House of Commons

Tuesday 24th June 2014 Commons Chamber

Tuesday 24 June 2014

The House met at half-past Eleven o’clock

Prayers

Tuesday 24th June 2014 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Tuesday 24th June 2014 Commons Chamber

The Chancellor of the Exchequer was asked—

[Mr Mark Harper (Forest of Dean) (Con)]

1. What recent assessment he has made of the effect on the economy of the level of employment.

[Chris White (Warwick and Leamington) (Con)]

12. What recent assessment he has made of the effect on the economy of the level of employment.

[The Chancellor of the Exchequer (Mr George Osborne)]

There are more people in work than ever before, with the latest figures showing the fastest increase in employment since records began. Today we have the very welcome news that Abu Dhabi will be investing £1 billion in building new houses in Manchester. That is a step towards it becoming the northern powerhouse I want to see, and it is a £1 billion vote of confidence in our long-term economic plan.

[Mr Harper]

Between 2003 and 2008 the Labour Government did create jobs, but unfortunately less than 10% of them benefited British citizens. Since this Government have come to power, through our skills, immigration and welfare policies over three-quarters of the 1.4 million new jobs have benefited British citizens. Is that not a long-term economic plan of which to be proud?

[Mr Osborne]

My hon. Friend is absolutely right, and I pay tribute to his contribution in making sure that the jobs that are being created in this recovery are jobs that British people have the skills and incentives to take. It is heartening that three-quarters of these jobs are going to UK citizens, as opposed to the truly staggering record of the last Government, when less than a quarter were taken by British citizens.

[Chris White]

Is my right hon. Friend aware that there has been a 59.5% fall in the number of jobseeker’s allowance claimants in Warwick and Leamington since April 2010? Also, recent figures show that a record number of companies were formed in Leamington Spa in the first quarter of this year. Will the Chancellor pay tribute to the local council, local chambers of trade and commerce and the local businesses that have made this possible, and will he outline what more can be done to further increase support for businesses in increasing employment?

[Mr Osborne]

I certainly pay tribute to the local council and local businesses who have worked with the excellent Member of Parliament, my colleague—[Interruption.] Yes, my hon. Friend has done remarkable work in bringing down the number of people claiming JSA by 60% since this Government came to office, and of course we will go on supporting businesses locally with important infrastructure, with the employment allowance and with awards. As I am sure my hon. Friend will be aware, Dennis Eagle, one of the companies in his constituency, has just been awarded a grant under our advanced manufacturing supply chain initiative, so we are backing manufacturing in the midlands, and backing his constituents all the way.

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

Sixty percent is a very interesting statistic. Does the Chancellor accept that the number of young people unemployed for more than 12 months has risen by 60% since he became Chancellor?

[Mr Osborne]

Youth unemployment is down 100,000 over the last year, and in the hon. Gentleman’s constituency the claimant count is down by 30%. I would have thought he would be welcoming that.

[Jack Dromey (Birmingham, Erdington) (Lab)]

When a proud Kingstanding dad of a newborn baby son tells me he has been on zero-hours contracts for two years and cannot plan from one week to the next, and says “Do them up there”—the Government—“get what life is like down here?”, and when a proud Stockland Green mother caring for her disabled son says, “My husband’s been made redundant twice in the last three years, with each new job less secure and on a lower rate of pay,” and adds, “What planet does the Chancellor live on?”, what does the Chancellor have to say to them?

[Mr Osborne]

I would say that through our long-term economic plan we are creating jobs in the hon. Gentleman’s constituency, with the economic security that that brings. We are legislating to deal with the abuse of zero-hours contracts, which for 13 years the Labour party did nothing about, and we have discovered in the last couple of weeks that the shadow Chancellor, who from the Opposition Dispatch Box has criticised zero-hours contracts again and again, uses them in his own office.

[Mr Andrew Tyrie (Chichester) (Con)]

If economic growth turns out to be higher than currently estimated, as has been the case in several quarters over the past 18 months, does the Chancellor agree that that might provide part of the answer to the so-called productivity puzzle? Has the Treasury done any work on that question, and does he agree with the Governor of the Bank of England that we need to do a lot more to improve Office for National Statistics data?

[Mr Osborne]

I agree with my hon. Friend that one of the big challenges now is to improve productivity, which was clearly impaired by the financial crisis. Obviously, in doing that we need to make sure that the data we receive from our ONS is of the highest quality. People at the ONS work incredibly hard on that, but of course there is always room for improvement, as the Governor of the Bank of England pointed out today, and we will work with the Bank and the ONS to ensure that any improvements that can be made will be made.

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

Is it not the truth that people in employment have seen their living standards fall year on year under this Chancellor? So can he tell us, will working people be better off next year than they were in 2010—yes or no?

[Mr Osborne]

The many thousands of people who are getting jobs in the hon. Lady’s area are better off, and of course—[Interruption.] Let me explain to the shadow Chancellor: if you bring the British economy to its knees, if you have the deepest recession for 100 years, if you preside over the biggest banking crisis in our history, you make this country poorer. But it is by fixing those problems, by working through our long-term economic plan, that we are going to make the country richer again.

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

2. What recent assessment he has made of the level of bank lending to businesses since May 2010.

[The Economic Secretary to the Treasury (Andrea Leadsom)]

The Government have introduced several measures aimed at improving all types of lending to businesses, such as the funding for lending scheme, the British Business Bank and the SME appeals process. Against this backdrop, gross lending to businesses in Q1 2014 was almost 10% higher than in the same quarter a year earlier, and 32% of SMEs that have been through the appeals process have had their initial loan rejection overturned.

[Mr Thomas]

On the Government’s watch, net lending to business is down by some £57 billion since May 2010. Does that not underline the case for further banking reform, for an expansion of the use of community development financial institutions, and for consistent disclosure of bank lending data?

[Andrea Leadsom]

The hon. Gentleman will know that the great recession in 2008-09 that the previous Government presided over left banks in an absolute mess, and it takes a very long time to recover from such a devastating position. The banks are still trying to sort out their balance sheets, and net lending has been down. It will take time to recover, but this Government are putting measures in place to create new access to finance from all sorts of different lenders. I was delighted yesterday to support the credit union movement on its 50th anniversary with a call for evidence on how we can expand that area of activity for.

[Guy Opperman (Hexham) (Con)]

I draw attention to my entry in the Register of Members’ Financial Interests. Does the Minister agree with me that, as well as stabilising and reforming the banking system, one of the key aspects of the long-term economic plan is the creation since 2010 of many new local banks that provide alternative and expanded lending to retail and business customers?

[Andrea Leadsom]

Yes, I absolutely agree with my hon. Friend. The Government want more competition and diversity in the banking sector, which is why we asked the old Financial Services Authority to review the barriers to entry for banks, why we legislated to give the Financial Conduct Authority strong competition powers, and why we created the payment systems regulator to look at fair access to payment systems.

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

In recent discussions with women entrepreneurs I have been struck by the number who have said they were surprised by the banks’ attitude towards them and their businesses. I spoke to one entrepreneur who said that only when she was featured in a TV programme did a bank phone her up and offer her a loan. What discussions has the Chancellor had with banks about women-led businesses, the demand for lending and how many they are lending to?

[Andrea Leadsom]

This Government have taken great steps to improve competition and I am delighted that, currently, the regulator is talking to 25 new applicants for new banks. We are also taking steps to ensure that those who get turned down for credit have the opportunity to go to other challenger banks to access other sources of finance. I am sure that the hon. Lady will welcome the steps that the Financial Secretary to the Treasury, my right hon. Friend the Member for Loughborough (Nicky Morgan), is taking to improve particularly the support the Government are giving to female entrepreneurs.

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

Increasing competition in the sector is key to improving lending. The Minister mentioned that the Prudential Regulation Authority is looking at 25 new applications for licensing to be banks. How does this compare with the decade before 2010?

[Andrea Leadsom]

My hon. Friend may know that in May 2010, when Metro bank was granted a full banking licence, that was the first new full banking licence for over 100 years, so the fact that the regulator is talking to potentially more than 25 new banks is very good news for competition and choice in the UK.

[Sir Richard Ottaway (Croydon South) (Con)]

3. What recent assessment he has made of the potential effect of increasing tax on businesses on public finances.

[The Chancellor of the Exchequer (Mr George Osborne)]

Government analysis has shown that high corporate taxes have a negative impact on investment, jobs and growth, so we have cut the corporation tax rate from 28% to 21%. Next year, it will fall to 20%, the joint lowest rate in the G20. Increasing corporation tax, as some propose, would damage the economy, cost jobs and drive away investment. It is anti-business and we will not do it.

[Sir Richard Ottaway]

I welcome that answer. There is growing evidence that, in a number of sectors where we have cut taxation, revenues are starting to rise. Does my right hon. Friend agree that those proposing increases in taxes are doing so for purely ideological reasons and because they are engaging in the politics of envy?

[Mr Osborne]

Whatever their motivations—I think my right hon. Friend is right—we are absolutely clear about the results. It will put people out of work and ensure that investment does not come to Britain. We are against plans to increase corporation tax. Indeed, I think that most people from around the world would look on in bemusement if Britain were to increase its business taxes, as the Opposition propose. To come to the point, the Treasury and Her Majesty’s Revenue and Customs are now providing more dynamic modelling of the effect of tax cuts on investment and growth, and cuts in corporation tax and fuel duty are shown to have positive impacts on the economy.

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

High profile companies operate schemes that lead to the UK economy losing out, and not benefiting to the fullest extent. Is the Chancellor aware that Google AdWords is de-ranking small firms if they do not stump up substantial funds? It means not only that Google’s profits go up, helped by its tax arrangements, but that the profits of small firms, such as those in my constituency, go down, and the Exchequer is the net loser. Will he please discuss that with his colleague, the Secretary of State for Business, Innovation and Skills?

[Mr Osborne]

I will make a general point, which is that the internet has provided an enormous opportunity for many small businesses, because it has dramatically cut distribution and start-up costs and created all sorts of opportunities that did not previously exist for small businesses in Britain. If we believe in free markets and technological change, we should believe in the innovation that that brings. Specifically on the tax issue, we are working internationally—this cannot be done in one country—to ensure that the international corporate tax system reflects the digital economy and international business of today. We are helping to fund that OECD work, and we are expecting the first conclusions this autumn.

[Mr Marcus Jones (Nuneaton) (Con)]

Employment is up substantially in my constituency of Nuneaton, and unemployment has dropped 20% in the past year. Does my right hon. Friend agree that it would be absolute suicide to increase employers’ national insurance contributions, and can he rule that out as part of our long-term economic plan?

[Mr Osborne]

My hon. Friend has done some fantastic work with local businesses to increase jobs in Nuneaton and to ensure that small businesses expand. He is absolutely right that the Opposition’s plans for an increase in corporation tax, which they talk about openly, and for a jobs tax, which they talk about secretly, would be a double whammy that would put people out of work in his constituency.

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

Is the Chancellor aware that most people do not mind paying tax if it is fair and transparent and if everyone pays their fair whack? When will he ensure that those people who avoid taxation actually pay it?

[Mr Osborne]

We have put a huge effort—I pay tribute to the Exchequer Secretary who has led this work—into ensuring that we collect the taxes that are due. As a result, many billions of pounds more in taxes are collected. We are eliminating abuse that existed before we arrived, such as that involving stamp duty, and we set our tax rates fairly. We do not have a situation, as we did under the previous Government, where people in the City were paying lower tax rates than the people who cleaned for them.

[Steve Baker (Wycombe) (Con)]

4. What steps he is taking to ensure future stability in the housing market.

[The Chancellor of the Exchequer (Mr George Osborne)]

Our economic plan is about stability and security, so we are taking two steps on housing. First, we are building more homes, so that supply better matches demand. The Government’s reforms mean that housing starts are now at a six-year high. Secondly, we have given the Bank of England the responsibility and the tools to deal with any financial risk associated with the housing market, and I am clear that the banks should not hesitate to use those new powers if they think it is necessary to protect financial stability.

[Steve Baker]

On 19 May, The Telegraph reported that house prices jumped £10,000 in five weeks when the Bank of England threatened to cap mortgages. Will my right hon. Friend take steps to ensure that the Bank does not inadvertently promote financial instability when it exercises those powers?

[Mr Osborne]

I do not think that the Bank is doing that. We have taken a big step forward in this Parliament to give the Bank of England macro-prudential tools to intervene in areas such as housing if it thinks that there is a financial risk. Clearly, these things did not exist before, which is one of the reasons why the economy was in the mess that it was in when we came to office. At the Mansion House, I offered the Bank of England new direct powers to impose limits on loan-to-value and loan-to-income ratios. It is, of course, entirely up to the Financial Policy Committee, acting independently of the Government, to deploy any of its tools if it sees risks developing.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

The greatest threat to stability in the housing market is the mismatch between supply and demand. The House knows what the Chancellor has done to stoke up demand, but supply is at its lowest level since records began—fewer than 150,000 units. I heard what the Chancellor said in his initial reply. What more is he going to do to boost supply in the housing market?

[Mr Osborne]

Housing starts are now at their highest since 2007, and we have seen an increase in housing starts and planning permissions this year. I was with the hon. Gentleman in his constituency just the other day, talking about what we could do to get more housing going in his part of London on a brownfield site that he knows has been left derelict for many years. He was working very co-operatively with me then, but perhaps the Chamber of the House of Commons brings out a more adversarial encounter.

[Tim Farron (Westmorland and Lonsdale) (LD)]

My right hon. Friend the Chancellor is right to say that meeting demand with supply is absolutely critical. Given that meeting that demand means 3 million new homes over the next 10 years and that the private sector built only 180,000 houses a year, at best, during the height of the housing boom in the 1990s, does he agree that public investment is needed in social rented housing, in the private sector and in the public sector, if we are to meet the 3 million target?

[Mr Osborne]

I do agree with my hon. Friend. We need to ensure that planning is reformed, and we have done that. It was a controversial decision, but as a Government we have pushed that through, and planning permissions are up. We need to create incentives for the private sector to build homes, and Help to Buy has done that. But we also need to go on building social housing, and as he well knows, the coalition Government are delivering the largest programme of social housing for a generation.

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

Does the Chancellor seriously believe that taxpayers subsidising mortgages on properties worth £600,000 is really leading to stability in the housing market?

[Mr Osborne]

I find it extraordinary that the Labour party is against Help to Buy, which is assisting those who are on low and middle incomes to get into the housing market. The great majority of those homes are outside London and the south-east. Almost none of them has been bought at £500,000 or £600,000, as the hon. Gentleman says, and what we are actually seeing is that the homes that are being built and bought are below the national average. So instead of carping about Help to Buy, Labour should get behind it.

[Mark Garnier (Wyre Forest) (Con)]

A key component of the financial crisis was a debt-fuelled housing bubble. The Governor of the Bank of England confirmed to the Treasury Committee this morning that a failure of regulation and macro-prudential policy was instrumental in that crisis. Is my right hon. Friend confident that the measures that he has introduced, including the new regulatory framework as well as the Financial Policy Committee, will succeed in heading off any future housing bubble-inspired crisis?

[Mr Osborne]

The Bank of England now has very powerful tools to deal with the kind of risks that we saw develop in 2006 and 2007, with such catastrophic consequences for our banking system and for our economy. The new powers that it will receive—subject, of course, to parliamentary approval—on being able to limit loan-to-income ratios and loan-to-value ratios for every mortgage or, indeed, as a percentage of mortgage portfolios, are very powerful tools. It is up to the Bank of England to make independent judgments about when to deploy them, because, as we have learnt with such monetary and macro-prudential policies, it is better that the politicians stay out of it.

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

Under this Chancellor, we have had the lowest level of house building in peacetime since the 1920s. The Financial Times reported a few weeks ago that the Chancellor is “relaxed” about an early rise in interest rates to rein in our unbalanced housing market. Can he tell the House how much a 1% rise in interest rates would add to the average mortgage bill?

[Mr Osborne]

I am not going to comment on interest rates because, as the right hon. Gentleman should remember, the Bank of England is independent, and it is for the Bank to make its judgment. Let me pick him up on what he says about housing. I absolutely believe that we need to build more homes, and housing starts are now more than double what they were in the last year of the Labour Government, in whose Cabinet the right hon. Gentleman sat. If he supported our planning reforms rather than opposed them, if he supported our approach to spending, which has enabled us to pay for the new social housing, and if he backed Help to Buy, he would have a bit more credibility when he stood at the Dispatch Box. As it is, I prefer to listen to the Labour leader’s speechwriter, who said this week:

“I fell out with Ed Balls because Labour’s economic policy is nonsense.”

[Ed Balls]

The Chancellor used to boast that record low mortgage rates were a sign that his policy was working. Now, with the Governor warning of an early rise in interest rates as demand outstrips supply, the Chancellor is desperately trying to claim that higher interest rates would be a sign of success as well. Is not the truth that his failure to get house building moving in the last four years is the reason our housing market is so unbalanced and early interest rate rises are on the cards? As for the question about mortgages, let me answer by quoting the Chancellor, who said in the House of Commons that

“a 1% rise on the average mortgage bill would add £1,000.”—[Official Report, 6 December 2011; Vol. 537, c. 147.]

I can tell him that homeowners up and down the country will not be relaxed about that.

[Mr Osborne]

The shadow Chancellor has got into pretty desperate territory when he says that an exit from exceptionally loose monetary policy, implemented in the middle of a crisis, whenever that comes, is a catastrophe for the British economy. The truth is that under any Bank of England setting, if the right hon. Gentleman was in office, the fiscal policy would be out of control and interest rates would be higher than under this Government.

The Prime Minister and I paid an interesting visit yesterday to the right hon. Gentleman’s constituency, along with the next Conservative MP for Morley and Outwood, Andrea Jenkyns. I will tell him what we found: people who had been unemployed now in work; the number of apprenticeships in the constituency doubled; and the Coca-Cola plant, which we visited, putting more money into Britain. The recovery in Morley and Outwood and the rest of the country is the real thing.

[Dr Julian Huppert (Cambridge) (LD)]

5. What steps he is taking to ensure that people pay the taxes for which they are liable.

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

Since 2010, the Government have been determined to support HMRC in improving overall compliance levels, tackling tax avoidance, evasion and fraud, and punishing those who break the rules. Overall we are investing about £1 billion in HMRC’s compliance activities, and HMRC achieved record levels of compliance revenues last year, securing £23.9 billion.

[Dr Huppert]

It is a huge frustration to people to see wealthy individuals and large companies avoid paying the taxes that they ought to be paying. I thank the Minister for his comments, but will he go further to make sure that our rules are fit for purpose? Will he tackle, for example, transfer pricing, and ensure that there is an international agreement that benefits Britain and means that people pay the correct amount of tax in this country?

[Mr Gauke]

As the Chancellor made clear a moment ago, it is right that we address these issues, and that we do so at an international level. The Organisation for Economic Co-operation and Development’s important work on base erosion and profit shifting is a consequence of the leadership shown by the Prime Minister and the Chancellor, and we hope that we will see the fruits of that progress beginning this autumn.

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

With the amount of uncollected tax rising, the Swiss deal raising less than a third of what the Chancellor predicted and Ministers refusing to close the eurobonds loophole, is not the truth that the Government are totally failing to tackle tax avoidance and to close the tax gap?

[Mr Gauke]

No, it is not the truth. The truth is that there are record levels of compliance yield, as I mentioned: £23.9 billion as a consequence of HMRC’s activity. The UK is leading the way in international reform. There has never been a Government so committed to, nor a revenue authority so successful in, closing loopholes, getting the tax in and making sure that people pay what is required under the law.

[Shabana Mahmood]

While the Minister fails to tackle tax avoidance, overseas buyers are snapping up property in London but not making a proper tax contribution in this country. Is it not time that the Government introduced a fair tax on properties worth more than £2 million, and used the money to cut taxes for 24 million working people, with a lower 10p starting rate of income tax?

[Mr Gauke]

If the hon. Lady wants to cut taxes for 24 million people, she might want to consider increasing a personal allowance to £10,500, which is exactly what the Government have done, rather than doubling the 10p rate of income tax as the previous Government did. As for taxes on property, it was this Government who introduced the annual tax on envelope dwellings, ensuring that there is a contribution to the Revenue from owners and occupiers of properties held in a corporate envelope. Again, I really do not think that on this issue the Labour party has a leg to stand on.

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

6. What recent assessment he has made of the effectiveness of his long-term economic plan.

[The Financial Secretary to the Treasury (Nicky Morgan)]

The Government’s long-term economic plan is working, and the UK is expected to grow faster than any other G7 country this year. Inflation is below target, the deficit has been reduced by more than a third since 2009-10, and employment is at record levels, but the job is not yet done, and the biggest risk now to the recovery would be abandoning the plan that is delivering a brighter economic future.

[Nick de Bois]

Evidence of the Government’s long-term economic plan was on display when the Chancellor visited Enfield to see the Meridian Water site, which is delivering jobs, houses and transport infrastructure. However, under this Government, will the Minister look at the opportunity for revisiting the northern gateway access road, which links the M25 with this vital economic area?

[Nicky Morgan]

My right hon. Friend the Chancellor has said that, yes, he is very happy to look at it. As he said when he visited, infrastructure investment is an important part of our long-term economic plan. I know that my hon. Friend has been working for many years on this scheme. He has built a coalition of partners locally and this is important for the Lee valley. The Government will always look at important infrastructure investment to bring jobs and growth to all parts of our economy.

[Helen Jones (Warrington North) (Lab)]

In my constituency, 20% of people in work earn less than the living wage and others are trapped in part-time jobs and on zero-hours contracts. Why do the Government keep trumpeting a supposed recovery that, for the first time ever, has left more people in poverty in work than out of work?

[Nicky Morgan]

I am sure that the hon. Lady will welcome the fact that there has been a 24% fall in her constituency in the number of young people on jobseeker’s allowance, and the long-term economic plan is for all people. My hon. Friend the Exchequer Secretary has always talked about the rise in the personal allowance, and it is this Government, as we have already heard, who are taking action on zero-hours contracts. The last Government had 13 years to tackle them and failed to do so.

[Mr Philip Hollobone (Kettering) (Con)]

The Minister will know that Kettering is very much middle England at its best. With a 2,500 increase in local jobs since the last election, does that not demonstrate that plan A is most definitely working, and there is absolutely no need for a plan B?

[Nicky Morgan]

I know Kettering very well as I pass it on the Midland main line up to my constituency twice a week. My hon. Friend is absolutely right to say that the increase in jobs shows that the Government’s long-term economic plan is working. As I said, the job is not yet done, there are always risks to our economy, and we need to build a sustainable, strong economic recovery that benefits everyone, including everyone living in Kettering.

[Jonathan Ashworth (Leicester South) (Lab)]

Does the right hon. Lady agree that the Chancellor promised to balance the books, but is going to fail; he promised to deal with debt, but is failing; he promised to maintain triple A ratings, but he failed; and when it comes to the jobs market, as my hon. Friend the Member for Warrington North (Helen Jones) said, it is increasingly characterised by low pay, squeezed wages and zero-hours contracts?

[Nicky Morgan]

My right hon. Friend the Chancellor promised to fix the British economy, which is what we are doing. The hon. Gentleman might remember that the last Chancellor promised to abandon boom and bust, and we know where that got us.

[Kerry McCarthy (Bristol East) (Lab)]

8. What recent assessment he has made of the effect of the Government's policies on its commitments under the Child Poverty Act 2010.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

10. What recent assessment he has made of the level of child poverty.

[The Financial Secretary to the Treasury (Nicky Morgan)]

The Government are committed to our goal of ending child poverty in the UK by 2020. We are determined to tackle the root causes of poverty, not just the symptoms. Our draft child poverty strategy 2014-17 sets out our approaches, based on robust published evidence review. Work remains the best route out of poverty. We are making work pay and tackling low pay through our reforms to the welfare and tax systems. Universal credit, for example, will lift as many as 300,000 children out of poverty.

[Kerry McCarthy]

But this week the largest ever study of poverty in the UK, the Poverty and Social Exclusion project led by the university of Bristol, was published. It found that full-time work is not sufficient to keep families out of poverty and that the majority of children who suffer multiple deprivations live with both parents, at least one of whom is working, in small families, with only one or two siblings. When will the Government accept responsibility for the rising tide of in-work poverty and do something to help people who are trying their hardest but still struggling to get by, including the children who are living in those families?

[Nicky Morgan]

We have set out, as I have already said, a clear commitment by this Government to end child poverty by 2020. The hon. Lady’s question shows that there are a number of root causes of child poverty. Incomes, of course, are a very important part of that. We are working to raise the income of poor children’s families by helping them get into work and making work pay, and she will appreciate the rise in the national minimum wage. We are also raising educational outcomes for poor children, which is equally important.

[Luciana Berger]

But nearly 30% of children in my constituency, Liverpool Wavertree, are living in poverty, and many of those children have parents who are in work. This is the highest level in five years. Is the Minister embarrassed by her Government’s record on child poverty? What exactly is she going to do about it?

[Nicky Morgan]

Five years ago there was a Labour Government in power, and I am sure the hon. Lady will welcome the fact that there has been a 21% fall in jobseeker’s allowance claimants in her constituency. I am sure she will also welcome the rise in the national minimum wage that this Government have overseen.

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

16. One of the key challenges to tackling child poverty in my constituency is the resilience of low income families to sudden financial shocks. The answer, surely, is to improve saving levels. What can the Minister do to improve the opportunities for families to save more?

[Nicky Morgan]

We have seen that the savings ratio has gone up under this Government, but my hon. Friend is right. The causes of poverty are many and various, but the important point is getting people into work. The troubled families programme, which this Government have introduced and overseen, has shown that getting an adult in a workless household into work has a transformative effect, alongside steps such as increasing savings. Getting people into work is the most important thing we can do.

[Charlie Elphicke (Dover) (Con)]

Is the Minister aware that child poverty, wider poverty and inequality rose in the previous Parliament and have been declining so far in this Parliament, as has the number of people who struggle to pay their food bill, according to OECD figures?

[Nicky Morgan]

My hon. Friend is right about the figures. We remain committed to continuing the fall and to eradicating child poverty by 2020. Our draft strategy sets out how we intend to achieve that. Children are three times more likely to be in poverty if they live in a workless household, which is why work remains the best route out of poverty.

[Ian Lucas (Wrexham) (Lab)]

9. What steps he is taking to promote private sector investment in the construction industry.

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

The Government published the Construction 2025 industrial strategy in July last year, setting out a clear vision of how the Government will work with the industry to maximise the opportunities for growth. The Construction Leadership Council, chaired by my right hon. Friend the Business Secretary and Sir David Higgins, is overseeing delivery of that strategy. In addition, efforts to drive improved delivery are being co-ordinated through Infrastructure UK’s cost review programme.

[Ian Lucas]

But Wrexham construction companies continue to tell me that banks fail to offer loans to support house building projects. Non-financial private sector investment has fallen from £43 billion in 2008 to £14 billion in 2013. Is this not just another aspect of the failure of the Chancellor’s short-term economic scam?

[Mr Gauke]

As a Government we are trying to do everything we can to help the construction industry, whether that is through the beneficial effect of Help to Buy, the local infrastructure fund, or the changes to planning. It is worth pointing out that construction output, according to the Office for National Statistics, is 4.6% up from where it was 12 months ago. The purchasing managers index also shows significant increases in construction. We are moving in the right direction.

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

The construction industry has benefited from the business-friendly policies of this Government. Does my hon. Friend agree with my constituent, the former Trade Minister, Lord Digby Jones, when he says that the Leader of the Opposition is the “least business-friendly” leader of any political party in years?

[Mr Speaker]

On the subject of private sector investment in the construction industry, rather than the characteristics of an individual, a brief reply, Minister Gauke. We are grateful.

[Mr Gauke]

If we want to see private sector investment in the infrastructure industry, or anywhere else, we must maintain business confidence. Anti-business policies do not help that.

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

But 2025 is a long way away for a plan. Is the Minister not aware that on this Government’s watch infrastructure output in the whole economy, public and private, is 13% down? Is it not about time they got their finger out and did something about it?

[Mr Gauke]

I am not sure whether the hon. Gentleman is criticising the long-term approach of our economic plan, but it is important that we think about the long term. Infrastructure spending, both private and public, will on average be higher in this Parliament than it was in the previous Parliament.

[Andrew Selous (South West Bedfordshire) (Con)]

Is the Exchequer Secretary aware that a partnership between the Government, Central Bedfordshire council and developers is leading to the construction of 5,200 houses north of Houghton Regis and the provision of a bypass, for which we have waited 60 years, as a result of a £45 million contribution from the developers? Is not that the way to get construction going?

[Mr Gauke]

My hon. Friend is absolutely right. It is as a result of this Government’s long-term approach to the economy that we will see significant increases in infrastructure over the years ahead.

[Nick Smith (Blaenau Gwent) (Lab)]

11. What recent assessment he has made of the difference between the rate of inflation and the rate of growth in average earnings since May 2010.

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

Times have been tough for hard-working people. As Paul Johnson of the Institute for Fiscal Studies said on 6 December:

“There have been very significant falls in real earnings as a direct but delayed result of the 2008 recession, essentially.”

As the Bank of England and the IFS have said, the best way to support living standards is to improve productivity and by sticking to the Government’s long-term plan to build a stronger economy.

[Nick Smith]

Real wages have fallen in Blaenau Gwent, partly due to poor access to labour markets. What progress is being made to speed up rail electrification for the valleys, which would boost earnings? The Chief Secretary said that he would look into the matter six months ago. What has happened?

[Mr Gauke]

There is an agreement with the Welsh Government on that, but as I said a moment ago, this Government have an infrastructure plan. Up and down the country progress is being made to improve our transport infrastructure. That is part of our long-term economic plan. The hon. Gentleman will also be aware that in his constituency the number of jobseeker’s allowance claimants is down 20% over the past year.

[George Freeman (Mid Norfolk) (Con)]

Does the Minister agree that all the evidence suggests that the biggest impact on the rate of earnings is the competitiveness and productivity of industry? Does he also agree that the single biggest threat to increases in average earnings is Labour’s plan for a stealth corporation tax and a jobs tax?

[Mr Gauke]

Absolutely. If we want to see jobs and investment in this country, we should be taxing jobs and investment less, not more.

[Sheila Gilmore (Edinburgh East) (Lab)]

13. What plans he has to review the effects of the Help to Buy scheme.

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

14. What progress his Department has made on the Help to Buy scheme.

[The Economic Secretary to the Treasury (Andrea Leadsom)]

Help to Buy is working. Since the Chancellor announced the scheme in the 2013 Budget, it has supported over 27,000 households on to the housing ladder, and the numbers show that it is helping the right people—but we will be vigilant. The Chancellor has asked the Financial Policy Committee to assess the ongoing impact of the Help to Buy mortgage guarantee scheme annually, and it will make its assessment in September.

[Sheila Gilmore]

I thank the Minister for that reply, but when in five London boroughs, for example, the value of properties sold under the scheme has been over £400,000, have we not reached the point at which we should be reviewing this urgently, because at the same time we are hearing increasing calls for the Financial Policy Committee to look at cooling the housing market? We could be cooling the mortgage market on the one hand and encouraging higher prices through Help to Buy on the other. It does not make sense.

[Andrea Leadsom]

The hon. Lady should be aware that the numbers just do not support what she is saying. In fact, 94% of all completions under Help to Buy are outside London, the average price of a home under the mortgage scheme is around £151,000, which is well below the UK average of £260,000, and only 1.3% of total mortgage lending is under the Help to Buy mortgage scheme.

[Diana Johnson]

The Minister will know that Hull North’s Kingswood area leads the table for the number of houses sold under Help to Buy, but is she aware that Ministers in the Department for Environment, Food and Rural Affairs have repeatedly told me in this House that those houses should not have been built because they are on a floodplain and will not get insurance under the Government’s new insurance scheme? Does one hand of Government know what the other hand is doing, because it does not look like it to me?

[Andrea Leadsom]

The Government know exactly what their policy is on Help to Buy—it is to support first-time buyers and, at the same time, to make a significant contribution to new housing starts. The supply of housing is absolutely essential for people to achieve their dream of getting on the housing ladder.

[Justin Tomlinson (North Swindon) (Con)]

A total of 119 households in my constituency have benefited from Help to Buy, of which 96% are first-time buyers. Will the Minister visit Swindon to meet these people and those in the construction industry who have benefited from this opportunity?

[Andrea Leadsom]

I am grateful to my hon. Friend for that invitation, and yes, I would love to take him up on it. As a new Minister, it would be a very exciting visit for me, so I thank him. The chief executive of Barratt Homes has said that its new housing starts are 20% up on two years ago owing to the Help to Buy scheme.

[Mr Speaker]

The Minister is in such a state of high excitement that we are pleased to see it.

[Jessica Lee (Erewash) (Con)]

Does my hon. Friend agree that Help to Buy is a key component in helping families and first-time buyers take the important step on the property ladder, as evidenced by my right hon. Friend the Prime Minister’s recent visit to Ilkeston in Erewash to see the very successful scheme at Briars Chase?

[Andrea Leadsom]

My hon. Friend, who represents Erewash so well, is absolutely right. Aspiring to one’s first new home is something that we all wish for, for ourselves, our children and our grandchildren. This Government are determined to do something about that while ensuring that we do not do anything that would enable an unsustainable housing boom.

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

15. One of the features of the UK housing market is that millions of houses are inefficient in their use of energy, and even much new housing is not as energy-efficient as it ought to be. The Help to Buy scheme could have been used as a way of providing a massive boost to more energy-efficient UK housing stock, but that opportunity has so far been lost. What will the Government do to remedy this deficiency?

[Andrea Leadsom]

The hon. Gentleman is right that house builders should be seizing the opportunity to make homes as energy-efficient as possible. That does not, however, detract from the very important point that the Help to Buy scheme was started to try to regenerate growth in the housing market, and that is an achievement that all Members should be proud of.

[Tim Loughton (East Worthing and Shoreham) (Con)]

Stamp duty on homes is a major money-spinner for the Treasury, yet it is paid disproportionately by hard-working families in the south-east of England who have to pay at least twice as much for a family home and therefore twice as much stamp duty as they might for a home in the shadow Chancellor’s constituency, for example. Is it not time to consider regional stamp duty rates so as to be fairer to hard-working families?

[Andrea Leadsom]

I accept my hon. Friend’s suggestion as a lobby to my hon. Friend the Exchequer Secretary, to whom I shall chat in due course, no doubt, in the Members’ Tea Room.

[Julian Sturdy (York Outer) (Con)]

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

[The Chancellor of the Exchequer (Mr George Osborne)]

The core purpose of the Treasury is to ensure the stability and prosperity of the economy.

[Julian Sturdy]

As we strive to close the north-south divide and continue to deliver faster growth for the north, what further steps is my right hon. Friend proposing to promote the area as an economic powerhouse to rival London and our global competitors?

[Mr Osborne]

Yesterday I had a very good meeting in Manchester with civic leaders from all parties and with universities from the north of England to discuss how we could improve the transport links across the Pennines and through Yorkshire and Lancashire and ensure that we have strong civic governance as well. Today’s investment by Abu Dhabi in Manchester is a good example of the confidence in the northern economy.

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

The House and the Chancellor should know that the jury has just delivered its verdict and the Government’s former director of communications, Mr Coulson, has been found guilty of conspiracy to hack phones. Does the Chancellor now accept that it was a terrible error of judgment for—

[Mr Speaker]

Order. This may be a matter of great interest, but it does not relate to Treasury questions. [Interruption.] Well, it is not clear to me that it does, and if the question were to be judged to be in order, it would need to be clear by now. [Interruption.] I really think not. I cannot see what the relevance is to the responsibilities of the Chancellor of the Exchequer. The shadow Chancellor can try another sentence and we will see.

[Ed Balls]

Does the Chancellor accept that he has brought the office of the Chancellor and the Treasury into disrepute by urging the Prime Minister, for his own reasons, to bring Mr Coulson into government? Has the Chancellor not damaged his own reputation and that of the Government?

[Mr Osborne]

Obviously the verdict has been announced while we have been doing Treasury questions. I will go away and study it, and of course if a statement is appropriate from me and the Prime Minister, there will be one—not in Treasury questions, when we are talking about the economy. May I say to the right hon. Gentleman that the person who worked alongside Damian McBride is no person to give lectures on anything?

[Mr Philip Hollobone (Kettering) (Con)]

T2. According to the Department for Transport, for Kettering’s sustainable urban extension to be sustainable a new road junction on the A14, junction 10A, costing £39 million, needs to be provided. Despite the best efforts of local people with numerous Departments, this funding has not been forthcoming. Would the Chancellor be kind enough to set up a meeting for local people with the Commercial Secretary to the Treasury so that funding for this vital infrastructure can be secured?

[Mr Osborne]

I am certainly aware of the importance to local people of this project, and I know that my hon. Friend has been speaking to the Department for Transport. I am of course happy to arrange for him to meet the Commercial Secretary, and I know there is also a bid in to the single local growth fund, on which we will be making an announcement in the coming weeks. May I also say that my hon. Friend has been a doughty champion of his constituents and of businesses in his constituency?

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

T3. The rate of employment of disabled people is approximately 30% lower than that of non-disabled people, and 650,000 more disabled people are required to look for work as a result of welfare reforms since 2008. The Chancellor of the Exchequer has spoken of his ambition of achieving full employment. Is he confident that the Government have a strategy sufficient to close this gap, as that will be essential to achieving that goal?

[The Financial Secretary to the Treasury (Nicky Morgan)]

The Department for Work and Pensions, and the Ministers responsible for disabilities and for employment, launched a strategy last December to help those with disabilities to find work. What this Government have not done is what the previous Government did, which was to say to people, “We don’t think that you can work.” We want to empower people to work, and schemes such as Access to Work are all about doing that.

[John Pugh (Southport) (LD)]

T6. May I congratulate the Chancellor on his excellent HS3 proposal? It follows on from an equally visionary plan from the Deputy Prime Minister—in the previous Government. How does the Chancellor’s plan exceed Lord Prescott’s ambition?

[Mr George Osborne]

I am sorry, but when the hon. Gentleman was talking about an excellent Deputy Prime Minister I assumed he was talking about the leader of the Liberal Democrats rather than John Prescott—perhaps the hon. Gentleman was just being ironic about Lord Prescott. Lord Prescott was on the television yesterday boasting that he had set out a plan in 2004, and then someone pointed out that nothing had happened to his plan since. We are talking about improving the links from the Greater Merseyside region across Manchester and Leeds to Hull, and indeed across all parts of the north. High-speed rail is part of this, but it is only part of it: this is also about solving local bottlenecks, such as with the money we are putting into the M62, and about speeding up the commuter trains, which is what the northern hub is all about. This is a coherent plan to back a northern powerhouse.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

T4. Despite the Chancellor’s boasts, the former Tory Chancellor admitted recently that people have “not yet felt any sense of recovery”.Does this Chancellor agree with him, yes or no?

[Mr Osborne]

I agree with the previous Deputy Prime Minister, John Prescott, who said that Labour gets “smashed on the economy”.

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

T8. Many trains now take longer to go from Liverpool to Manchester to Leeds than they did in the 19th century, so I welcome the Chancellor’s comment on HS3, but may I ask him to look particularly at how we can improve wider transport connectivity, not just an HS3 line?

[Mr Osborne]

High-speed connectivity across the Pennines is of course an important component of having the northern powerhouse, but it is also important to improve transport links within Lancashire, to Blackpool and other such places. We are going to be introducing electric trains on some of these lines in Lancashire from December, which will improve the quality of travel as well as the speed. As I said yesterday, when we also put in the franchise for the Northern rail line, we will be seeking to try to get better and more modern carriages, because one of the experiences of people living in the north is a feeling that the carriages are not as good as those in the south of England, and we want to address that in the franchise.

[Dan Jarvis (Barnsley Central) (Lab)]

T5. Next year will mark 100 years since the execution of Edith Cavell, the brave nurse who saved countless lives during world war one. In this important year of remembrance, will the Chancellor join me and the 110,000 people who have signed an online petition and urge the Royal Mint to mark the anniversary by including Edith Cavell on its list of designs for the new £2 coin, so that we can honour all those who served and made sacrifices for our country in different ways a century ago?

[Mr Osborne]

As well as being Chancellor of the Exchequer, I am Master of the Royal Mint. I can therefore address the hon. Gentleman’s question directly. I am certainly aware of the campaign, and I of course honour the bravery and sacrifice of Edith Cavell. There will be a whole series of coins to commemorate the first world war, some of which will be in general circulation and some of which will be for collectors. Like previous Governments, we act on the advice of a Royal Mint advisory committee on these topics, but I will directly take up with it the suggestion of marking Edith Cavell’s sacrifice and make sure that it is honoured in an appropriate way.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

T9. Pembroke refinery, which employs 1,100 people in my constituency, is 50 years old this year. Will the Chancellor assure the operator, Valero, that it has the full support of the UK Government and that the UK is a good place for refining to remain?

[Mr Osborne]

I can absolutely give my hon. Friend and his refinery that assurance. Refineries such as the one at Pembroke play a key role in the UK’s energy security and provide many thousands of skilled jobs across the country. Our energy policy enables companies to know that investment is coming in, and therefore to make investment decisions for the future. I hope that Valero will look at the British economy and see that it is recovering and on the rise, and that that, with activity increasing, will mean more requirements for refining capacity.

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

T7. May I remind the Chancellor that it was actually Daniel Adamson, who envisaged the Manchester ship canal in 1882, who talked about an economic powerhouse of the north from the banks of the Mersey estuary through to the North sea at Hull? That vision’s time has come, but it will take leadership, guts and gravitas locally and nationally, and on both sides of the House, to create a powerhouse that will rival any on the global stage.

[Mr Osborne]

I agree with the hon. Gentleman. One of the refreshing things about the discussions we had yesterday was that they took place on a genuinely cross-party basis. The Labour mayor of Liverpool, Joe Anderson, came to the speech I gave and met me and the Prime Minister to talk about what we could do, as did the civic leaders in Manchester. We are working across the political parties, as northern MPs, to bring this about, and of course the ship canal could be part of the exciting Atlantic gateway project, which would create regeneration and jobs along the course of that incredible waterway.

[Neil Carmichael (Stroud) (Con)]

T10. With manufacturing growing at an impressive rate, as I saw on my recent visit to ABB in my constituency, what steps is the Chancellor taking to ensure that manufacturing growth remains sustainable?

[Mr Osborne]

We are taking steps to reduce business taxes, when others would put them up. We are also taking steps to ensure that energy costs for manufacturers are lower; we set out a package in the Budget. Above all, we are creating a country in which people want to invest and create jobs because they have confidence in our long-term economic plan.

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

The number of tax compliance inspections of companies by Her Majesty’s Revenue and Customs is falling, rather than rising. Why is that the case?

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

HMRC is increasingly successful in bringing in its yield. It has to develop the most effective ways of working, and if it can find more efficient ways of doing so, that is fine. The important point is that HMRC is bringing in more money than it has ever done before.

[Angie Bray (Ealing Central and Acton) (Con)]

The Chancellor of the Exchequer will recall that we met a group of McDonald’s apprentices and an Ealing McDonald’s franchise owner, Atul Pathak, last week to celebrate the announcement by McDonald’s of 8,000 new apprenticeships across the UK. Does my right hon. Friend agree that the Government’s initiative on supporting apprenticeships has been one of our great success stories—good for the economy and good for youth unemployment?

[Mr Osborne]

We had a fantastic meeting with McDonald’s employees, at which my hon. Friend was present, and it was heartening to hear about their confidence in their economic future. It is remarkable that we have had an hour of Treasury questions, during which we have discussed youth unemployment, and there were Department for Work and Pensions questions yesterday, but not a single Labour MP has mentioned the welfare plan that their leader published last week. That shows why the Labour economic policy lacks credibility even with Labour MPs and why the Labour leadership is in crisis.

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

Unemployment is bringing despair to a generation of young people in Northern Ireland, where nearly one in four young people are unemployed and have to seek their prospects elsewhere. Has the Chancellor had any discussions with the Secretary of State for Northern Ireland? If so, what plans are in place to address this particular issue, as youth unemployment poses a risk to peace and the political process?

[Mr Osborne]

I certainly have regular discussions with the Secretary of State for Northern Ireland, who is very focused on Northern Ireland’s economic development. Of course, I also meet the Northern Ireland Executive. We have plans to increase investment through the enterprise zone, and I commend the work of people across Northern Ireland to bring new businesses to Northern Ireland. We have more work to do on fixing the banking system in Northern Ireland, which remains impaired by what happened a couple of years ago, but I assure the hon. Lady that we will work together to deliver an economic recovery of real strength in Northern Ireland.

[Mr Simon Burns (Chelmsford) (Con)]

Does my right hon. Friend accept that, as a result of the long-term economic plan, unemployment in Chelmsford over the past 12 months has fallen by just over 30% and, equally important, youth unemployment has fallen by just over 36%? Does he accept that any Opposition Member who thinks we should abandon that plan is a believer in voodoo economics?

[Mr Osborne]

I would suggest that it is not clear what Labour’s economic policy is. The shadow Chancellor wants to tax, borrow and spend more, but he is keeping his head down because he can see the car crash—he has experience of those—looming with the Labour leader, while the Labour leader is talking about prices and incomes policies and an anti-business agenda. It is totally muddled and means that if Labour ever got the chance again, it would put Britain back into crisis.

[Clive Efford (Eltham) (Lab)]

The Chancellor talks about credibility in economic policy, yet he consistently sets his face against having his economic policies, along with those of the other major parties—certainly those that would take part in television debates before the next general election—put before the Office for Budget Responsibility so that the electorate can understand what parties are saying about economic policy and be better informed when they vote.

[Mr Osborne]

As Robert Chote has set out, there would be very serious implications if the OBR, a new institution which, of course, the Labour party did not support when in government—[Interruption.] I remember proposing it time and again as shadow Chancellor and hearing Ministers say at this Dispatch Box that it was not a good idea. The proposal would make big changes to the role of the civil service as well as that of the OBR. Robert Chote is right to say that, while we can consider it in the next Parliament:

“To embark on this exercise in a rush, or with insufficient resources, could be…very damaging to the OBR.”

[Mr Speaker]

Very briefly, Greg Mulholland.

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

It is very welcome that the Government are introducing a statutory code of conduct for pub companies, but it lacks the all-important market rent only option. There is concern about the direct lobbying of the Treasury by the British Beer and Pub Association and the pub companies. When will the Treasury accept the freedom of information request from the all-party save the pub group?

[Mr Speaker]

Put the long version in the Library.

[Mr Osborne]

I am happy to look into the freedom of information request, but we have been working very closely with the Business Secretary on these proposals, and I would hope that the hon. Gentleman would welcome the legislation we are introducing to make sure that local pubs and publicans get a good deal.

[Mr Speaker]

Last but not least, Lucy Powell.

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

May I take this opportunity to welcome today’s announcement of the partnership between Manchester city council and the Abu Dhabi United Group to build 6,000 new homes in my constituency? Does the Chancellor agree that that shows that when we give freedoms, powers and budgets to good local authorities, they can increase housing supply in their areas and build the economy locally?

[Mr Osborne]

I certainly join the hon. Lady in commending the work that Manchester city council has done. One of the things I talked about yesterday was what we can do to make sure that cities such as Greater Manchester have more powers, perhaps through elected mayors. We should also pay tribute to Lord Deighton, who is in Abu Dhabi at the moment, for negotiating that deal. There was a good partnership between the city council and the Treasury, and it is fantastic news that Abu Dhabi United Group is making that big investment in the UK.

[Ed Balls]

On a point of order, Mr Speaker.

[Mr Speaker]

I apologise to the right hon. Gentleman, but points of order come after urgent questions and statements. [Interruption.] Well, that is the procedure, but I am always agog to hear the right hon. Gentleman. He can toddle back after the UQ and the statement, and I will be in the Chair to hear him. [Interruption.] I cannot have a conversation as we go along; we must have the urgent question.

Patient Safety

Tuesday 24th June 2014 Commons Chamber

12:35

[Andy Burnham (Leigh) (Lab)]

(Urgent Question): To ask the Secretary of State for Health if he will make a statement on his announcement on patient safety.

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

Mr Speaker, I would like to make a statement to the House about a package of measures that I have announced today to boost safety, transparency and openness in our NHS. It follows my earlier written ministerial statement.

Just last week, the independent Commonwealth Fund said that under this Government the NHS has risen to be the top-rated health care system in the world. Despite many challenges in our NHS, it is therefore clear that we have much to be proud of. However, it is also clear that there is more to do. It is estimated that for 12,000 deaths a year in hospitals there was a 50% or greater chance of their being prevented. Figures released by NHS England today tell us that there were 32 never events in the past two months, including cases of a throat pack and a hypodermic needle being left inside patients post-surgery. These are shocking statistics.

In the Government’s response to Sir Robert Francis’s landmark public inquiry on the poor standards of care at Mid Staffordshire NHS Foundation Trust, I made clear our determination to make the NHS the safest and most open health care system in the world. Today, all hospital trusts around the country will therefore receive an invitation to the Sign up to Safety campaign, which is led by Sir David Dalton, the inspirational chief executive of Salford Royal. The campaign will help us to achieve our ambition of halving avoidable harm, thereby potentially saving 6,000 lives. Trusts will be asked to devise and deliver a safety plan, and may receive a financial incentive from the NHS Litigation Authority to support implementation.

We are fulfilling the pledge that we made in our response to Francis to create a hospital safety website for patients. As of today, the NHS Choices website will tell us how all hospital trusts are performing across a range of seven key safety indicators, including one for open and honest reporting. For the first time, the website will let patients and the public see whether a hospital has achieved its planned levels for nursing hours. Indeed, I am pleased to inform the House that the latest work force statistics, published today, show us that we have 5,900 more nurses in our hospital wards since our response to Francis just over a year ago.

Finally, I am pleased to announce today that Sir Robert Francis QC will chair an independent review on creating an open and honest reporting culture in the NHS. The review will provide advice and recommendations to ensure that NHS workers can speak up without fear of retribution. It will also look at how we can ensure that where NHS whistleblowers have been mistreated, there are appropriate remedies for staff and there is accountability for those who have mistreated them.

I am confident that the package of measures announced today will shine a light on poor care so that lessons can be learned, action can be taken and harm to patients can be prevented. In the process, we will support front-line staff to help the best health care system in the world blaze a trail on issues of safety, transparency and compassionate care.

[Andy Burnham]

The Health Secretary rightly calls for openness, transparency and accountability. It is a pity that that does not extend to his dealings with this House. He spent the morning touring TV studios, but could not find the time to come to the Chamber. Is that because he has signed away day-to-day control of the NHS, as his public health Minister—the Under-Secretary of State for Health, the hon. Member for Battersea (Jane Ellison)—let slip, or is it because he did not want to face questions on the damning criticism of him from the outgoing president of the Royal College of Psychiatrists, who says that he is ignoring the “car crash” in mental health? Either way, it should not be left to us to drag the Secretary of State to the House.

An open, learning culture in all parts of the NHS is an ambition shared across this House and it builds on the work of the last Government following care scandals in the 1990s. More information is welcome, but how will the Secretary of State guard against the risk, as expressed this morning by Martin Bromiley, of creating a “naming, shaming and blaming” culture? He has just told the House that a fifth of hospitals are failing to report properly. Why is that and how will he correct it?

The Secretary of State mentions the Commonwealth Fund and I join him in celebrating the standing of the NHS. He implies that it has all been achieved in the past four years. That is pure spin. I remind him that the NHS first came top in 2007 and that this year’s report specifically traces the NHS’s recent success to reforms implemented by the last Labour Government and to the Darzi report, which it says led to

“an increased emphasis on improving the quality of care provided by the NHS.”

Perhaps the Secretary of State will reflect that analysis in any future statement on the previous Government’s record.

The Secretary of State promises new data on infection—one area where the Commonwealth Fund found cause for concern compared with 2010, with the NHS now ranked worst in the world for patients reporting infection in hospital or shortly after. What is he doing to turn that worrying trend around? On staffing, will he commit to publishing figures on how many of the nurses he mentioned are agency nurses? Is the NHS not now spending a fortune on agency staff—£1.4 billion, 162% higher than planned—because, in the first four years of this Parliament, the Government and the then Secretary of State, who is now the Leader of the House and sitting on the Front Bench, cut nurse training places by 10,000?

The Secretary of State talks about his new target to save 6,000 lives over three years. Can he explain how that will be achieved when people are now waiting longer to start treatment for cancer, when NHS waiting lists have hit a six-year high and when ambulance response times are getting longer? Is not that the real reason he was afraid to come here today? The NHS is getting worse on his watch and the Government have surrendered their power to do anything about it.

[Mr Hunt]

We talk about many things and there will always be political differences between Opposition and Government Members, but I would have thought that on patient safety, on saving patients’ lives, on dealing with the issue that once a week in the NHS we operate on the wrong part of someone’s body and on other terrible issues, there might be a degree of consensus. It is incredibly disappointing that, again, the right hon. Gentleman has chosen to make a political football out of something that should be above party politics.

Let me go through the right hon. Gentleman’s points. This morning in the radio studios, I talked about fulfilling a pledge that I made to the House in my response to Francis—that we would publish staffing data, something that he never did when he was in power. We have done that for 6,700 wards throughout the country, because we want to end the scandal of short staffing that happened on his watch and directly led to Mid Staffs.

I am delighted to come to the House. I have made a written ministerial statement. I often come to the House and I am delighted that the right hon. Gentleman has raised this issue. As he has raised some specific points, I need to address them. He quoted what the outgoing president of the Royal College of Psychiatrists said, but he failed to mention what the incoming president said this morning, which was to praise the remarkable work done by this Secretary of State and his Ministers to raise the issue of mental health.

The right hon. Gentleman talked about the Commonwealth Fund. Let us look at that. When he was Secretary of State, we fell from being top-rated in the world to being second. We are now back on top. He has spent the past four years saying that under the coalition Government the NHS is going to rack and ruin. Someone who is independent has now looked at it and said that we are the best in the world. The right hon. Gentleman should reflect on that before he starts to criticise and run down the NHS.

Let us talk about agency nurses. I am very proud of the fact that, in just over a year, we have 5,900 more nurses on our wards. That is an increase of 4,000 nurses across the system compared with when Labour was in power. Why is that? It is because we are doing something about the issue of safety and compassionate care—issues that the right hon. Gentleman repeatedly swept under the carpet when he was Health Secretary.

Finally, let me make this point. We are doing something that is a world first today: we are publishing staffing data on a hospital-by-hospital, ward-by-ward basis. Yes, we are also publishing which hospitals do not have an open and transparent reporting culture. Creating transparency about failures has, I am afraid, become one of the biggest dividing lines in this House. I think it is a very great shame that every time I raise the issue of poor care in the NHS, the right hon. Gentleman accuses me of running down the NHS and softening it up for privatisation, when what I am actually doing is standing up for patients, which is what he should have done when he was Health Secretary.

[Dr Sarah Wollaston (Totnes) (Con)]

I welcome today’s announcements. Unsafe care in the NHS carries not only a terrible personal cost, but a terrible financial cost—£1.3 billion a year in litigation alone—and I welcome the announcement of Sir Robert Francis’s review. Will the Secretary of State use this opportunity to reassure NHS staff that they do not need to wait for the outcome of that review, and that if they raise concerns about unsafe practice, not only will they be protected, but they would be failing their patients if they failed to do so?

[Mr Hunt]

I start by welcoming my hon. Friend to her new position as Chair of the Health Select Committee, which I think she will do brilliantly well. I also thank her for the fact that she had been talking about this issue long before she took up that post, and as someone who has worked in the NHS, she has always recognised its importance.

My hon. Friend is absolutely right to say that NHS staff should not wait until the outcome of the new Francis review before speaking out. My view is that the atmosphere is beginning to change inside the NHS. We are getting trust boards that are now spending much more time talking with safety, but the reason I wanted to have this review is that there are problems and issues across the world with people in health care speaking out, and nowhere has really embraced the culture of safety that we have in the airline, nuclear and oil industries, where concerns about safety are on a completely different level. I know that I have the wholehearted support of NHS staff in this mission; I think it is a shame that we do not have the support of the Labour party.

[Kevin Barron (Rother Valley) (Lab)]

In response to the Francis report in relation to the duty of candour, the Government said that it should be on institutions and not on individuals. Given that the Government appear not to want to bring in new regulatory bodies in relation to individual action inside the national health service, does the Secretary of State have any faith in the regulatory bodies currently looking after health professionals, given the state that Mid Staffs hospital ended up in?

[Mr Hunt]

We looked carefully at whether the duty of candour should apply to individuals, and we decided against that because we were worried about creating a legalistic culture in trusts. However, we are working with the regulatory bodies. The right hon. Gentleman is absolutely right to raise concerns, as they were indeed raised in the Francis report. Following on from my earlier response, one of the lessons that we learned from the airline industry is that pilots are professionally protected if they speak out, so on balance it is to their advantage to speak out rather than to shut up. As a result of that reporting of safety incidents, near misses and so on, the industry has achieved a remarkable reduction in accidents. I would like to see whether we can do the same thing in the NHS.

[Angie Bray (Ealing Central and Acton) (Con)]

One of my constituents spoke out against malpractice at the hospital where she worked and was subsequently vindicated at a tribunal, but she lost her job and has been unable to find work in the national health service ever since. Is it not time that we put an end to some kind of blacklist that stops people being re-employed when they have done the right thing?

[Mr Hunt]

I would like to thank my hon. Friend for the support that she has given to her constituent, whom I think I have also met. My hon. Friend is absolutely right: we have to stop this system of consequences for people who do the right thing and speak out. It is not right for me to comment on an individual case, because legal proceedings are often involved, but one hears of situations where people have spoken out and then been victimised by a trust, and that is wrong. We need to be better at looking after whistleblowers, but we need to go further and eliminate the need for whistleblowing by creating a culture where trusts are hungry to hear from their own staff about safety concerns because they want to put them right.

[Mr Ben Bradshaw (Exeter) (Lab)]

An Exeter psychiatric nurse of more than 20 years’ standing wrote to me in despair this week saying that

“mental health services are in collapse”,

and that patients are regularly placed in “life threatening” situations or sent as far away as Bradford because there are no beds locally. Vulnerable people are waiting a shocking three months for the co-ordination of their care. How dare the Secretary of State come to the House today and claim that our mental health services are not in crisis?

[Mr Hunt]

There are real pressures in our mental health services, but the right hon. Gentleman should recognise the progress that the Government have made. That includes doubling the money going into talking therapies, having global summits on dementia and putting a massive amount of money towards raising the profile of dementia in this country and across the globe, and legislating for parity of esteem as between mental and physical health—something that never happened under the previous Government. There is a lot of work to do, but I think he should give credit where it is due.

[David Morris (Morecambe and Lunesdale) (Con)]

On transparency of staffing levels, does my right hon. Friend know that the University Hospitals of Morecambe Bay NHS Health Trust vacancy level for nurses is now 4%, against a regional average of 10%? That is obviously an increase in nurses in my area, and I thank him for that.

[Mr Hunt]

I welcome the increase in nursing across the country, and I am surprised that Labour Members do not welcome it. When I started in this job they spoke constantly about nursing numbers, but I notice they have now stopped doing that. Although those numbers are an important first step, it is not possible to compare trust with trust at this stage because they are all self-reported numbers. Over the next months—certainly by next spring—we will go through all the figures ensuring that NICE-approved tools are used to fulfil them. We will then see how trusts are doing compared with each other, which will be useful to them.

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

As a member of the Health Committee, I am disappointed that the Secretary of State does not understand that being dragged to the House to answer an urgent question is not the same as coming here to make a statement. I would prefer to hear first in this House what the Government are doing.

The Secretary of State mentions the leadership of David Dalton and Salford Royal NHS Foundation Trust, but that leadership led to safe staffing levels, which he has not supported. A recent Nursing Times survey found that the majority of nurses said that their wards were dangerously understaffed. I hear from nurses who are working with ratios of 2:22, 2:24 or 2:28—that is the reality. Does he think it is time he apologised for cutting the number of nurses?

[Mr Hunt]

Again, I am surprised that we do not have more agreement. If the hon. Lady looks at the figures, she will see that in the past year there have been 5,900 more nurses on our wards. Why does she not welcome that? We are using Salford Royal—a brilliant hospital that she knows well—to lead a safety campaign across the whole country to learn from the brilliant things that it is doing. I put a written statement before Parliament, and nothing I said this morning is not in the public domain. I would be delighted to come to the House any time to make an oral statement, and I notice that far more coalition MPs want to ask questions about safety and compassionate care than do Labour MPs.

[Steve Baker (Wycombe) (Con)]

My right hon. Friend will remember some of the issues that I raised in the House about patient safety, and the Francis report, the Keogh review, and the new Care Quality Commission regime have made a material improvement. On Friday last week, Buckingham Healthcare NHS Trust was the second trust to emerge—at last—from special measures. Will the Secretary of State join me in congratulating that trust, and express the hope that that marks a new beginning about which we can be optimistic?

[Mr Hunt]

I would be delighted to do that. Incredible hard work by doctors, nurses and health care assistants on the front line of my hon. Friend’s local hospital has meant that the trust has come out of special measures, which the whole House should celebrate. Indeed, it was helped in that by Salford Royal, and one of the most encouraging things about the new special measures regime is that we are pairing up hospitals in difficulty with other hospitals that have a better record, and we are getting tremendous results.

[Derek Twigg (Halton) (Lab)]

Clinical commissioning groups commission services in hospitals. What discussions has the Secretary of State had with CCGs to ensure that when they commission services they particularly look to ensure transparency and that patient safety is the highest priority in their discussions?

[Mr Hunt]

We have a lot of discussions, and the hon. Gentleman is right: the commissioning of care is vital and we need CCGs to play their part. We have many discussions with NHS England about how to do that, and we will be considering how we can make CCGs more publicly accountable for their record in those areas.

[Sir Tony Baldry (Banbury) (Con)]

Oxford University Hospitals NHS Trust has managed to make multi-million pound recurring savings over the past couple of years and is now in the black. At the same time it has managed to create 400 new jobs in the trust, almost all of which are new doctors and nurses. Does that not demonstrate that it is possible for the NHS both to meet the Nicholson challenge, and to recruit more doctors and nurses to improve and enhance patient safety?

[Mr Hunt]

It certainly does, and that is another area where it would be refreshing to have a bit more openness from the Labour party. We can afford 8,000 more doctors and 4,000 more nurses in our NHS than when Labour was in power because we got rid of primary care trusts and strategic health authorities, and 20,000 administrative jobs that were not on the front line—a change that Labour opposed bitterly every step of the way. Labour Members must say what would happen to those doctors and nurses if we repealed the Health and Social Care Act 2012, as they have publicly committed to do.

[Jenny Chapman (Darlington) (Lab)]

If the Secretary of States wants some kind of TripAdvisor-style scheme for the NHS that is fine; it may improve safety and it may help patient choice. However, a woman who has fallen to the bottom of her stairs and is waiting hours for an ambulance does not have a choice. That is happening now and it was not happening five or six years ago. What is he going to do about that?

[Mr Hunt]

First, I will ensure that throughout the system when we have failures in care we are completely transparent about them and do not seek to brush them under the carpet. That is a very important change. Secondly, yes there is pressure on ambulance services, just as there is pressure in most parts of the NHS now, but under this Government our ambulance service is taking 1,000 more people every day on emergency journeys. We should credit it with doing a very good job in difficult circumstances.

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

I commend my right hon. Friend for being determined to create a different and more effective safety culture in the NHS, just as in the airline or oil and gas industries. Does he accept that publishing more data is only part of the equation and will not necessarily change attitudes and behaviours, particularly if those data are then gamed at another target? We must tackle attitudes and behaviours at source—in the operating theatre, the GP’s surgery and throughout the whole service—to get that better safety culture.

[Mr Hunt]

As ever, my hon. Friend speaks wisely. The first step is to be open and transparent about where the problems are, and I hope today will be a step in that direction. In the end, however, if we are to change things we must create a learning culture in all our hospitals so that the word goes out from the top down that the management is interested in hearing from staff if they have concerns about safety, because it wants to learn from those concerns and put them right. One of the messages I have been trying to get across is that that does not cost money; it saves money. We spend £1.3 billion a year on litigation and £800 million on adverse events. If we are feeling, as everyone is, a tough climate financially, this is a positive thing to do for that reason as well.

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

The House will be aware that the Health Secretary has refused to comply with the Information Commissioner’s ruling to publish the risk register for NHS reorganisation. Will he at least say whether that risk register warned the Government specifically that such reorganisation would hit A and E services?

[Mr Hunt]

That risk register is in the public domain, but I defend the right of my officials to give confidential advice to Ministers as that is an important part of government. I want my officials to be open and transparent with me if they think I am about to do the wrong thing, and all Ministers need a protected area where they can get frank advice. The hon. Gentleman is one of my constituents, so he will be pleased to know that the Royal Surrey county hospital in Guilford is embracing the safety campaign with vigour and completely renewing the way its wards are organised to improve patient care and safety.

[Mr David Ruffley (Bury St Edmunds) (Con)]

I commend the Secretary of State for these practical and sensible reforms on patient safety, and I look forward to discussing them with staff at West Suffolk hospital—the biggest district general hospital in my area. Does he agree that the sensible and deliverable transparency reforms will ensure that the conspiracy of silence that we saw tragically in Mid Staffs is not repeated on his watch?

[Mr Hunt]

I am absolutely determined to make that the case. The biggest example—a number of them have been raised today—is the issue of hospitals put in special measures. Over the last year, we have put more than 10% of NHS acute trusts into special measures. That was a very difficult decision and was not welcomed at the time. The result, I am pleased to say, is that we are seeing real and significant change in all those hospitals. I hope as many of them as possible will get out of special measures quickly, but we can achieve that change only if we are honest about the problem in the first place.

[Julie Hilling (Bolton West) (Lab)]

Bolton hospital is having to go abroad to recruit qualified nurses this summer because there are no British-trained nurses available. Will the Secretary of State now take responsibility for cutting nurse training places by 10,000 since the last election and accept that the lack of qualified nurses is just making the problem of safety worse?

[Mr Hunt]

What I will take responsibility for is agreeing to a public inquiry into what happened at Mid Staffs—something rejected by the Labour party—that has woken up the whole NHS to the need for safe staffing in all our wards. We are implementing the report and that will indeed be reflected in the nurse training numbers going forward.

[Jackie Doyle-Price (Thurrock) (Con)]

Basildon and Thurrock hospital was the first to exit the special measures regime after a number of years of failure. It did so because the leadership embraced what happened, was willing to learn the lessons from what went wrong and went out of its way to fix them. Far from being a naming, shaming and blaming culture, is it not the truth that my right hon. Friend is strengthening the culture of accountability in the NHS, which is as it should be?

[Mr Hunt]

Yes, and I would like to thank my hon. Friend for her superb work in supporting Basildon and Thurrock hospital through a very difficult period. I think that the chief executive there, Clare Panniker, is an exemplary one. She wrote an article in The Guardian pointing out that it is incredibly painful for trusts when they go into special measures, that it causes a lot of pressure in the local media, but that it also means that change can be made much more quickly when an urgency to solve these problems, many of which have been around for years and years, is created. I commend the staff of that hospital not just for coming out of special measures but for being rated “good” by the chief inspector of hospitals—a fantastic achievement.

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

Never mind the fact that this Government will not publish the risk register for a £3 billion top-down reorganisation; the Secretary of State and his Ministers will not meet me. If he wants to talk about accountability, why will he and his Ministers not meet me to talk about a minor injury unit in Guisborough being closed, a minor injuries unit in Brotton hospital being closed, a GP centre in Park End being closed and a walk-in and GP centre in Skelton being closed? All those units are in my constituency and they are all being closed, yet the Secretary of State and his Ministers will not meet me, which would represent genuine accountability.

[Mr Hunt]

Let me say to the hon. Gentleman that the accountability he talks about is precisely demonstrated by his ability to ask me questions right now as he has just done. He needs to be accountable and come clean with the House by saying that he has actually met my Ministers on a number of occasions on precisely the issues that he raised.

[Several hon. Members]

rose—

[Mr Speaker]

Order. For the benefit of the public—it is important that they find our proceedings intelligible—I should say that these exchanges are taking place because an urgent question was submitted and because I granted it. That is the beginning and the end of the matter.

[George Freeman (Mid Norfolk) (Con)]

After the shocking events at Mid Staffs under the last Government, I would like to congratulate the Secretary of State on his crusade for accountability and transparency as the best disinfectant, as shown by his support for whistleblowers and for 4,000 additional nurses. Does he agree that the collection, monitoring and day-to-day use of data on health outcomes is absolutely key? I welcome his Minister’s support for measures in my ten-minute rule Bill, now adopted and sponsored by me and my hon. Friend the Member for Stafford (Jeremy Lefroy).

[Mr Hunt]

I am happy to do that, and I would particularly like to congratulate my hon. Friend on the insight he has brought with regard to the power of data. In one example of why this is so important, the latest figures showed 43 or 44 people dying in the NHS because of medication errors, but if the person giving the medication had been able to see the patient’s entire prescription history, those horrific tragedies might have been avoided. That is why proper sharing of data is so important.

[Mr Andy Slaughter (Hammersmith) (Lab)]

I want to ask about the safety of the 22,000 patients who use Hammersmith hospital A and E every year. There is no increased capacity in the acute primary or community care services locally, which the Secretary of State set as a prerequisite for any A and E closures in west London. Will he ask Imperial Healthcare Trust to review plans to close the A and E at Hammersmith on 10 September? Will he answer that question, as my constituents in Shepherd’s Bush and White City deserve an answer to it, not the spin and the game playing that I always get from the Secretary of State?

[Mr Hunt]

I am afraid I will take no lessons in spin and game playing after what the hon. Gentleman wrote in local election leaflets in Hammersmith and Fulham, failing to tell his own constituents about the brand new hospitals, the opening of a seven-day GP surgery and the 800 out-of-hospital professionals. I think he behaved absolutely disgracefully.

[Charlotte Leslie (Bristol North West) (Con)]

I very much welcome the Francis review into whistleblowing, which does indeed focus on transparency, and I am bemused and depressed that we cannot get universal welcome for it across the House. In addressing the name, shame and blame argument, does my right hon. Friend recognise that many front-line staff will be relieved at what he has announced because it will force management priorities to be the same as their priorities, which are overwhelmingly about patient safety?

[Mr Hunt]

My hon. Friend speaks wisely, and I commend her for her work in championing whistleblowers. In her relatively brief time here, she has made a big difference on that issue. Personally, I do not like to use the term “naming and shaming” because I think identifying problems should always be the first step to sorting them out. What we are doing today by identifying trusts that do not have a proper open and honest reporting culture is also helping them to change that reporting culture while at the same time identifying trusts that have a good culture. It is all about changing the culture, so this is a positive move, and I think that NHS staff will really welcome it.

[Nic Dakin (Scunthorpe) (Lab)]

Does the Secretary of State agree that the best way to deal with concerns about patient safety, such as those raised last week about Scunthorpe general hospital, is to have a proper independent investigation that respects patient confidentiality and reports objectively, clearly and transparently so that appropriate action can be taken when all the facts are known?

[Mr Hunt]

There are definitely times when an independent investigation is needed, and a number of them are going on in the NHS at the moment. The first thing, however, is to talk to the trust and get it to deal with the particular issues being raised and to create a culture in which trusts are willing, enthusiastic and keen to do that. Today is an attempt to deal not only with what happens when things go wrong with whistleblowers, but with how to create the right culture in the first place.

[John Stevenson (Carlisle) (Con)]

I commend the Secretary of State for his desire to put patients at the centre of the NHS. Does he agree that patient safety in places such as North Cumbria can be ensured not just by quality medical care, but by good-quality leadership and management? Would he therefore agree that we need quality management throughout the NHS that is confident about being open and transparent?

[Mr Hunt]

I would agree with that, and I am grateful to my hon. Friend for talking to me on many occasions about the issues at North Cumbria hospital and for sharing his determination to turn things around— [Interruption.] I find it extraordinary that Labour Members are making all this noise. My hon. Friend will know that that hospital had to give £3.6 million in compensation to just one person because of an appalling mistake when Labour was in power. They should be welcoming these changes, not criticising them.

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

On 1 May I asked the care Minister why there had been a 60% drop in the number of people barred from working with vulnerable adults in the health and social care sector, and an even bigger drop of 75% in those barred from working with children. The Minister said that he was going to investigate, but I have heard nothing since. Does the Secretary of State share my concern that fewer unsuitable people are being barred from working in the social and health care sectors on his watch?

[Mr Hunt]

I do not know the answer to that question, so I will look further into the matter and get back to the hon. Lady.

[Andrew Percy (Brigg and Goole) (Con)]

As the hon. Member for Scunthorpe (Nic Dakin) mentioned, local GPs raised concerns last week about a cluster of cases at Scunthorpe and Grimsby hospitals—not at Goole hospital, which was also revealed last week never to have breached its four-hour waiting target. There is still a lot more to be done, so does the Secretary of State share my concern at the evidence received by the Health Select Committee last week from the Care Quality Commission, which stated that all too often, members of staff who raise concerns are dealt with by the human resources department rather than in a proper way that allows their complaints to be properly aired?

[Mr Hunt]

That is a very good point, and I thank my hon. Friend for welcoming me to Goole hospital; I had a very good visit. That hospital is in special measures but it is making real progress. It was interesting to talk to staff at the front line. I do not know when the hospital will be ready to leave special measures, but the staff on the front line felt that things were changing, and they welcomed that. My hon. Friend is absolutely right that if someone raises a safety concern, it should not be viewed as an HR issue; it is a patient safety issue, and trusts need to treat it as such.

[Jim Shannon (Strangford) (DUP)]

In his reply to the right hon. Member for Leigh (Andy Burnham), the Secretary of State referred to avoiding avoidable harm. Given that Combat Stress has reported the referral of some 358 additional troops for urgent treatment—a rise of some 57%—will he give us some idea of the discussions in which he has engaged with service charities to ensure that that harm can be avoided?

[Mr Hunt]

We have ongoing discussions with the Ministry of Defence about the care and support that we offer to our combat troops, but I can assure the hon. Gentleman that we give them the highest priority.

[Henry Smith (Crawley) (Con)]

I welcome the action taken by my right hon. Friend to extend transparency for the purpose of safety in the NHS, but could it be extended to the social care sector, especially in the light of the January 2010 Care Quality Commission report on Orchid View care home in Copthorne, near my constituency? The report rated the home as good, but 19 patients subsequently died.

[Mr Hunt]

I thank my hon. Friend for raising that very harrowing issue. I hope I can reassure him by saying that we are progressively extending the changes we introduced to hospital inspections to inspections of general practice and adult social care settings. The new inspection regime is designed to be much tougher when it comes to identifying problems. It is never possible to identify all abuse in an inspection, which is why what I have announced today is so important: it is about the creation of a culture that tries to prevent such problems from arising in the first place.

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

I welcome the statement and the work that the Secretary of State is doing. Mr Mufti, who was the medical director of Medway hospital under the last Government, raised serious concerns about the bullying of staff, which he feared was affecting the quality of care and patient safety. Will the new provisions address that problem?

[Mr Hunt]

That is exactly the intention. Following my conversation last week with Nigel Beverley, the chief executive of Medway, I think that the hospital is making good progress after going into special measures. However, it is important to recognise that while it is possible to change things externally, real culture change must come from inside. This is not a day on which we are announcing new targets or top-down initiatives. The Sign up to Safety campaign to be led by Sir David Dalton will be voluntary: hospitals must choose whether to sign up to it. I think that that will enable us to make more progress than we would make if we tried to do things in the old way.

[Several hon. Members]

rose—

[Mr Speaker]

Ah! I keep my eye on the hon. Member for Reading East (Mr Wilson), because he does bob up and down, but he tends to do so only intermittently. It is a good thing that I have noticed him. Let us hear from the fellow.

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

I was saving my energy, Mr Speaker.

I welcome my right hon. Friend the Secretary of State’s changes, which have made improving patient care and raising standards such a central part of the NHS mission. It is important to shine a light on poor performance, which is why I also welcome today’s CQC report on Royal Berkshire hospital, which highlights a number of important challenges that confront my local hospital. Does he agree that only by being open and transparent about problems can we tackle them and fix them for the long term?

[Mr Hunt]

I absolutely agree with my hon. Friend. I have had many discussions with him as he has campaigned in the House for his local hospital. The creation of a culture of openness and transparency should have support in all parts of the House, but that will not happen if every time we are honest about a problem, we are told that we are somehow running down the NHS. I urge Labour Members to think carefully about the way in which they approach this issue.

[Margot James (Stourbridge) (Con)]

I applaud the cultural change that my right hon. Friend is leading in the NHS and the social care sector. As he may know, three former members of staff at Granary care home, owned by Shaw Healthcare, were last week found guilty of appalling violence and abuse of frail elderly patients. The sentences handed down to those three individuals were utterly derisory, the longest being four months in prison. Will my right hon. Friend meet the Secretary of State for Justice to review sentencing in this crucial area?

[Mr Hunt]

I shall be happy to raise that issue with the Justice Secretary, and I thank my hon. Friend for raising it. I think it reminds us that whatever changes we may make in the House, it will take time for them to filter through. I am afraid that, even now, some terrible things are happening. One of the things that worries me most is that abuse of this kind often involves people who have dementia and cannot speak up for themselves. That is why it is so important for us to raise the profile of dementia, and to improve the training of those who care for people with the condition.

[Martin Vickers (Cleethorpes) (Con)]

May I take up what was said by my hon. Friend the Member for Brigg and Goole (Andrew Percy)? My right hon. Friend the Secretary of State will appreciate the concern felt by my constituents at a time when the local media are full of a dispute between the clinical commissioning group and the hospital trust about an ongoing investigation of patient safety. Can he assure patients that every support will be given to the CCG and the trust when the recommendations following the inquiry become known?

[Mr Hunt]

Yes, I can. My hon. Friend’s local trust is in special measures, and the decision on whether a trust should come out of special measures is no longer one for the Secretary of State; it is made independently by the chief inspector of hospitals. I hope that we have created incentives for system leaders to solve these problems, because if they do not, the chief inspector will simply not decide that the trust can be taken out of special measures.

[John Howell (Henley) (Con)]

I join my hon. Friend the Member for Wycombe (Steve Baker) in praising the improvements that have taken place in Buckinghamshire Healthcare NHS Trust, which has come out of special measures, and which affects part of my constituency. Are not those improvements a very good example of the way in which we are summoning up the political courage to tackle such trusts, particularly when they have experienced high death rates in the past?

[Mr Hunt]

I hope that they are. I think that in the end we shall be judged on how successful we are in turning around hospitals in special measures. Last week I met Anne Eden, the chief executive of Buckinghamshire Healthcare. I think she has done an excellent job in extremely difficult circumstances, but I know she would agree that there is still much work to be done. Taking hospitals out of special measures is the first step, but ultimately we must reassure the public that when there are problems, we shall be on their side and try to sort those problems out.

[John Glen (Salisbury) (Con)]

I welcome today’s announcement, and I assure the Secretary of State that Salisbury district hospital, which is in Odstock in my constituency, will be keen to sign up to the campaign. However, will he acknowledge that it and several other hospitals have been alive to issues of patient safety for a long time, and have recently been involved in a new patient safety initiative launched by Wessex academic health science network? Is it not important for existing arrangements to be acknowledged, so that there is no duplication of effort?

[Mr Hunt]

That is absolutely true. A number of initiatives are taking place, and I welcome them. The involvement of universities can help us to understand some of these very difficult issues. This is uncharted territory for the NHS, because nowhere else in the world are we seeing the rigour with which we are going about our task. I think that we should be open about anyone who can contribute to the debate.

[James Morris (Halesowen and Rowley Regis) (Con)]

I welcome the Secretary of State’s focus on transparency and accountability. He is right to draw attention to the positive steps that the Government have taken in regard to mental health services in the last four years, but given our aspiration to secure parity of esteem between mental and physical health in the NHS, and our need to drive up mental health care standards throughout the country, should we not extend the transparency and accountability measures that he has announced to those services?

[Mr Hunt]

I pay tribute to my hon. Friend’s campaigning on mental health issues, which has done a huge amount to raise the profile of the subject. Let me reassure him that the information that we are publishing on the website today includes staffing data for all the mental health trusts. We completely recognise the parity issue, at least in what we are doing today.

[Guy Opperman (Hexham) (Con)]

In my previous job, before I entered the House, I conducted dozens of clinical negligence cases. Almost every defending trust was obstructive, defensive and reluctant to admit blame, even when patently culpable. I strongly welcome the changes that are being brought about. Does my right hon. Friend agree that greater transparency and whistleblowing will bring about the safety changes that we all want to see?

[Mr Hunt]

I very much agree with my hon. Friend, and he will know that one of the things we have introduced this year is the duty of candour, which makes it a legal requirement for trusts to be honest with patients and their families when harm or avoidable death has occurred. He is absolutely right that we have to tackle this, and he will also know that when trusts are open and transparent, relatives are less likely to sue, because they recognise the good will and spirit involved.

[Andrew Selous (South West Bedfordshire) (Con)]

Will the Secretary of State join me in commending the initiative of Bedfordshire clinical commissioning group, under the excellent leadership of Dunstable GP Dr Paul Hassan, which has instituted unannounced checks on the wards of local hospitals by local GPs?

[Mr Hunt]

I do commend that, and it is excellent to see CCGs taking responsibility, because they control the NHS budgets. I think that is an excellent initiative, and I hope that other CCGs follow suit.

[Jeremy Lefroy (Stafford) (Con)]

May I commend my right hon. Friend on the work he has done on patient safety, while gently suggesting that perhaps the long-term, or even medium-term, aim should be to eliminate avoidable harm, rather than just halve it? In my case, in Stafford, we have seen huge improvements in patient safety since the very difficult times a few years ago, but I ask my right hon. Friend to bear in mind the hospital’s current situation, which is fragile, and to ensure that it is not left to its own devices, but that all the support necessary to maintain patient services during this difficult transition is given.

[Mr Hunt]

No Member of this House has done more for their local hospital than my hon. Friend, and I commend him on what he has done. We certainly will not leave that hospital to its own devices; we are following very closely what is happening. I want to pay tribute to him, too, on the issue of safety, because when the Francis report came out, he was one of the earliest voices saying, “Yes, this is about compassionate care, but it is also about safety.” I do not at all rule out the aspiration of zero harm and zero avoidable deaths, but that is a point we will have to get to step by step, and I am very proud that we are taking the steps that we are today.

[Mr Philip Hollobone (Kettering) (Con)]

A few years ago, Kettering general hospital had some of the very worst hospital infection rates in the whole country; now it has some of the very best. Last year, it had some of the very worst rates for attendance at A and E within the four-hour target; now it has some of the very best. Does this not demonstrate that determined local hospital leadership, plus dedicated and committed nursing staff, can transform the patient experience in our hospitals?

[Mr Hunt]

It absolutely does, and I think that is very important. There are huge pressures on NHS hospitals. I have been to Kettering hospital at my hon. Friend’s invitation, and it is a very busy hospital. There is a lot of pressure in the system, but with the right leadership it is absolutely possible to deal with these challenges, and I know that my hon. Friend has had a huge impact in Kettering, supporting the hospital through a difficult period.

Student Visas

Tuesday 24th June 2014 Commons Chamber

13:23

[The Minister for Security and Immigration (James Brokenshire)]

With permission, Mr Speaker, I should like to make a statement on student visas.

Since the last election, the Government have taken action across the board to reduce and control immigration. We have introduced a cap on economic migration from outside the European Union, we have reformed the family visa system, and we have eliminated much of the abuse of the student visa system we saw under the last Government. The result is that net migration from outside the EU is close to its lowest levels since the late 1990s, while net migration is down by a third since its peak under Labour.

The Government have always said that, even in the light of the reforms we have introduced, we need to keep each of the main immigration routes to Britain under review, we need to remain vigilant against abuse of the student visa system, and education providers need to meet their responsibilities. That is why I can tell the House that since the start of February immigration enforcement officers, with the support of the National Crime Agency together with officials from UK Visas and Immigration, have been conducting a detailed and wide-ranging investigation into actions by organised criminals to falsify English language tests for student visa applicants. They have also investigated a number of colleges and universities for their failure to make sure that the foreign students they have sponsored meet the standards set out in the immigration rules.

Since the reforms we introduced in 2011, it has been a requirement for all student visa applicants to prove they can speak English at an appropriate level. All students in further education or at a university that relies on English language testing who want to extend their stay by applying for a new student visa have to be tested by one of five companies licensed by the Government. One of those companies, the European subsidiary of an American firm called Educational Testing Service, was exposed by the BBC’s “Panorama” programme earlier this year following systematic cheating at a number of its UK test centres. Facilitated by organised criminals, this typically involved invigilators supplying, even reading out, answers to whole exam rooms, or gangs of impostors being allowed to step into the exam candidates’ places to sit the test. Evidently, this could happen only with considerable collusion by the test centres concerned. Having been provided with analysis from the American arm of ETS for a number of ETS test centres in the UK operating in 2012 and 2013, it has identified more than 29,000 invalid results and more than 19,000 questionable results. As it still has to receive test analyses from ETS for other testing centres it operated in the UK, it is likely that the true totals will be higher.

Officials from immigration enforcement and UK Visas and Immigration have not found evidence to suggest there is systematic cheating taking place in the tests carried out by the other providers.

As soon as the allegations of systematic cheating were first made, we suspended ETS testing in the UK, put a hold on all immigration applications from those in the UK using an ETS test certificate, and made all applications from overseas subject to interview by UK Visas and Immigration staff. In April ETS’s licence to conduct tests for immigration purposes ended, and two weeks ago we formally removed the company as a test provider in the immigration rules.

Because of the organised criminality that lies behind the falsified tests, the National Crime Agency has been brought in to work alongside immigration enforcement officers to pursue criminal action against the perpetrators. Immigration enforcement has begun work to identify anybody who is in the country illegally as a result of the falsified tests so that they can be removed. Her Majesty’s Revenue and Customs is also helping the investigation by scrutinising pay and tax records. A criminal investigation has been launched into the role of ETS Global Ltd. More generally, immigration enforcement is working to identify, pursue, and prosecute those involved in facilitating this activity, and to investigate links to wider organised crime. Arrests have been made, and I expect more will follow.

I should make it clear that proof that a visa applicant can speak English is only one test for somebody seeking to study in Britain. Other requirements include proof of academic qualifications, attendance at college or university, and compliance with the immigration rules, and if these student visa applicants had to cheat to pass an English language test, it is highly doubtful that many of the colleges, and some universities, that sponsored them in numbers were fulfilling their duties as “highly trusted sponsors”.

As I said earlier in my statement, UKVI and immigration enforcement officers have been investigating many of these colleges and universities because of wider concerns about their conduct. The evidence they have provided of what is going on in these institutions is cause for serious concern. The work undertaken by HMRC has identified a number of overseas university students earning more than £20,000 a year, despite the rule that they must not work more than 20 hours per week during term time. Overseas students at privately funded further education colleges are not allowed to work at all, yet one college—the London School of Business and Finance—has 290 foreign students who worked and paid tax last year.[Official Report, 7 July 2014, Vol. 584, c. 2MC.] One university student identified by HMRC had been working a 60-hour week for six months.

UKVI identified people allegedly studying in London, while their home addresses were registered as restaurants as far away as Ipswich and Chichester. Students sponsored by Glyndwr university so far identified with invalid test results provided by ETS number more than 230, rising to more than 350 if the scores counted as questionable are added. The comparable figures for the university of West London are over 210 sponsored students with invalid scores, rising to over 290 when questionable scores are included.

At certain private further education colleges, as many as three quarters of the file checks completed by UKVI officers were a cause for concern. At one college, a staff member told UKVI officers that they were not encouraged to report students’ absence or failure because doing so would reduce the college’s income and jeopardise its right to sponsor foreign students. The Government are not prepared to tolerate this abuse, so I can tell the House that this morning the Home Office suspended the highly trusted sponsor status—that is, the right to sponsor foreign students—of Glyndwr university. In addition, we have suspended the licences of 57 private further education colleges, a list of which I will place in the Library of the House. We have told a further two universities—the universities of Bedfordshire and of West London—that they are no longer allowed to sponsor new students pending further investigations, which will decide whether they too should be suspended.

Other universities are involved in the continuing investigation, and further action may follow, although because of the steps they have already taken to improve their processes, including voluntarily ceasing overseas recruitment to London sub-campuses, we will not at this stage remove their right to sponsor foreign students. Because much of the worst abuse we have uncovered seems to be taking place at London sub-campuses of universities based in other parts of the country, the Quality Assurance Agency for Higher Education will examine these London campuses to see whether further action should be taken against their parent universities.

The Government do not take such action lightly, but we are clear that this kind of irresponsibility cannot go without serious sanction. We have already removed some 750 bogus colleges from the list of those entitled to bring foreign students to Britain, and of these, almost 400, we now know, were linked to those who obtained invalid ETS certificates. We have tightened up the rules for individual students. We have reduced the level of immigration to Britain in part by cutting out abuse in the student visa system. But we have always said we must remain vigilant against abuse. The steps I have outlined today show that we will not hesitate to take firm action against those—students, colleges and universities—who do not abide by their legal responsibilities, and we will resolutely pursue organised criminality to bring those responsible to justice. I commend this statement to the House.

13:33

[Mr David Hanson (Delyn) (Lab)]

I thank the Minister for his usual courtesy in giving me advance notice of the statement, which is an astounding statement of systematic abuse on this Government’s watch. They said, no more bogus colleges; instead, we now have the major abuse of bogus certificates again being issued. As the Minister said, in February 2014 the Home Office announced that it had acted by suspending language tests run by ETS following an investigation by “Panorama”. The scale of the abuse—involving a minimum of some 48,000 students —is truly shocking and leaves open the question why it took the BBC, rather than the Minister’s own Department, to find the problem. Did the Minister or the Home Office know of this problem prior to the BBC reporting it, if not why not, and what checks did the Minister or his Department undertake?

It is clearly an abuse for language tests set by ETS to be taken by fake sitters, one that damages the integrity of the whole system. It is clearly right that the Minister has, finally, taken action today, and that criminal investigations are being pursued. Controlled migration and tackling bogus colleges are vital in protecting UK borders and stopping this exploitation. Indeed, that is why the previous Labour Government closed 140 colleges between April 2009 and January 2010.

However, my constituents and those of other Members will be outraged, and rightly so, by the news today that 48,000 people have fraudulently obtained language certificates, despite being unable to speak English, on this Government’s watch. There are a number of unanswered questions the Minister has not touched on that need further explanation. How many of these students are still in the United Kingdom? Does the Minister know where these 48,000 students are? Does he have addresses for them, and will he co-operate with the university sector and other sectors to ensure that we know where these individuals are, and take action? What steps is he taking to meet universities and colleges such as Glyndwr university, close to my own patch, to ensure that we rectify this problem as a matter of urgency?

Let us be clear: this Government’s failings are of their own making. They have been in office for four years. This is a scheme they established themselves, and this is a border crisis on the Home Secretary and the Minister’s watch. This is a Conservative-led coalition failure on immigration. The Government were warned about student visitor visas, which have increased from 38,000 under the last Government to 77,000 in the last 12 months. There are fewer checks and there is more scope for abuse.

This issue has been flagged up by John Vine, the independent chief inspector of borders and immigration. In November 2012, he said that the Government were clearly failing to follow up on notifications of potential bogus students and that at the time of his inspection there was a backlog—or should we now, following the passport crisis, call it “work in progress”?—of some 153,000 such notifications without action being taken. What action is the Minister taking today to meet the obligations set out by Mr Vine in his November 2012 report regarding the backlog of notifications of bogus students? What steps is he taking to rescind the certificates, and on the fake students and their surrogates?

The UK remains a key destination for international students. The UK market in international students is worth £8 billion, and has the potential to rise to £25 billion by 2025. However, the Government are failing to follow up with sufficient energy the notifications of bogus students, they did not take action on this issue when they knew about it, and they are now putting in place measures to slow down visa applications. At a time when the Minister is missing the net migration target that he himself set, he is now failing on the integrity of the system. He needs to restore that integrity today as a matter of urgency.

[James Brokenshire]

Listening to the shadow Immigration Minister, one might be forgiven for thinking that Labour believed in controlled immigration, but let us remember some of the facts about Labour’s record: record net migration of 2.5 million; hundreds of bogus colleges selling immigration, not education; students turning up at Heathrow unable to answer questions in English or even to explain what their course was about; and supposedly highly skilled immigrants working as security guards.

I hear what the shadow Immigration Minister has said, but Labour did nothing to tighten up the system, and it has fallen to this Government to introduce further stringent measures. It appears that, despite all that—despite the serious issues highlighted in my statement today— Labour now want to introduce blunt targets to increase international student numbers. Indeed, I think the shadow Immigration Minister wants to take students out of the net migration numbers altogether. We will take no lectures from the Labour party about immigration and controlling the issuing of student visas.

The shadow Immigration Minister managed to ask some serious questions, and I will address them now. On the investigations that have taken place, I can say that we have taken significant steps to follow through on identifying, locating and removing those responsible. Hundreds of visits have already been conducted and removals have begun. The criminal investigation is ongoing, and he will understand that I cannot comment further on those cases.

We are taking steps in relation to Glyndwr, and have suspended its highly trusted sponsor status. We are keen to provide support for genuine students whose institutions are affected by this. From today, there is a designated student helpline available specifically for all students at the affected institutions. Dedicated staff will take calls on the helpline to ensure that students have an avenue for their questions to be answered and their concerns alleviated.

We are also setting up a working group with relevant education establishments, including Universities UK—[Interruption.] I am sorry, but the Opposition do not seem to care about what is happening to the students who are involved in this. They might want to listen. We are setting up a working group with Universities UK, the UK Council for International Student Affairs, the Higher Education Funding Council for England, the Higher Education Funding Council for Wales, the Scottish Funding Council and the National Union of Students to enable the sector to support those genuine students who may eventually need to find a sponsor.

The right hon. Gentleman tried to make his general point about university applications, but the truth is that, while we have cut out much of the abuse in the student visa system, the number of overseas applications to study at British universities is up by 17% since the election, and that figure is based on genuine students. We are attracting the brightest and the best while, at the same time, resolutely focusing on ensuring that those who should not be here are stopped.

I was struck by what the right hon. Gentleman said about the immigration system not working, but I have to tell him—as we have done many times before—that it will take years to fix fully the system that we inherited from his party. We are making the difference. As the former UK Border Agency chief executive, Rob Whiteman, said last week, the agency that Labour set up was never going to work and it was right of this Government to break it into smaller pieces, because staff and managers can now get on with trying to put it right. If the right hon. Gentleman does not want to listen to Rob Whiteman, he could listen to the shadow Business Secretary who said that when he used to work in his predecessor’s surgeries, he could see how chaotic the UKBA was. “Hands up,” he said, “That was under my Government.”

All the facts I have outlined today are a direct legacy of the Labour party. A significant proportion of the students who have been caught cheating came to this country through a student visa system created by Labour. Under the previous Government, bogus colleges flourished, student visas were used for economic immigration and students did not even need to prove that they could speak English. The Government are focused on controlling immigration. Sadly, the Opposition still do not get it; it is as simple as that.

[Mr Mark Harper (Forest of Dean) (Con)]

I normally have great respect for the shadow Immigration Minister, but his tone today was not right. When this Government came to power, they had to deal with a legacy of hundreds of thousands of bogus students coming to this country. I commend my hon. Friend for the firm steps he has taken to root out abuse and to work with the sector to protect the genuine universities, higher education institutions and the genuine students and this valuable industry. He should carry on that work and not listen to the Opposition party.

[James Brokenshire]

I am grateful to my hon. Friend for his support. He is right that we are focused on a system that attracts the brightest and the best to this country while rooting out abuse. The step that this Government have already taken in closing down 750 bogus colleges is striking, and there is more work to do. That is what we are focused on delivering.

[Keith Vaz (Leicester East) (Lab)]

This is a shocking report. I welcome all the steps taken by the Minister to try to get to the root of what has happened. We are of course grateful to the BBC for the investigation it conducted. However, the Home Affairs Committee has been saying for years to successive Governments that there should be 100% unannounced inspections of these colleges, some of which have been fostering a climate of deceit. At the moment, the last report suggests that only 37% were unannounced. Secondly, we must have face-to-face interviews with people abroad before they come to the United Kingdom. If that was done, the bogus students would never get here in the first place.

[James Brokenshire]

I am grateful to the Chair of the Home Affairs Committee for his comments. He is right about the issue of interviewing those who are intending to come to this country to take up student positions through the student visa system. In the past year, we have conducted 100,000 interviews to root out abuse, identify those who do not necessarily have the language skills and provide that extra check. In respect of the continuing providers, we have stepped up announced and unannounced visits to check what services they are providing, and we are considering further what steps may need to be taken in relation to any re-procurement of the services to place safety and security right at the heart of the system.

[Dr Julian Huppert (Cambridge) (LD)]

Abuse is clearly unacceptable, and the Minister is right to be firm on those who cheat their way in, and on those organisations that actively help people to defraud the system. But we must not forget that around the world people are listening to the tenor of the debate here and the rhetoric that is used. Will the Minister make it clear, both now and in the future, that we still welcome bona fide students and that we are still open for business and will not take action against universities unless there is evidence that they are complicit in some of this fraud?

[James Brokenshire]

As I said in my statement, we have not taken this action lightly, and it has been based on visits to the various institutions and a detailed examination of the evidence before us. We seek to attract the brightest and the best, but my hon. Friend should be aware that applications from students sponsored by universities rose by 7% in the year to March 2014 and applications from students going to Russell Group universities by 11%. It is right that we focus on preventing abuse and that we have a rigorous system that seeks to attract genuine students to this country while ensuring that those who should not be here are rooted out.

[Mr Frank Field (Birkenhead) (Lab)]

I thank the Minister for his statement and ask him to share his thoughts on abuse that is occurring by those graduates who break their visa conditions by staying here after they should have left. Is he aware that a number of universities have difficulties over some students—presumably they can speak English—who do not pay their bills at the end of their courses? Those universities do not now award their degrees until the bills are paid. Might he not enter negotiations with the universities to consider that they should also have the responsibility of seeing that students go back home, according to their visa conditions, that degrees will not be awarded until those students are back home, and that the number of visas they can have, which could then be unlimited, will be linked to the numbers who actually return home?

[James Brokenshire]

The right hon. Gentleman makes an important point about the responsibilities of the academic institutions as part of the immigration system. They should ensure that students are attending and that they hold the right information in respect of them. We are seeking to work with the university of Portsmouth and others on the process that we need to put in place to ensure that students leave at the end of their course. It is right to underscore the role that the institutions have and the responsibilities that they hold in accommodating foreign students.

[Alistair Burt (North East Bedfordshire) (Con)]

I share the view of colleagues that the Opposition’s failure either to understand their role in what has happened or even to acknowledge it is one of the things likely to weigh heavily in the minds of the public as we run towards next May. In particular, on attracting the brightest and the best, will my hon. Friend look carefully at some of the problems raised by Gulf states that are looking for more sponsorship for specialist applications in science, engineering and medicine and at the fact that the visa restriction is quite heavy in relation to them? Will he also look carefully at any evidence presented, because those students represent an advantage to this country and to the states that they come from?

[James Brokenshire]

My right hon. Friend underlines again the need for the Government to continue to focus on the problems that we were left by the previous Government. Their lack of appreciation of the scale of what they handed on is striking. He makes some important points about the some of the detailed applications and courses. I will, of course, look at any representations that he may wish to make on the nature of the points that he has raised, particularly in medicine.

[Mr David Lammy (Tottenham) (Lab)]

UK universities contribute 2.8% to our GDP. The last time we had concerns about student visas, just one university in London was involved. This involves many colleges and universities. How long will this continue? As it continues, students from countries around the world who are contemplating coming to England will decide to go elsewhere. The Minister mentions hundreds of visits: 48,000 people are out there who should not be. Can he give us some time scales, please?

[James Brokenshire]

I appreciate the right hon. Gentleman’s knowledge of the university sector. This will take time to work through on the evidence and information available. It is right that meticulous work is conducted by our immigration enforcement officers to pursue their leads and lines of inquiry, where students who have relied on bogus certificates have sought to go on to university or college studies. I should like to reassure him of the Government’s commitment to supporting the whole universities sector. Indeed, I have had conversations with Universities UK and the Russell Group more generally on the excellent work that many of our universities do. They are world leading, and we should be proud of what they achieve and their ability to attract genuine students from overseas. We support that, but clearly we will rigorously focus on the abuse. I will certainly provide regular updates to the House on progress with the work to remove students and on further information that we may receive from ETS, as it continues to analyse its results from other centres.

[Angie Bray (Ealing Central and Acton) (Con)]

I totally support this statement. Of course, all colleges and universities must fulfil all their legal responsibilities when they sponsor students from abroad. The university of West London plays an important role in the local community in Ealing, as well as in the wider world of higher education, so can my hon. Friend provide some reassurance that, where investigations have to continue, they will be conducted speedily, so that we can get a speedy resolution and, we hope, get that university back on track?

[James Brokenshire]

I assure my hon. Friend that discussions are ongoing with each institution that has been affected by my announcement. I recognise the desire to gain certainty and, indeed, for the measures and steps that those institutions are taking to put right abuses and to put their systems in place. This is something for those institutions, for the community and for genuine students who may be affected. That is why I made the points about the support that is being provided to them. I am conscious of the impact on them, too.

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

I share the concern expressed across the House about the abuse and about the fact that the Home Office seems to be relying on the BBC to undercover it. May I raise a case with the hon. Gentleman that I have raised with his boss? I have yet to receive the courtesy of a reply. St Mary Magdalene academy is a very ambitious school, with a big sixth-form centre. It teaches Mandarin. It wants to run an exchange programme with Chinese students from Peking. It has applied to have 10 students come over. It will not charge them. It hopes to have a reciprocal arrangement. It expects these kids to bring language skills and an attitude that will really help inner-city children. The opportunity that those inner-city children will have to go to Peking will be extraordinary. The fly in the ointment is the Home Office, which has not allowed them to have the visa. Will the hon. Gentleman please deal with this matter now?

[James Brokenshire]

There is the student visitor route, which is separate from the normal student visa route that applies for universities and further education colleges. I am, of course, happy to look into the specific case that the hon. Lady highlights. I am not familiar with the detail, as I hope she appreciates, but I am happy to look into the matter, if she can give me some more information, and to consider what might be appropriate.

[Mr Nick Gibb (Bognor Regis and Littlehampton) (Con)]

Is not ETS the same company that grossly mismanaged the standard assessment tests in primary schools in 2008? If so, why was it originally given the contract in 2008 to test English language competencies? Will the Minister initiate a check across Whitehall to review any other ETS contracts with Departments?

[James Brokenshire]

ETS was a supplier and provider of services to the last Government and checks were undertaken in respect of the award of the contract, but I can give my hon. Friend a further assurance about work that we have commissioned to review all the suppliers of English language testing services. A review is being undertaken by the independent auditor Moore Stephens LLP, which is due to report next month. Additionally, it has been asked to undertake a wider review of other contractual or licence arrangements, including those relating to language testing services on which immigration, citizenship or other entitlements rely. We are focused on ensuring that there is such testing and audit across the board to give assurance internally and externally about the processes in operation and, indeed, to enable us to reflect further about contracts that might be awarded.

[Ian Lucas (Wrexham) (Lab)]

This is a very grave statement for Glyndwr university and for Wrexham. Will the Minister please clarify whether the withdrawal of status that he refers to applies to the whole university or only to its London campus? What discussions has he had with the Welsh Government, who are, of course, responsible for that devolved institution?

[James Brokenshire]

The suspension applies to Glyndwr as a whole. It is a suspension, not a revocation, but its ability to take on new foreign students is stopped. There is the potential to move to revocation if it is unable to demonstrate that it has put in place systems and processes to guard the immigration system as a whole. We have had discussions with Glyndwr for some time about the investigations and the audit of its records. We will continue to do so, and we will engage with other relevant partners, including the Welsh Government, as necessary.

[Alok Sharma (Reading West) (Con)]

I of course welcome all that the Government are doing to clamp down on bogus colleges and bogus students. Certainly, we do not need to take any lecture from the Labour party on controlling our borders. I welcome the Minister’s confirmation that the UK is open to genuine students and that there are no limits. Will he ensure that that message is delivered in some of the key markets from which students travel to the UK, because this is an important industry for us and one that is clearly growing?

[James Brokenshire]

Absolutely. I can certainly confirm that to my hon. Friend. He makes a number of important points about presentation and how others seek to present a false picture of our immigration system and the important requirements that we have. We can puncture some of the myths that are perpetrated overseas. Ministers visiting those key countries seek to underline that, but we have firm processes and procedures in the visa system for a purpose—to prevent abuse—and that is why steps such as interviews are important safeguards against those who are not legitimate, who are not genuine and who seek to abuse our hospitality.

[Paul Blomfield (Sheffield Central) (Lab)]

We clearly all welcome the action against bogus colleges taken by this Government and their predecessor, but is the Minister concerned that, contrary to the Prime Minister’s declared objective to increase international student numbers, for the first time in 29 years bona fide international student numbers are falling and our competitors are benefiting? When will the Minister listen to the recommendations of seven Select Committees of this House and the other place on the action needed to restore our competitive advantage?

[James Brokenshire]

The latest report from the Higher Education Funding Council for England, published on 10 April, shows a 3% increase in the number of undergraduate entrants between 2012-13 and 2013-14, a 1% increase in postgraduate course entrants and a 5% increase in postgraduate research entrants. We are focusing on ensuring that genuine students are attracted to the UK for study and that we continue to attract the brightest and the best, but it is important also to focus on the substance of what I have said—on ensuring that we are rigorous in our approach to those who seek to exploit our system. I know of the hon. Gentleman’s personal interest in the matter, and I respect his point, but his party appears to want to set an arbitrary growth target, which only risks further abuse.

[Mr David Ruffley (Bury St Edmunds) (Con)]

I congratulate the Minister on an excellent and robust statement that will not spoil the export market for higher education but will ensure its integrity. What additional sanctions, other than suspension or revocation of the special sponsor status, can be deployed against the minority of higher education institutions that have behaved wrongfully?

[James Brokenshire]

As I have indicated to the House, we have taken firm and decisive action in relation to a number of the institutions involved. I want to underline the point about responsibility. Many, many universities and academic institutions take their responsibility incredibly seriously. They do the work; they perform the checks, and they keep their records appropriately. The issue is those that do not, and it is right for the Government to take appropriate action in those cases, including referral to regulators, which will also help to ensure that academic standards at those institutions are raised.

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

I know that for this Government it is all about numbers, and about tracking down all these bogus students, but will they not listen to bodies such as Universities Scotland which are telling them, month after month, about the damage being done to universities in Scotland and the perception that it creates for overseas students, who have options and are using them? What is the point of educating overseas students to such a high standard in our Scottish universities, only to kick them out when they could make such a valuable contribution to our economy and they are welcome in our nation?

[James Brokenshire]

I say very clearly to the hon. Gentleman that the point of having a student visa is to study, not automatically to work. The problem is that, too often, people were abusing the student visa system simply to work, not to study, gain an education and make the contribution that he desires. There are postgraduate routes to remain here and study. We need a robust measure to ensure that our systems are not abused. It is the conflation of university education with an automatic right to work that lies behind the mistakes of the Labour Government and the abuses that we are dealing with.

[Chloe Smith (Norwich North) (Con)]

I welcome the balance that my hon. Friend showed in his statement. The number of colleges whose licence is being suspended appears to me to be a small proportion of the overall total. Will the QAA examine all London sub-campuses of universities, such as that of UEA London, to see whether further action should be taken, or does my hon. Friend have specific ones in his sights?

[James Brokenshire]

We are speaking to the QAA, as I said in my statement. London campuses have been highlighted, so we have asked the QAA to look at the matter in broad terms to give reassurance. It is important that we do so.

[Huw Irranca-Davies (Ogmore) (Lab)]

With 48,000 students and scores of institutions affected, this is criminality on a truly industrial scale. I was not clear about the Minister’s response to my right hon. Friend the Member for Delyn (Mr Hanson), so although we welcome the package of stringent measures that he has announced today, can I ask him at what point he and his Department were aware of the issue, bearing in mind the earlier warning signs, and whether the measures have been taken as a response to what we saw in the programme or whether they were already under consideration by his Department? I saw the programme, and I was appalled by the blatant and widespread criminality that was going on.

[James Brokenshire]

Action has been taken against colleges that were not meeting their standards. I referred to a number of 400. It has become clear that there was a link to the ETS tests, and we are now able to see the issue from a different perspective. The abuse that was uncovered by the “Panorama” programme provided a different angle, on another route of abuse, which is why we have carefully and rigorously been pursuing all lines of inquiry arising from that—with ETS on validating its data and by looking at the colleges themselves, where further issues had been highlighted. It is right and proper that we have done so, and we will continue to do so in the weeks and months ahead, as further information comes to light and we pursue outstanding lines of inquiry, including the criminal investigation.

[Mr Philip Hollobone (Kettering) (Con)]

I welcome the Minister’s clampdown on the scandal of student visa abuse. Will he name the six countries from which most of the students have come, and will he call the ambassadors from those countries into his office to make it clear to those countries how seriously Her Majesty’s Government takes this issue and ask them what they will do to help the Government combat the problem?

[James Brokenshire]

The primary issue is to ensure that there are rigorous measures in place for new applicants coming to this country, with interviews supporting the testing regime, so that we have an additional step to give a sense of reassurance. The point at issue is the student visa system created by the previous Labour Government, and the fact that a number of people who have been identified as being caught up in that sit on the Labour Benches means that a great deal of the responsibility lies there.

[Jim Shannon (Strangford) (DUP)]

I welcome the Minister’s statement. Education visas are worth £10 billion to the economy, and we need to retain that contribution. However, Migration Watch UK says that up to 60% of students do not return to their own country when their visa expires. In 2012 the number was 50,000. What action is the Department taking to deal with those students who seem, at least on paper, to go missing? What contact does he have with the devolved Assemblies, particularly the Northern Ireland Assembly, to address the issue?

[James Brokenshire]

One step that we have taken is to create Immigration Enforcement as a separate command within the Home Office, to have that rigorous focus on pursuing those who should not be here. We are also working with the university sector to see how it can continue to play its part in ensuring that students leave at the end of their studies. We will, as part of that, have discussions with the devolved Administrations and others to ensure that we continue the work and have the rigorous system that we all want.

[Mr Julian Brazier (Canterbury) (Con)]

I am proud to represent the university of Kent, Christchurch university and the university for the Creative Arts, with more than 30,000 students in my constituency. I strongly welcome the firm action that my hon. Friend is taking, and I commend to him the point made by the right hon. Member for Birkenhead (Mr Field). It would be helpful if, in our longer term deliberations, we could have detailed figures as to the proportion of students coming to this country to study who return to their own country at the end of that study.

[James Brokenshire]

My hon. Friend makes an important point about the responsibilities that universities and other academic institutions have within the immigration system. Many of them take those responsibilities very seriously indeed and I commend them for their work. My hon. Friend highlights the need for rigour within the system and the need to ensure that people rightly play their part, and that is what the Government are committed to achieving.

[Simon Kirby (Brighton, Kemptown) (Con)]

Foreign students are important to the economy of Brighton and Hove. Will my hon. Friend join me in thanking those universities and colleges that have done the right thing, put their house in order and are working with the Government, not against them?

[James Brokenshire]

Absolutely; I commend those bodies that take these issues seriously, and there are many that do so. We want a thriving, flourishing sector, and the Government are committed to that. The Home Office is working with the Department for Business, Innovation and Skills in telegraphing that clear message so that educational institutions are doing their best in representing this country and showing it at its best.

[Henry Smith (Crawley) (Con)]

I commend the decisive action that my hon. Friend and his Department are taking in closing down the abuse of the student visa route, which is already significantly reducing overall immigration. Is it not right that we also extend the closing down of abuse to some foreign nationals who are wrongly using the NHS?

[James Brokenshire]

I hope that my hon. Friend will recognise the steps that have been put in place through the Immigration Act 2014, and welcome the financial contribution that students and others who will be in this country for a period of time will need to make as part of the visa process. We are focused now on ensuring that that is effectively implemented to deliver what I think my hon. Friends and others across the House will want to see, recognising the contribution that should be made to our NHS from those who are coming to stay here for a period of time.

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

I am sure that everyone will welcome the identification of the abuse and the plans to eliminate it. The Minister has already said that some genuine students following genuine courses will be caught up in the process. Does he agree that the reputation of this country and our universities and their ability to recruit in the future depend on how genuine students are supported at this very difficult time for them?

[James Brokenshire]

I recognise my hon. Friend’s point, which is why in my statement and in some of the answers to questions I have underlined the support that is being provided to students who, through no fault of their own, may have concerns or be affected. We will certainly keep information on gov.uk up to date. The new hotline has opened this afternoon, so students will be able to contact that. As I have said, we will be working with the sector more generally to ensure that support is provided appropriately.

[Richard Fuller (Bedford) (Con)]

The Minister has suspended the right of the university of Bedfordshire, which has a campus in my constituency, to sponsor foreign students. Will he clarify whether that is because of its involvement with ETS, or because of broader aspects of abuse of student visas? Has he had an opportunity to speak to the vice-chancellor so that he may reassure students throughout the university on valid foreign visas that their studies will not be affected?

[James Brokenshire]

We are in regular contact with the university of Bedfordshire. There has been a conversation with the vice-chancellor this morning and a meeting has been arranged either for later today or within the next few days for the precise purpose of assessing the next steps and to see what may be required in relation to reassurance for students. The action taken by the Government has been linked to ETS in terms of the certificates provided that were questionable or incorrectly issued. It is as a result of looking at the records and the way in which that academic institution has been fulfilling its responsibilities as a highly trusted sponsor that we have taken the action today in respect of its inability to take on new students. We will clearly be working with each of the institutions that I have identified in my statement.

[Dr Matthew Offord (Hendon) (Con)]

I strongly welcome the Minister’s statement today and the action that he has taken, but I echo the words of my hon. Friends the Members for Forest of Dean (Mr Harper) and for Reading East (Mr Wilson) in that there is a vibrant community of language colleges in this country that provide great opportunities for many people. I have several in my constituency that I have visited, which have been sidelined and disadvantaged by some of the so-called bogus colleges. Will my hon. Friend consider introducing a hotline to resolve some of the minor administrative errors that occur during genuine applications, so that the main focus can be on bogus colleges and applications?

[James Brokenshire]

My hon. Friend makes an interesting point about the many institutions that are working hard, meeting their responsibilities and ensuring that they rigorously apply the set standards. It is on those that are not meeting such requirements that additional focus is required. We are considering broader work around the tier 4 student visa system, but I will reflect further on my hon. Friend’s point.

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

I welcome what the Minister had to say and the work that he is doing. Under the previous Government’s shocking administration of the student visa system, individuals were able to come to this country as a student, register as a student, but never attend an institution while being marked present by that institution. What steps are being taken to address the issue of absence and the failure of records, so that they correctly reflect what has been going on?

[James Brokenshire]

Again, my hon. Friend highlights the need for those academic institutions to fulfil their responsibilities and to know that students are attending their courses. It is precisely such measures that our inspectors investigate when they check whether those institutions are meeting their responsibilities. Ultimately, as a highly trusted sponsor, they should know where students are residing and whether they are attending their courses. That is precisely the purpose of the system and why we monitor it in the way that we do.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Last but certainly not least, I call John Glen.

[John Glen (Salisbury) (Con)]

To what extent are London campuses opened by universities based many miles from London simply devices to harbour bogus students, and how can we be sure that we will not see many more bogus students siphoned through those campuses in future?

[James Brokenshire]

As my hon. Friend will know from my statement, we have, with the specific universities that I have identified, highlighted the use of campuses. It is why we have brought it to the attention of the QAA, and it is important that it does its work to analyse the situation further and assess the position of those host academic institutions to ensure that appropriate standards are being met.

Point of Order

Tuesday 24th June 2014 Commons Chamber

14:17

[Wayne David (Caerphilly) (Lab)]

On a point of order, Mr Deputy Speaker. During yesterday’s Work and Pensions questions, I asked:

“How many people are now employed on zero-hours contracts?”,

to which the Minister of State, Department for Work and Pensions, the right hon. Member for Wirral West (Esther McVey), replied:

“Roughly the same number who were employed on zero-hours contracts under the Labour Government in 2000.”—[Official Report, 23 June 2014; Vol. 583, c. 14.]

According to the Office for National Statistics, 225,000 people were on zero-hours contracts in 2000. Today, according to the latest figures, 583,000 are employed on zero-hours contracts. Would it be appropriate for you to call the Minister of State back to the Chamber to correct her misleading statement?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

It would not be, but the hon. Gentleman has put that on the record, and I know that, tenacious as the hon. Gentleman is, further questions will now be tabled, and everyone will have heard the point that has been made.

Wales Bill

Tuesday 24th June 2014 Commons Chamber

Consideration of Bill, as amended in the Committee.

New Clause 1

welsh taxpayers for social security or child support purposes

After section 155 of GOWA 2006 insert—

“155A Welsh taxpayers for social security or child support purposes

(1) The Secretary of State may by order provide for individuals of any specified description to be treated as if they were, or were not, Welsh taxpayers for all or specified purposes of—

(a) social security, or

(b) child support.

(2) The Secretary of State may by order provide in relation to any year of assessment that the Welsh basic rate, Welsh higher rate or Welsh additional rate in relation to the income of Welsh taxpayers is to be treated as being a specified rate for all or specified purposes of—

(a) social security, or

(b) child support.

(3) An order under subsection (1) or (2) may apply in respect of any individuals whether or not they have a close connection with Wales.

(4) An order under subsection (1) or (2) may make such modifications of any enactment, or any other instrument or document, as the Secretary of State considers appropriate in connection with the provision made by the order.

(5) No order is to be made under subsection (1) unless a draft of the statutory instrument containing it has been laid before, and approved by a resolution of, each House of Parliament.

(6) No order under subsection (2) which contains a provision making modifications of an enactment contained in an Act is to be made unless a draft of the statutory instrument containing it has been laid before, and approved by a resolution of, each House of Parliament.

(7) A statutory instrument containing an order under subsection (2) is (unless a draft of the statutory instrument has been approved by a resolution of each House of Parliament) subject to annulment in pursuance of a resolution of either House of Parliament.

(8) In this section—

“specified” means specified in the order;

“Welsh basic rate”, “Welsh higher rate” and “Welsh additional rate” have the same meaning as in the Income Tax Acts;

“Welsh taxpayer” has the same meaning as in Chapter 2 of Part 4A of this Act.””—(Mr Gauke.)

An individual’s tax liability may be relevant to entitlement to social security benefits or to the level of child support payable. This amendment enables the Secretary of State, for social security or child support purposes, to treat someone as being (or not being) a Welsh taxpayer and the Welsh rates of income tax as being specified rates.

Brought up, and read the First time.

14:18

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

I beg to move, That the clause be read a Second time.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

Government amendment 1.

Amendment 9, in clause 9, page 13, line 33, leave out “10” and insert “100”.

This amendment would make the Welsh Government responsible for 100 per cent of income tax revenue gathered in Wales.

Amendment 10, in line 33, leave out “10” and insert “15”.

Government amendments 2, 3 and 4.

Amendment 11, in clause 28, page 30, line 20, after “except”, insert “sections 8 and 9”.

Amendment 12, in line 22, at end insert—

‘(2A) Sections 8 and 9 shall not come into force until a Welsh Government Minister has laid a report before the National Assembly for Wales containing a statement to the effect that the Welsh Government, with regard to the Statement of Funding Policy, is content with the fairness of the arrangements for allocating funding from the UK Government to Wales.

(2B) Sections 8 and 9 shall be suspended following any substantive reform, amendment or other alteration of the arrangements mentioned in subsection (2A), until the process under subsection (2A) has been repeated.”

Government amendment 5.

[Mr Gauke]

It is a pleasure to return to the Bill. I will start with new clause 1 and amendments 2 to 5. These are principally technical changes that, taken together, are intended to address two possible scenarios that could occur if a portion of income tax is devolved to the National Assembly for Wales following a referendum. The first issue relates to the tax status of an individual. This is directly relevant to the calculation of certain social security benefits, state pensions and child maintenance payments, and could be affected by the introduction of a Welsh rate of income tax.

An issue could arise where information regarding the tax status of an individual has not yet been established or is not available—for example, if a person has newly become self-employed and it is not yet clear what rate of tax will apply. The new clause resolves the issue by allowing the Secretary of State by order, subject to an affirmative resolution, to deem a person a Welsh taxpayer for the purposes of calculating their benefits.

The second issue relates to a situation where the Welsh rate of income tax has not been set for the coming year at the time when certain social security benefits need to be calculated. New section 116D of the Government of Wales Act 2006 requires the National Assembly to pass a Welsh rate resolution before the start of the tax year, but this could be set late in the preceding tax year, thus not allowing the Government sufficient time to make the calculations that need to be made. In such cases it would be important for the Secretary of State to be able to deem a Welsh rate. This mirrors the position in the Scotland Act 1998, which includes a similar power in respect of the Scottish rate of income tax. The Bill needs to provide for the same contingencies in respect of the Welsh rate.

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

In Committee, there was some confusion as to whether Kay Swinburne, the Conservative Member of the European Parliament who represents Wales but lives in England, would be eligible for the Welsh tax rate. Can the Minister clarify that?

[Mr Gauke]

I fear that the hon. Gentleman may not recall that debate correctly. There is no confusion about the definition of a Welsh taxpayer. A Welsh taxpayer includes anybody who represents Wales or a Welsh constituency. I hope that repetition will provide some clarity for him, but the position was already clear.

[Owen Smith (Pontypridd) (Lab)]

The Minister is right: there is no confusion. He clarified the position in Committee. Does he agree, though, that the people of Wales might think it slightly peculiar that a Tory Member of the European Parliament who lives in England should be deemed a Welsh taxpayer?

[Mr Gauke]

All I can say is that Wales has a very good MEP in Kay Swinburne and I am delighted that she has been re-elected—[Interruption.] Indeed: by the people of Wales.

I return to the new clauses and amendments before us. However rare the circumstances that I set out a moment ago might be, the potential hardship that a delay in the calculation of entitlements would cause to individuals makes it essential that we make these amendments to cater for such circumstances.

Amendments 2 to 5 are consequential and relate primarily to the commencement of the new clause. As I said, these amendments are minor and technical, but they address an important set of circumstances that could have a serious impact on some of the most vulnerable in society. I urge all hon. Members to support them.

On Government amendment 1, clause 6 gives effect to the Silk Commission’s recommendation that the Welsh Government should be funded from a combination of a block grant and some devolved taxes, with the clause conferring the required competence on the Assembly to legislate for these devolved taxes. Amendment 1 slightly alters new section 116A of GOWA, inserted by clause 6, to correct the possibly misleading impression that those taxes listed in chapters 3 and 4 of part 4A are the only taxes for which the Assembly has competence. The Assembly already has competence for local taxation, which includes council tax and business rates, and this minor amendment clarifies the position.

On amendments 11 and 12, we have been working closely with the Welsh Government in relation to Welsh funding. In particular, the Government recognise that there has been convergence between the levels of funding in Wales and England since devolution, and that this is a significant concern in Wales. As a result, in October 2012 we agreed to implement a joint process to review the levels of funding in Wales and England in advance of each spending review. If convergence is forecast to occur during a spending review period, options will be discussed to address the issue in a fair and affordable manner, based on a shared understanding of all the available evidence.

In advance of the 2013 spending round, a joint review was therefore undertaken by the two Governments and the outcome set out in a written ministerial statement. The review determined that funding levels are not expected to converge during the period to 2015-16. In fact, an element of divergence is forecast to occur. The review also determined that relative funding levels in Wales are within the range recommended by the Holtham Commission. These arrangements ensure that we have a shared understanding of funding levels in Wales, and that a process is in place to consider options if convergence is forecast to resume. There is therefore a firm basis for proceeding with the new financial powers in the Bill, and I hope that when the opportunity arises, hon. Members will withdraw amendments 11 and 12, but I look forward to hearing them make their case.

I turn now to amendments 9 and 10. When it comes to the extent of income tax devolution in Wales, there is a careful judgment to make. Devolving an element of income tax would increase the financial accountability of the Assembly and the Welsh Government in three important ways. First, it would enable the Assembly to fund more of the spending for which it is responsible. Secondly, the Welsh Government’s budget would be directly linked to their economic decisions in areas such as education, skills, housing and planning. Thirdly, the Welsh Government would be able to vary the levels of tax and spending in Wales. However, creating the link between the Welsh Government’s decisions and their budget involves transferring some risk to the Welsh Government. Specifically, the Welsh Government’s budget would benefit if the income tax base grew faster in Wales than the UK average, but would be adversely affected if growth in Wales was slower.

The larger the proportion of income tax we devolve, the greater the potential impact on the Welsh Government’s budget. Devolving 15p of income tax would increase the size of these impacts by 50%, compared to devolving 10p. Devolving all income tax to Wales, which is the stated aim of amendment 9, would increase the potential impacts even further.

[Jonathan Edwards]

In the light of what the Minister has just said, why has the Prime Minister made a manifesto pledge, should there be a no vote in Scotland, to devolve 100% in the case of Scotland?

[Mr Gauke]

No, my right hon. Friend the Prime Minister has not made a manifesto pledge. The Strathclyde Commission has put forward recommendations, which will be considered in due course by my party for the next Parliament. I should point out with regard to the amendment tabled by the hon. Gentleman and his colleagues, which suggests replacing 10 percentage points with 100, that the effect would be to produce negative tax rates—a minus 60% tax, a minus 55% tax and a minus 80% tax. I am not sure that that was quite what the hon. Gentleman sought to do, but I appreciate that he was trying to devolve all income tax to Wales. I take the opportunity to point out that there is a technical problem with amendment 9.

There is a balance to be struck between risks and rewards. At this stage we see no evidence that suggests we should move away from the Silk Commission’s recommendation to devolve l0p of income tax.

[Wayne David (Caerphilly) (Lab)]

Will the Minister give the House an assurance that what the Government propose today has the full support of all the Conservative Members of the Welsh Assembly?

[Mr Gauke]

It is for this Parliament to determine what we should put in place in the Bill. We believe that our proposals strike the right balance. We support the powers. In the time that I have been involved with the Bill, it has not yet been made clear to me whether the hon. Gentleman’s party supports or opposes these measures, but perhaps we will find out today. This Government believe that the powers should be in place and that there should be an option, following a referendum, for devolution of an element of income tax to the Welsh Government. I hope, therefore, that hon. Members will accept the balance contained in the Bill and recommended by the Silk Commission, and that they will withdraw amendments 9 and 10.

14:29

[Owen Smith]

It is a pleasure to serve under your chairmanship, Mr Deputy Speaker, and to do battle once more with the Exchequer Secretary, who seems to have been permanently seconded to the Wales Office—he is like a ringer, to use football parlance. We welcome him and the opportunity he now has to clarify some of the things that he was unable to clarify when we last debated the Bill.

On income tax, the Opposition’s priority is very clear: we believe that we ought to have a fair and progressive tax system across the whole UK. For us that means reinstating the 50p rate and having a starting rate of 10p. That will be far fairer for the people of Wales, and indeed the people of every other part of the UK, than the tax cuts for millionaires that the Exchequer Secretary has overseen at the Treasury.

In the context of the Bill, we have three further priorities. Our first priority—this is why we will support the Bill this evening—is to ensure that Wales has access to borrowing powers in order to offset the £1.6 billion that the Conservatives have cut from the budget for Wales. That is linked to the taxation powers set out in the Bill.

Our second priority is to ensure that Wales is not further disadvantaged by potential additional cuts to the block grant that might be associated with the transfer of tax powers, as we heard a moment ago from the Exchequer Secretary, and as I will test in a moment.

Our third priority is to test properly the costs and benefits to Wales of the transfer of additional powers, particularly in respect of tax, because one of the truths about the Bill thus far is that the Government cannot really be taking this seriously. If they took it seriously and thought that it would really benefit Wales, they would have done a bit of the work to determine what the net costs and benefits would be for Wales. They have undertaken no such analysis, which I think calls into question the seriousness with which they address it.

[Hywel Williams (Arfon) (PC)]

The hon. Gentleman has outlined three priorities. May I ask him, perhaps a little cheekily, which of those priorities is his priority?

[Owen Smith]

If I understand the hon. Gentleman’s question correctly, the answer is borrowing powers for Wales, because we have seen £1.6 billion cut from the budget for Wales, which is money that could usefully be made up by borrowing. Of course, all the tax powers set out in the Bill—income tax and, more immediately, stamp duty and landfill tax and other minor taxes—are directly associated with those borrowing powers. We are keen to see those borrowing powers afforded to Wales, and therefore to see the Bill passed.

However, we have never said that income tax-varying powers are a Labour priority for Wales. We remain sceptical about the benefits they would afford to Wales. Our scepticism is entirely factually based. The Silk commission’s report looks extensively at the revenues Wales receives from taxes and compares them with expenditure in Wales. It determines, to put it in blunt terms, that Wales currently spends around £35 billion in public moneys and nets in revenues from tax receipts of around £17 billion. That leaves a significant deficit that would need to be made up by a Welsh Government, were they to be reliant to a greater extent on their own tax receipts.

The Minister explained a moment ago that, under the terms of the formula outlined in the Bill and in some of the explanatory material, Wales would of course benefit if the growth of GDP in Wales outstripped that of England, but he also said that it

“would be adversely affected if growth in Wales was slower.”

Although in recent years the rate of GDP growth has been faster in Wales than in England, he will know that historically—if we look at the past 20 years, for example, and certainly over any longer period—the rate has been lower in Wales than in England, for all the obvious demographic and industrial reasons. We need to be certain that Wales would not be worse off, in both the short and the long term. We remain suspicious that tax competition, which seems to be the Government’s driving ideological imperative on the matter, will not benefit Wales, for the reasons I have given.

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

As someone who represents a border constituency, I think that my hon. Friend touches on a very important area. Tax competition, which might mean people moving their office across the border to take advantage of where the rate was better, will not do the overall economy in England or Wales any good.

[Owen Smith]

Absolutely. On previous occasions in the House I have outlined the difference between Wales and Scotland, in terms of the populous nature of our border, as well as the far greater problems that we will experience in Wales. I will touch on that later.

[Huw Irranca-Davies (Ogmore) (Lab)]

I agree with my hon. Friend on the Front Bench. There is an ideological difference between the idea that tax competition will inspire a race to prosperity and to the top, from which everyone benefits, and the opposite, in which nations and regions compete with each other in a race to the bottom. We do not want that for our constituents.

[Owen Smith]

I entirely agree. I have been at pains throughout our deliberations to make it clear that, in this Bill, we are being accommodating with regard to borrowing that we understand, but there are real concerns—they are not frivolous—about the benefit for our constituents of Wales having powers that could be misused, particularly by the Conservative party, to cut taxes in Wales in order to engender tax competition across the UK. We think that would bring little benefit but many risks.

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

Is the hon. Gentleman telling us that he is absolutely against lower taxes in Wales, and is he therefore ruling out any Labour Administration using these powers to reduce taxes in Wales at all?

[Owen Smith]

The latter part of that question would of course be a matter for the First Minister, were those taxes to be devolved to Wales, but I think that I have been absolutely clear that we are not in favour of Wales undercutting the rest of Britain to afford benefits to itself. We do not think that would be beneficial to Wales in the long term. Let me be clear: were that to happen, we do not imagine that Wales would continue to enjoy the same degree of welcome support that we receive from the rest of the UK.

[Mr Mark Harper (Forest of Dean) (Con)]

I am now thoroughly confused about the hon. Gentleman’s position. If he is in favour, as I think he is, of devolving these tax powers, but not of their being used to reduce taxes, he can only be in favour of them being used to put taxes up. Is he really saying that he wants Wales to have tax powers, but only so that people living in Wales can pay higher taxes than those living anywhere else in the United Kingdom?

[Owen Smith]

That is a misrepresentation of my position, but I have come to expect little else from the hon. Gentleman or, as he is also known, the shadow shadow Welsh Secretary—well, shadow shadow Foreign Secretary. [Interruption.] Maybe, but he seems to be auditioning these days for the Welsh Secretary’s job. Perhaps he will move on to the Foreign Secretary’s position at a later stage.

[The Secretary of State for Wales (Mr David Jones)]

Can the hon. Gentleman clarify whether the Labour party in the Assembly will be pushing for an early referendum on tax-varying powers?

[Owen Smith]

It was well worth waiting for the Secretary of State to intervene, but I think that the answer is no. Had he been paying attention, he would know that the First Minister has been very clear—[Interruption.] He says “Ah!”, but I think that there is no surprise in hearing that the First Minister has said that income tax-varying powers for Wales are not a priority, for all the reasons I have enumerated many times in this Chamber. If the Secretary of State was to debate some of these issues with me, rather than standing behind the Exchequer Secretary when it comes to all these detailed parts of his brief, perhaps we would have a clearer idea of his understanding of these issues.

[Jonathan Edwards]

Is the hon. Gentleman therefore concerned that the 22 local authorities in Wales can all put forward different levels of business rates?

[Owen Smith]

That is a tendentious and off-piste point, and I do not intend to busy the Chamber by bothering to respond to it.

We are still suspicious of the Government’s motives, not least because the leader of the Conservative party in Wales, Andrew R.T. Davies, has said explicitly that he wants to cut taxes for the wealthiest people in Wales. That is what we suspect that the Tory party would do if, heaven forfend, it were ever to assume power in Wales. We also still have suspicions that the Government are not really serious about doing this for Wales; in truth, we feel that it is more evidence that Wales is of interest to them only as a stick with which to try to beat the wider Labour party. We have heard this on health, on housing, and on education. Again, their perspective is to try to drive wedges into gaps that do not exist.

If the Government were serious about this, they would have undertaken some of the work that they have done in Scotland. When we last met here to debate this Bill on 6 May, we were anticipating a report by the Government—in fact, it was late by then—on the costs of implementing a similar scheme in Scotland. It did not come out on 30 March, as promised, but on 6 May—on the day, slightly unfortunately, of our debate. The report is entitled “Second Annual Report on the Implementation and Operation of Part 3 (Financial Provisions) of the Scotland Act 2012”. It contains welcome news, because it concludes that the total cost for Scotland will not be the £40 million to £45 million originally anticipated, but a mere £35 million to £40 million. That is what it will cost not Her Majesty’s Government but the Scottish Government to implement a separate Scottish tax regime.

One would have thought that if the Government were serious about implementing this, the cost to Wales should be measured, but the Treasury and the Wales Office have undertaken no such analysis. That is particularly troubling because of the point made by my hon. Friend the Member for Alyn and Deeside (Mark Tami), who is no longer in his seat. There is more complexity in implementing this scheme in Wales because of the greater population density on the border between England and Wales—on either side of Offa’s Dyke, or the line between life and death, as the Prime Minister refers to it. Just 4% of the Scottish population and 0.5% of the English population live within 25 miles of the Scottish border, whereas 48% of the Welsh population and fully 10% of the English population live within 25 miles of the Welsh border.

In Scotland, such measures would potentially affect just 450,000 people who travel back and forth across the border, whereas in Wales the number is likely to be closer to 6.5 million. The implementation costs for Wales are therefore likely to be greater, if not the volume of communication that the Government will have to undertake. Were they serious about this, we might have heard some analysis from them today, but we have heard not a jot.

[Glyn Davies (Montgomeryshire) (Con)]

I would like some clarity about the Opposition’s position. We are being told that they will vote in favour of the Bill, which is very good news, but the whole discussion on income tax devolution to Wales suggests that they are completely against it. There will inevitably be differences—we know that the border areas are more difficult in Wales than in Scotland—but the Opposition’s entire rhetoric suggests that they are against the devolution of financial accountability to Wales.

[Owen Smith]

I say again that we will support these measures. We will not press amendments 10 and 11 to a vote because we see value in greater accountability and, in particular, in the borrowing powers that are associated with income tax and other taxes. Nevertheless, there are all sorts of reasonable questions to be asked about the impact on the hon. Gentleman’s constituents and mine. The Government are being remiss, if not incompetent, in failing to deal with those questions and failing to come to this House with a proper explanation of what they think the impact will be, as opposed to using the issue merely as a stick with which to beat Labour.

14:45

[Mr David Jones]

I think that everyone in the House is now even more confused as a consequence of what the hon. Gentleman has said. He said that he sees the value of borrowing powers associated with income tax, but given that Labour will never hold a referendum on income tax powers, how does he hope to access those borrowing powers?

[Owen Smith]

I suspect that that reveals why the Secretary of State cannot speak to his own Bill and instead relies on the Exchequer Secretary. The Secretary of State will know, of course, that irrespective of whether there is a referendum in future, the volume of income tax powers to be extended to Wales has a direct link to the amount of borrowing, because the Government have chosen to introduce a different rationale for affording Wales borrowing powers from that which they used for Scotland. The Scotland Act 1998 draws a connection between the amount of capital expenditure—the budget for capital—and the amount of borrowing. In this Bill, for some reason, the Government have chosen to pursue a different rationale, whereby the ratio of borrowing is to be equal to the ratio of income tax devolution. It is very important that the Government consider amendment 10, because it would increase the volume of income tax that could potentially be exercised by the Welsh Government, and should therefore, under the logic employed by the Government, increase the amount of borrowing above the £500 million that is currently envisaged.

[Mr Gauke]

In moving on to borrowing, the shadow Secretary of State is finding whole new areas in which he is confusing the House. Does he not appreciate that there is a link between the revenue streams that the Welsh Government will have independently, including income tax, and the maximum borrowing levels that they will have? If an element of income tax is devolved, the borrowing cap will be higher than if it is not devolved. Does he understand that, and, if so, will he attempt to reconcile it with his earlier comments?

[Owen Smith]

I will forgive the Exchequer Secretary’s slightly patronising tone and simply say that I absolutely understand it. Perhaps he has not understood my point. Why does this Bill draw a causal connection between the quantum of income tax and other taxes to be devolved to Wales on the one hand, and the amount of borrowing that can be afforded to the Welsh Government on the other, when that rationale was not employed explicitly in the Scotland Act? Would he like to come to the Dispatch Box and tell us why that is different? Obviously there is no explanation—none whatsoever. Clearly, the Government have chosen to employ a totally different rationale in order to justify the lower level of borrowing that they will give to the Welsh.

The shift from 10p to 15p would not only increase the amount of borrowing that Carwyn Jones’ Government could undertake to fill the £1.6 billion gap left by this Government, but afford greater symmetry between what Labour is proposing in Scotland and what we are proposing in Wales. That shift is another positive thing about the Bill, although it will be superseded by the next Labour Government introducing even greater tax devolution in Scotland.

[Mr David Jones]

rose—

[Owen Smith]

I can see that the Secretary of State is champing at the bit. Why he did not simply do this in the first place is beyond me.

[Mr Jones]

The hon. Gentleman does not seem to understand that if there is never a referendum on income tax powers, the Welsh Government will not be able to access an income stream of either 10p or 15p. Does he not understand that point?

[Owen Smith]

Absolutely, so perhaps the Secretary of State could come back to the Dispatch Box to explain why that connection was never made in Scotland, and why, in Scotland, the powers relating to the amount of borrowing were a function of the capital expenditure budget. Can he explain why that difference occurred? Obviously, he cannot, so once again, we know that the Government have simply made it up as they went along.

My last point deals with our fair funding amendments. We remain convinced that the Government do not intend to provide fair funding for Wales, and that any extension of devolution of taxation to Wales ought to be subject to a clear understanding, and agreement by the Welsh Government that the fair funding issue has been dealt with. The Exchequer Secretary acknowledged earlier that the issue of convergence has been accepted by the Government in the floor that has been put beneath the Barnett formula. The Holtham commission said that there was a shortfall of about £300 million—perhaps it is now as little as £150 million—in Wales, but we are convinced that the Welsh Government ought to be the arbiter of whether that fair funding test has been met. That is why we would encourage the Government to adopt our proposal of a back-stop power for the Welsh Government to determine whether fair funding is afforded to Wales.

[Jonathan Edwards]

Diolch yn fawr, Mr Deputy Speaker. It is a pleasure to serve under your guidance as we discuss this vital Bill, which will empower the Welsh Government with an element of fiscal responsibility for the first time. I would have hoped that all MPs representing Welsh constituencies were united in the view that one of our major roles as elected Members is to ensure that the Welsh economy is able to perform far better than it has in the recent past. Considering the incredible wealth inequalities that exist within the UK, with Welsh communities all too often at the bottom of the wealth league, I would have hoped that every political party was united in a mission to turn around the decades of neglect served upon Wales by successive UK Governments.

Far too many politicians in Wales rejoice at the underperformance of the Welsh economy, as it enables them to preach that Wales is far too poor, too small and too weak to succeed as an independent country. Their assertions are plainly ridiculous; Wales has all the ingredients to be a successful nation. We are a country that is rich in natural resources. Our people are highly talented, producing global leaders in science, academia, sport, culture and economics. The real question we should ask ourselves in Wales is: how do we find ourselves in such a predicament? Are we, as a people, content to languish at the bottom of every performance table and at the top of all poverty measurements?

If I was a unionist, I would be ashamed of the fact that gross value added per head in inner London is 12 times larger than that in west Wales and the valleys—the communities I represent. Westminster is not working for Wales, which is why my party believes that the potential of the people of Wales can be achieved only if our own democratic institution has the tools to move our country forward. History shows that changing the colour of the Government in Westminster will make no difference: the Westminster parties are all signed up to the same economic agenda that has failed Wales for far too long, and the people of Wales increasingly understand that. All polling indicates that they want the National Assembly empowered with more political responsibility. A poll by the Silk commission found that 64% believed that income tax should be devolved to the Welsh Government, so it is disappointing, to say the least, that the efforts of Plaid Cymru to improve and strengthen the Bill in Committee hit the infamous Westminster wall. In Committee, we endeavoured to preserve the integrity of the proposals of the Silk commission, which of course were the foundation for this Bill. Disappointingly, all the Westminster parties reneged on the cross-party agreement that had been made during the commission. The Bill undermines what was agreed in the Silk commission, cherry-picking from a comprehensive package. On more powers for Wales, the three Westminster parties are three peas in a pod, despite the protestations of their representatives in the National Assembly.

In Committee, Plaid Cymru put forward sensible and reasonable amendments that would have improved the Bill. Those included removing the damaging lockstep on the proposed income tax-sharing arrangement between the UK and Welsh Governments; inflation-proofing the borrowing powers included in the Bill; and empowering the Welsh Government to issue bonds and tax credits, as has been done in Scotland. We also tabled a series of constitutional amendments on matters as simple as enabling the National Assembly to determine its own name; to set its own number of elected Members; and to determine its own electoral system. Needless to say, none of the amendments was accepted by the UK Government and neither would Labour offer its support, preferring instead to table wrecking amendments that would further dilute the effectiveness of this Bill. I suspect that has something to do with the anti-devolution cabal currently ruling the roost in the Labour Westminster shadow Wales Office.

[Wayne David]

Can the hon. Gentleman answer this simple question: are he and his party in favour of tax competition and the race to the bottom among the nations and regions of the United Kingdom?

[Jonathan Edwards]

Enabling the Welsh Government with tax-raising powers would incentivise the Welsh Government to improve the Welsh economy. At the moment, they are a spending body, in essence; there is no incentive for them to improve the economy. That is why these fiscal powers are so important.

[Mr Harper]

It might help the House if we thought for a moment about what Opposition Members mean when they talk about a “race to the bottom”. They mean that we allow hard-working families and other people to keep more of their own money so that they can make decisions about spending it, rather than having it taken off them and spent by the Welsh Government. That is what Opposition Members mean and it indicates all too clearly what they are about.

[Jonathan Edwards]

Well, that is the hon. Gentleman’s position. But if the Labour party’s position were to hold true in Wales, there would be a uniform business rate across the 22 Welsh local authorities. There seems to be a slight misunderstanding in Labour’s position.

[Alun Cairns]

Extending that logic beyond business rates, the same would apply to council tax rates. We have seen a 12% increase in council taxes in Wales since 2010, whereas there has been a broad freeze here in England.

[Jonathan Edwards]

The hon. Gentleman makes my point for me. He says that there are 22 local authorities in Wales, all with fiscal powers to change council tax rates and non-domestic rates. The Labour party does not seem to think that is a problem in Wales in terms of tax competition.

In my opening remarks in Committee, I also said that events in Scotland would supersede the second part of the Silk commission’s work and probably this Bill. Although it might appear that I have fortune-telling abilities, I reassure you, Mr Deputy Speaker, that I have yet to acquire such powers. Earlier this month, the Tory Strathclyde commission recommended that in the increasingly unlikely event of a no vote in Scotland in September, the Scottish Government should be given full income tax powers, and powers over VAT and the welfare system. The proposed new powers would make the Scottish Government responsible for gathering 40% of the money they spend. Crucially for this Secretary of State and this Bill, the Prime Minister has fully backed the commission’s proposals and promised to include them in the Conservative manifesto for next year’s general election. Contrary to the Minister’s remarks, the Prime Minister said that there was no reason why these powers should not be transferred to Scotland after the general election. Ruth Davidson, the leader of the Conservative party in Scotland, has said that this was going to be in its 2015 manifesto. Therefore, Treasury Ministers’ revelations might be revealing in terms of the debate in Scotland over the next few weeks.

The Secretary of State finds himself in an uncomfortable position, as this Bill represents the Tory offer for Wales. The people of our country can easily compare and contrast what is on offer for Wales with what is on offer for Scotland. Furthermore, the BBC is reporting that all three Westminster parties are pledging an agreement of joint travel, promising more powers for Scotland. Yet, this Bill does not even take us in Wales to where Scotland is now. Wales is not a second-class nation and there is no more powerful message in Welsh politics than equality with Scotland. This Bill is far from being a settlement that will last a generation; if the Tories want to survive in Wales next year, this Bill is unlikely to make it past the Lords in the autumn.

Only last week, none other than the Financial Times stated in its editorial that the UK should move to a federal model, noting that

“the status quo is not an option.”

It added that Wales should be included in proposals for full fiscal and policy autonomy. Today, we will endeavour to put forward amendments that will strengthen the Bill considerably. As the Westminster parties have decided to torpedo the Silk commission, we will also put forward amendments that go beyond its recommendations and reflect the rapid change of the constitutional debate within these isles. We will seek to divide the House on our later amendments in the next group, so that the people of Wales can contrast Plaid Cymru’s ambition for Wales with the apathy of the Westminster parties.

First, however, I will speak to our amendment 9, which is a straightforward, probing amendment. It would make the Welsh Government responsible for 100% of the income tax revenue gathered in Wales, rather than having the meagre 10%-90% split income tax-sharing arrangement on offer in this Bill. My Plaid Cymru colleagues and I have already tried to maintain the integrity of the original cross-party Silk commission recommendations. We tabled relevant amendments to the Bill in Committee, but they were either voted down or abstained on by Labour MPs who would not support what their colleagues in the National Assembly had been saying.

I mentioned the fact that the Tory Strathclyde commission has reported its conclusions. It recommended 100% devolution of income tax to Scotland. The report was fully endorsed at the highest levels of the Conservative party, with the Prime Minister himself giving it his full backing and saying that its recommendations would be included in the Conservative manifesto at the next UK general election. I need not point out to the Secretary of State, therefore, that what his party is offering to Scotland reveals what is on offer here to be completely behind the times.

15:00

As I said earlier, equality with Scotland is one of the most powerful messages in Welsh politics. Why should we not have the same powers as Scotland? Are the other parties content for Wales to have inferior powers to those of the other nations of the UK? The Labour party states, through its First Minister, that it wants the same powers for Wales as for Scotland, yet it does precious little about getting them. Only now is Labour meekly saying that it is standing up for Wales to get the powers that were given to Scotland a generation ago.

[Wayne David]

Is there not a contradiction between what the hon. Gentleman is now arguing for and his total support for the Silk recommendations? Surely he must choose one or the other.

[Jonathan Edwards]

I appreciate the hon. Gentleman’s intervention. As I have said, we endeavoured to preserve Silk during the Committee stage, but our attempts were completely torpedoed by the Government and by Labour. We are therefore saying that we are going to go beyond Silk in the remaining stages of the Bill.

Even the Financial Times says that the UK should move to a fully federal constitution. As I said earlier, it stated in its editorial on Monday last week:

“A shift to far greater fiscal devolution north of the border would have to be mirrored across the rest of the union. It would require a whole new constitutional settlement whose purpose would be to create a more federalised Britain...First, Wales and Northern Ireland would need to gain similar powers to those in Scotland to raise, and vary, tax rates.”

Crucially, it ended by saying that

“the creation of a new constitutional settlement...is not something that can be left on hold”.

Last week we also learned not only that 55% of the peoples of the UK want greater fiscal and policy powers for Scotland, but that 54% want Wales to have those same greater freedoms, according to an ICM poll commissioned by the Evening Standard.

We are moving towards a far looser Union, and that is why this Wales Bill is a major missed opportunity. I have always said that the powers on offer in the Bill would be completely overtaken by events in Scotland and I have been vindicated, not least by the fact that there is an increasing likelihood of Scotland voting yes in September, thereby making the Bill look like a sticking plaster put over a burst dam.

All the Unionist parties are now falling over themselves to offer increased devolution in Scotland, despite having previously said that that should not be an option in the referendum. They must be kicking themselves that they did not include it as a third option on the ballot paper. Who will believe a word they say when they promise jam tomorrow? I would say, based on past evidence—and on what the Exchequer Secretary to the Treasury has said today—that the only way for the people of Scotland to guarantee more powers for Scotland is to vote for independence.

I would draw the people of Scotland’s attention to the Wales Bill. Here we have a Government who set up a cross-party commission to bring forward a consensus which carefully put together a fully endorsed package of reforms. The Conservatives and the Liberal Democrats then reneged on their word by cherry-picking and watering down the recommendations of the cross-party commission. They added restrictions and caveats further to render the powers unusable via mechanisms such as the lockstep. The UK Government’s attempt to strangle the cross-party Silk commission’s original recommendations by adding caveats, restrictions and locksteps should be a salutary reminder to the Scottish people of the sincerity of Westminster’s promises regarding further devolution. If the Wales Bill is anything to go by, the Government here will make a big headline-grabbing announcement promising more devolution, only to reveal a paltry offer when the surface is scratched away.

[Wayne David]

I take the hon. Gentleman back to his comments a moment ago, when he said he was supporting Silk. He is now saying that he is not supporting Silk. Is he behind Silk or not? Does he want to see those proposals taken much further? He cannot have his cake and eat it; he must decide one way or another.

[Jonathan Edwards]

I am grateful to the hon. Gentleman for that second attempt, but I think I answered his question when he first intervened on me.

It is interesting that Labour Front Benchers have only now tabled amendments to the Bill to give Wales control over 15% of income tax revenue gathered in Wales. That proposal is in amendment 10. Admittedly it is better than the 10% on offer in the Bill as it stands, but it is still meagre and shows a lack of ambition and vision for Wales. That is symptomatic of the Labour Government in Cardiff and their puppet-masters here in Westminster. Of course, 15% is better than 10% and we shall be supporting the amendment if it is pressed to a vote, especially as it does not include the lockstep-plus mechanism I referred to in Committee. However, it still reflects Labour’s lack of dynamism. Why only 15%? That figure seems to have been chosen simply because it is ever so slightly better than the Tory and Lib Dem offering.

I see that Labour’s other amendments are more concerned with delay, obfuscation and preserving its own positions than with trying to get the best deal for Wales and its economy. On the vote in Committee to remove the lockstep restriction, Labour abstained, despite the Labour First Minister and Finance Minister having said that it should be removed. Where is Labour’s consistency? Again Labour Members say one thing in Wales and do another at Westminster. They are now saying that Wales should have control over 15% of income tax revenue, yet their amendment says nothing about the removal of the lockstep.

When the Westminster Government announced in November last year that Wales would be getting new powers, they stated that the powers would make Wales an “equal partner” in the UK. Nothing could be further from the truth. The Secretary of State for Wales has previously argued that Wales must be given “equal respect with Scotland”, yet his actions run completely against that. His party is effectively offering Scotland full income tax devolution, yet he is maintaining the lockstep in the Bill for Wales and proposing that we should have control of only 10% of the income tax revenues raised in our country.

In conclusion, I want the same powers for Wales as the other nations of the British state either have or are being offered. If the main party of Government here at Westminster has full income tax devolution for Scotland as its party policy, why on earth should Wales not have those same powers? The changing context of the Scottish independence referendum debate vindicates what I have said all along—namely, that its rapid development will ensure that the powers on offer in the Bill will not be the settlement for a generation that the Government are suggesting.

The Welsh economy needs those powers now, never mind in three years’ time—the earliest point at which they would come on stream. Ultimately, the powers on offer in the Bill pale into insignificance in the context of how the constitution of the British state will alter in the coming years. That should be noted by this Government and all the parties, and we should begin with full devolution of income tax, so that the Welsh Government can determine their own bands and rates.

[Mr Gauke]

I shall briefly respond to a number of the points raised in the debate. The first related to the cost of implementing the Welsh rate of income tax. HMRC is looking to develop a specific estimate for that cost but, because the timing of the introduction of a Welsh rate is uncertain and because it would depend on the outcome of a referendum in Wales, it is difficult to do so at this time.

I want to make two comments in regard to the comparisons with Scotland. First, the Scottish population is obviously larger than the Welsh population, so that will reduce some of the costs. Secondly, however, a counteracting element is that the number of people living close to the border might result in an increase in the number of people contacting HMRC to seek clarification. The hon. Member for Pontypridd (Owen Smith) mentioned the concern about the number of people working in Wales but living in England, and vice versa. We must remember that the definition of a Welsh taxpayer is based on where they live, not where they work. For the vast majority of people, it will be clear where they are, so we should not overstate those costs. As I have said, however, it is difficult to come up with a precise number at this point.

On the Strathclyde commission, I have made it clear that that will relate to what happens in the next Parliament. We certainly welcome Lord Strathclyde’s recommendations; there is much to take from them.

[Jonathan Edwards]

Given the comments of the Prime Minister and, especially, of the leader of the Conservative party in Scotland, does the Minister think that Ruth Davidson was being rather exuberant—for want of a better word—in proclaiming that those measures would definitely be in the manifesto?

[Mr Gauke]

I would say to the hon. Gentleman that what the Prime Minister says will be in the manifesto tends to be in the manifesto. That is a fairly wise approach.

The Opposition have set out their views and I think we have finally got some clarity. I think that Labour’s position is that we should not devolve any element of income tax to Wales, but that devolving 10p is not high enough and it should be 15p. In other words, it is saying that 15p is better than 10p, but nothing is better than anything. Labour also supports the Bill because it wants the Welsh Government to have access to borrowing powers that come as a consequence of having independent revenue streams, but it does not support the Welsh Government having access to the biggest independent revenue stream that might be available, which is income tax. I hope I have characterised Labour’s position correctly. It is simultaneously both for and against, on at least two different grounds.

With those points of clarification, I hope that the Government new clause and amendments will be accepted and that the Opposition amendments will not be pressed to a Division.

Question put and agreed to.

New clause 1 accordingly read a Second time, and added to the Bill.



New Clause 2

Infrastructure guarantees in Wales

‘Her Majesty may by Order in Council provide for the transfer of responsibility for providing infrastructure guarantees in Wales to the Welsh Ministers.’—(Jonathan Edwards.)

Brought up, and read the First time.

[Jonathan Edwards]

I beg to move, That the clause be read a Second time.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

New clause 3—National Assembly ability to hold binding referenda—

‘Her Majesty may by Order in Council provide for the transfer of responsibility for holding binding referenda to the National Assembly for Wales.’

New clause 4—National Assembly for Wales: reserved powers—

‘(1) The Secretary of State will lay a report before each House of Parliament on the further legislative steps needed to move to a model of reserved powers for the National Assembly for Wales and shall lay the report before each House of Parliament within nine months of this Act receiving Royal Assent.

(2) Part 2, except the referendum-related provisions and sections 19 and 20 shall not come into force until the report has been laid in accordance with subsection (1).’

Amendment 8, in clause 19, page 22, line 8, at end insert—

‘(1B) Welsh Ministers may set their own capital expenditure priorities.”

This amendment and amendment 5 enable the new clause inserted by new clause NC1 to come into force by order of the Secretary of State if the majority of voters in a referendum held under clause 11 vote in favour of clauses 8 and 9 (the income tax provisions) coming into force.

[Jonathan Edwards]

We should be using this Bill to empower the Welsh Government—with an arsenal of powers to enable them to intervene in the Welsh economy. During our discussions on the Bill, we have debated fiscal powers and different elements of borrowing powers. However, we have not debated one lever that could be of enormous use to the Welsh Government and that might not necessarily cost a penny, but that would allow them to provide security to various infrastructure projects that might not take place without such backing.

New clause 2 would allow the Welsh Government to issue financial guarantees for private projects that they choose to support in such a manner. Government guarantees are useful for companies that are then able to draw down private investment to fund their projects. As I have said, these guarantees would cost the Government nothing, unless the project fails.

Effectively, guarantees mean that the Government financially underwrite a project. In many cases, guarantees are more useful for helping projects get off the ground than borrowing powers. It is a simple measure that would help the Welsh Government kick-start infrastructure development in Wales, boosting jobs and growth.

I need only quote what the Chief Secretary to the Treasury had to say about the importance of guarantees when he launched the most recent outline of UK Government-backed projects:

“The offer of a guarantee is helping to get projects going…There is a lot of infrastructure happening in this country because of this programme.”

The Institute of Civil Engineers said that the guarantee scheme had enabled

“viable projects to secure finance in difficult market conditions…It is an excellent example of government making creative use of its resources to get projects moving,”

Last October, the UK Government announced their £40 billion guarantee scheme. Projects earmarked for support included a £300 million biomass energy generation plant in Avonmouth in Bristol; a £400 million gas-storage facility in Islandmagee in County Antrim; two gas-fired power plants in Lincolnshire and Essex; mixed-use development of homes, offices and shops in Aberdeen; a wind farm on the Forth estuary; a renewable energy port facility in north Lincolnshire; a low-carbon fuel plant for commercial vehicles; development of the university of Roehampton campus in Surrey; a wood-fired generation plant in Tilbury in Essex; relocation of Northampton university; a Five-Quarter Energy gas plant in the north-east of England; and ethane storage facilities at the Ineos Grangemouth plant near Falkirk in Stirlingshire.

If we look at the UK Government’s list of prequalified projects, which was updated on 16 June, we will see that none of those projects is in Wales. Despite heady announcements from the UK Government about “co-operation agreements” and the inclusion in the national infrastructure plan of projects in Wales, not one has even reached the prequalified stage, according to the publicly available list.

The UK Government guarantee scheme should not be confused with the national infrastructure plan, which is a wish list of future projects. The plan does include the proposed Wylfa B, with a promise of UK Government financing help following planning approval. The national infrastructure plan of December 2013 mentions

“a new cooperation agreement with Hitachi and Horizon with the aim of being able to agree an in-principle guarantee by the end of 2016 to support the financing of a new nuclear power plant at Wylfa, subject to final due diligence and ministerial approval.”

It has, therefore, still not reached the prequalified stage.

Returning to the UK Government guarantee scheme, the eagle-eyed will notice that none of the prequalified projects is located in Wales. Therefore, the Treasury is using Welsh taxpayers’ money to underwrite projects in other parts of the UK, and Wales has so far seen precious little, despite being desperately in need of better infrastructure to drive forward the Welsh economy. Driving forward the Welsh economy would be a real effort to rebalance the UK economy geographically, yet this Government have no real interest in doing so. They should either bring more infrastructure projects to Wales, or give the Welsh Government more tools to do so. I and my Plaid Cymru colleagues believe that it is for the people of Wales, through their democratic institutions, to decide which infrastructure projects to underwrite and where.

15:15

The UK Government have pledged to underwrite the £4 billion Thames super-sewer here in London. Some might regard that project as especially high-risk, considering the widely recognised indebtedness of Thames Water, a company that failed to pay any corporation tax last year, despite its profits increasing 79% to £259 million.

A few months ago, Welsh Members were invited to a meeting by the £280 million Circuit of Wales developers in Blaenau Gwent. They informed MPs and peers that one of the measures they needed above all else to get the project going was a Government guarantee. Hardly a week goes by without some Labour MP, Assembly Member or Lord saying that the circuit could be the saviour of the Welsh valleys. Today, Labour MPs will have their opportunity to give the Welsh Government the power to issue the guarantee required to get the project going. As ever, I do not hold out much hope that Labour MPs will put the communities they represent first, but the way they vote will be a matter of public record.

Our new clause 2 proposes that the Welsh Government should have the ability to issue guarantees—ultimately guaranteed by the Treasury—worth 5% of the UK Government scheme. That would enable the Welsh Government to underwrite £2 billion-worth of infrastructure projects, which would inevitably provide a significant boost to the Welsh economy.

Technically speaking, a guarantee gives rise to a contingent liability for the Government. In other words, it is a potential liability depending on something happening that will trigger the guarantee and require funds to be paid in full or in part to satisfy the guarantee. Given the uncertain nature of such liabilities, the Government do not score them against departmental expenditure limits, unless and until they result in payments being made.

The major infrastructure projects announced, or semi-announced, for Wales by the UK Government—the M4 relief road and rail electrification—will not come through infrastructure guarantees, but via puppet-master strings. The UK Government are seeking to force a future Welsh Government to use their borrowing capacity for the first, and the second is a complete shambles because neither Government can agree on who said what they would pay for.

Ultimately, Wales should get its fair share of economy-boosting infrastructure projects and the Welsh Government should be empowered to provide guarantees, without the constraints placed on them by Westminster as with the other cases I have just mentioned. If used prudently, the guarantees need not cost the Welsh taxpayer a single penny. It is a simple and effective mechanism.

The UK Government’s proposals in the Bill effectively handcuff the Welsh Government. They are saying, “You can have tax powers, which can’t be used because of the lockstep, and you can have borrowing powers as long as you spend them on our preferred projects.” They are treating the Welsh Government and the people of Wales with contempt.

In these remaining stages, the Secretary of State needs to rethink his position. The leader of the Conservatives in Scotland has described the current Scottish fiscal arrangements as those of a “pocket money Parliament”. Surely there should be a better deal on offer for the people of Wales. A Bill genuinely aimed at helping the Welsh Government to drive economic growth would at the very least include this new clause.

My Plaid Cymru colleagues and I also tabled amendment 8. We remain concerned that the UK Government will seek to shackle the ability of a future Welsh Government to use the borrowing-for-investment powers as they see fit. The case in point is the plan to use the new borrowing capacity for a new M4 road. Plaid Cymru has long advocated infrastructure investment as a means of creating jobs and developing the Welsh economy, which still languishes at the bottom of the UK economic league table. However, it would be a dereliction of duty by any future Welsh Government if they agreed to use their borrowing capacity solely to fund a new M4 road, because, first, there are far better ways of relieving congestion on the existing M4 in south-east Wales; secondly, any future Government of Wales will have a duty to the whole of Wales, not just the south-east; and thirdly, if the powers are to be devolved, surely it should be a matter for the democratically elected Government of Wales to determine their own priorities, not a matter of command and control from the Treasury.

The Bill as drafted says that the Treasury will have the final say on any infrastructure projects in Wales paid for via the borrowing powers. Our amendment 8 would enshrine the right of a future Welsh Government to choose as they see fit. Ultimately, as in other areas of the Bill, the Westminster Government are saying, “You can have the power to do x, y and z, but we still retain the right to overrule you or to attach conditions and caveats so that the power cannot be used freely.” We have seen that with the Government’s addition of the lockstep, the cherry-picking and the complete failure to give to Wales any devolved powers that match those for Scotland and Northern Ireland.

When the UK Government announced that they would make money available for investment in a new M4 relief road, it was unclear which funds would be allocated. As the Bill’s contents were gradually revealed, it became apparent that the Westminster Government intended to bind a future Welsh Government’s hands on the borrowing powers available by funnelling the new power into the project that they saw as the one worthy of investment—namely, the priority from a Treasury perspective. It is highly telling that the Government here want the money to be spent on the M4, as they see Wales through a colonial lens. For Westminster, Wales is worthy only of mineral and natural resource extraction and as a source of labour, which means that its only interest is in maintaining east-west links and that it has no interest in developing infrastructure internally in Wales.

In a close parallel, the UK Government stated that they would electrify the great western line to Swansea and the valley lines, but then reneged on their word. That also revealed the incompetence of the Labour Government in Wales, who completely failed to nail down the Westminster Government on the precise terms of the agreement. All along, the people of Wales are being let down by unionist parties who squabble among themselves and who deliver only mealy-mouthed promises and an economy in Wales that is still languishing.

[Mark Tami]

Will the hon. Gentleman please explain or elaborate on the imperialist nature of the M4, because I am slightly at a loss?

[Jonathan Edwards]

The point I am making is that all the investment seems to be on an east-west basis, rather than on a north-south basis.

[Hywel Williams]

Apropos of that intervention, I would have thought that the hon. Member for Alyn and Deeside (Mark Tami) was rather more interested in developing the A55 than the M4.

[Jonathan Edwards]

I am sure that that very useful intervention will be noted by the constituents of the hon. Member for Alyn and Deeside (Mark Tami).

Plaid Cymru recognises the issue of congestion on the M4 corridor around Newport and wants investment to take place. However, the current Labour Welsh Government’s preference for a new M4 to the south of Newport at a cost of £1 billion is a disproportionate solution to the amount of congestion. According to Friends of the Earth and Professor Stuart Cole, the Welsh Government consultation documentation overestimated traffic growth in 2012 and 2013. The flows were lower than the Welsh Government predicted, so they do not have a strong enough statistical base on which to justify such a huge financial and environmental cost. As the Federation of Small Businesses has pointed out, committing the vast majority of Welsh borrowing capacity and money from outside the borrowing limit in the Bill to one single project is misguided and does not serve the whole of Wales or the whole of the Welsh economy.

[Paul Murphy (Torfaen) (Lab)]

I am listening with extreme interest to the hon. Gentleman’s points. It seems to me that Plaid Cymru is therefore actively opposing the development of the relief road around the M4, which he will have to explain to those who vote for Plaid Cymru in Gwent and Glamorgan.

[Jonathan Edwards]

I have huge respect for the right hon. Gentleman. I will outline two alternative proposals that would be a better use of the borrowing capacity of the Welsh Government than blindly following what the Treasury wants.

The new M4 will not be a quick and decisive solution, despite what its supporters say. It will not be completed until 2031, according to the Welsh Government. The £380 million blue route, an upgrade of the A48 corridor that includes flyovers, would represent better value for money and would avoid the environmental damage caused by building on the Gwent levels to the south of Newport. The road upgrade would be accompanied by modern traffic management methods, such as signage to direct traffic flows between the A48 and the existing M4, depending on congestion levels. The blue route is future-proofed until 2035 and, if needed, it could be developed further beyond 2035. Money saved by developing the blue route could be invested elsewhere in Wales. In our previous transport consultation, Plaid Cymru identified transport needs in north, mid, west and south Wales. Above all, Plaid Cymru’s proposal to support the blue route is more innovative and balanced than the proposal with which the Labour and Conservative parties are trying to push ahead. Wales must not get tied into the UK Government’s deal on the M4.

Ultimately, although a new route is needed to relieve the pressure on the M4, what is really needed is the development of a metro system for south-east Wales and the valleys. Early estimations have put the costs at about £1 billion. The reality is that the M4 is used as a local road in south Wales, as the right hon. Member for Torfaen (Paul Murphy) well knows: 40% of journeys made on the M4 in that area are local ones of less than 15 miles. This means that—in one act—commuter journeys could be transferred to a metro system to relieve the pressure on the M4. The great thing about a metro system is of course that, after the initial outlay, a ready stream of revenue is provided through ticket sales that could be used in part to repay the initial expense and reinvest in services and upkeep. The success of the Newcastle and Tyneside metro could be repeated in south Wales if we had the necessary vision.

In conclusion, it appears that the Westminster Government are intent on binding the Welsh Government’s hands on how they utilise the borrowing capacity. The M4 relief road is a case in point. Unfortunately, the current Labour Welsh Government lack the ambition and vision to do something different, and are blindly following the UK Government’s lead. Amendment 8 would make sure that a future Plaid Cymru-led Welsh Government were not bound in the same way but could prescribe more intelligent solutions to infrastructure problems and provide a boost for the whole of the Welsh economy, rather than just the primary corridor routes in and out of Wales that concern the Westminster Government. With your permission, Mr Deputy Speaker, I will therefore definitely push amendment 8 to a vote at the appropriate time.

[Paul Murphy]

It was interesting to hear the points made by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), but I want to concentrate on my party’s new clause 4 on reserved powers. I very much welcome the new clause, which relates to the laying of

“a report before each House of Parliament on the further legislative steps needed to move to a model of reserved powers for the National Assembly for Wales”.

[Interruption.] Perhaps I should give up for a second while negotiations are going on behind the Speaker’s Chair.

I repeat that I support new clause 4 on reserved powers for Wales. I remind the House that the Leader of the Opposition, who was in north Wales for the Labour party conference some months ago, said that the next Labour Government would introduce a

“new Government of Wales Act, with powers assumed as devolved to Wales, unless specifically reserved. Bringing Wales into line with Scotland—modernising and advancing the devolution settlement for generations to come.”

I do not see why the Government, and particularly the Secretary of State for Wales, should reject such a proposal. In an earlier incarnation, I was probably more sceptical about devolution than even he is now, but the world changes. As the hon. Member for Carmarthen East and Dinefwr mentioned several times, the world has changed with regard to what might or might not happen in Scotland in a few months’ time. Let us assume, as I hope will be the case, that the voters of Scotland vote no. If that happens, we know that the Government—not the Opposition—will make far-ranging changes to Scotland’s constitution, with its Government being given extra powers as a consequence of his Government’s commitments. The Secretary of State also knows that it is quite likely that a future Labour Government would agree to such proposals. I therefore cannot understand why he is opposed to reserved powers for Wales only a matter of weeks before the possible introduction of a new Bill for Scotland that would give extra powers.

That argument is simple enough, but in a sense it goes back to our previous debate about borrowing. The Treasury Minister tried to make the point, rather heavily I thought, that borrowing could not be greater in Wales because we did not have sufficient streams of income. However, the shadow Secretary of State pointed out that Scotland and Northern Ireland were given borrowing powers for different reasons. Therefore, it is strange that, within Government, Wales is going that way and Scotland is going another way. There is no reason why that should be the case.

15:30

This is a modest measure. The new clause calls for a report to come to Parliament looking at the issue of reserved powers. It will avoid the need for the Secretary of State to keep going to the Supreme Court when there are disputes on, for example, the Agricultural Wages Board and other issues. This measure seems a simple solution to the problem. What happens in Scotland will have an effect. The Silk commission recommended this. Granting reserved powers to Wales—in other words, it would have all the powers it needed except those that are reserved to Westminster—is a way in which we can overcome the differences between Wales and Scotland.

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

I am following the right hon. Gentleman’s argument and I fully accept what he says about the benefits of a reserved powers model. However, it seems to us that the problem with the new clause is that it relies on a report some time in the future to bring that in. Accepting what he says and the obvious benefits of a reserved powers model, why do we need that report?

[Paul Murphy]

I hope that my hon. Friends on the Front Bench will elaborate a bit more on the matter, but my guess is that they discussed the issue of reserved powers at earlier stages and a new clause is necessary to revive the debate on that on Report. I agree that this measure is relatively modest in asking that a report be laid, but I am sure that my hon. Friend the Member for Llanelli (Nia Griffith) will clarify that we are in favour of reserved powers, as described by the Leader of the Opposition in north Wales. There is no equivocation at all about whether we want reserved powers. We do. The new clause is framed in this way so that the House can debate what is an important issue.

[Hywel Williams]

From my reading of new clause 4, it does propose a reserved powers model, but that is contingent on a report not on the reserved powers model, but on borrowing by Welsh Ministers. The Opposition seem to be yoking two different things together. I suspect that it is a delaying, or even a wrecking tactic.

[Paul Murphy]

It certainly is not a wrecking tactic. I have made the position clear. I am just a Back Bencher, but Labour Front Benchers will also make it clear that the Labour party is committed to reserved powers for Wales. In the light of what is likely to happen in Scotland, that becomes much more important.

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

I am grateful to the former Secretary of State for giving way. He is definitely not just a Back Bencher, but does he genuinely believe that moving to a reserved powers model is a panacea for all the difficulties and challenges of a devolution settlement between England and Wales—issues such as water, transport, and the populous border, which the shadow Secretary of State described earlier? Does he genuinely believe that moving to a different starting point is a panacea to overcome the challenges in the current devolution settlement?

[Paul Murphy]

I do not think for one second that the model is a panacea for all the issues and problems that we face, but I think that it will give tools to the National Assembly and the Welsh Government that they currently may not have and make it easier for them to resolve various issues. I do not suggest for one second that the model means that we will have to end the important cross-border co-operation that exists, or that there will be no need for the Governments to discuss matters. Of course that will have to happen, because of points Members made earlier; large swathes of the population live on the border in Wales, in contrast to Scotland. I agree with the Minister that this model is not the complete answer but it is an answer. It is also an answer in the light of what both parties are thinking with regard to Scotland. Whatever happens in Scotland—like me, the Minister will argue for a no vote—it will undoubtedly change the political and constitutional landscape of our country and so Wales must be in a position to take part in that. Otherwise, we will be seen as an adjunct to a very large England, with Northern Ireland, with its own special issues, on one side.

Therefore, I agree with the new clause. I am sure that my hon. Friend the Member for Llanelli will be able to make the points that I have not made and that have been discussed by Members.

[Nia Griffith (Llanelli) (Lab)]

The new clause calls on the Secretary of State to issue a report on the further legislative steps needed to move to a model of reserved powers for the National Assembly for Wales. It seeks to prepare the way for Wales to enjoy the reserved model of powers, so that legislation should set out the areas that are reserved for the UK Parliament, rather than trying to define all the areas that Wales can legislate on.

The current situation is that the model of devolution in operation for Wales is the conferred powers model. Following the referendum in March 2011, the National Assembly for Wales was empowered to make primary legislation in the 20 broad policy areas. Therefore, the areas where the National Assembly can legislate are conferred upon it and listed in the statute. However, Scotland and Northern Ireland enjoy the reserved powers model, which means that the legislation sets out the areas where the devolved legislature cannot legislate—areas that are reserved to the UK Parliament.

[Mr Mark Williams (Ceredigion) (LD)]

At least three parties in the House support the reserved powers model, but can the hon. Lady explain what is meant by subsection (2) of the new clause? The hon. Member for Arfon (Hywel Williams) made this point. It says:

“Part 2, except the referendum-related provisions and sections 19 and 20 shall not come into force until the report has been laid in accordance with subsection (1).”

What is that caveat? What is the hold up in moving towards a reserved powers model in the new clause?

[Nia Griffith]

That provision is to ensure that the report is actually laid. That is the point of it. It says, “Let us make sure that this is a genuine part of what happens during the passage of the Bill, rather than the issue being kicked into the long grass.” Otherwise, the danger is that the new clause, which asks for further progress on reserved powers, would just be kicked into the long grass. That would be the problem. It is integrally linked now with the progress of the Bill.

[Mr Williams]

Is there any link with the point made by the hon. Member for Arfon about the financial provisions of the Bill?

[Nia Griffith]

The whole point is that this is what we want to see. We are committed to a reserved powers model and that is what we would like to see progress on. It seems a missed opportunity not to have that in the Bill, so we want to put it in.

[Mr Williams]

I share the passion for the reserved powers model. The point the hon. Lady is making about the contrast with Scotland and Northern Ireland is an admirable one. My party leader has said that. So has Plaid Cymru and elements of her party, but why do we need subsection (2) of the new clause? I do not understand. Why can we not proceed with the reserved powers model anyway?

[Nia Griffith]

The important thing is that we are firmly committed to the reserved powers model and we wanted to find a way to put that in the Bill. We have put it in the new clause in this way because that is what we have been advised.

The Silk commission part 2 makes the recommendation that Wales would be better served by the reserved powers model, and it therefore seems to us that the Bill provides an ideal opportunity to pave the way for that change. Not to do so would be a missed opportunity, which is why we are proposing the new clause. The model is already there for Scotland and Northern Ireland.

My right hon. Friend the Leader of the Opposition confirmed our commitment to a reserved powers model when he announced at Welsh Labour conference that Labour has a manifesto commitment for next year’s general election to introduce a

“new Government of Wales Act, with powers assumed as devolved to Wales, unless specifically reserved. Bringing Wales into line with Scotland—modernising and advancing the devolution settlement for generations to come.”

Labour is the party that brought devolution to Wales and Scotland. It remains the only party that is committed to and can deliver devolution in the UK and get the best deal for Wales. Therefore, let us look at why we believe that the reserved powers model would serve Wales better than the current model.

As the Welsh Government told the Silk commission:

“The reservation model is a technically superior method of devolving legislative competence on a devolved legislature. In our view, the conferral model is incapable of prescribing with any degree of certainty exactly what the Assembly can legislate about…The Welsh model therefore lacks…clarity and certainty, and much time is spent addressing potential arguments about whether provisions of a Bill relate to such undefined subject-matter.”

Indeed, the submission from the Hywel Dda institute of the Swansea university school of law also concluded that

“the reserved powers model is, in principle, superior in terms of accessibility, clarity, stability, sustainability, effectiveness and consistency with the principle of subsidiarity”.

[Mr Llwyd]

I am listening intently to the hon. Lady’s arguments about the benefits of a reserved powers model, and I fully agree with her. I was here when the original Wales Bill was drafted some years ago. Why was it not put in as it was for Scotland at that stage, rather than the conferred model?

[Nia Griffith]

I very much hope that the right hon. Gentleman will welcome the move forward that we are making in light of the referendum that showed that the people of Wales wanted to go that step further. I think it reflects the mood and the present situation in Wales.

I am very pleased to hear that the hon. Member for Ceredigion (Mr Williams) is offering his support, particularly as his hon. Friend the Member for Brecon and Radnorshire (Roger Williams) stressed his wholehearted support for a move towards the reserved powers model only a few weeks ago here in this Chamber. His thoughts were, of course, echoed on 16 June by the Deputy Prime Minister:

“So, what you will find in our manifesto is a commitment to implement Silk 2 in full.”

I hope today that we will see that support demonstrated in full by his party.

As for the Secretary of State for Wales, I think I will have a rather more difficult time persuading him to even contemplate moving to a reserved powers model for Wales. Indeed, he is on record as preferring the current settlement and I suppose even that is a big step forward for him from our days together on the Welsh Affairs Committee, when he wanted a referendum to make provision for turning the clock back and reversing the devolution settlement.

That brings me on to further evidence for wanting to move to a reserved powers model. As hon. Members will know, since the Welsh Assembly received its full law-making powers in May 2011, there have already been three referrals to the Supreme Court seeking clarification as to whether proposed legislation is within the competence of the Assembly. Two of those referrals have been made by the Attorney-General. The first of those was the Local Government Byelaws (Wales) Act 2012, which was passed by the Assembly in July 2012. The Supreme Court delivered a unanimous judgment in November 2012 that it was within the competence of the Assembly. That process both delays the legislation and comes with a cost.

In this case, the legal cost of the Treasury Solicitor’s Department for representing the Attorney-General in relation to the Bill was £59,000. The legal cost incurred by the Welsh Government was £30,000 and about £15,000 was spent on civil service time in the Wales Office. The First Minister’s spokesman called it a

“ridiculous situation that has arisen on what is a totally uncontroversial piece of legislation…The primary policy objective of the Bill is to simplify and rationalise how local authorities make byelaws to deal with nuisances in their areas…So why the UK government has decided to take this to the Supreme Court, at the last minute, is inexplicable.”

You really do have to ask yourself, Madam Deputy Speaker, why the Secretary of State even thought it necessary to ask the Attorney-General to refer it in the first place. It is difficult not to conclude that it had something to do with his general antipathy to any new steps in devolution.

The second referral by the Attorney-General was the Agricultural Sector (Wales) Bill, passed by the National Assembly for Wales in 2013, and we are still awaiting the outcome. That Bill seeks to retain in Wales an equivalent of the Agricultural Wages Board, which has been abolished by this Government in England. It therefore represents a difference in policy between the UK Government and the National Assembly for Wales.

Yet again, we saw it referred by the Attorney-General. You might almost suspect, Madam Deputy Speaker, that that was a referral made by the UK Government because they disagreed with the legislation and were unwilling for the Welsh Assembly to do things differently. But to most people, it just looks like wasting public money, fighting an expensive legal battle to try and stop the Labour Welsh Government retaining an equivalent board in Wales to protect Welsh farm workers—a move that has the support of the Farmers Union of Wales and people in Wales.

Furthermore, as my right hon. Friend the Member for Torfaen (Paul Murphy), who has direct experience of these matters, said in a previous debate, when he was Secretary of State for Wales, disputes between the devolved Administrations and the United Kingdom Government were resolved at a governmental and political level and they should never get to the stage where they are resolved by the courts. He stressed that there is machinery within Government for resolving disputes between the devolved Administrations and their Parliaments and the UK Government.

15:45

The third referral was of the Recovery of Medical Costs for Asbestos Diseases (Wales) Bill by the Counsel General. The Bill was introduced by a Back-Bench Assembly Member and passed by the National Assembly in November 2013, and again, we are still awaiting the outcome of that referral.

If we moved to a reserved powers model of devolution for Wales, that would help address any such issues in the future and afford the Assembly the respect it and the Welsh people deserve. That is why we are anxious to see the new clause included in the Bill.

[Hywel Williams]

With all due respect to right hon. and hon. Members who have spoken today, I would like to begin with a quote that, for me, exceeds anything that has been heard today for eloquence:

“The will of the people is the only legitimate foundation of any government, and to protect its free expression should be our first object.”

I quote that in support of our new clause 3, which stands in the name of my hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) and my right hon. Friend the Member for Dwyfor Meirionnydd (Mr Llwyd). The quote comes from Thomas Jefferson, third President of the United States, primary author of the declaration of independence and, as I am sure the Western Mail would remind us, one of 16 of the 56 signatories to the declaration who were of Welsh extraction. Jefferson’s argument is that the validity of any Government is bound up with their purpose of representing the will of the people. That could also claim to be the primary motive behind our new clause 3.

In Committee, we in Plaid Cymru tabled amendments, as my hon. Friend the Member for Carmarthen East and Dinefwr said earlier, that would grant further powers to the National Assembly, including the power for it to decide on the number of Assembly Members, change its name should it wish to do so, and make amendments to secure further financial powers. We were disappointed that more Members from other parties did not support those amendments, but this new clause encompasses them all.

We believe that decisions of this nature are better made when elected representatives have the backing of the people, and the most straightforward means of determining the will of the people on any particular subject is, of course, a referendum. New clause 3 would therefore give the National Assembly the power to hold binding referendums on issues already in its competence, and on questions relating to further transfers of constitutional or financial powers, such as those that have been proposed in respect of changes to income tax.

The National Assembly could ask the people of Wales questions such as how many Assembly Members they believe should sit in the Assembly, what the voting system should be, and whether new fields should be devolved if we do not get to the reserved powers model. That would give our people a clearer say in the Assembly’s decision-making process.

The Wales Bill allows for a referendum on the question of transferring to the Welsh Government power over 10% of income tax receipts, but the notion that there should be a new Bill in this place each time a referendum is needed on a reserved matter is convoluted, to say the least, and convoluted is not good: witness the wretched legislative competence order process. Plaid Cymru is not in favour of holding a referendum for the sake of it. For example, the transfer of minor taxes to Wales—as recommended by the Silk commission—without recourse to a referendum has set a precedent. We have argued that the planned referendum on income tax powers is not necessary, but circumstances will certainly arise in the future when holding a referendum will be the proper and practical way forward.

Unlike in other countries with written, codified constitutions, the transfer of such a power to Wales would require no official constitutional change; it could be done by an Order in Council. A recent precedent for that was signed into being by the Edinburgh agreement in 2012:

“The United Kingdom Government and the Scottish Government have agreed to work together to ensure that a referendum on Scottish independence can take place…the referendum should: have a clear legal base, be legislated for by the Scottish Parliament, be conducted so as to command the confidence of parliaments, governments and people, deliver a fair test and a decisive expression of the views of people in Scotland and a result that everyone will respect”—

an excellent set of principles. The agreement goes on:

“The governments have agreed to promote an Order in Council under Section 30 of the Scotland Act 1998 in the United Kingdom and Scottish Parliaments to allow a single-question referendum on Scottish independence to be held before the end of 2014.”

There we have the basis for a referendum for Scotland and, I would argue, the basis for a power of referendum for the Assembly. That Scottish agreement is valid for that one referendum, and no other referendum can be held under those specific terms unless they are renewed. Our new clause, however, would confer a continuing power to the Assembly.

According to a recent study published by the Political Studies Association, there have been 49 independence referendums worldwide, both official and unofficial, with an average turnout of 79%—far higher than the average turnout in UK general elections over past years. I point out that in democratic countries after 1945, the average yes vote in such referendums has been 62%. Not all those referendums have been recognised by national or state Governments; for example, in 1946 the Danish Government refused to recognise the result of an independence referendum in the Faroe Islands. After negotiation, however, the islands were granted what we would now call devo-max: all powers except foreign affairs and defence were devolved.

The independence referendum due to be held in Catalonia on 9 November this year is highly likely to produce a yes vote. I suspect, however, that it will be ignored by the Spanish Government on their current form, as that has been Madrid’s response to the rolling programme of non-binding local community referendums on that subject, which have been held in hundreds of towns and villages across Catalonia from September 2009, and in which a large majority voted for independence. Madrid has ignored those developments to its cost: witness the enormous pro-independence demonstration by 1.5 million people out of a population of 7.5 million in Barcelona in September 2012. That was a huge show of public opinion, interest and support—we are talking about 20% of the entire population—and it perhaps would not have been quite so huge but for Madrid’s intransigence. That is why the Edinburgh agreement is so significant, and why I believe that, precedents having been set, Wales should have that same power. My discussions with Catalonian friends, and the attitude of the Spanish Government, bear out the superiority of the situation in the UK and the Edinburgh agreement. At least it is clear, and all sides are to be congratulated on that.

[Guto Bebb (Aberconwy) (Con)]

I am slightly confused about the argument. As the hon. Gentleman rightly points out, the situation in Madrid is one of Madrid refusing to recognise the right of the Catalonian Government to hold a referendum. The situation in Edinburgh is of an agreement between the UK and Scottish Governments, which showed that the two Governments could work positively together. The argument in favour of the new clause seems to be based on the failure of another Government in another country.

[Hywel Williams]

My remarks, which will appear in print tomorrow, will repay close reading, as that was precisely the argument I made. The position in Catalonia and the rest of Spain is far inferior to that in the UK, and I am pointing out the superiority of that Edinburgh agreement as the basis of my arguments for a legally binding system of referendums to be established for Wales.

In the UK, the important referendums and constitutional changes have occurred over the last 10 to 20 years, including the devolution referendum in 1979, the one in 1997, and the more recent referendum on our electoral system. In 2011, the people of Wales were asked in a referendum whether they wanted the Welsh Assembly to be given full and primary law-making powers; 63.5% of those polled voted yes. That stood in stark contrast to the results of earlier referendums that right hon. and hon. Members will remember. In 1979, for example, 79.7% voted against devolution; in 1999, there was a narrow majority of 50.3%, secured on a small turnout of 50.1%. That is how it was, but since then, I would argue that the people of Wales have grown to favour devolution, as have some right hon. and hon. Members in this place. The Assembly has grown in confidence, and as it gains further powers, it should surely have the power to ask the people of Wales what they think. That would be in the interest of legitimacy and accountability.

I referred to the Edinburgh agreement, and I suggest that a similar agreement in Wales should be called not “the Cardiff agreement” but “the Celyn clause”. This refers to Capel Celyn, which, Members will recall, was the village drowned in 1965 against the express wishes of elected and representative bodies throughout Wales—and, I understand, the wishes of every Welsh MP bar one. That was a transformational event in Welsh politics, and we have seen the effect of it over many decades. That effect is clear and provides a firm reminder of what can happen when the will of the people is so resolutely ignored. That is why we tabled new clause 3, giving the Assembly the right to hold legally binding referendums. I certainly commend it, but I assume that the matter will be discussed, possibly in greater detail, at some point in the future.

Let me make a few brief points about new clause 4. My Plaid Cymru colleagues and I have supported the reserved powers model for the National Assembly for a very long time. We are glad to see the Damascene conversion of the Labour Front-Bench team—better late than never! We certainly believe that this is the next step for our country; it would certainly clear up much of the confusion, not least in the minds of the public and others, as to the split of powers between the National Assembly and Westminster. I say to the Welsh public and others that I too often see people from the media refer to Assembly matters as if they were Westminster responsibilities, and vice-versa.

We in Plaid Cymru were, as I mentioned, against the LCO—legislative competence order—model, which so blighted the lives of those on the Welsh Affairs Committee and held up the pragmatic and practical transfer of the most innocuous of powers to the Welsh Government, as well as some rather more controversial powers. We wanted the boldest arrangements, but that was not forthcoming under the Government of Wales Act 2006—until the referendum. Circumstances have changed again, and the need for a move to a reserved powers model is even more pressing than before.

No one in this place or in the Assembly can be sanguine, given a recent survey showing how far we have failed as politicians to inform our constituents of the reality of the split in power. As I said, the media are far from blameless. Having said all that, it is disappointing that in the second part of their new clause 4, the hon. Members for Pontypridd (Owen Smith) and for Llanelli (Nia Griffith) have chosen to predicate any developments in relation to this matter on delaying the minor taxes. I must therefore view the new clause, I am afraid, as a delaying tactic at best, and as aimed at wrecking this part of the Bill at worst.

[Wayne David]

I support granting and extending borrowing powers to the Welsh Government. It is important that the Welsh Assembly has at least some facility to borrow what it deems necessary, as local government does. I also share the concerns expressed about the possibility of eventual tax competition, and I deeply regret that the Government have proposed no modification of the Barnett formula to address the shortfall in what Wales receives.

It also causes me concern that the Government do not appear to accept the need to address what we consider to be a fundamental shortcoming in the current devolution settlement. I believe that we need to move from a conferred powers to a reserved powers model, which would allow the Welsh Government to make law in any area unless it was clearly stated that they were unable to do so. That is why I support new clause 4.

16:00

I should make it clear that I am not one of those people who believe that a transformation of the model would solve all the problems of devolution. Devolution inevitably throws up issues that our constitutional arrangements in this country have not confronted in the past, and there will be new challenges to meet. Nevertheless, I think that if we made that fairly significant change, the problems would be fewer and far easier to get to grips with.

Members have heard me refer in the past to the difficulties experienced in Scotland in connection with what is known as the Antarctica issue. When Antarctica was not mentioned in the list of reserved powers, it was assumed that Scotland had devolved powers in relation to it. That was not the intention, and it was not what the Scottish Parliament wanted. However, the issue was resolved, although there have been other problems as well. Those difficulties do not alter my belief that there is a strong, objective and balanced argument in favour of a move to the reserved powers model. As we know from debates held in Wales and in the House of Commons, that was one of the key recommendations of the Richard commission, and was also mentioned by the Silk commission.

For me, there are three fundamentally important arguments in favour of the shift. First, it would undoubtedly clarify the current devolution settlement and make it more understandable. I have read a number of academic papers that support that contention. The Hywel Dda Institute at Swansea university has argued strongly that it would make the settlement “conceptually simpler” . I agree. As the institute says, it would deal with many of the so-called “jagged edges”.

Housing is an example of that. Schedule 7 of the Government of Wales Act 2006 lists housing as being eligible for legislation by the Welsh Government, but there is a complication. It lists a number of exceptions: for instance, it excludes

“Coal, including mining and subsidence”.

As we know, subsidence plagues the south Wales valleys, and there is inevitably a relationship between it and the plight of many houses in valley communities. That prompts the question: is housing that is affected by subsidence within the scope of potential legislation? The answer is yes, but a strict reading of the 2006 Act as it stands does not make that very clear, because of the different ways in which the various exceptions are listed. I believe that a reserved powers model would make such instances much more intelligible, and much less fraught with difficulties of, in particular, a legal nature.

[Mr Mark Williams]

Some parts of the Act contain even more obvious problems. No doubt the hon. Gentleman will be as alarmed as I was to read in the Western Mail about a survey that suggested that 40% of people thought that the national health service in Wales was directly administered from this place. There is an issue about the clarity of our democracy and our systems, even when it comes to core issues such as that.

[Wayne David]

That is a fair point, and I will touch on it a little later. We have asymmetrical devolution in the United Kingdom; we have different forms of devolution in different parts of the UK. While there are good reasons for that, it does not help the general public’s understanding of what is devolved and what is not devolved. If we had greater consistency in the bedrock of devolution between Northern Ireland, Scotland and Wales, that would help that public understanding. Some may say that strictly speaking the Northern Ireland settlement is not quite akin to the Scottish settlement, but nevertheless in effect we have a reserved powers model in place and it would be advantageous if Wales were to follow their examples.

As Members, and in particular my hon. Friend the Member for Llanelli (Nia Griffith), have said, there has been an unfortunate conflict between central Government and the Welsh Government through the Supreme Court. There have been three referrals of legislation to the Supreme Court. We have heard about the then Local Government Byelaws (Wales) Bill, which the Government here in London questioned. They asked for the Supreme Court to make an adjudication, and the position of the Welsh Government was upheld, but we must consider the amount of time and effort that went into questioning such a relatively small measure and whether that meant there was better government.

I feel I must quote the Counsel General for Wales, Theodore Huckle QC, who has said that

“it took five Supreme Court Justices…several of the UK’s leading constitutional lawyers and a great many officials across three Governments to decide it was lawful to make minor changes to the way Welsh local councils deal with things like dog-fouling and loitering in public lavatories.”

That raises this question: what sense is there in that? How on earth can that be defended as good government? It cannot be.

[Stephen Crabb]

I genuinely wonder whether the hon. Gentleman is suffering from amnesia, as he was a part of a Government who created that exact system. If he does not think the Supreme Court is the relevant mechanism for resolving disputes between two Governments over legislative competence, then what is, under the reserved model he supports?

[Wayne David]

I just think it is very important to learn. I know that is anathema to the current Government, but if we recognise that devolution is a developing process, it is vital that we learn and make things better and, when things are clearly not as they should be, make improvements. That is a good way to approach government.

[Paul Murphy]

I remind my hon. Friend and the House that there are highly developed mechanisms in these islands to resolve disputes of any nature through the Joint Ministerial Committee, or simply between ministerial committees, without having to go to courts of law. There are better means of proceeding, and we should use them rather than go to the Supreme Court.

[Wayne David]

My right hon. Friend makes an extremely good point. He has tremendous experience in these matters—far greater than I have—and I would certainly bear out what he has said. A common sense way to approach disputes between different legislatures in the United Kingdom is to sit down and talk, and use the established structures, and not resort to expensive, time-consuming legal processes that are very obtuse to most people. That is one lesson to be learned.

We must also learn the lesson that we need a different model. We need a reserved powers model to form the bedrock of our developing devolution settlement in the United Kingdom.

[Guto Bebb]

I have listened carefully to the hon. Gentleman’s comments, and to those of the right hon. Member for Torfaen (Paul Murphy) and the hon. Member for Llanelli (Nia Griffith), who is on the Opposition Front Bench. If the Labour proposal is to move to a reserved powers model, which is clearly the case judging from the arguments presented today, do Opposition Members believe that the report they envisage should look at the consequences for the largest part of the United Kingdom, which is England, because not once has any Opposition Member talked about any potential impact on the English electorate?

[Wayne David]

I have no qualms at all about talking about England, because we are a United Kingdom, but if I deviated from my notes and spoke at length about England, you would take me to task pretty quickly Madam Deputy Speaker.

It is important to recognise that the Local Government Byelaws (Wales) Act was not a one-off. We have seen an attempt—perhaps most significantly, politically—to prevent the Welsh Government from carrying through their legislative plans for the agriculture sector. That is a far more emotive issue, particularly for workers who are directly affected by this Bill—or, as may happen, the lack of it. However, that reinforces the constitutional point that the current situation is unsatisfactory, facing as we do ongoing legal challenges on the basis of politics, rather than, as my right hon. Friend the Member for Torfaen (Paul Murphy) said, Members sitting down together where there is a genuine dispute between the two legislatures and working things out.

The conclusion I come to is that we need a system that transcends party politics: a constitutional arrangement that is seen to be fair to everybody, and that respects the integrity of the United Kingdom but also the development of devolution in Wales; a settlement based on a reserved powers model that is far more intelligible to people in Wales, and that will help them to understand far more easily the basis of our devolution arrangements in Wales and the United Kingdom as a whole.

[Stephen Crabb]

The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) said that the purpose of amendment 8 is to ensure that the Welsh Government can use their new borrowing powers to invest in projects that they, rather than Her Majesty’s Treasury, want to take forward. I should point out that the Bill already provides Welsh Ministers with complete flexibility to decide how to use their borrowing powers, in much the same way that they have complete flexibility regarding their resource and capital budgets. I wonder whether the hon. Gentleman was confusing the requirements for the early borrowing powers with the wider borrowing powers the Bill sets out. Regarding the former, he is right that there is a specific agreement between the Welsh Government in Cardiff and the UK Government—specifically the Treasury—to facilitate early movement on a strategic project of importance to the Welsh nation and economy: namely, the M4 upgrade. So, rather than it being a project imposed from above by the UK, it is very much demand-led from within Wales.

[Jonathan Edwards]

The Bill as I read it states that the Treasury has the final say on what the Welsh Government will be able to use those borrowing powers for, and the UK Government have made it crystal clear that their priority is the M4 relief road.

[Stephen Crabb]

There is a line in the Bill that refers to Welsh Ministers being able to borrow with the approval of the Treasury. That merely refers to the overall borrowing limit, which the Treasury will agree with the Welsh Government. It is not about the Treasury signing off on individual projects. We want to give the maximum possible freedom to Welsh Ministers to use their borrowing powers to decide on exactly the infrastructure projects they want to take forward. I am very happy to continue this discussion with the hon. Gentleman another time, but that is the situation.

On new clause 2, the Welsh Government already have the power to provide guarantees in relation to their devolved responsibilities. Section 70 of the Government of Wales Act 2006 states that

“Welsh Ministers may give financial assistance (whether by way of grant, loan or guarantee) to any person engaged in any activity which the Welsh Ministers consider will secure, or help to secure, the attainment of any objective which they aim to attain in the exercise of any of their functions.”

So there are no handcuffs or binds on Welsh Ministers. For example, they already have the powers to support the Circuit of Wales with a guarantee, should they choose to do so. Conversely, the UK Government would not be able to provide a guarantee under the terms of the Infrastructure (Financial Assistance) Act 2012 as the Circuit of Wales project does not meet the infrastructure criteria set out in the legislation.

Furthermore, it is the size of the UK Exchequer that enables the UK Government to guarantee substantial infrastructure projects, such the Wylfa Newydd nuclear plant that has been guaranteed with Hitachi. Wales, therefore, benefits from UK Government guarantees in relation to energy and other infrastructure, while the Welsh Government can decide how to provide financial support to help deliver their own devolved responsibilities.

16:15

The hon. Member for Carmarthen East and Dinefwr also made the point that he did not believe that there were any current Welsh infrastructure projects that were at the prequalification stage for an infrastructure guarantee. The information that I have received from the Treasury is that there are indeed projects based in Wales. They are at the prequalification stage for an infrastructure guarantee, but the project sponsors have chosen not to reveal their identities for commercial and other good reasons. The Wales Office is keen to promote the infrastructure guarantee programme. My right hon. Friend the Secretary of State for Wales held a successful event in north Wales, promoting the programme to the business community. I, through the Wales Office infrastructure working group and alongside Treasury officials, have been promoting it to other businesses in Wales. We want to see more Welsh projects come forward and benefit from the infrastructure guarantee scheme.

[Jonathan Edwards]

I can base my position only on the list of prequalified projects, which was last updated by the Government on 16 June. I have a list here of a page and a bit, which has not a single Welsh project on it.

[Stephen Crabb]

All I can do is reiterate the information that I have received from the Treasury that there are indeed Welsh projects at the prequalification stage. We are currently talking about infrastructure guarantees to Welsh businesses and other companies that want to invest in Wales. I will happily write to the hon. Gentleman with further information to clarify the situation. On that note, I hope that Members agree that the existing arrangements and the Bill before us are therefore optimal and will withdraw amendment 8 and new clause 2.

I turn now to new clause 3, which would allow the transfer of responsibility for referendums to the National Assembly for Wales. I am afraid that with this new clause, we once again find Plaid Cymru trying to shoehorn far-reaching and fundamental changes to the wider devolution settlement for Wales into this specific Bill, which takes forward the recommendations of part 1 of the Silk commission.

Referendums, such as the one this Bill provides for, are intended to allow the electorate to decide on key constitutional issues. Competence for the conduct of referendums, except in very exceptional circumstances, such as those around the Scottish independence referendum, rests at a UK level. I have seen no evidence yet to suggest that there should be any change to the existing devolution settlement.

It is also worth noting that the Silk commission made no recommendations about that issue when it examined the devolution settlement in its second report. Furthermore, there have been no calls from the Welsh Government or the Assembly for this competence to be transferred.

This Bill is focused on delivering new fiscal powers to Wales that were recommended by the Silk commission in its first report, and new clause 3 forms no part of that. I therefore ask Opposition Members to withdraw this amendment as well.

Finally, I turn to new clause 4, which bares a striking resemblance to an amendment tabled by Opposition Members in Committee. The new clause seeks to postpone the commencement of part 2 of the Bill, apart from the referendum provisions and clauses 19 and 20 in relation to borrowing powers, until the Secretary of State has laid a report before both Houses of Parliament setting out the steps needed to move to a reserved powers model of devolution. That report would need to be laid within nine months of the Bill’s enactment, generously giving the Government three months longer than the Opposition permitted in their Committee stage amendment.

With these new clauses, Labour Members once again seek to connect directly the commencement of the parts of the Bill that will devolve tax-raising powers to the Assembly with one of the most far-reaching of the Silk commission’s part 2 recommendations. Other hon. Members have described that as a delaying tactic; some have even described it this afternoon as a wrecking tactic. It reveals yet again the Welsh Labour party’s opposition to the proposals in the first Silk commission report to devolve income tax powers to Wales. It is merely a smokescreen for Labour Members’ deep and widely held scepticism and suspicion—they have used those words this afternoon—and they fundamentally oppose fiscal devolution, which is the next important stage of devolution for Wales.

As this Government have made clear on a number of occasions, a move to a reserved powers model would be a fundamental change to the devolution settlement in Wales. We have also made it clear, as did the Silk commission, that this should be a matter for party manifestos at the next election. Therefore, there is nothing to be gained by requiring the Government to report to Parliament on the legislative steps needed to move to a reserved powers model.

Once again, the Labour party seems to be mired in confusion about its position in relation to the Silk commission’s recommendations in the part 1 and part 2 reports. As is typical of the Labour party, it wants borrowing powers, but it does not want the means to pay back the money borrowed. It does not want true accountability for the devolved Government in Wales; it just wants public spending on the never-never. Just such a reckless attitude by the Labour party got this country’s finances into such a mess in the last Parliament.

This coalition Government have no intention of returning to that sorry state of affairs. We are committed to devolving the tax and borrowing powers in the Bill as soon as possible, so that the Welsh Government can become accountable for raising the money that they spend and for repaying the money that they borrow. I therefore invite Opposition Members to consider the full implications of new clause 4 and not to press it.

[Jonathan Edwards]

We have had an interesting debate on this group of new clauses and amendment 8, three of which Plaid Cymru tabled: first, to allow the Welsh Government to issue a guarantee to enable them to boost economic development; secondly, to release the handcuffs on borrowing powers to enable them to choose their own priorities—the borrowing capacity in the Bill will be more or less completely consumed by the M4 project that the Treasury favours; and, thirdly, to hold binding referendums based on the Edinburgh agreement.

Labour tabled new clause 4. Obviously, as a party, we fully support the move to a reserved powers model for Wales. It is a pity that the Labour party decided to spoil the new clause with a second element, which is obviously a delaying tactic. The Welsh economy needs these powers now, rather than waiting for a report. It is obviously a wrecking new clause, typical of Labour’s attitude during progress on the Bill in all its various stages. Plaid Cymru is not a tribal party—we vote as we see fit—but we cannot support new clause 4 because of the wrecking element in its second part.

With your permission, Madam Deputy Speaker, I intend to press amendment 8 to a vote at the appropriate time, but I will not press new clause 3 and ask leave to withdraw new clause 2.

Clause, by leave, withdrawn.

New Clause 4

National Assembly for Wales: reserved powers

‘(1) The Secretary of State will lay a report before each House of Parliament on the further legislative steps needed to move to a model of reserved powers for the National Assembly for Wales and shall lay the report before each House of Parliament within nine months of this Act receiving Royal Assent.

(2) Part 2, except the referendum-related provisions and sections 19 and 20 shall not come into force until the report has been laid in accordance with subsection (1).”—(Nia Griffith.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

16:23

Division 18

Ayes: 202

---

Labour: 198
Social Democratic & Labour Party: 2
Independent: 1
Green Party: 1
Democratic Unionist Party: 1

Noes: 276

---

Conservative: 230
Liberal Democrat: 45
Democratic Unionist Party: 1

Clause 2

Removal of restriction on standing for election for both constituency and electoral region

[Nia Griffith]

I beg to move amendment 13, page 1, line 9, leave out clause 2.

[Madam Deputy Speaker (Dame Dawn Primarolo)]

With this it will be convenient to discuss the following:

Amendment 14, in clause 28, page 30, line 19, at end insert “except section 2”.

Amendment 15, in page 30, line 37, at end insert—

‘(8) Part 1, section 2, comes into force when a Welsh Government Minister has laid a report before the National Assembly for Wales containing a statement to the effect that the Welsh Government, with regard to the electoral arrangements of the National Assembly for Wales, is content with fairness of those arrangements.’.

Government amendments 6 and 7.

[Nia Griffith]

Amendment 13 would remove a clause which would make it possible for people to stand both on the regional list and in the constituency. A bizarre argument is put forward in favour of dual candidacy—if dual candidacy is not allowed, the smaller parties in Wales may struggle to find sufficient candidates of any quality—but if such parties expect the electorate to take them seriously as parties that could help form a Government in Wales, they need to demonstrate that they can find enough additional candidates to field on each of the five regional lists.

Could this problem of finding candidates be something to do with which parties we are talking about and what they believe in? Could it be that young people in Wales are not rushing to put themselves forward as Conservative candidates because they know that the Conservative party in Westminster abolished the education maintenance allowance, while the Labour Welsh Government have retained it, or because the Conservative Government here did away with Labour’s future jobs fund, whereas the Labour Welsh Government have launched a similar programme, Jobs Growth Wales, focusing on the private sector? There is also the issue of university tuition fees.

Could it be that people are not coming forward as candidates for Plaid Cymru because they do not want an independent Wales, or because they do not want to support cutting tax for the better off, as Plaid Cymru’s economic adviser, Adam Price, has confirmed is its policy? People have realised that Plaid Cymru is not the progressive party it pretends to be, but a reactionary party.

Perhaps people do not want to put themselves forward as Lib Dem candidates as they are somewhat confused. One minute we hear that the Lib Dems are in favour of a reserved powers model, yet we struggled to see any of them in the Lobby with us, supporting our amendment. I am not sure where they are now.

People simply do not like to think that they have bothered to go out to vote, only to find that although their preferred candidate won, the candidate or candidates they rejected also got in. We all remember the Clwyd West scenario where the Labour candidate won the constituency—

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

What advice has the hon. Lady had from her colleagues in Scotland on this issue, given that they are now almost totally dependent on the list for their membership in the Scottish Parliament and have reviewed their whole attitude towards dual candidacy? It is a democratic good, according to Scottish Labour.

[Nia Griffith]

I am not casting aspersions on any individual list candidates. We have two excellent Labour list Assembly Members in west Wales—Rebecca Evans, who champions disability issues, and Joyce Watson, who champions human trafficking issues. They are doing an excellent job, because they are focusing on topics, not sitting like some great cuckoo on one constituency out of eight and making that their sole focus of attention, ignoring what is happening in important aspects of the other seven constituencies that they represent.

We have seen such abuse in Wales before. I am sure my right hon. Friend the Member for Neath (Mr Hain) will remind us again, as he has done many times, of the blatant abuse of the list system. He has quoted frequently from the leaked memorandum from Leanne Wood, the leader of Plaid Cymru, in which she gives explicit instructions to her party’s list Assembly Members to direct their time and resources, paid for by the taxpayer, to Plaid Cymru’s target seats.

Some people say that putting into the 2006 Act the clause that prevents an individual from standing for both the constituency and the list was a partisan move by the Labour Government, but we knew full well that it would also prevent our candidates from standing for both. We had at least four sitting constituency AMs who we knew were likely to be vulnerable to electoral change in the 2007 Assembly election and who could have hedged their bets by standing for both. That might have been very cosy for them, but as a matter of principle we knew how much the electorate hated it. On the doorsteps we heard people ask, “What difference will it make if we go out and vote?” It was extremely difficult to convince people after the Clwyd West scenario, because whoever the constituents voted for, all four parties were elected.

It was extremely important to us to stand by our principle, rather than making some sort of cosy situation for our AMs. In fact, I would go so far as to say that in some circumstances, depending on the specific arithmetic for the region, a candidate who could stand for both the constituency and the list could be pretty much guaranteed to be elected on one or other of them. That could breed a certain complacency, which would not serve the electorate well at all. We take issue with the accusation that this is a partisan point, because it is a point of principle. We strongly oppose clause 2, which seeks to turn the clocks back and allow dual candidacy. Our amendment therefore seeks to remove that clause from the Bill.

Our view is that the Assembly’s electoral arrangements should be decided in Wales, so we have also tabled an amendment proposing that an order should be laid in the Assembly by the Welsh Government before any change on dual candidacy can be implemented. I hope that Members will vote for our amendments.

[Mr Peter Hain (Neath) (Lab)]

I, too, wish to speak in favour of amendment 13 and against clause 2 remaining in the Bill. The Secretary of State and other Members who have taken part in our proceedings on the Bill might recognise some of my comments from my single transferable vote speech on dual candidature, because I remain firmly opposed to that abuse of democracy. However, I will be brief, because my favourite premiership player, Frank Lampard, is captaining England at 5 o’clock, and I know that even Members from Welsh constituencies, with the possible exception of our Plaid Cymru friends, will want to cheer them on in their final game.

I repeat my basic argument, which I have expressed throughout the Bill’s proceedings, and the rationale for my ban on dual candidature in the 2006 Act: it cannot be right for losers to become winners through the back door, despite having been rejected by the voters. That is an abuse of democracy. People who stand for a single-Member seat and then lose can end up being elected anyway, in defiance of the electorate’s wishes, because at the same time they are in a list category, and that is an abuse of democracy. There is no real argument against losers becoming winners in that way.

There was a widespread abuse practised by 15 of the 20 list AMs prior to the 2006 ban. They used taxpayers’ money to open constituency offices in the very single-Member seats in which they were defeated. They then targeted those seats at the following election by cherry-picking local issues against the constituency AMs who had beaten them. Why are they so afraid of taking their choice to the people, and why are the Government so afraid of democracy? Why are they so afraid of losing constituency elections that they need the lifebelt of standing for the lists as well? That is what the leader of Plaid Cymru, Leanne Wood, for whom I have considerable admiration despite all that, is doing in Rhondda. In a leaked memorandum written in August 2003, she was refreshingly honest about promoting abuse of the dual candidature system by list Members using taxpayers’ money.

16:45

With the 2006 Act ban having been removed by the Government, there is nothing to stop such abuse being practised again. I suspect that Leanne Wood may need to reissue her guidance. Perhaps she could pass it round to all the political parties in Wales so that Labour, the Conservatives, the Lib Dems and the UK Independence party can exploit the system together instead of leaving it to Plaid Cymru. Indeed, perhaps the Secretary of State could issue the document from the Wales Office so that it has the official approval he presumably wants in changing the law as he now intends, despite the strength of the arguments against it, because it is really a bible for the dual candidature that he and the Government are so enthusiastically preaching and want to restore following the 2006 ban in the wake of these serial abuses. I remind him, and the House, of just how valuable that guide could be for all the political parties. If the political system is to be brought into disrepute by the restoration of dual candidature and the ending of the ban following the serial abuses, why cannot all parties take part and make sure that the decline in respect of Assembly elections is endemic in the system, given that that is what he is encouraging?

Leanne Wood urged Plaid Cymru list Assembly Members to concentrate tens of thousands of pounds of their local office budgets, paid for by taxpayers, on their party’s target seats. She urged them to do casework only where it might benefit Plaid Cymru in those target seats, and to attend civic and other events in the constituency only if they thought that there were votes in it.

There has been a deafening silence from Ministers about this bible for dual candidature, so I will repeat its essential contents in case they have not memorised my two previous speeches on the subject. Leanne Wood’s memorandum, “What should be the role of a Regional AM?”, perfectly illustrates the problem that we faced before the 2006 Act banned dual candidature in Wales. She should be praised for her honesty—indeed, her transparency. She wrote:

“Each regional AM has an office budget and a staff budget of some considerable size. Consideration should be given to the location of their office—where would it be best for the region? Are there any target seats...within the region?”

She meant, of course, single Member target seats.

[Pete Wishart]

I am genuinely interested in the right hon. Gentleman’s view on this issue. What advice does he have for Scottish Labour, which has just done a total U-turn on dual candidacy and is now allowing the practice to go on? Will he disparage Scottish Labour as much as he seems to be disparaging Plaid Cymru for carrying out this appalling act?

[Mr Hain]

rose—

[Madam Deputy Speaker (Dame Dawn Primarolo)]

Order. Before you answer, Mr Hain, let me make it absolutely clear that we are talking about dual candidacy in Wales, as I think you probably appreciate. This is a tightly drawn debate and that is the subject of the amendment.

[Mr Hain]

I am grateful for your guidance, Madam Deputy Speaker, which directly answers the hon. Gentleman’s point. I am speaking about Wales. I am not aware of serial abuses of the kind practised in Wales prior to the 2006 ban occurring in Scotland. Indeed, I think that the codes that apply in Scotland may be different. I note that the then Presiding Officer of the Scottish Parliament, Lord Steel, attacked dual candidature in terms very similar to mine.

Leanne Wood’s bible for dual candidature went on:

“We need to be thinking much more creatively as to how we better use staff budgets for furthering the aims of the party.”

She finished with a refreshing burst of honesty that, in an era of political spin, can only be commended:

“Regional AMs are in a unique position. They are paid to work full-time in politics and have considerable budgets at their disposal. They need not be constrained by constituency casework and events, and can be more choosy about their engagements, only attending events which further the party’s cause. This can be achieved by following one simple golden rule: On receipt of every invitation, ask ‘How can my attendance at this event further the aims of Plaid Cymru?’ If the answer is ‘very little’ or ‘not at all’, then a pro forma letter of decline should be in order.”

All the arguments and evidence I have cited in the past few minutes, in Committee and on Second Reading, demonstrate that the 2006 ban was not partisan but instead enhanced the democratic standards of all Welsh Assembly Members.

Indeed, I reminded the House at the time of the ban that six Labour Assembly Members, including three Ministers, would be defeated in the 2007 Assembly elections by a very small swing of 3% against them. They would not have the lifebelt of dual candidature, which I had removed; they would no longer enjoy the safety net of the regional list. Two of them subsequently did lose, as I said could happen. The reform affected Labour candidates and candidates of other parties alike, a point that my hon. Friend the Member for Llanelli (Nia Griffith) made so eloquently.

In conclusion, the Government have now officially blessed this practice—presumably, they will marshal the votes shortly to try to defeat our amendment—and it appears that they are, sadly, doing so with the blessing of the Electoral Commission. I therefore look forward to Labour being welcomed into the fold of running dual candidates again. After all, why should we lose out while everybody else takes advantage? Never mind the voters, let us put our own self-interest as political parties first. I trust that the Government will be proud of bringing politicians in Wales into even greater disrepute than the political class right across the United Kingdom. Tellingly, the Electoral Commission is endorsing that disrepute and the Secretary of State is now smiling in anticipation of that happening. That is the consequence of his reversal of this ban; he is opening the door again to the serial abuses which have been documented and proved beyond doubt. He is going to invite that very abuse of democracy in Wales by removing the ban and installing clause 2, which is the reason for supporting amendment 13.

[Mrs Siân C. James (Swansea East) (Lab)]

I wish to speak briefly in support of amendment 13 and against the removal of clause 2. I oppose dual candidacy simply because if a candidate is not elected by a constituency under the first-past-the-post system, it cannot be right for them to be elected under the list system. If the electorate have rejected someone once as their first-choice candidate, it is not acceptable for them to have the opportunity to re-enter the game through the back door. In mainstream society people get one chance at a job; if they are not successful at an interview, they have to accept the decision and they do not go back squealing to the prospective employers saying, “Can we change the rules now? Can I possibly be appointed under different criteria or under a different set of interview processes?” Things should be no different for politicians. There should be no swapping or alternatives; it should be the same for everybody.

Let us examine the attitudes towards dual candidacy. We have heard a lot of pooh-poohing of the Bevan Foundation’s inquiry and report, but my constituency took part in that inquiry and I did not see any party members participating; those who participated all came from local community groups and pensioners groups, were not affiliated to any particular party and were not aligned to any political point of view. Some of them were sceptical about devolution and the political process, whereas others were very supportive of it. Those who participated sent a clear message saying, “We are really concerned about the way politicians are behaving on the dual list system and about what is happening.”

The report found that more respondents said that

“dual candidacy was unfair compared with those who felt candidates should be free to stand in both.”

Someone who was interviewed said:

“I think it is unfair…It’s like people can sneak in the back door.”

Another said:

“It seems unfair in a way, surely if they weren’t popular enough they shouldn’t be able to get in.”

There has also been international criticism of the dual candidacy idea. Moves have been made to improve things in New Zealand and in Canada, and Canadian research states:

“Voters are displeased with the case where a candidate is not successful in a single member constituency, but is elected anyway by virtue of being placed on the top of a party’s list.”

In further support of my argument, I give the example of the unfairness—this has already been mentioned by colleagues—in the Clwyd West constituency. It puzzles most people in Wales that it was possible for all four candidates on the first-past-the post list to end up being elected. When I got into politics, a very wise old bird told me, “Siân, don’t get into politics if you’re not prepared to lose, because there’s only one winner.” We have totally turned that on its head with devolution and now anyone can be a winner, as long as they are at the top of their party’s list. I think the public find that difficult to understand and they are puzzled by it.

[Mr Harper]

We debated this issue at length in Committee. What the hon. Lady is really doing is criticising a closed-list system whereby voters can vote only for parties and have no choice of candidates. She is not really offering a critique of the Bill’s proposals. If she does not like that system, she should remind herself that it was her party that put it in place.

[Mrs James]

I thank the hon. Gentleman for his intervention, but it is not true that I am opposed to the list system. I think it is excellent and that it gives an opportunity to all parties. It is fair and gives a voice to parties that may not otherwise have had a voice in the Assembly. What I oppose is placing candidates at the top of the list so that if they lose in one system they have the chance to win in another. I am not criticising the system; all I am saying is that dual candidacy is not acceptable.

For an individual who is already standing as a candidate on a constituency list to have an opportunity for a second bite of the cherry is political carpetbagging—that’s all it is, pure and simple—and therefore unacceptable.

[Bob Stewart (Beckenham) (Con)]

Does that mean that the hon. Lady is in favour of a complete list system or an individual candidacy system? What she really seems to be against is mixing them up, so which of them does she support?

[Mrs James]

I support having both first-past-the-post and regional Assembly Members. They add a great deal to the Assembly and, as I have already said, the system is fairer and proves that people who stand for smaller parties get a voice. That cannot be opposed, but I am opposed to people standing on both lists.

[Jonathan Edwards]

Will the hon. Lady give way?

[Mrs James]

I want to finish, because I promised to be brief and I want to keep my speech tight.

It is no wonder that the public see us politicians as a bit devious and above and beyond the basic rules, because we always apply rules that suit us. That is what the public see this as, purely and simply: politicians having a second bite of the cherry when they do not. I ask the Secretary of State to reconsider the amendment and to consider our proposals seriously.

[Mr David Jones]

With your permission, Madam Deputy Speaker, I will first address the Government amendments in this group. The Bill provides for a referendum to be triggered by the Assembly on whether a portion of income tax should be devolved. If the Assembly triggers that referendum, as I very much hope it will, it will be the third referendum on devolution to take place in the past two decades. It is vital that we as a Government learn lessons from the previous referendums, particularly the referendum on law-making powers that took place in 2011, to ensure that the framework for holding an income tax referendum is as robust as possible.

Hon. Members will recall a key issue in 2011 that led some to question the system that was then in place, namely that, because no credible organisation applied to the Electoral Commission to become the designated no campaign, no yes campaign could be designated either. Any future referendum on the devolution of a portion of income tax would pose a crucial question to the electorate in Wales that would affect generations to come, so it is highly important that the credibility of that poll should not be questioned in any way.

Amendment 6 therefore provides more flexibility in the designation process so that, should the Government of the time wish to, they could, by Order in Council, enable the Electoral Commission to designate an organisation under the Political Parties, Elections and Referendums Act 2000 for only one possible outcome of the referendum rather than only both. That will ensure that where a credible organisation seeks designation for one outcome, it can be designated even if no credible application for designation for the other outcome is made. We would of course want credible campaigns for both outcomes in a future referendum so that a full and vibrant debate about the issues could take place, but amendment 6 will help to ensure that there is no repeat of the situation that arose in 2011, when no organisation was designated for either outcome.

17:04

Amendment 7 makes further provision for when an organisation is designated for only one outcome or no organisation is designated for either outcome. Under the amendment, an Order in Council can allow the Electoral Commission to take action to promote public awareness of the referendum in Wales, including about the referendum itself, the question on the ballot paper and the importance of voting in the referendum. It will enable the Order in Council to require the chief counting officer to take action to encourage participation in the referendum and, to give full effect to that, the chief counting officer can give directions to local counting officers in Wales about how they should encourage voting in the referendum in their locality. That will ensure that if an organisation were designated for only one outcome or if no organisation were designated for either outcome, the Electoral Commission could take action to ensure that the electorate in Wales were adequately informed about the important issue on which they were asked to decide.

Taken together, amendments 6 and 7 provide for flexibility in the powers to make an Order in Council for the conduct of a future income tax referendum to enable the Government to ensure that such a referendum is conducted using as robust a process as possible. The Government have consulted the Electoral Commission in preparing them. The amendments show that we have learned from previous referendums, and I ask hon. Members to support them.

Turning to the Opposition amendments, amendment 13 seeks to remove clause 2 from the Bill and to continue to prohibit candidates from standing in both a constituency and a region in an Assembly election, while amendments 14 and 15 seek to delay the commencement of the provision. Once again, it is disappointing but not at all surprising that the Labour party continues to plough its lonely furrow in opposing clause 2. Indeed, this is very much groundhog day. I must pay tribute to the hon. Member for Llanelli (Nia Griffith) and the right hon. Member for Neath (Mr Hain) for their persistence in putting their heads above the parapet to be shot at again.

Hon. Members will no doubt know that this issue was debated at great length in a Committee of the whole House, which then voted by 265 votes to 191 that clause 2 stand part of the Bill. Rather than seek to debate aspects of the Bill that might have a real impact on the prosperity of businesses and individuals in Wales, the Labour party is focusing on a partisan electoral issue of appeal only to Labour party members. That is underlined by the extraordinary arrogance of amendments 14 and 15, which, if clause 2 remains part of the Bill, would provide for the Labour Welsh Government in Cardiff to decide whether the dual candidacy provisions come into force. Interestingly, the amendments would not even allow the Assembly to have a vote on the decision. Clearly, the Labour party is not even bothering to hide the partisan agenda that it is pursuing.

To repeat—this is very much a repetition, because it has previously been aired at great length—Wales is the only country in the world where dual candidacy is banned under this type of electoral system. As was discussed at great length in debates on Second Reading and in Committee, when the Labour party introduced the ban in 2006, it did not make the same provisions for elections to the Scottish Parliament or the London Assembly.

[Mr Hain]

Is the Secretary of State aware of the evidence that Professor Roger Scully has brought forward? A number of Asian countries have a similar ban, including Taiwan and South Korea, in similar circumstances. Does the Secretary of State think that he should withdraw the statement that he has just made?

[Mr Jones]

I clearly referred to a particular type of system, which is the majoritarian type. That is where the votes in the constituencies count towards the list elections. In Asia and Ukraine, there is something similar, but not under that type of system. I am pleased that the right hon. Gentleman refers to Professor Scully. In his evidence to the Welsh Affairs Committee during pre-legislative scrutiny of the draft Bill, he clearly said:

“If parties that are defeated at constituency level can still win representation through the list, then it is difficult to see why that should not also apply to individuals.”

In other words, what is the difference for this purpose between a party and an individual? That is Professor Scully’s view. To pray him in aid goes against the advice that he gave during pre-legislative scrutiny of the draft Bill.

[Mr Hain]

Notwithstanding that advice, Professor Scully was simply correcting the Secretary of State on his basic proposition. The point is this, and no one has disputed it: neither the Secretary of State nor the Minister have challenged one bit of evidence that we have brought forward, and which I have repeatedly cited, about the serial abuses in Wales under the dual candidacy system, which the Secretary of State is about to reintroduce. He offers no protection or guarantee that that serial abuse will not happen; it went on prior to the ban in 2006. In fact, his Bill is a charter for reopening that abuse.

[Mr Jones]

I have to take issue with the right hon. Gentleman. The reason for the abuse was that a particular individual, whom the right hon. Gentleman constantly quotes and cites in this context, behaved extremely badly, and people will continue to behave extremely badly. Let us go back to Professor Scully. He said in his evidence to the Committee:

“No substantial independent evidence was produced at the time of the GOWA (or, to my knowledge, has been produced subsequently) of significant public concern about dual candidacy. The claims made about dual candidacy ‘devaluing the integrity of the electoral system’, and ‘acting as a disincentive to vote’ therefore remain wholly unsupported by solid evidence.”

Those were the comments of the academic Professor Scully, whom the right hon. Gentleman prays in aid. That same professor demolishes the right hon. Gentleman’s argument.

The prohibition was introduced against the advice of leading academics such as Professor Scully, organisations such as the Electoral Reform Society and independent bodies such as the Electoral Commission. I was very surprised by the right hon. Gentleman’s criticism of the Electoral Commission. We are now legislating to correct this anomaly and I hope that the hon. Members for Pontypridd (Owen Smith) and for Llanelli (Nia Griffith) will not press their amendments, although I am not holding my breath.

Question put, That the amendment be made.

17:08

Division 19

Ayes: 196

---

Labour: 192
Conservative: 1
Independent: 1
Democratic Unionist Party: 1

Noes: 278

---

Conservative: 225
Liberal Democrat: 46
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Green Party: 1
Democratic Unionist Party: 1

Clause 6

Taxation: introductory

Amendment made: 1, page 5, line 12, leave out “the taxes” and insert

“particular taxes as devolved taxes”—(Mr David Jones.)

This amendment clarifies that Chapters 3 and 4 of Part 4A of GOWA 2006 deal with devolved taxes. This distinguishes devolved taxes from the local taxes (such as council tax and non-domestic rates) over which the Assembly already has legislative competence under paragraph 12 of Part 1 of Schedule 7 to that Act.

Clause 13

Commencement of the income tax provisions etc if majority in favour

Amendment made: 2, page 18, line 23, at end insert—

‘( ) The Secretary of State may bring section (Welsh taxpayers for social security or child support purposes) into force by order.”—(Mr David Jones.)

This amendment and amendment 5 enable the new clause inserted by new clause NC1 to come into force by order of the Secretary of State if the majority of voters in a referendum held under clause 11 vote in favour of clauses 8 and 9 (the income tax provisions) coming into force.

Clause 19

Borrowing by the Welsh Ministers

Amendment proposed: 8, page 22, line 8, at end insert—

‘(1B) Welsh Ministers may set their own capital expenditure priorities.”—(Jonathan Edwards.)

This amendment would ensure that a future Welsh Government can utilise the borrowing capacity in order to invest in infrastructure projects that it deems a priority, and not be constricted or forced to invest in a project that the Treasury deems a priority.

Question put: That the amendment be made.

17:21

Division 20

Ayes: 8

---

Plaid Cymru: 3
Social Democratic & Labour Party: 2
Democratic Unionist Party: 2
Green Party: 1

Noes: 278

---

Conservative: 232
Liberal Democrat: 46

Clause 22

Reports on the implementation and operation of this Part

Amendment made: 3, page 25, line 43, at end insert—

“() section (Welsh taxpayers for social security or child support purposes) (Welsh taxpayers for social security or child support purposes),”—(Mr David Jones.)

This amendment ensures that a report under clause 22 (reports on the implementation and operation of Part 2 of the Bill) is not required to cover the new clause inserted by new clause NC1.

Clause 27

Power to make supplementary, consequential, etc provision

Amendment made: 4, page 30, line 14, at end insert—

‘( ) In this section, references to the provisions of Part 2 do not include section (Welsh taxpayers for social security or child support purposes) (Welsh taxpayers for social security or child support purposes).”—(Mr David Jones.)

This amendment ensures that the power to make supplementary etc provision in clause 27 does not extend to making provision in connection with the new clause inserted by new clause NC1.

Clause 28

Commencement

Amendment made: 5, page 30, line 27, after “9” insert

“, (Welsh taxpayers for social security or child support purposes)”—(Mr David Jones.)

Schedule 1

Referendum about commencement of income tax provisions

Amendments made: 6, page 32, line 40, at end insert—

“Assistance for designated organisations

6A (1) An Order under section 11(1) may make provision for the provisions of PPERA 2000 listed in sub-paragraph (2) to apply with specified modifications in relation to a referendum held by virtue of section 11(1).

(2) The provisions are—

(a) sections 108 and 109 of PPERA 2000 (designation of organisations to whom assistance is available);

(b) section 110 of, and Schedule 12 to, that Act (assistance available to designated organisations).

(3) The modifications specified may include allowing a permitted participant to be designated by the Electoral Commission under section 108(1) of PPERA 2000 in relation to one of the possible outcomes at the referendum whether or not a permitted participant is designated in relation to the other possible outcome.”

This amendment enables an Order in Council under clause 11 to modify the provisions of PPERA 2000 about designation of organisations by the Electoral Commission, and the kinds of assistance available to designated organisations. For example, the Commission could designate an organisation under section 108 of PPERA 2000 in relation to one (rather than both) of the possible outcomes of a referendum. Amendment 6 is in amended form from the text originally submitted.

Amendment 7, page 33, leave out lines 1 to 29 and insert—

“Information and encouraging participation

7 (1) An Order under section 11(1) may authorise or require the Electoral Commission to do things for the purpose of promoting public awareness and understanding in Wales about one or more of the following—

(a) the referendum which the Order causes to be held;

(b) the question to be included on the ballot paper at that referendum;

(c) voting in that referendum.

(2) An Order under section 11(1) may authorise or require the Chief Counting Officer to do things for the purpose of encouraging participation in the referendum which the Order causes to be held.

(3) The things which the Commission or the Chief Counting Officer may be authorised or required to do under sub-paragraph (1) or (2) include imposing obligations, or conferring powers, on counting officers or other persons.”—(Mr David Jones.)

This amendment enables an Order in Council under clause 11 to authorise or require the Electoral Commission or the Chief Counting Officer to do things for the purpose of promoting public awareness and understanding of, and encouraging participation in, the referendum. Those things may include the issuing of directions to counting officers.

Third Reading

17:31

[Mr David Jones]

I beg to move, That the Bill be now read the Third time.

We have had a number of productive debates on this Bill, and I would like to thank all right hon. and hon. Members for their contributions. It was in November 2012 that the Silk commission recommended a package of measures to devolve fiscal powers to the National Assembly and the Welsh Government. We have had a number of debates in this House since then on giving the Welsh Government increased borrowing powers; on the devolution of a portion of income tax, subject to a referendum; and on the devolution of taxation on land transactions and landfill. Our debates on the Bill have enabled us to fine-tune those proposals further, and I appreciate the broad support that the Bill has received from all parts of the House. I would again like to thank Paul Silk and his commissioners for their work on their two reports, and also my hon. Friend the Member for Monmouth (David T. C. Davies) and the other members of the Select Committee on Welsh Affairs for their excellent pre-legislative scrutiny of the Bill.

This Bill is a major milestone for Wales, and it demonstrates the Government’s commitment to strengthening Welsh devolution and Wales’s role in the United Kingdom.

[Mr Harper]

In the debate in Committee on 6 May, at column 109, the Secretary of State committed to updating the House, either on Report or on Third Reading, on the conversations he was going to have with the Secretary of State for Health about the health service. Is he able to do that today?

[Mr Jones]

Yes, and I am grateful to my hon. Friend for reminding me about that important point. I can tell the House that I have engaged with the Department of Health, and that NHS England is continuing its efforts to work constructively with the Welsh Government to find a solution to the problems faced by English patients, such as my hon. Friend’s constituents, who access NHS services in Wales. Work on resolving the issues raised by the cross-border protocol is continuing, and it is hoped that this work will conclude by the end of this year.

[Owen Smith]

Can the Secretary of State also inform the House on the relative performance of the NHS on either side of that border? What is the difference between, for example, the Wye Valley NHS Trust and the Aneurin Bevan health board on cancer waiting times? My understanding is that in Wales the targets are rather more stringent, and are being met.

[Mr Jones]

I could rehearse the remarks that were made on the last occasion we discussed this issue, but the point that my hon. Friend the Member for Forest of Dean (Mr Harper) was making was that his constituents access the health service in Wales. They wish to access the English health service, but at the moment they have difficulty doing so. I would have thought that the hon. Gentleman would want to facilitate my hon. Friend’s constituents’ access to the English health service, rather than continuing to snipe.

[Alun Cairns]

The shadow Welsh Secretary mentioned cancer waiting times, but does my right hon. Friend the Secretary of State agree that that is a very narrow element of this? The patient experience involves diagnosis, and the waiting times for diagnosis are much longer in Wales. If we take into account the total waiting times in Wales for cancer treatment, the picture is very different from what was suggested.

[Mr Jones]

My hon. Friend makes an important point. The shadow Welsh Secretary ought to understand that there is huge public dissatisfaction with the Welsh Government’s performance on health in Wales. I suggest that, rather than trying to engage in guerrilla warfare on individual points, he has a word with his Assembly colleagues and urges them to do more to deliver a decent health service for the people of Wales.

Despite Labour’s focus on dual candidacy, at its heart the Bill is about driving forward economic growth in Wales, and it illustrates the centrality of economic recovery to everything this Government do. The Bill provides the Welsh Government with additional levers and incentives to deliver economic growth. As well as providing opportunities for the Welsh Government, it increases scrutiny of them. Since devolution, the Assembly and the Welsh Government have been accountable only for how they spend taxpayers’ money; now, they will become more accountable for how they raise it. The challenge for the Assembly and the Welsh Government will be to use the tools we have given them effectively and efficiently. Part of that challenge will be deciding if and when to seek the agreement of the Welsh electorate, in a referendum, to devolving an element of income tax. I urge the shadow Secretary of State and his colleagues in Cardiff Bay to abandon their opposition to a referendum, and the Assembly to trigger a referendum sooner rather than later.

We are 87 days away from probably the most momentous decision in the 300-year history of our Union. The referendum in Scotland has significant implications for devolution in Wales. The majority of us in this House sincerely hope that the people of Scotland will vote to remain part of the Union. A no vote will allow those of us who believe in the Union to consider how best to strengthen it and to enable all parts of our United Kingdom to prosper.

In Wales, the recommendations made by the Silk commission in its second report provide opportunities to consider further devolution. As the commission acknowledged, the key legislative recommendations should be matters for the next Parliament, and it will be for political parties to set out their proposals at the 2015 general election. That will provide a mandate for the next Government to implement the changes they have committed to, and will enable Parliament to consider changes to the Welsh devolution settlement in the context of strengthening our Union.

As well as its financial reforms, the Bill makes some highly welcome improvements to the Assembly’s electoral arrangements, making them fairer and more equitable. Assembly terms will be changed from four to five years to make it less likely that Assembly and parliamentary elections occur on the same day. Members will no longer be able to sit simultaneously in both the Assembly and the House of Commons, enabling Assembly Members to concentrate on representing their constituents in the Assembly. The Bill overturns the clearly unfair ban on dual candidacy introduced by the Labour party, which is seen by constitutional experts and the public alike as partisan and anomalous.

This Bill marks a significant strengthening of the Welsh devolution settlement. It bolsters the democratic institutions in Wales, and ensures that the Assembly and the Welsh Government are more accountable to those who elected them. It provides the tools for the Assembly and the Welsh Government better to support stronger economic growth. I commend this Bill to the House, and I trust that the House will support its Third Reading.

17:40

[Owen Smith]

I echo the Secretary of State’s thanks to colleagues from all parts of the House who have engaged in debate and scrutiny of this Bill on the Floor of the House over what feels like quite a long period of time. We have had a constructive set of discussions, which have revealed some of the divisions between Ministers and their Conservative colleagues in the Welsh Assembly and exposed the clarity of the Opposition’s support for devolution.

I join the Secretary of State in thanking Paul Silk and the members of his commission for preparing the groundwork for this Bill, and also for reflecting on the future of Welsh devolution, not just in respect of fiscal powers but beyond that. I am sure that we will debate the measures in the second part of the Silk report at some future stage.

Labour supports much of this Bill, and will not oppose it on Third Reading. In particular, we support the Government’s decision to afford Wales borrowing powers. I have said on many occasions in this House that, in not being able to borrow, Wales has been at a disadvantage compared with other parts of the UK. We have acknowledged that that was a mistake of previous devolution legislation. Wales is a legislature that should be able to borrow in order to invest in vital infrastructure. It is welcome that the Government have recognised that, and are moving to afford Wales those borrowing powers. It is a shame that the borrowing powers are not the same as those that will be enjoyed in Scotland, but, overall, we are supportive of the measure.

We are supportive, too, of the proposal to devolve stamp duty, land tax, landfill tax and other minor taxes. Business rates are also to be fully devolved to Wales. We look forward to the Welsh Government, with their progressive values, using those powers in a fair and progressive manner to deliver, hopefully, innovative and progressive solutions for Welsh people in respect of land and businesses taxes.

I also welcome the move towards a more symmetrical position between Wales and Scotland. Wales is not Scotland, and the history of our two countries is very different. The way in which we came to support devolution is very different, and I have often said that. That asymmetry can be explained by our different histories and the different degrees of support for devolution in Wales and Scotland at the point of the initial referendum. However, that position has changed, which could be due in part to the impending referendum in Scotland. The Secretary of State rightly referred to it as a momentous moment for British democracy and for our country. It is right that we consider how things have moved, and why people’s support for Welsh devolution has strengthened. It seems increasingly clear to us, and also to the Government, that a more symmetrical system of devolution might add to the stability of the devolution settlement and diminish the cause of separatism.

We are disappointed that the Government have failed in this Bill to undertake any serious analysis of how the costs and benefits of tax devolution will be weighed for Wales. Any Government who were truly serious about affording these powers to another Parliament and Assembly should have undertaken that sort of analysis. Indeed, this Government did undertake that sort of analysis in respect of the Scottish proposals to take on taxation powers. I cannot therefore understand why the Government and the Secretary of State for Wales in particular have refused to insist that colleagues in the Treasury undertake a similar measure for Wales.

The argument has been made that a considerable gap is now expected between the passing of the Bill and the adoption of these powers, but there was a considerable gap—three years or so—between the passing of the Scotland Act 1998 and the uptake of its powers, and that did not prevent the Government from seeing the necessity of undertaking the work in advance.

It is also disappointing that the Government have failed to offer any real guarantee about whether Wales will be better or worse off under these provisions. We still do not know whether the block grant will be eroded over time. Initially, it will be protected, but the Exchequer Secretary told us again here today that if Welsh gross domestic product and revenues grew more slowly than those of England, Wales would have less money over time to spend on vital public services. Given the problems of meeting the demand for public services in Wales because of our specific demographics and history, and of a £1.6 billion cut to the Welsh budget since the Conservatives came to power, it would be better for the Government to give some sort of guarantee to the Welsh people that they would not be worse off.

[Jonathan Edwards]

Does not that point indicate that the hon. Gentleman has no faith in the Labour party’s abilities to improve the Welsh economy while in control of the Welsh Government ?

[Owen Smith]

No, it does not indicate that at all. It indicates that we are not fantasists. We understand the fiscal reality of Wales, which expends £35 billion a year in public expenditure and raises £17 billion a year in tax revenues, leaving a very large shortfall. We understand that that shortfall is made up by virtue of our being part of a generous Union that shares risks and pools rewards across the UK. Our fear is, of course, that Plaid Cymru Members wish to use this—honourably, from their perspective, as they believe in a separate, independent Wales—to fuel their cause of separatism. We are not interested in fuelling their separatist cause. That is why we have asked questions about the Bill.

We are concerned that the Government have failed to take this opportunity today to use the Bill to take forward the reserved powers model. For the reasons that I mentioned earlier, we think that it would be beneficial for Wales to be placed on a similar footing to Scotland in respect of the devolution model, and the Government could have taken that step in the Bill.

The biggest failing relates to the measuring of benefits and costs to Wales. We will now need to rely on noble Members of another place to undertake further scrutiny of the long-term impact on Wales of the volatility of tax revenues and of the costs of establishing an Exchequer function for Wales. The reason why the Government have not undertaken such scrutiny is that, I fear, they are not terribly interested in Wales. If they were more interested in Wales, they would not have implemented £1.6 billion-worth of cuts. If they were interested in Wales, they would not constantly mislead the public, as we have heard this evening, and seek to divide and rule in Britain when it comes to the respective merits of our health care systems, housing, education and all manner of other things where the Secretary of State chooses to bad-mouth Wales. If they were genuinely interested in assisting Wales, he would have demanded that the Exchequer Secretary undertake a similar analysis to the one that he undertook with Scotland.

The bit of the Bill in which the Government are most interested—as I suspect are nationalist hon. Members—is the bit on dual candidacy. We have heard eloquent and compelling arguments from Labour Members as to why it is right that we banned dual candidacy. It is not right for losers to be turned into winners, as was the case in Clwyd West, in the Secretary of State’s seat. The public do not understand how political alchemy is used to transform people who have been rejected under first past the post, and to put them back into office via the back door. The Secretary of State and his colleagues have wholly failed to explain why they are doing that, other than for narrow party political advantage.

It is fair to say that we have not had many laughs here in the last couple of days, debating this rather dry and dusty devolution Bill. One thing that has amused me is the attempt to paint my party, and indeed me, as somehow anti-devolution. That is as amusing as it is risible because, of course, the Labour party is the party of devolution. We campaigned for it for 100 years; we delivered it, and we will continue to deliver it. We have concerns about tax-varying powers because we do not want them turned to what we think would be malign intent—to fuel the separation of Wales from England. The Secretary of State is right to say that we face a very important choice in Britain; the Scottish people face an important choice. We do not want to fuel separation by encouraging tax competition, with one part of Britain undercutting another in a race to the bottom. That is anathema to Labour values and anathema to the values of the people of Wales.

17:51

[Glyn Davies]

I am grateful for being called to speak on an issue that is of great personal interest. As well as being the Member of Parliament for the Welsh seat of Montgomeryshire, I served for eight years representing Mid and West Wales as a regional Member of the National Assembly for Wales. My dominant interests since becoming a Member of Parliament have been Welsh politics, the Welsh economy, Welsh public services and, indeed, the relationship between Cardiff Bay and Westminster as they deal with the devolution process, which will continue for many more years. The nature of such a process is that one does not reach an end stage, a point to which I shall return.

I do not think this a dry debate at all. Constitutional debates tend not to be ones about which we joke and laugh, but as someone who is deeply embedded in Welsh politics, I find a debate about a Bill concerning the future governance of my country hugely interesting, and I have enjoyed the various aspects of it.

I declare my enthusiastic support for the Bill, which is a significant step forward in the devolution process, although there are aspects with which I do not agree. Perhaps I am in a very small minority, but I should refer to those differences alongside my general support for the Bill, to put my opinions on the record for the benefit of anyone in my constituency and indeed the rest of Wales who might want to know what they are.

I have listened to some of the debate; I missed some of it owing to meetings. My general impression is that Labour’s position in particular is confused. Clearly, Members on this side of the House are pleased that Labour will be supporting the Bill—that is a positive move—but the contributions of many Labour Members suggest that they just do not accept the principle underlying the devolution of tax to the Welsh Assembly. Some of their language has sounded more as though they oppose the Bill than support of it.

The Plaid Cymru contributions have been churlish—that is the word that I would use. During this Parliament it was a Conservative Secretary of State who introduced, with very great determination, the Bill that created law-making powers in Wales. I do not believe that it would have been introduced if it had not been a Conservative Secretary of State; I think that a Labour Secretary of State would probably have chickened out. It was a Conservative Secretary of State who established the Silk commission. It has done very good work and, like several other Members, I commend it for that work. It is a Conservative Secretary of State who has introduced this Bill. I perfectly accept that it does not go as far as Plaid Cymru Members may want—one would not expect that—and, indeed, there are differing views on the detail of the Bill in all parties, but nobody can disagree that granting tax-raising powers to the National Assembly for Wales, and the borrowing powers that go with them, is anything but a huge constitutional step forward. On that basis, it might have been at least fair of Plaid Cymru to congratulate the Conservative party on taking us down the road, not as far as it would want, but certainly in a positive direction.

[Mr Llwyd]

The hon. Gentleman said that he had been in and out of the debate, and I accept that—so have I. My colleagues were generous about various parts of the Bill, but nevertheless there are parts about which we are concerned, and that is the nature of politics. Do not call us churlish because we find fault in some way with the Bill. That is just politics, is it not?

[Glyn Davies]

I thank my friend for that; he has been a friend for a long time. It is reassuring that he has decided to intervene and say how supportive he is of what the Conservative Government have delivered in the past few years. I shall read today’s debate in Hansard to pick out all those individual bits that he speaks so enthusiastically about.

There are several elements to the Bill, the most important one by a long way being the tax-raising powers and the commensurate borrowing powers that go with them. There will be continuing debate on that. It may well feature in the manifestos of the various parties leading up to the next general election, and I think it will be revisited in the next Parliament. That is natural in constitutional issues when there is a process. I think there will be a next step to this process, which I look forward to being a part of after the next general election.

Another issue that has caused a lot of excitement is dual candidacy. If there was any political intent to gerrymander, it was on the part of the Labour party when it introduced the ban. No independent body in Wales, including the Electoral Commission, thinks that it is any way partisan to scrap the ban on dual candidacy. It was brought in by the Labour Government in this place with the support of Labour in Cardiff, with the view that it would benefit the Labour party in Wales, and it is truly ironic that it did not. The Opposition should welcome what is a right and proper constitutional change brought in by this Government.

I am not in favour of a referendum; generally speaking, I do not like them. Political parties should tell the people what they intend to do and if the people vote for them at a general election, they can carry that out without a referendum. I accept that I am in a minority in relation to a referendum on tax-raising powers in Wales. The Silk commission recommended it and there was a referendum in Scotland. Apart from this one contribution on this issue, I will have to sneak back into my box rather quietly on that one.

I am also not in favour of a five-year term, and again I might be in a minority. I generally think that four-year terms are right for Parliaments. We have a five-year term here, and I realise that there is a lot of support for a five-year term for the National Assembly. Again, that is another little box that I will have to crawl back into, because that might be a minority view.

But let us not forget what the Bill will do if, as I hope it will, it receives its Third Reading today. This Westminster Parliament is granting to the National Assembly for Wales the power to raise taxes—financial accountability, so that in future a Welsh Government will be accountable to the people whom they represent. There is further to go, but there is an important principle: that a Bill put forward by a Conservative Secretary of State is making a significant contribution to the process of devolution in Wales.

17:58

[Paul Murphy]

It is a great privilege to speak on Third Reading of a Bill that my hon. Friend the Member for Pontypridd (Owen Smith) indicated we will not oppose, for a variety of reasons. The Secretary of State referred to this as a milestone Bill. I have sat through 26 years of Welsh Bills, and I have to say that I do not think this is a milestone. There are some good parts to it, but a real milestone was the Bill introduced by the Labour Government after the 1997 general elections, which set up the Welsh Assembly.

The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) suggested in a previous debate that the Westminster parties, by which I assume he meant the Conservatives, Labour and the Liberal Democrats—he is actually a member of a Westminster party, as we meet here in Westminster, rather than Dudley or anywhere else—were obstructive when dealing with devolution matters. Had he said that in 1978, he would have been absolutely right. I was treasurer of the “No Assembly” campaign in Wales and deeply opposed devolution in the late ’70s, but I changed my mind, and for a variety of reasons, including all those years of Conservative government. He and his Plaid Cymru colleagues must reflect on this: no Labour Government would have meant no Assembly and no Welsh Government. Obviously we were helped by the pro-devolution parties—the Liberal Democrats and his party.

The hon. Member for Montgomeryshire (Glyn Davies) suggested that a Labour Secretary of State might have “chickened out” of extending the Assembly’s powers. I see no evidence for that, having been a Secretary of State for Wales twice. I certainly would not have chickened out. Indeed, when this Bill was introduced I enthusiastically supported the previous Secretary of State, who I thought showed great courage in introducing it as a Conservative, and I agreed with her.

[Glyn Davies]

I would like to reassure the right hon. Gentleman that I do not think the Labour party would have chickened out had he been Secretary of State.

[Paul Murphy]

I am grateful to the hon. Gentleman for that.

The devolution of extra powers was supported overwhelmingly by the people of Wales in the referendum, including in my constituency, which, having been one of the most sceptical and anti-devolution constituencies in the whole of Wales, changed its mind. I think that there has been a sea shift in how people perceive devolution. People understand it more, although not completely. We heard earlier about the Welsh television surveys indicating that many people did not know who ran the health service, for example. There will still be some of that, but there has been a change none the less.

To that extent, I welcome aspects of the Bill. The change to the name “Welsh Government” might seem trivial to many people, but it is significant. I think that the fixed terms, the ban on dual membership and other aspects of the Bill are greatly to be welcomed. Even though we disagree on how the business of taxation should be introduced in Wales, the fact that the Government have introduced the idea that we should deal with it is significant. All parties now agree on that, even if we disagree on the method and mechanism by which it will be introduced. However, there are parts of the Bill, including dual candidacy, on which we fundamentally disagree with the Government. There are substantial disagreements, but there are also agreements.

The Bill will now go to the other place, and I think that there is an opportunity for their lordships to improve it. I will refer to just two issues. One relates to reserved powers, which I spoke about earlier. I think that the Scottish referendum—I hope that there will be a no vote—will be followed by extra powers for the Scottish Parliament and that that will be replicated in our Assembly in Cardiff. I hope that the Government will rethink that.

More immediately significant is the issue of borrowing. I think that we are being short-changed in Wales as a result of this Bill. I agree wholeheartedly with the Government that the Welsh Government should be able to borrow, as the Northern Ireland Executive and the Scottish Government can, but I have still heard no reasonable answer to the question that all of us on the Opposition Benches have posed. The borrowing principle was introduced in Edinburgh and Belfast without necessarily any reference to streams of income, even though Scotland theoretically has a stream of income and the Northern Ireland Assembly has dealt with rates for many years. There is a gaping hole there. I think that their lordships would be well advised to examine that issue in the Bill.

[Mr Llwyd]

There is one further problem with the borrowing situation in the Bill. Why should the Westminster Government allow borrowing powers and then direct where the money should be spent? That undermines the whole principle of devolution, subsidiarity and any other principle of democratic accountability in sharing out responsibility. Their lordships will undoubtedly address that issue.

[Paul Murphy]

I think they will be right so to do. There is a lot of work to be done by their lordships, particularly the Welsh Members, in dealing with these issues, including borrowing.

[Mr David Jones]

I am reluctant to interrupt the right hon. Gentleman, but the intervention by the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) is completely misconceived. There is no question of the Westminster Government directing the Welsh Government as to how to exercise their borrowing powers.

[Paul Murphy]

In that case, we are all right, are we not, and we can see what happens next?

These detailed issues are very important for us. Whatever divides us in this Chamber—the nature of politics is that we do divide on issues—there is a general consensus among us all that this Bill is another step in the right direction, and a step that makes sure that we remain members of the United Kingdom. By strengthening devolution, we strengthen the United Kingdom. However, the situation is changing. We must all accept—even I, coming from south-east Wales and Monmouthshire, with all my early scepticism, accept it, and not reluctantly but with some enthusiasm—that the landscape of our constitution and the way in which we govern ourselves in the United Kingdom is changing. Inevitably, the referendum in 87 days’ time will change us all, but I hope that in so doing it will unite us in ensuring not only that the United Kingdom remains as it is but that we devolve, sensibly, more and more powers—including, indeed, taxation—to the people of Wales.

18:04

[Mr Mark Williams]

It is a privilege to say a few words in support of the Bill on its Third Reading.

The Silk commission made a serious attempt to tackle the deficiencies in the devolution settlement, notably the lack of responsibility and accountability at Cardiff Bay. Those principles have been carried forward in the Bill. In assessing the funding system, Silk properly identified what was required—not just accountability but economic incentivisation, empowerment, efficiency, equity and, above all, responsibility.

I applaud the Bill and thank my right hon. Friend the Secretary of State and his team in the Wales Office.

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

Many tributes have been paid to my constituent, Mr Paul Silk. It is extraordinary that because of the quality of the work that he and his fellow commissioners did, the Bill has gone through relatively easily, even with a few minor amendments.

[Mr Mark Williams]

I very much agree with my hon. Friend. Paul Silk has done the politics of consensus a great service. The commissioners, from all four parties, sometimes had to make compromises but arrived at an agreed report on two occasions. That is a mark of Paul Silk’s chairmanship and the quality of those commissioners.

Of course, my right hon. Friend is a Conservative Secretary of State—

[Bob Stewart]

A very good one.

[Mr Mark Williams]

Indeed—he is a very good Secretary of State on many issues.

I remind my hon. Friend the Member for Montgomeryshire (Glyn Davies) that this is a coalition Government and it is a Liberal Democrat achievement that we have got this far with this Bill. Last week I was at a book launch, as was the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd), to celebrate the life of the late Emlyn Hooson—one of my hon. Friend’s illustrious predecessors—who on St David’s day in 1968 put forward a Parliament for Wales Bill that did not get very far. It is a mark of his work and that of many others from other political parties that we have reached this point today, albeit crystallised by my right hon. Friend the Secretary of State.

[Mr Llwyd]

Is it possible that the hon. Member for Montgomeryshire (Glyn Davies) is being churlish?

[Mr Mark Williams]

I could not possibly comment, but I will give way to him.

[Glyn Davies]

I would just like to say that the late, great Baron Hooson was a wonderful Member of Parliament who served Montgomeryshire and Wales with distinction for many, many decades; I do not want to be accused of being churlish.

[Mr Mark Williams]

My hon. Friend says that with great sincerity, and I know him to be a sincere man. I just wish to place on the record the fact that the process of devolution has been an achievement of politicians of all parties—Liberals, Conservatives, and friends from the nationalists and from the Labour party—over the years. That process of consensus has to continue if the process of devolution marches on.

[Susan Elan Jones (Clwyd South) (Lab)]

I would not wish the hon. Gentleman to continue without mentioning one of his predecessors, Lord Elystan-Morgan, who made an interesting point in his autobiography, saying that when he started his political career—many of us know that he did not spend his life in just one political party—he would not have dreamt that the process of self-government and devolution would have gone on to the extent that it has.

[Mr Mark Williams]

I thank the hon. Lady for that intervention, and I agree with that. I can promise her, very much in the spirit of what the right hon. Member for Torfaen (Paul Murphy) said, that Lord Elystan-Morgan and others of our respective Welsh teams will be working very hard on this Bill to make necessary amendments to make it all the more workable and successful.

I wish to talk about one regret I have about this Bill, which is the lockstep, an ideal that, as a devolutionist, still confounds me. I agree with my hon. Friend the Member for Montgomeryshire on that matter. I recently read a military definition of the lockstep—I am alarmed that the hon. Member for Beckenham (Bob Stewart) is here, because he may correct me on this—which talked about how, when marching, all the marchers’ legs should be moving in the same way at the same time. Of course the Silk commission suggested something different, recommending that income tax rates should be capable of variation independently to create better economic conditions in Wales.

We have heard from the Secretary of State and from the Opposition about giving the Assembly Government the tools to do the job, and that is what I want this Bill to do. We should, however, be mindful of what Paul Silk said in his report, which was that the availability of capacity borrowing powers is contingent on the level of income tax devolution available to the Welsh Government following a successful referendum. He said that the lockstep model is less attractive and would therefore discourage the Welsh Government from pursuing devolution and the additional capital borrowing powers that would accompany it. He was right, and I regret the fact that he had to say that. I regret the response of the Labour party to the Bill and what Paul Silk said. I am clear that we have not heard the last of this, and I encourage Conservative Members to examine what their colleagues in Scotland have said about the lockstep and act accordingly, because those tax-varying powers really would enhance the tools available to Government.

I agree with Professor Dylan Jones-Evans who said that the important thing is to give the Government, of whichever colour, the powers to do the job. That is about grown-up government, and about respecting other Governments and other jurisdictions’ capacity to do the job; it is not about “nanny knows best”. Our friends from Plaid Cymru will agree with that characteristic, as much as Liberals and Conservatives will. That is a principle behind the Bill and I hope we can take it further. Welsh Liberal Democrats want to see flexibility of income tax powers without the Scottish lockstep model. Nevertheless, the Bill represents a huge step forward—although it does not provide the strides that some of us would have hoped for.

That brings me to the reserved powers model for the future, which I support. I could not support the Labour amendment on Report, as it struck me as a fudge, although outside the Chamber I was assured by the shadow Secretary of State that it was anything but. I wish to reiterate what Liberal Democrats, including the Deputy Prime Minister, have said, which is that we support the reserved powers model. The challenge Paul Silk set was for every party in this House to sign up to the reserved powers model at next year’s general election. The debate about devolution and the progress made have been a journey of stops and starts, but I believe the reserved powers model is the way forward and I endorse what Paul Silk has said.

Finally, there is an old adage that time and tide wait for no man. I believe that the tide of devolution in Wales is flowing fast and no Government, including this one and, indeed, future ones should be left behind.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Business without Debate

Tuesday 24th June 2014 Commons Chamber

Delegated Legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

European Union

That the draft European Union (Definition of Treaties) (Convention on International Interests in Mobile Equipment and Protocol thereto on matters specific to Aircraft Equipment) Order 2014, which was laid before this House on 31 March 2014, in the last Session of Parliament, be approved.—(Mr Evennett.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6) and Order, 16 June),

Financial Assistance to Industry

That this House authorises the Secretary of State to undertake to pay, and to pay by way of financial assistance under section 8 of the Industrial Development Act 1982, sums exceeding £10 million and up to a cumulative total of £100 million in respect of early stage venture capital funds investing in small and medium-sized enterprises.—(Mr Evennett.)

Question agreed to.

Sharia Law Student Loans

Tuesday 24th June 2014 Commons Chamber

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

18:16

[Simon Danczuk (Rochdale) (Lab)]

I am pleased to have secured this debate on an issue that has been raised with me by my constituents. A few months ago, I was visited at my constituency office by Fatima Riaz and her two daughters, Saffiyah and Helima, who lobbied me on the issue of loans for Muslim students. I have to admit that I was not up to speed on the issue, but that was quickly cured by the girls, who explained their frustrations with the system. Saffiyah and Helima did not stop there; they organised a letter-writing campaign to show me how many people in Rochdale are affected by the issue.

It was inspiring to see young people engaged with a political issue and lobbying their MP, and the huge pile of letters on my desk is a testament to their success. It is on behalf of these young activists and the many constituents who have written to me that I have secured this debate today.

The Office for National Statistics describes British Muslims as

“a young, tightly clustered, but often disadvantaged community”.

Although that may be true for Rochdale, I would add that it is also a highly ambitious community. Most are ambitious for themselves and are highly entrepreneurial, setting up many new businesses that are helping to move the town forward. Many are also ambitious for their families and care deeply about the education of their children. They are determined that their children should have better lives than them and see education as the route to success in the future.

A university degree is now essential to unlock the door to many professions in this country. Whether that is a good thing or not is open to question—I remain of the view that we should be doing more for young people who do not go to university—but that is the reality of the situation in this country today, so it is no surprise that young Muslim people in my constituency are desperate to go to university and get the qualifications they need to get on in life. They want to improve their own employment prospects and to continue a great tradition of Muslim scholarship at the same time.

Members can imagine their dismay when they find that the student loans on offer to help with astronomical university fees are not compatible with their religious beliefs. Essentially, they are being asked to choose between the future they want for themselves and their own religious convictions. That is not a choice we should be asking anyone to make. It is an unacceptable situation. I understand that not all Muslims feel that way and that there is a degree of theological argument about the issue. I would not dream of wading into that particular debate, but I will briefly set out the issue as I see it, for the benefit of the House.

In Islamic teaching and in some other religions, there are rules about the charging and receiving of interest. Under the old student finance arrangements, that was not much of an issue because interest rates on student loans were tied to the retail prices index, so they were not considered commercial loans. The vast majority of Muslim students felt that as long as the interest was in line with inflation the loans were compatible with their beliefs.

The issue came to a head with this Government’s decision to overhaul the student loans system when they came into office. It is fair to say that that decision was not their most popular one among certain coalition Members, and it was certainly not popular with the public. The new loans have a real interest rate that operates on a sliding scale, depending on the graduate’s income once they have left university. According to the National Union of Students, many Muslim students feel that the new arrangements are not compatible with Islamic teaching because of the real interest rate.

That means that many Muslim students are left to rely on their parents to fund their education. That was sometimes possible under the old system, which had lower fees, because parents could save up the money for years in advance of their children going to university. The fees were about £3,000 per year, so it was not easy, but it was possible. Under the new system, with fees of up to £9,000, that option is now out of reach for the vast majority of Muslim families.

In fact, Muslim students who are unable to get loans are actively discouraged from going to the best universities, because they have the highest fees. That forces agonising choices on parents, who have to explain to their children that they cannot afford to send them to the best universities, even if they get the required grades. That has created an unfair playing field in higher education and discriminates against Muslim students, especially those from poor families. Of course, the Government know that, because it was identified as an issue in their equality impact assessment when they announced the new student loans system in 2010. They have now had at least four years to sort it out.

[Bob Stewart (Beckenham) (Con)]

Forgive me for intervening, Mr Speaker. I am just anxious to learn whether there are not Muslim banks or sharia law banks to cater for Muslims who cannot pay what contradicts their religious beliefs, because I thought that there were such banks.

[Simon Danczuk]

The hon. Gentleman makes a good point, which I will come on to. The United Kingdom is very good on sharia-compliant financial services, but because the system is Government-run, the process for paying tuition fees for going to university needs to be matched by a sharia-compliant system. The same issue applies to advanced learner loans and business start-up loans, which are often overlooked in debate about this matter.

Thanks to some great lobbying work by the National Union of Students, the Federation of Student Islamic Societies and others, the Government agreed to take action. In a debate on the then Education Bill in another place, Baroness Verma said the Government would “seriously consider” changes and would seek to

“address the doubts that members of some faiths might have”.—[Official Report, House of Lords, 1 November 2011; Vol. 731, c. 1204.]

That was in 2011; we are now in 2014, and there is still nothing on the statute book to address this inequality. I find that staggering, given that the Government—to their credit—have taken action on the similar issue of Islamic mortgages and on Government bonds. There is now a thriving Islamic finance sector in the UK, with 22 banks offering services that comply with sharia law, so why the delay with student loans?

As far back as October 2012, the Minister for Universities and Science—he is now in his place—said that the Government had

“identified an alternative Shariah compliant system”.—[Official Report, 24 October 2012; Vol. 551, c. 934W.]

The system works using a murabaha scheme, which is interest-free but still costs the students the same amount overall. That point is important. Muslim students are not seeking to pay less than other students. They are simply asking for a loan system that fits their religious views. It is also important to say that any new scheme should be open to all students, not just to Muslims.

I understand that the Government are consulting widely on this matter, and I am pleased that they are doing so, but I question why it has taken so long to start the consultation, given that the issue was identified back in 2010. In the Government’s own equality assessment published in 2012, they said that changes would require primary legislation, but we have just seen the Government’s final Queen’s Speech of this Parliament and I could not see anything about this issue or any other Bill in which it could be addressed. I hope that the Minister will explain why that was the case and confirm that that means that there will be no real action on the issue in this Parliament. If that is the case, it is extremely disappointing. My constituents will feel that the Government simply do not see their education as a priority. It is difficult to escape the conclusion that they are right.

Getting more British Muslims into higher education in this country should be a priority for the Government. There are 2.7 million Muslims in England and Wales, but according to the Office for National Statistics, a third of those of working age have no formal qualifications. British Muslims are also the least likely of any religious group to have a degree and the most likely to be unemployed.

This inequality has wider social and economic consequences. It leads to the under-representation of British Muslims in public life and the professions. That can be seen clearly in Parliament. Out of 650 Members, only eight are Muslim. If Muslims were represented proportionately, the number would be closer to 30. That means that there are fewer people to speak up for Muslims in Parliament.

The Prime Minister has recently decided to talk about “British values” in schools. I agree with him that that is important but I say to the Minister that I think that “British values” include the right to a good education for all, regardless of religious views. Given that his Government have failed to deliver that, I suggest that the Government be more careful when lecturing British Muslims about “British values”.

Under-representation of British Muslims is not confined to politics but stretches across society to the media, academia and the law. That fuels segregation and ignorance, which hold us back as a country. There is also an economic dimension. By denying Muslim students equal access to higher education and business loans, we are wasting the potential of thousands of our citizens.

These young people could go on to found successful businesses, cure diseases or go into teaching and inspire new generations of students, but they are being deterred by the current policies of this Government. That is a tragedy for them, but it is also a tragedy for the country. The best resource we have is our people and we must not let their potential go to waste.

I am sure that the Minister agrees, but I make this point to impress upon him the urgency of rapid action on the issue. It now appears that we will have to wait until 2016 for any new system to be implemented. That means that at least five cohorts of students will have been let down by the system. That is an unacceptable waste of young talent.

I want to finish by reminding the House of the words of the Prime Minister at the World Islamic Economic Forum in October last year. He said:

“Never again should a Muslim in Britain feel unable to go to university because they cannot get a Student Loan—simply because of their religion”.

I could not agree more with the Prime Minister, but he should remember that it was his Government who created this situation. Unless he acts quickly, it will be his Government who failed to resolve it.

18:29

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

May I begin by apologising to the hon. Member for Rochdale (Simon Danczuk) and to you, Mr Speaker, for not being able to be present for the start of the debate? I have just returned from a visit to the US and my flight was delayed, but I apologise to the hon. Gentleman and to the House. I have had a report of the remarks he made in the first minutes of his speech and I have, of course, listened very carefully to what he said in the latter part of it.

Let me begin by showing the hon. Gentleman that we are committed to ensuring that young people can access all the opportunities available to them. Our higher education reforms introduced in 2012, following Lord Browne’s independent review, are, we believe, contributing to maintaining the quality of education and bringing more money into universities by contributing more to the costs of education. That is because graduates gain a range of benefits from a university education, most notably the higher salaries they earn.

Lord Browne’s report also highlighted the importance of ensuring that students get a fair deal. Given the current fiscal environment, the alternatives to asking graduates to contribute more are a reduction in student numbers or a cut in per-student funding, which would undermine the sustainability of our HE sector. We agreed with his recommendations, and, of course, no first-time undergraduate student has to pay upfront fees. Students from lower-income households continue to receive support through the student loans and grant system.

I very much agree with the points the hon. Gentleman made about the Muslim students he is familiar with from his own constituency and more widely. He referred to their aspiration to go to university, which we absolutely promote, and to their entrepreneurial instincts, which are admirable. It would be a tragedy if any student, particularly a Muslim student, were put off going to university by concerns about so-called interest rates.

Perhaps I can report to the hon. Gentleman and to the House the evidence we have from the longitudinal study of young people in England and the youth cohort study. It suggests that many Muslim students take up Government student loans. The findings so far are that 74% of Muslim young people who attended higher education at 18 took out a student loan, compared with 80% of Christian students, 81% of Hindu students, 73% of Sikh students and 80% of students with no stated religion.

It is a small study and we will continue to monitor this very closely, but at the moment we do not believe that there is evidence of a disproportionate exclusion of Muslim students from university because of anxieties about the fees and loan system. Nevertheless, there is an understandable and legitimate concern about this whole issue, and we have been trying, wherever possible, to design loan schemes that are consistent with the principles of Islamic finance. We have already announced the creation of a type of start-up loan that is consistent with those principles while being equitable for other participants in the scheme. That is why we are now examining a sharia-compliant alternative to conventional student loans.

We are clear that we want a single student loan system that can meet the needs of the majority of students where possible. We are proposing a Takaful, which would be administered by the Student Loans Company and run alongside the conventional system. Collections would be made in the same way as conventional loans, and application would be open to anyone and done through the same channels as conventional loans.

Any alternative finance product would not result in a student being in any way disadvantaged or advantaged over a student who took out a more conventional student loan. Both the size of the finance and the repayment amounts would be equivalent under the two systems, but the Takaful model does have a different underlying principle, which is one of communal interest and transparent sharing of benefit and obligation, with the repayments of students participating in the fund being used to provide finance to future students who elect to join the fund. This ensures that all members of the fund benefit equally from it.

Let me take the hon. Gentleman and the House in a little more detail through how the proposed Takaful would work. Students participating in the fund would not be borrowing money and paying it back with interest to a third party, which would not be compliant with sharia law. Instead, the Takaful fund will be established with an initial amount of money that can be donated to the fund from government or on the basis of Qard Hasan—interest-free loan—and based on a concept of mutual participation and guarantee.

Students will obtain finance from the fund by applying in a similar manner as for a conventional loan. The contract will be based on a unilateral promise guaranteeing that they will pay a Takaful contribution, which is perceived as a charitable contribution from a sharia perspective for the benefit of members of the fund. Moneys will be released once the contract is signed. Repayment will be made to the fund once the student is in employment and earning above the repayment threshold, which will be set at the same level as for traditional student loans.

The contribution that the student repays to the fund would help to ensure that future students benefit from the fund, allowing them to complete their studies as the original student did. The mutual basis of that structure, with members of the fund helping each other attend higher education, makes that model acceptable under sharia law: the lending-borrowing relationship does not exist in that model. The student finance fund—the Takaful fund—is managed by a fund manager under the Islamic finance principle of Wakala, or agency, for a specified fee. The fund is completely segregated from traditional student loans to ensure full compliance with sharia in the whole cycle of the fund.

It has taken us time to develop and consult on that model, but it was proposed and developed by experts in Islamic finance, and the concept has been provisionally approved by the Sharia Supervisory Committee of the Islamic Bank of Britain. Were that alternative finance product to be made available, the Sharia Supervisory Committee would oversee the operation of the fund and ensure that it was operating in a sharia-compliant manner, with an annual report on the operation of the fund.

The hon. Gentleman did not raise this point, but because of concerns coming from a different perspective I make it clear that this measure does not mean we are introducing sharia law in the UK. Sharia principles are the code of personal religious law governing the conduct of Muslims. They can extend into all aspects of people’s lives, but provided that an activity prescribed by sharia principles does not contravene the law of England and Wales, there is nothing that prevents people from living by them.

I understand the hon. Gentleman’s frustration about the timetable, so I will briefly take him through that. Any alternative finance product would not be available before 2016 at the earliest. We will require legislation to allow the Secretary of State to issue an alternative finance product, because currently only loans and grants can be issued, and HMRC may also need to update its regulations. I am afraid it has not been possible in the time available to bring before the House a higher education finance Bill that would include such provisions, and there is more work to be done.

Full feasibility is required before we can implement any alternative finance product. That will include working with HMRC to determine any changes to its systems and forms, and engagement with employers over collections as well as implementation by the Student Loans Company. There looks to be minimal additional cost to the taxpayer, but that will require more detailed study.

The Government accept the importance of the concerns raised by the hon. Gentleman and representatives of the Muslim community, and we are determined to ensure that the student finance system is accessible to as many people as possible. A consultation that closed earlier this month provided the UK population as a whole with an opportunity to voice their opinions. Findings will be published later this year, but early indications suggest that the majority of respondents are in favour of an alternative finance product, and that as long as we provide evidence that it is sharia compliant they would find Takaful acceptable. It also highlighted concerns from potential students about having to choose between their religious beliefs and their education.

In conclusion, I assure the hon. Gentleman and the House that we understand the importance of ensuring a form of student finance that is consistent with sharia law, and we do not believe that our conventional model is one of commercial loans—that may be why the scheme already has high levels of participation by Muslim students.

[Bob Stewart]

Is my understanding correct that, until 2016, no system whatever will be in place—Government-sponsored or otherwise—to help students who wish to go to university but cannot afford it without parental support?

[Mr Willetts]

As I said a moment ago, it will not be possible, sadly, to legislate in the time available, but I hope that my hon. Friend will take some comfort from the evidence showing that a substantial proportion of Muslim students are taking up our conventional fees and loans, and I believe they are doing so because our fees and loans are not actually commercial loans in any recognised sense of the term. There is an important issue here, however, and we understand it and have consulted on it. I very much hope that it will be possible to introduce this as a matter of urgency in the new Parliament, and I am sure that continued pressure from the hon. Member for Rochdale—and our sense of obligation to the Islamic community—will mean that, after the latest round of consultation, we will be able to bring it to a successful conclusion. I conclude the debate on that basis.

Question put and agreed to.

18:40

House adjourned.