturers and retailers supply products online—I am sure many of us have purchased items in this way—but consumers can end up buying products from less reputable suppliers who deal in products that are sometimes of poor quality and unsafe and which perform badly. Such suppliers can use the internet to avoid their liabilities and responsibilities to customers. Customers are often not as well informed about the products they are purchasing, or about the person from whom they are buying, as they are when they go into a physical shop. As a result, the relationship between consumers and retailers has changed over the years.

In a very small number of cases, manufacturers will identify problems with the appliance after it has been sold and there will be a product recall—or, more correctly, a “corrective action”. Manufacturers, including importers, and distributors, such as retailers, have a duty in consumer protection legislation to ensure that the products they place on the market are safe, but corrective action is sometimes needed to remove a risk that has been identified. This includes a range of options depending on the issue, such as providing customer information and, as a last resort, recalling a product. This is complex and often very expensive.

The majority of industry recalls are undertaken voluntarily by manufacturers, as the hon. Gentleman said, because they are keen to avoid or minimise damage to their brand and to make sure that they put something right—they rely on the trust of consumers for their brand to be successful. There is a comprehensive legislative framework in place for product recalls, which is underpinned by guidance. There is also comprehensive best practice at both UK and EU level. Consumer protection legislation requires manufacturers to have a process in place to identify problems that consumers experience, so they have a feedback system. If a manufacturer of a consumer product becomes aware that it has placed an unsafe product on the market, they are obliged to tell the market surveillance authority, including trading standards, so they do have that responsibility.

Contrary to what the hon. Gentleman suggested, trading standards can insist on a recall. They have the power to ensure that a recall takes place under the general product safety regulations. This power is rarely needed as manufacturers usually do the right thing and set up a recall voluntarily, but trading standards can enforce one if they believe it is necessary. Recalls are often complex. As the hon. Gentleman highlighted, the biggest problem facing manufacturers and retailers is that it can be very difficult to trace customers. Customers often do not provide contact details when they buy a product. The difference between cars and electrical goods is that the owners of cars are in a big database and it is very easy to trace them. People are generally more loth to hand over all their contact details to the manufacturer when they are buying a toaster, so it can be much more difficult to trace them.

Consumers have the option of providing their details via warranty cards, generally for large appliances. There are, however, all sorts of reasons why they do not do so and the hon. Gentleman highlighted many of them. For many smaller items, the option is not generally available. Even if the consumer did complete the warranty card, he or she may have moved house, or changed his or her contact details for some other reason. Products are often a number of years old when the recall takes place, and contact details will have often have changed because of that. The consumer may even have disposed of the appliance by giving it away, scrapping it or selling it, and that makes recalls extremely tricky, because it is difficult to establish where products are.

I think that, in general, the legislative framework is effective and appropriate. Strict consumer protection legislation requires electrical products that are supplied to be safe, and there is legislation that places a civil liability on suppliers of appliances and producers in the event of any injury, death or damage to property. There is also legislation prohibiting misleading or untrue statements by those selling products, which covers consumers who are buying products through distance selling—over the internet, for example. So the legislation is there, but, as the hon. Gentleman emphasised, the implementation is all-important.

The Government are trying to improve market surveillance. We have funded projects to improve surveillance at United Kingdom ports with the aim of detecting non-compliant and counterfeit products, and reducing the number of such products that come into the UK. We are also trying to improve the sharing of information between authorities, and have launched a product safety focus group. We are encouraging the use of intelligence from the fire services, which are often an extremely important source of information that others do not have. Until fairly recently, we were not making very good use of that information. Through the Department for Business, Innovation and Skills, the UK is working in Europe to improve the sharing of information between the authorities in different countries. As more and more people buy and sell products across borders, particularly in Europe, we want to ensure that that information is shared as well.

[Jim Shannon]

Will the Minister say something about the role of the electrical contractors who supply the appliances and have to conform to the law?

[Jenny Willott]

In the case of appliances that are manufactured in the UK, the responsibility lies with either the manufacturer or the trader. In the case of appliances that are imported, the importer is liable for ensuring that they are in compliance with British law. All products that are sold in the UK must conform to British safety regulations. Traders are then responsible for ensuring that the goods that they sell to consumers are appropriate and safe, and comply with those regulations. It is clear that consumers will be protected by a number of different pieces of legislation so that they cannot fall into any gaps.

We are working with the Association of Manufacturers of Domestic Electrical Appliances on an industry initiative to encourage consumers to register their appliances, because the number of people who respond to recalls is extremely low. If more people register their appliances and ensure that the details are up to date, the recalls will be more effective. The leading appliance manufacturers—there is a great deal of money behind many of the big manufacturers—are trying to encourage product registration, and have committed themselves to using the power of their marketing programmes to show consumers why it is worth registering their domestic appliances.

I hope that that will debunk some of the myths identified by the hon. Member for Strangford. Many people think that they will end up on some junk mail list and be sent a load of stuff that they do not want after handing over their contact details, and do not complete the warranty forms because they do not understand why the information needs to be held. It was quite illuminating during the Committee stage of the Consumer Rights Bill to hear a number of Members say “I had no idea that that was why we were asked to fill in those cards.” If we can make people understand why it is important to provide the information, more of them will do so, and recalls will become much more effective. We are working with the manufacturers and also with trading standards and the fire service, and with consumer groups, too, because they have a very important role to play in helping consumers understand why this is important and worth doing.

This is a very important area. Although 21 deaths is quite a low number, every one of them is a tragedy and it is still far too many. As the hon. Member for Batley and Spen highlighted, as well as those tragic deaths there are also injuries and significant damage to property. We want to try to reduce that as much as possible.

I believe that the legislative framework is right, and we are working very closely with enforcers, consumer groups, the fire service, manufacturers and retailers to try to ensure we share best practice, tighten up enforcement to make sure that is effective, and in the long run make corrective action, including recalls, more effective, so that we can reduce the number of tragedies and consumers are properly protected under the law.

Question put and agreed to.

22:26

House adjourned.

Ministerial Correction

Monday 24th March 2014 Ministerial Corrections

Monday 24 March 2014

Legal Services (Red Tape Challenge)

Monday 24th March 2014 Ministerial Corrections

The following is an extract from the Written Ministerial Statement presented by the Lord Chancellor and Secretary of State for Justice, the right hon. Member for Epsom and Ewell (Chris Grayling), on 27 January 2014.

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

...We will work with the Land Registry to simplify the process of searching for local land charges by making the legislative changes necessary to allow the Land Registry to have sole responsibility for maintaining a local land charges register, and for supplying local search results. This should make searching simpler as there will be one register of local land charges, rather than separate registers with different local authorities as at present. It will also enable the Land Registry to standardise the price of searches, turnaround times and the format of searches and will mark a significant step towards making the Land Registry a “one-stop shop” for property searches by April 2015. The Land Registry will continue to make the necessary changes to move towards “digital by default”, including enabling all applications to update/change the Land Register to be made electronically, should people wish to do so, by March 2014.

[Official Report, 27 January 2014, Vol. 574, c. 23-24WS.]

Letter of correction from Chris Grayling:

An error has been identified in the Statement given on 27 January 2014.

The correct Statement should have been:

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

...Subject to the outcome of the consultation, ‘Land Registry: Wider Powers and Local Land Charges’ published on 16 January 2014, we will work with the Land Registry to simplify the process of searching for local land charges by making the legislative changes necessary to allow the Land Registry to have sole responsibility for maintaining a local land charges register, and for supplying local land charge search results. This should make searching simpler as there will be one register of local land charges, rather than separate registers with different local authorities as at present. It will also enable the Land Registry to standardise the price of searches, turnaround times and the format of searches and will mark a significant step towards making the Land Registry a “one-stop shop” for property searches by April 2015. The Land Registry will continue to make the necessary changes to move towards “digital by default”, including enabling all applications to update/change the Land Register to be made electronically, should people wish to do so, by March 2014.

Written Statements

Monday 24th March 2014 Written Statements

Monday 24 March 2014

City Deal

Monday 24th March 2014 Written Statements

[The Minister of State, Cabinet Office (Greg Clark)]

Following the successful completion of the first wave of city deals in July 2012 with the “core cities”, the Government committed to work with a further 20 cities and their wider areas to negotiate a second wave of city deals in October 2012.

I can today inform the House that the Government, local businesses and civic leaders from Leicester and Leicestershire have reached agreement on a city deal.

The Leicester and Leicestershire city deal aims to halve youth unemployment by 2018 through a “Young Persons Pledge”. This pledge commits the area to provide all 16 to 24-year-olds with the chance to secure sustained employment or education and training and will be underpinned by the Leicester and Leicestershire “to work” programme.

The city deal will also provide funding to support the expansion of Loughborough University Science and Enterprise Parks and unlock the development of a new Advanced Technology Innovation Centre.

Small and medium-sized enterprises (SMEs) will also be supported to grow through the provision of tailored business support programmes. This scheme will enhance signposting of business support services and will establish grant schemes targeted at small/micro businesses and at medium-sized businesses that have the potential for further growth.

Business and civic leaders in Leicester and Leicestershire anticipate that the deal will create 4,000 new apprenticeships and traineeships, create 1,400 new jobs and safeguard a further 400, and support £130 million of public and private sector investment.

Agriculture and Fisheries Council

Monday 24th March 2014 Written Statements

[The Secretary of State for Environment, Food and Rural Affairs (Mr Owen Paterson)]

The next Agriculture and Fisheries Council will be on 24 March in Brussels. The Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Camborne and Redruth (George Eustice), who is responsible for farming, food and marine environment, will represent the UK. Richard Lochhead MSP will also attend.

There are both fisheries and agriculture items on this month’s agenda.

On agriculture the Commission will present proposals for regulations on the provision and promotion measures for agricultural markets, which are currently under negotiation. There will possibly be a proposal regarding organic production and labelling of organic products. There will be a report from the Commission on mandatory country of origin labelling for meat used as an ingredient, which will be followed by an exchange of views. The report highlights the high costs of legislation on this issue and the European Commission has not proposed any action at this stage: the UK will resist new measures that would add to business costs. There may also be a presentation of a report from the Commission on the reform of the fruit and vegetable sector and a presidency report on the situation in the dairy sector.

On fisheries there will be an exchange of views on the recently concluded mackerel and the EU/Norway bilateral negotiations. This will highlight the agreement that has been reached between the EU, Norway and Faroe islands on the management of north-east Atlantic mackerel. The sand eel total allowable catch (TAC) for 2014 may be adopted at this Council. There is one “any other business” item that has been requested by Spain regarding illegal, unreported, and unregulated (IUU) fishing.

The presidency has also invited Ministers to a lunch to discuss international agricultural trade issues.

Veterinary Products Committee

Monday 24th March 2014 Written Statements

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)]

I have received the annual report of the Veterinary Products Committee and its Sub-Committee 2013, which has been published today.

Copies of the report have been placed in the Libraries of both Houses.

I am pleased to acknowledge the valuable work done by the distinguished members of the Veterinary Products Committee and its Sub-Committee and thank them for the time and effort dedicated in the public interest to this important work.

Foreign Affairs Council/General Affairs Council

Monday 24th March 2014 Written Statements

[The Minister for Europe (Mr David Lidington)]

My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs attended the Foreign Affairs Council on 17 March, and I attended the General Affairs Council on 18 March. The Foreign Affairs Council was chaired by the High Representative of the European Union for Foreign Affairs and Security Policy, Baroness Ashton of Upholland, and the General Affairs Council was chaired by the Greek presidency. The meetings were held in Brussels/Luxembourg.

Commissioners Füle (Enlargement) and Oettinger (Energy) were in attendance for some of the discussions at the FAC. Commissioners Reding (Justice) and Füle (Enlargement) were in attendance for some of the discussions at the GAC.

Foreign Affairs Council (FAC)

A provisional report of the meeting and conclusions adopted can be found at:

http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/141614.pdf.

Middle East Peace Process

Baroness Ashton briefed Ministers on work to prepare the “unprecedented package” of incentives promised in December’s Council conclusions. Following the FAC, Baroness Ashton stated publicly that the EU would offer “huge opportunities” for market integration and co-operation on security, research and innovation, and that the EU could support the parties in the fields of transport, energy, water, the environment and people-to-people links.

Iran

Baroness Ashton briefed Ministers on her 8-10 March visit to Iran. She had met human rights activists and the Iranian Government had signalled their disapproval. She noted that the EU’s special representative for human rights would visit shortly. Baroness Ashton also noted that E3+3 talks with Iran would resume on 18 March to continue discussions towards a comprehensive agreement on the nuclear file.

Middle East and North Africa

On Syria, Baroness Ashton noted that UN Special Envoy Brahimi was pushing for further talks between the regime and opposition. On Iraq, Baroness Ashton explained that the security situation made a full election observation mission of the 30 April elections impossible. Instead, the EU would send election experts to work with domestic observers. On Libya, Baroness Ashton thanked Italy for organising the 6 March Rome Ministerial meeting.

Bosnia and Herzegovina

Baroness Ashton briefed on her 12 March visit to Bosnia and Herzegovina (BiH). She had passed a strong message that BiH needed leadership and that progress could not wait until after elections. The EU should consider stepping up engagement with BiH, which should encourage leaders to respond to the socio-economic demands of recent protests. Baroness Ashton stated that she expected conclusions to be prepared for the April FAC.

EU-Africa Summit

Baroness Ashton briefed the Council on preparations for the fourth EU/Africa summit, which is to take place in Brussels on 2-3 April under the theme “Investing in people, prosperity and peace”. In addition, there will be an EU/Africa Ministerial meeting on 1 April, in advance of the summit. Conclusions were adopted on a number of African files, including on responding to the security challenges of the Gulf of Guinea, the situation in South Sudan, the Sahel and the Central African Republic (CAR).

Ukraine

The Foreign Secretary updated the House on 18 March on the situation in Ukraine, including on the actions agreed by the Foreign Affairs Council, 18 March 2014, Official Report, column 650. At the FAC, Ministers strongly condemned the holding on 16 March of an illegal “referendum” in Crimea on joining the Russian Federation, in clear breach of the Ukrainian constitution. The EU does not recognise the illegal “referendum” and its outcome.

In line with the statement of the EU leaders of 6 March, the FAC adopted the package of sanctions against 21 individuals in Crimea and Russia who were threatening Ukraine’s territorial integrity. The targets include Crimean political leaders, Russian parliamentarians, and Russian military commanders. Baroness Ashton outlined EU support to Ukraine and Ministers endorsed the signing of the political chapters of EU/Ukraine association agreement at the 20-21 March European Council. Conclusions were agreed setting out EU concerns, noting the sanctions, and repeating existing language about possible further measures.

Ministers also emphasised the importance of signing the association agreements with Georgia and Moldova.

Energy diplomacy

Ministers discussed EU energy diplomacy over a lunch which Commissioner Oettinger attended. As well as focusing on the immediate situation in Ukraine, Ministers considered the issue from a strategic viewpoint. The Foreign Secretary stressed how energy security would play an increasingly prominent part in the future of foreign policy, and encouraged consideration of options for decreasing dependency on any single particular source.

Other business

Ministers agreed without discussion a number of other measures:

The Council adopted a decision on the amendment of a specific protocol to each of the euro/Mediterranean association agreements as concerns the concept of “originating products”.

The Council updated the EU’s common military list, which defines the scope of EU rules on arms exports as set out in Common Position 2008/944/CFSP defining common rules governing the control of exports of military technology and equipment.

The Council approved revised guidelines on the appointment, mandate and financing of EU special representatives.

The Council amended the restrictive measures against the Democratic Republic of the Congo so as to implement changes decided in UN Security Council resolution 2136 (2014) of 30 January 2014.

The Council adopted a crisis management concept for a civilian mission under the common security and defence policy to assist the internal security forces in Mali so as to enable the Malian state to ensure law and order and fight against terrorists, organised crime and cross-border trafficking.

The Council authorised the opening of negotiations for an agreement on the participation of the Swiss confederation in the EU integrated border management assistance mission in Libya (EUBAM LIBYA).

The Council approved conclusions on West Africa’s Economic Partnership Agreement Development programme.

The Council adopted the conclusions on the EU common position for the first high-level meeting of the global partnership for effective development co-operation, which will take place in Mexico City on 15-16 April 2014.

The Council adopted conclusions on the European Court of Auditors’ special report No. 9/2013 on EU support for governance in the Democratic Republic of the Congo.

General Affairs Council (GAC)

The 18 March GAC focused on: preparation for the March European Council; the European semester; and the Commission’s communication on the rule of law.

A provisional report of the meeting can be found at:

http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/genaff/141629.pdf.

The Preparation of the March European Council

The GAC discussed the March European Council (20 and 21 March), both in the plenary session of the General Affairs Council and over lunch with the President of the European Council, Herman Van Rompuy.

The main focus of this European Council is the situation in Ukraine. In addition, the Council has a full agenda covering: the energy and climate 2030 package; the European semester; industrial policy; and EU/Africa relations including the preparations for the EU/Africa summit to be held on 2 and 3 April.

Following the Foreign Affairs Council’s extensive discussion on Ukraine on 17 March, the GAC concentrated more on the other European Council agenda items, though there was a substantial discussion at the Ministerial lunch. On the climate and energy 2030 package, I again stressed the importance of aiming for an ambitious outcome at the March Council, but made clear that member states needed flexibility to de-carbonise in the most effective way. The issue is not only about climate, but also ensuring Europe’s long-term energy security needs are met. On industrial policy, I said that it was important to create the right conditions to encourage re-shoring and investment in Europe by reducing unnecessary burdens in key industrial sectors and creating a regulatory environment that drives innovation, industrial growth and competiveness. The GAC also discussed widening the scope of the EU/Africa discussion to include trade, development and economic partnership.

The European Semester

The GAC endorsed the presidency synthesis report on the 2014 European semester for further discussion at the March European Council.

Commission Communication on the Rule of Law

The GAC received a presentation by the Commission of its communication on the rule of law mechanism and had a preliminary exchange of views. I made it clear that the focus on political dialogue and systemic threats was a step forward from earlier ideas but noted the need for further discussion after member states had considered the communication in detail.

Subsidiarity

Over lunch, ministers had a discussion on the principle of subsidiarity, following interventions by different member states, including the UK, at previous Council meetings. Germany and the Netherlands said that the EU needed to focus in the areas of its competence where it could add most value. I agreed and said this was a crucial debate at the right time given the upcoming institutional refresh.

Illegal Wildlife Trade

Monday 24th March 2014 Written Statements

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

On 12 and 13 February I chaired the London conference on the illegal wildlife trade, which was organised by the Department for the Environment, Food and Rural Affairs in conjunction with the Foreign and Commonwealth Office, the Department for International Development and the Home Office. I would like to inform the House of the outcomes of the conference and to explain how the UK Government will take forward further action to combat the illegal wildlife trade.

The London conference brought together over 50 countries and international organisations to agree new and bold measures to tackle the illegal wildlife trade, signalling a new level of political commitment to tackle the issue. As well as the devastating consequences for biodiversity and the environment, the illegal wildlife trade is a serious criminal industry worth billions of pounds, which damages local communities and sustainable development, particularly in Africa.

Participating Governments at the conference agreed a political declaration that should mark the turning point in the fight to save endangered species and to end the illegal wildlife trade. Governments committed to action designed to strengthen law enforcement, reduce demand and support alternative livelihoods of communities affected by poaching and the trafficking. Notably, Governments committed themselves for the first time to renounce the use of products from species threatened with extinction, which sends the strong signal that Governments will not procure the things that drive demand for illegal wildlife products. Governments also went further than earlier commitments and promised to support the current position within the convention on the international trade in endangered species of flora and fauna (CITES) to prohibit commercial, international trade in elephant ivory until the survival of elephants in the wild was no longer threatened by poaching. Governments also committed to treating poaching and trafficking in wildlife as a serious, organised crime; the same category as trafficking in drugs, arms and people.

Implementation of all the commitments made in the political declaration will be reviewed at a follow-up conference, to be held in Botswana in early 2015.

The London conference also provided a platform for Governments to make new commitments, including the elephant protection initiative, launched by the Governments of Botswana, Chad, Ethiopia, Gabon and Tanzania. These Governments committed to an extended moratorium on the sale of ivory and also to put all ivory stocks beyond economic use, showing their determination that it is the elephants that hold value for them and their communities, not their tusks. In response, the partners would access a fund to support measures contained in the African elephant action plan. Her Majesty’s Government (HMG) committed to match the first tranche of private sector finding for the elephant protection initiative, amounting to £1 million.

The UK Government’s approach to tackling the illegal wildlife trade following the London conference is set out in the UK Government “Commitment to Action”, published on 5 February 2014. This includes the provision of a £10 million fund to help Governments, non-governmental organisations (NGOs) and charities tackle illegal wildlife crime across the world and help deliver the outcomes of the London conference; continued funding and active engagement and leadership in CITES; and a guarantee of funding for the UK National Wildlife Crime Unit (NWCU) until 2016. The Foreign and Commonwealth Office will continue to use its network of diplomatic posts to influence international efforts to combat the illegal wildlife trade, including through supporting anti-poaching and trafficking initiatives, promoting demand reduction measures and providing support to the Government of Botswana in preparing for the follow-up conference on the illegal wildlife trade in early 2015.

I have laid a copy of the “London Declaration on the Illegal Wildlife Trade”, and of the “Elephant Protection Initiative”, in the Library of the House.

InterCity East Coast Franchise

Monday 24th March 2014 Written Statements

[The Secretary of State for Transport (Mr Patrick McLoughlin)]

On Friday, 21 March 2014, I published the invitation to tender (ITT) for the InterCity East Coast franchise. This marks the next step in the formal competition to find a new private sector partner to run passenger rail services on the east coast main line.

I have also published the InterCity East Coast stakeholder briefing document, which provides an update to the InterCity East Coast consultation summary report published in October 2013.

The ITT asks bidders to set out detailed proposals on what improvements for passengers they will deliver and how they will build on the multi-billion pound investment planned for the east coast main line and should they win the franchise. The invitation to tender includes:

the requirement to introduce the new world-class fleet of trains from the inter-city express programme;

continuation of services to all current destinations;

faster, more frequent services to/from King’s Cross by May 2020;

faster average journey times to Leeds and Edinburgh from May 2020;

the potential for improved services to destinations such as Lincoln;

an opportunity for bidders to serve five new routes including Huddersfield, Scarborough, Harrogate (via York), Middlesbrough and Sunderland (via Newcastle); and

a fund that will drive innovation for passengers and deliver long-term benefits for the franchise and wider rail industry.



It is anticipated that the successful bidder will be announced in November and that the new franchise will start in March 2015 and run for eight years and four weeks, with a possible one year extension callable at my sole discretion.

Services along the east coast main line are set to be transformed over the coming years through £240 million worth of investment which will improve reliability and boost capacity for passengers and freight. The route will also benefit from the Government’s £5.8 billion inter-city express programme, which is set to deliver a new fleet of state-of-the-art trains which will improve journey times and deliver a boost to the customer experience.

Grand Committee

Monday 24th March 2014 Grand Committee

Monday, 24 March 2014.

Arrangement of Business

Monday 24th March 2014 Grand Committee

Announcement

15:30

[The Deputy Chairman of Committees (Baroness Fookes) (Con)]

My Lords, I am required to make the usual announcement that if there is a Division in the House, the Committee will adjourn for 10 minutes.

Immigration and Nationality (Fees) Regulations 2014

Monday 24th March 2014 Grand Committee

Motion to Consider

15:31

Moved by

[Lord Taylor of Holbeach]

That the Grand Committee do consider the Immigration and Nationality (Fees) Regulations 2014.

Relevant Document: 22nd Report from the Joint Committee on Statutory Instruments.

[The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach) (Con)]

My Lords, in moving that the Committee should consider the draft Immigration and Nationality (Fees) Regulations 2014, I will also speak to the Immigration (Employment of Adults Subject to Immigration Control) (Maximum Penalty) (Amendment) Order 2014.

Members of the Committee will remember that I came to the Grand Committee on 28 January to debate the Immigration and Nationality (Fees) Order 2011, which provides powers to charge for visa, immigration and nationality applications and services. I am here today to debate the specific fees charged within the scope of that order. I am happy to take points on any of the fees proposals set out in the Written Ministerial Statement of 24 February 2014, both those contained within these regulations and those in the Immigration and Nationality (Cost Recovery Fees) Regulations 2014, which have been laid separately before Parliament.

The fees proposals aim to strike the right balance between ensuring that our visa fees compare favourably with other countries and providing sufficient income to fund the system and improve services. We have sought to limit most increases to 4%. It might help noble Lords if I now describe those fees which have increased by more than 4%, which include the following. The first is the fee for dependants applying to extend their leave. We propose to remove the concession on fees for dependants applying at the same time as main applicants in the UK so that all dependants will pay the same as main applicants. This is consistent with the charging policy for applications made overseas and with separate dependant applications in the UK. Each individual within an application may receive an independent set of entitlements and will involve additional administration costs.

The second set of fees are those for UK premium services. The in-person and the priority service are optional services for people who wish to have their application expedited. The in-person fee is increased from £375 to £400 and the priority service fee from £275 to £300. We have also looked at the two-year and five-year visit visas, which will increase from £278 to £300 and from £511 to £544 respectively in order that the 10-year visit visa may be held at the current fee of £737. Long-term visit visas offer good value for money for frequent travellers, since a long-term visit visa fee is less than the cost of multiple short-term visit visas to cover the same period.

We are also introducing further concessions to encourage tourism and promote economic growth. There is to be a fee reduction for those who transit the UK without passing through border controls from £54 to £40. The fee for a visitor-in-transit visa and for those who need to enter the UK for a short period pending onward travel remains unchanged at £54.

I turn now to concessions for tier 2 applications where the applicant has a job on the shortage occupation list. It makes sense to encourage skilled overseas workers to fill these important roles until we can improve the skills and employability of the UK workforce. Some fees have been reduced in line with unit costs, including those for sponsorship, the transfer of conditions, travel documents and settlement visas for refugee dependent relatives.

I turn now to some new fees which we are introducing. The proposed fee for tier 2 leave applications for up to five years, in line with new rules that allow a tier 2 (general) or tier 2 (intra-company transfer—long term) certificate of sponsorship for up to five years is £1,028 for applications made overseas and £1,202 for in-UK applications. That is equivalent to two tier 2 applications for up to three years’ leave but means migrants only have to apply once. There is a new fee of £1,093 for dependants of Armed Forces personnel applying for leave to enter for settlement. A registered traveller service will offer expedited border clearance to regular visitors from low-risk countries; after completion of the Border Force pilot, the service will be charged at an annual registration fee of £50 per year later this year.

Following a review of nationality fees, we are introducing a revised charging structure in line with the entitlements allowed by each route. The fee for naturalisation as a British citizen will increase by 4% from £794 to £826. Registration as a British citizen provides a similar entitlement to naturalisation but, in recognition of the fact that certain people would qualify by right to apply, the proposed fee is 10% lower at £743. Applications for other categories of nationality, such as British overseas citizen and British Overseas Territories citizen, will be charged at 20% less than the fees for those applying for full citizenship. Fees for children will be 10% cheaper than the equivalent adult fee.

Finally, we are bringing fees for optional premium services for visa applications into our charging legislation. Fees will be at a single global rate rather than set locally.

The second instrument for noble Lords to consider in this single debate is the Immigration (Employment of Adults Subject to Immigration Control) (Maximum Penalty) (Amendment) Order 2014. Noble Lords will be familiar with the civil penalty scheme to prevent illegal working from recent debates on the Immigration Bill. We are pursuing a broad package of reforms to tackle illegal working. The noble Baroness, Lady Smith, and I see a common objective in dealing with this scourge. Some measures are in the Bill, such as strengthening debt recovery and streamlining objections and appeals. Other measures concern changes to secondary legislation, including today’s proposal to increase the maximum penalty from £10,000 to £20,000 for each illegal worker.

We can only deliver a comprehensive response to illegal immigration if we work with UK employers to deny employment to those without the right to work in this country. Illegal working is the main incentive for illegal immigration and often involves exploitation and unfair competition. The civil penalty scheme encourages employers to comply with their obligations to check the right to work of all employees, without criminalising those who make a mistake. Under the scheme, an employer can establish a statutory excuse by undertaking specific document checks. The legislation provides a separate criminal offence for those who knowingly use illegal labour.

When an illegal worker has been identified and the employer has no statutory excuse, a financial penalty will be levied according to a statutory code of practice. Employers will have the right to object and, separately, to appeal to the court against the civil penalty. The maximum penalty was set six years ago at £10,000 for each illegal worker and has remained the same since. The Government are concerned that this penalty framework no longer provides a sufficient deterrent and does not reflect the full economic advantage derived from using illegal labour or the wider costs to society.

We intend to make the scheme tougher on rogue employers by increasing the level of the maximum penalty to £20,000 for each illegal worker. As is the case now, the maximum will be levied only on those who breach the legislation on more than one occasion.

We are also strengthening the penalty scale to ensure that higher penalties are applied where employers fail to conduct proper right-to-work checks. A revised draft code of practice that specifies the factors to be considered in determining the amount of the penalty will shortly be laid before the House. The scheme will continue to incorporate sensible penalty reductions for those employers who actively co-operate with the Home Office when failings in their recruitment processes come to light.

Legal migration brings economic, cultural and social benefits to the UK. We will continue to send a clear signal overseas that this country welcomes genuine visitors and the brightest and best migrants. I believe these instruments provide a basis for a sustainable immigration system that will command public support and I commend them to the Committee.

[Baroness Smith of Basildon (Lab)]

My Lords, I am grateful to the Minister for his explanation. In some ways the orders are fairly straightforward. The Minister will be pleased to know that we certainly support their principle and do not intend to oppose them. However, it would be helpful to have further clarification on detail. The Minister is smiling because he knows that I always seek further clarification and he would not expect me to do otherwise.

We have just finished the Committee stage of the Immigration Bill and it is helpful to have this debate against that backdrop. Many of the issues we have been discussing in the Bill have common themes with these orders.

On the first order, I understand that there is a flat 4% increase across the board. I tried very hard when the Minister was speaking to try to do some calculations in my head but the maths was beyond me at such short notice. It is projected that some increases will be more than 4% and some will be less. Is the Minister able to give me more detail? I do not expect it today; I would be happy with a more detailed breakdown in writing of the figures he gave for the percentage increases for different kinds of visas, given that it is supposed to be a 4% increase across the board.

I understand that this is an income-generating measure. I entirely agree with the Minister’s point that those who benefit should pay the cost; I have no difficulty with that. However, when reading the impact assessment I struggle to understand how much of this is to cover a shortfall in Home Office funding from the Government and how much is to cover the costs and ensure that this is self-financing. The impact assessment makes it clear that funding for the immigration system is going to reduce over the five-year period of the current comprehensive spending review. Over the CSR period financial planning requires the Home Office to deliver the maximum amount of fees agreed with the Treasury under the CSR. Any income above that amount is surrendered to the Treasury’s Consolidated Fund. I am trying to understand how much additional income the Minister thinks would be generated from the fees being proposed in this order today, as well as the impact of those increased fees.

I have already said that we support the principle. However, during the passage of the Immigration Bill the impact of the Government’s immigration policies on overseas higher education students has generated considerable discussion in your Lordships’ House. I would be keen to know what information is available to the Government and how robust the evidence is on whether foreign students are going to be deterred by the increase in fees. I know there are figures on applications in the impact assessment, but I am not sure how those are arrived at. More information about the process used and clarification of the figures would be helpful.

15:44

Two higher education representative bodies have raised concerns with the Government. One of the bodies—GuildHE—says that,

“proposals designed to generate more income from immigration services could serve to deter international students and staff and, ultimately, lead to reductions in income in these areas for the Government while inflicting serious damage both on the higher education sector and on the wider economy”.

It also asks the valid question why fees paid by applicants under tier 4 should be set anywhere above cost recovery level. It would be helpful to have more information on that. The figures for overseas students show that the number of visas issued to Pakistani students was down 55% on the previous 12 months, and that for Indian students it was down 21%. I know that the noble Lord has heard these arguments several times in Committee on the Immigration Bill but noble Lords are concerned that universities should not be disadvantaged by any other measures that the Government may take, given that they have already taken a bit of a hit with the falling number of overseas students. I would appreciate it if the Minister would address that point.

The Tourism Alliance’s response to the consultation called for tourist visas to be set at a competitive level to Schengen visa rates. I assume that analysis has been undertaken of the impact on tourist numbers, but if more information on that is available, it would be helpful to have it. The Employment Lawyers Association argued in its consultation response:

“Any increase in fees should only be implemented if it is certain that service standards can be maintained and/or achieved”.

This is also an issue we discussed in the debate on appeals in the Immigration Bill. If the Minister can give assurances about an improved level of service with an increase in fees, that would also be welcome.

I was interested in the Minister’s comments on illegal immigration. He referred to our concerns that the Government should take measures to tackle illegal immigration and those employers who abuse both British and migrant workers by not fulfilling the proper terms and conditions of employment, paying lower wages and trying to bypass health and safety provisions. When he said that we shared a common objective in dealing with this, I was somewhat surprised to hear him refer to a surge in numbers. If he can say something more about that, it would be helpful. He frowns at me but he used the phrase “a surge in numbers” when he talked about illegal immigration and illegal employment. It would be helpful to be given any figures he has on that, albeit it always seems to me that figures on illegal immigration are somewhat less than robust.

The Minister will not be surprised to hear that we support the order, but having read through it, the Explanatory Notes and the impact assessment, I have a few questions which it would be helpful if he could answer. My questions concern the same issues as I raised on the Immigration Bill—that is, the evidence base for decisions that are taken; the impact the measures proposed by the Government will have; and the practicalities of implementing them. The reason for increasing penalties on the illegal employment of migrants was originally to act as a deterrent to employers so that they would not employ illegal migrants, and to punish those who broke the law. As I said, this practice is bad for UK citizens and can often mean a race to the bottom in terms of wages and employment conditions. Therefore, it is in everyone’s interest that we tackle this issue.

The impact assessment was helpful. However, for the legislation to be effective it has to be enforceable and fully enforced. The impact assessment states that around 10,000 penalty notices have been issued from the introduction of the relevant legislation in February 2008 to the end of last year. Is it possible to have an annual breakdown of the number of penalty notices issued in each of those years from February 2008 through to the end of 2013? I anticipate that when the legislation was first introduced, there would have been a slow start but that the number of prosecutions would have picked up by 2013. If the Minister does not have the annual figures with him today, it would be helpful if he would write to me with that information. In those six years, the penalties levied amounted to more than £90 million. On appeal, that fell to £70.8 million. I would like some clarification on how that figure is broken down.

Less than £30 million of that money has been collected. According to the debate in the other place, as well as the impact assessment, £20 million has been written off. The Minister in the other place, James Brokenshire, when asked about it said that £7.2 million of the written-off money related to companies that had been dissolved. I should like an assurance that some work will be done on that because an issue in consumer law is that although no action can be taken when a company is dissolved, the directors or their wives can crop up as directors of other companies so that, in effect, the company continues but with different directors. Are directors of dissolved companies kept track of to see whether they go on to set up anywhere else where they may continue the practice of illegally employing migrants? When the Minister in the other place was asked about the remaining £12.8 million that had been written off, the only response he could give—I read this several times to make sure that I had it right—was:

“I am quite sure that there will be a number of different reasons”.—[Official Report, Commons, 12th Delegated Legislation Committee, 19/3/14; col. 11.]

What are they? Why has £12.8 million in penalties been written off? If it is not because companies have been dissolved, disappeared or broken down, what are the reasons? It was not helpful for the Minister in the other place to say that. If the noble Lord can enlighten us about what the reasons are, it would be helpful.

Mr Brokenshire also said that there were measures in the Immigration Bill to deal with this point on the collection of penalties but I am not sure what they are. It would be useful if the noble Lord could address how the Bill will address enforcement and the collection of civil penalties. We start with the £90 million, which was reduced on appeal; then £12 million was written off for other unspecified reasons; and, finally, less than £30 million has been collected. That still leaves over £20 million in penalties unaccounted for. The Minister in the other place said that the debts were being pursued. How long are they being pursued for before they are written off? How much more is likely to be written off? If it is the case that the money is being pursued and the full £20 million will come in, I would be very happy to hear that. However, I am concerned that we could be writing off large amounts of money when there is clearly an issue. If employers think that the law is not enforceable and they do not have to pay the fines—simply because they can shut down the firm, the fine will be written off or for “other reasons”, according to James Brokenshire—the law is not particularly effective. How long ago were those penalties which have been written off or awaiting collection imposed? How long do we have to wait before payment?

The point that I am trying to make is similar to one I made about the Immigration Bill. The law is effective only if it is properly enforced. If we are writing off huge amounts of penalties owed to the taxpayer, there is a serious problem with the effectiveness of the legislation before us. I hope that the noble Lord can reassure me on those points and I look forward to his response.

[Lord Taylor of Holbeach]

I thank the noble Baroness for her support and general welcome for these measures. I appreciate her comments and have, for me, a surprisingly large number of answers. I hope that the Committee will bear with me on them.

First, I must say that I did not refer to “a surge” but “a scourge” of illegal migration. I hope that the record shows that because that is what I meant to say. I do not want to get my notes muddled up and will therefore deal with the fees regulations first and then talk about the order on illegal working. I have a fair amount of information and will make sure that the noble Baroness receives details of the percentage increases, which actually were set out in the Written Ministerial Statement of 24 February. I am sorry that I do not have a copy of it to hand but will certainly make sure that I send it to her.

Secondly, the noble Baroness asked how much of the income generated is to cover a shortfall. She is quite right: we use this money to help support immigration services in general, which are quite expensive. If we want effective immigration control which efficiently delivers a speedy resolution of difficult cases, we have to make sure that we have the right resources to do it. The fee increases are expected to raise approximately £50 million per annum.

The noble Baroness went on to talk about that familiar subject: student visa fees and student numbers. If I appeared a little breathless when I came into the Committee, it was because I had been talking to a certain noble Lord about this very issue. I do not seem to be able to move around the House without talking about it. Our view is that there is no direct relationship between the visa fee and volume demand at this price level because the major costs are not visa fees or even the health charge that noble Lords have spoken about. Independent research suggests that visa pricing is only a marginal consideration for students and the UK is one of the most desirable places to come to study. This is an argument I have been making in the Immigration Bill. University applications are up 7% as of last September. We know that there is a problem in the Indian subcontinent as a whole, and that is reflected in the Australian experience. Elsewhere, numbers are almost the same. We have had a considerable surge in the numbers from China, which has more or less offset the decline from India. We are confident we have got the balance right.

Visas are not used as a method whereby we limit migration. We have not targeted tier 4 applicants. The 4% increase that applies to other fees also applies here, so it is a standard across-the-board increase. We set fees based on the value of the successful application to the migrant and, to that extent, it is a market-led calculation.

I think the noble Baroness welcomed the increase in fees as long as it was going to maintain or, if possible, improve service standards. We have put measures in place. There has been considerable organisational change in the old UK Border Agency. UKVI is now in-house in the Home Office, and our performance against service standards is improving. In the past year we have made great progress in reducing the stocks of in-country case work and backlogs. A straightforward application made today would be dealt with within service standards.

The noble Baroness asked whether we have considered joining Schengen or have considered our relationship with the Schengen visa system.

[Baroness Smith of Basildon]

I was not suggesting that we join Schengen. I was just taking about the comparative costs of visas.

[Lord Taylor of Holbeach]

Our visa product is competitive with Schengen in price and entitlement. We are running a pilot in China trialling ways to encourage tourists to apply for a Schengen visa and also to travel to the UK. This allows selected travel agents—that is fairly straightforward in the Chinese experience—to make offline applications for tour groups using the same form as they use for Schengen. We are trying to facilitate the use of Schengen applications in China and are monitoring that because some people say that having to make two applications for separate visas is a deterrent. However, I am pleased that the noble Baroness is not suggesting joining Schengen. In fact, I have to say that I did not think that she had said that, either—but my papers suggested that she might have done.

On the question of illegal working, I have the figures, which show an increase in particular years. They started off at 1,722 in 2008-09; the next year, they were 2,339, while in 2010-11 they were 1,898 and in 2011-12, 1,342. In 2012-13, they were 1,270 but last year, up to 28 February—we are still in 2013-14—the number was 1,862. I shall make sure that the record has the figures available.

16:00

[Baroness Smith of Basildon]

I did not quite catch them, but I shall read the record in Hansard. Does that suggest that from 2010 until last year, the figures for actions against those who employ illegal workers went down?

[Lord Taylor of Holbeach]

Yes, that is certainly the case. They dropped in that period and they have now increased markedly, so the latest figure is on track to be the second highest since the scheme was introduced.

We are taking steps to increase our focus on illegal working. With the creation of the Immigration Enforcement Directorate last year, we have already seen a significant increase of 47% in illegal working operations in 2013, compared with 2012, and a corresponding increase in civil penalties involved. Around 10,000 civil penalty notices were issued to employers since the start of the scheme until the end of 2013. The gross value of penalties levied during that time is in excess of £90 million, but the net recoverable value is £70.8 million. During the period from 2008 to 2013, almost £30 million was collected. Civil penalties to the value of £20 million were written off. The noble Baroness is right to draw attention to that factor. That happened during the previous Labour Government as well as during this Government, often because the companies evade the penalty by dissolving their business. The remainder is still subject to recovery; we are still pursuing some of these people—but we are using the Immigration Bill to make it easier to enforce civil penalty debts in the courts. The change will accelerate the process of enforcement, reduce costs and provide clarity.

[Lord Hussain (LD)]

I wanted to clarify one point. What consideration has been given to how to implement the penalties on small employers whose sole income may not be as much as the penalties being introduced of £20,000?

[Lord Taylor of Holbeach]

Whether you are a small or large employer, it is clearly illegal to employ people who are not entitled to work here. The penalty regime is designed to provide the enforcement authorities with flexibility in how they apply the scheme. The whole point of the exercise is not to drive people out of business but to prevent businesses that gain an economic advantage by employing illegal workers from gaining that advantage and to discourage them—and to make sure that they have proper checks in place, small or big business, to make sure that they have proper records in these cases.

I would argue that in some ways it is easier for a small employer to have a rigorous regime, because people are more likely to be working alongside each other in small businesses than in larger organisations. We are trying to work with business. I hope that my noble friend will agree with me that the employment of illegal labour is a scourge that needs addressing and that, whether it is in large or small businesses, we are right to deal with it. They are treated equally, and we allow payments in instalments to reflect the impact on the business. I should just mention that.

[Baroness Smith of Basildon]

If the Minister has other points to make on the questions I asked about the penalty notices then I may be jumping the gun, but so far he has only repeated the information that I spoke of and has not given any of the information that was asked for in the debate. One question was about the money written off. The Minister in the other place said that £7.2 million was written off when companies were dissolved. I asked in particular whether we did any checks on the directors of those companies to see whether they set up other companies. I also asked what the £12.8 million remaining out of the £20 million written off was for. In the other place, the Minister, James Brokenshire, just said it was for “different reasons”. When we are writing off £12.8 million, I do not think that that is an adequate reply.

[Lord Taylor of Holbeach]

I cannot really add directly to the information that the noble Baroness already has but will certainly write to her on the matter. We are tackling phoenixism—the arrangement whereby a business is here today, gone tomorrow and there again the following week. We are intervening to prevent companies dissolving to evade penalties, which is a common enough phenomenon, and we act with the Insolvency Service to disbar directors who are clearly not prepared to abide by the law in this area. As I said earlier, the Immigration Bill accelerates debt recovery by enabling us to register the penalty as an order of the court. This avoids lengthy court processes, as we can insist on payment on a much easier basis than by having to use the court.

I have tried to answer a number of the questions but may not have answered them all. To the extent that I have failed to do so, I will make a point of writing to the noble Baroness and to my noble friend so that they are in the loop on this matter. I beg to move.

Motion agreed.

Immigration (Employment of Adults Subject to Immigration Control) (Maximum Penalty) (Amendment) Order 2014

Monday 24th March 2014 Grand Committee

Motion to Consider

16:08

Moved by

[Lord Taylor of Holbeach]

That the Grand Committee do consider the Immigration (Employment of Adults Subject to Immigration Control) (Maximum Penalty) (Amendment) Order 2014.

Relevant Documents: 22nd Report from the Joint Committee on Statutory Instruments

Motion agreed.

Combined Authorities (Consequential Amendments) Order 2014

Monday 24th March 2014 Grand Committee

Motion to Consider

16:09

Moved by

[Baroness Stowell of Beeston]

That the Grand Committee do consider the Combined Authorities (Consequential Amendments) Order 2014.

Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)]

My Lords, I am pleased to introduce the draft Combined Authorities (Consequential Amendments) Order 2014, which was laid before this House on 10 March. In speaking to it I shall also speak to the other three orders in my name on the Order Paper relating to the three proposed combined authorities.

The orders we are considering this afternoon, if approved, will bring about the establishment of combined authorities in three major metropolitan areas: across Merseyside and Liverpool, around Sheffield and South Yorkshire and in West Yorkshire. The purpose of these combined authorities is to enable the councils and their partners in each of these areas to work together more effectively to promote economic growth, to secure more investment and to create more jobs. These combined authorities will be central to delivering the outcomes in the city deals that the Government have agreed with each of the areas. They will also provide the governance needed for any future growth deals drawing on resources of the local growth fund.

Each combined authority will be responsible for economic development, regeneration, and transport across the functional economic area. All the councils in each area have agreed that their combined authority will be able to exercise their functions on economic development and regeneration. The combined authority will also have the transport functions currently exercised by the area’s integrated transport authority. That integrated transport authority will be abolished when the combined authority is established.

The process for setting up a combined authority is set out in the Local Democracy, Economic Development and Construction Act 2009. Crucially, all the drive and initiative has to come from the places involved. It is what we call a bottom-up process. It is a process where the first steps are taken by the councils involved. The first step is for the councils to undertake a governance review in their area looking at how decisions are taken on economic development and regeneration, and on transport. This review will allow the councils to decide whether the combined authority approach is the most effective way for them to work together and with their public and private partners, particularly the local enterprise partnership for the area concerned to promote economic growth and prosperity. All the councils concerned have followed this process and concluded that a combined authority is the right way to work together and with their partners to drive growth.

This Government’s approach is one of localism, which reflects our belief that residents and their representatives are best placed to decide what happens in their area. Where councils come forward with a proposal for a combined authority—like the three before us—which commands wide local support and we consider that the statutory conditions have been met, we invite Parliament to approve a draft order to establish the proposed combined authority. If, in the future, local councils decide that changes are in the area’s best interest—perhaps another council joining, or one leaving—and statutory conditions have been met, we would bring an order back to Parliament for approval to enable the change to take place.

As the 2009 Act requires, each group of councils concerned have provided the Government with detailed information about how they wish the combined authority to operate, to take decisions and be open, transparent and accountable. The Government have consulted on each proposal, and each proposal has been considered in the light of relevant statutory conditions to make sure that the proposal: is likely to improve the exercise of statutory functions relating to transport, economic development and regeneration in the area; is likely to improve the effectiveness and efficiency of transport in the area; and is likely to improve the economic conditions in the area. In each case I can tell the Committee that the Government consider that these tests are unambiguously met. The Government have also had regard to the need to reflect the identities and interests of local communities and to secure effective and convenient local government. Furthermore, we are clear that in each of these areas the combined authority would command wide local support—from local businesses, other public bodies and from local people and their democratically elected representatives.

I turn to the draft orders themselves. Three of them provide for the establishment respectively for combined authorities across the areas of Greater Merseyside, South Yorkshire and West Yorkshire. Each of these three orders specifies the formal, legal name for the combined authority, to which all the councils concerned have consented. But—and I know that this is an important matter and one of great interest to many noble Lords in the Grand Committee today—how that authority will brand itself, including the use of any brand name, will be entirely a matter for the combined authority.

Each of these three draft orders also makes provision for the abolition of the integrated transport authority for the area, about the transport and economic functions the combined authority will have and about its membership and constitutional arrangements. A combined authority will be governed by its members and subject to scrutiny by one or more overview and scrutiny committees with a membership drawn from members of the councils concerned to hold the combined authority to account. Good governance practice will mean that such committees will be politically balanced, enabling appropriate representation of councils’ minority parties in the governance of combined authorities.

Combined authorities are also subject to the same transparency and audit requirements as local authorities, so they will be audited by an external independent auditor. Meetings of the combined authority are open to the public in the same way as local authority meetings, and in future people will have the right to film and use social media to report on council meetings. This applies equally to meetings of combined authorities.

Finally, the fourth draft order simply makes amendments to transport legislation which are applicable to all combined authorities.

In conclusion, these draft orders will enable the councils concerned and their partners to work together more effectively to deliver economic growth across their areas. Establishing these combined authorities is what the councils and their partners in these areas want. They want this because they believe it is the most effective way for them to promote economic growth. In creating their combined authority, they are putting the promotion of economic growth at the heart of all that they do. This is a priority for them. It is a priority for the Government. I commend the draft orders to the Committee and beg to move.

16:15

[Lord Storey (LD)]

I am very grateful for the comments from my noble friend. I am also delighted to hear the Minister address a number of issues that have caused concern among Members. We are very much in favour of combined authorities—they are an important economic opportunity for local areas. However, the thing that concerned us most was the citation. The word “region” is apparently no longer acceptable, and when in my area there was discussion about what name would be acceptable, it was not possible to come up with an agreed name. The notion of trying to market and get external investment into the Liverpool region using the citation “Halton, Knowsley, Liverpool, St Helens, Sefton and Wirral”, would be rather difficult. I was going to ask my noble friend whether that was purely a legal name and whether these areas could choose whatever name they wanted to get this external investment and marketing which has been so important, certainly in my area, for the past 10 or so years, and she has said—it is quite important—that they can have whatever brand name they choose. That is hugely important.

[The Deputy Chairman of Committees (Baroness Fookes) (Con)]

My Lords, I am sorry: we now have to interrupt proceedings. We shall reconvene in 10 minutes.

16:18

Sitting suspended for a Division in the House.

16:25

[Lord Storey]

I was just turning to the issue of transparency, having dealt with the issue of branding and flexibility. I was delighted to hear my noble friend talk about the issues of scrutiny and independent audit. I assume that the minutes of the proceedings of the combined authority are,

“kept in such form as the Combined Authority may determine”.

I presume that that therefore means that they would be open to press and public for scrutiny as well. That is quite an important matter. The same will be true of the role of transport, which will now be part of the combined authority. The Minister in the other place got it completely wrong when he suggested that Merseytravel had purchased £1 million worth of Beatles memorabilia which are worth only £300,000. Actually, it was the transport authority that did it, not the council. With transparency, issues like that will be dealt with and we will know which council or organisation is responsible. I am delighted with the orders and I thank the Minister for her helpful replies.

[Lord Alton of Liverpool (CB)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Storey, not least because in the 1970 general election, what seems like a million years ago now, we were both students and friends, and I sent him out on his first election day experience. Sad to say, he returned later that day minus the wheels of his car. I thought that that might put him off politics for the rest of his life, but it did not do so. On this occasion I am happy to be able to concur with what he has said, and I thank the Minister for the way that she introduced the orders.

Personally, I entirely approve of and agree with the decision to allow local authorities to create combined authorities. I think that they will encourage strategic cohesion and be a catalyst for economic development, notably job creation and transport, as we have just heard. It will allow the regions to speak to central government with a more united and stronger voice. It will create partnership between boroughs, in this case referring specifically to those on Merseyside where it will create cohesion and partnership between six boroughs, and it does not give disproportionate power to any of them. It is worth saying in this context that some 84% of those living within the city region work there.

I was struck by a report for Liverpool City Council produced in August 2013 by the Mayor of Liverpool, Joe Anderson OBE, which he has been good enough to share with me. He states:

“A Combined Authority is not a merger or a takeover of existing local authority functions nor would be a ‘Super-Council’. Instead it would seek to complement local authority functions in economic development regeneration and transport and enhance the effectiveness of the way they are discharged”.

I was struck when reading that report and an earlier one produced in July 2013 by the reasons given by the mayor why a combined authority would be so worth while. In the earlier report he states that,

“current governance is not helping rebalance the”—

Liverpool city region—

“economy quickly enough; the structural issues highlighted remain issues; a more collaborative approach is required for change; and there is a lack of coordinated delivery structures at present”.

In the August report I see that he points out some of the other challenges facing the Liverpool city region and talks about the opportunities that would be created if such a body was to be set up.

As a one-time member of Merseyside County Council and Liverpool City Council and as a Liverpool Member of the House of Commons for 18 years, I was saddened to see the title of the Liverpool combined authority as it appears on the order which has been laid before the Grand Committee. The Minister said by way of a curtain raiser to her excellent speech that she thought that this was one of the issues that was most likely to be raised. Whatever else might be said in its favour, the title, “Halton, Knowsley, Liverpool, St Helens, Sefton and Wirral Combined Authority”, hardly trips off the tongue. This nine-word title is not just clumsy, it is a missed opportunity. This is not just about nomenclature or that ugly word “branding”, which has been used. In the early 1970s when Merseyside County Council was established, it puzzled me then that while Greater Manchester capitalised on a name that immediately told everyone in the world where it was, we were not to be known as “Greater Liverpool”, but as Merseyside. It was a decision based on petty rivalries and parochialism rather than on what was in the best interests of the common good. That lost opportunity weakened Liverpool and actually played into the hands of some of those who were agitating against the city and were exploiting some of the problems in the community during the 1980s, and which disfigured Liverpool’s reputation. Liverpool is at the very heart of the conurbation, and if a body’s heart is not well cared for, all the other organs will fail, too. During the past two decades the regeneration of Liverpool has become a sine qua non for the regeneration of surrounding boroughs. That success story is something that everyone in the six boroughs should be proud of and celebrate.

I am always struck that wherever I have travelled, even in remote parts of Africa, Latin America and Asia, Liverpool’s name immediately elicits a response. It is synonymous with sport, music and culture. Just think of the extraordinary success in which the noble Lord, Lord Storey, was involved in 2008—the Capital of Culture. I do not think that anywhere that has been designated a Capital of Culture has been able to rival the success of that year. Think of the city’s maritime legacy and its world-class universities. I declare an interest as holding an honorary chair at Liverpool John Moores University. Liverpool’s international reputation is further enhanced by the extraordinary work of its school of tropical medicine. I know from my time as chairman of the Merseyside Special Investment Fund that the city’s economy is in good shape, while its directly elected mayor is proving to be a good ambassador for the city and its interests. He has also been chair of the better-named Liverpool City Region cabinet for the past three years. That post of elected mayor was created as a result of the Liverpool Democracy Commission, which I helped to found and served on. It has proved to be a great success for the city of Liverpool.

In 1207, King John gave Liverpool its royal charter. Since then, there never has been a time in which Liverpool has not been the engine room for the region. It correctly describes itself as “the whole world in one city”. I agree with the Liverpool Echo’s assessment that the city is working,

“at a pace we’ve not seen for, arguably, the last 100 years”,

and that,

“it’s growing, it’s exciting and it’s the envy of most of its rivals”.

It is important to underline how vibrant the surrounding boroughs remain. In my professional life, I worked in two of those boroughs and, through the good citizenship award scheme that I founded at my university, I have been able to spend a lot of time in those neighbouring boroughs. The award scheme underlines what wonderful young people are emerging all over the region. It is their future that is at stake here, and it is their talent that the combined authority has to harness.

The new authority needs to be instantaneously recognisable. It needs a name that carries clout. It needs a name that exudes confidence and strength. People might mistakenly ask, “What’s in a name?”. “Everything” is the answer. A tongue-twisting piece of gobbledegook is no substitute for a name that would command immediate recognition, and I therefore hope that what the noble Baroness has said this afternoon—that it would be within the discretion of the authority to choose a name that resonates—will be heard loud and clear by the leaders of those six boroughs.

[Lord Shipley (LD)]

My Lords, I strongly welcome these draft orders, and the fact that the north-east draft order is on its way, making four orders in total, with the potential for more to come in the months ahead. As we have heard, combined authorities are important on the grounds of geography and scale because they reflect natural regions and travel-to-work areas. In terms of scale, so many councils are comparatively small that investment and risk management are much more difficult for them, so pooling with neighbours is a much better way in which to proceed.

I noted that the leader of Manchester City Council has said that this Government have devolved more in three years than the previous Government did in 13 years. He is right. The importance of this devolution is that it is essential to help to drive growth outside London and the south-east effectively. Combined authorities, working closely with their LEPs, will be responsible for regeneration and economic development, and for strategic transport investment and management, as the Minister confirmed. That is a hugely welcome change. I have been involved in the first and second waves of city deals, which have been very important in increasing the understanding that councils have with their LEPs in terms of their leadership role in promoting economic development. I have no doubt at all that the creation of combined authorities will help enormously with that process.

I would like to raise one important issue of principle with the Minister, which concerns the membership of the combined authority. I listened carefully to what the Minister had to say earlier. I understand that the overview and scrutiny committees will be politically balanced so that minority parties in councils will have representation in the governance of the combined authority. Can the Minister say, either now or at a later date in writing, a little more about how proportionality will work, whether an opposition member will be required to chair them and how agendas will be constructed to ensure that debate is not stifled by individual party political interest? That is a very important issue and there have been a lot of discussions around it.

There is a strong case for saying that minority parties should have access to the main deliberations of the combined authorities. However, it would help significantly to know now that the Government understand the issue and are prepared to ensure that the rights of minority parties are guaranteed in the orders when they are finalised, either now or at a later date. In terms of principle, it is important, as my noble friend Lord Storey said, that the public have confidence that this is not to be the creation of a one-party state.

[Lord McKenzie of Luton (Lab)]

My Lords, I thank the Minister for introducing these important orders in a clear and comprehensive way. As the noble Lords, Lord Shipley, Lord Alton and Lord Storey, said, and as would have been clear from the debate in the House of Commons, we thoroughly support these orders. Indeed, why would we not, given that the authorities involved are largely Labour and that the primary legislation from which they spring—the Local Democracy, Economic Development and Construction Act—was legislation of the previous Government? We acknowledge that the work of the noble Lord, Lord Heseltine, has spurred the coalition Government to take the opportunities that that legislation offers, and we acknowledge the Government’s current commitment to localism. I am bound to say that those of us who spent many hours ploughing through the Localism Bill and its detail will recall that it seemed to us then to be as much about power for the Secretary of State as about freedoms for local government, but it would be wrong to be too churlish on this occasion.

As for growth, of course we welcome the improvement in the economy. We will have to see how sustainable it is and how much of it genuinely comes from a rebalancing of the economy, a point touched upon by the noble Lord, Lord Alton. We agree that local authorities working together in the interests of their communities can be a real engine for growth, particularly outside London. As my honourable friend Andy Sawford put it when this matter was debated in the Commons:

“The new combined authorities will bring many benefits, including the strong and visible collective leadership of an area with democratic accountability and an influential and unified voice. That leadership will be able to have a single conversation with the Government, national agencies and business leaders and to align decision making and economic growth at a strategic level”.—[Official Report, Commons, 18/03/14; col. 707.]

As the noble Lord, Lord Shipley, said, combined authorities should enable more effective engagement with LEPs and facilitate delivery of city deals.

The issue that York is currently a non-constituent council in the West Yorkshire Combined Authority was the subject of some discussion in the other place, particularly following an earlier intervention from my right honourable friend Hilary Benn. We took it from the Minister’s reply in another place that the current problem is that combined authorities require whole local authority areas that share the same boundaries. The Minister undertook to consult in the next few weeks about how the legislation could be changed to address that problem. Perhaps the Minister could add a little more about the propositions that are being developed in that regard.

We welcome the commitment to see the combined authorities brought within the VAT refund scheme, which is another matter that was discussed in the other place.

16:45

From the comments in the Explanatory Memorandum, it is clear that these propositions were forged from consensus. Indeed, we heard that from noble Lords today. The formal names of the combined authorities seemed a particular bone of contention, and when I first read this, I wondered whether they were a bit of a nit-picking issue, but I have been convinced by the discussion in the Committee this afternoon, particularly from what we have heard about all the accolades delivered for Liverpool, that they are not. They are clearly an important issue. It seems to me that how the combined authorities address this and reach a consensus will be a test for them.

I understand that the combined authorities’ borrowing powers are limited to their transport functions. Will the Minister say why this is so? Presumably the levies that the authorities impose on constituent authorities now have to feature in the determination of whether each is raising an excessive level of council tax. This is a change in the legislation which we debated in the Local Audit and Accountability Act. Will the Minister confirm that there are no adverse tax or otherwise consequences for the ITA, the passenger transport executives or the constituent councils from their transfer of functions, properties, rights et cetera to the combined authority?

We are pleased to support these orders. We await further such developments, particularly—in support of the noble Lord, Lord Shipley—in relation to the north-east; we would be happy to support that order when it emerges.

[Baroness Stowell of Beeston]

My Lords, I am very grateful to all noble Lords for their strong words of welcome in support of these orders. I shall start by acknowledging a point made by the noble Lord, Lord Alton. He quoted a report stressing that a combined authority is not a merger. I agree with that. These combined authorities open the way for more effective collaboration between the councils and their partners to promote economic growth and secure investment for their area. This is about collaboration. It is most definitely not a merger.

My noble friend Lord Storey again flagged the question of the naming of these combined authorities. The noble Lord, Lord Alton, went into greater detail about his concerns and said that the statutory names on the orders do not trip off the tongue. The most important thing for me to do is to be absolutely clear in restating what I have said and to answer directly the noble Lord, Lord Alton, that the decision about what a combined authority might want to call itself will be a matter for that combined authority. The names on the orders are the legal names, but we feel that it is right for these combined authorities to decide the best way to—I know the noble Lord did not like the word “brand”—present themselves and their local people to the rest of the country and indeed the world. As the noble Lord said, there is widespread awareness of Liverpool around the world. On that, I can be absolutely clear, and I hope I have reassured noble Lords on that point.

My noble friend Lord Storey asked for some assurances around accountability and transparency. I am happy to confirm that these orders and other existing legislation place robust requirements on the combined authorities. To the point made both by him and by my noble friend Lord Shipley, I can say that the combined authority will be governed by its members and subject to scrutiny by one or more overview and scrutiny committee, with membership drawn from members of the councils concerned, to hold the combined authority to account. Good governance practice will mean that such committees will be politically balanced, enabling appropriate representation of councils’ minority parties in the governance of combined authorities.

My noble friend Lord Shipley asked some specific questions around how proportionality will work, who would choose the chairman of the committee and how agendas would be decided. I understand why he raises these questions and certainly acknowledge to him the importance of these points. However, what he has outlined is what I would describe as, and what would be commonly described as, good practice. What we are clear about is that it is for the individual councils and the combined authority itself to decide how they will put in place their arrangements. I urge them to take the good practice approach that we would all expect and want them to follow, not least because of the strong welcome that we all have for this new governance structure.

[Lord Alton of Liverpool]

Can the Minister clarify further how it will be possible to see minority representation when in a combined authority there is only single-party representation—and, therefore, only leaders of that party are part of the combined authority? Is it not therefore particularly important that there should be some specificity when it comes down to the openness of meetings, and some requirement that meetings should be able to be accessible by the public and the media?

[Baroness Stowell of Beeston]

The noble Lord raises a couple of points there. The point that I am getting to with the overview and scrutiny committee is that it would be made up of representation from the various authorities that make up membership of the combined authority. The scrutiny committee that will hold the combined authority to account will be made up not of the chairman or the leaders of the different local authorities but of people from the different parties represented in that local authority. So there will be a variety of political parties represented on the scrutiny committee that holds the combined authority to account.

As to access to meetings of the combined authority, I was going to come on to that, because it was a point that my noble friend Lord Storey also raised. They will be subject to exactly the same transparency requirements as local authorities. So, yes, the meetings of combined authorities will be open to the public; this is a statutory requirement. Their minutes will be published in exactly the same way as local authority minutes will be published—and, indeed, they will be subject to the requirements of the Freedom of Information Act in exactly the same way as local authority meetings are at this time. I hope that before I sit down I will be able to confirm that the scrutiny committees will also be open to scrutiny in the same way.

The noble Lord, Lord McKenzie, referred to West Yorkshire and York in particular. He acknowledged there that we are seeking what we describe as a legislative reform order to amend primary legislation on combined authorities to enable a council that is not contiguous with other members of the combined authority but which is in the same functional economic area to become a constituent council of that combined authority if it wishes. As a first step, we will be consulting on proposals for such a legislative reform order, which will be an opportunity for those with views on this to put them to government.

The noble Lord, Lord McKenzie, also referred, I think, to the combined authorities’ ability to reclaim VAT. I confirm that they will not be disadvantaged by VAT legislation. Last week, the Government launched a consultation on the proposal to add Greater Manchester and these proposed combined authorities to the existing VAT refund scheme for local authorities, which can be achieved through secondary legislation. The consultation closes on 18 April and, following that, if the Government decide to proceed, parliamentary approval will be sought to give effect to this and to enable established combined authorities to recover VAT, just as the constituent local councils can.

The noble Lord, Lord McKenzie, also sought confirmation that local authorities and the ITAs that will be abolished would not be subjected to any disadvantage around tax arrangements. I will see whether the answer to that emerges, but if it does not, I will write to the noble Lord. I can confirm that there will be no disadvantage. I am nearly at the point where I might be able to avoid a letter, which would be great.

Going back to the point that I was talking about previously, I confirm to the noble Lord, Lord Alton, and all noble Lords, that the scrutiny committee will be open to the public, as will be the combined authority meetings.

Several noble Lords mentioned devolution and localism more generally. The Localism Act 2011 devolved powers not only to local authorities but to local communities. We are interested in discussing with local authorities what more can be done to empower them to deliver economic growth and take their communities forward. We certainly hope that more of the combined authorities will come forward. As my noble friend Lord Shipley said, the combined authority covering local authorities in the north-east will be with us very shortly. I hope that I have been able to address all the key issues that have been raised.

[Lord McKenzie of Luton]

I may be able to avoid the Minister having to write. I am not sure that she dealt with the point about funding and whether the opportunity runs beyond the existing opportunities in relation to transport funding. In particular, given what is effectively a recent change, as levying bodies, presumably these are the very sorts of levies that have to be taken into account by individual local authorities in judging whether or not their council tax increases are excessive. Within the overall constraints—whether we agree with them or not—that the Government have imposed, there is an effective cap, subject to referendums, on what the combined authorities would charge in their constituent authorities. Should that not be an argument for perhaps some relaxation in relation to prudential borrowing for so long as it could be funded through the levy mechanism?

[Baroness Stowell of Beeston]

The noble Lord is right to say that I had omitted to respond to him on that important point. We are absolutely clear that levies should be included in the regime for the consideration of council tax levels. Levies will therefore be caught by the council tax referendum policy. We are absolutely clear that local people should be able to have their say on any proposed excessive increase in council tax, whether caused through a levy on the council or by any other reason. Certainly in Leeds, where this has been a particular debate, we are confident that the measures proposed in that area would be possible without an increase above 2%. If a combined authority wanted to propose an increase above 2%, it would be open to it to conduct a referendum.

17:00

The noble Lord asked specific questions about borrowing. There is no intention or plan to extend the powers of the combined authority to borrow beyond those powers that already exist for the ITA and will be transferred to the combined authorities. The funding of combined authorities outside of transport will be provided by the membership local authorities. The level at which each local authority makes its contribution will be decided by the members of that combined authority, with the default position being that the level of funding would reflect the size of the local authority.

I hope that I have been able to address all the points that have been raised today. I think we are in general agreement that establishing these combined authorities will support these councils in driving their commitment to deliver growth and prosperity for their area. That is a priority which should be at the heart of everything councils across the country do, and I commend these orders to the Grand Committee.

[Lord Shipley]

Will the Minister give further guidance on the overview and scrutiny structure? She referred to good practice. Will she write to the councils that form combined authorities about what that good practice might entail? In particular, will she advise that having an opposition chair of scrutiny, which anyway is common practice in many councils for the overview and scrutiny process, might be recommended by the department? Will she also advise on whether all members who are appointed to serve on an overview and scrutiny panel are able to place items on the agenda? I am seeking to avoid a situation in which the majority party on the combined authority chairs the overview and scrutiny panel and then controls the items placed on the agenda. Good practice is what I would expect to happen, and I am sure that in the case of the combined authorities orders we have today, and get in the future, that would be deemed to be good practice, but it might help if the Minister defined clearly what good practice actually means so that everybody can be aware of it, including those authorities that are yet to put in their proposals.

[Baroness Stowell of Beeston]

My noble friend raises some very important points. As a point of principle, I or one of my ministerial colleagues would be happy to write to the combined authorities, and I will discuss with them the precise detail to put in such a letter.

[Lord McKenzie of Luton]

The exchange has prompted a thought. Presumably the combined authority will have to have an audit panel, subject to the constraints or requirements of the recent Act.

[Baroness Stowell of Beeston]

Yes, it will. I commend these orders to the Grand Committee.

Motion agreed.

Barnsley, Doncaster, Rotherham and Sheffield Combined Authority Order 2014

Monday 24th March 2014 Grand Committee

Motion to Consider

17:04

Moved by

[Baroness Stowell of Beeston]

That the Grand Committee do consider the Barnsley, Doncaster, Rotherham and Sheffield Combined Authority Order 2014.

Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments

Motion agreed.

Halton, Knowsley, Liverpool, St Helens, Sefton and Wirral Combined Authority Order 2014

Monday 24th March 2014 Grand Committee

Motion to Consider

Moved by

[Baroness Stowell of Beeston]

That the Grand Committee do consider the Halton, Knowsley, Liverpool, St Helens, Sefton and Wirral Combined Authority Order 2014.

Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments

Motion agreed.

West Yorkshire Combined Authority Order 2014

Monday 24th March 2014 Grand Committee

Motion to Consider

Moved by

[Baroness Stowell of Beeston]

That the Grand Committee do consider the West Yorkshire Combined Authority Order 2014.

Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments

Motion agreed.

Urban Development Corporations in England (Area and Constitution) Order 2014

Monday 24th March 2014 Grand Committee

Motion to Consider

Moved by

[Baroness Stowell of Beeston]

That the Grand Committee do consider the Urban Development Corporations in England (Area and Constitution) Order 2014

Relevant documents: 22nd Report from the Joint Committee on Statutory Instruments

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)]

My Lords, I am pleased to introduce to the Committee the Urban Development Corporations in England (Area and Constitution) Order 2014, laid before this House on 10 February 2014.

The order formally revokes the statutory instruments under which the West Northamptonshire Development Corporation, London Thames Gateway Development Corporation and Thurrock Thames Gateway Development Corporation were established in 2003. The former urban development corporations of London Thames Gateway and Thurrock Thames Gateway closed for business on 28 February 2013 and 31 March 2012 respectively. The corporations were subsequently formally dissolved. West Northamptonshire Development Corporation will close on 31 March 2014 and be formally dissolved on 31 July 2014. These three urban development corporations were set up to promote and enable growth in their areas, unlock economic potential and drive local regeneration to deliver new homes, businesses and jobs. Their role was always intended to be time-limited, with a planned lifespan of up to 10 years. The purpose of this order is to make the necessary legislative changes to the statute book by revoking the statutory instruments that set up these three urban development corporations and provided them with their powers.

This order is linked to another two orders specifically related to the West Northamptonshire Development Corporation. The first of these is the West Northamptonshire Development Corporation transfer order, which transfers the corporation’s property, rights and liabilities to relevant local authorities in the area and comes into effect on 27 March. That is a negative SI that is not the subject of today’s debate. The second is the West Northamptonshire Development Corporation dissolution order, which formally closes down the corporation but allows for any residual winding-up tasks, including the preparation of the final report and accounts by a skeleton team and board members on the audit and risk committee. That dissolution order is not subject to any parliamentary procedure and will come into effect on 31 July.

The three urban development corporations achieved much in their lifetimes, but their lifespans have reached a natural end. They leave a legacy that local authorities and other public sector bodies can build on as we enter a different phase. Their achievements allow us to pass responsibility to locally led delivery bodies that are already rooted in their areas and can be responsive to the needs of their local communities.

Urban development corporations are only one of several ways in which we can support major developments, and this Government intend to use them only sparingly, when they are the appropriate model to deliver growth. For example, as the Chancellor announced last week, we will set up a new urban development corporation that will work with local communities and has been welcomed by them to drive and accelerate progress at Ebbsfleet and deliver up to 15,000 homes along with new jobs and infrastructure.

This order is the final step to fulfil the legislative requirement to revoke the respective area and constitutions that established the three urban development corporations. I beg to move.

[Lord McKenzie of Luton (Lab)]

My Lords, I thank the Minister for moving this order. When I first looked at the Explanatory Memorandum, I assumed that we were in effect dealing with two orders because the negative order as well as the affirmative order is covered in it. I hope that the Minister will therefore allow me to raise one or two questions about the West Northamptonshire Development Corporation (Transfer of Property, Rights and Liabilities) Order 2014. As we have heard, the urban development corporation order would appear to revoke the order which established three further development areas. The Thurrock Development Corporation was dissolved in 2012 and the London Thames Gateway Development Corporation was dissolved in 2013. In each case, the property, rights and liabilities were transferred to other bodies. However, in the case of the West Northamptonshire Development Corporation, it appears that some assets and powers have already been transferred to successor bodies. One of the orders completes the transfer and enables the revocation of the third urban development order.

As a general point, if each of the development corporations is devoid of assets and has been dissolved, is the revocation order just a tidying-up exercise to prevent them being revived at some stage in the future? I think the noble Baroness said that they have a 10-year life, so no wonder if they expire anyway. Given that there will be nothing in them, why is there a need formally to deal with them in this manner?

Specifically in relation to the West Northamptonshire DC transfer order, a reference is made to a dissolution date, being a dissolution by an order made under Section 166(1A) of the Local Government, Planning and Land Act 1980, so presumably that order will be laid in due course. I think that that may have been what the Minister referred to when introducing the order. Can she say why paragraph 2 of the West Northamptonshire DC order is being revoked separately from the residual revocation which is to take place with effect from 31 July 2014?

On paragraph 4.1 of the transfer order, can the Minister say what remaining property rights and liabilities are to be transferred to the Secretary of State? Also, what is the final destination of the property, rights and liabilities which are on the retained list? Similarly, what is the position in relation to contracts of employment and pension schemes under paragraph 3(3)(b), given that the import of those arrangements is obvious? What is the position of West Northamptonshire DC if it has not completed the winding-up of its affairs by 31 July 2014, or is there an inevitability about that? Paragraph 8.3 of the Explanatory Memorandum indicates ongoing discussions between Northampton Borough Council and the Department for Communities and Local Government. What are the points at issue and have they now been dealt with satisfactorily?

More generally, can the Minister confirm that there will be no adverse financial consequences for any of the local authority transferees from these arrangements, including their prudential borrowing power and capacity? Will that be affected in any way by these transfers? It is presumed again that there are no taxation consequences for the West Northamptonshire DC, but perhaps the Minister can confirm that. I ask the question simply because if an entity is transferring a range of assets to another entity, typically if it were a private sector entity, valuations and capital gains tax would have to be dealt with, as well as other issues. I presume that that does not come into play with the sort of body we are dealing with here, but it would be good to have that confirmation. Lastly, what measures are the Government putting in hand to estimate whether the successor arrangements are delivering on regeneration?

[Baroness Stowell of Beeston]

My Lords, I am grateful to the noble Lord, Lord McKenzie, for his remarks. I thought that he might have some questions about the orders that are referred to in the Explanatory Memorandum but are not before the Grand Committee for debate today, so I have some information which I hope will be helpful to him.

One of the first points he made concerned why we are introducing the order formally to bring these corporations to an end. Although there was an expectation that they would be time-limited when they were set up, no specific time was fixed for them at the point of their creation. Therefore, it is necessary to draw them formally to a close.

17:15

I may have to write to the noble Lord on some of the specific questions that he raised. However, I can respond to the questions he posed on Northamptonshire, which relate more to the transfer order than to the one before us. The proposal to transfer the corporation’s assets has been subject to consultation, as required by the statute under which the transfer is made. We consulted Northampton Borough Council, Daventry District Council, South Northants Council and Northamptonshire County Council as the authorities within the West Northamptonshire Development Corporation’s geographical area of operation which are directly affected by the closure.

All four councils participated in the consultation, which took place from 26 November 2013 until 2 January this year. My officials worked closely with the authorities before the consultation for some time, so the proposals did not come as any surprise. Indeed, the successor local authorities are eager to take on their new responsibilities. Quite a bit of work has taken place between all the interested parties.

Three out of the four local authorities formally responded to the consultation, all of which supported the proposals. In the main, they were seeking clarity on the arrangements—for example, confirmation that the assets would be transferred to them for nil cash consideration. We were able to confirm that this would be the case, as it was with the transfer of assets from London and Thurrock corporations.

Northampton Borough Council queried the adoption of a bridge on one of the sites, but we were able to give it sufficient additional information to resolve this concern. To help it with sufficient resource capacity to manage the assets and liabilities going forward, we have provided £1 million of funding to Northampton Borough Council, which will be taking on the vast majority of projects. In the case of London and Thurrock, similar capacity funding was also provided to the GLA and Thurrock Council respectively. Therefore, we have ensured that any costs involved will be covered and that local authorities will not be disadvantaged.

It might be worth my telling the noble Lord what assets we are talking about. The majority of assets are in Northampton. The major assets being transferred are St Peter’s Waterside, land at South Bridge Road and land at Avon Nunn Mills. That has all gone to Northampton Borough Council. A former railway line between Coton Road, Northampton and Great Houghton is transferred to Northamptonshire County Council.

In Thurrock, all the assets and liabilities of Thurrock Thames Gateway have been transferred. London Thames Gateway’s development assets on the fringes of the Olympic Park were transferred to the new London Legacy Development Corporation. This was followed in January 2013 by a transfer of further land in the Lee River Park. In April last year, the remaining development assets of the London Thames Gateway Development Corporation were transferred to the Greater London Authority. As I say, funding has been provided to cover any costs.

The noble Lord, Lord McKenzie, asked about pension rights and retained pension liabilities. They revert to the DCLG. He also asked about a retained list and human resources, I think. That, again, comes back to the DCLG.

On ensuring the successor arrangements are delivering in line with the principle of localism, we will not be formally monitoring local authorities’ performance but, as I have already said, we have provided capacity funding for them and have confidence in Northampton Borough Council on the specific points for which it is going to take responsibility.

The noble Lord asked about winding up affairs by 31 July. If any issues are outstanding, they return to the department. It will be dealing with issues such as final accounts between March and July, so we are now in the period where we are dealing with all the minor remaining issues, and we have no reason to believe that they will not be completed by 31 July.

I hope I have responded to at least the vast majority of the points that the noble Lord raised. If there is anything that I missed, I will come back to him in writing.

[Lord McKenzie of Luton]

I am very grateful to the Minister for a very full reply. There are a couple of points that we might just have in writing. In relation to prudential borrowing by the transfer-in entities, if they are going to get a bunch of assets for a nil value, some of those assets are presumably quite valuable and some may be very valuable. Routinely you would expect that potentially to influence what prudential borrowing that entity might be able to undertake. The answer may be that that is not how the rules operate, but I would be grateful for further clarification on that.

In relation to pension arrangements, I was not quite sure what was transferring to CLG. Presumably employees will be TUPE-ed to the new transferee councils. What pensions is CLG picking up?

[Baroness Stowell of Beeston]

I have just been handed a note. I understand the words on it but not how they relate to the question the noble Lord has just asked me. If he will allow me, I will write to him on that matter and on borrowing capacity against assets because I do not think that the note that I have been handed quite answers the specific point he raised so I will not take up your Lordships’ time by reading it out.

I am grateful to the noble Lord for his broad support for this order, and I commend it to the Committee.

Motion agreed.

Prevention of Social Housing Fraud (Power to Require Information) (England) Regulations 2014

Monday 24th March 2014 Grand Committee

Motion to Consider

17:23

Moved by

[Baroness Stowell of Beeston]

That the Grand Committee do consider the Prevention of Social Housing Fraud (Power to Require Information) (England) Regulations 2014.

Relevant documents: 22nd Report from the Joint Committee on Statutory Instruments

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston)]

My Lords, the power to table these regulations is contained in the Prevention of Social Housing Fraud Act 2013, which your Lordships may recall was originally a Private Member’s Bill which was very ably introduced in and steered through your Lordships’ House by my noble friend Lady Eaton, and I am pleased to see her in her place.

Social housing is one of the most important resources we have as a nation, providing as it does so many hard-working people with the safety and security they need. While the vast majority of social housing is being used as intended, statistics show that around 98,000 of these homes are being occupied unlawfully, including those that are being sub-let without permission or that were allocated following a fraudulent application. Encouragingly, an increasing number of social landlords are recognising the importance of tackling this abuse of their stock. Yet, while the recovery rate is going up and has gone up about 50% since 2008, in 2012-13 only around 2,600 unlawfully occupied local authority-owned homes were recovered. It is clear that social landlords need more powers to tackle the problem. What they have told us is that they really need better access to data, and, when an offence is suspected, this is what these regulations will give them.

When investigating social housing fraud, it is important to be able to link the tenant or applicant to another address. I am about to explain what I mean when I say access to more data. This can show, for example, that an applicant for social housing owns a property that they have not declared on their application form, or that an existing tenant is actually living elsewhere, suggesting they are sub-letting the property that they were allocated in good faith. However, social housing fraud investigators cannot always get hold of the data that they need to prove their case. Currently, they can ask for information, but cannot compel it to be given. This means that in many cases their requests to holders of key data such as banks, building societies and utility companies are refused. These regulations will give local authorities the power to compel certain data-holders to supply them, for social housing fraud investigation purposes, with information that they hold. Local authorities already have such powers in relation to their social security fraud and council tax reduction scheme fraud investigations.

Clearly, the list of bodies that can be compelled to supply data should not be any longer than is necessary. When considering which types of organisation to include, we wanted to strike a balance between giving landlords access to the data that they have told us they need and not including those who we felt would be asked for information only very rarely. We will keep the list under review, so if it proves to be longer or shorter than is necessary we will seek to rectify matters. This Government are keenly aware of the need to protect individual freedoms, and a privacy impact assessment for this new power has been published.

The power comes with a number of safeguards. For example, requests may be made only if it is reasonable to do so. In practice this will mean that investigators must have made efforts to obtain via another route the data they need; this power will not be the first port of call. Information may be required only if there are reasonable grounds for believing that the person in question or a member of their family is committing, has committed, or intends to commit a social housing fraud offence. The protections set out in the Data Protection Act will continue to apply. These include requirements that the information obtained must be: fairly and lawfully processed; processed for limited purposes; adequate, relevant and not excessive; accurate; not kept longer than necessary; processed in accordance with the individual’s rights; and kept secure.

The intentional delay or obstruction of someone authorised to obtain data, or the failure or refusal without reasonable excuse to provide information when required to do so, will incur a maximum penalty of a fine of £1,000. Thereafter, continuing non-compliance will incur a penalty of up to £40 per day.

The Bill introduced by my noble friend Lady Eaton received generous cross-party support in both Houses before it became an Act. It gives landlords the tools they need to clamp down on the abuse of their stock. I therefore commend these regulations to the Committee, and I beg to move.

[Baroness Eaton (Con)]

My Lords, I am delighted that we are here today to see this stage in the process of tackling social housing fraud. My noble friend the Minister explained to us the amount of fraud that is still taking place, so the necessity for these powers to be made available is a very important factor. I am someone who is very much in favour of individual freedom, so I do not fit comfortably with lots of legislation forcing people to give information, but I am reassured by the safeguards that my noble friend described and the fact that the investigator should have tried all other possible routes before we get to the demand for data—and that the data protection legislation still applies.

I fully recognise the need for a penalty for those who still refuse to comply with the regulations as they are drafted and tabled. This is a really important move and I look forward very much to seeing the number of fraudulent lettings decrease enormously. As we are to have a review of what is needed and which lists of data are going to be necessary, I am sure that we will have more of an idea about how successful we have been in stamping out this unnecessary fraud.

17:30

[Lord McKenzie of Luton (Lab)]

My Lords, I again thank the Minister for introducing these regulations, which, as we have heard, are focused on facilitating investigation into social housing fraud. We support that focus and support these regulations. The Prevention of Social Housing Fraud Act 2013 introduced deterrents, additional to the right to terminate a tenancy, relating to unlawful subletting and recovery of profits. As we have heard, it was a Private Member’s Bill and was very ably steered through your Lordships’ House by the noble Baroness, Lady Eaton—we should again congratulate her on that effort.

We have common cause in tackling social housing fraud. Cheating on the system and denying those whose housing needs are thereby frustrated can in no way be condoned. This would be the same in any era, let alone that which faces us currently, with a housing crisis with, simply, too few new homes—private and social—being delivered; and notwithstanding also that those to whom social housing is unlawfully let may themselves be faced with appalling housing situations. We have heard the Audit Commission estimate that some 98,000 of the 4 million social homes are unlawfully occupied—4% of the stock in London and 2% elsewhere. Other estimates put it even higher. Whatever the actual numbers, we know that unlawful occupation prevents tens of thousands of social homes being allocated to the people who need them most. For many who let unlawfully, there are profits to be had: the difference between private sector rents and social rents. The inexorable rise of private sector rents make such letting potentially very lucrative. There is also the cost to the public purse of families being displaced into the private rented sector, with increased housing benefit bills.

As the privacy impact assessment makes clear, and in tune with what the noble Baroness, Lady Eaton, has just said, compelling certain private sector organisations to provide data to local authorities for social housing fraud investigation purposes raises important issues around privacy and data protection. It is asserted that although the key task of the social housing fraud investigation is to link the tenant to another property, through evidence of the receipt of rental income from a sublet or mortgage payments suggesting ownership of another property, the information reasonably requested should not include sensitive personal data. That analysis is one that we agree with. We accept that the powers sought in these regulations are based on the well established procedures for social security fraud and, indeed, are not as extensive in that levels of income, for example, are not needed. We understand that the fact that subletting is now a criminal offence itself enables organisations to lawfully disclose certain information but does not compel them—hence the need for new powers.

There are express safeguards surrounding these powers, which the noble Baroness, Lady Stowell, spelt out. I will not repeat them now. There are obviously, at least theoretically, robust safeguards but the issue is how they are being monitored in practice. The expectation is that local authorities will publish information through their Freedom of Information Act publication scheme—for example how often they use the gateway. There is also the expectation that they will comply with data protection principles around processing and handling the relevant data et cetera. Perhaps the Minister can just say a little more about what is expected in this regard and what local authorities’ records have been in relation to their powers in this regard to date. We will expect the Government to keep Parliament updated on how effectively the regulations are working in ensuring that social homes are reallocated, and on whether the anticipated savings are materialising, before the official departmental review in 2018. We are pleased to support these regulations.

[Baroness Stowell of Beeston]

I am very grateful to the noble Lord, Lord McKenzie, for his warm support for these regulations. I am also grateful to him for describing in some detail how the impact assessment on privacy has been carried out and what it contains. He is right—as, indeed, is my noble friend Lady Eaton—that we have to be careful that the relevant privacy issues are properly taken account of.

On that particular point, the noble Lord asked whether there was any evidence of misuse of these new powers. We certainly expect local authorities to have strong systems in place to prevent misuse. We would expect disciplinary action to be taken against an authorised officer who misused the power to require information because it is an offence to obtain unlawfully or disclose personal data. The Information Commissioner will be able to investigate complaints about the use of data by a local authority, and it will be for the Information Commissioner’s Office to investigate such claims. Should it find any failings in this area, it can, and will, give out fines for the misuse of data.

On the noble Lord’s questions about publication of the use of this power, that issue will be coming through to me and I will respond before I sit down. More generally, as I have already said and as we have acknowledged, social housing is an extremely valuable asset. While the vast majority of social tenants play by the rules, it is vital that social landlords have the tools they need to root out those who do not. Along with the other measures in the Prevention of Social Housing Fraud Act, the new power introduced by these regulations will help free up much needed homes for many of those on the waiting list who are in genuine need.

We talk a lot about the need to build more new homes but we are mindful also of the need to ensure that the existing social housing stock is being used as intended. Reducing fraud will mean that more households in genuine need will enjoy the security and stability that a decent home provides. Cracking down on that fraud will reduce the benefits bill by moving households on the waiting list from expensive temporary accommodation into the newly freed up social homes.

It is worth saying that about 90% of responses to the government consultation were in favour of the new data access power. Councils already have similar data access powers for social security and council tax fraud reduction schemes. As well as tackling fraud that is already in the system, these regulations will help to prevent fraud by stopping cheats getting into the system in the first place. The Government want social landlords to tackle fraud in their housing stock and we must give them the tools that they need to do that. I am very pleased that this power will enable them to do so.

Sadly, it does not look as though I am going to be able to provide the noble Lord with any more information at this time about how we will ensure that local authorities place their use of these powers in the public domain. However, I will ensure that I follow up that information in writing. I am slightly frustrated that I cannot find it in my brief because I know that I read something over the weekend about providing information of this kind to allow for proper accountability and scrutiny. However, I am confident that I will be able to send the noble Lord forthwith a comprehensive letter in reply.

Motion agreed.

Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2014

Monday 24th March 2014 Grand Committee

Motion to Consider

17:40

That the Grand Committee do consider the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2014.

Relevant document: 22nd Report from the Joint Committee on Statutory Instruments

[The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson) (LD)]

My Lords, this order will enable billing authorities in Wales to continue to contract out certain additional functions relating to the administration and enforcement of council tax, following the making of new regulations in relation to council tax reduction schemes for 2014-15 onwards.

I will first provide a brief overview of the legislative background. The Council Tax Reduction Schemes and Prescribed Requirements (Wales) Regulations 2012 and the Council Tax Reduction Schemes (Default Scheme) (Wales) Regulations 2012 introduced council tax reduction schemes in Wales for 2013-14. Schemes introduced under these regulations are now being successfully operated by local authorities as part of the council tax system.

However, as the 2012 regulations are limited to 2013-14 by virtue of a sunset clause agreed with opposition parties in the National Assembly for Wales, a new set of regulations has been brought forward to govern the operation of the council tax reduction schemes from 2014-15 onwards. These are the Council Tax Reduction Schemes and Prescribed Requirements (Wales) Regulations 2013 and the Council Tax Reduction Schemes (Default Scheme) (Wales) Regulations 2013.

It is now therefore necessary to update the references within the numerous pieces of interrelated subordinate legislation to take into account the new set of regulations that will govern the operation of council tax reduction schemes in Wales from April 2014 onwards. This work includes making the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2014. The purpose of the 2014 order is to enable billing authorities in Wales to continue to contract out certain additional functions relating to the administration and enforcement of council tax following the making of the 2013 regulations, which will operate from 2014-15 onwards.

This time last year the Committee approved the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2013. The 2013 order enabled local authorities in Wales, under the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) Order 1996, to contract out functions connected with the administration and collection of council tax. We wish to ensure that local authorities in Wales continue to have the freedom to contract out these administrative functions. The order being considered today amends the 1996 contracting-out order for Wales by substituting references to the 2012 regulations with references to the 2013 regulations.

The 2014 order will enable local authorities to continue to contract out the following administrative functions: the issuing of council tax reduction decision letters; the payment of a reduction amount under certain circumstances where the billing authority is of the opinion that it would be appropriate; the serving of a penalty notice in connection with an offence committed with a reduction; and the repayment of an amount paid in connection with a penalty related to a local scheme that has been subsequently quashed.

Although this order does not expand on the provisions that are currently in place for the administration of council tax reduction schemes, if it is approved by noble Lords it will carry out an essential function by enabling local authorities in Wales to continue to choose how to deliver their local schemes, whether that is by using internal resources, external providers or a mixture of the two. It is important that we provide local authorities with the tools they need to deliver a cost-effective council tax system. I commend the order to the Grand Committee and I beg to move.

[Baroness Morgan of Ely (Lab)]

I thank the Minister for that explanation. It is probably worth dwelling on the fact that this is not just needed because of the sunset clause. We need to go back further than that and think about why this needed to be done in the first place. It was necessary because in 2012 the UK Government abolished council tax benefit as part of the coalition’s Welfare Reform Act 2012. The responsibility for replacement schemes was passed on to local authorities in England and to the devolved Governments in Scotland and Wales. However, when it was handed over, there was of course then a cut of 10% in the funding that had previously helped people pay their council tax.

The IFS warned that 320,000 council tax benefit recipients in Wales would lose, on average, £74 a year and that this would hit the poorest the hardest, as 80% of council tax benefit spending in Wales went to those households with the lowest incomes. Unlike in England, where the IFS says that this approach has left 2.5 million households worse off by an average of £160 a year and has resulted in 500,000 people receiving summonses for non-payment, the Welsh Assembly has thankfully stepped in to protect this entitlement for those 320,000 people in the poorest households through a council tax reduction scheme. As the Minister has described, councils in Wales need to be able to contract out council tax services, as they do other services. For that reason it is important that the draft order is passed as quickly as possible, and the Government have our support in that.

What we have seen this week is a concerted effort—the start of an attack—by the current Government, pointing out problems in Wales. We have seen Grant Shapps come to Wales talking about problems we have had there and a concerted effort by the Daily Mail and the Times. This is an example of Wales understanding the needs and problems of the people and standing side by side with the most vulnerable. I do not suppose we will see any coverage of that in our newspapers in the next few days.

[Baroness Randerson]

My Lords, I thank the noble Baroness for her support for this order. I would point out, in relation to her detailed comments, that my introduction referred to the 1996 scheme on which this is built. This is not a new system. It was introduced all that time ago and it has been adapted to the new council tax reduction schemes.

I make no apology for the fact that the Government have devolved responsibility for this to the Welsh Government. It is my view and that of the Government that this responsibility should lie with the Welsh Government and local authorities. It is right because council tax is levied by local authorities, and arrangements for reduction schemes should therefore also be made at that level.

In relation to the latter part of the noble Baroness’s comments, I would point out that fewer people are this year claiming for council tax reduction than in the previous year. In other words, fewer people are in the difficult circumstances that would ensure that they needed to make such a claim. That is part of the general series of symptoms of an upturn in the economy. The situation in Wales is getting very much better; some indicators suggest that it is doing so at an even faster rate than in the rest of the UK. Council tax is one of the areas of which the previous Labour Government lost control, and I make no apology at all to this Committee for the fact that the Government stepped in to take control. I commend the order to the Committee.

Motion agreed.

Whistleblowing at Work

Monday 24th March 2014 Grand Committee

Question for Short Debate

17:52

Asked by

[Lord Wills]

To ask Her Majesty’s Government whether they will implement the recommendations of the Commission established by Public Concern at Work on Whistleblowing.

[Lord Wills (Lab)]

My Lords, 100 years ago, the great American, Justice Louis Brandeis, said that electric light is the best policeman. The merits of transparency have long been recognised, and so too has it long been recognised that whistleblowing—making a disclosure in the public interest—is crucial to the promotion of transparency in public organisations. Almost 20 years ago, the Nolan committee said:

“All organisations face the risks of things going wrong or of unknowingly harbouring malpractice. Part of the duty of identifying such a situation and taking remedial action may lie with the regulatory or funding body. But the regulator is usually in the role of detective; determining responsibility after the crime has been discovered. Encouraging a culture of openness within an organisation will help: prevention is better than cure. Yet it is striking that in the few cases where things have gone badly wrong in local public spending bodies, it has frequently been the tip-off to the press or the local Member of Parliament—sometimes anonymous, sometimes not—which has prompted the regulators into action”.

We have seen the value of whistleblowers demonstrated over and over again, most recently in the revelation of scandals in the NHS. The Government recognise this and the Prime Minister has said:

“We will always back whistleblowers when they challenge poor standards, particularly in large organisations”.—[Official Report, Commons, 26/2/14; col. 257.]

He has also said that,

“we should support whistleblowers and what they do to help improve the provision of public services”.—[Official Report, Commons, 24/4/13; col. 882.]

And yet we are still some way away from a situation in which whistleblowers are adequately protected, and we are still further from the creation of a comprehensive culture in public institutions in which whistleblowing is encouraged.

Whistleblowing reveals wrongdoing in great public institutions and those carrying out functions in the public interest, but such institutions are always powerful, usually driven by a potent internal culture, and often inward-looking. Every case of whistleblowing challenges the powerful vested interests that run such institutions. After every scandal is revealed, after the abuses have been tackled and the guilty punished, and after the fine words about whistleblowers have been spoken, it is all too easy for those dominant interests to revert to carrying on much as they did before. The powerful never like being challenged.

The inward-looking culture that dominates so many of our great public institutions discourages whistleblowing. Repeated failures within the NHS have highlighted not only how important whistleblowers can be in protecting the public, but also how very difficult they find it if they try to expose incompetence and wrongdoing. These problems are not confined to the NHS. For all the police wrongdoing after the Hillsborough disaster that has now been exposed, for 20 years no one blew the whistle. No one blew the whistle on the scandal of MPs’ expenses, even though the Fees Office was well aware of the scams that were going on. There is clearly a need to do more to encourage and protect whistleblowers. Just this month, the National Audit Office made a series of recommendations for improvements, including the creation of a strategic lead within central government, a series of clarifications, and more effective communication of existing arrangements and protections. I hope that the Minister will consider those recommendations carefully.

The Public Interest Disclosure Act 1998 was a landmark piece of legislation providing statutory protection for whistleblowers, but it is now nearly 15 years old and it has never been reviewed officially. But the whistleblowing commission set up by Public Concern at Work and chaired by a retired Court of Appeal judge, Sir Anthony Hooper, has done so. Following a public consultation and research produced by Public Concern at Work, Ernst & Young and the University of Greenwich, the commission has made a number of recommendations aimed at changing culture and extending, simplifying and improving the processes for delivering protections for whistleblowers. If we are to give whistleblowers the protection they need, the Government need to address these recommendations and, if they are not willing to adopt them, at least give the reasons why.

I would be grateful if the Minister could give his response to the following key recommendations made by the commission. To help change workplace culture, the commission has recommended the introduction of a code of practice on whistleblowing that would set out best practice for employers, workers and whistleblowers. Similar to ACAS codes of practice, this code should be rooted in statute, taken into account by the courts in whistleblowing cases, and included in the inspection regimes of regulators. Will the Minister pursue this?

Next, legal protection for whistleblowing in the Public Interest Disclosure Act needs to be extended to prevent the blacklisting of job applicants, which is such a potent disincentive to whistleblowing. Protection also needs to be extended to those working in sensitive positions in organisations that could benefit significantly from encouraging and protecting whistleblowers. The definition of “worker” needs to be clarified—and there is some doubt about the current definition under the recent Enterprise and Regulatory Reform Act—so that it includes without doubt student nurses, doctors, healthcare professionals, social workers and general practitioners. It should also be clear that the term “worker” includes volunteers, interns, non-executive directors, professional partners, including partners in LLPs, priests and ministers of religion. These are all categories of worker listed under the Equality Act 2010 but not currently protected, or at least it is not clear that they are, under the provisions of the Public Interest Disclosure Act. Overseas workers raising concerns about their UK subsidiaries need protection as well. I would therefore be grateful if the Minister could confirm that the Government will find the first available legislative opportunity to extend such protections.

Whistleblowing protection needs to be extended to allow individuals seeking advice from trade unions to be more easily protected. Whistleblowing protection needs to be simplified to ensure that everyone understands that gagging clauses are illegal, to make the causation tests for dismissal and detriment the same, and to make sure that whistleblowers can easily raise concerns with regulators. Will the Minister undertake to do this?

At present, it is possible for wrongdoing to be buried in settlements as there is no open register of claims under the Public Interest Disclosure Act. In 2008, the then Government introduced a process whereby claimants could request that their claims be sent to the relevant regulators, but this process is not mandatory. Not all such claims were sent forward, and it should be mandatory. The employment tribunal process needs to be improved for whistleblowing claims, a register of claims under the Public Interest Disclosure Act should be made available to the public, and the referral of such claims to regulators should be made mandatory. Again, I would be grateful if the Minister could confirm that the Government intend to make progress in these areas.

There are also complex issues around extending whistleblowing protection to members of the armed services and those involved with national security. At the moment, national security whistleblowers enjoy no protection, even if the concerns they raise have nothing to do with national security but are about other issues such as human rights abuses, bribery, procurement and corruption within the chain of command. I should be grateful if the Minister would agree to look at these issues and write to me with proposals for extending protections in this area. Perhaps he could also copy the letter to those noble Lords who are taking part in today’s debate and place a copy in the Library.

Finally, the Public Interest Disclosure Act does not protect disclosures by workers, primarily in law firms, of information that is subject to legal professional privilege, even where the worker raises the concern with a senior colleague in their firm or with the client. This appears to be an anomaly as in both cases such communication would not be a breach of the privilege or of confidentiality, even though the information itself is privileged. There would therefore seem to be no good reason to deny the protection to such whistleblowers. I would be grateful if the Minister would agree to bring forward an amendment to that effect at the first available legislative opportunity.

I recognise that this is a long agenda for the Minister to address, but it is still not comprehensive. This is such an important area of public policy, with the potential to transform the way public services are delivered, that I hope the Minister will be able to engage constructively with it and make significant progress on all the issues I have raised today.

18:02

[Baroness Browning (Con)]

My Lords, I commend the noble Lord, Lord Wills, for bringing the Committee’s attention to and providing the opportunity to debate, the document that we have all received from the Whistleblowing Commission, which was initiated by Public Concern at Work. As I was a Member of Parliament for 18 years, I am very familiar with the charity Public Concern at Work. I have recommended it to many constituents who have come to me with problems because, as whistleblowers, they found themselves under pressure for trying to do what they saw as the right thing and becoming the victim. In some recent very high profile cases, we have seen appalling results that have happened to whistleblowers who have tried to do the right thing, particularly in very severe cases to do with the health service.

I support the request by the noble Lord, Lord Wills, to the Government to look at this and see if they can use this as a blueprint—that is what is being asked for—to implement and tighten up not only the way in which the public sector works as far as whistleblowers are concerned but to help prevent the need for people to feel that they have to whistleblow in the first place.

I shall focus on two aspects of the report in its summary of recommendations. As the noble Lord, Lord Wills, said, recommendation 1 is for a code of practice, which is outlined in detail at the back of the report. One of the points in the proposed code of practice, at section 8, is:

“Where an organisation publishes an annual report, that report should include information about the effectiveness of whistleblowing arrangements”.

It goes on to show that this should be incorporated as a normal part of what we would all regard as the essential reporting of governance of any organisation. It applies to the corporate sector as well as to the public sector.

This recommendation should be adopted because if an annual report is produced it should also show who at the top on the board of directors of an organisation—whether public or private sector—is responsible for overseeing that this happens, if that is what has been agreed. As a Member of Parliament, I was involved in cases in which potentially there could have been whistleblowers who might well have prevented some tragic happenings. Many that we started to investigate resulted in suspensions. For example, in the case of a hospital, staff were interviewed and asked why they had not said something earlier. A certain culture has developed in recent years, particularly in the public sector.

I am very pleased to see that the noble Earl, Lord Lytton, is in his place because in a similar debate a while back he gave me a quote that sums up this culture and why whistleblowing is so essential, so that people feel strong and secure enough to come forward. The noble Earl said that collectivisation of risk equals abrogation of individual responsibility.

I have experienced this culture myself. Where several people now share the risk and make collective decisions, that sounds all very well; but it often results in people asking, “Who is in charge and who will actually take a decision?” One often finds this culture in what I can only describe as process-driven organisations that are looking at processes rather than outcomes. That needs to be looked at that. If we can change it and if—as in this code of practice—there are people who have to take responsibility and publish what the outcome of that responsibility is, that should trickle down through the organisation and there should be less need for people to feel that they have got to blow the whistle. I believe that systemic problems will be identified in a much more structured way and before crisis point is reached. I therefore commend the code of practice.

The other area I particularly commend to the Minister is in recommendation 2, concerning regulators, in the summary of recommendations in the report. It is essential that regulators have a much more hands-on role in their inspections. We have heard of far too many cases lately in which regulators in different areas of the public sector have significantly missed huge, life-threatening problems, despite the fact that they have been into a premises, inspected its processes and interviewed people; and still tragic consequences have come about as a result of those regulators not asking the right questions or picking up on the really serious issues. Again, this is a really important area in which regulators should have a much more hands-on role in making sure they are involved, not just in identifying problems but in dealing with the policy of the organisation as far as whistleblowers are concerned, so that they can help prevent the need for whistleblowers in the first place.

Sometimes there is a little cynicism about people who whistleblow. Of course, occasionally one comes across a person who one might describe as a vexatious complainant. The noble Lord, Lord Wills, has been a Member of Parliament and he and I have had our fair share of vexatious complainants. However, most people who see what is happening in a workplace or in the organisation they work for and can see that it is causing harm to others should be supported, and know that the law is on their side and that there is something they can do about it.

18:10

[Lord Phillips of Sudbury (LD)]

My Lords, I should declare an interest in that 20 years ago I set up the charity, Public Concern at Work. I think it took me five or six years to persuade the Charity Commission that it should be given charitable status, but we got there in the end and it has done a wonderful job ever since. I commend the PCaW commission on this report. It is led by my old friend Tony Hooper—the right honourable Sir Anthony Hooper and a former judge in the Court of Appeal, I should say. There is no point in pretending that this is anything other than an incredibly vexed set of issues and that there is a great deal of fear where whistleblowing is concerned. There is also no point in disguising from ourselves the fact that we live in an age of collapsing standards. Over the past few years our own proud City of London has been embroiled in tragic and scandalous behaviour of all sorts. Great banks have completely lost their way. However, it is not just about us because this is a predicament across the developed world, and probably the underdeveloped world. The need for whistleblowing is therefore ever greater.

It is an extraordinary fact that in the LIBOR and PPI scandals and the foreign exchange rigging, apparently no whistleblowing went on. Those corrupt scandals lasted for years and involved hundreds of people—in the PPI case tens of thousands of people—all of whom knew that what they were doing was wrong. Most of them knew that it was unlawful and some knew that it was corrupt. The need, therefore, to act on the central provisions of this report certainly seems to be quite plangent. In saying that, I am not deluding myself, because I agree entirely with the noble Baroness, Lady Browning, that without an underlying moral cohesion of our society in the minds and hearts of ordinary people, no amount of law and regulation will succeed. The one can only buttress the other, but we need to buttress more effectively.

The Public Interest Disclosure Act 1998 was good as far as it went but, first, it did not go far enough. Some of the areas of insufficiency are set out in the commission’s recommendations. Secondly, I want to emphasise strongly that there is a total insufficiency of enforcement, a point that I hope the Minister will take back with him. Given the choice of putting much more effort into enforcement and making no changes to the law, I would go for the former every time. How many cases of fraud have been prosecuted on the back of evidence given by whistleblowers? The Minister may not know—it is not fair to spring it on him.

Perhaps I may mention Paul Moore of Halifax Bank of Scotland, who 10 years ago was dismissed for blowing the whistle on a state of affairs within that massive entity that was wrong and completely unsustainable. To give him his full title, Mr Moore was the head of Group Regulatory Risk and the good practice manager. After a great deal of in-depth inquiry, he reported to the main board, as he did at every board meeting, that the bank’s system was not sustainable. Indeed, one senior employer told him that to meet sales and marketing targets, the bank had to act unethically and that it could not be done ethically. That man has been blackballed in the City from that day to this. He never got an interview for any job he applied for and he was not offered a job. We have to understand, too, that we have a culture whereby people involved in certain aspects of our economy are themselves corrupted by all this, and who view anybody who tries to uphold the law as a traitor. Noble Lords would not believe what this man has been called in the intervening years. I have spoken to him about this at length and in depth and have his consent to mention these facts today.

I know that this is a difficult area of enforcement—I make no bones about it. It requires sensitivity, extreme tenacity of prosecutorial effort and a detailed knowledge of the law. Whoever takes this on will be met by legions of expensive lawyers and accountants because that is another feature of our times—the total disparity of resources in trying to uphold the law in relation to fraud and so on.

I commend recommendation 21 which asserts that tribunals dealing with the Public Interest Disclosure Act should be presided over by someone with specialist training in this field. We should look at what the Americans do, as they have a public authority with responsibility for dealing with whistleblowing. I think that is right. We need to go that way and have an authority—it may be small, but strong—which can uphold and enforce the law in conjunction with the prosecutorial authorities.

Finally, I believe that the most important body of recommendations in the commission’s report are those which beef up the role and the duty of the regulators in all aspects of our economy so that they have the power to require large companies to do something effective to enable whistleblowing to thrive to the benefit of companies, the economy and the country. That is the point, is it not? I wish well the Minister, the Government and all who have to take these important matters forward.

18:17

[Lord Low of Dalston (CB)]

My Lords, I am particularly grateful to the noble Lord, Lord Wills, for securing this debate because I took quite an interest in the legislative framework on whistleblowing when the Enterprise and Regulatory Reform Bill was going through the House last year; and because I argue there are reasons for believing that the need for that framework to be as positive and supportive as possible grows ever greater by the day. Indeed, that point was made by the noble Lord, Lord Phillips. Some themes are beginning to emerge—that is just one of them—but I hope that it will do no harm if I underline one or two of them.

Research commissioned by the charity, Public Concern at Work—the organisation which commissioned the report whose implementation we are debating—has shown that in recent years, at least, attitudes to whistleblowing and whistleblowers are positive. However, it was not always so. This led to a series of Private Members’ Bills in the Commons during the latter half of the 1990s, sponsored by the then MP, Tony Wright, and the noble Lord, Lord Touhig, which finally culminated in the Public Interest Disclosure Act 1998, steered through by Richard Shepherd MP, which sought to give legal protection to whistleblowers against the negative reaction their conduct attracted from fellow workers and employers.

There are good reasons for keeping this legislation under review so that it remains fit for purpose. The commission whose report we are discussing makes a compelling case in its own terms for saying that it could do with updating and simplifying in a number of respects. Indeed, Public Concern at Work is much to be commended for commissioning this report, and the commission itself is to be congratulated on producing a report which is both comprehensive and lucid, and all within a modest compass.

I hope that nobody imagined that I was trying to pour cold water on any of its recommendations by upsetting my glass of water when the noble Lord, Lord Wills, was in full flood. He was in full flood and I am glad to say that I created only a minor one over here.

The report argues that PIDA is not working as intended, and that it could benefit from some amendment. Whistleblowing may be viewed in a positive light at a societal level but this is not commonly how it is experienced by the whistleblower at a local level, where whistleblowers are typically regarded as trouble-makers by their employers and traitors by fellow workers. Blacklisting of workers who raise concerns about health and safety issues is thought to be commonplace in the construction industry and is also found in other sectors. Lisa Martin, for example, who exposed serious abuse at the Orchid View care home revealed that she had been unable to get a job in the care sector ever since reporting her concerns to the police in 2011. Some workers have even had death threats. It is little wonder then that in such a climate, workers fail to speak up because of their concern that they will not be listened to or that nothing will be done at best, or from a fear of reprisals at worst. The report makes a number of sensible recommendations for dealing with the current legislation’s shortcomings in dealing with these abuses. I hope very much that the Government will look at them very seriously.

However, as I have hinted, the reasons for welcoming this report and urging its rapid implementation in full go wider. Such is the decline of trust in many of our key institutions—politics, the police, the NHS, the press and even the BBC—that whistleblowing now assumes a strategic significance, outstripping anything that it had before. There has been a succession of scandals, such as the Savile affair, Orchid View, which I have mentioned, the system of care homes in north Wales, the rigging of LIBOR and the foreign exchange market, price fixing in the energy industry, Hillsborough, the Mid Staffordshire NHS Foundation Trust and phone hacking at the News of the World. All those scandals show that once where we thought we could rely on the corporate culture to ensure that organisations behaved properly, and that if they did not, wrongdoing was brought to light and malefactors were brought to book, we now have to rely on the whistleblower as our last defence against the corporate culture which thrives on malfeasance. As the report says in its foreword:

“Effective whistleblowing arrangements are a key part of good governance. A healthy and open culture is one where people are encouraged to speak out, confident that they can do so without adverse repercussions, confident that they will be listened to, and confident that appropriate action will be taken”.

The commission makes a number of recommendations designed to promote this strategic role of whistleblowing and it is to those that I particularly want to draw attention. Recommendation 1, on which the noble Lord, Lord Wills, spoke at some length, says that,

“PIDA be amended to authorise the Secretary of State … to issue a code of practice on whistleblowing arrangements, and provide that such a code of practice must be taken into account by courts and tribunals wherever it is relevant to do so”.

The report contains a draft code of practice which is recommended to the Secretary of State as a basis for consultation. Recommendation 8 states:

“The Commission recommends a simplification of PIDA”.

Recommendation 10 suggests that,

“the Secretary of State uses the powers set out in Section 20 of the ERRA”—

Enterprise and Regulatory Reform Act—

“2013 to add”,

a number of categories of workers to PIDA, including job applicants who are victims of blacklisting.

Recommendation 25(d) suggests that the Government “undertake research” to assess, inter alia,

“whether a state sponsored agency could carry out strategic litigation and give legal support to whistleblowers (similar to the model of the Equality and Human Rights Commission and its work in discrimination cases)”.

The Government have given a commitment,

“to ensuring a strong legislative framework to encourage workers to speak up about wrongdoing, risk or malpractice without fear of reprisal”.

In their national action plan for open government, the Government have agreed to take into account the findings of the Whistleblowing Commission and to consider legislative change, statutory or non-statutory codes of practice, guidance and best practice measures. I look forward to the Government delivering on those commitments.

Finally, the Government launched their own consultation on the whistleblowing framework last July. It would be good to hear from the Minister about the progress of that call for evidence and when we are likely to get the Government’s response to the evidence received.

18:26

[The Earl of Lytton (CB)]

My Lords, I, too, congratulate the noble Lord, Lord Wills, on securing this debate, Public Concern at Work on setting up the commission into whistleblowing and the commission itself on writing what is an absolutely excellent report. Noble Lords will know that my interest stems in particular from police conduct and crime recording. Given the systemic fiddling of the crime figures, it is surprising how few internal questions were being raised, and as we now know, the problems of widespread cover-up went much deeper. I pay tribute to the many people who have put themselves at risk to blow the whistle. Were it not for them, many very serious cases would never have come to light. Even so, we know that bad practices continue and, indeed, that lives are at risk, so we have no reason to be complacent. Thank goodness that, in retirement, some former police officers have retained a conscience.

The report identifies problems with bullying, harassment and blacklisting of whistleblowers. Some are seen as troublemakers, as we have heard, and have been unable to secure further employment in their chosen field. My analysis is that blacklisting would be to no purpose if it were not for senior people still in post whose policies and activities might yet be exposed by that same whistleblower being restored to their position. Weak, if not actually corrupt, management protects them. That is a sign of a great deal of unfinished business.

Under the Public Interest Disclosure Act, whistleblowing comes within employment law. As any business knows, employment issues are a nightmare even if there is a fully fledged HR facility. Separating terms and conditions of employment from the objective reporting of corporate wrongdoing is almost impossible. The whistleblower must go to the line manager, but there is an obvious conflict of interest for the manager, to add to the confusion between employee conditions of work on the one hand and reporting of behaviour contrary to public interest on the other. Whistleblower protection is thus inadequate, and the current system is ineffective as well as the process being divisive.

At paragraphs 79 and 80, the commission explains one paradox where an employee claims a genuine belief that disclosure was in the public interest, but the employer can dispute this without first addressing the primary issue of whether there was corporate wrongdoing. Recommendation 12 specifically highlights the issue of workers “wrongly identified” as whistleblowers. I do not believe that the necessary change in corporate attitudes will happen on its own without some sort of push. However, information about corporate misdeeds is not confined to employees. It may be an outsider—a family member, business associate, subcontractor or even an observant bystander—who sees things and cottons on to the fact that something is amiss, possibly something not affecting employment at all. These people have no reliable avenue for raising concerns, so I maintain that the current construct is too narrow and that its scope needs to be widened substantially.

Follow-up for both employee and non-employee categories can be extremely patchy, as we have heard. There are numerous instances where an employee has gone to their line manager or people outside have gone to the police with their worries only to find that nothing happens and the evil persists. It is a failure of corporate social responsibility.

Where a systemic culture of cover-up and large-scale complicity exists, management can, quite literally, close ranks and kill the issue. This also happens in hierarchical bodies and in uniformed services, where the concept of not grassing on your mates is a particularly potent bond. The other concept of noble purpose—perhaps public order, saving lives, curing disease—may even override all other considerations, including decency, proportionality and justice. The scandals of some police-on-police internal investigations in response to whistleblowing are an example.

The noble Baroness, Lady Browning, quoted me, but in fact I am not the origin of the comment. It comes from a 2008 article in Policing by Barry Loveday of the University of Portsmouth. He links some of these aspects with the construct of performance management. He says that when applied to public sector bodies as opposed to manufacturers with measurable outputs of widgets and sales, the results are often this collectivisation of risk, avoidance of individual responsibility and abrogation of leadership. Mid Staffordshire NHS Foundation Trust had precisely that generic problem.

These mutually reinforcing factors mean that we have to be particularly vigilant in the choice of mechanisms that enable people to speak out when they feel a compelling need and protect them from reprisals when they do so. My suggestion would be to follow recommendation 25 in the report, in that we need a completely independent, sector-by-sector whistleblower ombudsman—I use the term broadly—in other words, a totally confidential, external and objective mechanism with enough expertise to distinguish personal employment issues from plain mischief making, and both of those from genuine public interest disclosure. It would need powers to act on the findings.

The question will be asked: how do we fund this? To which my answer is that if there was proper assessment of the distress to families and individuals of miscarriages of justice, the damage to employee prospects, the dereliction of public interest and even the deaths, then it would happen. Today’s press coverage of fraud in the NHS tells us that the present situation is, frankly, unaffordable.

However, the final problem may be at the top. I refer, of course, to the reluctance of Governments to countenance anything that discloses unsavoury reactions by the state, often for long periods afterwards. The unnecessary use of the Official Secrets Act and of public interest immunity certificates in judicial proceedings are examples of the same corporate lockdown as confidentiality clauses and gagging provisions that are used to protect guilty people and prejudice innocent public interest whistleblowers. These factors should be subject to judicial scrutiny, even if by closed session.

There is also a dangerous belief that some areas of endeavour are above suspicion. They are not and must not be. We can, if we wish, make provision in an organised way, or we can leave it to default through the court of the press, the web and social media. There is a choice, and I suggest that we get ahead of the curve. The commission has helpfully fired the starting gun in a report that covers a wealth of issues. I hope the Government are listening.

18:32

[Lord Young of Norwood Green (Lab)]

My Lords, I, too, congratulate my noble friend Lord Wills on initiating this debate. Contributing at the end, I find that the waterfront has been covered so well that I am almost tempted to say “ditto”. However, given my position as Front Bench spokesperson, I probably need to say a little more than that.

I went on to the website to look at the call for evidence and I noticed that it finished in November last year. However, I did not find a report. It may be that I missed it but perhaps the Minister could say whether any summary of the evidence has been published as yet. I can see a head shaking so it looks as though the answer is no. It has been quite a long while but no doubt we will be informed why. If the call for evidence finished in November, I would have thought that by now we would have had at least a summary, if not a complete report.

I concur with much of what my noble friend Lord Wills said. He made the point that the PIDA is now 15 years old. It may not be whiskery but given all the analysis we have heard today and the tributes we ought to be paying to Public Concern at Work—I was fascinated to learn that the noble Lord, Lord Phillips, was the instigator of that organisation—

[Lord Phillips of Sudbury]

I am terribly sorry. I should not mislead your Lordships. I was only the mere lawyer who set the thing up; I was not the impetus for it.

[Lord Young of Norwood Green]

Okay. He played a significant role, we will say. It is not often that I dare to disagree with him, and his analysis is usually good, but when he said that if he had to make a choice between reform and enforcement he would go for enforcement, I did feel that that is not the advice we ought to be giving the Government. It is a 15 year-old piece of legislation and a very significant and comprehensive report—it ought not to be an either/or choice; it should surely be both. Reform is pointless without ensuring that we have adequate enforcement, as we have heard, with regard to all the difficulties that whistleblowers face.

I have to be careful how I comment on an issue that I was personally involved with recently as a school governor, when I saw what happened when somebody tried to deal with a difficult and sensitive issue. They were not exactly congratulated by all those concerned and it led to the individual feeling that they did not want to continue in their role as governor. The point has been made time and again: the pressures on people who try to blow the whistle are enormous.

I could not help but reflect on the comments made by the noble Lord, Lord Low of Dalston. He listed a whole range of organisations, in construction, care homes, the BBC, the police—the list goes on and on. We have heard so much of this. It was actually the noble Lord, Lord Phillips, who mentioned the E-word—ethics, although I heard it only once. I am always fascinated when people talk about what goes on in MBA syllabuses and business schools and I am constantly reminding them of the importance of ensuring that ethics is a part of training.

Someone else—I think it was the noble Earl, Lord Lytton—talked about corporate social responsibility. It is there in every annual report. In theory, it is in companies’ own interests to encourage whistleblowing. If you think of the cost when organisations fail—whether it is health and safety or PPI, for example—the payouts are enormous. Companies ought to have a strong vested interest in ensuring that all their procedures are right but we know that, time and again, whether it is the hierarchical resistance referred to by the noble Earl, Lord Lytton, or the sheer fear whistleblowers feel about the reaction from their colleagues—whether it is higher up in the organisation or, as we saw in Mid Staffs, your own work colleagues—it takes a brave person to become a whistleblower. There is no guarantee that what you are doing, even if it is deemed to be in the public interest, means that you will be seen as a hero. The reverse can happen: not only can you lose your job but you can then fail to get employment elsewhere.

Without going through every single recommendation of the report—I do not think that I need to do that because so many of them have already been highlighted—there was one that I wanted to draw out, which was mentioned by the noble Earl, Lord Lytton: the question of whether workers who are wrongly identified as having made disclosures should be protected. I was interested in that because the Public Interest Disclosure Act says that the protection provided by the Act is not subject to any qualifying period of employment, so it is referred to as a “day one” right in employment law. Yet here, Public Concern at Work was saying, “Well, where the worker is wrongly identified as a whistleblower, there is a possibility that they will not get that ‘day one’ right to protection”. I hope that the Minister will be able to cover that in his response.

As regards all the points that have been made on regulation and being clear about what we mean by a worker—my noble friend Lord Wills was absolutely right when he gave us a long list of workers where it is doubtful whether they are necessarily included—I do not need to go through those again because they have already been adequately made. However, I look forward with interest to the Minister’s response, especially to the point I made about the call for evidence.

18:40

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)]

My Lords, I am grateful to the noble Lord, Lord Wills, for initiating this important debate. As we have heard, whistleblowing is a sensitive issue which continues to be in the spotlight, bringing public matters of concern to our attention.

The noble Lord, Lord Wills, my noble friend Lord Phillips and the noble Lords, Lord Low and Lord Young, highlighted some examples—in the case of the noble Lord, Lord Young, a personal example—of incidents or tragedies that may well have been avoided if those people who had spoken out had been heard and some action taken. The noble Lord, Lord Wills, raised a number of questions, and I will certainly attempt to answer them all during this debate. If I fail to do so, I will write to the noble Lord and copy in all noble Lords who have contributed today.

As noble Lords will be aware, the Public Interest Disclosure Act was introduced in 1998 to provide protection in the workplace to individuals who make a disclosure which is in the public interest. The noble Lord, Lord Wills, described it, correctly, as “landmark” legislation. Where disclosures are made in good faith and in the specified way, the law protects the whistleblower from unfair dismissal, from being victimised by the employer or from otherwise suffering a detriment at work.

Last July, the Government renewed their position in support of the important role whistleblowing can play in a workplace by further strengthening the legislation. Through the Enterprise and Regulatory Reform Act, we made a number of changes to the whistleblowing framework. We introduced a public interest test, which requires an individual who brings a claim at an employment tribunal to show that they had a reasonable belief that their disclosure was in the public interest. That brought the law back in line with its original intention.

We made an amendment to the good faith test so that it is relevant to remedy and not liability, meaning that it affects the compensation an individual may get if they win their case rather than the outcome of the case itself. Previously, if an individual was unable to show they had made their disclosure in good faith at an employment tribunal, their case could fail. Now, even if an individual is unable to demonstrate good faith, they can still win an employment tribunal claim. However, any compensation awarded in respect of that claim may be reduced by up to 25%.

We also introduced vicarious liability, which ensures that an individual who has suffered a detriment from a co-worker as a result of blowing the whistle can bring a claim against both the co-worker and the employer, who may be vicariously liable for the actions of the co-worker. We made an amendment to the definition of “worker” to include certain contractual arrangements in the NHS to ensure that certain NHS workers, including GPs, would qualify for the whistleblowing protections. We also inserted a power enabling the Secretary of State to make further changes to the definition of worker by secondary legislation, so that the law can be kept current in this respect. To echo the words of the noble Lord, Lord Low, many of those changes are a result of the hard work of groups such as Public Concern at Work—which the noble Lord is speaking for today—that bring important issues to the attention of the Government.

During the passage of the Enterprise and Regulatory Reform Bill, the Government also committed to reviewing the whistleblowing framework through a call for evidence to identify whether further changes were required to improve the effectiveness of the legislation. The call for evidence was held between July and November last year, and officials in the Department for Business, Innovation and Skills are currently analysing the submissions. It involved a thorough process where discussion sessions were held, meetings with interested parties took place and responses were submitted by 81 individuals or organisations. My noble friend Lady Browning stated that she hoped this would be a blueprint for the future, and I hope so too. As part of its analysis, the department is taking into account all the submissions, including the recommendations made by the PCaW commission. I have had sight of the initial analysis produced by officials. Many of the issues raised here today by noble Lords and by the PCaW commission’s report have been taken into consideration.

My noble friend Lord Phillips spoke passionately, focusing particularly on enforcement. I do not wish to pre-empt the Government’s response, which I believe will be published before the Easter Recess—which I hope answers the question from the noble Lord, Lord Young—but it might be helpful if I outline for your Lordships today some of the key issues that have been established through this process.

First, we have established that there is a level of basic misunderstanding in relation to the provisions acting as a protection against detriment rather than providing a remedy once that detriment has occurred. Secondly, there is a high level of concern that the issues that are raised by whistleblowers internally to employers rarely become the focus of the employer’s attention. The focus tends to be about the existing working relationship between the worker and the employer. For example, if a concern is raised with an employer about inconsistent safety practices witnessed on a worksite, the expectation of the individual would be for the employer’s focus to be on the concern that they have raised, not on scrutinising the individual’s employment history as a way of deflecting attention from the concern itself. As my noble friend Lady Browning said, the focus should be on the issue, not just on the process.

Thirdly, the culture around whistleblowing seems to be the driving force behind negative responses to disclosures and the resulting victimisation or detriment that the whistleblower may suffer. Fourthly, it is of concern to the Government that practices and standards for handling whistleblowing disclosures made externally—to regulators, for example—are inconsistent across organisations, with a disclosure often negatively received. My noble friend Lady Browning made a particular point of this issue, while my noble friend Lord Phillips spoke about beefing up the power of the regulators.

I want to say a few words about regulators, because the Government recognise that there is more that the regulators could do to reassure the whistleblower that the disclosure is being dealt with, given that the whistleblowing legislation is designed to deal with the detriment that a whistleblower may suffer rather than the issue of the disclosure itself. There is a challenge here for the Government to identify an appropriate solution in this area, but I assure the Committee that efforts will be made to do so.

This is not a new issue to us and we are considering how to address it in practical terms. The answer here will most likely fall to addressing cultural behaviours—the noble Lord, Lord Young, mentioned the important point that there is a close link between cultural behaviours and ethics—as well as through the legislative framework itself. Obviously we want to ensure that the level of understanding is correct and that individuals are willing to speak out without fear of reprisal. However, we also want to help business to understand the benefits that whistleblowers can bring to an organisation through helping to tackle corruption and malpractice by aiding the early detection of issues so serious that they can destroy businesses or even threaten life. The Government believe that the most effective way to do this is by setting direction and sharing best practice while giving employers the space to get it right in the way that works best for their organisations. Mandating best practice through statutory measures is not necessarily the best means to achieve the cultural change that is needed.

As I have already said, it would be imprudent and inappropriate of me to pre-empt the government response. However, I assure the Committee that a thorough review of the framework has taken place through the call-for-evidence process and that the outcome of the exercise will be available shortly. That is as far as I can really go in answering the question about timing from the noble Lords, Lord Low and Lord Young. We will continue to work with organisations such as PCaW to implement any changes that may come about as a result of the response to the call for evidence.

My noble friend Lord Phillips asked how many cases of fraud have been prosecuted. We have statistics for how many claims have been brought at employment tribunals by those who have suffered a detriment as a result of blowing the whistle. However, we are unable to confirm the number of fraud cases that have been prosecuted as a result of those disclosures. I will be very happy to try to establish the number and to write to the noble Lord on that point.

The noble Lord, Lord Wills, who has been very patient, raised a number of points that I will address. First, on the matter of codes of practice, the Government agree that guidance on best practice needs to be improved to drive up standards and consistency across all organisations. Indeed, there are many examples where non-statutory guidance is an effective tool for ensuring certain standards within industries or sectors. For example, there is the fair access protocols advice that the Department for Education has developed to provide advice to help local authorities and schools understand their obligations and duties in relation to the schools admission code.

Furthermore, there are industry codes of practice, such as those used in the oil and gas industry, which are an effective means for self-regulation within a sector. Those examples demonstrate that statutory codes and guidance are not always required to drive certain behaviours, compliance and standards. However, as this is a matter that has come up in the call for evidence, I can assure noble Lords that the Government are currently deciding the best approach for ensuring that standards for whistleblowing are consistent.

The noble Lord, Lord Wills, and my noble friend Lord Phillips asked if the Government will do anything to address the issue of whistleblowers becoming blacklisted as a result of making disclosures, which was an important point. The Government are clear that blacklisting is a totally unacceptable practice and do not support it. Individuals who believe that they are being excluded from employment because of a blacklist should seek redress in the county courts in England and Wales, or Court of Session in Scotland, under the Employment Relations Act 1999 (Blacklists) Regulations 2010. While there are protections in place for this type of treatment, there is more to be done than just leaving individuals to rely on a legal protection.

The noble Lord, Lord Wills, asked about adding additional groups to the definition of worker. We are aware of some of the groups of people; noble Lords have raised groups that have been identified as not qualifying for whistleblowing protection in the event that they make a disclosure. The provisions do not definitively exclude some members of those groups. However, the Government are again looking at this issue and hope to strike the right balance to include those where there is clear detriment suffered and the appropriate remedy for address.

The noble Lord, Lord Wills, asked about the anti-gagging clause. The Government believe that the legislation on the invalidity of the gagging clauses is clear. However, these are not applicable in respect of a disclosure. The guidance around that issue will be updated to make it clear. In addition, he asked whether the Government will consider adding trade union representatives. The answer is that any further changes to the prescribed persons list will be considered at a point when the list is next revised.

The noble Lord, Lord Wills, asked about claim referrals. The Government are looking at the system of referrals in the employment tribunals as part of the call for evidence and will report on that in due course.

I fear that I am just out of time. There are a couple of questions that I certainly will endeavour to answer by letter to the noble Lord, Lord Wills, and, indeed, any other noble Lord who asked a question.

I hope this reassures noble Lords that the Government have been listening to a wide range of views on this important matter and that they will be taking steps to address these issues where possible.

Finally, I will be happy to send a copy of the government response when it is published—and I have said that that will be soon—to all those taking part in this important debate.

Committee adjourned at 6.53 pm.

House of Lords

Monday 24th March 2014 Lords Chamber

Monday, 24 March 2014.

14:30

Prayers—read by the Lord Bishop of Chester.

Flooding: Military Deployment

Monday 24th March 2014 Lords Chamber

Question

14:36

Asked by

[Lord Holmes of Richmond]

To ask Her Majesty’s Government what assessment they have made of the military deployment during the recent floods.

[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)]

My Lords, our people lent invaluable support to the relief efforts, with a peak of 5,000 personnel from all three services and the reserves. They were available to provide everything from sandbagging to aerial reconnaissance, as well as highly visible reassurance to the public. Now, in the recovery phase, we still have 223 people in the field. Once the operation is complete, we will make a detailed assessment of our contribution to civil resilience within the overall national response.

[Lord Holmes of Richmond (Con)]

I thank my noble friend for his response. As we saw with the recent flooding and with the Olympic and Paralympic Games, when we deploy our military in the appropriate civil circumstances the results are always excellent. What further plans do the Government have to review the use of our military in other potential appropriate civil circumstances?

[Lord Astor of Hever]

My Lords, I agree with my noble friend—the work of the Armed Forces is always excellent. The lessons learnt will provide a valuable opportunity to look at how the contribution of our Armed Forces to civil resilience can be enhanced and accelerated in future emergencies. We are working with the Treasury to consider whether there is potential for improvement to the funding processes. We routinely support civil authorities on a wide range of resilience activities, such as support in the event of industrial action by fuel tanker drivers and firefighters.

[Lord Rosser (Lab)]

My Lords, on 12 February the Prime Minister told Parliament that money would be no object in the response to the floods and that local authorities had only to request military assistance, yet the flooding started in late December in the West Country. Why did it take not far short of two months to make that statement on money being no object, and why was it so long before the military was called in? Why was no action taken by the Government in the first week of flooding to consider and determine the potential role that the military could play? Was it because the Government were not prepared to find the funding to enable cash-strapped local authorities to call in the military until weeks later, or was it because the Government just did not get round to doing it?

[Lord Astor of Hever]

My Lords, the department received its first request for assistance on 29 January and had deployed the requested support by the following morning. As the weather continued to deteriorate, defence became increasingly involved in providing support to local authorities.

[Lord Selkirk of Douglas (Con)]

Can the Minister confirm that the contribution made by reservists to flood relief was in this case substantial?

[Lord Astor of Hever]

Yes, I can assure my noble friend that that is the case. The average number of reservists employed in mid-February, at the peak of the crisis, was around 80 per day. In most cases reservists were employed on man training days—the payment method used for routine reservist activity—although there were a small number of formal mobilisations, namely of signallers and engineers. I managed to visit some of the reservists who helped with the flood work, both infantry and engineers, who told me that they were very well received by the public for the work that they did.

[Lord Dannatt (CB)]

My Lords, would the Minister like to say a little more about the issue of funding? We are aware that when the military is called out in support of the civil power, if it is to reduce the threat to life there is no charge, but very quickly the charging becomes extremely high. That could well have been the reason why local authorities were concerned about calling the military out. That would seem to be counterproductive when trained bodies of people are available to help in civil situations. Can the Minister say what the Government are thinking of doing about that?

[Lord Astor of Hever]

My Lords, the noble Lord asks a good question. Certainly the perceived risk of a substantial full-costs bill at the end of an operation can be a concern to local authorities. We would like to do more to support the civil authorities, but we must ensure that the defence budget is not disadvantaged, nor indeed gains any inappropriate benefit, from so doing. The Secretary of State is currently in discussions with the Treasury, exploring the possibility of a full marginal costing recovery scheme, which would make the costing situation much clearer to all parties in advance.

[Lord West of Spithead (Lab)]

My Lords, does the Minister agree that numbers themselves have a real strength? In our push to try to reduce the number of people in the military to get maximum efficiency, we are losing that. France in its White Paper, for example, saw the use of the military in various départements as a very important part of the whole structure. Have we really looked at this in detail? I believe that we have reduced numbers to a level at which they cannot assist the civil power where they should be able to do so, because they are formed bodies which are very often self-supporting.

[Lord Astor of Hever]

My Lords, as I said in my initial Answer, we are looking at this whole process to see how to improve it in future. This is one area that we will certainly look at closely.

[Lord Trefgarne (Con)]

Can my noble friend confirm that the deployment to which the Question and his Answer relate had no effect on routine operations?

[Lord Astor of Hever]

My Lords, the personnel allocated to assist with flooding were selected in such a way that their participation would have no impact on military units’ preparedness for future operations. That includes contingency operations should assistance be requested in the event of future flooding or other severe weather.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, as the flood water recedes and people begin to reoccupy their homes, can the Minister say whether he anticipates that the armed services will be needed for a similar role next winter?

[Lord Astor of Hever]

My Lords, I cannot say that I am very good at forecasting the weather, but if the Armed Forces are called on I am sure that they will do as good a job as they did this year.

[Lord Whitty (Lab)]

My Lords, military assistance to the emergency services in the Environment Agency was very welcome. I well recall an even more acute situation in the foot and mouth disease outbreak. However, had that outbreak occurred a few months later, the military would all have been in Iraq. It is, therefore, important to recognise that military priorities change and we need to invest in the emergency services. I have just been given information that there is to be a huge cut in West Sussex Fire and Rescue Service of about £2.5 million this year and another £1.5 million next year. We depend utterly on those emergency services; help from the Army is good, but we need to continue to fund them.

[Lord Astor of Hever]

My Lords, the noble Lord makes a very good point, but the Armed Forces are always ready to do what they can to help the civil authorities.

Burma

Monday 24th March 2014 Lords Chamber

Question

14:44

Asked by

[Baroness Cox]

To ask Her Majesty’s Government what is their assessment of the current situation in Burma with particular reference to the Rohingya, Shan and Kachin peoples.

[The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con)]

My Lords, we welcome that the Burmese Government and ethnic armed conflict groups will establish a joint committee to draft a nationwide ceasefire text, but remain concerned by low-level fighting in Kachin state and Shan state. We are troubled by UN reports that at least 40 Rohingya people were killed in Rakhine state in January and by constraints imposed on Médecins sans Frontières. We have pressed for improved security and accountability, co-ordination of humanitarian assistance and a solution on Rohingya citizenship.

[Baroness Cox (CB)]

My Lords, I thank the noble Baroness for her Answer, including her expression of concern for the suffering of the Rohingya people. Is she aware that I visited Shan state recently and Kachin state last year, and that in both states, despite ceasefires, the Burmese army continues to carry out military offensives and atrocities, including the killing, rape and torture of civilians, while the Burmese Government continue their expropriation of land, theft of natural resources and displacement of hundreds of thousands of civilians? Will Her Majesty’s Government not consider more robust responses? Many Burmese people and advocacy organisations such as Burma Campaign UK, in its recent report, Downplaying Human Rights Abuses in Burma, are concerned that the British Government are making trade and investment such a priority that the Burmese Government can continue to kill and exploit their own people with impunity.

[Baroness Warsi]

My Lords, as ever, the noble Baroness comes to these questions with probably the most up-to-date information available. She is absolutely right that, despite ceasefires having been signed, there is still concern about real human rights abuses happening in Shan, about fighting in Kachin and, of course, about the appalling situation in Rakhine. We take these matters very seriously. They have been raised in the most robust way at the highest level, by the Prime Minister, when President Thein Sein visited the United Kingdom, and most recently by me about a week ago, when Ministers from the national planning committee were here, as well as representatives of the chamber of commerce and the director-general responsible for all investment coming into Burma. I did not hold back in any way in making very clear to them our view that responsible business can happen in Burma only against a backdrop of human rights being observed.

[Lord Avebury (LD)]

My Lords, have we asked the Burmese Government directly why they are not providing adequate protection and relief for the 140,000 Rohingya displaced victims of ethnic cleansing in Rakhine state but are instead expelling humanitarian organisations such as MSF, which provided health services to these victims of the Government’s failure to protect them? Secondly, why does the FCO’s quarterly report on Burma as a country of concern play down or omit these and other human rights violations, such as the tolerance of hate speech?

[Baroness Warsi]

I assure my noble friend that the discussions in relation to Médecins sans Frontières are ongoing. We have huge concerns about it being probably one of a handful of NGOs that are providing health support in Rakhine. Those discussions are ongoing and I will certainly report to the House once we have made some progress. The quarterly report stated:

“More needs to be done to tackle hate speech, which continues to inspire violence and intolerance across Burma; we continue to lobby the Burmese government to tackle these underlying issues”.

We continue to raise these matters. As to humanitarian access, my noble friend will be aware that there are certain parts of the country which, unfortunately, due to fighting, we cannot access, but we continue to press the Burmese Government to allow us access in those areas where there is no fighting.

[Baroness Kinnock of Holyhead (Lab)]

My Lords, how does the Minister respond to the report of the outgoing UN special rapporteur for human rights in Burma last week, in which he concluded that human rights violations against the Rohingya people could amount to crimes against humanity that should be the subject of an independent international inquiry? Will Her Majesty’s Government support these well founded recommendations?

[Baroness Warsi]

We support a lot of the work that is being done by the special rapporteur. In that report, which he presented to the Human Rights Council, he felt that technical assistance was required from the international community for any investigation to be transparent, credible and acceptable. I know that the noble Baroness does a large amount of work in this area and continues to campaign. Of course, we will continue to press the Human Rights Council for a strong resolution on human rights against Burma.

[Lord Alton of Liverpool (CB)]

My Lords, the noble Baroness will be aware that the forthcoming census in Burma is largely funded by the United Kingdom. Has she seen the calls by a number of non-governmental organisations that it should be postponed, not least because in Rakhine state, and other states where there are large ethnic minorities, it could certainly be a flashpoint for further confrontation. Will she at the very least ensure that, should the census be conducted, it will not be used to further distort the ethnic tensions in Myanmar?

[Baroness Warsi]

The noble Lord is right. We have provided about £10 million to ensure that the census is conducted in a technically sound way. We have also helped with the mapping exercise. We have concerns about the census, which is due on 28 March. This Friday will be census night and there will then be a period of 10 days when enumeration will take place. We have concerns because of the 135 officially recognised ethnicities—Rohingya, for example is not included—but we take some comfort from the fact that we have gained agreement from the Burmese Government for independent observers to be mobilised during this process. We hope that the option to self-identify will be used by the Rohingya community to be properly enumerated.

[Lord Triesman (Lab)]

My Lords, the noble Baroness has said that these issues are raised with the Burmese authorities vigorously and frequently and I know that to be the case. I am sure that these efforts are appreciated. To ensure that these issues do not drop between any cracks or rely on a single sentence to capture them, should we not adopt in the quarterly report a traffic light system under which countries that persistently abuse human rights are shown to all of those who read our reports around the world as red, those which are making progress as amber and others as green? As we take comfort in some progress, I sometimes feel that we have lost them on our radar.

[Baroness Warsi]

As the Minister with responsibility for human rights, I constantly keep under review how the quarterly and annual reports on human rights are presented, how we can present them better and how we can better judge countries that are making progress. I am starting to see the first drafts of the human rights reports which will be published later this year. They will include a great deal of detail on Burma, both as a country of concern and in relation to specific human rights abuses.

Israel and Palestine

Monday 24th March 2014 Lords Chamber

Question

14:52

Asked by

[Baroness Tonge]

To ask Her Majesty’s Government what representations they have made to the government of Israel about the actions of the Israeli Defence Force towards civilians in the Occupied Territories.

[The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con)]

My Lords, we have serious concerns in regard to IDF actions in the Occupied Palestinian Territories, including the killing and injuring of civilians, policing of non-violent demonstrations and treatment of child detainees. We have repeatedly raised cases with the Israeli authorities, including the Ministry of Strategic Affairs, COGAT, and the National Security Council.

[Baroness Tonge (Ind LD)]

I thank the Minister for that reply. Is she aware that since last July, 44 civilian Palestinians have been killed and many hundreds have been seriously injured? Among them, for example, 12 year-old Attah al Sabbah, now a paraplegic, was shot while collecting his school satchel; and two young footballers, Adam and Johar Halabiyeh, from Abu Dis near Jerusalem, were shot in the legs before being beaten up, one having his knee joint shattered. They were returning from football training. Will the Minister ensure that, as well as the usual ineffectual representations that our Government make to the Israeli Government, they will also ask FIFA to impose penalties on countries which allow young footballers to be treated in this way? Will she also say why it is that we are prepared to impose sanctions on Russia for breaking international law but not upon Israel, which has been breaking international law for decades?

[Baroness Warsi]

I thank my noble friend for that question. She comes to these matters with great expertise. She has asked a number of questions—not only Oral Questions but Written Questions—on a regular basis. I can assure her that we take these matters incredibly seriously. There has been a worrying increase in violence in the West Bank. In 2012, nine civilians were killed; in 2013, 27 civilians were killed; and the number of civilians who have been injured is also on the increase. Last week I raised these matters with our officials and only yesterday—Sunday— our ambassador spoke with the national security adviser and again put our concerns before him.

[Lord Grocott (Lab)]

My Lords, it is true, is it not, that in recent weeks the international community has taken a dim view of the occupation of one country by a neighbouring country and that this has led, quite properly, to a flurry of international activity, reference and the activation of sanctions? Yet, given that this question quite rightly refers to occupied territories which have been occupied now for more than 40 years, am I right in thinking that that there is no sense whatever of the same level of urgency and commitment being given to liberating these occupied territories as there is when similar events occur in other parts of the world?

[Baroness Warsi]

It is important that I try to focus on this Question. I understand why people try to read across to other matters, but successive government policies on the Occupied Palestinian Territories have been clear. Successive government policies about the two-state solution based on the 1967 borders, with agreed land swaps and a settlement for refugees in Jerusalem as a shared capital, have been the same. There is a Kerry framework agreement on which we hope progress will be made and we hope that that will be done by around the end of April. We are supporting and continue to support that, and we hope that it will yield some positive results.

[Lord Hylton (CB)]

My Lords, will the Government continue to raise the use of excessive force, the lack of proportionality and the almost complete impunity of the IDF when operating in occupied zones rather more strongly and effectively than has been the case in the past? There is the particular case of Raed Zeiter, a Palestinian civilian and a Jordanian magistrate, who was killed by the Allenby Bridge. Will the Government insist on a full and independent inquiry into his death?

[Baroness Warsi]

The views of this House are very clear, and I will certainly make sure that the strength of feeling on this matter is fed back. Officials from our embassy in Tel Aviv have raised with the IDF the issues of the Palestinian-Jordanian judge Raed Zeiter, who was tragically shot. I understand that there has been some progress, and that Prime Minister Netanyahu has issued a public apology and announced a joint Israeli-Jordanian investigation into the incident. Anger about it has been widespread and that has been communicated to the Israeli authorities.

[Lord Palmer of Childs Hill (LD)]

My Lords, bearing in mind the incidents that have been referred to, does my noble friend the Minister agree that the particular importance of the two-state solution should be stressed and that the consequences of not achieving an agreement should be warned against? Whatever the incidents, the only way forward is an agreement on peace and I hope that the Government will support that.

[Baroness Warsi]

We are supporting the Kerry framework agreement.

[Baroness Scotland of Asthal (Lab)]

My Lords—

[Lord Turnberg (Lab)]

My Lords, the bad behaviour of soldiers from any country is inexcusable, but is the noble Baroness aware of the many efforts made by Israel to support the Palestinians on the other side? These efforts relate to the economy, where the GDP in the West Bank is rising by about 7% a year, to the number of Arabs in East Jerusalem and Jerusalem, which is increasing at a greater rate than that of the Jewish population, and to the large numbers of Palestinians who are being treated in Israeli hospitals across the country, as well, incidentally, as those wounded from Syria. Should the UK not be concentrating on pressure on Mr Abbas to continue negotiations so that we can get to a two-state solution that the vast majority of the population in Israel supports?

[Baroness Warsi]

The Government have always been quick to recognise the progress that has been made on positive action by the Israeli Government. However, that does not take away from the real and serious concerns that we have in relation to child detainees, for example, that I know the noble and learned Baroness, Lady Scotland, was trying to get in on. We have concerns about IDF actions and continue to raise them at the highest level.

[Lord Dykes (LD)]

Does my noble friend agree that Israel is a great country with a great people, but unfortunately with a very narrow-minded and reactionary Government? Will our Government specifically seek out meetings with the Israeli human rights group B’Tselem, which has recently made strong representations to the Israeli Government about these unacceptable Palestinian casualties?

[Baroness Warsi]

I am not familiar with that particular human rights group but I will certainly ensure that officials are aware of the work that it is doing.

Alexander Litvinenko

Monday 24th March 2014 Lords Chamber

Question

14:59

Asked by

[Lord Clinton-Davis]

To ask Her Majesty’s Government whether they intend to reconsider their decision not to hold a public inquiry into the murder of Alexander Litvinenko, following the judgment by the Court of Appeal on 11 February.

[The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach) (Con)]

My Lords, the Home Secretary has decided not to seek permission to appeal the judgment and will give fresh consideration to the exercise of her discretion to establish an inquiry. The Government continue to co-operate fully with the inquest into Mr Litvinenko’s death.

[Lord Clinton-Davis (Lab)]

I thank the noble Lord for his somewhat implausible Answer. The fact is that three eminent judges have concluded that the coroner was absolutely right, that the Government’s case was unconvincing and that a special inquiry was needed. As we have heard, the Government have not appealed against that. Why do the Government concede that a special inquiry might be adopted, not now but in the distant future? Is that sensible?

[Lord Taylor of Holbeach]

My Lords, the noble Lord is being rather uncharacteristically churlish about the Answer I gave. These are complex and sensitive issues, as I hope noble Lords will appreciate, and it is right that the Home Secretary gives proper consideration to whether or not to hold an inquiry. That is her right and we should support her in that.

[Lord Elystan-Morgan (CB)]

My Lords, does the Minister recollect that on 11 February this year Lord Justice Richards, in giving the judgment of a unanimous and strong Court of Appeal, examined in detail each and every one of the six reasons given in the decision letter by the Home Secretary and rejected each and every one of them absolutely? He crystallised the situation with this sentence:

“If she is to maintain her refusal she will need better reasons than those given in the decision letter, so as to provide a rational basis for her decision”.

Does the Minister accept that failure to allow this matter to be properly examined under the Inquiries Act 2005 would not only be a denial of the justice that the assassinated Litvinenko deserves but a breach of the commitment that the United Kingdom has shown so honourably over the years to the rule of law?

[Lord Taylor of Holbeach]

My Lords, the Government have sought justice in this case ever since Mr Litvinenko died in 2006. That remains the position. This crime took place in this country and involved a British citizen. We want to see those whose arrests were sought by the Crown Prosecution Service—Andrey Lugovoy and Dmitry Kovtun—brought to and put on trial in the UK. Meanwhile, the noble Lord has emphasised why it is important that the Home Secretary gives proper consideration to the need for an inquiry.

[Lord Lester of Herne Hill (LD)]

My Lords, the judgment of this very powerful three-judge court emphasised that the case for setting up an immediate statutory inquiry, as requested by the coroner, Sir Robert Owen, is plainly a strong one. As has just been said, the judges rejected all the reasons given by the Home Secretary for not doing so, and then said that there needed to be,

“fresh consideration to the exercise of her discretion”.

That was said in a judgment on 11 February. In the intervening weeks, has the Home Secretary given fresh consideration and can the Minister now tell the House what her reasons are for accepting or rejecting the idea of an inquiry?

[Lord Taylor of Holbeach]

The noble Lord is quite right. The judgment was a firm one. None the less, the decision to order an inquiry requires proper consideration. There is no deadline for this consideration but, clearly, the Home Secretary will seek to come to a conclusion as soon as possible. Meanwhile, the arrest of those whom we wish to see tried for this offence remains our priority.

[Lord Anderson of Swansea (Lab)]

My Lords, does the Minister agree that there was in the past at least a scintilla of plausibility in the argument that, on prudential grounds, it was not worth provoking the Russian Federation because we needed to work with it in other areas, such as Syria and Iran, but that after Russia’s blatant invasion of Crimea, all that has gone and justice should now be done?

[Lord Taylor of Holbeach]

Yes, but, as I have pointed out, justice requires that those whom we wish to see put on trial in this country for this crime are brought to justice, and that requires the Russians to honour their agreement to extradite according to our request. I could not agree more with the noble Lord that our relationship with Russia has deteriorated as a result of the recent attempted annexation of Crimea. We are clearly not happy with that situation either, so it is yet another breakdown in our relationship with Russia.

[Lord Pearson of Rannoch (UKIP)]

My Lords, instead of passing sanctions of doubtful usefulness on various Russian citizens, would it now not be better to honour the promise given personally by the Foreign Secretary to Mrs Litvinenko, and to honour the Written Answer to me of 8 July last from the Minister, and respect the basic principles of British justice with a fully open inquest or inquiry? I have not understood whether the Government are committed to that or not.

[Lord Taylor of Holbeach]

My Lords, I think that I have made the position quite clear. The Home Secretary is considering, in the light of circumstances, whether an inquiry is the proper course of action. Meanwhile, as noble Lords will know, the G7—not the G8—is meeting in The Hague today to consider developments as a result of Russian aggression in the Black Sea area.

Defence Reform Bill

Monday 24th March 2014 Lords Chamber

Report (First Day)

15:07

Amendment 1

Moved by

[Baroness Miller of Chilthorne Domer]

1: After Clause 8, insert the following new Clause—
“Procurement of communications systems or servicesAdditional arrangements relating to procurement of communications systems or services
(1) To the extent that communications systems or services are procured for defence or related purposes under this Part (whether by the Secretary of State, Scottish Ministers or officers of other states resident in the United Kingdom) and those systems or services are used or proposed to be used for the purpose of interception of communications or processing of intercepted communications, it shall be the duty of the Interception Commissioner to report on the use or proposed use of those services or systems for any activity which may be subject to the provisions of the Regulation of Investigatory Powers Act 2000.
(2) In section 57 of the Regulation of Investigatory Powers Act 2000 (interception of communications commissioner), at the end of subsection (2) insert “; and
(e) the transmission of data through the jurisdiction and processing of data by means of any communication systems or services procured under Part 1 of the Defence Reform Act 2014 in the United Kingdom for defence (whether or not of the United Kingdom) or related purposes which has been obtained by interception, whether by—(i) the Secretary of State or Scottish Ministers; or(ii) officers of other states acting within the jurisdiction.””

[Baroness Miller of Chilthorne Domer (LD)]

My Lords, I will take just a moment to remind Members of the problem that I am trying to address with this amendment—that is, that the ability to intercept communications has leapt ahead of the regulations governing them. However, that is a very broad area and I think it is generally accepted that the Regulation of Investigatory Powers Act needs a thorough overhaul. This amendment addresses just the update to governance that is needed in the area of defence procurement—the subject of this part of the Bill.

The capacity and scale of interceptions from the RAF bases used by our allies, the Americans, under the Visiting Forces Act means that Parliament must put something in place to be confident of a statutory basis for these interceptions. However, I emphasise that in no way should the amendment be seen as undermining of our relationship with our NATO allies or of the intelligence agencies—quite the reverse. It seeks to increase confidence among UK citizens that we are in compliance with international law and have a national legislative framework that respects citizens’ right to privacy while keeping abreast of threats and technological developments.

I raised this issue in Committee and, in tabling this more focused amendment, I have taken account of the Minister’s comments at that stage. Since Committee, both the Deputy Prime Minister and the shadow Home Secretary have made speeches highlighting the need to act quickly and decisively with regard to governance of the intelligence agencies and interception.

I welcome particularly my right honourable friend Nick Clegg’s announcement that the Royal United Services Institute—RUSI—has agreed to establish an expert panel to review the use of internet data for surveillance purposes. That panel will consist of a group of experts drawn from the worlds of intelligence, technology, civil liberties and the law, and it will be chaired by Professor Michael Clarke, the director-general of RUSI. The panel will look at the principles that ought to govern our use of surveillance, examine current practice and make recommendations for reform and, where necessary, new legislation. I am sure that the review will spend some time looking at the whole legislative framework.

This amendment does no more than try to plug a gap in the mean time in respect of how data are obtained from UK citizens and how they may be shared, stored and used. The DPM went to the heart of the matter in his speech to RUSI when he said:

“it is in all our interests to ensure that we can enforce the law in the online world in the same way we enforce the law in the offline world, targeting terrorist and criminal networks and preventing attacks from taking place, precisely to safeguard the free and open society that we want”.

Yet would our laws even apply as things stand? The facts about what is intercepted and stored by, for example, the NSA as opposed to GCHQ, are a matter of conjecture to most of us, certainly to me. No doubt many interceptions are joint operations, but just how do Ministers know which are which and what is going on? It is so that Ministers are precisely aware of what is being planned that I propose in this amendment a reporting obligation relating to the procurement of communications systems or services in the area of defence.

The amendment seeks to extend the existing reporting obligations of the Interception of Communications Commissioner to report on the use of all communications systems and services procured for defence purposes. This expressly includes systems used on US bases by officers of states who are in the United Kingdom. The proposal involves extending the remit of the ICC, as I have suggested in subsection (2) in the amendment. In doing this, I sought to take into account the Minister’s careful response to the more extensive series of amendments tabled by the noble Lords, Lord Hodgson and Lord Dubs, the noble Baroness, Lady Stern, and me in Committee. In particular, I accept the argument of my noble friend Lord Astor that an entirely new scrutiny group might not be necessary, with the caveat that we must therefore build on existing mechanisms to fill the gaps in regulation and monitoring of all communications systems in the UK. This modest amendment seeks to address those different points on which my noble friend Lord Astor, through absolutely no fault of his own, given existing regulation and the remit of the Bill, was unable to reassure us.

We were informed by the Minister when this issue was last debated in Committee that,

“under the Visiting Forces Act visiting forces are subject to UK law”.

In response to an earlier version of this amendment, which also sought to provide oversight by the Interception of Communications Commissioner of the activities undertaken at US bases on UK soil, my noble friend Lord Astor added that, if the visiting forces,

“ever wanted to undertake interception activities that engage the Regulation of Investigatory Powers Act—RIPA—a proper authorisation must be obtained. All such authorisations are already overseen by the Interception of Communications Commissioner, and he reports annually to Parliament and the Prime Minister on the exercise of those powers”.—[Official Report, 5/2/14; col. GC 118.]

This reply puzzled me somewhat; perhaps I misunderstood it. I thought that US bodies or officers were not actually listed as those authorised under RIPA to apply for interception activity. With this in mind, I would be very grateful if my noble friend Lord Astor could explain whether and how such authorisations have been made. In addition, the reported scale of the interceptions would make the granting of such a volume of authorisations almost impossible.

15:15

The amendment would plug a gap in the oversight of these activities at such bases by providing an active duty of review to be undertaken by the ICC and his five trained specialist inspectors, who assist him in carrying out his duties. The amendment would therefore broaden the ICC’s remit, because currently, as I read it, the ICC does not have in his remit oversight of activity at US bases and looks only at,

“designated public authorities based in the UK”,

and specifically does,

“not oversee the intelligence or security services”.

By giving the ICC, who is a highly trusted commissioner who already oversees very sensitive material, responsibility for reviewing intercept data transmitted through or processed in the UK, the amendment would help us to scratch the surface of the activities being undertaken at US bases in the UK.

Whether or not the Government feel that this is the right amendment for the regulation of the interception activity, the need for action in this area is now urgent. I am sure my noble friend the Minister is aware of answers in the other place to questions asked about RAF Croughton, which the US military describes as the headquarters for the provision of,

“world-class … communications and global strike operations”.

RAF Croughton has been reported as being linked to both covert drone strikes in Yemen and the widespread programme of NSA/GCHQ surveillance that is the subject of so much controversy in the United States and which President Obama has undertaken to take action on and, as he says, to rein in. I am not sure that the Government’s position in maintaining in their Answer that,

“There is no requirement for an additional agreement regarding the use of RAF Croughton by the United States Visiting Forces”,—[Official Report, Commons, 10/12/13; col. 196W.]

stands up. The Government have also said:

“The Ministry of Defence remains satisfied with the arrangement that is currently in place regarding the use of RAF Croughton by the US”—

I might mention also Menwith Hill—and that,

“The Department has no plans to review this arrangement nor review the activities undertaken by the US at the base”.—[Official Report, Commons, 26/11/13; col. 213W.]

In reply to my Written Question of 3 December 2013, my noble friend the Minister said:

“The requirement to monitor the compliance of US personnel at RAF Menwith Hill with the Regulation of Investigatory Powers Act 2000 is not contained within the terms of the NATO Status of Forces Agreement of 1951”.—[Official Report, 3/12/13; col. WA 41.]

Therefore, I submit that interception activity is not covered by SOFA, nor does the MoD have plans for a memorandum of understanding, which might go some way towards filling that gap.

Some of you will have read the advice of Jemima Stratford QC, which was written for members of the APPG on Drones. The advice, which I am happy to provide to any noble Lords who would like a hard copy, supports my amendment. It concludes, as do I, that,

“pending review of the existing legislative framework, such amendments might go some way to ensuring that Ministers are informed about data passing through the UK. This, in turn, would help the government monitor compliance with UK law and make informed decisions about whether there is a need for an MoU or other multilateral agreement between NATO partners”.

I beg to move.

[Lord Rosser (Lab)]

As the noble Baroness, Lady Miller of Chilthorne Domer, said, she also raised the issue of interception capabilities in Committee when she referred to concerns over the relevance of existing legislation in the light of rapid advancements in technology, the level of application of that technology by in particular American forces operating from UK soil and the extent to which UK law did or did not apply to them.

The amendment moved by the noble Baroness does of course refer to,

“officers of other states resident in the United Kingdom”,

and officers of other states acting within the jurisdiction.

I presume, therefore, that the amendment is nation-neutral and is intended to refer equally to other countries, although I am not sure that it is intended to cover any such activities being undertaken by, for example, embassy officials of such other countries.

As far as the United Kingdom is concerned, the Interception Commissioner, as I understand it, already monitors intercepted data, including of the Ministry of Defence, so I assume that is not the real issue since that individual reports annually to Parliament and to the Prime Minister. The Government have stated that if visiting forces want to undertake interception activities covered by the Regulation of Investigatory Powers Act a proper authorisation must be obtained, that such authorisations are overseen by the Interception of Communications Commissioner, and that covert surveillance powers are subject to separate oversight arrangements through the Chief Surveillance Commissioner.

In relation to foreign military personnel, the extent to which they are exempt from local jurisdiction is regulated through status of forces agreements negotiated between the sending and the host nation, which allow a sending state’s military forces to operate within, and at the consent of, the host state.

In 1951 NATO agreed a status of forces agreement covering hosting arrangements between the alliance’s member states, and thus from our perspective applies equally to visiting forces in the UK and to British forces based in NATO countries. The 1952 Visiting Forces Act incorporated the NATO status of forces agreement into UK law. The Act and the agreement provide for foreign laws and military discipline to apply to foreign military personnel in the UK, but such personnel are still subject to UK law, and this arrangement applies equally to our forces when they are overseas. The Armed Forces Act 1996 extended the Visiting Forces Act to third countries by Order in Council.

The Government have said that the US visiting forces are thus subject to both US and UK law. At present I believe that around 9,500 US military personnel and supporting civilian staff are permanently based at various locations throughout the United Kingdom. Most UK military bases involved are used by the United States Air Force, but RAF Menwith Hill is used by the US National Security Agency. The United States visiting force is responsible for internal security at the bases that have been made available to them. The parliamentary Intelligence and Security Committee has oversight of the intelligence activities undertaken by RAF Menwith Hill, and the Government have stated that the mission at RAF Menwith Hill is conducted in accordance with UK law and with the knowledge and consent of the UK Government. The United States visiting force also declares its inventory of weapons in the UK annually to the MoD, which ensures that all weapons are appropriately licensed and stored, and the storage of US munitions on bases in the UK is governed by a 1997 agreement between the UK and the US.

I listened to the concerns raised by the noble Baroness, Lady Miller of Chilthorne Domer, just as I listened to the Minister’s response in Committee, when he gave the Government’s assurance that oversight mechanisms were in place and covered any person subject to UK law performing such activities in the UK. Clearly the Government have a responsibility to make sure that appropriate arrangements are in place to ensure that we know what is going on in our own country in the field of military and security activity, including interception of communications and surveillance, and that what is happening conforms to UK law. That means that the Government have to satisfy themselves that both oversight mechanisms and the law continue to keep pace with increasingly sophisticated technological developments. I hope that in responding the Minister will be able to assure us that that is, and indeed will continue to be, the case, not only because a Government must know what is going on within their own borders in these vital areas, but to address some of the questions and concerns raised by the noble Baroness, Lady Miller, in moving her amendment today.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the noble Baroness, Lady Miller, for raising and giving an airing to this subject. I can only hope that this will not be the end of the discussion of this important matter. The point was made as to whether this amendment was within the remit of the Bill. I like to think that this is going to be not one that we will necessarily vote on today, but one that we will come back to in greater detail bearing in mind the reply from my noble friend the Minister.

The noble Lord, Lord Rosser, went into great detail, and I certainly do not intend to repeat his comments, but I share many of his concerns about the assurances that he seeks. Do my noble friend the Minister and the Ministry of Defence believe that, with our reduced Army, Navy and Air Force, we are more vulnerable without such interception? No one likes the breaking of privacy and no one likes secrecy, but with our Army being reduced by 20,000, our Navy by 5,000 and our RAF by 5,000 personnel, and with the increase in the Reserve Forces, which we will deal with later in the Bill, rising very slowly to reach the 30,000 level, how important is that interception, and how important is it that it is reported and transparent, as my noble friend Lady Miller asked?

That is brought very much to the forefront of our minds with the problems in Ukraine. What help or hindrance does such interception cause in the present climate of hostilities? Overall, how should such transparency be effected on forces such as those of the United States operating on UK soil?

[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)]

My Lords, Amendment 1 deals with the issue of interception of communications and follows on from the amendment on the issue that we considered in Grand Committee.

As I am sure that my noble friend appreciates, the issues that she has raised this afternoon, although important and interesting, are not entirely related to the Defence Reform Bill. In fact, the Interception of Communication Commissioner’s Office—the role and powers of which are covered by the amendment—is the responsibility of the Home Office, rather than the Ministry of Defence. I hope that she will therefore understand if I do not respond to all the points that she raised. In particular, as the Prime Minister recently made clear in the House of Commons, intelligence-sharing between the UK and its allies will not be discussed in public. I will, however, try to cover those aspects of the amendment that deal with defence matters and to touch upon the wider points where I am able to do so.

I can give my noble friend and other noble Lords an unequivocal assurance that the Government are fully aware of the activities at US bases in this country and that interception activity in this country is subject to the full rigour of oversight provided under RIPA. We all know that there is intelligence co-operation between the UK and US Government and that that is a key component of our relationship with them. I will not be drawn into commenting on the specifics of that co-operation, but I can confirm that operations at the base that my noble friend mentioned are carried out in accordance with United Kingdom law.

The amendment is in two parts. The first would require the Interception Commissioner to report on the use or proposed use, subject to the Regulation of Investigatory Powers Act 2000, of services or systems procured for defence purposes. However, the Interception of Communications Commissioner is already required by Section 57 of RIPA 2000 to keep under review the issue of RIPA 2000 interception warrants. Therefore, the additional legal effect of this part of the amendment would be to impose a requirement on the commissioner potentially to be involved twice for the same interception. He would be required to comment once in reviewing the use and proposed use of equipment to intercept communications, and then again when reviewing the actual issue of any subsequent interception warrant. Therefore, this part of the amendment is unnecessary; it provides no additional scrutiny, and could, in some circumstances, introduce uncertainty and lack of clarity. This would be an unhelpful extension of the commissioner’s remit, which, as it stands, is clear and distinct.

15:30

The second part of the amendment would amend Section 57 of RIPA 2000, so that the commissioner would be required to keep under review the transmission of data through the jurisdiction and processing of data by means of any communication obtained for defence or related purposes, by systems procured under what—I hope—will become Part 1 of the Defence Reform Act 2014. The commissioner is already required, by Section 57 of RIPA 2000, to keep under review the issue of RIPA 2000 interception warrants. It is an offence to intentionally, and without lawful authority, such as that of a warrant, intercept—at any place in the UK—any communication in the course of its transmission. This amendment would require the commissioner to keep under review a new category of non-interception activity—transmitting and processing intercept data—in respect of data that have been intercepted.

This broadening of the commissioner’s remit is undesirable for two reasons. First, the inclusion of transmission and processing material would not provide any additional scrutiny of activity. By definition, any material that is transmitted or processed must first have been intercepted, and is, therefore, already subject to the commissioner’s oversight. Any material that is processed or transmitted would either have been legally obtained under a warrant that would have been issued under the existing RIPA powers, or unlawfully obtained, in any situation where it had not been collected in accordance with a warrant or some other lawful authority. If it has been obtained lawfully, this amendment would provide no additional safeguards. If obtained unlawfully, normal criminal proceedings would apply, with no requirement for further involvement by the commissioner.

The second reason why the Government cannot accept this part of the amendment is similar to the basis on which we opposed the amendment’s first part: that it would introduce a lack of clarity into the commissioner’s role. The commissioner’s office is not currently staffed, trained, organised or equipped to monitor transmission and processing as well as the legality of the production of warrants for interception. I need to be clear that I am not arguing simply that the commissioner has not got enough money. It is a matter not of resources but of clarity of purpose. Transmission and processing are areas of activity that are very distinct from interception in the way they are carried out and scrutinised legally. Effective oversight of transmission and processing is an activity which is primarily technical, rather than legal. It is one for which the office of the commissioner would not be equipped, given its current role—which is to ensure that activities are carried out in accordance with the law.

These proposed new areas of oversight are so distinct from interception that to introduce a requirement to monitor these activities, as well as interception itself, would introduce the risk of the commissioner’s oversight losing focus, and could therefore, perversely, impair the commissioner’s ability to perform its primary role.

In conclusion, I appreciate the efforts the noble Baroness has made to tie the amendment as closely as possible to the Bill, by adjusting the wording from that which she used in Grand Committee. We have had a debate this afternoon but I hope she will understand that I cannot accept the amendment, for the reasons I have outlined. I therefore ask my noble friend to withdraw it.

[Baroness Miller of Chilthorne Domer]

My Lords, first, I thank the noble Lord, Lord Rosser, for his thoughtful, thought-provoking and informative reply, from which I hope to have gained a lot more food for thought. Between us, we have managed to move the debate on this afternoon. I very much thank him for taking the time and effort to analyse the issues that we are looking it. I also thank my noble friend Lord Palmer of Childs Hill for his support because this matter really goes to the heart of that balance of which I spoke, between security and privacy.

I also warmly thank my noble friend the Minister. I realise that his reply labours under the difficulty of the amount that he is not able to say. He has given, as far as he is able to, some of the assurances that I was seeking. The difficulty is that there is so much that we cannot possibly know that it is very hard to imagine that we will ever be able to legislate adequately for the technological advances that have been made. That is the challenge before us because at some stage we are going to have to update RIPA, and even where it crosses into areas of defence it will have to be within a legislative framework.

The Minister made one particularly useful and interesting comment that I picked up on. That is the fact that some of this falls under the jurisdiction of the Home Office and some under the jurisdiction of the Ministry of Defence. Again, when we come to legislate that is a real issue because its effect is to leave a bit of a hole in the middle down which things can disappear. Also, had we had something about procurement and expanding defence capability back in about 1990, then what was going on and being built at Menwith Hill might have created a bit more of a stir about what was being procured there and for what purposes. There was some debate that it was for missile defence; I am sure that some of it is but some of it is for other purposes. The Intelligence and Security Committee may be aware of those purposes but of course many of them are poachers turned gamekeepers, which poses another challenge.

In concluding, I pay tribute to the Campaign for the Accountability of American Bases, which is based up near Menwith Hill. This is about accountability. It is not asking American bases to go home but saying that they should be accountable to the UK. Without that campaign, some of these issues would be much harder to keep our eye on from Westminster. However, I thank noble Lords for giving us the time during this important Bill and, in the mean time, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Clause 14: Regulations relating to qualifying defence contracts

Amendment 2

Moved by

[Lord Tunnicliffe]

2: Clause 14, page 9, line 30, after “state” insert “for Business, Innovation and Skills”

[Lord Tunnicliffe (Lab)]

My Lords, we now come on to Part 2 of the Bill. I would like to acquaint the House with my interests in this from my history. In 2008, I was working for Defence Equipment and Support, and I therefore tend to come at the problems being tackled in Part 2 from perhaps a wider direction than is typical.

At this point, I also thank the Government, particularly the Parliamentary Under-Secretary of State, Philip Dunne MP, the noble Baroness, Lady Jolly, and their civil servants and advisers, for the enormous amount of time that they have given to Peers in general and ourselves in particular in scrutinising Part 2. We therefore have only three groups and five amendments, because we have done all the probing—“What do these little clauses mean?”, et cetera—in those detailed meetings. The way that the Government handled that is highly commendable.

Before we move on to the amendments, it would be useful to pause and look at the problem that we are trying to fix. The Ministry of Defence procures between £6 billion and £8 billion-worth of equipment each year through contracts which are sourced by a single-source supplier. Why does it do this? It does it for the harsh practical reason that, in order to secure sovereignty, it has to cede monopoly. Why does it have to do this? It has to do this because defence technology cannot be this much-dreamed-about, off-the-shelf idea; you need your technology to be at the leading edge, and frequently the only people you can buy leading-edge technology from are your own suppliers. You use your own suppliers to assure security of supply.

The problem with these large contracts is that any vestige of competition recedes as the contract proceeds. The world changes and the Ministry of Defence is left with the harsh choice either to cancel or to pay more. These contracts are also very big. Taxpayers, not unreasonably, often feel that they have got a bad deal. This is compounded by the fact that contracts are frequently obscure and opaque—they are certainly not transparent. I would, en passant, like to commend the Government for the provisions in Part 2 that relate to the reporting regime, which we completely support and believe is an important step forward.

As I say, the people who tend to get blamed for this are the Ministry of Defence, civil servants and serving personnel who work in DE&S. We have to see the size of the problem of managing contracts of enormous size, difficulty and complexity over many years. The Government’s reaction to this was to ask the noble Lord, Lord Currie of Marylebone, to produce a report—which I have read and commend—and to invite a team of civil servants and at least one adviser to produce legislation to address the issue. That legislation is Part 2 of the Bill.

What Part 2 is trying to do is neatly summed up in the provisions referring to the Single Source Regulations Office: the aim is to ensure,

“that good value for money is obtained in government expenditure”,

and,

“that persons … who are parties to qualifying defence contracts are paid a fair and reasonable price”.

That is the objective, and the Opposition commend the Government’s efforts in this area. We support the generality. Part 2 is a good attempt but not good enough. That is why we have three groups of amendments on Part 2, which will focus on: the independence of the Single Source Regulations Office; the misuse of target cost incentive fees; and the focus on allowable costs.

Amendment 2 relates to the independence of the Single Source Regulations Office, or at least our solution to what we think is not its independence but its apparent independence. It is important to understand how Part 2 works. My interpretation of the way Part 2 works—probably the Government will put me right in a minute or two—is that it puts a straitjacket or constraint or series of rules on how government can behave in these contracts and hence prevent itself by law from being bullied by big suppliers. It is quite a complicated thing to do. You would think, “Well, why don’t you just tell them not to be bullied?”. Of course, in the heat of the moment, when an urgent requirement is coming through, when you have got to do the deal, when it is a matter of national security, it is very difficult to resist the bullying of a big and powerful supplier. The essence of Part 2, as I read it, is to create this framework or the straitjacket that officials will have to work within when they complete these qualifying contracts.

Right at the centre of Part 2 is the Single Source Regulations Office, the SSRO, which has an immensely important role. The two aspects that I would pick out are its responsibility for analysing the data—overlooking the contracts and creating some of the parameters within which they are created—and making rulings. This analysis and these rulings are very significant for the financial impact on the contractor and, conversely, the other side of the coin, on the taxpayer. The SSRO stands between the MoD and the contractor, and its very essence is that not only is it independent but it must be seen to be independent. It is the Opposition’s contention that it is not independent enough and certainly not seen to be independent enough.

15:45

I will constrain myself to proving my points, because we had a very good debate about this in Committee. I commend to anyone who wants to see the sources of the comments that I am going to make—and I do not think that the Government will challenge any of them—the Hansard of the Grand Committee of 25 February. The essence of the issue is that the Secretary of State appoints the non-executive chairman through a process that involves: asking a panel to seek to recruit capable people; from those capable people, the panel determines those who are sufficiently good to do the job; a list of names is then given to the Secretary of State, and he then chooses the chairman. The appointment is within his discretion, once the individuals have passed the appropriate fitness test. He also appoints the other non-executive members of the board; he decides on the reappointment or not of the chairman and the non-executive members; he decides their pay; he approves executive appointments; and he determines the SSRO’s budget. While technically he does not control the pay of its staff, one of the two very useful letters from the noble Baroness, Lady Jolly, on 4 March 2014, says:

“The Bill does not impose any legal constraints on pay for the SSRO employees but, as with all non-departmental public bodies, the Government would expect the SSRO to comply with the relevant Cabinet Office guidelines”.

I ask noble Lords to imagine a situation where they are standing between two very powerful bodies, the industry and the Government. The difference between these two parties is that the individual responsible for the department spending between £6 billion and £8 billion, on which your rulings will have significant impact, appoints you, pays you and decides your budget, whether you are reappointed, who your people are, how big your budget is and, effectively, influences how much you pay people. In my view, this is not sufficiently independent.

We had some debates on this topic in Grand Committee. I commend the noble Baroness, Lady Jolly, on making the unambiguous statement:

“The creation of an independent body is absolutely central to the success and longevity of the framework”.

I could not agree with her more. She made a series of statements to try to make me feel good about it. There was a lovely little paragraph at the end:

“There will be a framework agreement established between the MoD and the SSRO that sets its budget, in accordance with HMT’s guidelines in Managing Public Money and performance targets”.—[Official Report, 25/2/14; cols. GC 330-31.]

What those performance targets are going to look like I do not know. One has a slight, itsy-bitsy worry that the Treasury might have as a performance target, “Try minimising the cost to the Treasury”, which of course would not make it very independent.

An area where I probed a little in Committee was whether the Ministry of Defence was going to put in place any mechanisms to try to put some space between the SSRO and the Ministry of Defence. I do not work in the City, but I will risk the term “Chinese wall” type things. You need to have control of the communications. I posed the question: what would be the characteristics of the communication between the Secretary of State, his staff and the chair of the SSRO, the chief executive officer and the staff of the SSRO? The noble Baroness, Lady Jolly, did not produce a response at the time but went away and carefully thought about it and produced a response in her letter of 4 March 2014. In the letter addressed to me, she said:

“Specifically, you asked if the Secretary of State or MOD staff would be able to communicate with the Chair of the SSRO, or his/her staff. I can confirm that we do not envisage any bar on communication between the Department and the SSRO, indeed, we would see regular exchanges as a positive and constructive development … I suspect that it would be a relatively infrequent event for the Secretary of State to write directly to the SSRO … but I do not accept that such correspondence would be harmful or an indication of the Secretary of State seeking to influence the SSRO unduly”.

The SSRO, we are told, is a small organisation—I got the impression that it would be something like 30 to 50 people. What are they going to talk about, with regard to an organisation of 30 to 50 people, other than the rulings and analysis that the SRRO generates? If your boss talks to you about the rulings you produce, how can that not be a situation in which you do not feel influence?

As if to really cheer me up, the noble Baroness, Lady Jolly goes on—she writes a lovely letter, I must say—to state:

“I suspect”—

not “guarantee”; not “assure”—

“that the Chair will be energetic in defending both the reality and the perception of independence on behalf of the new body in order to underpin its credibility”.

Given the power of the SSRO, I contend that, sat in the MoD with the Secretary of State having this range of powers, it is not sufficiently independent.

We looked at some of the other solutions in government, and there are a variety of solutions, although I did not research them in any great depth. I believe that the Comptroller and Auditor-General of the National Audit Office is appointed for only one term of 10 years, so he is not very susceptible to influence. I think the Governor of the Bank of England was going to be something like eight years, but the new governor said that he wanted only four, or something like that. Nevertheless, there is a mechanism in that Act to give the individual a sense of security. The OBR, I believe, has some mechanism related to the Select Committee. We looked at this range of options but ultimately felt that we should go for a simple option that had already been considered by the noble Lord, Lord Currie, and, as far as I can see, was rejected only because the department in question said that it did not want to do it: putting this organisation in another part of government. Therefore, our recommendation is that the SSRO be placed in the Department for Business, Innovation and Skills.

We have done this because BIS is a big department with experience of regulation. It presently has the Competition and Markets Authority in it—the Office of Fair Trading is morphing into that together with the Competition Commission and the Competition Service. It has this type of experience of balancing regulation. It has some involvement with defence through UKTI. It has tribunal experience. It actually has 49 agencies and public bodies, including the Central Arbitration Committee, the Competition Appeal Tribunal, the Copyright Tribunal et cetera. It has adjudication experience. It is responsible for the Groceries Code Adjudicator. We thought it was a simple solution to recommend that the SSRO be placed in the Department for Business, Innovation and Skills.

The other amendment in this group is Amendment 3, which speaks to Clause 14(7). Here, we just want to put into law the very straightforward assurance that the noble Baroness, Lady Jolly, gave in Grand Committee:

“To summarise, we expect the Secretary of State to use his exemption power only in exceptional cases”.—[Official Report, 25/2/14; col. GC 340.]

I lighted upon Clause 14(7) because it is one of those very typical subsections that government puts in legislation, which, roughly speaking, say, “Notwithstanding the above, the Secretary of State can exempt everything”. We have had an assurance that the exemptions will be exceptional; we would like to put that in the Bill, and we commend that to the House.

We have also had some discussions about exemptions, which were put on the record in Grand Committee. However, a specific set of exemptions was sought by industry, to which the noble Baroness, Lady Jolly, responded in her letter of 19 March. Those exemptions relate to that exemption being used in the case of—for want of a better term—call-off contracts: things which have a determined external price. That seems to be a perfectly good exemption. Perhaps the Minister could say a little more to reinforce that it will be used in that entirely practical area, which is an area where industry would value a little additional exemption. I beg to move.

[Lord Palmer of Childs Hill]

My Lords, I welcomed the letter from the Minister. It gave a lot of confidence, which is needed not only by Members of your Lordships’ House but by contractors, who I am sure were worried about changes in circumstance and the new organisations that they would have to deal with.

These sections of the Bill talk about how both the Government and the contractor cannot be bullied; the question is whether they have the correct balance. The balance is pretty good. I have great confidence in my right honourable friend the Secretary of State for Business, Innovation and Skills, who I am sure would deal with this admirably within his department. However, these contracts are very MoD-based, and there ought to be the ability within the MoD to deal with this probably in a better manner than the Department for Business, Innovation and Skills.

Who should deal with defence: the MoD or Business, Innovation and Skills? I would like the Minister to take back to his department the question of whether there should be more co-operation between Business, Innovation and Skills and the MoD. There are skills in that department which the MoD would do well to emulate, such as regarding how contracts under EU regulations are dealt with. BIS deals with that better than does the MoD.

As regards inserting an organisation other than the MoD in the management appointment of SSRO, I understand the fears. There is a fear when the organisation that is appointing you is the one you are criticising—that point was well made. However, someone has to be in that role, and there is no better organisation for it than the Ministry of Defence.

16:00

[Baroness Jolly (LD)]

My Lords, as the noble Lord, Lord Tunnicliffe, explained, the intent behind the proposed amendment is to increase the independence of the SSRO by giving BIS responsibility for the regulations relating to qualifying defence contracts. As we have made clear on countless occasions during the progress of the Bill, and indeed in positive meetings with noble Lords—we have met quite frequently to discuss this, so I am glad the noble Lord found that helpful—the Government are fully committed to the independence of the SSRO in order to achieve value for money for the taxpayer. The SSRO will succeed only if it is, and is seen to be, fair to both parties. If it is too biased towards the MoD we risk driving the best suppliers out of the market. It is precisely the need for an independent moderating authority that led the MoD to propose the creation of the SSRO in the first place.

In Committee the noble Lord, Lord Tunnicliffe, pointed out that the SSRO chair and other non-executive directors are appointed and potentially reappointed by the Secretary of State. The Secretary of State sets the budget for the SSRO and can abolish it if he, or she in the future, so wishes. The noble Lord considers that that gives the Secretary of State considerable leverage. It would perhaps help if I were to explain in detail the context of our approach to the SSRO. In framing the legislation, we wanted to give the SSRO as much freedom as possible, including the ability to recruit its own staff. We did not want the SSRO to be a servant or agent of the Crown. These requirements have led to it being designated a non-departmental public body—NDPB.

Considerable public attention has been paid to NDPBs over the past few years, and substantial guidance has been developed. This includes the requirement that they must be allocated to a department, and the Secretary of State of that department must appoint the chair and the non-executives of that body. This department must also pay for the NDPB, which is why the MoD must set the budget for the SSRO. As to the ability to abolish the SSRO, this has been included in Clause 40 which relates to the termination of the whole of Part 2. This power will be used only if there is a desire to repeal the entire framework and revert to a non-statutory approach. In either case, the SSRO will no longer have a role, so the power will exert no leverage over the SSRO.

I turn now to what we have done to ensure the independence of the SSRO. The independence of the chair and other board members is essential, so I hope that noble Lords will forgive me if I describe the recruitment process in detail. To ensure that this appointment will result in a suitably independent and unbiased person, we are running the process in full accordance with the guidelines of the Office of the Commissioner of Public Appointments—OCPA. The recruitment panel for the chair is headed by a public appointments assessor, who has been chosen for us by OCPA. Also on the recruitment panel is an independent person suggested by OCPA and approved by the public appointments assessor. There are two others on the panel—one MoD official, and a representative from industry, Mr Paul Everitt, the CEO of ADS, one of the industry trade bodies for the defence sector—so only one of the four members of the interview panel will be from the Government.

A similar recruitment panel, with the addition of the chair, will be used to select the other non-executive directors. There are additional requirements for suitable candidates. They must not have come recently from the MoD or a defence supplier. Together they must represent a balance of private and public sector experience. They must have between them a variety of relevant experience: for example, legal or regulatory expertise, and experience of acquisition within the price sector. This is a rigorous appointment process, and I am confident that the result will be an independent SSRO board.

Having a suitably independent and strong chair will safeguard the independence of the framework, and we have tried our best to achieve this. This is further backed up by guaranteed freedoms. The SSRO is largely free to determine its own procedures, including making committees. The exceptions to this are where procedures are laid out in the Bill, and the requirement to run a full public consultation in support of the quinquennial review, which will be included in the framework document between the MoD and the SSRO.

In addition, the SSRO, like all public bodies, will be subject to external scrutiny by organisations such as the Competition and Markets Authority and the National Audit Office. Moreover, the SSRO chair can be brought before a parliamentary committee at any time. All these points highlight the considerable efforts we have made to ensure that the SSRO will be independent and subject to appropriate public and parliamentary scrutiny. The fact that the Secretary of State appoints the chair and that he can dissolve it are not what will determine the independence and impartiality of the SSRO. While we fully share with the noble Lord his aspiration of protecting the independence of the SSRO and the framework, we do not believe that this amendment is a necessary or effective means of achieving it.

In terms of practicalities, the Ministry of Defence will be the sole government user of the single-source procurement framework. It already has the technical expertise, the understanding and the necessary contacts with the defence industry to understand how the framework will operate in the real world. While the Department for Business, Innovation and Skills would undoubtedly be able to develop the required level of knowledge and expertise, it would take considerable time, effort and cost to create and would, in effect, duplicate the existing capability of the Ministry of Defence.

Moreover, it is normally the case that a single government department acts as the sponsor for a regulatory authority. This amendment would have the effect of splitting this between BIS, which would be responsible for the regulations relating to qualifying defence contracts, and the Ministry of Defence, which would be responsible for all other aspects, including the application of civil penalties. This would create an unhelpful degree of confusion and inconsistency, especially with regard to relations between the Government and the SSRO.

By creating the SSRO, we will increase the number of parties involved in single-source procurement from two—the MoD and the supplier—to three. Adding BIS as a fourth party would add confusion. For example, a supplier might lobby BIS for a change rather than the SSRO, and BIS might seek the MoD’s opinion on a matter rather than trust the SSRO’s recommendations. It is true that BIS has a similar role with regard to other regulators, such as Ofcom, but in such cases BIS is acting as a moderating body between the privatised suppliers and the public. In the case of the SSRO, however, the proposed amendment would place BIS in the position of setting statutory pricing and procurement rules of which the MoD is the sole user. BIS would thereby become the moderating body between private industry and another government department. This would create a potentially unhelpful relationship.

I will make a final point on premises and the issue of independence. I reaffirm what I said in Committee, which was that the SSRO, although it will be on government estate, will not be co-located within the Ministry of Defence. In developing this piece of legislation, the MoD has consulted extensively with industry over a prolonged period. There has been no suggestion from industry that it would see any advantage in having BIS own these regulations. Indeed, the Minister for Defence Equipment, Support and Technology, Mr Philip Dunne, recently met with Mr Paul Everitt of ADS, who said that industry no longer had any concerns over the independence of the SSRO.

The noble Lord, Lord Tunnicliffe, asked about a couple of points, including performance targets. Targets are there to ensure the efficient operation of the framework and the organisation. They are likely to relate to how quickly the SSRO responds to opinions or determinations made by the MoD or the supplier. He requested clarification on communications between the Secretary of State and the SSRO. If they are not on ruling, what sort of communications will they be? The SSRO will be responsible for keeping the framework under review and this will require communication with the Secretary of State or his officials to discuss any matters relating to the performance of the framework of the SSRO. The SSRO will have similar communications with industry.

On Amendment 3, as I stated, the purpose behind Part 2 is to ensure that in exchange for providing suppliers with a fair and reasonable price, the MoD will receive value for money for the goods and services it obtains through single-source procurement. Here we are in complete agreement. This works in two ways. First, it does this by establishing pricing rules that must be followed by the MoD and suppliers and by giving the SSRO the power to adjust the contract price if these rules are not complied with. This places a direct obligation on suppliers to use only appropriate and reasonable pricing assumptions.

Secondly, the Bill imposes transparency requirements which will allow the MoD to monitor suppliers’ costs: for example, ensuring that cost increases are highlighted in good time. These transparency provisions will allow the department, over time, to generate pricing benchmarks for goods and services. In turn, this will help the MoD to negotiate with industry over prices and to press for tough but reasonable efficiency targets. As it is in the interests of the MoD that these two features are applied as widely as possible, we fully expect that the Secretary of State for Defence will use the powers of exemption set out in Clause 14(7) only on an infrequent basis.

In Committee, I provided examples of where we envisage that the use of exemptions might be justified. However, I will summarise them again for the benefit of the House. The first circumstance is where there is no market failure. The framework addresses the situation where a contract price is not subject to the competitive pressures of the market. If those pressures are evident in the contract price, the framework is not required. An example is the purchase of additional items that are already available in the civil market, such as computers.

The second circumstance is one of national security. The Bill provides for some categories of contracts to be automatically excluded from the framework. One of the categories identified in the draft regulations is when the contract is for the purpose of intelligence activities. These exclusions apply only if the whole contract is covered by one or other of the excluded categories. So in the case where a significant part, but not all, of the contract is for intelligence activities, the contract would not be automatically excluded from the framework. As transparency is a significant part of the framework this is unlikely to be appropriate, so the whole contract may require exemption by the Secretary of State.

The third circumstance concerns our relations with other nations. Some of the standard reports would give us sight of a supplier’s plans for the key industrial sites sustained by MoD’s single-source procurement, which could result in a supplier having to reveal the forecast throughput assumptions of facilities that are used predominantly by a foreign Government, thereby exposing that country’s defence planning assumptions. This is likely to be treated with considerable reluctance by the foreign Government and therefore may require use of the exemption.

These are strong, valid reasons for the Secretary of State requiring this exemption power. However, not all the potential cases might be classed as being exceptional, as set out in the proposed amendment. Let us take, for example, the case where the market failures addressed by the framework are not present. It might be useful if I quoted the hypothetical but plausible example of where the department wishes to buy additional desktop computers. In the interests of operating only a single type, an open competition might be undesirable. However, in this example we do not need the full protections Part 2 offers to confirm that the price being offered to the department is fair and reasonable; we can simply compare it with the market price. This may be an unusual case as it requires a contract to be single-sourced yet fully priced using market prices. There would be a valid case for using the exemption powers, but it would be hard to argue that this constitutes exceptional circumstances.

We do not wish the Secretary of State to be constrained by how the new regime is applied in this way, but given that it is in the department’s interests that as much single-source procurement activity as possible is covered by the framework, the fewer exemptions there are, the greater the benefits there will be to the MoD.

I hope that this explains our position and therefore I urge the noble Lord to withdraw his amendment.

[Lord Tunnicliffe]

My Lords, I thank all Peers who took part in this debate, and in particular the Minister for her various assurances. I have faith that the people currently in the Ministry of Defence will undoubtedly use the right mechanisms to select the chairman of the SSRO and the individuals who are its non-executive directors. The pressure, which I am sure the present Administration would not bring to bear on the SSRO, will nevertheless come from all the subtleties. I speak as somebody who has chaired a nationalised industry, and who has been the chief executive of one and therefore on its board. The most subtle pressure comes from something that is entirely within the discretion of the appropriate Secretary of State. The Commissioner for Public Appointments, whom the Minister quoted, stated in a recent press release:

“The Public Appointments Commissioner plays no part in a decision not to re-appoint someone at the end of their term of office. That is a matter for Government”.

As we have seen recently in the case of Ofsted, the Government exercised that privilege without recourse to any mechanisms or checks. Everybody will try to do the right thing in these circumstances, but at the end of the day “not being reappointed” is a code for being fired, and being fired can engage the mind rather firmly. I believe that we should do more to distance the SSRO from the Ministry of Defence; the solution that we have chosen is the best one, and because it is important that the Government understand the wisdom of our words, I beg leave to test the opinion of the House.

16:17

Division 1

Ayes: 169

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Labour: 145
Crossbench: 14
Independent: 5

Noes: 227

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Conservative: 121
Liberal Democrat: 53
Crossbench: 41
Independent: 4
Bishops: 2
Democratic Unionist Party: 1
Ulster Unionist Party: 1

16:25

Amendment 3 not moved.

Housing: Inherited Social Housing Tenancies

Monday 24th March 2014 Lords Chamber

Statement

16:31

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, with the leave of the House, I shall now repeat a Statement made by my right honourable friend the Minister of State for Employment, Esther McVey, in the House of Commons earlier today. The Statement is as follows.

“Mr Speaker, the Urgent Question called by the honourable Member for Rhondda is not a new one but part of the 1996 provisions which impacted on the spare room subsidy legislation in 2012 and one that we have debated in the House before.

Upon investigation early this year, it would appear that some claimants may have been unintentionally protected from the effects of the removal of the spare room subsidy, including those who have been in receipt of continuous housing benefit since 1 January 1996 and have lived in the same property since that date, unless the move was due to a natural disaster, fire, flood and so on. A grace period of four weeks—or 52 weeks if the claimant or their partner is a welfare-to-work beneficiary—applies. For example, housing benefit would be classed as continuous if the break is less than four weeks, or 52 weeks for welfare-to-work recipients. Where a claimant dies, the partner or an adult child can inherit the protection, but it must be in respect of the same dwelling and they must qualify for housing benefit.

The issue about inheritance of housing benefit has always been part of our understanding about what the loophole meant. This was also part of the guidance issued to local authorities some weeks ago. The loophole derives from a very narrow but complex set of regulations dating back to 1 January 1996, when local reference rent rules were introduced.

In January 1996, transitional protection was offered to existing claimants, which could, and still can, be inherited if the claimant dies; for example, by a partner, or, where there is no partner, by adult children, and the protection only applied in respect of the same dwelling. Therefore, partners or adult children must continue to live in that property and only if they qualified for housing benefit. This protection ends if housing benefit ceased or they moved address.

With hindsight, the protection offered by the regulations could have been time-limited, but it was not; it has lain dormant for 17 years. The effect is that it has now unintentionally been applied to a group of people who were not financially affected by the local reference rent rules. In fact, in the previous debate, my honourable friend for Hitchin and Harpenden, who was Secretary of State at the time, said clearly that this exemption was never intended to be the case. This matter was fully debated and voted upon on 26 February 2014 to approve amendment regulations to close the loophole. Clearly, the House has already spoken on this issue.

As guidance was sent out a few weeks ago, I would suggest that this is not the appropriate time or place to discuss any questions local authorities may have, and that there are clear channels for them to do so. However, our experience with local authorities at the moment is that they know what they need to do, and are just getting on with it”.

16:34

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for that Answer—I think. Obviously, this House has not discussed the regulations concerned, although a regret Motion is coming up. I want to ask the Minister two questions, the first on numbers. He has told the House previously that the number of people affected by this loophole in the bedroom tax is small—the DWP says 3,000 to 5,000—but figures obtained under FOI by Labour show that, with more than a third of councils still to reply, already well over 23,000 people are likely to be affected. The new guidance, to which I think the Minister referred, may increase the number still further. Can he therefore tell the House precisely how many people will be affected by the loophole?

Secondly, I want to put to the noble Lord the following statement:

“I worry about what Labour chooses to call the bedroom tax, because so often what is a spare room is in fact a vital part of looking after an elderly person. It enables their relatives to come, it enables carers to be there … I think we introduced that rather without thinking it through very well, and I think that’s costing us”.

It is costing all of us, in discretionary housing payments, in rent arrears and in human misery. Surely the Minister agrees.

[Lord Freud]

My Lords, as I have said in this House previously, the numbers involved with this particular loophole are small. This particular inheritance issue does not change our estimates. A figure of around 5,000 has been attributed to the DWP in defining “small”.

On the FOI figures, it is worth making the point that local authorities are now getting to grips with the actual numbers. The Birmingham figures were quoted quite extensively. It was reported that Birmingham alone had 2,100 cases, the significance being that they make up a large proportion of the figure that we have been looking at. More recently, Birmingham put out a clarification, saying:

“We haven’t finished identifying them at Birmingham so can’t give you an exact number, but the number of possible cases has dropped substantially below the 2100 that was reported in the papers.”

So we can see that some of the FOI responses to which the noble Baroness referred—if that was an example—may be clarified.

We have a process for supporting local authorities and people to make the adjustments through discretionary housing payments, which we have increased in recent years from £20 million to £180 million in the current year—indeed, the signs are that that figure will be underspent. The number of people being affected is coming down reasonably rapidly; it is now below half a million.

[Lord German (LD)]

Can my noble friend tell the House roughly how many people in this country are living in overcrowded conditions or are on housing waiting lists? Can he also put on the record the number of new social houses being built by this Government and compare that with the number built by the previous Government, because, clearly, housebuilding and social housebuilding are crucial?

[Lord Freud]

My noble friend draws the comparison between the amount of capacity that we have in this country and the demand for it. The number of people on the waiting list is 1.8 million, with the figure for overcrowding running at 250,000 on some estimates and 400,000 on others.

When this Government took office, we were left with the lowest level of peacetime housebuilding that this country had seen since the 1920s. Since then we have delivered nearly 400,000 new homes and put in very substantial investment. There is £11.5 billion public investment to boost housing supply over the four years of the spending review, and this is meant to lever in more private investment. The volume of housebuilding is now picking up. The starts in the quarter to December were up 20% compared with the same period last year.

[Baroness Hollis of Heigham (Lab)]

My Lords, every stat I have heard from the Government is either misleading or wrong. The bedroom tax will not help the waiting list because they too want smaller accommodation. It will not much help overcrowding as most families who are overcrowded do not live in the places where there are underoccupied houses. It will not make government savings. As we see, the GHP figures keep going up but the savings stay the same—false. Had the Government followed their own precedent of 1996 of transitional protection for the private rented sector, or had they followed what we did in 2008 by protecting existing tenants in the private rented sector, we would not have the calamity, misery and distress facing so many vulnerable and disabled people in this country. It is shameful.

[Lord Freud]

My Lords, the figures show that there is a reasonable balance around the county; there is not one place with overcrowding and another with waiting lists. We are staying with the estimate of roughly £500 million a year in savings. On transitional protection, we have given even more notice on the changes coming through than we gave on the LHA changes at the emergency Budget of 2010.

[Baroness Quin (Lab)]

My Lords, will the Minister tell us when the review on the bedroom tax will be published? In the mean time, will he undertake to meet many of the people who have been personally affected by this tax, and whose lives have been turned upside down as a result?

[Lord Freud]

We are conducting a review on the spare room subsidy; those figures will be published in the final review next year, and we have an interim publication later this year. I meet a lot of people all the time on this issue—in particular, I am seeing a large number of local authorities and holding discussions with them.

[Lord Campbell-Savours (Lab)]

The Minister says that he is seeing a large number of local authorities. Is he actually meeting people who have been affected by this tax? If he has, where has he met them—in what part of the country, in what boroughs? Perhaps he might tell us when. Also, he refers to 400,000 houses built since the last election in 2010—he mentioned 400,000 in his brief, which he read to the House. How many of those were started under the previous Labour Government? It was the Minister who was playing politics with the stats.

[Lord Freud]

I do not have to hand the number of starts. All I can say is that the number of completions in that last year—the handover year—was the lowest level of building in peacetime since the 1920s, which is a pretty shameful performance from a Government who saw a very long boom. I would like to be able to answer the question, but if I am not allowed to I will not.

[Lord Martin of Springburn (CB)]

There are communities where, unfortunately, the housing estates are known as hard-to-let properties. If the noble Lord, through legislation, is forcing families out of those houses, it is not necessarily the case that those who are on the waiting list will take up those houses. There is a danger that the people who are fighting hard to keep up the morale of the community in hard-to-let housing areas will see empty property vandalised, will despair and will leave the housing estate where they have worked so hard to keep up appearances.

[Lord Freud]

Local authorities clearly have a duty here and interest in their local areas to manage them. We are making sure that they have those resources in discretionary housing payments. Indeed, I have been very keen to spend the extra £20 million of funding on discretionary housing payments. It is a balance of maintaining the housing stock and the people in it with the right people in it. There are always isolated cases where the management of particular estates is tough; those are issues for the local areas.

Railways: High Speed 2

Monday 24th March 2014 Lords Chamber

Statement

16:46

[The Minister of State, Department for Transport (Baroness Kramer) (LD)]

My Lords, with the leave of the House, I shall now repeat a Statement made by my right honourable friend the Secretary of State for Transport in another place. The Statement is as follows:

“Mr Speaker, the past few days have brought important proposals to make the most of High Speed 2. They will help us to build the line better, bring benefits to the north sooner and support job creation and economic growth. I want to update the House at the first opportunity, and I am sorry that, for unavoidable reasons, I was not able to do that last week.

The proposals are welcome, because HS2 is a vital project. It can do for future generations what Victorian railways did for previous generations and the motorways for ours. That is why it has the strong support of the Government, and it is why cities in the Midlands and the north are calling for its benefits to be spread as widely as possible.

We must heed that call, but for this to happen we also need to get the basics right: stick to cost, plan well, listen, respect the environment, build what really works and what we really need for the future and, of course, make sure that people get the benefits as quickly as possible.

I know, too, that HS2 is just part—but a vital part—of our long-term economic plan, one that will see better infrastructure for all parts of the country. It is a clear and ambitious plan, a plan that is already paying dividends—shown by last week’s welcome decision by Hitachi, the company that invented the bullet train, to move its global rail headquarters to Britain. That is the sort of opportunity presented by HS2.

First, let me respond to the report by Sir David Higgins. He began work as chairman of HS2 in January. The first task that I set was to look at how to maximise the benefits of HS2 and manage the costs. Last year, Parliament backed the principle of a high-speed rail link to the north with 350 votes in favour and only 34 against. Now it is up to us to make it happen. Given his great track record, there is no one better suited to the job than Sir David.

I turn to his proposals. First, on costs, Sir David has reviewed the cost estimates for constructing phase 1 and confirmed that they are realistic. The budget set by the Government in 2013 stands. As experience shows, in Britain we can build great projects on time and on budget, such as High Speed 1 and Crossrail. However, at this early stage, before Parliament has considered the hybrid Bill, we must include a proper contingency. Of course, for popularity’s sake, one option would be to slash the contingency and claim it as a saving. Sir David says that would be the wrong thing to do. I agree, but, as he also says, with growing certainty comes growing confidence. There will be the stage when we can bring the contingency down.

Let me turn to his second proposal. I have heard many honourable Members ask why we cannot build in the north sooner. I agree: we can. His report suggests opening the line to a new hub station in Crewe six years earlier than planned. Direct trains will of course be able to run off HS2 lines to serve places such as Stoke, Liverpool, Manchester, north Wales—and Scotland—faster too. A line to Crewe sooner would mean shorter journeys than with just the current phase 1: quicker to Manchester, quicker to Liverpool, quicker to Scotland.

This is a welcome proposal and I am commissioning HS2 Ltd to undertake work to allow it to be considered in detail. However, this must be seen as an acceleration of phase 2, not an alternative. Sir David said that we must make the most of this investment so that as many towns and cities as possible benefit. I agree, and we will make sure that happens.

With the third proposal—for the southern end of the line—our priority must be to get the benefits to the Midlands and the north as soon as possible. In short, we must put our money and time where it can do most good. Sir David is clear that he does not think existing proposals for the HS2-HS1 link meet that test. The HS2-HS1 link proposed in the hybrid Bill has not secured a consensus. The link requires too many compromises in terms of impacts on freight, passengers and the community in Camden. I therefore intend to remove the link from the hybrid Bill and withdraw safeguarding as soon as possible. I will also commission a study into options for improving connections to the continent which could be built once the initial stages of HS2 are complete.

I also agree with the report that much more can be made of Euston station—not just to build something we can be proud of but to maximise the economic potential of the line and use a site which has been neglected, and to generate private sector investment which can reduce the overall burden on taxpayers. I will, therefore, ask HS2 Ltd and Network Rail to develop comprehensive proposals for the redevelopment of Euston. Our ambitions for Euston must not, however, conflict with our commitment to control costs. I want to see substantive private sector investment to ensure this.

Secondly, I turn to the report from the growth task force published last week. It is from an impressive panel, including business leaders such as Sir John Rose, Alison Nimmo and Ray O’Rourke, city leaders such as Julie Dore from Sheffield, and the general secretary of the TUC, Frances O’Grady. I thank everyone involved and in particular the Commercial Secretary for his committed leadership. Their message is clear: we need HS2 and we need to act now to squeeze the most from it in terms of jobs, skills and growth.

The task force’s recommendations are plain common sense: things that business, government and cities can do together, and must start doing now. In relation to skills, this means proper training to ensure that our young people get the best jobs on the project. In relation to planning, it is ensuring that the line brings new strength to our cities. On transport it is ensuring that we link the existing road and rail network properly to HS2, and plan investment in them together. Regeneration and economic growth are vital parts of HS2.

City leaders have already started to put plans in place, but government has a role to play as well. That is why I am asking HS2 Ltd, and London and Continental Railways—which developed the King’s Cross St Pancras site—to come forward with proposals for a regeneration company that will respond to the growth task force’s recommendations on regeneration. This matters because, as I have said before, HS2 is a project that will be built over many Parliaments—and no doubt Governments too—and it will serve people through many generations. It is not the only answer to our transport needs but it is a central part of the answer. That means designing it carefully and building it right: building something that works, that we can be proud of, and that benefits as many people and places as possible for the lowest cost. We are on schedule to open the line in 2026—which, by the way, is exactly the date the previous Government set in 2010—or ahead of that date in the case of the Crewe proposal.

The Government are keen to rise to the challenge. I hope that honourable Members on all sides of the House will do the same”.

16:55

[Lord Davies of Oldham (Lab)]

My Lords, I thank the Minister for repeating the Statement. None of us underestimates its significance. We should begin by congratulating Sir David Higgins and the noble Lord, Lord Deighton, on their substantial and very thorough reports. Significantly increasing capacity south of Birmingham and improving connectivity north of Birmingham are vital and will transform our great cities. I am glad that the penny has at last dropped and that the emphasis is being put on the real role of HS2, which is significantly to increase capacity in our crowded stations and not to reduce journey times from Birmingham to London by 20 minutes for businessmen. It is not that that reduction is unwelcome but it is not as important as the other concepts.

We will of course continue to hold the Government to account for keeping costs down on the project. One of the issues which Sir David Higgins emphasised is that significant savings will be made if the Government set about reducing delays. Therefore, I ask the obvious questions. Where is the hybrid Bill? When will we be able to consider it? What steps is the Secretary of State taking to ensure that we consider the Bill at the earliest possible time? Delay costs money.

I am also glad that one significant objection, which was the concern of a very large number of people, has been allayed by agreeing to scrap the link between HS1 and HS2. That link was always fraught and it brought immense troubles to very large numbers of residents in the London Borough of Camden, while effecting the link on that route looked to be a matter which would be subject to great challenges during the passage of any hybrid Bill. Given the acute affordable housing crisis in Camden, a significant proportion of any new housing must be social housing. There will still be consequences for Camden from the fact that Euston is to be significantly enlarged, even though the link is not to be pursued. At Old Oak Common, where significant regeneration is planned, there is no decision yet from the Government about the relocation of the First Great Western and Heathrow Express train depots. That is of considerable significance to this project and we want to see a decision and proposals on that as soon as possible.

This means that the Government have to put themselves out and talk to the local authorities concerned, as indeed they need to talk constructively to the local authorities that govern our great cities in the Midlands and to the north of London, which will welcome the suggestion that Crewe should be developed several years ahead of what was forecast earlier. However, there are significant implications for our northern cities, which have every right to be prioritised for integration as much as elsewhere in the country. We want a coherent transport plan for the north, which of course has been historically underfunded. We are all too well aware that the Government committed the sin only a couple of years ago of transferring excellent rolling stock from the north to Thameslink. It is not surprising therefore that northern cities think that their needs take a lower priority than they ought.

We need a rebalancing of railway investment into the regions in order to close the economic divide. Even the Government, despite their commitment to government having little role to play in huge areas in the economy and everything being left to the market, recognise that we cannot afford such a significant and drastic difference between the growth of London and the growth prospects of our other major cities. We welcome the proposal on Crewe and the faster construction of phase 2 that is promised.

There is a great deal of consultation to be done. When will the Government announce their response to the phase 2 route consultation? Time means money with such a project in which so many resources are invested. I hope also that there will soon be an announcement of the site of the HS2 skills college. We have seen from the construction of Crossrail the stimulus that is given to high-level skills. We have also seen the difficulty of our own people being able to respond at the relevant level of skills in all aspects. It would be tragic if we did not ensure that the benefits of the construction of HS2 were directed towards the British people from the very construction of the lines.

We must also learn lessons from Crossrail on SME procurement. Contract numbers are high in volume, but the total value of the contracts is uncertain. We must ensure that the high speed pound reaches all parts of the United Kingdom. It is vital that we maximise the opportunity that this new north/south line can bring to the whole of our country. Of course we support the project, but we wait for the Government to rise to the challenge.

17:02

[Baroness Kramer]

My Lords, there is clearly a great deal of consensus across the Benches in this House. I very much welcome that because, as the Secretary of State said in his Statement, this project will span many Parliaments and inevitably a number of Governments. Therefore, that consensus is absolutely vital.

I thank the noble Lord, Lord Davies, and I welcome the comments that he made. I did not identify many questions within his comments. I found one to which I think he wanted a response, which concerned when we would respond to the consultation on HS2. We expect that to be in the autumn. There have been a very substantial number of responses. We need to go through those in a great deal of detail and we need to pay a great deal of attention to them. That is a complex process.

I assure the noble Lord that we have long recognised the importance of the Midlands and the north. In this process I have been spending a great deal of time myself in the north. I welcomed the growth task force report in Manchester with the leaders of Manchester council, the former leader of Trafford, and a number of other representatives of local communities. I underscore that importance and look forward to further questions from other Members of this House.

17:03

[Lord Berkeley (Lab)]

My Lords, I congratulate Sir David Higgins and the noble Lord, Lord Deighton, on their two reports. I am very pleased that the Government have accepted them. They are a breath of fresh air. I look forward to continuing to work on the project.

I am particularly pleased that the HS1 link has been removed as it was not fit for purpose, but can the Minister encourage her ministerial colleagues not to be too negative about that? She may know that there is already a link with HS1—it was built with HS1—on to the North London Line and the west coast main line which could be used to run Eurostars north of London. It needs signalling—they have forgotten to do that—but that is a minor detail. The trains are operating in France but they could operate in Birmingham and Manchester very quickly and provide that link if there was a demand. I hope that she will take that back to stop any negativity coming from the northern part of the route and the claims that cancelling the HS1 link is a disaster. It is not.

[Baroness Kramer]

I fully agree with the noble Lord’s comments about the HS1/HS2 link, and those were indeed the comments of Sir David Higgins. It is something that could technically have been done but, given the impact that it would have had not just on the community but on passengers and freight traffic, trains would have travelled at 20 miles per hour on that particular link and no more of them than three an hour, at that, so it was not fit for purpose.

However, I give assurances, as the Secretary of State has said, that there will be an important study to look at how to connect the north through to the continent as HS2 progresses. We recognise the importance of that; it is a significant and serious piece of work. Sir David Higgins has recently welcomed proposals from others who understand transport and community issues, and the department had done so previously. We will continue to appreciate the input that comes in, and that expertise.

[The Lord Bishop of Chester]

My Lords, the spirit of the Statement is in for a penny, in for pound—a lot of pounds, of course—but if it is to be done, it should be done well and quicker. I particularly welcome the extension to Crewe, which is in my diocese, so much sooner; I am sure that the people of Crewe, that noble old railway city, will welcome that warmly.

I notice in the Statement, though, that direct trains will be able to run off HS2 to serve north Wales. I have always assumed that the trains on the high-speed rail link will be electric. Does this mean that the Government are announcing plans to electrify the railways beyond Crewe to Chester and into north Wales? If so, when is that going to happen?

[Baroness Kramer]

My Lords, the line will be able to take classic-compatibles immediately, which will provide a great deal of the flexibility that is needed. Obviously there is a wide programme of electrification already under way. I can take a look again at the route that he has just suggested and come back to him with comments on it but, essentially, the way in which the line is being designed does not just mean that HS2 trains themselves will be able to run up and down it but ensures that it can be used by classic-compatibles that can go on to a wide range of other destinations.

[Lord Bradshaw (LD)]

My Lords, I wonder whether I can start with a question: can anything be done to expedite the tortuous Bill procedure in both Houses? This is a matter for the Government and the House authorities, but we really should not wait for years and years while the Bill waits at the convenience of the House—or, rather, the convenience of the nation.

We have already been told that the fares policy will encourage use rather than deter it. I agree that the HS1/HS2 link as tabled is not very satisfactory, but we need a modern transport link between Kings Cross, St Pancras and Euston. I regretted to see in the report the issue of one stop on the Underground. That would mean carting your cases, luggage and everything down to where it is very congested. The time has come to bite the bullet and make a proper link. If these stations were an airport, they would be one terminal; the distance is very short.

I am most interested in what has been said about the north. I think that the north has been done badly to by successive Governments. The most recent bad thing that was done was when the noble Lord, Lord Adonis, cancelled an order for 200 new diesel trains that would have improved the services there. The north must have decent rolling stock, not the cast-offs from other railways and certainly not antiquated stock. Every city in the north needs its local enterprise partnership to get down now to planning how they will link supporting services into the stations that are served.

Lastly, I challenge the Government on the consistent reports I have seen for years that there is no business case for investing in the north. I think that the reason is that, with the present trains and present service, it is difficult to see why people should use the railway. However, we are looking at a new era, and I am sure that there will be a business case for investing properly in the north.

[Baroness Kramer]

We absolutely agree that we are looking at a new era. It is frankly inspiring to meet the city leaders, businesses and other stakeholders of the great cities of the north and the Midlands, who are coming together to create a sort of common strategy for maximising the benefits of HS2 by building interconnectivity between them. That is absolutely crucial. My noble friend may be hinting at a rolling stock issue in the north. That is an immediate problem that the department has said that it will find a way to resolve no matter what, but it has not yet found an absolute answer.

Parliamentary procedure is a matter for the two Houses. I am sure, though, that with the good will of Members of both Houses, we can encourage the process to move according to the speediest possible timetable. It is important that people who are petitioning are properly heard and listened to; I would not want to cut short the opportunity for that proper interface.

On fares policy, we have said that this will not be a premium service. There will be many ways to link Euston and St Pancras. They have to be looked at. Travelators have been mentioned; there is one stop on the Northern line.

[Lord Jenkin of Roding (Con)]

My Lords—

[Lord Snape (Lab)]

My Lords, this side.

[Noble Lords]

This side!

[Lord Popat (Con)]

Order, please. I think it is my noble friend Lord Jenkin, then it will be the noble Lord’s turn.

[Noble Lords]

No! This side!

[Lord Popat]

Okay, I will accept that.

[Lord Snape]

My Lords, I am grateful that the normal procedures of the House are being abided by. I strike a discordant note, as a supporter of this project, to say how disappointed I am—as I am sure many people in the Midlands and north will be—at the abandonment of the link between HS1 and HS2. Thirty years ago, during the passage of the Channel Tunnel Act, we were told that there would be through trains from Paris, Brussels and other continental cities to our great cities of the Midlands and the north. This was, at least, a chance for those through trains to run between those cities. How does the Minister suggest that a businessperson coming from the continent to the Midlands or the north gets between Euston and St Pancras? Do they take the Victoria or the Northern line? Or will they pull their luggage along Euston Road? Will the Minister accept from me that there will be a great deal of disquiet in many parts of the country about the abandonment of this link?

[Baroness Kramer]

Many of the cities in the north and the Midlands accept that the link as it was designed did not fit the purpose that they saw for it. It simply was not adequate in the role that it played. We will be looking at many more trains going to many more destinations out of Kings Cross and St Pancras. There has to be a much better way to create a link between HS1 and HS2. That will be a major study. It is a piece of work and it needs to be of the standard that a high-speed intercontinental link deserves.

In the short term, we will need a way to get between Euston and St Pancras. As I say, that will be looked at. The distance, as other people have said, is very limited; I walked between the two in four minutes yesterday. However, it will be important to make sure that that is an efficient and effective link and not a matter of trundling down the street.

[Lord Jenkin of Roding]

My Lords, on this question of the HS1/HS2 link, there could be an additional dimension. I have had discussions with Sir Howard Davies who, with his commission, is currently looking at whether a Thames estuary airport could be a realistic addition to the shortlist of options that will be given to the Government after the next election. If, indeed, it becomes a realistic option—which is not impossible at all—then the question of a link from the north will become absolutely vital. People must have a way of travelling down on the HS2 and going on the HS1, with a link to the airport at the Isle of Grain if that is the one which is approved. That would be almost more important than a direct rail link to the continent.

[Baroness Kramer]

My Lords, none of us is attempting to second-guess what the conclusions of the Davies report will be, or the conclusions of the Government of the day that will make the final decision. At that time it will be appropriate to take a look and work out how links can be created if they will be relevant to whatever the major airport will be for the south-east, and to the high-speed line. However, to attempt to do so at this point would delay HS2, which we want to get into the ground by 2017 to deliver the benefits which we all discussed earlier. That is absolutely crucial.

[Lord Foulkes of Cumnock (Lab)]

My Lords, I was very glad that the Statement mentioned Scotland on a couple of occasions. However, in her replies to all the previous questions, the noble Baroness mentioned just the Midlands and the north—she is reverting back to that again. Will she confirm that the best part of the whole economic case is regarding journeys between London and Scotland, and that that also frees the existing lines to have more stops at intermediate stations in England? Will she therefore initiate discussions with the Scottish Government as quickly as possible to ensure that work is under way to determine the route to Scotland, to start to think about the funding and to start working on dates for construction? Unless she and the Government do that, we will not think that they are being serious about Scotland.

[Baroness Kramer]

I am delighted to say that the department is somewhat ahead of the game. I have already commissioned a report and consultants have been retained; we expect a preliminary response on how to take the benefits of high-speed rail to Scotland. We will get our interim response in July, and that will be a very important document in being able to identify the future. Of course, HS2—even the “Y” that is currently planned—will help to bring journey times to Glasgow and Edinburgh down to less than three hours.

[Lord Shutt of Greetland (LD)]

My Lords, I welcome this report; I am in favour of HS2. However, I am rather more in favour of the “plus”. In this report, one word which bellows out is “connectivity”. In the foreword it says that there is,

“poor connectivity in the North”.

It wants us to be,

“more ambitious … about producing a coherent transport plan for the North”.

On page 9, the report states:

“In contrast, connectivity in the North is poor”.

I agree.

I do not want to detract from what has been said about getting to Crewe earlier, and the connectivity in the north-west. However, I want to speak about the other leg, from Birmingham up into Yorkshire, and the possibilities beyond that. The original proposals in January 2013 propose a terminal station in Leeds—what I describe as a “hammerhead terminus”—where the only connectivity is a long walk. That might suit Leeds but it is useless for connectivity for anywhere else, such as Huddersfield, Halifax, Bradford, Keighley, Skipton, Ilkley, going back round to Wakefield, or further connectivity to York, the north-east and Scotland.

Does the Minister agree that connectivity will be achieved if, in Leeds, we get a new station parallel to the Leeds City station of today, not a station that is a hammerhead terminus, which would mean that people would have to leg it such a long way, and the detraction that that would bring?

[Baroness Kramer]

Yes; I can reassure my noble friend that we are looking very closely at all the proposals that have come in through the consultation, and more generally we are going back to look at all the detailed elements of the second phase of HS2. The issues he raised have been raised with the department and will be looked at, as will other proposals. As I said, we will come back with our conclusions in the autumn.

[Lord Beecham (Lab)]

My Lords, I declare an interest in HS2. Unfortunately, it is likely to be a post-mortem interest because by the time it reaches Newcastle I will have long since been dead and buried. The urgent need is for investment now, or as soon as possible, in the north-east in the intra-regional rail infrastructure and indeed, that which will extend across the Pennines to the north-west. It is a very poor route and service at the moment. Can the Minister give any assurance that investment will take place sooner rather than later in those regards, irrespective of what happens in the timing of the HS2 project as such? After all, the north-east has a mere fraction of the per capita expenditure on transport infrastructure, particularly of the south-east, but also in relation to many other regions in the country.

[Baroness Kramer]

The noble Lord will be aware that spending on transport in the next Parliament is to be £73 billion, of which only £17 billion will be on HS2. There will be a very substantial spend on other transport services, including upgrading and improvement of rail, electrification, and so on. I could go on with a very long list. I can assure the noble Lord that that is not being ignored. There are also great opportunities with the local growth fund, which is a £2 billion-a-year fund for stakeholders to bring forward plans that they see linking into and maximising the benefits to HS2, so that they can go ahead in preparation for the arrival of HS2. I expect many of the cities and communities in the Midlands and the north to be doing exactly that.

[Lord Brooke of Sutton Mandeville (Con)]

Does my noble friend share my enhanced confidence in recent developments from the fact that the growth task force is chaired by our noble friend the Commercial Secretary, following his remarkable achievements on the infrastructure of the London Olympics, in particular?

[Baroness Kramer]

The noble Lord, Lord Deighton, has brought so much to this issue, not just his experience. The House will be aware that some years ago transport was looked at primarily in silos. It was about how to get people or freight from one place to another. It is now seen as inherently part of an economic development strategy. Local connectivity and integration with the rest of the network now have an importance that perhaps they once did not have. The noble Lord, Lord Deighton, has been very instrumental, with others, in making sure that we have those thoughts right at the forefront of the HS2 scheme.

[Lord Clark of Windermere (Lab)]

My Lords, I greatly appreciate the Statement today, but when we talk about the great cities of the north, are we including cities such as Preston or Carlisle, which almost certainly will end up with an inferior rail service to the capital in London unless we get the connectivity right, as the noble Lord, Lord Shutt, has wisely drawn our attention to? There is no sign of that at the moment. For example, in a Parliamentary Question in the past few months, I was told that there was not even a business case made for high-speed trains from Wigan, which was to be the terminal to Glasgow. I find that incredible. I am also told that the high-speed trains will not run on the high-speed line, so the tilting trains will be providing an inferior service down the conventional west coast line.

[Baroness Kramer]

I am not sure that I fully understood the noble Lord’s last point. There will be the fast, specially designed HS2 trains, but the line can also take the classic-compatibles—diesel or otherwise—that can go off to a whole variety of other connections on the west coast main line and other routes. This frees up the west coast main line, the east coast main line and the Midland main line to take a whole complexity of other services. That issue has been raised by others on the Floor today. The expectation of an enhanced service from a much greater number of cities than those absolutely directly connected to HS2 is entirely viable. We just have to make sure that it is deeply embedded in our planning.

[Lord Grocott (Lab)]

My Lords, I warmly welcome the Statement, representing as it does an increased and restated commitment to this project from the Government, added to by my noble friend Lord Davies, who spoke for the Opposition. It is extremely important that it is restated in that way, and it is encouraging to see what questions have been asked as well. However, I share some of the concerns raised by my noble friend Lord Snape. I certainly do not wish to delay anything—the quicker the better, in terms of preparing the scheme and getting it going. However, with regard to the statement:

“I will also commission a study into options for ways to improve connections to the continent which could be built once the initial stages of HS2 are complete”,

I would like it to be spelt out in a little more detail what this commission is going to do and within what timescale, and I would like just a clue as to what the other conceivable options would be if there were not to be a direct link between HS1 and HS2, because that must be a concern for those of us in the Midlands and the north.

[Baroness Kramer]

The decision to not develop the proposed HS1-HS2 link is very recent. A lot of work and thought needs to go into framing the study. As soon as we are able to do that, I will be glad to share it with the House.

Defence Reform Bill

Monday 24th March 2014 Lords Chamber

Report (1st Day) (Continued)

17:26

Clause 16: Pricing of contracts: supplementary

Amendment 4

Moved by

[Lord Tunnicliffe]

4: Clause 16, leave out Clause 16

[Lord Tunnicliffe (Lab)]

My Lords, I am pleased to see the noble Baroness, Lady Jolly, in her seat. I would feel inhibited in quoting extensively from her letters, as I intend to do, in her absence. As I mentioned earlier, my vision of Part 2 is essentially that it delivers value by forcing the Government into the constraints that the legislation will spell out once it becomes law. Broadly speaking, what it will do, I hope, is to force agreements into a shape whereby a price is set in one form or another and the excesses or losses that actually occur in practice are handled by Clause 21 entitled “Final price adjustment”. The concept seems to be very sound. You have to go into the regulations to understand it but, broadly speaking, if the actual outturn cost goes up, then pound for pound the contractor makes a loss until the cost becomes excessive, and then, by a formula, the loss starts to be shared with the MoD, eventually on a 50:50 basis. Similarly, if the actual cost goes down because of the efficiency of the contractor, initially all that efficiency and improvement falls to the contractor. Only when the profits start to become excessive is there any clawback to the MoD. It looks to be a good idea that contracts can be forced into that by law. We will wait to see whether that comes off but it is a good aspiration, which we support.

As I mentioned earlier, the Government facilitated extensive discussions on the contract. Of course, when everyone sees a formula, one at least takes some interest in how one would get round it, because that is what people will try to do. As an example, I examined the Statement on carriers made by the Secretary of State for Defence on 6 November in the House of Commons, in column 251 of Hansard. He criticised extensively the previous deal, which was for the carrier but then went on to be a deal which I will call a critical industrial capacity deal. In other words, it was a deal, quite complicated in nature, that essentially paid BAE Systems to do nothing if it had nothing to do in order to retain the essential workforce, facilities and so on. It is a very uncomfortable deal but nevertheless you can see the wisdom of it. Our Government made such deals, this Government have made a similar deal, and despite all the wonderful planning in the world I suspect that future Governments may have to make a similar deal. We agreed with BAE on 6 November.

17:30

Perhaps I may comment on a sentence or two of the statement. Crucially, under the new agreement, any variation above or below that price—£6.2 billion in the paragraph—will be shared on a 50:50 basis between government and industry. That looks like a good target-cost incentive fee, which is the second big way in which the Bill envisages that business will be done. In other words, if the outturn cost is £100 million higher, then government stump up £50 million and BAE loses £50 million profit. If it is lower, the extra profit or surplus is shared 50:50 with BAE. So far so good. However, the next few words are,

“until all the contractor’s profit is lost”. [Official Report, Commons, 6/11/13; col. 251.]

So suddenly the sharing is 0:100. This means that 100% of the excess cost once the contactor’s profit is lost is paid for by government. This does not seem to fit with any of the models in the Bill.

I raised this issue in Committee and the noble Baroness, Lady Jolly, was kind enough to write to me. In her letter she said, “You speculated that although this agreement”—the agreement to which I have just spoken—“deals with an area concerned with single source procurement, deals of this type could not be covered by the new framework and therefore would be exempted under Clause 14(7)”. That is the clause we were talking about earlier which states that the Secretary of State could exclude contracts but, the Government have assured us, only under exceptional circumstances. The letter continues, “Obviously, in this particular case the new framework has not yet commenced and the provisions are not retrospective”. So the new framework will not cover this agreement. It goes on, “Moreover, although this is a very complex agreement covering a range of issues such as redundancies and policies, were a similar agreement to be reached in the future then there is no reason why such an agreement should not be covered by Part 2 of the Bill. There is no expectation that it will be exempted under Clause 14(7). The principles underlying Part 2 would be as relevant in the application of such an agreement as any other single source contract between MoD and industry”. That is great. That is good. In future we are going to work within the limitations of the new framework.

At a subsequent meeting I said that that was a great assurance but how do we accommodate the point where the deal just concluded goes into a sharing of 100% of the losses being picked up by government and 0% of the losses above that point being the responsibility of BAE Systems? The Government drew breath and said that they would write again. When they wrote again the letter stated, “As I explained to you in my last letter, our initial assumption is that in future any single source contract negotiations will be on the basis that the resulting contract will be a qualifying defence contract as defined in Part 2 of the Bill. It is also our assumption that the Secretary of State will only be required to use his exemption powers on very rare occasions. We do accept that there may be situations, such as where there is a very large element of risk involved in a major project, where it makes sense for the MoD to accept the potential liability for a larger proportion of the costs. In this case, however, there will no requirement to invoke the Secretary of State’s exemption powers. Clause 16”—which is the subject of this debate—“provides the department with the flexibility to make target-cost incentive fee arrangements with industry, allowing us to specify arrangements where we share a greater proportion of potential gains and losses than is the case under the final price adjustment”, which I have previously described.

I do not know about your Lordships, but “target-cost incentive” means that there is an incentive. Every pound that you lose, being wholly paid for by the Government, does not seem to be an incentive at all. This seems to be a complete misuse of Clause 16, which was designed to keep an incentive on the contractor throughout the contract to the very end. I cannot claim that use of this clause in this way is contrary to the wording, but I do claim that it is contrary to the clause’s intention, which was to create a framework for a target-cost incentive fee arrangement—in other words a proper incentive running all the time.

I believe that the use of this clause to legitimise a large and complex deal, whereby all losses are picked by government, is an improper argument. We support the generality of this Bill, but I would like to hear what the Government will do about the use of this clause, which will allow a coach and horses to be driven through this otherwise well crafted part of the Bill; we believe that that is wrong. We would like to hear what the Government are going to do about it and that is why we have put forward this amendment that the clause be deleted. I beg to move.

[Baroness Jolly (LD)]

My Lords, this amendment seeks to remove Clause 16 of the Bill.

The clause is essential to ensure the consistent and widespread application of the new framework to all types of contracts used by the Government in single-source procurement. The purpose of Clause 16 is to allow for qualifying defence contracts that use a target price rather than a fixed price. These target-price contracts include sharing arrangements in the event of cost overruns or underruns. The benefits of any cost reductions are shared by the MoD and the supplier, as are the risks of costs being greater than anticipated. They are usually referred to as target-price incentive fee contracts, as the noble Lord has said. This kind of contracting approach is a model often used in high- value single-source MoD procurements where there is insufficient pricing certainty to make a firm or fixed-price contract a sensible option. In the past they have accounted for approximately 40% of our single-source contracts by value.

The Typhoon-availability contract, which provides support to the RAF’s Typhoon fleet, is one such contract. We want to retain the ability to use these target-cost contracts. We also do not want these contracts to be excluded from all the protections offered to both parties by Part 2. Clause 16 ensures that such target-cost incentive fee contracts, or indeed any other pain/gain share models based on a target price, can benefit from all the protections of the new regime.

Target-cost contracts are typically used when it is not reasonable for either party to take the risk of a firm price at the outset of the contract. This risk may be so great that in order to accept it a supplier would have to price in a very large contingency. This does not represent value for money. In this case, the price at the outset is deemed to be a target price. The final price is determined by comparing actual incurred allowable costs with those used to set the target price. Contractually agreed terms specify the share each party takes, whether 50:50 or some other split. Clause 16 ensures that the allowable costs included in the target price, and the allowable costs later agreed as the actual costs, must conform to all the pricing rules within the Bill. It is possible that there might be a disagreement at the end of a contract over what the actual costs were. In this case Clause 16 allows one or both of the contracting parties to ask the independent SSRO to make an expert determination. This helps ensure that disagreements are not overly prolonged.

Clause 16 also specifies that Clause 21—“Final price adjustment”—does not apply to target-cost incentive fee contracts. This requires a little explanation. The purpose of Clause 21 is to deal with any excessive profits or losses that might apply to firm- and fixed-price contracts. Most of our single-source contracts—approximately 60% by value—are such firm- or fixed-price contracts. A fixed price is typically used for contracts that are not risky enough to justify the use of a target-cost approach. They provide suppliers with the strongest incentive to become more efficient, as any cost reduction will improve their bottom line. This, in turn, will create better value for money for the taxpayer in lower follow-on prices.

However, when profits become excessively high, we do not want to have to wait until we engage in a follow-on contract. Indeed, it is possible that there will not be any follow-on contract at all. That is why we want to ensure that we get a share of these profits even if we have agreed a fixed price. Equally, we do not want to force a supplier to be subject to potentially crippling losses simply because they agreed to a fixed-price contract. For cutting-edge defence equipment, a contract that did not appear risky at first may turn out to be just that, which is why Clause 21 also provides a minimum protection for suppliers in the event of excessive losses. Because Clauses 16 and 21 both include profit-sharing arrangements, they cannot run simultaneously. That is why Clause 21 is excluded from target-price contracts.

Turning back to the amendment, we would like to maintain both options: the option to agree a fixed- or firm-price contract, with suitable protections for excessive profits and losses, as set out in Clause 21; and the option to agree target-price contracts if the contract is clearly high-risk and a fixed-price contract would not give us value for money. Clause 16 is what allows us to do this. The clauses have clearly distinct purposes and will be used in different cases.

Target-price contracts typically account for more than £2 billion worth of contracts per annum. This clause is therefore essential to the overall functioning of the new framework and must remain within the Bill if the substantial financial benefits expected under Part 2 are to be realised. I hope that this explains our position, and I therefore urge the noble Lord to withdraw his amendment.

[Lord Tunnicliffe]

I thank the noble Baroness for that explanation. But, as she knows, I do not need that explanation because I agree with everything she said. What I am challenging is the use of Clause 16 to explain an agreement where the share is 100% of the losses to the Government and 0% to the contractor. That seems incompatible with the spirit of Clause 16. I do not want Clause 16 to be removed and the noble Baroness knows that I will withdraw my amendment, but I would like at least some assurance that such a deal will not be done in the future. It makes a mockery of the target-price sharing if the so-called share is 0% versus 100%.

[Baroness Jolly]

I thank the noble Lord for his patience. I would rather not give him inaccurate information. How an agreement works out is very much due to commercial judgment, assured for value for money by the Ministry of Defence or HMT—the Treasury. That is the answer that I have. It is determined as a result of judgment, assured for value for money by the MoD or HMT.

[Lord Tunnicliffe]

My Lords, there is much agreement between the Opposition and the Government. On this area, I am afraid there is not. Considering the interest that has been shown in this debate by the rest of the House, and my lack of success on a previous occasion, I beg leave to withdraw the amendment.

Amendment 4 withdrawn.

17:45

Clause 20: Allowable costs

Amendment 5

Moved by

[Lord Tunnicliffe]

5: Clause 20, page 14, line 14, leave out subsection (1) and insert—
“(1) The Secretary of State shall set out in regulations the overarching principles governing the treatment of allowable costs under qualifying defence contracts, and such other measures as may be necessary.
(1A) Having regard to the principles set by the Secretary of State under subsection (1), the SSRO shall issue guidance about determining whether costs are allowable costs under qualifying defence contracts.”

[Lord Tunnicliffe]

My Lords, Amendments 5 and 6 seek to bring out the relative weight given by the Bill to the contract profit rate and allowable costs. The contract profit rate is the subject of Clauses 17, 18 and 19; allowable costs are the subject of Clause 20. The split between profit and allowable costs is typically that more than 90% of the final price will be allowable costs and less than 10% will be profits.

Clause 17(1) states:

“Single source contract regulations must make provision for determining the contract profit rate for a qualifying defence contract”.

Since it is a regulation, it will be made by statutory instrument, with all the parliamentary attention that that will enjoy. Clause 20, which is about much, much more money—nine or 10 times as much money—simply says that the SSRO,

“must issue guidance about determining whether costs are allowable costs under qualifying defence contracts”.

The essence of our concern is that the real potential for profit and loss in a defence contract comes from how the allowable costs are set. They are the much bigger proportion, and once the deal is set—unless it is a profit-sharing contract such as we have just discussed, and even there, the allowable costs are set—every pound by which the contractor is able to produce the goods cheaper than the allowable cost converts to profit on their account. It may not be under the profit part of the pricing deal, but it drops to profit. One has to realise that a substantial amount of the allowable costs—sometimes more than half—are allocated overheads. If you are the finance director of this large conglomerate, you are probably more concerned about making sure that you can—I was about to use a very unparliamentary word—get as much of your overheads into the allowable cost as possible. If one were negotiating this deal, one would not worry about the profit; everybody knows that it is going to be about 10%, as it is laid out by statute and all that sort of thing. The concentration would be to get as much into the allowable costs as possible, both in terms of the original price setting and in terms of taking advantage of some of the price adjustment mechanisms.

It is therefore our contention—and Amendments 5 and 6 give effect to this contention—that the allowable costs rules should be set out in regulations and that there should be a framework of regulations setting out the criteria for allowable costs, recognising that the actual detail of allowable costs will be extensive and that those criteria should go on, as Amendment 6 proposes, to be the subject of guidance from the SSRO. It is a very simple idea, but, we think, a very important one: to give the debate on the most important part of the price a higher profile in the public domain, and to try to persuade the Government that they should be as accountable—indeed, more accountable—for the criteria setting allowable costs as they are for those setting profit.

The Government will no doubt come back and point to Clause 20(2), which sets out criteria. I was somewhat scathing about the criteria in Committee, so I shall try to be less so now. The three criteria are that the cost should be,

“appropriate … attributable to the contract, and … reasonable in the circumstances”.

Working backwards through them, my general understanding of administrative law is that things have to be reasonable in the circumstances. I would not quibble at throwing “reasonable” into the Bill, but it is not a particularly heavy or precise definition.

The next criterion is “attributable to the contract”. It does not seem to me a very exciting idea that the cost should be attributable to the contract; I think that the average lay person would expect allowable costs to be attributable to the contract. Nevertheless, that is what is set down.

The only criterion that seems to have any substance is that the cost should be appropriate. I have a very low opinion of the word “appropriate”. I used to stand on the opposite side of this Chamber and read the stuff that the officials produced for me. Whenever I saw “appropriate”, I knew it meant that they could not find a better argument—I fear that that is what “appropriate” means.

The overarching framework of allowable costs should be set out in regulations so that they can come before Parliament and be widely developed. The SSRO’s guidance should be developed from those fundamentals and should be in the public domain. I beg to move.

[Baroness Jolly]

My Lords, I will consider Amendments 5 and 6 together. They concern the statutory guidance that the SSRO must issue for determining whether costs are allowable costs under qualifying defence contracts. The allowable costs make up the bulk of the price, and we agree with the noble Lord, Lord Tunnicliffe, that it is important that there should be clear and comprehensive rules that help ensure value for money.

Amendment 5 would introduce an additional step requiring the Secretary of State to set out in the single-source contract regulations principles governing the treatment of allowable costs. The SSRO would be required to have regard to those principles in the regulations when issuing its statutory guidance. Amendment 6 would require the parties to a qualifying contract—that is, the MoD and the supplier—to have regard to those principles as well as to the SSRO’s guidance.

It is in the interests of both the MoD and our suppliers that the rules determining allowable costs should be clear. These costs will typically account for around 90% of the value of a qualifying contract. The SSRO’s guidance must be sufficiently detailed to ensure that inappropriate costs are excluded and to avoid unnecessary ambiguity. The guidance must be enforceable. The Bill provides a strong enforcement mechanism underpinning the SSRO’s statutory guidance on allowable costs. This ensures that its guidance will be adhered to unless there is good reason not to do so, and it is achieved through several provisions.

Clause 20 provides three high-level principles that are binding on the parties to the contract. The noble Lord listed them. Costs must be reasonable in the circumstances, appropriate in nature and attributable to the contract. However, the noble Lord must know that, in the past, costs have not always been attributable to contracts. That has been unavoidable, but it has always been found to be the case after the event. Clause 20 also requires the SSRO to issue statutory guidance.

The guidance issued by the SSRO will have effect in several ways. First, both parties to a qualifying defence contract must have regard to the guidance when agreeing the price. Secondly, the Secretary of State can require a supplier to demonstrate how they have followed the statutory guidance at any time. Thirdly, the SSRO may make a binding determination on the extent to which a cost is or is not allowable.

If either party feels that the guidance was not followed, they can appeal to the SSRO, which can change the price. Any deviation from the SSRO’s guidance carries with it a significant risk. Following an appeal, the SSRO has the power to adjust the price back to what it would have been had the guidance been properly applied—and it is likely to do so unless there were good reasons not to follow its guidance, supported by a robust audit trail. Therefore, although it is called guidance, it is enforceable guidance.

Turning to the content of the guidance, we are confident that the statutory guidance will be substantial. We have agreed with industry that we will jointly recommend to the SSRO that its initial guidance should be heavily based on the existing government accounting conventions. These make up a substantial part of the current “Yellow Book”. For example, there is substantial and detailed guidance on the treatment of costs such as research and development, rationalisation and redundancy, and other such cost categories. These conventions can be imported into the initial statutory guidance, and will be expanded on to include areas not yet covered. Producing this guidance will be one of the first duties of the SSRO, which it will do in consultation with the MoD and industry. MoD officials are already working on the material we intend to provide to the SSRO in support of its consultation, and we know that industry is doing likewise.

The statutory guidance will also continue to evolve as new circumstances are considered. This will happen through the SSRO’s ongoing reviews and consultations on the framework, where the MoD and industry will suggest amendments. The SSRO will also make amendments following opinions or determinations that it is asked to make in relation to allowable costs. For example, if there is any ambiguity in the case of a particular contract, one or other party is likely to raise this with the SSRO for an opinion. After the SSRO has considered the matter, it will be likely to amend the guidance at the next appropriate point so that all parties have the clarity they need. Therefore, the existing provisions of the Bill contain everything required for substantial guidance backed by a strong enforcement mechanism.

In issuing its guidance, the SSRO is acting in its role as an independent expert charged with regulating the framework. The SSRO’s aim is to ensure value for money for the taxpayer and a fair and reasonable price for suppliers. This aim is provided for in the Bill under Clause 13. We do not consider that there is any need to limit the SSRO’s power in relation to providing detailed guidance consistent with that aim. In the event that the MoD objects to the SSRO’s guidance, it can make that case to the SSRO. However, we consider that a strong and independent SSRO will provide the best outcome for the new framework, and it should be fully empowered to fulfil its aim, as with other regulators, without unnecessary constraints.

There may also be an unintended consequence to these amendments. One of the parties to qualifying contracts—the Secretary of State—would be allowed to limit the power of the SSRO to independently set guidance on the allowable costs of those contracts. This may be perceived as introducing a partisan element to the regime, which we do not want.

There is one final point I wish to make. These amendments would lead to there being three tiers to the rules that determine allowable costs: primary legislation, regulations, and statutory guidance. This would add an additional level of complexity to the framework. MoD commercial officers and their industrial counterparts would have to follow and have regard to all three. There are cases where it may be appropriate to have three levels of rules, but clearly it should be avoided unless absolutely necessary. In this case we do not consider it necessary. We have taken the simpler approach of having three high-level principles in primary legislation, supported by substantial detailed guidance issued by the independent SSRO.

In summary, we want a framework that provides clear guidance on allowable costs, supported by a strong enforcement process, and for the SSRO to be able to act as a strong and independent regulator. The Bill as drafted does this, and we do not consider that these amendments are required. They will unnecessarily constrain the power of the SSRO and may introduce uncertainty for contractors. I hope this explains our position. I urge the noble Lord to withdraw his Amendment 5.

[Lord Tunnicliffe]

My Lords, I am still not convinced by the argument. The essence of my argument is that there should be symmetry of regard for profit and allowable cost. The allowable costs are so intrinsic to how much defence equipment costs the taxpayer, and so much a part of contracts which, over the years, have received massive—perhaps unfair—public criticism. This part of the Bill—which, as I have already said, is a good try and something that we support—will have the biggest impact on cost and profit, and we are not exposing it to the public scrutiny that having the criteria and framework in regulation would allow and, indeed, insist on.

I am incredibly impressed by my arguments but equally seized of the fact that I would not win a vote, so, with enormous reluctance, I beg leave to withdraw the amendment.

Amendment 5 withdrawn.

Amendment 6 not moved.

Consideration on Report adjourned.

South Sudan

Monday 24th March 2014 Lords Chamber

Question for Short Debate

Asked by

[Lord Chidgey]

To ask Her Majesty’s Government what is their assessment of the progress of peace talks between opposing armed groups in South Sudan and the influence exerted by Sudan on those developments.

[Lord Popat (Con)]

My Lords, in view of the absence of my noble friend Lady Warsi, it may be for the convenience of the House to adjourn briefly. I beg to move that the House do adjourn during pleasure for five minutes.

18:01

Sitting suspended.

18:06

[The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con)]

My Lords, it appears that four of the 11 speakers are not in the Chamber at the moment. We could either adjourn for a further five minutes or we could start and allow them to speak.

[Lord Chidgey (LD)]

I think another five minutes would not hurt. It is so short.

[Lord Alton of Liverpool (CB)]

My Lords, I wonder if it would not be more flexible to start and to allow speakers to speak when they arrive.

[Baroness Warsi]

I do not know what the protocol is—I look to the clerk for advice on what the procedure would be. I am quite happy for speakers to speak as and when they—

[The Deputy Speaker (Lord Brougham and Vaux) (Con)]

The Companion says no.

[Baroness Warsi]

In those circumstances, my Lords, shall we just adjourn for five minutes to see who else turns up, possibly until a quarter past?

18:06

Sitting suspended.

18:15

[Lord Wallace of Saltaire (LD)]

My Lords, I apologise for our timing being so far out. There are some noble Lords who have not been able to come here. If they come within the next two or three minutes, we will allow them to speak. They may well be expecting to start much later. In these circumstances, we will not enforce the six-minute rule quite as sharply as is our wont, but we might enforce the seven-minute rule quite sharply.

18:15

[Lord Chidgey]

My Lords, I presume that the extension of time also applies to the opening speech.

While diplomats attempt to find a lasting solution to the long-standing rivalry that sparked widespread conflict in December, millions of South Sudanese are suffering an acute humanitarian crisis. Fighting spread rapidly from the capital to volatile locations in Jonglei, Unity and Upper Nile states, fuelling local political battles and inflaming old civil war grievances.

More than 1,000 people were killed during the five weeks of violence before President Salva Kiir and the former vice-president Riek Machar signed a ceasefire agreement. Terrible human rights atrocities have been documented throughout the crisis. Taban Deng Gai, the rebel chief negotiator at the peace talks in Addis, confirmed that innocent people lost their lives in Malakal, Bentu and Bor, the state capitals of Upper Nile, Unity, and Jonglei states. Human Rights Watch concluded that armed forces from both sides have looted extensively, destroying civilian property and desperately needed aid facilities. They have targeted civilians and carried out ethnically based extra-judicial killings.

A substantial solution to the crisis will come only through an inclusive political process that engages South Sudanese communities and deals with the underlying causes of unrest. A political agreement between leaders that does not address people’s grievances, nor clearly invite citizens across the country to play their part in finding long-term solutions, may be a first step. It will, however, prove a poor foundation in the search for sustainable peace.

On 30 December, the Peace and Security Council of the African Union called for the establishment of a commission of inquiry to investigate abuses perpetrated during the conflict to ensure accountability, reconciliation and healing among all South Sudanese communities.

A five-member commission of inquiry was appointed on 7 March 2014, to be headed by former President of Nigeria, Olusegun Obasanjo. The mandate of the commission is to,

“investigate the human rights violations and other abuses committed during the armed conflict in South Sudan”.

I ask my noble friend what actions the Government are taking to ensure that the commission is adequately supported and that it focuses on all its objectives— including modalities for reconciliation—as well as identifying perpetrators of human rights abuses. How are our Government working with the Security Council to press all the warring parties to allow unrestricted humanitarian access across the country, and to stress the need for UNMISS to fulfil its mandate to protect civilians more effectively?

On 30 March, east African heads of state met in Addis Ababa in the latest push for peace. Leaders from the Intergovernmental Authority on Development, IGAD, were called together, even as fierce fighting took place around Malakal. They authorised the prompt deployment of a regional protection and deterrent force that would operate as part of the IGAD monitoring and verification mechanism established to support the 23 January ceasefire. Riek Machar, the leader of the SPLA in opposition, immediately rejected the proposal, saying that UNMISS already had a clear mandate in the country.

The current crisis has its roots in wide-ranging failures of governance, security provision, reform, justice and reconciliation in Sudan. If the country is to move forward, there needs to be a process that is ready and willing to embrace these issues and address these drivers of the crisis. This will involve a change in political participation, not just a power-sharing deal. The peace talks must lead to a fundamental change in the way in which politics is done in Sudan, not just a political power-sharing deal between two leaders, which would be a return to the status quo. The peace process needs to deal with the roles of current leaders in any future Government, including what the appropriate role is for Salva Kiir.

South Sudanese civil society organisations are calling for robust justice mechanisms as well as reconciliation to be built into final agreements. These will need to deal with historic grievances that are not dealt with by the comprehensive peace agreement, as well as those from the newest outbreak of conflict. What are our Government doing as a matter of urgency to ensure that civil society plays an effective role in the negotiations and in the monitoring and verification mechanisms? What political and material support are we providing to help them to fulfil that role? Do our Government agree that the IGAD and international funds must quickly take steps to expand participation in the mediation process and engage representatives from South Sudanese communities, the diaspora and religious communities to ensure that the process is seen, heard and active across the states of South Sudan?

The Security Council received an advance copy of the Secretary-General’s report on South Sudan on 6 March, which it is understood was discussed on 18 March. The report apparently contains a reprioritisation of the core functions of the mission—protecting civilians, rather than capacity-building. In December, the Security Council voted to increase the mission’s military component by 5,500 to 12,500. However, UNMISS is unable to have a broader impact on the crisis and is increasingly seen as partisan by both sides of the conflict. On 13 March in Western Bahr el Ghazal, an area that has largely escaped conflict, youths demonstrated against the force, citing it as working with the rebels.

That same week, the Government of South Sudan openly accused UNMISS, or agents working with it, of channelling weapons to Riek Machar after they found mislabelled weapons in UNMISS-marked trucks travelling to Unity State. There is a strong perception that agents of armed groups have infiltrated protection areas within UNMISS bases and are monitoring who is inside. These perceptions increase fear, anxiety and tension within camps. UNMISS and UN police should expand their patrolling efforts and engage with communities to better control their perimeters and reassure populations.

Do our Government agree that the UNMISS mandate should be refocused on the protection of civilians and away from giving capacity-building support to either party? It is understood that finding additional troops for UNMISS is proving difficult. What are our Government doing to help to ensure that the reinforcements agreed in December arrive in good time?

On 14 February the UN Security Council welcomed the positive bilateral relations between Sudan and South Sudan. President Bashir visited Juba on 6 January and sent an envoy to the South Sudan peace talks. Sudan’s position is critical to the course of the ongoing conflict in South Sudan. The split in South Sudan mirrors the division seen in the second civil war, when Riek Machar and a number of other groups split from John Garang and ultimately received support from Khartoum. The split differs in a number of ways from that of 1991. For example, the Bul Nuer of Mayom County, who comprised the core of the SSDF forces of Paulino Matip and remained allied with Khartoum until 2006, fought with Salva Kiir this time. The core of the rebellion was also from Bor, John Garang’s home territory.

Ugandan forces have been reported to have been fighting alongside the Government of South Sudan in the recent conflict. There is some argument that worse scenarios might have developed if they had not been present. The consensus at the Addis talks and among the international community, however, is that the involvement of the Ugandan army is counterproductive because it has undermined the ability of IGAD, in which Uganda is a main actor, to act as a mediator between the parties.

The 27 September 2012 agreements on outstanding issues between Sudan and South Sudan still lack implementation, and the situation in Abyei has deteriorated terribly. Sudan’s internal conflicts have also escalated, and the international community should make every effort to avoid its piecemeal approach of the past, of following the crisis and taking its eye off the bigger picture. I ask my noble friend what reports our Government have received, if any, of any international actor providing political or material support to the SPLA in opposition. What are our Government doing to ensure that the Government of Sudan withdraw their oil police from Diffra, and that the SPLA and South Sudan police forces withdraw from Abyei, in line with the United Nations Security Council statement of 14 February?

What representations are the Government of the UK making to Sudan about accessing the 25,000 or so refugees who fled to that country from South Sudan in the recent fighting? Finally, I ask my noble friend to confirm, given the complexity of these issues and what I am sure will be the large number of questions put by noble Lords, that she will write to me to answer the questions more fully than is possible in the time available.

18:26

[Baroness Cox (CB)]

My Lords, I warmly congratulate the noble Lord, Lord Chidgey, on securing this very timely debate and on his comprehensive introduction of it. As I have recently returned from a visit to South Sudan with the Humanitarian Aid Relief Trust, I will highlight three aspects of our visit: the continuing problems and suffering resulting from the failure to secure agreement on Abyei; the escalating humanitarian crisis in Bahr el Ghazal and Warrap state; and the prerequisites for an effective peace process.

Our visit began in Agok, near to Abyei, where we met senior representatives of the Ngok Dinka community. Their situation remains cause for deep concern. Abyei town is still devastated; the continuing refusal of the Khartoum Government to remove their military forces maintains a reign of terror, so civilians cannot return to their homes; the murder with impunity last year of the paramount chief has left deep scars; and the failure of the international community to fulfil obligations for a referendum created such frustration that the local community organised their own, with an overwhelming mandate for joining South Sudan. Sadly, recent weeks have seen an increase in violent attacks, with many more civilian casualties reported. There is also a justifiable fear that the conflict which has erupted in South Sudan will deflect the attention of the international community from the urgent requirement to address the continuing needs and suffering of the people of Abyei.

We then visited Man-Angui camp, where nearly 5,000 internally displaced people are living in horrendous conditions. Warrap state and Bahr el Ghazal have been inundated with thousands of civilians fleeing from the conflict in Abyei, from Khartoum’s continuing genocidal bombardment in the Nuba mountains and in Blue Nile, and, most recently, from the tragic eruption of conflict in South Sudan. Many are without any humanitarian aid, living in flimsy cardboard shelters which will disintegrate with the imminent heavy rains; some have no shelter at all. There is such a shortage of food that people are forced to eat leaves with no nutritional value. For many, there is no health care, so pregnant women are giving birth with no midwives or access to clinical intervention if needed. The current crisis in these parts of South Sudan is becoming another catastrophe. The rains will bring even more disease, worsened sanitation, famine and severe challenges for access for humanitarian assistance as more than half the country becomes impassable. What support is being given by DfID to address this critical situation in this part of South Sudan?

The urgent need for a genuine peace process is intensified by Khartoum’s continuing genocidal policies in Darfur as well as Blue Nile and South Kordofan, where it has ruthlessly tripled aerial bombardment while the international community’s attention has been focused on the conflict in South Sudan. February saw the highest number of civilians killed or injured in South Kordofan since the current conflict began in 2011, with the number of fatalities more than double those recorded in January. The Sudanese Air Force is now employing even more sophisticated weaponry against civilians, including upgraded aircraft.

The Famine Early Warning Systems Network argues that food insecurity in South Kordofan will reach emergency levels by April. In Blue Nile state there is even less humanitarian assistance. When we visited there last year, many hundreds of people had already died of hunger. What are the British Government doing to try to help humanitarian assistance reach these civilians before hunger and disease claim many more hundreds of lives in South Kordofan and Blue Nile?

The proposed peace process needs to meet the complex realities on the ground, as the noble Lord, Lord Chidgey, emphasised so well. As the conflict erupted, myriad locally focused groups in north-eastern South Sudan—only some of them Nuer—took up arms against President Salva Kiir in order to protest localised grievances. While those groups have grievances against the president, only a small minority support Riek Machar. However, in mid-March 2014, when IGAD announced the formation of the Protection Deterrent Force—PDF—for South Sudan, Riek Machar announced that “his forces” would not co-operate with the PDF.

Therefore, for a genuine conflict resolution process to be effective, the complex reality must be recognised and addressed. First, the diverse grievances of the myriad grassroots groups must be studied, understood and resolved. That process should be conducted separately with each group, with cessation of violence as a precondition for such discussions. There is no other way to stop the fratricidal violence that currently plagues so much of South Sudan.

The second phase can come only when violence has subsided, making it possible to engage in meaningful discussions with all the key political forces in South Sudan—not just President Kiir and Riek Machar—about governance reforms and the political future of the nation. President Kiir has outlined an excellent eight-point road map for a return to peace and moving the country forward, which needs to be considered by the international community, although there is no comparable proposition from Riek Machar or any other opposition groups.

Having just returned from a heartbreaking visit where we witnessed first-hand the massive scale of suffering, I urge Her Majesty’s Government to fulfil their continuing responsibility, as a member of the troika, to support a realistic, just peace process, essential for urgent action to alleviate the current catastrophes; to prevent escalation of yet more conflict; and to ensure that the Government in Khartoum do not take advantage of the conflict in South Sudan to escalate their ruthless assaults on their own people. The United Kingdom has a responsibility to bring some hope to people in both nations, Sudan and South Sudan, who have suffered too much for far too long. I sincerely hope that the Minister will provide that hope this evening.

18:32

[Lord Sheikh (Con)]

My Lords, I am grateful to my noble friend Lord Chidgey for initiating this short but important debate. I was born and brought up in Africa and still have many connections throughout the continent, so I feel particular resonance with this debate. I have visited Juba, as my family undertook business in that part of the world. I also declare that I am the chairman and a funder of a charity which has undertaken humanitarian work in Sudan.

There was a long struggle for independence for South Sudan, with decades of conflict, but since it was granted independence in July 2011 its problems have not been erased. In Sudan, there has been a history of problems relating to cultural differences, poverty, tribal intolerance, violence and ethnic religious prejudice. After South Sudan gained its independence, differences arose within the ruling Sudan People’s Liberation Movement. It started as a political dispute between President Salva Kiir and his former deputy Riek Machar, but has escalated into a full-scale conflict, with some of the fighting along ethnic lines. The President has accused Mr Machar of launching a coup, which Mr Machar denies strongly. Following the ceasefire of 23 January there was hope that a long-term peaceful solution could be found. However, the brutality witnessed less than a month later in the city of Malakal shattered all our hopes and disturbed even the most seasoned of aid workers on the ground.

Two months on and I am now very disappointed that the second round of peace talks has been delayed. The two sides are unable to even agree on who is to attend such talks. This is extremely frustrating and illustrates the scale of the challenge ahead. The international community must be swift and assertive in condemning any obstruction to progress on negotiations. I support the threat of sanctions by the European Union and the United States in the event that progress is not forthcoming. Most importantly, it is the humanitarian situation and human rights violations that are threatening innocent people’s livelihoods. I commend the work of the United Nations and the World Food Programme to assist with this, but it is not and cannot be enough.

The UN mission in South Sudan has been clear to both sides that its premises and facilities must not be violated. I welcome the temporary strategic shift towards the protection of civilians and the facilitation of humanitarian assistance. I also welcome the establishment of a commission of inquiry so that human rights abuses are properly investigated and perpetrators held accountable. Any eventual solution must be thorough and comprehensive enough to prevent such a catastrophe from recurring. I believe that the participation of all sides and relevant parties is crucial if this is to be achieved. The decisions of the Intergovernmental Authority on Development must be respected in its role as mediator in the region.

It is also paramount that we see the withdrawal of all allied forces and armed groups, as originally drafted in the cessation of hostilities agreement. The people of South Sudan are enduring suffering every day. Twenty thousand people have died and nearly a million people have been displaced in the space of just three months. There are now also warnings of a potential famine if farmers do not feel safe enough to return to their homes and plant their fields. It is depressing that the world’s youngest country has descended into such chaos. The people of South Sudan had already encountered far too much suffering prior to independence. Ultimately, these divisions must be healed and governance must be strengthened for the sake of the South Sudanese people.

This will happen only through mutual compliance with the cessation of hostilities and mature political dialogue. During the January ceasefire, our Foreign Secretary was clear that the UK was ready to lend its full support to efforts for a process of national reconciliation. I hope that we will do so and respect this commitment, and I would be grateful for clarification on this point from my noble friend the Minister. I am, however, encouraged by our Government’s commitment to working closely with the Republic of South Sudan towards international peace and stability. I ask my noble friend to update the House on the representations that the UK has received from the African Union on the assistance the UK can provide.

I also call on the Government to further press South Sudan to implement the agreements from September 2012 to resolve outstanding areas of disagreement with Sudan and uphold the ceasefire. We need to continue to work towards resolving the political, tribal and humanitarian problems to achieve peace and prosperity not only in South Sudan but in Africa as a whole. I look forward to the Minister’s remarks at the close of the debate.

18:39

[The Earl of Sandwich (CB)]

My Lords, I begin by apologising to the noble Lord, Lord Chidgey, for arriving late in his introductory speech. I should normally be struck off the list, but business is very hard to predict in the House of Lords. I thank the Whips on the Front Bench for resurrecting me.

All of us who follow South Sudan regularly have been dismayed and disturbed by the events in December, having had high expectations of Africa’s youngest country. What concerns me most is that so much killing will discourage even those who supported and nurtured this country long before its independence. I am sure that noble Lords will have read, as I have, other harrowing accounts about Malakal and Bor and especially the work of the International Committee of the Red Cross and of Médecins sans Frontières, which we must highly commend for their swift action. Through the aid agencies and the churches, we somehow have to rebuild the trust that we know exists among the people of South Sudan. We have to remind ourselves of the many bonds between the different races and that this is primarily a political conflict, in my view, based on and exploiting ethnic divisions. In short, it is a failure of leadership where it was most needed.

One of the most critical problems is the loss of confidence in UNMISS and the possibility that the UN itself will have to rethink its mandate in terms of nation building rather than state building. What is our Government’s analysis of this? Does the Minister agree that there has been perhaps too much emphasis on influencing—at times even controlling—organs of central government? One can imagine the enthusiasm of supporting states at a time of independence. Does she agree that there has therefore been too little emphasis on devolving power and ensuring that capacity building in the regions and people’s participation in local communities are equally important?

The showdown between Salva Kiir and the UN may now have passed, judging by more soothing comments I read recently from the GOSS. It would be very serious if this row halted the basic humanitarian work of the UN and the related agencies, on top of the considerable present challenges of feeding and sheltering tens of thousands in the midst of civil war and the continuing arrivals of refugees from almost every direction. The fighting has continued in Upper Nile, Unity and Jonglei in spite of efforts at diplomacy and peacekeeping.

I have no doubt that the UK has played a useful and important role in the troika during the IGAD talks in Ethiopia, but if the principals are not willing to settle their differences—which have a long history going back before the CPA—what hope is there for diplomats? I trust that we are not going to reduce the staff any further in the Sudan unit, for instance, or in South Sudan itself at a time when, at the onset of the rains, we are going to see a much bigger humanitarian disaster unless aid agencies can pre-position their supplies in time. I understand that, so far, owing to official obstruction as well as road conditions, the World Food Programme has been able to reach only 765,000 people—about three-quarters of a million—out of the 2.5 million affected by the conflict, and that is only in the south, although it has now begun airdrops in the three conflict states. UNHCR and UNOCHA estimate an even higher figure at risk of food insecurity, and there has been concern about the high level of malnutrition seen among young refugees arriving in Ethiopia from the north-east.

As we heard from the noble Lord, Lord Chidgey, the situation in Abyei remains precarious. We heard from the noble Baroness, Lady Cox, that across the border in South Kordofan the Nuba people are still the victims of bombardment by the Sudanese armed forces. There is no doubt that Khartoum has taken advantage of the situation in the south to exploit its own position.

What about Riek Machar, the maverick opposition figure who has a long track record in Sudan? I notice that the IGAD statement loosely condemned tribalism and ideological bankruptcy. I am not sure which one of those applies to whom, and I do not know whether the member states of IGAD have any idea how to deal with Riek Machar. There are suspicions that he may return to his old alliance with the north. He has long had ties with the UK, and the FCO needs to make more effort to bring him back to the negotiating table. Perhaps the Minister will update us also on the position of his colleagues, who are in detention and the subject of diplomacy.

Finally, there has to be national reconciliation. There are currently three different official bodies concerned with justice and reconciliation and, although they put out a joint statement in January, there is concern that they are not yet active. The churches, on the other hand, led by Archbishop Deng, are an essential part of this process. They are already active and I understand that their initial focus will be on the displaced from Bor, Malakal and Nimule, who have suffered most in the recent conflict.

18:46

[Lord Harries of Pentregarth (CB)]

My Lords, I, too, am grateful to the noble Lord, Lord Chidgey, for initiating this debate. I claim no special expertise on this subject but, like other noble Lords, I am extremely keen to hear the Government’s assessment of how the peace process is proceeding.

It is indeed tragic that so soon after South Sudan came into existence as an independent country in 2011 such a vicious civil war should have broken out. I do not think that the world as a whole has yet woken up to the scale of the disaster, with more than 10,000 dead, according to the latest Economist report, and close to 1 million internally displaced people, according to the report of the United Nations Secretary General on 6 March. As we have already heard, major towns such as Bor, Malakal and Bentui have been totally destroyed.

Sadly again, as we know, it looks as though the conflict has taken on a horribly strong ethnic dimension, with Dinka and Nuer pitted against one another, and, even more tragically, that atrocities have been committed on both sides. However, it is important to note that the Government were formed from and still contain people from both ethnic backgrounds—and, furthermore, that they remain the elected Government.

The parish in which I reside and help when not working elsewhere has close links with South Sudan and, through this, I have information from a source who is not only very well placed but, in my view, is utterly to be trusted. He is quite convinced that the vice-president, Riek Machar, tried to depose the president in a coup and that he and his associates were certainly guilty of embezzlement. As we know, Riek Machar denies this and says that the spark for the conflict was fighting in the presidential guard. Nevertheless, we know that he broke away from the SPLM in 1991, signing a peace deal with Khartoum in 1997 and accepting arms from the north.

Furthermore, it is absolutely undeniable that he is now leading an armed conflict against the Government. If this reading of events is true—as I say, I know and trust the source, who is a good position to know what is happening—the wording of the Motion does not quite reflect the situation when it refers simply to “opposing armed groups”, as though there was an equality of blame. There are indeed some other breakaway armed groups and both the Government and Riek Machar’s forces are to blame for the atrocities, for local troops on both sides have got out of control.

However, the conflict is at heart one between a constitutional Government and a faction that has tried to overthrow them by force. In these circumstances it is difficult to see how the President could agree immediately to a power-sharing agreement, which he has been asked to do, without at least some adequate international backing to ensure that what has happened in recent months does not happen again, if and when first a ceasefire and then an agreement have been reached. Nevertheless, the UN Secretary-General was surely right when he said:

“While the declared intention by Mr Machar to remove an elected government by force is unacceptable, both sides now bear full responsibility for bringing the senseless fighting … to an immediate end”.

It will be very interesting to learn the Government’s assessment of Sudan’s role in all this. We cannot help wondering whether Sudan is once again trying to influence the course of events in the south, not least with a view to the oil fields, a significant portion of which are occupied by rebel forces. However, against this there is the fact that according to the latest Security Council report from the UN, President Omar al-Bashir and President Salva Kiir of South Sudan have met, and President al-Bashir has agreed to support a cessation of hostilities, and to participate in a monitoring and verification team.

We cannot underestimate the sheer difficulties that this country now faces. As we know, it is very poor. The Government are limited in the resources that they have to bring to bear. There are high expectations among the different tribal groups, and there is a long history of conflict that is still simmering and erupting. The number of troops on the ground is limited, considering the country’s vast size. Despite these difficulties, clearly every effort must be made, first, to bring about an immediate ceasefire, because nothing can happen until there is one. Secondly, as the noble Baroness, Lady Cox, emphasised so forcefully from her long and passionate engagement with the country, there must be an immediate stepping-up of humanitarian aid. There must be a serious examination of the kind of political system that might work there—without forgetting the fact, as I have emphasised, that there is a constitutionally elected Government in place and there is surely some duty to try to support them.

18:51

[Lord Avebury (LD)]

My Lords, I echo the warmest congratulations that have been expressed on my noble friend Lord Chidgey’s masterly analysis of the appalling consequences of the civil war and the useful proposals that he has made for the solution of the conflict.

After what was originally a political dispute between President Salva Kiir and former Vice-President Riek Machar, the tensions escalated until they became acute. It was the President who fired Machar, accusing him of trying to oust him in an attempted coup. If the allegations that have been referred to by the noble and right reverend Lord, Lord Harries, are correct, I really wonder whether Machar has any future role to play in the politics of South Sudan, or whether the international community should say that he is no longer a fit person to engage in a dialogue with the Government.

After the power struggle escalated into violence, there were, first, clashes between units of the SPLA in Juba loyal to the two leaders respectively, and then almost immediately ethnic cleansing against the Nuer in the capital, resulting in tens of thousands abandoning their homes and possessions, and taking refuge in the UN camp next to the airport. This conflict spread with extraordinary speed to other parts of the country, as my noble friend said, particularly to the three capitals: Bentiu, the capital of Unity state; Malakal, capital of Upper Nile, which is the largest oil-producing region, recaptured as I understand from the rebels three days ago; and Bor, capital of Jonglei. The fighting has continued in spite of the ceasefire agreement between the warring ethnic factions. As has been said, the UN estimates that over a million people have been displaced, a quarter of a million of them across the borders, 90,000 to Uganda alone, with 500 people a day still crossing that border.

My noble friend mentioned the IGAD meeting 10 days ago in Addis, which authorised the prompt deployment of a regional “protection and deterrent force” in support of the ceasefire. As to Machar’s prompt rejection of that proposal and his idea that UNMISS should have sole responsibility in those areas, I ask my noble friend the Minister: what discussions have there been between IGAD and the UN with a view to dovetailing their mandates and even assigning specific tasks to IGAD?

The criticism of UNMISS that we have heard about may well be partly justified, particularly the episode when it was found that weapons were being shipped in a truck that was otherwise engaged in humanitarian assistance. UNMISS has explained this by saying that those arms were destined for Ghanaian peacekeepers, and apologised for departing from its usual practice of shipping weapons to the peacekeepers by air. Nevertheless, a nasty smell remains over that allegation, which needs to be cleared up.

UNMISS has not done anything substantial to prevent the carnage and destruction so far, even though its mandate includes the deterrence of violence and the protection of civilians. However, should the revision of its mandate called for by my noble friend explicitly authorise the use of armed force in support of those objectives? I ask my noble friend the Minister: will Ugandan troops remain in South Sudan as part of the IGAD force? My noble friend is surely right to say that Uganda has played an important role in preventing even greater loss of life, which would have happened without its troops. It would seem perverse if IGAD did not build on its knowledge and experience of the situation on the ground, but I understand that it is not on the list of potential contributors to the IGAD force.

The UN says that 3.7 million people are at risk of food insecurity, and the situation could become even worse if the conflict continues. Aid agencies have so far reached only about a quarter of these people, and I wonder if my noble friend has any information about the further plans of the eight humanitarian agencies whose emergency directors just concluded a three-day visit to the country to enhance the response that they are already making.

Do we know the timetable for the deployment of IGAD forces, and will they give priority to Unity, Upper Nile and Jonglei, where not only was the fighting worst but 90% of the food-insecure are concentrated and all the WFP food stocks, offices, computers, vehicles and other assets were looted or destroyed? In Upper Nile’s two WFP warehouses alone, 1,700 tonnes of food were stolen, which would have been enough to feed 102,000 people for a month. What guarantees have been given by the rebels that when these assets are replaced, as they have to be, the same will not happen again?

With the rainy season about to start, any planting will cease, turning the country’s acute food crisis into a long-term problem, as the FAO has said. On top of its lack of capacity and resources to deal with the humanitarian needs of its own population, South Sudan has to look after some 200,000 refugees from Sudan and to cope with the continued aerial bombardment of civilians in the border area by the Sudanese air force, which was mentioned by the noble Baroness, Lady Cox, and the noble Earl, Lord Sandwich. I hope that my noble friend the Minister will at least be able to say that the UK has responded to this dreadful crisis with our accustomed generosity.

18:58

[Lord Alton of Liverpool (CB)]

My Lords, the whole House is indebted to the noble Lord, Lord Chidgey, for tabling this Question for Short Debate. I am sure that we all thank him for the eloquent way in which he set the scene for this debate.

Following the fighting that broke out in Juba last December, we have seen the violence spread like a plague to Jonglei, Unity and Upper Nile states, where fresh clashes only last week have rendered those areas inaccessible to humanitarian agencies. As we have heard, unverified reports suggest more than 10,000 fatalities. The key message of our debate to all sides should surely be that there should be an immediate cessation of hostilities with no delay.

Both President Kiir and his former deputy, Riek Machar, must understand that anything which further exacerbates the existing ethnic tensions, particularly between the Dinka and Nuer, risks the very future of South Sudan and plays into the hands of those who wanted the world’s newest state to fail from the very outset. They should also take careful note of the statement of the special envoys of the European Union, the United States and Norway in which the troika warned them that, if they fail to engage constructively with the IGAD-led talks, “they will face consequences” and that:

“The people of South Sudan expect renewal, they expect their voices to be heard in forging a more sustainable peace. Business as usual is not a viable way forward”.

The suffering of the people of South Sudan is being further compounded by the collateral effects on humanitarian relief and those who work so selflessly to provide it. Since January there have been three fatalities among aid workers, more than 100 were prevented from relocating from Yirol in Lakes state to Juba for safety, and more than 75 humanitarian vehicles have been commandeered or stolen. It is impossible to feel anything but deep admiration for those aid workers still in the field, risking their lives to bring relief and help to the destitute. Surely there is more that we could do to give them practical help and support.

With 3.7 million people now experiencing acute food insecurity and 7 million facing some degree of food insecurity, according to figures provided by the food security and livelihoods cluster, does the Minister agree that if, as the noble Lord, Lord Avebury, has just mentioned, pastoralists and farmers prove unable to move with their livestock or to plant their seeds at the outset of this rainy season, it is becoming increasingly possible that this crisis of food insecurity will freefall into outright famine? I hope that the Minister will update us on the Government’s own assessment. Perhaps she can also tell us whether, with the reallocation of funds from development projects in other parts of the country to emergency food relief, she would concur that this poses a threat to the country’s long-term recovery. Is it the case that the crisis response plan for humanitarian activities until June 2014 is around only 23% funded, with a shortfall of £592 million? How can that gap be filled?

Over these weeks we have seen former allies become enemies, old grievances reignited, and tribalism and factions threatening the cohesion of South Sudan. The failure to address many of these underlying issues and challenges—many of which were well known but ignored in the framing of the 2005 comprehensive peace agreement—has played its part in the genesis of this new eruption of violence. Any political agreement crafted between power brokers and warlords that does not address grievances and fails to reach out to affected communities will be a poor basis on which to build a peace. There needs to be a fundamental shift in the way that politics is practised in South Sudan. It cannot be based on deals between a couple of competing leaders. Sudan’s churches have always had a historic and important role as peacemakers, and groups such as Citizens for Peace and Justice—a coalition of 30 civil society organisations—should be given direct and independent participation at the IGAD negotiating table. They at least, in contrast to some of the political leaders, have had an enduring interest in the humanitarian needs of the people.

As is always the case when violence replaces negotiated political solutions, powerless, vulnerable people, especially women and children, are caught in the cross-fire and are the ones who suffer the most. From December to mid-January, almost 500,000 people were displaced. It is predicted that total displacement may reach more than 900,000 and that 40% of those will be children. The impact is also spreading to neighbouring countries. As we have heard, there are now around 222,000 refugees. As of 12 March, 70,000 South Sudanese had crossed into Ethiopia seeking asylum, with the number expected to reach more than 150,000 by the end of this year. Perhaps the Minister can update us on the Government’s own assessment of the numbers and of those who have been responsible for these events. Is there not an argument for the United Kingdom to have in place a full-time special envoy to Sudan?

We have seen attacks on civilians by government forces, attacks on civilians by opposition forces, ethnic targeting by government forces, and widespread destruction and looting. Perhaps the noble Baroness can tell us what is being done to hold those responsible to account and particularly to tackle the recruitment and arming of children and young people into their militias. Can she also tell us whether she thinks that the commission of inquiry, which has been referred to, is sufficiently well resourced? Will it have unimpeded access to the affected areas? As well as bringing perpetrators to justice, does it have within its terms of reference the creation of mechanisms for settling grievances which might pre-empt future eruptions of violence, while fostering a climate in which reconciliation might occur? Reconciliation is not a soft issue—an add-on which might be nice to have—but a hard-edged security requirement.

Will the Minister say what child protection specialists are in the field and whether we have formally requested the UN Special Representative of the Secretary-General for Children and Armed Conflict to travel to South Sudan and report to the Security Council, so that due weight can be attached to addressing the appalling plight of the children whose lives have been shattered by these events? Perhaps I may also ask whether the British Government will be bankrolling the elections next year. How can we possibly imagine that an accurate census can be taken when 1 million people are displaced? What genuine choices will be able to be made?

As I conclude, I should be grateful if the Government would tell us what intelligence they have on the role and influence of South Sudan’s neighbours in the conflict. The harsh reality is that events in South Sudan have enabled Khartoum to continue its systematic war of attrition against the people of South Kordofan and Blue Nile. The reality is that events in South Sudan have taken the spotlight off the 18 states affected by armed conflict in the north—not least in Darfur, where violence continues unabated and largely unreported.

19:06

[Lord Luce (CB)]

My Lords, the noble Lord, Lord Chidgey, has done a great service in helping us once again to focus attention on South Sudan. I greatly admire the consistent work done by so many noble Lords—above all, my noble friend Lady Cox—who take an interest in Sudan and in South Sudan.

I first went to Juba in 1950, 64 years ago. I was only 14 and I had the privilege of travelling around Equatoria province with my father, who was then an administrator in the south, visiting schools, seeing what life was like and visiting the missions. Later, in the early 1970s, when I became a Member of Parliament, I flew south to Juba from Khartoum with the then Foreign Minister of Sudan to visit the south at a time when President Nimeiry had made a major gesture to the south. He went south and spent Christmas with the Christians. Here was a Muslim President going south to spend Christmas with the Christians. Alas, that gesture and spirit did not last.

I want to make just a few reflections. First, it is right that Britain, having had responsibility for Sudan for 60 years, should, as part of the troika and as part of the international effort, carry on its interest and concern for that country. Indeed, it is a British interest that we should do so; it is a British interest to see stability in east Africa and in South Sudan.

Since independence—we have heard much today about this—there has been at least 30 years of fighting: horrific bloodshed and the longest civil war that Africa has seen. We have heard the figures. Two million were dead and 4 million internally displaced before independence was ever reached. We have heard the figures today on what has happened in the past three months. Earlier, in the 1980s and 1990s, there was serious disagreement within the southern SPLA. There was rivalry for power among the different politicians, creating what today could be described only as a Dante’s Inferno. We have to ask ourselves: what can we, the international community—the east African nations, above all—and the African Union, supported by the international community, do that will help these wretched, poor people?

First, there is the question of survival. We must have, before anything else can happen, a ceasefire, the right amount of humanitarian aid and stability. Then, to my mind, follows reconciliation; the lessons can be learnt from South Africa and other countries. There is an investigation going on led by IGAD, but it is important that civil society, local communities, women and, above all, the church—which is widely respected in the south—should take the major lead in reconciliation. I was very impressed by the visit made to South Sudan by the most reverend Primate the Archbishop of Canterbury in early February, when he talked about the need to plant “a tree of reconciliation”, not trees of bitterness. He said:

“Politics is lived by habit; violent conflict has become the habit of politicians. It’s time to set a new habit”.

The church can play a major role in helping with reconciliation, led by people such as Archbishop Deng Bul and others.

I strongly endorse the comments made by my noble friend Lady Cox, but I think that we should see the area as a whole—not just the states of Jonglei, Upper Nile and Unity but South Kordofan, Abyei and Blue Nile. Then we have to consider security, where we and others have skills to help. There is a dire need to create cohesion among the security forces in South Sudan and to be quite clear as to what the role of UNMISS is, as well as that of the neighbouring states in their military co-operation. Beyond that, there need then to be plans for the longer-term development of South Sudan.

I want to stress two final points, which have been made during this debate. First, only after stability has been created can we begin to recreate the framework for democratic participation, both at a local and a national level, to suit South Sudan’s own traditions, culture and history. I should like to know what the Minister’s view on this is, because you cannot achieve proper democracy of the kind that will suit Sudan without establishing the right values—those of freedom of expression, the rule of law, an independent judiciary, systems of accountability, tolerance and mutual respect. That takes a long time—we all know that.

Secondly, to achieve all these things, somebody has to hold the ring to avoid this unending cycle of violence. My own view is that it would be best to explore the idea of a trusteeship, created by the African Union and IGAD and supported by the UN and the troika. An interim Government could be established, participated in by all willing politicians and, above all, President Kiir, supported by leaders of civic society and the church—women, too, who have a vital role to play—and advised by many international experts.

I do not believe that any of this can be achieved without the basic security and stability of that country. The international community, because it is contributing money, resources, expertise and advice, is entitled to have a strong say in how that stable framework can be devised. For the sake of these wonderful people, the long suffering people of South Sudan, let us help them to have a future.

19:13

[Lord St John of Bletso (CB)]

My Lords, I join those who have thanked the noble Lord, Lord Chidgey, for introducing this debate at a critical time for the future of South Sudan. There is clearly huge frustration at the lack of sustainable progress in the peace talks between the opposing groups in South Sudan. It is also extremely alarming to see human rights violations, particularly those recently in Bor, continuing to be committed on both sides, targeting innocent civilians along ethnic lines and resulting in the massive humanitarian crisis that so many of your Lordships have spoken about this evening.

At a time when so much has been achieved economically and politically in sub-Saharan Africa, it is a tragic state of affairs that the world’s youngest nation, which had such high expectations on achieving independence in 2011, has failed to end the current crisis.

I entirely agree with the recent statement by the head of the United Nations peacekeeping operations in the region, who said:

“The security and humanitarian situation in South Sudan will continue to deteriorate until the parties fully engage in the political talks, respect the cessation of hostilities and allow freedom of movement for the United Nations and its partners”.

Despite the rhetoric of President Salva Kiir and Riek Machar, I question the commitment of both sides to ending this conflict. With the diplomatic initiatives in Ethiopia stalling, there is clearly growing support by several western backers to impose targeted sanctions in an attempt to break the deadlock.

The tragedy for South Sudan is that with its vast oil reserves and untapped additional natural resources, the country has huge potential to attract foreign direct investment. However, with the continued political uncertainty this investment is unlikely to be forthcoming. In the recently published Global Peace Index, South Sudan ranked 143rd out of the 162 countries analysed, making it one of the most risky countries for foreign direct investment. There is growing concern that the unrest within South Sudan could spill over its borders and destabilise the volatile region.

My noble friend Lady Cox’s account of continued genocide attacks in Sudan is extremely concerning. However, while Sudan could have taken advantage of the disarray in South Sudan to strengthen its hand on outstanding disputes between the two countries, President Omar al-Bashir so far appears to have supported IGAD in its efforts to mediate a sustainable settlement. Both the Sudanese and South Sudanese Governments have requested the international community to assist in the debt relief of both countries. This should be another lever by the international community to incentivise a sustainable resolution to the challenges facing the region.

In conclusion, can the Minister outline what is being done to assist with humanitarian relief, particularly more air drops, to those regions with poor infrastructure? I would also like to hear what can be done to include civil society in the protracted negotiations. I entirely agree with my noble friend Lord Luce when he calls for women to have a more vital role in the future of the region.

This is a time for urgent compromise, strong leadership and an inclusive Government if there is any chance of a sustainable future for this fledgling nation.

18:49

[Baroness Morgan of Ely (Lab)]

My Lords, I thank the noble Lord, Lord Chidgey, for his introduction and for securing this debate. South Sudan is in a terrible mess. After gaining independence from Sudan, as the noble Lord, Lord St John, suggested, there were great hopes for South Sudan, the newest nation on earth. The overwhelming support of the South Sudanese for independence has not, however, resolved the problems that have plagued the country. Fighting between government troops and rebel factions has erupted, killing thousands and forcing more than 800,000 to leave their homes. After more than three months of negotiation, the only achievement of the peace process has been a ceasefire that has been repeatedly violated since January.

Last week, the United States special envoy to South Sudan, Donald Booth, issued a warning on behalf of Britain and other international diplomats when he said that,

“there will be consequences for those who obstruct progress”.

However, last Friday we heard that the second round of South Sudan peace talks had been delayed over the issue of who could participate. South Sudan’s Government have made it clear that they do not want to take part in the peace process if a group of former high-ranking political leaders whom they oppose join in the talks as a third party. I hear what noble Lords have said in terms of the undesirability and unsavoury characteristics of some of these people, but one cannot start to negotiate until all the relevant parties are round the table. That is unacceptable behaviour.

Therefore, following the warning prior to the meeting, what are the consequences now? If the international community fails to follow through, we will lose credibility. Will there be, as was threatened by the European Union representative, targeted restrictive measures against individuals who are obstructing the political process? At some point, all groups will need to get back round the table to deal with key issues.

Other noble Lords, including the noble Lord, Lord Sheikh, and the noble Baroness, Lady Cox, have focused on the severe humanitarian crisis in the country. When you read the horrific statistics, you imagine what it must be like, but I cannot imagine some of the suffering that the noble Baroness, Lady Cox, has witnessed over the years.

Efforts will also be need to be made to address two crucial issues. Oil is both a blessing and a curse for the country. Despite the significant resources in oil wealth, there is a desperate scarcity of infrastructure, and instability is holding back the opportunity to exploit oil. Oil production has fallen drastically. Sudan is now dependent on South Sudan for oil, but Sudan has the refineries and the pipeline to the Red Sea. Significant progress will need to be made on the issue of oil between Sudan and South Sudan before peace can be made permanent.

Border disputes in Sudan continue to strain ties. The main row is over the border region of Abyei, where a referendum for residents to decide whether to join South Sudan or Sudan has been delayed over voter eligibility. The conflict is rooted in a dispute over land between farmers of the pro-South Sudan Ngok Dinka people and the cattle-herding Misseriya Arab tribesmen.

Another border conflict zone to which other noble Lords referred is the Nuba mountain region of South Sudan’s Kordofan state, where violence continues between the largely Christian, pro-SPLA Nuba people and the northern government forces. Again, those issues need to be resolved before there is a lasting peace.

There has been a regional escalation to the situation. Uganda, Sudan’s main regional foe, is openly supporting the South Sudan Government in protecting the oil state of Unity. That has created the real fear that Sudan will go on the offensive, with its calls for Uganda to withdraw being ignored and its oil supply being threatened. Ethiopia has largely tried to arbitrate in the conflict. However, reports of Eritrea—Ethiopia’s old rival—becoming involved by funnelling weapons from Sudan to the South Sudanese rebels significantly increase the chances of it becoming involved. There is a real fear that all the old regional scores will be settled in South Sudan. As one Western diplomat observed: “You’ve got Uganda fighting Sudan inside South Sudan, with Eritrea fighting Ethiopia inside South Sudan and a complete law and order vacuum”.

A sustainable solution must include a resolute determination to address the people’s grievances, and the wider community must be involved in the negotiations. I was delighted to see that the Japanese Government have contributed $1 million to ensure that civilian members will be involved in the monitoring and verification mechanisms. It is worth taking note of the point made by the noble Earl, Lord Sandwich, about the need for devolution within the country. There also needs to be an opportunity within the commission of inquiry to enable reconciliation, as suggested by the noble Lord, Lord Chidgey, in addition to identification of the perpetrators of human rights abuses. Can the Minister explain whether and how the Government intend to pursue that with the commission of inquiry?

19:23

[Baroness Warsi]

My Lords, like other noble Lords, I am grateful to my noble friend Lord Chidgey for tabling today’s debate, and to noble Lords for allowing me to adjourn the House for a short period to allow as many speakers as possible to take part. I thank all noble Lords who have taken part for their contributions. I also take this opportunity to commend the continued work of the All-Party Group on Sudan and South Sudan, of which I know that my noble friend is a member, as are other noble Lords here tonight. Their work ensures that parliamentarians of all parties are kept informed as the tragedy in the region continues to unfold and helps to raise awareness of the dire humanitarian situation facing millions.

This House’s continuing interest in both countries is evident from the past six months, in which we have had two debates, three Oral Questions and over 50 Written Parliamentary Questions. Since I updated your Lordships on 7 January, the picture has got no better. Huge efforts by IGAD, the African Union and the UK and its partners were put into getting the two sides to sign a cessation of hostilities agreement, which happened on 23 January. Not only have both sides blatantly disregarded it but they are showing no sense of urgency in political talks. The Government, in particular, have resorted to unacceptable rhetoric against UNMISS.

Through our Ministers and our special envoy we continue to work closely with the IGAD countries, the troika and the EU to try to move entrenched mindsets. We are providing both financial support and technical expertise to the IGAD process. In the Security Council we are making it clear that UNMISS should prioritise the protection of civilians, the facilitation of humanitarian assistance and the investigation of human rights.

The African Union has now established its commission of inquiry into alleged human rights violations. We fully support that commission and look forward to its findings. In the mean time, a report from UNMISS has made clear the depth and scale of human rights atrocities by both sides. These include extrajudicial killings, targeting of civilians, torture, recruitment of children and sexual violence.

My noble friend Lord Chidgey spoke about the commission of inquiry. We recognise the capacity limitations that the African Union faces and are encouraging it to liaise closely with the Office of the High Commissioner for Human Rights and UNMISS, and we welcome the efforts UNMISS, Human Rights Watch and others have already made to report these atrocities.

The noble Baroness, Lady Cox, and other noble Lords referred to the dire humanitarian situation. It is getting worse. More than 900,000 people have been forced from their homes. Around 75,000 are still sheltering in UN compounds in appalling conditions. The UN has declared a level 3 emergency—the highest level of humanitarian crisis. In response to my noble friend Lord Avebury and the noble Lord, Lord Alton, I can confirm that there is a very real risk of famine. We have responded by committing an extra £39.5 million for emergency assistance. This is helping to provide food, shelter, water, sanitation and tents, which afford some privacy to women, girls and young children. We are pressing all sides to ensure that unhindered access is given to humanitarian agencies.

We are, however, reviewing with the UN humanitarian country team and other donors how best to reach displaced populations that are on the move because of the security situation. This was a priority issue for the UN emergency directors’ visit to South Sudan last week, and we expect to announce a further package of support very soon. The UK is currently the second largest contributor, after the US, to the crisis response plan. We are lobbying other donors to contribute more, most recently through the working party on humanitarian aid and food aid in Brussels.

The South Sudanese population deserve better than this from their leaders. Beyond an immediate cessation of hostilities, they need to see a truly inclusive settlement which brings in not only politicians but—as the noble Lord, Lord Luce, said—a full cross-section of civil society, including church groups, women’s representatives and minority groups. Those politicians currently standing trial in Juba must receive a fair and transparent trial. There needs to be a comprehensive national reconciliation process which properly addresses the deep-rooted political and social grievances that existed even before the current conflict. There must be a full inquiry into alleged human rights violations, and proper accountability for those found guilty. Access must be granted for humanitarian agencies needing to deliver and pre-position urgent aid before the rains. Humanitarian assets should be protected, and staff safety guaranteed.

My noble friend Lord Avebury asked about the other challenges to aid, and about what guarantees rebels have given in relation to aid. We have a real problem in relation to looting, commandeering and destruction of humanitarian assets. This is constraining the response and risks fuelling the conflict. The UK and our humanitarian partners are taking measures to reduce the risk of looting of humanitarian supplies during the conflict. We have called on all parties to respect the independence, impartiality and neutrality of humanitarian personnel.

My noble friend Lord Chidgey drew attention in the Question to the role of Sudan, and he expanded on that in his speech. We should recognise the fact that the Government in Khartoum, in their role as a member of IGAD, have chosen to put their full support behind the peace process and are resisting any temptation to intervene militarily. We acknowledge that Sudan has played a constructive role in that capacity. The two Governments have remained on good terms, with President Bashir’s visit to Juba in January being followed by a number of mutual exchanges, including most recently a visit by the South Sudanese Defence Minister to Khartoum last week. Our envoy Tim Morris was in Khartoum last week and held constructive talks with senior government Ministers. The Minister for Africa, Mark Simmonds, also discussed the situation in South Sudan during his visit to Khartoum in mid-January.

As the noble and right reverend Lord, Lord Harries of Pentregarth, said, it is important that all regional leaders play a constructive role in the ongoing discussions and negotiations. However, we should also highlight our deep concern at the turn of events within Sudan in recent weeks, in which the upsurge of violence in Darfur has led to the displacement of about 120,000 people. The Minister for Africa issued a Statement condemning this on 6 March.

The noble Baroness, Lady Morgan, also referred to other regional players such as Uganda. The presence of Ugandan troops in South Sudan is at the invitation of President Kiir. However, we have been clear to all South Sudan’s neighbours that their actions should not contribute in any way to escalating the violence. We welcome Uganda’s stated intention to withdraw its troops once a regional force has been established and we have been in regular contact with the Ugandan Government about this.

My noble friend Lord Chidgey spoke about Abyei and the withdrawal of police forces. We have repeatedly made it clear to both Governments through the UN Security Council and through our embassies that they should comply fully with the Abyei interim agreement of May 2011 and with UN Resolution 2046, including by withdrawing all their forces from Abyei. We have been clear that lack of progress in implementing agreements will only invite further unilateral action, increase tensions and raise the risk of conflict. The noble Baroness, Lady Cox, also asked about our support for Abyei. We are very supportive of the role which the United Nations Interim Security Force for Abyei is playing in trying to keep the peace. Beyond UNISFA, all our support for the people of Abyei goes through UN agencies. I can certainly write to the noble Baroness with a full breakdown of that support.

The noble Lord, Lord St John of Bletso, asked about debt relief. We are committed in principle to seeing debt relief for all heavily indebted poor countries, including Sudan, where we are confident that it will lead to poverty reduction. We continue to make it clear to the Government of Sudan that they will need to meet the requirements of the internationally agreed HIPC initiative before the UK will provide debt relief as part of a multilateral Paris Club agreement. The Minister for Africa, Mark Simmonds, made this position clear to the Sudanese Government when he visited Khartoum in mid-January of this year. The noble Lord also referred to UN targeted sanctions. We have made it clear, as have the EU and the US, that we stand ready to consider targeted measures against individuals obstructing the political process in support of the African Union and the IGAD effort.

My noble friend Lord Chidgey referred to peace talks and civil society, as did the noble Lord, Lord Luce. We welcome the civil society forum, which was held in Addis last week, and its subsequent declaration as an important step towards ensuring that civil society views are heard and properly engaged. My noble friend also asked about the UNMISS mandate, which we believe must reflect the changed environment in South Sudan so that it can focus on protecting civilians, enabling humanitarian assistance and investigating human rights abuses and violations. We are encouraging the UN Security Council to bring forward the renewal of the UNMISS mandate so that it is better able to respond to these priorities. In the medium term this is bound to entail less of a role on state-building, which I think was also referred to during the debate.

The noble Earl, Lord Sandwich, referred to the staffing in the Sudan unit. We have no plans to reduce staffing in that unit. I think that the noble Lord, Lord Alton, also asked about this. We have a UK envoy, Tim Morris, who was appointed in January especially to cover the South Sudan talks. He has been travelling extensively in the region in support of those talks; in fact, I think that he may be there today. A new special representative for Sudan and South Sudan will take a post in the summer.

My noble friend Lord Sheikh asked about what representations the UK had received from the African Union and what support it would like the UK to supply. We have not received a direct request for assistance, for example with the commission of inquiry, but we are encouraging it to work closely with the UN and would be happy to consider any request. We are providing financial and technical support to IGAD—I think around $1million—which is mediating the wider talks.

The noble and right reverend Lord, Lord Harries of Pentregarth, spoke about the attempted coup, as he described it. There are conflicting accounts of the precise circumstances that led to the conflict. We have not seen any evidence of a coup attempt, but we are urging leaders on all sides to restrain their followers and to work actively to prevent the situation deepening divisions along ethnic lines. While there have been deeply disturbing occurrences of ethnically targeted killings, it is clear that the crisis began initially as a political one.

My noble friend Lord Avebury asked about discussions between the UN and IGAD, and the role specifically of the Ugandan forces. Our envoy Tim Morris is, as I said earlier, in Addis Ababa today. He is discussing with IGAD, the troika and the EU envoys, the nature of any popular deterrent force. We believe it is essential that any such force comes under the UNMISS hat, albeit drawing on regional forces. It will be for IGAD countries to agree on whether that should include Ugandan forces.

The noble Lord, Lord Alton, spoke about child soldiers. We are concerned about the number of child soldiers that have been recruited. It is vital that the commission of inquiry looks into this thoroughly during its investigations.

The noble Lord, Lord Luce, spoke about civil society, but I think I have already addressed that earlier.

In conclusion, bringing lasting peace and development to South Sudan is a huge and complex challenge which will require time, patience and unceasing attention from the regional and international community. For the good of the South Sudanese people, who have suffered for far too long, the UK will remain centrally involved for as long as is necessary. I know from the interest in your Lordships’ House that we will continue to keep this matter on an important and priority agenda.

House adjourned at 7.36 pm.