House of Commons

Thursday 8th January 2015 Commons Chamber

Thursday 8 January 2015

The House met at half-past Nine o’clock

Prayers

Thursday 8th January 2015 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Thursday 8th January 2015 Commons Chamber

The Secretary of State was asked—

[Kerry McCarthy (Bristol East) (Lab)]

1. What steps the Government are taking to increase the value of the minimum wage and encourage firms to pay the living wage.

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

On our return to Business questions after the break, may I wish you, Mr Speaker, and all Members a happy new year? I am sure that the thoughts of everybody in the House this morning are with France and, in particular, with the relatives and friends of those who were killed and injured in the appalling terrorist atrocity yesterday.

Last year, the Government announced the first above inflation increase in the national minimum wage since the 2008 banking crisis, benefiting more than 1 million workers. Since 1 October 2014, full-time minimum wage workers have seen an annual cash increase of £355 in their pay packets, and we expect real-terms increases to continue as the economy recovers. We support employers paying the living wage where it is affordable and not at the expense of jobs.

[Kerry McCarthy]

I thank the Secretary of State for that response. He will know that for every £1 that employers pay above the minimum wage to lift workers to the living wage, the Treasury reaps 49p in reduced benefits and increased tax revenues. Why will his Department not consider using that increased revenue to incentivise businesses to pay the living wage for the first 12 months, as Labour is proposing with its make work pay contracts?

[Vince Cable]

It is precisely because of that revenue wedge that the Government have invested so much resource in lifting the threshold so that low-paid workers are not caught in taxation. That has substantially alleviated the pressure on the living standards of low-paid workers.

[Mr Philip Hollobone (Kettering) (Con)]

It is really very important that minimum wage legislation is enforced, as those in receipt of the minimum wage tend to be at the bottom of organisations and among the lowest paid. What sanctions are being used on those at the top of organisations who receive the highest pay—the board directors—when minimum wage legislation is not being followed?

[Vince Cable]

There is a legitimate concern about high pay as well as low pay, which is why the Government introduced reforms of executive pay, with a binding vote on executive pay by shareholders, significantly strengthening the Government’s powers to ensure that shareholders exercise proper responsibility over top pay.

[Mr Frank Field (Birkenhead) (Lab)]

The Secretary of State talks about relieving pressures on the living standards of the lowest paid, but is he aware that the all-party parliamentary group on hunger and food poverty in Britain found, to its surprise, that a number of people using food banks were on the minimum wage? Might he not therefore use whatever powers he can to press those sectors of industry that could pay the living wage, such as banking and finance, to do so?

[Vince Cable]

I suspect that relatively few people are on the minimum wage in the banking and finance sectors, but we support the living wage for those companies that can afford it and are not putting people out of work. My responsibilities are more in respect of strengthening the minimum wage and making enforcement tougher. We are doing that and we are signalling to the Low Pay Commission that we respect its independence but are looking forward to real-terms increases in the minimum wage in the future.

[Paul Blomfield (Sheffield Central) (Lab)]

In a debate in Westminster Hall on the widespread abuse of employment practice for care workers, the Secretary of State’s colleague, the Minister of State, Department of Health, the right hon. Member for North Norfolk (Norman Lamb), said that he was pressing the Department for stronger enforcement against illegal practices. What is the Secretary of State’s Department doing about it?

[Vince Cable]

I worked actively and closely with my colleague in the Department of Health on this issue. There are two issues involved: minimum wage enforcement and ensuring that we have tougher legislation to deal with some of the practices that operate in that sector, such as zero-hours contracts. At the moment, we are looking more widely at employment rights for groups of people who are classified as workers but who do not currently enjoy those rights. The care sector is one such group.

[Yvonne Fovargue (Makerfield) (Lab)]

2. What recent assessment he has made of the effect of copycat websites on consumers.

[The Minister for Culture and the Digital Economy (Mr Edward Vaizey)]

Copycat websites con people out of hard-earned cash. They undermine trust in online services and we are committed to stopping them. We need to work with search engines, to take enforcement action, to improve the consistency of Government websites and to educate consumers.

[Yvonne Fovargue]

The top advertised search result for the European health insurance card if someone searches for “health card” or “national health card” is a site that charges £49 for its so-called services. Will the Minister act to put a stop to that practice by giving similar powers to those of Transport for London and blocking transactions from that site, tackling the problem at source?

[Mr Vaizey]

We have taken a lot of action. We have worked closely with the search engines to ensure that they implement their terms and conditions on copycat website advertising, and the click-through to Government websites has increased by 30%. There is a problem with blocking transactions for websites that charge. A lot of Government services are free and we would not necessarily know whether other websites were charging. We know what Transport for London has done and we continue to keep the issue under review.

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

In fact, I was recently online to renew my European health card. I discovered that most of the top Google search results were sites that made people pay, but a lot of consumers do not realise that they can get the card free. There is an urgent need for the Government to take action to ensure that at least Government-provided services are clearly signposted on websites so that people know they are on a genuine website and not one that will rip them off.

[Mr Vaizey]

I completely agree with the hon. Lady. I hear complaints from my constituents about such websites. We have referred the issue to the Internet Governance Forum and convened a round table of digital traders to discuss strengthening terms and conditions, and we work with Nominet, the UK’s internet registry services provider, to look at ways of prohibiting the registration of such domain names.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

May I associate the members of the Opposition Business, Innovation and Skills Front-Bench team with the Secretary of State’s remarks? We wish you a happy new year, Mr Speaker, and express our sympathies to the families of those killed in Paris.

The Minister seems not to get the point. Many of those services are meant to be free, but the sites imply that people have to pay for them. The Mayor of London obviously does not believe that the Government’s action on copycat websites is good enough because he has introduced legislation to tackle rip-off congestion charge sites. Does the Minister believe the Mayor was right to do that? If so, why is what is good enough for London not good enough for the rest of the UK?

[Mr Vaizey]

I always support the Mayor of London, because he is one of the most brilliant Mayors of London this country has ever seen. He has frozen the Mayor’s precept and introduced Boris bikes. However, it took me an hour and 10 minutes to get to Westminster from Hammersmith on the tube, so perhaps today I am about 99% supportive of the Mayor rather than 100%.

I completely agree with the hon. Lady’s sentiment that we must stamp on these copycat websites. I progressed the issue myself because of complaints from my constituents. That is why I am so pleased that we have made progress with strengthening search engine terms and conditions and started to move away from copycat websites having prominence and seen an increase in people using Government websites.

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

3. What steps his Department is taking to increase the number of apprenticeships.

[The Minister for Skills and Equalities (Nick Boles)]

We have achieved our ambition of 2 million new apprenticeships since 2010. The apprenticeship grant for employers is helping smaller business to take on new apprentices. From April 2016, employers will not be required to pay employer national insurance contributions for apprentices under the age of 25.

[Stephen Metcalfe]

Will the Minister join me in congratulating the nearly 800 people in my constituency who started an apprenticeship last year? However, it is not just about quantity; it is also about quality. What steps is he taking to raise quality as well as quantity?

[Nick Boles]

I am delighted to congratulate those who started apprenticeships in my hon. Friend’s constituency this year. There has been a 40% increase since 2009-10 in the number of people starting apprenticeships in his constituency. They are higher-quality apprenticeships than those that existed under the previous Government. They have to last at least 12 months, and they have to be a real job with a real employer. That is a key part of the economic plan that is improving conditions for young people in his constituency.

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

The most recent figures show a fall in the number of apprenticeship starts in the north-east. What explanation can the Minister offer for that concerning trend and what does he intend to do about it?

[Nick Boles]

The previous Government created a great number of Mickey Mouse apprenticeships in order to massage the figures. There were apprenticeships for which people did not need an employer, and apprenticeships that lasted way less than 12 months. Under this Government, there is substantial growth in real apprenticeships—those that last more than 12 months and that give people real skills that will improve their earnings. That is why the number of people not in education, employment or training is lower than it has ever been.

[Andrew George (St Ives) (LD)]

The Government should be congratulated on what they have achieved with regard to apprenticeships, but the Minister will be aware that in rural and economically challenged areas such as mine in west Cornwall and the Isles of Scilly, it is quite difficult to advance apprenticeships, particularly in small and micro-businesses. What will the Government do to ensure that small and micro-businesses can enjoy this success?

[Nick Boles]

It is incredibly important that apprenticeships are created not just by the largest employers who obviously have the resources and capacity to engage with the scheme. That is why we introduced the apprenticeship grant for employers, which is specifically focused on small businesses and pays them £1,500 for the first new apprenticeships that they create. We are also looking at ways of making it easier for small businesses to get the Government’s money and to decide with whom they want to work as a training provider. But it is critical—only about 10% of employers are creating apprenticeships; if we could just double that, we could more than double the number of apprenticeships.

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

Should we not give the Minister the opportunity to withdraw his unfortunate remarks about Mickey Mouse apprenticeships, which really are very disrespectful to all those who worked hard and did a good job in important apprenticeships in the years to which he was referring? Is it not true that most of the increase under this Government, which Members from all parts of the House welcome, has taken place not among 16 to 18-year-olds but in the 20-year-olds-plus group, and we now need apprenticeships that will encourage the younger group into them?

[Nick Boles]

It gives me great pleasure to disagree with literally everything that the hon. Gentleman has said. I certainly will not withdraw my suggestion that the last Government was conning young people. An apprenticeship that lasted less than 12 months and did not even have an employer was a fraud on them, because it was not preparing them for a life of work or giving them relevant skills. It is a bit strange for the Opposition to suggest that nobody over the age of 24 deserves any investment in new skills or any chance to acquire a new ability. I welcome the fact that people over the age of 24 are taking up apprenticeships more than ever before.

[Mr Robin Walker (Worcester) (Con)]

One of the benefits of the real apprenticeships that the Government have brought in is that they provide long-term avenues into work. I recently visited a small business in Worcester that was taking on its 13th apprentice. Every single apprentice that had been through had been given a full-time job by that business. But there is still a challenge in persuading careers advisers that apprenticeships provide real value. What can my hon. Friend do to encourage them to support apprenticeships more generally?

[Nick Boles]

My hon. Friend is absolutely right. It is often careers advisers and teachers who, perhaps for the best reasons in the world, just do not understand the opportunities out there in apprenticeships, or the fact that someone can now get a degree through an apprenticeship or rise to almost any position in the senior management of a company. It is no longer about a young lad under the bonnet of a car; it can still be that, but it can also be about a young woman who has just got a first-class degree at BAE Systems through a higher apprenticeship. We are trying to get that message out in every way we can.

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

This Government have contrived to create a country where this generation of young people is now the first generation for a century to be poorer than the generation before them. Young people now face an unemployment queue that is three quarters of a million long; graduates now face £44,000-worth of debt; and from figures published by BIS before Christmas, we learned that the number of apprenticeships for the under-24s has not gone up but down. Social mobility in this country is in reverse, and we need more apprenticeships for young people, not fewer. The Opposition have an ambition that by 2025 as many people should be going into an apprenticeship as are going to university. Is that an ambition that the Minister will match?

[Nick Boles]

What I hope to hear from the right hon. Gentleman is whether that pledge, which we have costed on a reasonable basis, received the approval of the shadow Chancellor. My understanding is that the shadow Chancellor has not approved the approximately £700 million of extra spending, entirely unexplained, that it would cost to support that ambition. The Government are very clear what our ambition is. We will create 3 million new apprenticeships in the life of the next Parliament. Those apprenticeships will be for all people who would benefit from them. Unlike the Labour party and the hon. Member for Coventry North West (Mr Robinson), we do not discriminate against people over the age of 24.

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

4. What estimate he has made of the contribution net trade will make to GDP over the next four years.

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

Our goal is for exports to reach £1trillion by 2020.

[Mr Bain]

I am grateful for the Minister’s answer, but last month the Office for National Statistics said that exports had remained largely flat for the past four years, and the Office for Budget Responsibility and the British Chambers of Commerce both downgraded their forecasts for net trade this year, so can he confirm that with this failure on economic rebalancing, his targets for Britain to double our exports to £1 trillion by 2020 and to get 100,000 more firms exporting from Britain will be missed?

[Matthew Hancock]

It is a pity to hear the Opposition setting their face against the desire to double exports to £1 trillion. Of course, the eurozone on our border is in deflation and has had a series of recessions over the past four and a half years. Over the past three months our trade deficit has narrowed, so things are improving. This is undoubtedly hard work, but it is hard work that we will pursue.

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

5. What progress his Department has made on creating a low-carbon economy.

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

The Government have taken strong action to create a low-carbon economy, including setting up the Green Investment Bank and a catapult centre dedicated to new renewables, and electricity market reform. Through the Department’s industrial strategy, we are working with industry to increase green jobs via sector-specific strategies for the offshore wind and nuclear industries.

[Miss McIntosh]

Although I welcome the Government’s commitment to green energy and a low-carbon economy, surely there must be a better way of achieving that than hydraulically fracturing for fossil fuel such as shale gas, which causes huge environmental disbenefits.

[Vince Cable]

I am aware of the hon. Lady’s concern about the areas of outstanding natural beauty in Yorkshire, which she represents. There is indeed an expression of interest, but there are very strong environmental and safety protections around shale gas drilling, and I am sure she will look forward to the extra development that this will produce in her constituency in due course.

[Clive Efford (Eltham) (Lab)]

The Environmental Audit Committee says that our investment in renewable energy is growing at half the rate it needs to grow at to meet our future energy needs. What is the Secretary of State doing about that?

[Vince Cable]

My understanding is that investment in renewable energy is double what it was in the previous Parliament. There are certain aspects of new renewables where we lead the world, including offshore wind.

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

Does the Secretary of State realise that if we are to have a low-carbon economy, he and his Government have to start taking investment in higher education seriously? I chair the Engineering and Physical Sciences Research Council’s committee on sustainable production. If we do not put more money into postgraduate education, and if we do not support higher education and get away from this crazy system where all higher education relies on a mountain of student debt, we are heading for terrible trouble.

[Vince Cable]

That is a rather creative stretch to the low-carbon economy, but specifically on postgraduate education, the hon. Gentleman will be aware that we have just introduced a postgraduate loan scheme for the first time.

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

6. What steps he is taking to increase the number of apprenticeship places through Government procurement.

[Mr John Spellar (Warley) (Lab)]

15. If he will make greater use of Government procurement to increase apprenticeship places.

[The Minister for Skills and Equalities (Nick Boles)]

We are keen to look at ways that procurement of major infrastructure projects such as HS2 and new nuclear power plants can drive investment in construction and engineering skills. High Speed 2 will create up to 2,000 apprenticeship opportunities and Crossrail is on track to deliver its target of at least 400 apprenticeships during construction.

[Mr Bailey]

In their response to a Business, Innovation and Skills Committee report on this issue, the Government said that they were

“working on guidance to encourage best practice amongst local authorities”.

This National Apprenticeship Service guidance was subsequently published in July. It was eight pages long, and the first six pages were devoted to problems in securing this policy and case studies of failed projects. Does the Minister agree that if we are to realise the policy’s full potential, we need a far more robust and proactive approach by the Government?

[Nick Boles]

I certainly agree that there is more to be done, which is why I have had several meetings with Lord Deighton, the Commercial Secretary to the Treasury, to work out exactly how we can make it an integral part of the procurement process for all major infrastructure projects that there is a clear commitment by all successful bidders to invest in skills training and in the creation of apprenticeships.

[Mr Spellar]

I recognise that the Minister is new to this place, and that point scoring has its place, especially at this stage in the political cycle, but a previous answer of his did not match the seriousness of the situation. He referred to real apprenticeships leading to real skills, but we still have a huge skills shortage across the economy—for example, in construction, engineering, health and haulage, to name but a few areas. Will he make it a contractual requirement that bidders for national and local contracts have proper ratios of training places, and will he enforce those provisions if bidders fall short?

[Nick Boles]

I am grateful to the right hon. Gentleman for giving me an opportunity to clarify that. I think that it should absolutely be part of the procurement process for all major infrastructure projects that bidders are expected to make appropriate investments either in some form of skills training or, ideally, from my point of view—I am the apprenticeships bore—in the creation of apprenticeships. I hope that he, having criticised our record, will welcome the enormous number of apprenticeships that have been created in his constituency —50% up on 2009-10.

[Sir Bob Russell (Colchester) (LD)]

Is this Government policy applicable to all Departments? Will the Minister specifically have a word with the Ministry of Defence, which perhaps does not know about it?

[Nick Boles]

I have the greatest respect for my hon. Friend and am always nervous about implying that his comments are in any way unfair, but the armed forces in fact create more apprenticeships every single year than any other organisation in the country. I want this to be an integral part of the procurement for major infrastructure projects and, to the extent that the MOD is involved in such projects, it will absolutely apply to it, but the MOD is leading the way in creating apprenticeships, and we should pay credit to it for that.

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

7. What steps he has taken to support manufacturing in the renewable technologies sector.

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

Our industrial strategy and our energy policy support manufacturing of renewables. I welcome the recent announcement from MHI Vestas that it will manufacture the blades for offshore wind turbines in my hon. Friend’s constituency. Of course, as with any other area of our economy, the best support we can give renewables manufacturers is to stick with our long-term economic plan.

[Mr Turner]

I am sure that my right hon. Friend welcomes the recent announcement that MHI Vestas is to restart manufacturing 80-metre offshore wind turbine blades, which, as he said, will be designed, built and tested on the Isle of Wight. Will he assure me that he will continue to support those manufacturing jobs, in which the island is fast becoming a globally important player?

[Matthew Hancock]

I pay tribute not only to my hon. Friend for the work he has done to bring that investment to the UK, and specifically to the Isle of Wight, but to all hon. Members who have worked to make Britain one of the best players in the world in the manufacture of renewables technology. That complements our energy policy. The tie-up between getting the industry and the energy policy right is absolutely vital, and he has played an important role in that.

[Lilian Greenwood (Nottingham South) (Lab)]

8. If he will take steps to ensure that employees working on zero-hours contracts who are in practice working regular hours over an extended period have the right to a fixed-term contract.

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

Under flexible working legislation brought in on 30 June 2014, all employees with 26 continuous weeks of service have the right to request flexible working from their employer. Employees on zero-hours contracts can request a change in their contracts, which could of course include a request to move to fixed hours.

[Lilian Greenwood]

Over Christmas, Radio Nottingham carried reports of a zero-hours worker at SportsDirect who was so worried about missing a shift that he went into work despite being critically ill. I have heard from constituents working in health and social care who dare not raise concerns about health and safety or quality of care for fear of losing all their hours. Is it not now absolutely clear that the only way to end that exploitation is to vote Labour on 7 May?

[Jo Swinson]

Unsurprisingly, I disagree with the perspective at the end of the hon. Lady’s question. I agree that there are serious issues with zero-hours contracts. Although they work well for many people, as backed up by Chartered Institute of Personnel and Development surveys, there are other examples—she highlights some from her constituency—where that type of contract is not used as it should be. That is why we are taking action through the Small Business, Enterprise and Employment Bill to ban exclusivity clauses and why we are going further, with the development of sector-specific guidance to show what the proper and responsible use of these contracts looks like.

[Ann McKechin (Glasgow North) (Lab)]

The Minister will be aware that in parcel and distribution services there is not only widespread use of zero-hours contracts but, as we have seen with the collapse of City Link, increased use of self-employed contractors, who have ended up with no rights to redundancy, with losing pay, and with being increasingly abused. How will the Minister regulate the sector so that we halt this race to the bottom in labour conditions?

[Jo Swinson]

The hon. Lady raises a genuine point. The Government do recognise this as an area of concern, particularly as regards different employment statuses. My right hon. Friend the Business Secretary announced a review of employment statuses so that there can be greater clarity about the issues and we can see whether we need to make changes to the way in which different employment statuses are currently set out. The review is ongoing and we expect it to report over the next couple of months.

[Kelvin Hopkins (Luton North) (Lab)]

9. What recent assessment he has made of the effect of the UK’s EU membership on businesses and the UK economy.

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

The European single market gives British firms access to 500 million consumers and, as our largest trading partner, is responsible for almost half this country’s exports. There is a clear direct benefit to British businesses from European Union membership.

[Kelvin Hopkins]

Britain has an enormous and persistent trade deficit with the EU, equivalent to about 1 million lost British jobs. The growing crisis in the eurozone will only make the position worse, and there is no end in sight to its economic problems. What are the Government going to do to protect Britain’s economic interests in this dire situation?

[Vince Cable]

I am surprised that the hon. Gentleman does not share the consensus among Opposition Members about the benefits of British membership. I am sure that if he occasionally crosses the border into Luton South and visits the vehicle production institution, he will recognise the EU’s importance to the industry and of its having the European Union negotiate access to bigger markets such as north America, as it currently is.

[Ian Murray (Edinburgh South) (Lab)]

In a recent article in The Times, a host of senior Cabinet members, including the Foreign Secretary, the Chief Whip, and even some Ministers in the Secretary of State’s own Department, stated that they would campaign for an “out” vote in any EU referendum. In the same article, another Cabinet member was reported as saying:

“It would be a continual distraction from…work on the economy”.

Given that, as the Secretary of State said, the EU is one of our largest trading partners, what is his view on the impact on UK trade and jobs in the event of, first, an EU referendum, and, secondly, exit from the EU?

[Vince Cable]

That unnamed member of the Cabinet was probably me; I did take a different view. None the less, I do have common ground with my Government colleagues in believing that the European Union needs to be reformed in quite radical ways. We need to deepen the single market, to reach trade agreements with other countries, and to reduce much of the bureaucracy that surrounds commercial activity.

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

10. If he will make greater use of Government procurement to increase innovation and develop supply chains.

[The Minister for Universities, Science and Cities (Greg Clark)]

The Government are making greater use of public procurement to increase innovation and develop supply chains. The small business research initiative has provided the most innovative companies with 1,900 contracts worth £235 million, and it will be expanded. The Small Business, Enterprise and Employment Bill implements the reforms proposed by Lord Young radically to simplify Government procurement, such as by making contract opportunities available on a single website to which all businesses can have access.

[Robert Flello]

Given that the Government’s recent science and innovation strategy does not cover departmental research and development, when will the Government outline their plans on the vital role that Whitehall Departments must play in supporting innovation? In the light of his response, perhaps the Minister will place in the Library a short audit of how Departments are responding to the points he mentioned.

[Greg Clark]

The hon. Gentleman is mistaken. If he reads the science and innovation strategy—I invite him to do so and will send a copy—he will see that it makes several references to this matter, including the fact that the SBRI covers a number of Whitehall Departments and will expand. It also recognises the important work of research and development within each Government Department and makes proposals to advance that.

[Mr Speaker]

Question 11. Sir Peter Luff is not here. I call Heidi Alexander.

[Heidi Alexander (Lewisham East) (Lab)]

12. What assessment he has made of recent trends in the number of apprenticeship starts for people under 19; and if he will make a statement.

[The Minister for Skills and Equalities (Nick Boles)]

In 2013-14 there was a total of 119,800 apprenticeship starts for people under 19—5,300 more and a 4.6% increase compared with 2012-13.

[Heidi Alexander]

Last month, the Government’s own apprenticeship pay survey showed that one in four young apprentices are not receiving the legal minimum wage they are entitled to. In 2013-14, how many 16 to 18-year-olds did not receive the £2.68 per hour they are entitled to?

[Nick Boles]

My right hon. Friend the Secretary of State set out very clearly what we are doing to improve enforcement of the national minimum wage. One of the things that is clearly happening is that, given the complexity of the different rates—the rate changes both if someone becomes an apprentice and as they get older—many employers simply get it wrong because people’s ages change as they go through an apprenticeship scheme. That is one of the reasons we have written to the Low Pay Commission strongly suggesting that it should simplify the system and improve the minimum wage rate for 16 to 17-year-olds in apprenticeships. That would deliver a £1 increase, but it would also simplify the system, which would improve enforcement. I am happy to write to the hon. Lady with the detail on the figures she desires.

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

13. What recent steps he has taken to support small businesses.

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

There are a record number of small businesses in Britain—760,000 more than in 2010—and they are employing more people than ever before. As in any other area of our economy, the best support we can give small businesses is to stick with the long-term economic plan.

[Mary Macleod]

I commend the Government for what they have done for small businesses, especially on business rates, which has helped local businesses in my constituency of Brentford and Isleworth. One of the issues that still faces small businesses is late payment. I know some of that will be addressed—by negotiating fairer contracts—in the Government’s Small Business, Enterprise and Employment Bill, but does my right hon. Friend agree that the unfair practices of late payment and supply chain bullying are unacceptable?

[Matthew Hancock]

Yes, I do. We are working incredibly hard—in fact, no Government have done more than this one—to tackle late payment. Changes coming into effect at the end of this month will ensure that 30-day payment terms are driven down the supply chain from public sector purchases. There have been 9,400 business start-ups in my hon. Friend’s constituency during this Parliament—one of the highest figures across the whole country, thanks in no small part to her hard work.

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

A Minister told one of my hon. Friends earlier that the Government would review employment law. Will the Minister for Business and Enterprise also review company law, certainly in relation to City Link? I am sure my hon. Friend the Member for Coventry North West (Mr Robinson) will support me in saying that we should review company law as well as employment law. What happened at City Link, with redundancies being announced on Christmas day, was an absolute disgrace. How would people feel if that happened to them?

[Matthew Hancock]

The timing of the announcement was clearly very difficult, but we are doing all we can to support those affected by the decision. Both the Secretary of State, who was constantly in touch with the company and the unions over Christmas, and I are working hard to support those affected.

[Toby Perkins (Chesterfield) (Lab)]

One of the things that the Government could do to support small businesses is to support Labour’s plans to outlaw pay to stay agreements. We very much welcome the fact that, on the back of pressure from the Opposition, Premier Foods has ceased its pay to stay arrangements. The Government say that such arrangements are unacceptable, but at the same time they refuse to outlaw them. Does the Minister consider some forms of pay to stay acceptable, or are the Government so hostile to any form of regulation that they are willing to stand by while unacceptable business practices evolve and to leave small firms at the mercy of their big business customers?

[Matthew Hancock]

I know that the hon. Gentleman likes to chip in to this debate, but recent events have clearly demonstrated the power of transparency in relation to late payment to small business. As he knows, we are radically improving the position through the small business Bill. When the contracts came to light, the company was held to account and did a U-turn. [Interruption.] They were brought to light by the Federation of Small Businesses, to which I pay tribute for its work in highlighting the issue.

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

14. What steps he is taking to increase the number of engineers.

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

The Government are making a series of interventions to increase the number of British engineers—from trailblazer apprenticeships in engineering, manufacturing and automotive sectors to national colleges in advanced manufacturing, high-speed rail, nuclear, oil, gas and wind, with £30 million of funding to address employers’ skills shortages in engineering and £200 million of capital investment in science, technology, engineering and maths teaching facilities in higher education.

[Andrew Jones]

I thank my right hon. Friend for that reply. What more is he doing to inspire younger people, particularly younger women, to take up engineering careers?

[Vince Cable]

I am aware of my hon. Friend’s interest in the issue. Harrogate college recently benefited from significant investment in vocational education. He asks how we promote the message about engineering, particularly to women, who are massively under-represented in the sector. I pay tribute to the STEM network of volunteers; there are about 28,000 of them, and 40% are women. We hope that through that process of campaigning, and visits to schools and education institutions, we will gradually turn this unsatisfactory situation round.

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

The UK automotive industry has had another good year, which is welcomed across the House, but it now needs to recruit even more engineers. What is the Automotive Council UK doing to promote the industry to the next generation of engineers?

[Vince Cable]

The Automotive Council UK is one of the success stories of industrial strategy. There is a great deal of commitment from industry and, indeed, on both sides of the House. The talent retention scheme is working well: if engineers are lost in particular sectors of the economy, they are speedily re-employed elsewhere and the skills base—which, as my hon. Friend implies, is inadequate—is maintained.

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

16. What support he is providing to businesses wanting to take on apprentices.

[The Minister for Skills and Equalities (Nick Boles)]

Some £l70 million has been made available between 2014 and 2016 to fund more than 100,000 additional payments of the apprenticeship grant to employers, and the Government’s planned investment in apprenticeships in the current financial year totals £1.5 billion.

[Rehman Chishti]

Will the Minister join me in welcoming the news that in Gillingham and Rainham there were 450 intermediate, 230 advanced, and 20 high-level apprenticeship starts in 2013-14, meaning that 700 young people gained invaluable skills and experiences for future careers? Will he join me in congratulating businesses such as Jubilee Clips and Delphi in my constituency on providing excellent engineering apprenticeships?

[Nick Boles]

Businesses such as those my hon. Friend mentions are leading this country into recovery and ensuring that that benefits everyone in his constituency. Since 2009-10, there has been a 73% increase in the number of new apprenticeships in his constituency, and that extraordinary figure is testament to local employers, colleges, and the local Member of Parliament.

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

17. What position his Department took at the Competitiveness Council discussions on 4 December 2014 on the product safety and market surveillance package and the provision of mandatory origin marking on consumer products manufactured or imported.

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

The UK’s position on the product safety and market surveillance package remains unchanged: we oppose the inclusion of mandatory country of origin marking in the consumer product safety regulation. The issue was briefly raised at the Competitiveness Council meeting on 4 December, but no formal discussion or decisions were taken.

[Joan Walley]

I thank the Minister for that reply, but I am disappointed. On the grounds of public health and putting British manufacturing on a level playing field, we desperately need to hold a consultation and do the necessary research to make the case for compulsory country of origin marking, so that when we turn over a cup or saucer we know exactly where it was manufactured. Why cannot the Government abandon their opposition to that deregulatory measure?

[Jo Swinson]

The hon. Lady is a long-standing campaigner on and advocate for that issue. I do not believe it is a product safety matter, but she is right to say that there is a genuine issue that businesses in her constituency and other parts of the country are concerned about. We are looking into the matter in more detail and we expect a UK study on country of origin marking to complete by next month. The Commission has announced its own study on origin marking, which we will consider closely.

[Grahame M. Morris (Easington) (Lab)]

18. If he will bring forward legislative proposals to prohibit firms from being asked to make pay to stay agreements to remain or become approved suppliers by large firms.

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

The Government are radically increasing transparency over late payment, drastically shortening public sector payment terms, and consulting on changes to tackle pay to stay arrangements.

[Grahame M. Morris]

The business practices of Premier Foods in charging firms for the privilege of being a supplier have been condemned as unethical and an example of predatory capitalism. Will the Minister join me in condemning the way in which City Link management treated its work force, and will he say what the Government are doing to support City Link workers? Does he support a full inquiry into this dreadful affair, including into the circumstances leading up to the announcement, so that lessons can be learned and we do not have any repeat of such events?

[Matthew Hancock]

The administrator will report on City Link. On the issue of Premier Foods, the practices were hard to defend, as I said earlier. In fact, the company found them impossible to defend when they came to light. The extraordinary increase in transparency will help to make sure that we can see which companies have good payment practices and which have the worst. We can then compare them and hold to account those companies with bad practices. More than that, we are consulting on changes to such contracts and we will have the results of that consultation shortly.

[Heidi Alexander (Lewisham East) (Lab)]

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

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

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

[Heidi Alexander]

May I press the Minister further on the question of apprenticeships? Not only did the pay survey expose some concerning trends, it also showed that one in five apprentices do not actually receive any training. Given that most people’s idea of an apprenticeship is a placement that combines on-the-job work experience and a specific training programme, I find that deeply concerning. What percentage of the Government’s apprenticeships are not really apprenticeships at all?

[The Minister for Skills and Equalities (Nick Boles)]

There is confusion because sometimes employers will call something an apprenticeship that we do not recognise as an apprenticeship and for which we provide no financial support. They are free to do that: we do not own the trademark of an apprenticeship. We make a choice, however, about which apprenticeships we support, and we have a clear policy that we enforce—they have to last longer than 12 months, they must pay the minimum wage for apprenticeships, and they have to involve training. If the training is not external—some big employers will have internal training arrangements—they have to be Ofsted inspected, like every other training provider.

[Caroline Dinenage (Gosport) (Con)]

T5. What plans do the Government have to strengthen the prompt payment code to stop larger organisations taking advantage of their suppliers?

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

We are strengthening the prompt payment code. We want more companies to sign up to the code and I am writing to all the FTSE 350 companies to encourage them to do so. If a company changes its payment practices for the worse and to the detriment of small businesses, I want to see a situation in which they will be kicked off the prompt payment code so that they cannot wear that badge of pride.

[Mr Chuka Umunna (Streatham) (Lab)]

Following on from the question from my hon. Friend the Member for Coventry South (Mr Cunningham), does the Secretary of State agree that to hear that your job has been put at risk of redundancy not from your employer, but while watching the television news with your family on Christmas day—as was the case with the City Link workers—is an utterly appalling way to be treated?

[Vince Cable]

I certainly agree that for the 2,300 workers involved it was a very sad and dispiriting event. The company can answer for its behaviour, but the fact is that it was no longer viable and was put into administration. [Official Report, 16 January 2015, Vol. 590, c. 9MC.]

[Mr Umunna]

With so many unanswered questions for employees and contractors of City Link, the entire affair stinks. Why, for example, if the firm was technically insolvent on 22 December, as has been reported, was it planning to trade until 26 December? Is it true that contractors were told that rumours of it going into administration were false? Why was a new subsidiary set up on 9 December?

The administrators will do their work and no doubt make a D1 filing with the Department. Given the numbers involved and the public interest in the administration, will the Secretary of State commit to conducting a full and proper inquiry into the matter, as he did with Comet? Those who have lost their jobs and contractors who are owed money deserve nothing less.

[Vince Cable]

The difference with the Comet case is the allegation of serious misconduct by directors, and that may or may not be the case with City Link. In six weeks, the administrator will make a report to our Insolvency Service and, depending on what that says, we may want to initiate an investigation, but let us wait and see the findings of that. [Official Report, 16 January 2015, Vol. 590, c. 10MC.]

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

T6. There have been more than 500 apprenticeship starts in my constituency in the past year, but I want to increase that figure. What more can we do to ensure that businesses support, and schools promote, apprenticeships?

[Nick Boles]

The level of creation of apprenticeships in my hon. Friend’s constituency is fantastic, but more can always be done. The best possible advocates for apprenticeships in schools are the people who have just finished doing them. They are discovering that they are getting great jobs with better pay than their peers. Getting recently graduated apprentices back to their schools to talk to young people about the choices they are about to make is the most powerful way of persuading them of this opportunity.

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

T2. Five hundred of the City Link redundancies are in Scotland. Does the Secretary of State share the outrage of the Scottish people at the way the workers have been treated and the fact that the taxpayer is expected to pay for part of the multimillion pound redundancy bill? What is he doing to help the workers and their families, in Scotland and across the UK, who have been devastated by this news?

[Vince Cable]

The taxpayer is, of course, always responsible for statutory redundancy and this case is no different. I have talked to the head of the union and the secretary-general of the Trades Union Congress on how to deal with the implications for the labour market. The labour force is very widely distributed across the UK with no major concentrations, but where there are, and if there are people who really need help with finding employment and reskilling, we are certainly willing to do the maximum we possibly can to help.

[Mr Robin Walker (Worcester) (Con)]

T7. The ringing of tills, especially among small independent shops, should always be welcome in this nation of shopkeepers. In the last week of December, Worcester’s high street saw a 13% increase in footfall. That is very welcome. Small shops in Worcester are looking forward to the £1,500 discount to business rates this year. May I urge the Minister, as the Government consider further reform to business rates, to ensure that small businesses continue to benefit?

[Matthew Hancock]

I am delighted to hear of that improvement in Worcester, which is no doubt in part, though not all, down to the work of my hon. Friend. Business rates raise revenue and revenue is necessary, but the review has to ensure that they work better. The £1,500 discount for retailers is a step forward, but this is a major opportunity to improve the way the tax works.

[Sheila Gilmore (Edinburgh East) (Lab)]

T3. The Department for Work and Pensions’ proposals for universal credit will involve more than half a million self-employed people having to submit new and different monthly accounts. The Secretary of State for Business, Innovation and Skills is responsible across government for reducing red tape. What discussions is he having with the Secretary of State for Work and Pensions and the DWP to do something about this? He probably has time, given the delay to universal credit, but this is a matter of considerable concern for people trying to set up their own businesses.

[Matthew Hancock]

There is a series of discussions between officials in my Department and in DWP, and at ministerial level, to do precisely that. The advent of universal credit will help to make work pay. It is a very important change in our welfare system, but it has to be done in a way that supports small businesses which, after all, employ many, many people. The Government’s ongoing work will ensure that that happens.

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

As of last week, one could go into an Asda supermarket and buy four pints of milk for 89 pence. Milk, with all the work and care that goes into its production, should not be cheaper than plain water. Is it time to look again at the remit of the grocery code adjudicator to give her the opportunity to look at whole supply chains, especially when they greatly disadvantage primary producers?

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

The grocery code adjudicator’s remit is set out clearly in primary legislation, but it is important that the Government keep these issues under review. The Department for Environment, Food and Rural Affairs has engaged significantly with milk producers on this issue. My hon. Friend highlights a real problem concerning the sustainability of those who produce this vital resource.

[Mrs Mary Glindon (North Tyneside) (Lab)]

T4. What does the Minister have to say to members of the Alliance for Inclusive Education, who consider that his requirement for disabled students to contribute £200 towards their computer equipment funded by the disabled students allowance is unacceptable and discriminatory?

[The Minister for Universities, Science and Cities (Greg Clark)]

As the hon. Lady knows, we have reflected carefully on some of the representations made about the proposed package, and we continue to consult on the details and will come forward with a full response in due course. It is fair to say, however, that disabled groups and their representatives have recognised and welcomed the changes.

[Philip Davies (Shipley) (Con)]

Given our huge trade deficit with the EU, will the Secretary of State tell us why he is so certain that were we to leave the EU, it would stop free trade with us? Or is it that kind of woolly thinking that has led to his removal as his party’s economic spokesman at the general election?

[Vince Cable]

I actually remain as our economics spokesman, but that is a minor internal matter.

I think that most Conservative Members fully support British membership of the EU; they might wish to see it reformed, as I think we all do, but membership is fundamental. It is difficult to imagine that Britain could independently negotiate trade agreements with the US, India and other countries with the same authority as the EU.

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

T8. In the Government’s opinion, at what level of RAB—resource accounting and budgeting—charge does the student loan system become unsustainable?

[Greg Clark]

As the hon. Lady knows, probably the most respected expert in the world on this subject, the OECD, has been clear that “the UK higher education system is excellent for individuals and for the Government” and offers the “most sustainable” system in the world. The system is in robust good health and works well. It offers good value for the taxpayer and students.

[Mr David Willetts (Havant) (Con)]

Will the universities Minister confirm that overseas students will continue to receive a warm welcome in this country, and will he assure me that we will not expect them to leave the country after they graduate and apply for a post-study work visa from abroad?

[Greg Clark]

That is not the Government’s policy and I do not agree with the suggestion. I take great pride in the fact that the brightest and best people in the world want to come and study at our excellent universities. It is great news that we heard just before Christmas that we have record numbers of overseas students applying for admission to university in this country next year. When they come here, they will receive the most cordial of welcomes.

[Ian Lavery (Wansbeck) (Lab)]

Most companies pay the national minimum wage, but increasingly we have seen more companies not wishing to pay it and developing numerous professional scams—making individuals pay for uniforms, non-payment of mileage, bogus employment and bogus apprenticeships. What will the Government do to police the national minimum wage effectively in respect of these companies?

[Jo Swinson]

The hon. Gentleman raises a very serious issues and alludes to today’s TUC report, which I look forward to reading in detail. We have expanded the resources available for the enforcement of the national minimum wage; we have increased the penalties; we have introduced the naming and shaming scheme; and we will continue to clamp down hard on those companies that break the law. Many of the practices he outlined, which would seem to be in the report, are already against the law. The pay and work rights helpline in Her Majesty’s Revenue and Customs will also help to clamp down on these employers.

[Jeremy Lefroy (Stafford) (Con)]

Just before Christmas, Alstom Grid announced its intention to construct a state-of-the-art factory and research facility in Stafford— a vote of confidence in this country’s skills, openness to investment and industrial strategy. Will my right hon. Friend join me in paying tribute not only to Alstom—soon to merge with GE—but to Staffordshire county council, which had the foresight to construct a state-of-the-art business park, in which Alstom will be the first investor?

[Vince Cable]

I happily join the hon. Gentleman in that tribute. I have been to Alstom and seen its advanced electrical equipment manufacturing—it is one of the best in the world—and it is a tribute to the policies we have pursued that it wishes to expand its investment here.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

Given that Brent crude has dropped to $50 a barrel—40% of what it was—I am surprised there was not one question on the Order Paper about the effect of that on the supply chain, which is the responsibility of the Secretary of State; I know he knows this. My right hon. Friend the Member for East Renfrewshire (Mr Murphy), the new leader of the Labour party in Scotland, is calling for a summit to cover not just offshore but the supply chain factors affected by this collapse in the oil price. Will the Secretary of State join that summit and help not just the offshore industry but the supply chain, which is also affected?

[Vince Cable]

We understand the importance of that question. One of the sectoral groups in our industrial strategy is specifically concerned with the oil and gas supply chain. The companies around Aberdeen in particular are among the world leaders and could be seriously hit by the contraction of investment. Certainly, we will be getting that group together quickly and making an assessment of what it means. It is important to think long term, of course, as much of the industry does; temporary fluctuations in price are not necessarily as damaging as the hon. Gentleman might believe.

[Mr Philip Hollobone (Kettering) (Con)]

In 2010, the European Union sold to this country £28 billion more in goods than we sold to it. By the end of 2013, this massive figure had risen to £56 billion. Over that period, however, unemployment in this country has fallen significantly. Does that not destroy the Liberal Democrat myth that 3 million UK jobs are dependent on EU membership?

[Vince Cable]

What an extraordinarily primitive view of economics to believe in narrow bilateral balances of trade! One thing that should be said is that we are dealing, of course, not just in goods, but in services, where Britain has a major competitive advantage.

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

Does the Secretary of State approve of, and will he support, the campaign of the all-party group on manufacturing to find a great export in each of the 650 constituencies? Will he back that? It is a cross-party initiative; it has raised the profile of British exports; and I think it is a very good idea.

[Vince Cable]

I am very happy to support it. I remember that a couple of years ago, the hon. Gentleman asked every individual MP to identify companies in their constituencies that had made major manufacturing innovations. I praise the work that this all-party group is doing.

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

The Secretary of State has agreed to see my hon. Friend the Member for Coventry South (Mr Cunningham) and me on Monday on the question of City Link. We are grateful for that and look forward to meeting him. Will he take the opportunity now, at probably the last question of this Question Time, to make clear personally how much he deprecates the cynical and disgraceful behaviour of the owners of City Link and put that on the record? No behaviour like this can be justified in the 21st century—it belongs to the 19th century, if it belongs anywhere at all. Will he make that clear today?

[Vince Cable]

Giving lectures in that way is probably not helpful. I need to establish the facts about what has happened. Very serious allegations have been made, and we need to get them properly investigated. It needs to be said for the record, of course, that this is a company that was losing money under a variety of ownerships for as long as five years, so its future has been in question for a long time.

Business of the House

Thursday 8th January 2015 Commons Chamber

10:32

[Ms Angela Eagle (Wallasey) (Lab)]

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

[The First Secretary of State and Leader of the House of Commons (Mr William Hague)]

The business for next will be:

Monday 12 January—Consideration in Committee and remaining stages of the Stamp Duty Land Tax Bill, followed by consideration of Lords amendments to the Consumer Rights Bill, followed by a motion to approve a carry-over extension on the Consumer Rights Bill.

Tuesday 13 January—Debate on a motion relating to the charter for budget responsibility, followed by a debate on a motion relating to national policy statement on national networks, followed by consideration of Lords amendments to the Criminal Justice and Courts Bill, followed by a motion to approve a carry-over extension on the Criminal Justice and Courts Bill, followed by a motion to approve a carry-over extension on the Deregulation Bill.

Wednesday 14 January—Opposition day (12th allotted day). There will be a debate on an Opposition motion. Subject to be announced.

Thursday 15 January—Debate on a motion relating to contaminated blood, followed by debate on a motion relating to the transatlantic trade and investment partnership. The subjects for both debates were determined by the Backbench Business Committee.

Friday 16 January—Private Members’ Bills.

The provisional business for the week commencing 19 January will include:

Monday 19 January—Consideration of an allocation of time motion, followed by all stages of the Lords Spiritual (Women) Bill.

I should also like to inform the House that the business in Westminster Hall for Thursday 15 January will be:

Thursday 15 January—General debate on national commissioning of NHS specialised services.

[Ms Eagle]

I thank the Leader of the House for announcing next week’s business. In the aftermath of yesterday’s atrocity in Paris, I add my voice to the many who have already expressed their shock and anger at this attack on democracy and free speech. This House, of course, stands in solidarity with the French people and we send our heartfelt condolences to the friends and families of those who were so brutally murdered.

Despite the appalling events of yesterday, I would still like to take this opportunity to wish the whole House a very happy new year and say that I hope the Leader of the House has had a rest over the Christmas period. Judging from the Government’s meagre future business in what is left of this zombie Parliament, the right hon. Gentleman seems to want to extend the period of rest for a few more weeks yet. I hear that the Government Chief Whip, not satisfied with introducing a three-day week for Government Members, has now decided to slim it down to two days for his worried Back Benchers. I suggest that he should be sent as an envoy to the Lords, who this week were forced to debate how to reduce the number of peers attending their House because so many coalition cronies have been crammed into it that it is bursting at the seams. Perhaps a two-day week would be the answer for them too.

Before Christmas, the Governance Committee produced a series of responsible and sensible suggestions and proposals for reforms. It is vital for the new management system to be implemented before the end of this Parliament. I note that the Leader of the House did not announce a date for a debate on the report. Will he confirm that we will consider it very soon, and will he ensure that the House has an opportunity to vote to implement its recommendations rather than merely taking note of them?

The general election campaign seems to have kicked off this week, and I am afraid that the Leader of the House has not had the most auspicious of starts. On Monday he flashed his briefing note at the cameras, and inadvertently revealed secret Tory plans to slash the schools budget after the next election. Perhaps he will now come clean and tell us what cuts that briefing note was trying to hide—or was the Liberal Democrat Education Minister right when he revealed that if the Tories win, they will cut the education budget by a quarter?

At the same press conference, the Chancellor told us that the choice at the general election was between competence and chaos, and on that one issue I actually agree with him. So let us see how the Government are doing on competence. Last year began with severe flooding in the south-west, which they did not even seem to notice until the Somerset levels had been under water for weeks and the hue and cry became too loud to ignore. Then we had the fiasco at the Passport Office when tens of thousands of passport applications were delayed, which caused considerable anxiety and extra cost and ruined many holidays. We have had the ongoing saga of the Secretary of State for Work and Pensions, who has been in denial about the fiasco that is universal credit implementation—now very late and hugely over budget. On the deficit, the Government have missed every target and broken every promise, borrowing £200 billion more than they promised at the start of the current Parliament.

The year has ended with chaos on the railways, and our NHS in crisis. Not content with wasting hundreds of millions on botched rail franchise competitions, the Department for Transport topped even that over Christmas, when thousands of travellers were left stranded, separated from their families and herded around stations like cattle—but the railways Minister toasted the success of rail repairs in her Christmas message, and said she was “chuffed” that there was

“light at the end of the tunnel”.

In the last year, the Government have breached half the service standards that they enshrined in the NHS constitution. In A and E, nearly half a million people have been left waiting more than four hours for treatment—the worst waiting time since records began—while the Prime Minister and the Health Secretary are in denial. If all that is the Chancellor’s definition of competence, we have to wonder what on earth chaos would look like.

Will the Leader of the House grant us a debate on the competence of the Government, and, while we are at it, may we also debate the chaos of the coalition election launches? First we had the Tory campaign poster, a barren road to nowhere which the Chancellor stubbornly insisted was

“a British picture, a British road”.

Actually, it turned out to be in Germany, which presumably explains why there were no potholes in it. Then we had the Liberal Democrats promising to be the heart and spine of any future Government. Well, while we are all in favour of organ donation, it is surely impossible to donate something that you do not already possess.

And then we had the Leader of the House and his colleagues, the least exciting five-piece ever to take the stage. Their fan base is in decline, and they are all jostling to be the lead singer—except the Leader of the House, who is leaving the band. It was not so much One Direction as No Direction.

[Mr Hague]

On the solemn note on which the hon. Lady began, I absolutely join her, as will the whole House, in condemnation of yesterday’s terrorist attack in Paris. The people of France are very much in the thoughts of this House and of the British people today. As the Prime Minister has made clear, we will, of course, offer all possible assistance to our colleagues in France. I think this attack will only redouble the determination of people in Britain, France and across the world to defend freedom of speech, because that is clearly what is at stake here.

The hon. Lady said that, despite that, it was appropriate to wish a happy new year. I am not sure why she thought I particularly needed a rest over the new year, but I join in wishing her a happy a new year. It will, however, still be a year for a considerable amount of work in this House. The hon. Lady used the phrase “zombie Parliament”, and I ought to point out that in this Parliament we will actually sit for 734 days, which is more than the 718 days of the five-year Parliament under the last Government, and that in this Session we are considering, including the Bill to be introduced today, 23 Government Bills, compared with 13 main programme Bills under the Labour party in the last Session of the last Parliament. In the penultimate Session of the last Parliament there were 18 Government Bills, whereas there were 20 in this Parliament. I therefore do not think the Opposition have much to crow about in that regard. The Bills we are considering are not only numerous, but they include the Pension Schemes Bill, which is giving people a freedom on retirement that they never enjoyed under any previous Administration, a small business Bill, which is very good for entrepreneurs, and an Infrastructure Bill, which is giving another multi-billion pound boost to our economy, and these are things that the Opposition do not seem to think are necessary or desirable. That is what is happening in this Session of Parliament.

The hon. Lady asked about the very important report on the governance of the House. I certainly intend that that will be debated soon—almost certainly in the week after next, although I have not been able to announce the full business for that week. That will mean that debate can take place after the meeting of the House of Commons Commission, which, as she knows, will also take place that week, on the 19th. I am sure the House will want to make a decision about how to proceed with this, rather than, as she said, just take note of matters. A great deal of work has gone on in the Governance Committee. It has been very good work, as I am sure the House will agree, and we do now need to get on with implementing many of the conclusions of that report.

The hon. Lady asked about various aspects of political campaigning and advertising in the last week, including a road in Germany. We know that what the Opposition would lead us to is the road to Greece—not the road to Germany, but the road to the deficit of more than 10% of GDP that they left us with.

I am happy to read out to the hon. Lady the note that the press noticed me carrying:

“In this Parliament, we’ve shown that we can protect the front line by making the Education budget more efficient and effective…But putting the economy at risk because Ed Miliband doesn’t have an economic plan, Labour would put our schools at risk.”

I am very happy to read that out to her, but I do not think she can lecture us about competence when the rebuttal document from the Opposition to what we said on Monday first of all confused a “million” with a “billion” three separate times, which does not inspire confidence as to how they would make any numbers add up, and asserted that one of their spokesmen was only a Back-Bench peer, the noble Lord Rosser, when he turns out to have been on their Front Bench for five years now without them even being aware of it in their own party headquarters. So telling us about competence after such a document may not be a very appropriate way to start the new year. Labour has also been forced to drop 12 policies in their entirety over the course of this week. It is too long a list for me to go through them all—

[Mr Peter Bone (Wellingborough) (Con)]

Oh, go on!

[Mr Hague]

Well, the list is too long for me to go through them all, but a proposal to ban food waste from landfill was dropped within minutes of Monday’s press conference. Bringing back Care First—[Interruption.] The shadow Leader of the House says that that has never been Labour’s policy, but according to her colleagues it was. Other policies that were dropped include additional funding for a national refuge fund; justice reforms for 18 to 20-year-olds; a women’s justice board; and reinstating Cycling England. Also, Labour’s opposition to reductions in the Arts Council budget was dropped within hours of Monday’s press conference. So competence has not really been on display from the Opposition this week. I notice that, over the recess, the hon. Member for Wansbeck (Ian Lavery)—I can say this because he is here—gave a very good analysis of the Labour leadership, saying:

“We’ve got an elite which quite frankly frightens me. They haven’t been anywhere or done anything, and when you’ve got an accent like mine, they think, ‘Well, that man doesn’t really know too much’.”

Well, on the basis of that, I think he knows quite a lot. It is time the Labour leadership listened more attentively to the hon. Gentleman’s views on that and perhaps on other things.

[Sir George Young (North West Hampshire) (Con)]

I welcome what my right hon. Friend has just said about an early debate on the governance report. I would be grateful if he could tell us, as a footnote to the question from the shadow Leader of the House, what has happened to the recommendation in paragraph 186, which states:

“We therefore recommend that the ‘paused’ recruitment process be formally terminated. We believe that this action should be taken immediately.”

In his own White Paper, “The implications of devolution for England”, my right hon. Friend has indicated that he would welcome an early debate and a vote on this matter. When he has narrowed down the options, will he give us an idea of the timetable for this? May we have such a debate before the February recess?

[Mr Hague]

On my right hon. Friend’s second question, I certainly hope that we can do so, but there will need to be consultation between the parties about the nature of such a debate as well as its timing. However, I certainly hope that we can have such a debate and, if possible, have it before the February recess, although I cannot rule out it having to be later than that.

On my right hon. Friend’s first point, the implementation of that recommendation of the Governance Committee is a matter for you, Mr Speaker, but I know that it will be possible to discuss these things in the forthcoming meeting of the House of Commons Commission and in the debate.

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

I have been prompted to ask for a debate by something the Prime Minister said this week. He seemed to suggest that there were too many old people in this country, and that that was the reason behind the problems in accident and emergency departments in the national health service. That kind of ageism seems to be creeping into our society.

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

Quite!

[Mr Sheerman]

We have debates in the House on many “isms”, and it is about time we took ageism seriously. May we have an early debate on how we can keep the older population in this country happy and healthy? They are very important electors and very important citizens.

[Mr Winnick]

I’ll vote for that!

[Mr Hague]

I think all of us, including the Prime Minister, are opposed to ageism, and the hon. Member for Walsall North (Mr Winnick) has just loudly proclaimed his opposition to it. We have just lost the hon. Member for Bolsover (Mr Skinner) from the Chamber but I am sure that he, too, would have agreed strongly with these sentiments. He is an advertisement for great activity in slightly older age.

Of course no one is blaming older people for the problems that have been experienced in A and E departments. We now have almost 1,200 more A and E doctors, including 400 more consultants, than we had in 2010, and they are trying to cope with the pressures. The hon. Member for Huddersfield (Mr Sheerman) makes a good case for discussing ageism and for combating it; I fully agree with him.

[Mr Nigel Evans (Ribble Valley) (Con)]

A car is a necessity, not a luxury, in the Ribble valley. It is a rural area, as the Leader of the House knows, and many hard-pressed motorists are now benefiting from the fact that petrol prices have dropped. They have not dropped enough, however; petrol should now be about £1 a litre. May we have a debate on fuel prices so that we can not only shame those organisations that are not fully passing on the price reductions but propose that if they do not do so now, the Government will consider imposing a windfall tax on their profits?

[Mr Hague]

As my hon. Friend knows, the Chancellor has stressed the importance of this matter. As the Chancellor said on Tuesday, the oil price is now at its lowest in five years, and it is vital that this is passed on to families at the petrol pumps, and though utility bills and air fares. The Government are closely monitoring whether companies are passing on to their customers the benefits of plunging oil and gas prices as quickly as possible. Let me add that Ofgem has referred the gas and electricity markets to the competition authorities to ensure that those markets are working effectively, and it has made it clear that it will be looking at the relationship between wholesale costs and retail prices as part of its investigation.

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

The Leader of the House will know that the Cabinet Office has recently published its list of upcoming triennial reviews of non-departmental public bodies, helpfully pointing out that they will take six months from start to finish. Will he therefore ask the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Camborne and Redruth (George Eustice) to come to this House to explain why the triennial review for the Marine Management Organisation, which closed in October 2013, with publication due in early 2014—a response to a parliamentary question then said it would be published before the end of 2014—has still not been published? This is the subject of a cross-party request for an investigation into the quality of data, and fishers in my constituency are being affected. Will the Leader of the House please explain what the Department for Environment, Food and Rural Affairs and the Government are hiding?

[Mr Hague]

That is, of course, a question directly for the DEFRA Ministers, and the hon. Lady will have opportunities to ask them directly. I am sure she has done so before, so I encourage her to do that again, but I will make it clear to them the concern that she and other Members have about this matter.

[Sir William Cash (Stone) (Con)]

Yesterday, my Committee deeply deplored the fact that the Prime Minister, despite promises given, provided a mere written statement regarding the most recent European Council. That is greatly to be deplored, but another matter of grave concern to my Committee is the failure to schedule debates on the Floor of the House and to carry those through. I recently asked a similar question of the Leader of the House and he said that he would try to do something about this. We have only recommended 11 debates, including on matters as important as the free movement of persons—that has not been debated, despite the fact that we made the recommendation one whole year ago. It simply will not do. In the circumstances, will he agree to appear before my Committee to explain the situation, because, frankly, we have just about had enough?

[Mr Hague]

On the first point about a written statement, the Prime Minister has a very strong record in coming to the House to deliver statements, including after the great majority of European Councils. As my hon. Friend knows, this particular Council meeting took place after the end of Parliament’s sitting, so it would not have been possible to come straight to the House about it. I think there are some Councils and occasions when it is appropriate to give a written statement instead, but on the vast majority of occasions an oral statement is made. I understand the point my hon. Friend is making about the range of reports and requests from the European Scrutiny Committee. It has not been possible to schedule those debates as things stand, but of course I am happy to discuss that further with him.

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

May we have an early debate on compensation for victims of badly installed cavity wall insulation? Many people, including my constituents, have had cavity wall insulation carried out, funded by the obligations placed on energy companies by the Government. When that goes wrong, as it sometimes does, the Government refuse to intervene and the Cavity Insulation Guarantee Agency, the industry regulator, is absolutely useless at taking any action. May we have an early debate with Ministers to see what can be done to sort the problem out?

[Mr Hague]

There will be people caught in a difficult situation as a result of that, and the right hon. Gentleman raises a point that will be important to some people around the country. It would be an appropriate subject to advance for a Backbench Business Committee debate or for an Adjournment debate, but I will also draw the attention of my colleagues at the Department of Energy and Climate Change to what he has said.

[Mr Keith Simpson (Broadland) (Con)]

My right hon. Friend is no doubt aware of the very strong feeling expressed both in this House and in the other place for a speedy report by the Chilcot inquiry into the Iraq war. I accept the fact that, as this is an independent inquiry, he and the Prime Minister have no control over this matter, but I hope that Sir John Chilcot takes note of this concern and expedites the report as quickly as possible. Assuming that he does report by February, Sir John Chilcot will undoubtedly make a press statement and a statement will be made in this House, but can the Leader of the House assure us that we will have a full day’s debate on the report and that there will be a gap between the report’s publication and the debate to allow Members to read the 1 million words that are reported to be in it?

[Mr Hague]

My hon. Friend makes a good point. He is renowned for his reading and his reviews of books, but even he would need some time to read 1 million well-chosen words. Of course it will be important for the House to digest the report before having a full-scale debate on it. Whenever it is published, I certainly expect that to happen, but I cannot undertake—and the Prime Minister made this clear yesterday—that that will be in this Parliament. It may well be something for my successor in the next Parliament to deal with, but I am sure that those running the inquiry will have heard the concern in Parliament, which my hon. Friend has again expressed today.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

May we have a statement or a debate led by the Department for Work and Pensions on the guarantees or guidelines that have been given to local authorities for when the independent living fund is abolished? Sadly, no Conservative Members attended a recent lobby meeting to speak to people who are facing this problem. One representative told me:

“When ILF closes in June 2015, none of the 18,000 disabled people who currently receive the independent living fund, nor their families or friends, have any idea whether they will end up condemned to living in a care home or effectively imprisoned in their own home without adequate support.”

There were poignant tales of people who have gone from independent living to being put into care homes by local authorities. May we have a statement and a debate on this terrible tragedy, which has been caused by the Government’s abolition of the independent living fund?

[Mr Hague]

That is something that can be raised with DWP Ministers at their regular questions. It is a perfectly normal subject for debate, and the hon. Gentleman may wish to pursue all the various means of obtaining a debate—through the Backbench Business Committee and so on—but I will bring this matter to the attention of the Ministers concerned.

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

Affordable housing is a major issue in London, especially in my constituency of Brentford and Isleworth. May we have a debate in this House about that matter and about how we can encourage Government and local authorities to ensure that we have enough affordable housing in planning applications?

[Mr Hague]

Again, there would be a good case for such a debate. As my hon. Friend knows, the national planning policy framework makes it clear that local authorities should use all the evidence available to them to ensure that their local plan meets the objectively assessed need for affordable housing in their area. The Mayor in London is currently revising the London plan to address a likely increase in the capital’s population and is proposing a minimum of 17,000 affordable homes per annum in the future. Again, as I have said to other Members, it is open to her to pursue a debate in all the normal ways.

[Mr John Spellar (Warley) (Lab)]

The Times today carries an alarming story that when public registrars report alleged sham marriages to the Home Office, no action is taken in three-quarters of cases. Moreover the Home Office refuses to provide feedback to the registrars. That shocking state of affairs is only too familiar to MPs and constituents when we report cases of immigration abuse. It is no wonder that there is such concern in all communities about the immigration shambles. May we have a debate so that the Home Secretary can try to justify this incompetence and chaos? It would be even better if she could knock her Department into shape.

[Mr Hague]

The Home Secretary has done a great deal to knock her Department into shape and continues to do so. The right hon. Gentleman raises a legitimate concern, of course, and I have also seen that report in the newspapers today. I know that the Home Office will want to respond to it and I will draw the Home Secretary’s attention to what he has said. I am sure that there will be opportunities to raise the subject further in this House, including with Home Office Ministers.

[Sir Tony Baldry (Banbury) (Con)]

May I thank the Prime Minister, the Deputy Prime Minister and the Leader of the Opposition for the cross-party support for the Bill that will enable women who are consecrated diocesan bishops in the Church of England to be nominated for membership of the House of Lords as soon as possible? I thank the Leader of the House, the shadow Leader of the House and the usual channels for providing time for that one-clause Bill to be debated on Monday week. Will my right hon. Friend confirm that the intention is that if the Commons can cover all stages of the Bill on 19 January there will be time in the other place for the Bill to be passed and enacted during this Parliament so that we can see women bishops in the House of Lords as soon as possible?

[Mr Hague]

My right hon. Friend has been assiduous in ensuring that the Bill was brought forward in a timely way. He asked a few weeks ago for all of its stages to be dealt with in one day and that is what we will be able to do, subject to the agreement of the allocation of time motion on 19 January. Of course, it is very much the intention that it will be possible for the Bill to receive Royal Assent before the dissolution of Parliament. We would not have introduced it with any other expectation. I am pleased that we have been able to introduce it speedily and I hope that we will be able to consider it speedily, and that they will be to do so in the other place as well.

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

Will the Leader of the House join me in congratulating the Whitefoot and Downham community group here in London on winning the Paul Goggins memorial prize, which was established by the all-party parliamentary group on poverty and the Webb Memorial Trust? As it was the anniversary of Paul’s death yesterday, will he also extend the sympathy of the House to Paul’s family during this very difficult period?

[Mr Hague]

Yes. What the hon. Gentleman has said will have wide support and will have raised strong feelings across the House and I congratulate the group that won that award. In all parties we have fond memories of the work of Paul Goggins and we remember him again today.

[Mr Speaker]

I thank the hon. Member for Wythenshawe and Sale East (Mike Kane) for what he has said and the Leader of the House for his reply. Paul Goggins was hugely respected and much loved across the House and what has been said today will offer some comfort and succour to his family. That is greatly appreciated.

[Philip Davies (Shipley) (Con)]

May we have a debate on how the honours list is determined? Mr Peter Smith, the Tour de France project co-ordinator for Leeds council, was awarded an MBE in the new year's honours list, which was, I am sure, well merited, but does that not go to show what a glaring omission it was that Gary Verity, who brought the Tour de France to Yorkshire, was ignored? In that debate we can perhaps show the strength of feeling in Yorkshire that Gary Verity should receive a knighthood for what he did, which I hope will be addressed as soon as possible. In any such debate, we could also perhaps discuss the merits of a knighthood for Geoffrey Boycott who, as the Leader of the House knows, is a rival to him as the greatest living Yorkshireman.

[Mr Hague]

Without straying into all parts of that question and recognising that we are not allowed to dispense honours at the Dispatch Box, I am sure that we all agree that many people did tremendous work to bring the Tour de France to Yorkshire. It was a fantastic success. It is right that those people are recognised and I agree with what my hon. Friend said about the crucial and important role that Gary Verity played as leader of Welcome to Yorkshire. I cannot comment on how the honours system operates, but I will certainly convey what my hon. Friend has said about Gary Verity to all those responsible. After all, the new year’s honours list, while an important list, is not the only honours list in the year and so names can be considered for another list as well.

[Jeremy Corbyn (Islington North) (Lab)]

Before the Christmas recess, I raised with the Leader of the House the question of human rights abuses in Bahrain and the opening of a British base there at the same time. He will be aware from my early-day motion and from news reports of the arrest and imprisonment of Sheikh Ali Al-Salman, the leader of the opposition in Bahrain, who remains in detention, as do many other people. Will he put pressure on the Foreign Office to receive a delegation of Members to express serious concerns about human rights in Bahrain and the apparent approval of the Bahrain Government’s record on this by the placing of a British base in that country?

[Mr Hague]

Foreign Office Ministers have, as I know from my experience as Foreign Secretary, been very ready to discuss these things with Members of Parliament, and I am sure that if the hon. Gentleman asks for a meeting for Members of Parliament with Foreign Office Ministers, it would be entirely the normal thing for them to give a positive reply. It is very important to be able to discuss these things. We have often raised human rights concerns directly with the Bahraini Government, but I stress that the minesweepers that are based in Bahrain are there for the protection of our own national security and that of our allies more widely. They provide a very important role in assuring safety of navigation through the strait of Hormuz. So the British military role there is not something simply about Bahrain; it is about our wider collective defence and it should be seen in that context.

[Mr Peter Bone (Wellingborough) (Con)]

May I offer a happy new year to the shadow Leader of the House? She is an excellent shadow Leader of the House and I hope that she continues in that role in the next Parliament. Has the Leader of the House given any thought to the sad day when he delivers the last business statement of this Parliament? Will he do a multi-choice? He has to announce the first week’s business of the new Parliament. Will he announce what the Labour party might do if it was able to form a majority Government? It would obviously have to have an emergency Budget to increase taxes and borrowing. If it was a Conservative majority Government, we would immediately introduce a European Union (referendum) Bill. If it was a Liberal Democrat majority—no, I am not going into fantasy land. Could we have a statement next week?

[Mr Hague]

That is a very attractive idea for the last business statement of the Parliament, which we will come to towards the end of March. I will look at that idea. Certainly, my hon. Friend is right that a Conservative Government will want to have a European Union (referendum) Bill, and to have the earliest possible debate on it as a Government Bill in Government time. I do not know whether there would be time for any of that if there were to be a Labour Government, since they would be dealing with the financial crisis, the huge uncertainty in the markets and the difficulty facing the currency. Since they would be on that road to Greece, I am not sure they would have time for much legislation.

[Kevin Brennan (Cardiff West) (Lab)]

Is there any means by which the business of the House today could be suspended briefly at 12 noon to allow hon. Members to attend in Westminster Hall with a pen, joining journalists and members of staff of this House in a show of solidarity with our French neighbours in the face of what happened yesterday, and to demonstrate that ultimately the pen is mightier than the sword?

[Mr Hague]

The whole House will agree with that sentiment. Any suspension of the sitting is a matter for you, Mr Speaker, although it will be possible for the majority of hon. Members to do that even when the House is sitting. The hon. Gentleman makes a good point about showing our solidarity and determination to protect freedom of expression in this country and across the world.

[Bob Stewart (Beckenham) (Con)]

May we have a debate about national responsibility for the funding of memorials such as St George’s, the RAF memorial chapel at Biggin Hill? It was saved yesterday, but there was some debate and some bad words about the possibility of the local council, Bromley council, having to fund it. Such memorials are a national responsibility and we should have plain, understandable instructions on how they are preserved.

[Mr Hague]

There is, of course, a good case for these things to be clarified, and even for a debate on them. In this particular case, which is very important and which my hon. Friend and other neighbouring Members of Parliament have been assiduous in pursing, as the Prime Minister confirmed yesterday, the chapel at Biggin Hill will be preserved for future generations. We are very pleased that Bromley council wishes to create a heritage centre on the site, and, subject to agreeing suitable terms to secure the site, we will lease the site on a long-term basis to the council for a peppercorn rent, which will help enormously. For today, we should thank all the parties that have come forward in offering their support, which we all greatly appreciate.

[Nic Dakin (Scunthorpe) (Lab)]

We begin 2015 with ownership of Tata Steel UK’s long products division uncertain into the future. This is causing great anxiety in steel communities throughout the land. Is it not time that we had a debate in the Chamber about the future for UK steel?

[Mr Hague]

We have just had Department for Business, Innovation and Skills questions, where there were opportunities to raise that. We had an urgent question some weeks ago about the matter, and of course there are continuing concerns. The hon. Gentleman will be able to continue to raise the matter with BIS Ministers. There will also be opportunities to debate the economy in general over the coming months. There is a strongly improved outlook from the British Chambers of Commerce survey published only today. The hon. Gentleman will be able to find many opportunities to continue to pursue the subject, as he always does.

[Robert Halfon (Harlow) (Con)]

My right hon. Friend will be aware that in Harlow we have had over 100 illegal traveller encampments over the past year and sadly we have a police commissioner who seems to have adopted the unwise mantle of the three monkeys—hear nothing, say nothing and do nothing. Now he wants to increase the police precept and hit the most vulnerable residents across Essex and in my constituency, Harlow. May we have an urgent debate on the police precept? Will my right hon. Friend, with the Home Secretary, ensure that the police commissioner consults local residents before putting up taxes, and will he do everything he can to stop that?

[Mr Hague]

My hon. Friend, as always, raises an issue that is important to his local communities. There is already a statutory requirement for police and crime commissioners to consult their police and crime panel regarding any proposals in relation to the council tax precept, and the police and crime panel has the power to veto the proposed precept and ask the PCC to set it at a higher or lower level. Ultimately, one of the virtues of PCCs being elected is that they are periodically accountable to the local voters for their decisions if they want to stand for re-election.

[Jonathan Ashworth (Leicester South) (Lab)]

May we have a debate on the role and responsibilities of NHS England in ensuring reasonable access to GP surgeries? I raise the matter because the Highfields medical centre in my constituency was forced to leave its premises, giving patients just a couple of weeks’ notice, and move to premises in Leicester East, the neighbouring constituency. I wrote to NHS England on 18 November, raising concerns on behalf of my constituents. I have not yet had a response. Many patients in my Leicester South constituency are now without a GP in that part of the city and are deeply concerned about it.

[Mr Hague]

GP access is extremely important to people all over the country. All Members of Parliament understand that extremely well, and I hope that NHS England will respond quickly to the concerns that the hon. Gentleman raised on behalf of his constituents. There are questions to Health Ministers next week in the House, so he will be able to raise the matter with them directly if he has not achieved satisfaction for his constituents before then.

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

Yesterday Harrogate borough council confirmed its plans to deliver a sixth successive annual council tax freeze, taking advantage of the support from the Government to help it do that. May we have a debate to consider what we can do to encourage and support more local authorities to set fair and sound budgets that are sound for local taxpayers as well?

[Mr Hague]

My hon. Friend’s council is a good example of setting sound budgets. Every part of the public sector needs to do its bit to pay off the deficit left by the previous Government, including local government, which accounts for a quarter of all public spending. We have been working hard to give hard-working people greater financial security by keeping the council tax down so that the local government settlement that was introduced in December is fair to all parts of the country. It helps councils to do that, including freezing council tax bills, and that is a tremendous contrast with the doubling of council tax bills that took place under the previous Government.

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

I recently discovered that 30 addresses in the midlands accounted for 5,000 bogus emergency calls to the ambulance service in one year, and 600 were to a single address in Birmingham. I have since been advised that there might be a perverse incentive in the operation of the ORCON—operational research consultancy—response system that deters the service from tackling those bogus callers. Given the problems that the health service is facing and the fact that this is clearly not just a local matter, may we have a debate in Government time on bogus calls and the operation of the ambulance ORCON response system?

[Mr Hague]

On the face of it, it sounds as though the hon. Gentleman raises an important point about bogus calls. There is no Government time available for such a debate, but there are many other opportunities to explore such matters, including Adjournment debates and questions to Health Ministers, which we will have next week. I encourage him to take those opportunities, because this is an important matter. If changes can be made that lead to a reduction in such bogus calls, and therefore to the more effective use of emergency services, that would be an important improvement for people across the country. I will refer the points he has raised to the relevant Ministers and encourage them to look into the matter.

[Jeremy Lefroy (Stafford) (Con)]

My hon. Friend the Member for Broadland (Mr Simpson) referred to the Chilcot inquiry, as did the Prime Minister yesterday, which was established only two years after my right hon. Friend first called for it. In my constituency we have seen two inquiries by Sir Robert Francis, the latter a public inquiry steadfastly called for by my hon. Friend the Member for Stone (Sir William Cash). May we have a debate on public inquiries, including how they are initiated, their conduct and, most importantly, whether they achieve their aim of getting to the truth and bringing about change for the better?

[Mr Hague]

There is a good case to be made for such a debate, and my hon. Friend might wish to pursue it more generally, including through the Backbench Business Committee. There are regular calls for major inquiries, and some of them are of huge importance. He referred to those that related to his constituency. The House has heard several times this week about the anxiety that the Chilcot inquiry report should be published. He rightly referred to the fact that in June 2007, two years before the inquiry was set up, some of us tabled a motion in this House, supported by Members now sitting on the Government side, calling for it to be established. Had that happened then, the inquiry would have reported long ago.

[Simon Danczuk (Rochdale) (Lab)]

Over the past few days, police in Bangladesh have continued to crack down on protesters demonstrating against last year’s general election. At least two protesters have been killed, the leader of the opposition has been placed under house arrest and the media have been banned from reporting the views of opposition figures. Does the Leader of the House agree that the behaviour of the Bangladeshi Government is completely unacceptable and that we should have a debate on how the UK can contribute to restoring democracy in that country?

[Mr Hague]

We have been concerned for some time about political events in Bangladesh, which have sometimes impinged on human rights, particularly the events surrounding the last election and the failure of the two main parties there to agree a way forward for elections to take place with wide participation. These events are the result of that continuing failure. The UK Government are certainly concerned about the situation in Bangladesh. We will have questions to Foreign and Commonwealth Office Ministers on 20 January, when the hon. Gentleman will have a further opportunity to raise the matter.

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

Further to my previous question, the Leader of the House will know that illicit tobacco continues to concern my constituents, as it damages local health and the local economy. May we have an urgent statement on the measures that are being taken to tackle this, including the often underused powers available to strip retailers of their lottery and alcohol licences when they are found to be breaking the law?

[Mr Hague]

My hon. Friend has indeed raised this matter before, and I think that I mentioned on that occasion the powers that are available to deal with such situations and the increased attention that is being given to them. He has again made the case for more of those powers to be used, and I am sure that what he has said will be listened to by both the Government and local authorities.

[Clive Efford (Eltham) (Lab)]

Yesterday, the Secretary of State for Health was required to come here to answer an urgent question about the crisis in our accident and emergency services. Is it not right, given the widespread concern up and down the country about A and E services, that we should have a debate on this issue here, in Government time, so that we can examine the details? It would also give the Secretary of State a chance to put right his claim that I misled the House yesterday in stating that he proposed the closure of the Lewisham accident and emergency service, which he certainly did. Subsequently, in October 2013, he lost a judicial review on that same issue, so it is surprising that it seemed to slip his mind. Will the Leader of the House provide an opportunity for the Secretary of State to put the record straight and let us have a debate on this very important issue?

[Mr Hague]

There was a lot of discussion about this in the House yesterday in a lengthy urgent question and during a great deal of Prime Minister’s questions. Next Tuesday, there will be questions to the Secretary of State for Health and his colleagues on the Floor of the House, and next week there is an Opposition day debate in which the Opposition have yet to decide what to debate. Putting all those things together, I am sure that there will be many further opportunities for these issues to be debated on the Floor of the House.

[Mr Philip Hollobone (Kettering) (Con)]

Once again this year over the Christmas period, we have seen our A and E departments and police cells clogged up with people who have simply had too much to drink. A constituent of mine from Barton Seagrave wrote to me this week to say the following:

“I feel that we have to claim back our town centres at the weekends from drunks and protect our Health Service from thoughtless, ignorant abuse. To me it isn’t rocket science. When we see how the Drink Drive campaign has changed behaviour over the years, plus the Seat Belt campaign what we need is a government led campaign to educate against such boozy and loutish behaviour.”

May we have a Government statement or debate in the House on this important topic?

[Mr Hague]

These things have, quite rightly, been debated in the House from time to time. We have introduced a radical package of measures to overhaul the Licensing Act 2003, including providing more local powers to deal with problem premises, doubling the fine for persistent under-age sales, and giving residents a greater say about licensing decisions in their area. We have banned the worst cases of very cheap and harmful alcohol sales. We are challenging the alcohol industry to raise its game in doing more on a voluntary basis, including by widening the availability of lower-strength alternatives in pubs, removing high-volume and high-strength beer and developing new retail standards. I hope that a great deal will continue to be done to address the problem that my hon. Friend rightly raises.

Point of Order

Thursday 8th January 2015 Commons Chamber

11:23

[Chris Bryant (Rhondda) (Lab)]

On a point of order, Mr Speaker. Many hon. Members have referred to the events in Paris yesterday. I wonder whether it would be in order for you to suggest to Members, peers, journalists and anybody else that if they wanted to join other Members in Westminster Hall at noon holding either a pen or a pencil, that would be an act of solidarity with the French people.

[Mr Speaker]

I am extremely grateful to the hon. Gentleman for his point of order. Members who have been present in the Chamber for some minutes will have heard the hon. Member for Cardiff West (Kevin Brennan) mention that it was intended by significant numbers of Members, staff in the service of the House and apparently also journalists to congregate in Westminster Hall holding pens in an act of solidarity with the people of France. Moreover, he suggested that I might wish to suspend the sitting. I hope that he will understand why, at short notice and with scheduled business, I am not minded to suggest a suspension of the sitting.

However, pursuant to what the hon. Member for Rhondda (Chris Bryant) has said, I would certainly wish to offer encouragement to any colleague from the Back Benches who wishes to attend the event in Westminster Hall to do so, in the knowledge that if that Member wishes to speak in the upcoming debate and returns promptly to the Chamber, he or she will suffer no detriment in the pecking order for speeches. I hope that is a suitable way in which to handle this matter. I thank the hon. Gentleman for his point of order.

Bill presented

Corporation Tax (Northern Ireland) Bill

Presentation and First Reading (Standing Order No. 57)

Mr Chancellor of the Exchequer, supported by the Prime Minister, the Deputy Prime Minister, Danny Alexander, Secretary Theresa Villiers, Mr David Gauke, Priti Patel and Andrea Leadsom, presented a Bill to make provision for and in connection with the creation of a Northern Ireland rate of corporation tax.

Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 149), with explanatory notes (Bill 149-EN).

Backbench Business

Thursday 8th January 2015 Commons Chamber

Higher Education Funding

Thursday 8th January 2015 Commons Chamber

11:25

[Mr Speaker]

I call the Chair of the Business, Innovation and Skills Committee, Mr Adrian Bailey, although I think that he is speaking in a personal capacity.

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

I beg to move,

That this House notes the Third Report from the Business, Innovation and Skills Committee, Student Loans, HC 558, and the Government response, HC 777; and calls on the Government to outline proposals that will sustain funding for the sector while addressing the projected deficit in public funding.

I thank the Backbench Business Committee for agreeing to hold this debate, which is of huge significance to universities up and down the country and, indeed, to the cohorts of students at or about to go to those universities. The debate is essentially about the Business, Innovation and Skills Committee report on student loans. I must thank my Committee colleagues because the report’s recommendations to the Government were unanimously agreed on a cross-party basis. It is fair to say that they reflect the concerns of Members from both sides of the House.

I will also draw on other reports not mentioned in the motion, including some by academic and university institutions, but particularly a report by the independent Institute for Fiscal Studies and one by the Higher Education Commission. I stress that the IFS is an independent body with expertise across both the academic and economic spheres, and that the Higher Education Commission report was co-chaired by the Conservative peer Lord Norton of Louth and Dr Ruth Thompson. Although the reports’ details may vary, their conclusions are remarkably coherent and consistent.

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

My hon. Friend will know that I used to co-chair the Higher Education Commission. I have a copy of the “Too Good to Fail” report, which we produced on an all-party basis, and I thank him for mentioning it.

[Mr Bailey]

I understand that my hon. Friend is due to speak, so although I will draw on his report, I will not pre-empt him by discussing its conclusions.

The motion mainly deals with the policy’s public spending and budgetary aspects, but it is important to recognise that we are not just talking about money. Higher education is vital to the economy of this country and to our society. It is an £8 billion export earner and attracts students from all over the world, because British universities consistently feature at the top of the rankings of world universities. In addition, universities drive and sustain economic growth in their immediate local economies, which are often in some of the most deprived parts of the country.

For an individual going to university, such an education is a potential path to personal fulfilment, and of course an economic advantage. Various estimates of graduate earnings show a minimum of something like £150,000 earned by a graduate over their lifetime over and above what they might expect had they left school after A-levels, and many estimates show more.

The Treasury estimates added benefits from taxes earned, and further benefit to employers through productivity gains. In short, higher education in this country is a success story that needs to be sustained, and it is crucial to reinforce Britain’s position in a global economy that is becoming ever more competitive.

[Paul Farrelly (Newcastle-under-Lyme) (Lab)]

I congratulate my hon. Friend and the Business, Innovation and Skills Committee on its report. Clearly, the size of student loans reflects in great part the size of fees. I have read the Government’s response to the consultation in which they state that they have

“no current plans to initiate a formal review of the sustainability of the student loans system in England.”

That means that there are no formal plans for a review of fees. Does my hon. Friend think that that is right or responsible?

[Mr Bailey]

My hon. Friend, as ever, touches on the key issue underlined in the Committee’s report, and I will address that issue in due course.

As I was saying, higher education is a success story and vital for our economy, our society and the aspirations of millions of young people in the country. To underpin it we need a funding system that enables it to respond to the demands that will be placed on it by outside pressures, and to sustain its role as a driver of social change. The current funding system is based on recommendations in the 2010 Browne review and subsequently implemented, with some changes, in 2012. The key change was to replace direct Government funding of university teaching by a fees-based system payable by individual students on the basis of Government loans through the Student Loans Company, capped at £9,000. Those fees are to be repaid after graduation once a salary of £21,000 has been reached, over a period of 30 years.

There were short-term benefits to that model. It removed the cost of funding from public accounts, except for those costs that would have to be written off through under or non-repayment in the future—technically known as the resource accounting and budgeting, or RAB, charge. That model benefited the universities because it led to an increase in funding at least in the short term, and it benefited taxpayers because there was a drop in public subsidy per student of something like 5%. The benefit to the student is far less clear. Although the system delays payment for education until later in life and is income-contingent, the Institute for Fiscal Studies estimates that the average debt per student will be more than £44,000 for a combination of tuition fee and maintenance loans. In its report the Higher Education Commission stated that focus groups demonstrated a low level of awareness among students about that issue and its potential implications for them.

[Mr Sheerman]

The IFS and the commission report highlighted the fact that many students we interviewed had no idea that the debt would be that much. They will possibly never be eligible to get a mortgage later on, which I find absolutely stunning, astounding and disgraceful.

[Mr Bailey]

It is fair to say that the full implications and potential consequences of the projected level of debt for millions of people have yet to be worked through. We are not yet aware of how it will affect people’s economic behaviour when they have that level of debt.

[Mr Brian Binley (Northampton South) (Con)]

Will the hon. Gentleman give way?

[Mr Bailey]

I will give way to my fellow Committee member.

[Mr Binley]

Many of us feel that the contributions being demanded are often too great, but I would not want to overstate that to the point at which we begin to believe that no student will ever be able to buy their own house. That is more than a slight exaggeration and it needs to be corrected.

[Mr Bailey]

I thank the hon. Gentleman for his observation. When I speak to sixth formers and potential undergraduates I always make the point that, compared with the cumulative spend in their lifetimes on cars that depreciate immediately, investing in their education is a very good investment. But it will have consequences for patterns of consumer expenditure, the full implications of which we do not yet know.

[Mr Sheerman]

I am sure that my hon. Friend would not wish to mislead the House and I know that he is replying to an intervention, but the IFS study says that middle earners—the public administrators, the health and education workers—will be particularly affected. That is 40% of graduates, so we are not talking about a small number who may never be able to get a loan for a house.

[Mr Bailey]

I understand the point that my hon. Friend makes and I could talk about it at some length, but I recognise that other people wish to speak in the debate so I will not pursue it any further.

It is now clear that the level of debt repayments is predicted to be much lower than when the scheme was initiated. In the early days, the Committee questioned the Minister on that point, and the estimate was a level of default of between 28% and 30%. It is now acknowledged by the Government that the rate is 45%, and that may rise. In crude terms, for every £100 the Government lend, they get only £55 back. That has huge implications for the Government’s long-term budgeting.

The principal reason for the projected increase in non-repayment is the fact that graduate income has not grown as anticipated by the Office for Budget Responsibility. That will keep an increasing number of graduates below the repayment threshold, and even if they reach the threshold they will repay at the lower rate, commensurate with their lower income. That will mean that they will be unlikely to pay off the debt within 30 years.

The IFS has estimated that 73% of graduates will not repay in full. We can add to that the difficulties that the Student Loans Company has had in securing repayments, particularly from former students living abroad, so there is a basic problem and other administrative problems.

The Select Committee has made recommendations on the latter. If we look at the implications for annual budgetary expenditure, we find that £7.4 billion in loans was given to undergraduates in 2012-13. In 2015-16, that figure is estimated to be £12.6 billion. If we estimate that nearly half of the loans will not be paid back, it is clear that that has enormous implications for future budgetary planning. If that were not a big enough problem in itself, the Chancellor added to it in his 2013 pre-Budget report by announcing the lifting of the cap on student numbers to allow the additional recruitment of 30,000 students. He tacitly admitted that there was a funding problem when he said that that would be funded by the sale of the student loan book. The Committee subsequently questioned Ministers and others on that. We expressed considerable concern that such ongoing expenditure should be financed in this way, and we were very doubtful about the Government’s potential to balance their books by doing so.

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

Does the Chair of the Select Committee accept that, when I was in charge of the Department for Innovation, Universities and Skills, we put considerable effort into trying to sell the previous loan book? We concluded that the inevitable uncertainties—future inflation rates, earnings rates and so on—made it quite impossible to get good value for money from the student loan book. Is that not a second reason why it was quite irresponsible of the Chancellor to suggest that this was an easy way of funding the long-term expansion of higher education?

[Mr Bailey]

I agree with my right hon. Friend. Indeed, the report’s recommendations underline that point. It is significant in another way, too: it was a tacit recognition by the Chancellor that if he were to expand the number of places, extra money would have to come from somewhere, and that that was not being provided for in the then current Budget projections. It is still unclear exactly how the escalating cost—it could well rise to considerably more than 30,000 students if the cap were removed completely—will be dealt with by the Government.

[Mr David Willetts (Havant) (Con)]

The hon. Gentleman talks about costs, budgets and public spending. In the interests of having a clear debate, will he confirm that the resource accounting and budgeting charge is not an item of public expending, as it appears in the national budget or the national accounts?

[Mr Bailey]

I understand the question, because I have heard the former Minister’s, shall we say, robust prosecution of this particular argument before. May I make an admission? I am not an accountant. All I do is go by what the authoritative bodies say. If the right hon. Gentleman wishes to argue with them that is fine, but I think most people would say it is a matter of common sense that if we lend so much money and get only so much back, sooner or later that particular default rate will have to be incorporated in national accounts and people will have to pay for it.

[Mr Denham]

May I add to my hon. Friend’s point? The Office for Budget Responsibility’s fiscal responsibility report makes it clear that there are three sets of national accounts: whole Government accounts, national accounts and resource accounts. The comments made by the right hon. Member for Havant (Mr Willetts) apply to only one of the three ways of looking at the national books. My hon. Friend is absolutely right. If we borrow £10 billion a year and write off £5 billion a year, that is bound to show up somewhere as a cost to the taxpayer—that is common sense.

[Mr Bailey]

I welcome the interventions of two former Ministers, which have shone an economic light on some of the most obscure elements of our education accounting.

To return to my point on the student loan book, the fact that the sale has now been abandoned underlines what my right hon. Friend said about the non-viability of this course of action in funding future financial higher education commitments.

In short, we have an education funding model that is producing an ever-increasing call on the nation’s finances, and actually further commitments are being added. The House of Commons Library paper projects that by the mid-2030s the addition to the national debt incurred as a result of this policy will be equivalent to 8%—about £350 billion to £360 billion at current prices. That is a huge sum of money that will have enormous implications for future Governments—and universities and students—in terms of financial planning.

[The Minister for Universities, Science and Cities (Greg Clark)]

I am sorry to pre-empt my response to the debate, but at the beginning of his contribution the hon. Gentleman mentioned the important benefit—he referred to it as unambiguous—to the Exchequer. Has he made an estimate of that benefit to set against the costs he is referring to?

[Mr Bailey]

I believe that these estimates are projected in the figures from the Institute for Fiscal Studies, and certainly there is the netting off if you like, of these figures. There will be benefits. I said in my opening comments that there would be benefits. However, to have this level of future debt without any policy recognition that it will have to be funded in the future accounts is complacent and, in my view, a dereliction of duty. I shall return to that in one moment.

It was because of the figures that the Committee recommended an urgent review of the sustainability of the system, and obviously the sort of figures the Minister mentioned would be incorporated in such a review. If the model does stack up, I do not see why the Government should have any problem undertaking that review to demonstrate it. In their reply to the Committee’s recommendation, the Government quoted, of course, Andreas Schleicher from the OECD—I believe this featured in exchanges earlier today:

“The Government has no current plans to initiate a formal review of the sustainability of the student loans system in England. Indeed the OECD’s Director for Education and Skills, Andreas Schleicher, considers that we are the first European country to have established a sustainable higher education system.”

However, the Government response did not mention, as the Minister’s earlier response did not, that Andreas Schleicher’s comments were about the pre-2012 funding model, not the current one.

[Greg Clark]

I was aware of this matter, and I was surprised to hear that with uncharacteristic discourtesy—it is not his normal demeanour—the shadow Business Secretary accused me of having misled the House in referring to this endorsement from the OECD. It is important to clarify to the House that I met the author of the report, Mr Schleicher, on the day he published it. I know that overseas visitors often do not get the chance to meet members of the Opposition Front-Bench team, but I had the great privilege of meeting him, and there was never the slightest doubt about what he meant. In fact, he wrote to me this week, on 6 January, having read the report from the shadow Business Secretary. He wrote: “I had made it very clear that the rise to £9,000 fees had not changed the overall assessment by the OECD.” In fact, it is in the opposite direction: “The UK higher education system is excellent for individuals and for the Government. England has got it right on paying for higher education. Among all available approaches, the UK offers still the most scalable and sustainable approach to university finance.” I hope that when he responds, the Minister, on behalf of the shadow Business Secretary, will apologise to me for his accusation.

[Mr Bailey]

Far be it from me to intervene in the exchanges between the Front-Bench teams on this point, but I stand by my earlier point: when this response was made, it was done on the basis of evidence submitted on the pre-2012 model.

[Paul Farrelly]

Let me come to the Select Committee’s aid. Does my hon. Friend recognise that it is not only his Committee that has found the system to be unsustainable, but the former adviser to the right hon. Member for Havant (Mr Willetts) when he was a Minister, Nick Hillman, who said that the Government had got their maths wrong? He is now the director of the Higher Education Policy Institute and he said in March last year:

“The government has got it wrong and therefore there is a big funding gap and something has to be done about it.”

[Mr Bailey]

I agree. What I find odd is that Ministers will pray in aid a body such as the OECD, but refuse to recognise the overwhelming consensus of opinion of experts across the academic and economic sphere in this country that the system is unsustainable.

So far, the Government’s approach has basically been to say that the figures on which the estimates are based are essentially projected hypothetical figures, which could be altered if macro-economic conditions change. I certainly accept that that is absolutely true in broad terms. One point quoted more often than others is that if graduate incomes increase, it will substantially alter the projected potential deficits and increase in RAB charges.

The trouble is that it is possible to look at a whole range of economic variables, many of which might work in the other direction. Let me cite a couple of examples off the top of my head, but there are many others. First, if the cap in student numbers is removed and we have a larger number of graduates coming on the market as a result, that could further depress the starting salaries for graduates to a lower level than before. That could also have a significant impact on future RAB charges. If the Government had to borrow money at a higher rate than applies at the moment in order to re-lend, that, too, could considerably alter RAB charges.

[Mr Speaker]

Order. I am listening intently and with great interest to the hon. Gentleman’s opening speech. I hope he will not take it amiss if I express the hope that the four or five sets of papers arrayed in front of him do not constitute individual chapters in the development of his speech. Although we are not hugely pressed for time, there are several other hon. Members who wish to contribute. The hon. Gentleman, being a considerate and sensitive fellow, will wish to tailor his remarks accordingly.

[Mr Bailey]

Thank you, Mr Speaker. I reassure you that, given the expertise of some Government Members, and one in particular, the papers in front of me are there to provide a factual basis on which I can respond to them. I am coming on to conclude my particular comments.

The broad point is that where it is possible to look at future macro-economic variables that will benefit the RAB charge, it is equally possible to look at a whole range of them that do not or even work in the opposite direction. What I find particularly worrying is that so far, on the basis of available evidence, it is the authoritative research organisations that have predicted an increase in the RAB charge and they have proved to be correct, while the Government sources, which have been very complacent on this issue, have not been proved correct.

I have spoken about the range of the research done on this issue. In summing up, as a Committee, we did not put any specific proposals before the Government. What we wanted was a review. I recognise that a number of organisations and individuals have looked at this in some detail. They include, of course, the Higher Education Commission, and I am sure that my hon. Friend the Member for Huddersfield (Mr Sheerman) will talk about some of its recommendations. They also include my right hon. Friend the Member for Southampton, Itchen (Mr Denham), who I know has done considerable research and will want to talk about his suggestion, and, of course, the shadow Minister, my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne).

I think it important for us to begin by recognising that there is a problem, but the Government do not appear to recognise that. It is not possible to solve a problem without starting from the basis that there is one, and it seems to me that the Government are sticking their head in the sand. All those other organisations and individuals are putting considerable effort and research into finding a solution, but from the Government we have had no response, just the complacent argument that there is no problem so no problem needs to be fixed. I believe, my colleagues on the Committee believe, and an increasing body in the academic and economic world believes that there is a problem, that there needs to be a review, and that we need to look at these issues. There is no easy answer, no silver bullet, but universities and future cohorts of students can reasonably expect to have some sort of answers to these questions.

11:56

[Mr Brian Binley (Northampton South) (Con)]

I pay tribute to my colleague the Chairman of the Business, Innovation and Skills Committee, the hon. Member for West Bromwich West (Mr Bailey), not just for the report, but in recognition of all the years during which we have worked together on the Committee, with me as his would-be vice-Chairman. I believe that I speak as the longest-serving member of the Committee: I have been a member for nine years, and the grey hairs can attest to that record. I also thank all the other Committee members with whom I have worked during those nine years. It has been a fascinating experience.

I hope that I may wander off the main topic of the debate just a little—and it will only be a little. It is about time we saw Select Committee membership as an alternative career choice in the House of Commons. I hope that the importance of Select Committees will be enhanced, because, if that does nothing else, it may end what I consider to be the dangers of patriotism and patronage that apply in this place. I hope that that remark has been recorded, and will be picked up somewhere.

[Greg Clark]

rose—

[Mr Binley]

I was talking about patronage on the Front Bench.

[Greg Clark]

I know that my hon. Friend—and he has been a friend for many years—is a considerable patriot. I cannot imagine that he was deprecating patriotism.

[Mr Binley]

No, not patriotism; I meant patronage, and I am glad that my right hon. Friend has pointed that out. I will now continue to speak according to the terms of the motion, Mr Deputy Speaker, which I am sure will delight you.

My colleague—indeed, I shall use the term “hon. Friend”—the Chairman of the Committee said that he would concentrate on wider issues than that of the money itself. I want to concentrate on the issue of the resource accounting and budgeting charge, the money and the black hole that the charge is producing for future generations.

[Paul Farrelly]

I realise that pinning down the RAB charge is rather like Phil Taylor—the legendary darts player who comes from my constituency of Newcastle-under-Lyme—throwing darts at a moving board, but does the hon. Gentleman agree that, with 45% of student debt expected to be written off in the future, the current system is really not working for students or for the taxpayer? Even in this age of austerity, lower fees would lead to the recovery of more debt, as well as wider potential economic benefits for students as they make their way in the world after university.

[Mr Binley]

I welcome the hon. Gentleman’s remarks. I shall say a little more about my views on the point he raises as my speech unfolds, but I will say now that every small business man in the land—I do not mean small in stature; I mean small in the sense of the size of the business—will know that if he lends money that he will not get back, he will have a cash flow problem that will create real trouble for him, if not now, then certainly in the future. I do not believe that Government money is any different in that respect.

The saga of higher education funding and support has rumbled on for a long time. Reforms in the 1990s created an expansion in higher education that widened participation, which, of course, is welcome. However, those reforms necessitated a change in the financial model for universities and those attending them. That is becoming increasingly unsustainable and could lead, as I have said, to a sizeable black hole in the Exchequer accounting, which the Government seem not to wish to recognise.

Many Government members are also my personal friends, and I am sure they are working on contingencies and do not have this in mind, because I would not ascribe to them the financial inadequacy that not recognising the problem would suggest. I hope my good friend the Minister will recognise that I do not think he is inadequate and I do think he will come up with the answers we require—that he will recognise the problems and consider very carefully the need for a proper review not only of the RAB charge itself and the loans surrounding it, but the way our universities work. I will talk about that as my speech unfolds.

[Bob Stewart (Beckenham) (Con)]

I thank my very hon. Friend for giving way. Is it correct that if my children go to a Scottish university, they will pay a lot of money, whereas those from Scotland, or from France or Poland, do not pay tuition fees? That is unfair and should be addressed, too.

[Mr Binley]

I will allude to that problem, which I hope will be corrected when this place discusses—if it has the courage to do so, and I pray it does—devolution and the Barnett formula, because there is no doubt that Scottish students who attend Scottish universities get a much more helpful and lucrative deal than Scottish citizens who attend English universities. This is a matter not of English or Scots, but of devolution, which in this instance works very much against students in English universities. They are ill done by, as are citizens more broadly, on whom less per head of population is spent than on our fellow Scottish citizens.

The much discussed 50% target for participation in universities, although arbitrary, was entrenched in the need for change in the 1990s and was one of the motivators of the current situation. I was a secondary modern schoolboy under the tripartite system, which could have been enhanced and could have flowered in the extent of choice it gave to parents. I regret that, at a stroke, it was done away with. I fear that was to our great cost and genuinely feel that the extension of offers in education that is beginning to flower now is an important development. Most importantly, we must place apprentices, technologists and all those who are so vital to the well-being of our economy on an exact par with university students, and in the past I fear they have not been given that recognition. I want to see a more equitable division between those who have gone on to higher education in technical fields and those who have chosen the academic areas for which the universities are famous. I think that that is part of the answer and I am sure that the Government will take it on board.

The 2011 White Paper promised that higher education would be put on a financially sustainable basis. The Browne review established the principle that the beneficiaries of higher education would need to make a greater contribution towards the costs, and I agree with that. It was also proposed that graduates should pay a proportion of their salary only when they were earning more than £21,000 a year, and that was widely welcomed. That provides a part-answer to a previous question.

The Select Committee inquiry in the first Session of this Parliament, to which I contributed, drew two conclusions about the affordability of the loan system. We agreed that there should be clarity for students about the relationship between the burden borne by them and that borne by the taxpayer, as a function of the performance of the economy. That seemed to me to be vital, because we have turned students into customers and consumers, and consumers have a right to know that they are getting a fair deal. That fair deal will also have an impact on their children and grandchildren, which is why this matter is so important.

I genuinely believe that we are leaving a massive black hole for future generations to deal with, and I say to my right hon. Friend the Minister that I find that immoral and totally unacceptable. I know that he thinks of politics in terms of an ethical and moral base, and I hope that he will hear my plea. We have no right to lay so much danger and concern on to those who follow us. We are already doing it with a deficit that was built up to far too high a level. That is causing us problems now and will continue to do so for at least the next five, six or seven years. I do not want that problem to be added to by a black hole because we did not take the trouble to consider this issue properly.

That is why I am appealing to my right hon. Friend in this regard, and I do so not for ourselves. Of course the Government can hide the problem away, but if they do so, they will not be acting in the ethical and moral way in which the Minister and I would want them to act. I therefore hope that he will recognise this element of the problem. This is not about the accounting that the Treasury seeks to project; it is about what most Members of the House of Commons want to see. I have served here for almost 10 years, and I believe that Members consider morality, ethics and good practice to be massively important factors in their deliberations, and I hope that we can apply those factors to this issue.

I shall be leaving this place in three months and I want to make a heartfelt appeal to the Minister on behalf of my two children and three grandchildren. The problem could easily be shoved aside, but it will come back to haunt us in a big way in 15 or 20 years if we are not careful.

The Select Committee inquiry drew two conclusions. I have just outlined the first, but the second has greater significance. We stated:

“The affordability of the new system is dependent on a wide range of variables which are outside of Government control.”

The truth is that we doubted that they had been fully taken into account when the system was set up. That gives the Minister the opportunity to say that there is a need to revisit this issue to consider what the other variables outside the Government’s control are. We are not the masters of every issue we face—we are rarely the masters of any issue we face, but that is especially true of this one, which will leave a deficit for our children and grandchildren if we are not careful. This issue is not totally, by any means, within the Government’s control and we need to consider that aspect. If we do not do so, we will be letting future generations down. Consequently, I wish to focus my remarks on the second conclusion.

Let me repeat for the record the doubts I had at the time the reforms were introduced. My right hon. Friend the Member for Havant (Mr Willetts) will know of them, because of some friendly, courteous but relatively robust cross-examinations when he was on the Front Bench. He knows that we were deeply concerned at that time, and nothing that has happened since has changed my mind. I do not believe that proper regard was given in the first place to long-term sustainability, and I want to concentrate on that nub of this matter.

In October 2012, my right hon. Friend the Member for Havant, a wise and certainly highly intelligent Minister, was reported in The Independent—this was “reported”, so I cannot claim he actually said these things, as we all know the dangers that lie in that term—to have said that the RAB on students loans would not rise above 32%, with a 38% ceiling being the worst possible outcome for the taxpayer. In April last year, in response to a parliamentary question, he asserted that estimates at that time placed RAB at about 45%—in such a short time it had already risen way above what I believe were his genuine and heartfelt estimates. In my view, a level not far off 50% has been reached—perhaps it has already moved above that figure—and that simply highlights how important this matter is. To be totally fair, I should point out that he also stated that the Government had achieved significant savings for students, and increased income for universities. I believe he was right to say that, and I welcomed that view then and do so now. We pay tribute to the work he did in the Department, which will benefit my children and grandchildren. I hope I have given an even view of how I see the work of a right hon. Friend I am criticising just a little.

Looking at the reforms from a more detached perspective, it is far from clear that the Government can claim that these changes were a total success, not least on the RAB. A forecast drop in student loan repayments has raised existential questions about the true sustainability of the new system, and we could face a situation in which the effect of trebling tuition fees has resulted in a more expensive settlement for taxpayers, in the way that I have described. A report in March last year by London Economics found that if the charge increases beyond 48.6%, the cost of the reform

“will exceed the 2010-11 system that it replaced.”

That is a startling fact and it ought to add not only to our concern, but to the need for an immediate review in the way the Select Committee is requesting. As I have said, the RAB index is perhaps already above 50%. No business could sustain, and no Government should be prepared to sustain, such a situation, because it is the worst kind of accounting. It is the worst kind of financial thinking about the future, and I reject it, not only as a business man, but as a parent.

[Mr David Lammy (Tottenham) (Lab)]

I hesitate to interrupt the hon. Gentleman during what is emerging as an outstanding contribution on the Floor of the House. Does he agree that, given the Government’s continued repetition of the need to balance the country’s books, this is an extraordinary outlier in relation to that clear view that we have to have a sustainable economy? The fact the RAB is moving beyond 50%, as he is indicating, should cause real alarm.

[Mr Binley]

I am most grateful for the right hon. Gentleman’s remarks, and I add that this situation should cause real alarm to not only every Member of this House, irrespective of their position or party, but to every parent, business man and citizen in the land. At some stage their children and grandchildren will have to meet this charge if we do nothing about it now. I do not take the accounting answer given earlier by a man I respect, my right hon. Friend the Member for Havant, and I welcome the comments made by the right hon. Member for Southampton, Itchen (Mr Denham), a former Labour Minister, who, sadly, is leaving this place, too—that will be a great loss. He made the point that we cannot avoid debt of any kind and we cannot talk it off a balance sheet; it has to be dealt with at some stage. I would rather it be dealt with now than at some point in the future.

Any business would stem the flow of debt immediately, as it would be so damaging—it would threaten the very livelihood and stability of that business. Any business would be looking for ways of tightening up on credit control—it would probably have done that already, because it could never have afforded to have got into this situation. Any business would look for ways of increasing productivity within the system, and you will be pleased to know that I wish to say a few words about that relatively shortly, Mr Deputy Speaker, and then I will sit down. Does that reassure you?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I am sure it reassures the rest of the Chamber.

[Mr Binley]

I fear that they are enjoying my contribution immensely, but your job is another matter.

Any business would be seeking to tighten credit controls and to find ways of increasing productivity in the areas of service provision, and would talk to its bank about contingency arrangements that might be in put in place and how that might be done. We are simply appealing about that aspect, because in this respect our bank is the taxpayer. I wonder what the taxpayer might feel about our not considering those contingencies. I have made that point in a number of ways during these remarks, but it is a vital part of what this place is about.

How must we seek to emulate that good, solid business man who would take those steps? I would seek from the Minister a wish and plans to improve loan contracts, with special emphasis on repayment procedures. We now have the information to prove that the procedures are simply not good enough to reclaim taxpayers’ money, especially from overseas students, and we have to look at that. Secondly, we have to improve collection procedures—again, particularly in respect of overseas students. It is not the job of this House to finance the education of those people, even though doing so creates a better world; I understand that aspect, but it is still not our job to finance their further education for the nations that they come from—I do not believe that our bank of the taxpayer would disagree with that view.

I would also equalise the cost of university education through the nation. My hon. Friend the Member for Beckenham (Bob Stewart), who is no longer in his place, has already talked about the disparity in the fee situation between England and Scotland, which many people find unfair and unacceptable.

We need to increase university productivity. We should also consider compressing the time it takes for a student to complete a course. We could have courses of two years, or even 18 months if we are talking about golf course management. As a businessman, I despair at some of the degrees that come before me when people seek jobs, but that is another matter. We need to think about compressing courses and improving the productivity of a sector of our national life that has had it easy for too long. Members may think that there speaks a secondary modern schoolboy who did not have the opportunity to sit at the high table, but many people in this land believe that our university structure has been too aristocratic and too full of itself and that it needs to recognise that it is a contributor to our national wealth and well-being, and it is from that aspect that I come to this subject. We need to ensure that the Treasury finally improves contingency planning to reduce the impact of the deficit that we say will meet us in ever greater amounts as time goes by.

I have some questions for the Minister. I would welcome his confirmation on some of the details of our assumptions. In particular, what proportion is assumed to be used up by foreign nationals whose offspring would not have legal access to loans? What analysis has there been of the key variables affecting repayment rates, such as the future performance of the economy? A very long telescope is required for such a difficult job. None the less, we must have some contingency plans in place for worst-case scenarios, as they have not been built into the sector.

What work are the Government undertaking to understand more the nature of defaulters and, in the light of other options, the desirability of the continued expansion of higher education, particularly in the context of apprenticeships? We need to put even more effort—I do recognise how much the Government are doing in this regard—into technology apprenticeships and all those practical skills that the target of university entrance has demoted in the minds of many of our young people. I see too many people who think that the only objective in life is to go to uni. What a tragedy that is. We are increasing the number of people who see opportunities in engineering, technology and other such skills, but we are still not putting enough effort into that sector, and we are still not changing the view of young people that university really is the place to be.

[Paul Farrelly]

I take on board the hon. Gentleman’s points about engineering and vocational degrees. But does he also agree that at levels of £9,000 a year plus maintenance loans, many of those degrees at the likes of Imperial, which stretch over more than three years, make it less likely that people from more modest backgrounds will enter those professions, and therefore socially restrict the entry?

[Mr Binley]

That is absolutely correct, and it underlines the need for a proper review and perhaps the need to rebalance things. We should have not an across-the-piece £9,000 level of payment, but a rebalancing of the loans in association with what is required. This is a more complicated business than we first thought, and we need a review to take into account those factors to ensure that we have enough young people who can pay for my pension and the pensions of those who follow me and that this nation has the well-being to compete in an ever-more competitive world. That is what we are talking about. This arrogant view of universities as the place where we produce rounded men who talk with wonderful accents must end. These people who talk the Queen’s English sometimes do so to such an extent that they are not understood by those from a working-class background. I want all of our people to benefit. I want our nation to be serviced by people, from whatever background, with the skills and the ability to ensure that we maintain the well-being that I and other Members of this House have had the good fortune to enjoy.

Finally—you will be delighted to hear that, Mr Deputy Speaker—I want to mention the European dimension to this black hole. What prediction has the Minister made of changes and developments whereby equal access rights and obligations arise for EU nationals to borrow and study in the United Kingdom? If that is to be the case, will we find ourselves increasingly subsidising foreign nationals? I believe that charity and support must start at home.

I have every faith in my right hon. Friend the Minister. I know that he is an honest man and I look forward to his response with great interest, because I think that he might surprise us all and say that he agrees with many of our points.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I did not expect to have to do this, but may I advise Members that the Front Bench speeches will start at 1.45? Two speakers have taken an hour already, and that cannot continue. I would be grateful if all Members could bear that in mind.

12:26

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

I welcome this debate and congratulate colleagues on both sides of the House on securing it. I pay tribute to my hon. Friend the Member for West Bromwich West (Mr Bailey) and the hon. Member for Northampton South (Mr Binley) who opened the debate with their excellent speeches that summarised so well the situation and the conclusions of the Business, Innovation and Skills Committee. I will try not to tread the same ground, but I do wish to strike the same note as the Chairman of the Select Committee and query why the Government are refusing to review the system when so many organisations across higher education as well as in the business community are saying that changes are needed. Such complacency is very dangerous indeed.

It is clear why so many organisations are saying that something has to be done, even if they do not agree on the solutions. It is because English universities are boxed in. As the real value of fees erodes, the squeeze on university incomes threatens teaching quality and research excellence. Over the past few years, universities have done quite well out of the system, and have not faced the sort of pressures that our colleagues in health or local government have experienced. But everyone in universities knows that that will not last. The real value of those fees is now well below £8,500 and continues to shrink. The public finances cannot bear ever more debt write offs, but raising fees and graduate payments is still politically toxic. I would be surprised if any political party goes into the next election promising that. Indeed, I would be surprised if they are not forced to rule it out over the course of the campaign.

The idea of allowing universities to fund their own fees might have some role to play if current fees were much lower, but sanctioning ever-more eye-watering fees is likely to be controversial and socially divisive. All the solutions that people come up with essentially boil down to making graduates pay more, pay earlier, pay at higher rates of interests and pay for a longer period of time. The idea that we can simply solve a problem by going back to graduates and asking them to pay more money, however we dress it up, is clearly not right.

It is worth noting that concerns are coming not just from within the sector, but from a range of business and employer groups, including the CBI, which all claim that the system is not working. I will base my remarks around not one, but two observations. Yes, we need to reform the funding system, but we also need to reform the delivery of some of the higher education systems, to echo what the hon. Member for Northampton South has said. The second of those two points is as important as the first.

We have engaged in this debate for a year now and there is a marked division between those largely in the sector who say that there is nothing wrong with higher education just the way we fund it and those largely outside it who say that it is not just about funding but about the higher education on offer.

Before turning to funding, let us review the problem of delivery, which is intimately linked to it. There is now strong evidence that there is a mismatch between the education of many graduates and the needs of employers, society and the graduates themselves. According to the latest figures, which I got from the Office for National Statistics yesterday, the long-term employment prospects of graduates are continuing to deteriorate. The percentage of graduates not working in graduate jobs five years after graduation has now reached a record 34%, up 4% since 2010. The newest graduates are doing a little better in the sense that the percentage not in graduate jobs just after they graduate has fallen from a peak of 48% two years ago to 44%, but that is still much worse than in any year before 2010 and has happened despite the much-trumpeted increase in overall employment in recent years. Whatever sort of recovery is under way, it is clearly not using the skills and education of recent graduates in high value-added graduate jobs. These levels of graduate underemployment are a far cry from the aspirations of students who now borrow huge sums of money to go to university. At the same time, organisations such as the CBI continue to complain about the quality of graduates being produced.

[Mr Lammy]

Does my right hon. Friend agree, on that fundamental point, that not only is there underemployment among that group of graduates who are not working at the level that was expected, but those graduates have pushed out other young people who are unemployed—in London, one in four young people are unemployed and they are depressed because they are outside the market—who cannot get the jobs that they were hoping to get, often in retail, as a consequence?

[Mr Denham]

That must of course be the case if graduates are working in non-graduate jobs. That is a bigger issue than higher education, of course, but the failure to use a graduate work force in graduate jobs is a huge drag on the economy and is one of the reasons why the RAB charges and debt write-off charges are as bad as they are.

Let me be clear that if we understand an honours degree as giving not just knowledge but technical expertise and the capacity to analyse, think independently, exercise intellectual judgement, take responsibility and innovate, we certainly need 50% or more of our population to be educated in that way. We do not have too many graduates, but too many graduates who are not receiving the most appropriate degree-level education.

One of the effects of Government policy over the past four years has been to undermine employer-based higher education. Foundation degrees, usually employer supported, have declined by nearly a half under this Government and employer-funded part-time degrees fell from 40,000 to 25,000 in one year. Out of the hundreds of thousands in university, fewer than 20,000 full-time students across the entire higher education system in all years of study are being funded by employers to do their degrees. The work force development programme, created when I was a Minister, was shut by the coalition, even though it alone was creating 20,000 employer co- financed degrees a year by the time of the last election.

There is much that is good and much that is excellent in the English higher education system and we do not need to change all of it, but we need to make changes that increase the diversity of routes to study and enhance employer engagement with delivering higher education. When we talk about funding higher education, we need to think about how we deliver a better system.

Let me make one point about the long-term sustainability of the system. The Business, Innovation and Skills Committee has done an excellent job and I will not go over that ground, but since then we have had the latest fiscal responsibility report from the OBR, which makes interesting reading. Ministers justified heavy cuts in teaching funding as part of a deficit reduction programme, arguing that we should not put the costs on to future generations. The Chancellor said in 2010:

“If we do not deal with these debts and do not have a credible plan, it will be our children and grandchildren who are saddled with the debts that we were not prepared to pay.” —[Official Report, 20 October 2010; Vol. 516, c. 989.]

The leader of the Liberal Democrats said:

“This strikes me as little short of intergenerational theft. It is the equivalent of loading up our credit card with debt and then expecting our kids to pay it off.”

The recent OBR report underlines just how the debts we are building up now will hang around the necks of graduates and non-graduates in years to come. The OBR estimates that additional net debt arising from new loans will reach nearly 10% of GDP in the late 2030s and 2040s. That debt brings cost. Some debt will have to be written off after 30 years and after 2046, when that kicks in, it will leap dramatically to 0.25% of GDP. Graduates will be making cash repayments of about 0.45% of GDP in the same period and the Government will be paying interest on that stock of debt that the Library estimates at 0.3% of GDP. Many of those costs fall on taxpayers as a whole, not just on graduates.

There is a lot of uncertainty about the figures, but those are the best we have. They tell us that in about 30 years, the public and private cost of paying for the regulated debts will be around 1% of GDP. None of that will fund anybody going to university. According to the OECD, in 2010 the UK spent only 1.3% of GDP from public and private sources on higher education and at that time little was being spent on the cost of debt. The simple conclusion from the OBR is that the policies of the Government are pre-empting a massive share of future national wealth being used to pay for their high-fee, high-debt priorities and not being available to fund future higher education. It is the opposite of what Ministers claimed and it is loading debt on to future generations in a way that is unfair and unsustainable. That is my answer to those who say that we should not worry about RAB charges as they are all technical: there comes a point at which these debts have to be paid and when they do, they will take money out of the national economy that will not be available to pay for higher education.

As for the alternative, I have set out my views over the past year on a number of occasions and, given your remarks, Mr Deputy Speaker, I shall make just two brief observations. Let us not deny that this started under the Labour Government, but it has accelerated under this Government, and we have developed a one-size-fits-all higher education system that is entirely focused on 18-year-olds studying for three years away from home for a residential degree. That has been at the cost of part-time education, at the cost of employer co- sponsored education and at the cost of mature student study.

In a constituency such as mine, where even today relatively few young people go to university, we are closing the door on every single person who did not get a chance to go to university by saying that if they did not do it when they were 18 or 19, they cannot afford it, it will not be flexible, it has to be done over three years, they cannot study part time, they cannot do it intensively and all the rest of it. That is a bad thing for social mobility. Of course, the fact that the move towards younger people from deprived backgrounds going to university has continued is welcome, as many of us said at the time, but we must consider the whole picture if we want to see what is happening.

Of course, we have a difficulty in that there is no new public money for higher education so we will have to do something within the skin that we have. The good news is that money, public and private, is wasted hand over fist in the current system. Every year, billions of pounds are borrowed with the intention of writing it off. The RAB charges essentially mean that almost £1 in two is written off. We have the most wasteful, or at least the most expensive, model of higher education in the three-year residential degree. We are by far the outliers in the OECD as regards the extent to which our higher education system is based on a three-year residential degree for young people. Nobody else graduates so many young people so expensively in that model at the moment.

[Paul Farrelly]

I fully appreciate the point that my right hon. Friend is going to make, because I have read all of his work. Germany, to take the example of one of the most successful economies in the world, does not have the levels of fees that we do, so what is Germany doing so wrong that we are doing so right?

[Mr Denham]

That is an interesting point. Germany had a fees system and got rid of it, but the German system is much more diverse. Far fewer German students study away from home. The Germans have a different way—I would not suggest we go down this route —of seeing the diversity of the technical degree-level qualifications and other degrees and allowing people to study over a longer period of time. In other words, they have designed a system that meets the needs of their economy, but I believe it also meets the needs of graduates. I reject those who say, “If you should work more closely with employers, you are corrupting the purpose of higher education.” There will be room in the system for the senior common room on which the hon. Member for Northampton South missed out, and room for those who want to study hard for two years to get an employment-related degree. There is space in the system for everyone.

[Mr Willetts]

Will the right hon. Gentleman confirm that Germany has lower levels of social mobility than us? Many fewer people from low-income backgrounds go to university in Germany, because access in Germany is very restricted compared with access here.

[Mr Denham]

We should therefore not say that there is a simple model to pick off the shelf from somewhere else, but, as I shall say in a moment, we should pick up the elements of our system that work and take elements that work from other systems. We could even invent things of our own that are appropriate to our needs. We have the most expensive model of higher education. Ten years ago, when we first aimed for 50%, very few people, including Labour Members, assumed that the expansion would be done through having so many young people in such an expensive model of higher education.

Because teaching funds have been deliberately cut, fees are higher than would otherwise need to be the case. The private cost has risen, which is important because we should be stewards of what happens to people’s private money just as much as we are stewards of public money. Those who repay do not just repay their own course costs. Their fees help to subsidise research and to pay the fees of those who will never repay in full. I predict that there will be a point at which those graduates kick up against the bills they are being asked to pay for other people.

That is wasteful because the introduction of increased fees has caused politicians on both sides of the House to introduce new elements of public spending that do not teach students anything—Government’s of all parties have made maintenance systems more generous. The current Government required universities, under the Office for Fair Access, to put back 30% of all fees above £6,000 into widening participation, much of which was in fees and bursaries of completely nugatory value, which does not encourage universities at all—they just make universities compete for the same students. We have built waste into the system because politicians have been afraid of the consequences of their decisions. There is huge potential to use public and private money more efficiently to deliver a better system.

I have had a lot of support from the House of Commons Library, for which I am very grateful. Apart from my colleagues, one of the things I will miss most about being a Member of the House is the excellence of the House of Commons Library staff. I asked them to look at a model that would retain current levels of public spending; maintain institutional income to the sector from public and private sources; protect low-income students, so that no one in future would pay as much as people pay today, whatever the mode of study; have more intensive and flexible two-year and part-time courses; and have more employer-funded courses. I asked the Library to consider a system in which 70% of students do the traditional three-year residential degree and 30% study more intensively, have employer-sponsored courses and so on.

I also said to the Library, “Let’s be radical. Let’s spend public money on higher education to teach students something. Let’s strip away as much as we can of the money that is not spent on teaching students something.” That has the effect of reducing fees dramatically and reducing the cost of debt cancellation. In the spirit of my idea of keeping what is good, I said, “Let’s keep the current system that allows students to choose the university they want and take their resources with them—let’s not go back to a fixed allocation of numbers.” Having created a much larger fund for teaching, I would grant every English student a student entitlement that goes to the university that accepts them towards the cost of their fees.

In summary, in my model, public spending is at current levels and university sector income is unchanged, but spending on teaching increases from £0.7 billion to £5.5 billion. RAB charges fall by £3 billion a year. The student entitlement for each student, irrespective of the type of course they do, is £15,000, meaning that fees at full-cost universities, which currently charge £9,000 a year for a three-year degree, would fall to £4,000 a year. A two-year intensively studied degree costs just £4,500 in total—the student would probably study from home. Employers could co-sponsor a degree for an average contribution of £5,000 towards fees, less than typical recruitment and retention costs for a graduate. The same number of people would graduate because intensive study means fewer students at any one time. Spending per student would rise by 13%, an immediate and important boost to university finances.

More graduates would pay for their course in full. Let me be clear that I happen to believe that that is morally right: if we ask people to take on a debt and buy something, they should pay for it in full. For every mode of study, average lifetime payments would be less than they are today. If under that new much lower-cost system the higher-earning graduates—the City high-fliers—were paying too little, there would clearly be scope to introduce a free-standing graduate tax on the highest earnings, which could provide a useful fund for reinvestment in higher education teaching and research.

[Paul Farrelly]

I trust my right hon. Friend’s expertise, rigour and figures, but for the benefit of hon. Members, has he had his figures verified independently, for example by the House of Commons Library?

[Mr Denham]

I take responsibility, as all hon. Members must, for the use of those figures, but I have done my very best to ensure that they and the modelling have been done by the House of Commons Library, using the simplified higher education model produced by the Department for Business, Innovation and Skills.

[Mr Willetts]

Will the right hon. Gentleman give way?

[Mr Denham]

You want me to finish my speech, Mr Deputy Speaker, but I will give way to the right hon. Gentleman.

[Mr Willetts]

Will the right hon. Gentleman clarify one important point? Is he therefore proposing that the maintenance grant goes and is not replaced by maintenance loans, and as a result that many more students do not travel from their home town to go to university?

[Mr Denham]

My proposals would replace the maintenance grant with the maintenance loan. In other words, the income available to the student would remain exactly as it is currently. The key thing is that, provided fees are low enough, the total graduate debt would be less than under the current system. Putting maintenance grant cash into teaching enables us to get the debt cancellation charges down.

I do not want to overstate my case. Producing an outline model with the help of the excellent people in the House of Commons Library is not a policy, but it shows that a different policy is possible. I would look to the Government to do the sort of modelling I have talked about, but properly, completely and within their resources. In the real world, we would not, as I have done, separate honours degrees from level 4 and 5 apprenticeships, and we would not separate higher and further education study in an integrated system, but it is clear that there should be a review, because things could be different and better than they are at the moment.

12:47

[Mr David Willetts (Havant) (Con)]

This has been an illuminating debate, although my successor, the excellent Minister for Universities, Science and Cities, might think he is in danger of hearing from too many former Ministers going through our old arguments. We look forward to his fresh approach. I want to respond to the Business, Innovation and Skills Committee report. I always appreciated the courtesy of the Committee’s interrogations and the acuteness of its questioning.

There is shared ground. Going to university brings substantial public and private benefits. There is little evidence that the benefits are decreasing even when the number of students and graduates is increasing. The private benefits come in the form of significant extra earnings. The public benefits come in many forms, including higher income tax receipts. The extra that a graduate is likely to earn during his or her working life, which on average is £200,000 or more, and the extra that the Exchequer is likely to collect from a graduate during his or her working life, which is possibly another £300,000 or more, are significantly larger than the amount of so-called debt that graduates have—it is a fixed monthly payment through PAYE, so the extent to which it should be regarded as normal debt is open to dispute.

Rightly, we contribute public resources to universities through the Higher Education Funding Council for England grant, which runs at almost £2 billion a year, and through support for students in maintenance grants and other specific payments. It is interesting that we are now hearing from the former Labour Secretary of State a proposal to abolish maintenance grants and replace them with further maintenance loans. Those costs that are paid through the Exchequer—the HEFCE grant to universities and the maintenance grant, disabled students allowance and so on to students—are undoubtedly actual public spending today and are accounted for as such.

There is a third cost—on which too much of the debate has already focused, but I will touch on it now—which is the extent to which these loans that are now being made for students will be collected back in the future, and the extent to which, at the end of the 30-year period, in 2046, people in this Chamber will discuss the public expenditure item that year of writing off the loans that have not been repaid. The former Secretary of State said that there are lots of different methods of treating this, and the Select Committee Chairman said that this was accounting. It is not a fiddly accounting point; it gets to the heart of the system. This is a forecast of what might happen in the future. That is why it is not public spending today. If it were treated as public spending today, we would get into the nonsensical position in which it would affect real things that BIS was doing. A BIS Minister would have to say, “I will cut back spending on catapult centres because I have to spend more money on the possible future write-off of loans in 2046.” That is no way in which Governments should operate and, thank heavens, they do not.

[Mr Binley]

Of course I understand both the experience and knowledge with which my right hon. Friend speaks, but at the end of the day we do have a duty—it is why children and grandchildren have been mentioned so much in this debate—to think about what they will inherit. Does he recognise that, and how does he see that duty being undertaken by this Parliament?

[Mr Willetts]

My hon. Friend makes an important point. This is not public spending, as is explained in the Office for Budget Responsibility “Fiscal Sustainability Report” at page 174, paragraph B.21, which states:

“given the way the National Accounts are measured this does not directly affect our fiscal forecast.”

But that does not mean that we should be cavalier or wilful and say, “It doesn’t matter what the write-offs are. That is a problem for 2046.” My hon. Friend is absolutely right, and that is what I want to touch on. Clearly, we have to do this prudently, which is why this appears as an item of spending in some BIS departmental budgets. Quite rightly, BIS Ministers and Treasury Ministers have to discuss what they think will happen on the write-offs. Incidentally, a very sensible reform a couple of years ago, when even the Treasury understood that having this in the annual budget bouncing around as forecasts was nonsense, was for the accounting charges to happen at a rate of one thirtieth a year. We want to recognise this issue, but it would be a mistake for it to be regarded as just like normal departmental expenditure.

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

I am conscious that this may be the last time in this Parliament that we have a debate on higher education on the Floor of the House, so it is appropriate to salute the right hon. Gentleman’s extraordinary career and contribution, not just to this field of public policy, but to public policy in this country more generally. [Hon. Members: “Hear, hear.”]

During the last year or so, the right hon. Gentleman has been sanguine about a debt write-off rate that has risen quite dramatically. Why does he therefore think that a debt write-off rate of 100% would be a bad thing? Does he draw from that hypothetical argument that there is an optimum rate, and if so, will he share it with us?

[Mr Willetts]

I thank the shadow Minister for his generous remarks. I, too, as the former Secretary of State was saying, shall miss the House and even, no doubt, these debates. The shadow Minister asks a very fair question: what has happened to the RAB charge and why? The RAB charge is a peculiar calculation. First, it is a forecast, not public spending, and it has several elements. One element is a schematic assumption of the cost of Government borrowing. One reason why I am less worried about the so-called RAB charge than some other Members in the debate is that the RAB charge calculation assumes that the cost to Government borrowing is 2.2% real, when it is not. That is fixed by the Treasury. It may have been before the right hon. Gentleman was Chief Secretary, but under the previous Labour Government in 2005, when they first launched their scheme—very similar in structure to the scheme we have now—the RAB charge was 42%. One of the reasons why it was 42% was that it assumed a Government cost of borrowing of 3.5% real. In 2005, they announced that the actual cost to Government borrowing was 2.2%, and in a stroke, that reduced the RAB charge to 33%.

One piece of advice I would give to my excellent successor is that he should go back to the Treasury and ask why we are all having an argument about a figure that is based on a completely incorrect assumption for the cost of Government borrowing. If he does not do it, and the right hon. Gentleman were to be in Government, I will make a modest prediction that one of the first things that will happen to the RAB charge is that there will be a different and more realistic cost of Government borrowing, and lo and behold, the RAB charge will suddenly be discovered not to be 45%. As the OBR helpfully point out, 1% off the cost of Government borrowing lowers the RAB charge by 10 percentage points. So we are stuck on a calculation, one crucial element of which is fixed by Treasury stipulation. It does not respond to the real world.

Another bit of the calculation absolutely responds to the real world, and with excessive sensitivity. The other reason why it has gone up is what it is thought the £21,000 repayment threshold will be worth in 2016. Clearly, it will be worth more relative to earnings than we thought it would be when we set it. That is because, rightly, Ministers take the OBR earnings forecast, and the OBR’s assessment of what will happen to earnings year on year has kept on changing.

There was a deliberate decision to have a higher threshold than the previous scheme. We wanted to lower graduates’ fixed monthly outgoings. The hon. Member for Huddersfield (Mr Sheerman) asks whether graduates will be able to get into the housing market, and all the lenders to whom I spoke made it clear that when it came to mortgages they looked at fixed outgoings. So if the threshold is raised, fixed outgoings are lowered and the capacity of graduates to take out mortgages is increased. That was one of the arguments for the higher threshold. Nevertheless, it has turned out that that £21,000 will be worth more in 2016 relative to earnings than was expected.

The real impact comes because it is then assumed that the £21,000 threshold is uprated with earnings, year after year for the next 30 years. In other words, the real value of that threshold, relative to earnings, over the 35 years of a graduate’s experience, is entirely determined by the performance of wages between 2011 and 2016 compared with the OBR forecast in 2011. That is a peculiar way of modelling a graduate repayment scheme. The Labour party, which says that that proves it is unsustainable, did not increase the £15,000 threshold during the entire five years after it came into force. The Labour party lowered the RAB charge by changing the figures for the cost of borrowing, and the threshold stood at £15,000 without an annual uprating.

What is happening? The reason why I am so uncomfortable with this focus on the RAB charge is that this is a forecast that we have to make, but it is a very peculiar forecast indeed, and we need to keep it in proportion.

[Mr Byrne]

I am grateful to the right hon. Gentleman for that contribution, because I think he has given us one of the best arguments that I have heard this afternoon for precisely the review that my right hon. Friend the Member for Southampton, Itchen (Mr Denham) has called for. If the right hon. Gentleman poses significant questions about the right interest rate and the right earnings threshold—which we all know was a compromise with the Liberal Democrats—there are obviously some serious questions that demand a review. That is why the logical conclusion is that the Minister should stand up later today and admit that he has changed his mind. I hope that the right hon. Gentleman will just underline an acceptance that, although we might dispute the right way of calculating a RAB charge, being concerned about the level of debt write-off is none the less very important, because the lower we can keep it, the more money there is for future generations.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The right hon. Gentleman should save some speech for later.

[Mr Willetts]

On write-offs, I hope people can accept that what we are talking about here is a forecast shaped with some rather peculiar assumptions, not an item of public spending today. On a review, a lot depends on what people mean. My view is that the last thing that the higher education sector needs is another equivalent of Robbins, Dearing or Browne. All three political parties represented in the Chamber today, when faced with how to finance higher education when money is tight, have all essentially reached the same decision: to go for a graduate repayment scheme. My right hon. Friend the Minister is entirely correct when he quotes Andreas Schleicher and the OECD in saying that this is the sustainable model.

In my experience as Minister—I am sure that it is my right hon. Friend’s experience as well—there were certain Ministers around the world who looked at us and tried to work out how to get something closer to what we have. The last thing we need is a review that throws all this up into the air, particularly if the anxieties that people are focusing on arise from an unfair comparison. The reason why there are so-called anxieties about the sustainability of this model is the forecasts, which are very peculiar indeed, and the assumption that everything is fixed until 2046.

When the advocates of a graduate tax stand up and say that they want a graduate tax, they do not then say, “It’s going to be 9%, and it’s going to have an earnings threshold of £21,000, and we commit now that that will be the threshold related to earnings for 30 years.” As soon as they did that, exactly the same kind of calculations would be possible and we could calculate the x billion pounds that they expect to collect in the next 30 years, and every six months we could recalculate and announce that they had just lost £3 billion and ask what they were going to do about the fiscal crisis in their scheme. In other words, the advocates of a graduate tax are of course assuming that it is a flexible device to ensure that people continue to pay for higher education, and that is what this graduate repayment scheme is. Although designed by Labour and adjusted by us, it is conceptually the same thing. The last thing we need is to reopen that question.

[Mr Denham]

I look forward to hearing the right hon. Gentleman, who I think is pursuing a debate about a pure graduate tax, which is of no interest to my proposals, as he will have heard. Could he tell us what the RAB charge represents? The only common-sense interpretation is that it is the best estimate we have at present of how much money will not be repaid. Does he accept that? It is not good enough to say, “It’s not very good, so I will ignore it.” Surely, the very least that he should be demanding from the Minister is a sensible projection of how much will not be paid back.

[Mr Willetts]

The only country that has a system like ours is Australia. The last time I was in Australia, comparing notes and discussing our two systems, when I asked the leading Australian expert what the Australian equivalent of the RAB charge was, he said, “I think when we launched the scheme five years ago, we did an estimate of write-offs, and come to think of it, we probably ought to have another look at it now.” The idea that every six months a new figure was churned out essentially based on what has happened to earnings in the previous six months compared with the OBR forecast in 2011 would have been regarded as absurd. I would happily have a much more credible set of assessments of write-offs, which would have to allow for the fact that this must be a flexible system.

Returning to the shadow Minister’s intervention, I accept that all of us in all parts of the House should openly recognise that the scheme will not remain unchanged until 2046. We do not sit around with our income tax system, saying, “Well, of course Geoffrey Howe decided income tax rates and thresholds in 1980, and now that 35 years have elapsed we can decide on a new set.” That is not how policy is conducted in this country. One of the reasons why I am unhappy with this focus on a particular way of calculating the RAB charge is that it brings with it a set of assumptions which, unlike any other area of public policy, have been determined until 2046, so the only thing to do if someone wanted to change it is to tear the whole system up and start again.

I completely accept that there will be a necessity—I am interested in this and I am doing something on it at present—for us to discuss the right balance of public and private benefit from higher education and the balance of public and private contribution to the costs of higher education. The graduate repayments must clearly reflect the private benefit from higher education, but nobody should be preoccupied with a set of calculations that are possible only because of some highly precise assumptions that bear no relationship to the real world of higher education over the next 30 years.

[Mr Bailey]

I have been listening to the right hon. Gentleman with great interest. It seems to me that part of the case for a review is that, when the scheme was introduced, the Government based it on certain assumptions about RAB charges that have subsequently proved to be incredibly inaccurate. That may at some time in the future result in a need at least to amend policy. Given that the scheme has been in effect since 2012 and these inaccuracies have been exposed, is not this the most appropriate time to review it to see what changes should be made?

[Mr Willetts]

On inaccuracies, the RAB charge is largely determined by external factors. The 2.2% cost of borrowing is determined by Treasury assumption. The repayment threshold in 2016 relative to earnings is entirely determined by OBR forecasts. We did not go round trying to reach an alternative wages forecast; we just took the OBR forecast, which was the only sensible way to proceed. Then the British jobs market performed differently from what everyone expected in 2010, with good news on employment and less good news on increases in the real value of wages.

There was an error. The error that was made, which emerges from increased research on what has happened to graduates, is that it looks as though graduate earnings do not bounce around as much as was expected. That is another factor, although not a significant one in how the RAB charge is forecast. The forecast is inevitably shaped by the kind of assumptions that I described earlier.

I have spoken for 20 minutes and I do not want to go on any longer. I have touched on my concern about the way this debate is going wrong. It is going wrong by treating the assumptions necessary to make any kind of RAB charge calculations as somehow fixing the design of the system for the next 30 years, when that is absolutely not the purpose of the specification of those assumptions to make the calculation.

[Mr Binley]

I deliberately mentioned black holes because they have an event horizon. Once an object crosses that event horizon, it is stretched out of existence. Part of the reason why I want us to have a review is to know where that event horizon is. That would be one of its important purposes. Is my right hon. Friend eschewing the other aspects that we talked about—better debt collection, better loan agreements and better productivity from our universities—which would be useful now?

[Mr Willetts]

That is very fair, and it is the point on which I want to end. I think debt collection is not a particular weakness of the scheme. Again, some of the Select Committee reports and even the NAO stuff is unfair in regarding debt collection as an area where we could do massively better. Essentially, we are forecasting income tax receipts up to 2045—calculating 9% of earnings above a threshold out to 30 years and discounting its value back. This preoccupation with the RAB charge is relatively new. When Labour’s RAB charge was 42%, we did not have agonised debates about it. It has suddenly become the hot topic of the day, as though it somehow proves that the system is unsustainable.

The real issue, as has been correctly identified by my hon. Friend the Member for Northampton South (Mr Binley) and the right hon. Member for Southampton, Itchen (Mr Denham), is what is happening to the student’s academic experience. When I talk with student unions, I find them relatively relaxed and accepting that 9% of earnings above £21,000 is affordable, but what they say is, “We are entitled to £9,000-worth of higher education today for the fees we pay.” There is a lot of dissatisfaction with the quality of the academic experience—for example, the amount of contact time they have with academics and the quality of the teaching—and that is the real-world challenge for our universities. I am one of the culprits in this regard, but I hope that in future our debates on higher education—I look forward to reading the Hansard reports—will focus a little more on that question and a little less on esoteric calculations of what might or might not be written off in 2046.

13:10

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

What a privilege it is to take part in this debate. The quality of the contributions has been excellent. The House will recall that I have been involved in higher education for a very long time. Over the 10 years that I was the Chair of the Education Committee it partly covered higher education, so I was very absorbed in the subject. I was also a university teacher for 12 years, back when I used to work for a living, as I sometimes say—like the hon. Member for Northampton South (Mr Binley), I am one of the few Members who had a career before entering this place. The fact of the matter is that this has been a very high-quality debate.

I care deeply about higher education and love what it has done for my generation. I am the youngest of five children and the only one to go to university. I got into the local grammar school and was saved by going to Kingston technical college and then getting a scholarship to the London School of Economics, where I am now a governor. Higher education made my life. It gave me opportunities that my brothers and sister never had. I think that we underestimate just how powerful it can be and just what it has done in a short number of years for the people of this country.

I was at the LSE when the Robbins report was being written. Indeed, we had to walk quietly past the great man’s study in case he was behind the door, working on the royal commission. What he came up with still guides us, and I still think that it is right. He said that higher education should be paid for through a fair balance between the individual who benefits, the employer that benefits and society. That thread has run through all the contributions we have heard today. We are still concerned about how to deliver that fairness and that balance.

I do not want to repeat the excellent contributions we have heard on funding or to get into the black hole, so I will instead focus my remarks on delivery. However, I will say that the reason I gave, as co-chair of the Higher Education Commission, for doing a report on the long-term sustainability of higher education in our country was that everyone is talking about it. As my old friend the right hon. Member for Havant (Mr Willetts) knows, the higher education sector is very gossipy, and people in every corner—including vice-chancellors and business people—have been asking whether this is a long-term, viable model. They are asking that because higher education is so vital to our future. To get it wrong would be disastrous for our country’s future.

Fifty years ago Harold Wilson, who was born in my constituency, delivered a speech to the Labour party conference in Scarborough. It is now known as the “white heat of technology” speech. He said that for years this country had been ruled by a few people who went to posh schools and then to Oxford or Cambridge and who were essentially amateurs, but that the new world had no future for people without skills, or even for semi-skilled people. He saw that the future was in high skills, quality management and high science. He told us to look at what was happening in Russia: they had put a man into space before the Americans. He had been to the United States and seen production lines in the automobile industry where nothing was touched by a human hand. He could see that as a country we had to become highly skilled.

Harold Wilson also said some ridiculous things in that speech. He said, “Why do only 5% of people go to university? It should be 10%.” What a silly statement—I say that in jest. Why should we not have a university in every former industrial town? When Labour won the election a few months later, the polytechnics were introduced. There is a lovely story that Harold, when given the list of colleges of technology that were to be brought up to polytechnics, said, “Eee, where’s Huddersfield?”, before writing it in. I mention that because it is an amusing story, but there is a serious point: any town or city in this country that does not have a university cannot get into the super league. Up and down the country, large towns and cities that do not have a university—Huddersfield is lucky to have one—are in a lower league. I do not mean to decry those places, but universities are so important to the life of our communities, to their wealth and success. If we took them out of our towns and cities, we would be left with very little.

[Mr Binley]

I made a point earlier about being a secondary modern schoolboy at a time when only 2% of the population went to university, and I desperately regret not being able to take advantage of further education. I am really glad that so many of our young people can now do so. I was one of those boys that Harold Wilson was perhaps talking about—I was not a great fan of his, but that is another matter. Thank God we have a university that is doing its job so well in Northampton. I agree with the hon. Gentleman in that respect.

[Mr Sheerman]

I have a close relationship with Northampton university and its excellent vice-chancellor and know of its commitment to social enterprise. I am astonished by how few Members are in the Chamber for this debate. Huddersfield university is the biggest employer in my constituency, the biggest bringer of wealth, and it is what makes my town so vibrant. It has 25,000 students, and growing, and a massive number of staff. Think what that means for local businesses and supply chains. It pays very fair wages and sticks to all the principles. Indeed, not only was it last year’s university of the year, but it has just been given an award for the best level of employability of graduates. I will say more about that in a moment.

What Harold Wilson said 50 years ago is even more true today. If we do not produce the high skills we need in this country to compete and earn our living, we will be in dreadful trouble. Out in India, Brazil and China there are masses of people getting high-level and very practical qualifications. In every area where we have expertise we will find more and more competition as time goes on. We have to become brighter and smarter all the time. There is no place in our society for people without skills. That is a tragic aspect, but it is also a hopeful one. We have built up a fantastic university structure.

When I got the “Too Good To Fail” report going, what I wanted to say was that we do not want to throw everything up in the air. I do not want another Browne report, and I do not want to have to go back to the LSE and have another Robbins report. It is time that sensible men and women get together, as we have today, and say, “The system is working fairly well, but there are some real problems—can we fix them intelligently by co-operating?” The interesting and remarkable thing about the way in which higher education policy was produced, as Members might remember, is that it came out of an all-party agreement not to discuss the subject during a general election. We said that we would set up an inquiry agreed by both sides—Opposition and Government—and let it get on with its job.

[Ian Swales (Redcar) (LD)]

The hon. Gentleman is making a very powerful speech that I agree with. He talks about the fantastic system we have. However, it is basically a market-based system that is not delivering the balance of skills that the country needs. For example, we need 500 power engineers a year but we have only 100 undergraduate places. What does he think we should do about how the market delivers what the country needs?

[Mr Sheerman]

The hon. Gentleman anticipates the second part of my remarks, and I do not want to detain the House for much longer.

I wanted to begin by setting the scene in establishing how important universities are to towns, cities and communities. Our higher education system is pretty marvellous. People come from all over the world to see it. I show them around and they marvel at its quality. However, it is not perfect; the hon. Gentleman is absolutely right in many ways. As my right hon. Friend the Member for Southampton, Itchen (Mr Denham) said, we are not delivering the right product in our universities. All my vice-chancellor friends will disown me for saying “product,” but it is a product.

Are we delivering the kinds of graduates our country needs? In lots of cases, we are—they are brilliant. My own university has one of the best design departments in the country. Young people who do its fashion degrees are snapped up by fashion houses all over the world. Indeed, the head of Burberry is one of our graduates. Mechanical engineers and design engineers are snapped up by Formula 1. My right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) has a son who is a graduate working in F1 because of the fine quality of the department. We do loads of things right—of course we do—but often not in a way that is appropriate to what is really needed.

That is not to say that things are not happening. There are people doing two-year degrees in Coventry. Skoda Coventry has people doing degrees either only in the morning so they can work in the afternoon, or only in the afternoon so they can work in the morning. The diversity of what is being done around the country is much greater than we might think.

[Mr Denham]

In its evidence, million+ said that the political sensitivity of fees denies it the chance to run two-year degrees that would cost 80% of the cost of a three-year degree, because that would take the fees to more than £9,000 a year, even though the degree would be cheaper. Does my hon. Friend agree that we need to remove some of the artificial constraints that have stopped universities being as flexible and creative as they would like to be?

[Mr Sheerman]

That is absolutely right. We must find the right model and give opportunities to people. Part-time degrees have plateaued—some say diminished—but not in Scotland and Wales, interestingly. We need a more flexible system.

I get a bit tired of the CBI saying, “We’re not getting the right people with the right skills as graduates”, but there is a strong element of truth in that. When people are delivered having finished their degree, there should be a strong element of their being fit for employment. When a good arts or social sciences graduate comes to see me, I say, “You’ve got an arts degree—go to Cranfield or the LSE and get yourself a business degree or something with economics that is much sharper, because that is what the market is looking for.” That is a good combination, but it creates a greater level of debt, and a lot of people are reluctant to increase their debt.

The level of debt is always on my mind. Young people’s inability to get mortgages is a very important issue. We are in an age when it is getting more and more difficult for people to get a home of their own. Many people are still living at home with their parents when they are in their 30s. Those within the middle-income areas in public services, education and health will be most hit by the inability to get a mortgage.

I do a great deal of work in identifying entrepreneurs and increasing their ability to be entrepreneurs. As some Members will know, a lot of it involves crowdfunding and crowdsourcing. I have been working with a number of universities to ensure that they are knowledgeable about crowdfunding platforms. Then, when their undergraduates become graduates and want to start a business, there is on the campus, as in Northampton, an ability for them to get money through crowdfunding for start-ups. When I go to universities nowadays, I look very carefully at how much space there is for young entrepreneurs. They do not have to be a private entrepreneur; they can be a social entrepreneur. Enterprise and entrepreneurship is going to be the future.

When people ask me why the industrial revolution started in places like Huddersfield, I say that it is because we had cheap power in the form of the water that flowed from the Pennines and turned the water mills that made the factories possible; we had high skills; and—people tend to leave out the third element—we had entrepreneurs who could put all that together and make something. Our universities have to be much more focused on how to create opportunities for entrepreneurship to be not only learned but encouraged. As opposed to the old, tidy world of going into the City, academic life, or whatever—the traditional occupations—we have to make it much more possible for young people, and older people, to find the spark of enterprise and entrepreneurship.

By the time people have graduated, they should understand some of the rules of how to be interviewed properly and organise themselves properly. That would make a real difference. I once horrified some people at a meeting in the House when I said that I would teach management from four years old onwards. I chair the all-party management group. Managing one’s life is pretty darn important. When I talk to undergraduates, I find that they do not know how to manage their life. If they did, they would be much more likely to get a job.

I go round universities all the time. I am a visiting professor at Huddersfield and at the Institute of Education in London. I talk to graduates and they do not know what the British economy is like. I ask, “How many people in this country make anything?”, and they say that the figure is 30% or 40%, but of course it is less than 10%. We have 1% of people working in agriculture, 30% in what Conservative Members tend to call public services—but I call it education, local government and health—and 60% in private services. People working in early-years or later-years care will be on the minimum wage or minimum wage-plus, as will those in retail and distribution. When I tell students this, they say, “Wow, is that true?” Then I say to them, “If you’re on the minimum wage or minimum wage-plus, you can’t have the good life.” Someone at the back always puts their hand up and says, “Mr Sheerman, I really disagree with that. You can have the good life in a cave—it is in your heart.” Then we get into the best discussion of the reason most of us come into Parliament—to give the people we represent and the people of this country the good life. We con people if they end up thinking that one can have the good life without high skills.

The model for universities has to be refined; we do not have to throw everything up in the air. We need more flexible degrees, with much more emphasis on people being work-ready and enterprising so that they can become entrepreneurs.

This has been a tremendous debate, and the quality of the speeches has been excellent. For the first time in a long time, I may not stay until the end. I have a sick elderly relative who has been rushed into hospital with pneumonia, so I may have to disappear, but that is no disrespect to those who speak after me.

13:30

[Paul Blomfield (Sheffield Central) (Lab)]

I echo the comments of my hon. Friend the Member for Huddersfield (Mr Sheerman), who said that one of the advantages of speaking towards the end of a debate is being able to reflect on the quality of the speeches so far.

As we head towards a general election, it is fitting to debate an issue that was central to the last one; I very much feel that as the Member of Parliament who, according to the last census, represents more students than any other. It was certainly an issue on which the Liberal Democrats, who are conspicuously absent from today’s discussion—

[Ian Swales]

indicated dissent.

[Paul Blomfield]

The Liberal Democrats are absent in terms of their contribution. They put the issue at the very centre of the campaign in my constituency. My political neighbour, the right hon. Member for Sheffield, Hallam (Mr Clegg), was very busy at both the universities in Sheffield—they are both in my constituency—emphasising the pledge that he subsequently quickly forgot.

The debate in the early days of this Parliament arguably introduced the biggest changes to higher education funding since those introduced in 1962, following the Anderson committee report. I have enormous respect for the right hon. Member for Havant (Mr Willetts), but I do not agree when he says that the Government simply in some way tweaked the system that they inherited. The fundamental changes introduced in 2012 effectively removed all public funding from the majority of undergraduate courses in most of our universities, which was a very significant alteration to the model that had been in place for the previous 50 years.

As other hon. Members have mentioned, the changes have put huge debts on students. According to the Institute for Fiscal Studies and the Sutton Trust—I think this is the most recent calculation—we are talking of a debt of about £44,000, when maintenance costs are added in, for an ordinary three-year course, and the debt is clearly much higher for medicine, dentistry and other longer courses.

My hon. Friend the Member for Huddersfield was right to view such debts in the context of the other burdens we are placing on the generation graduating this year, who face such debts for the first time. They are also having to deal with a housing market in crisis, and all the costs associated with buying or renting. That generation will not be able to enjoy the benefits of final salary pensions, which many of us expected to have in our careers, and will have to put aside very substantial sums to provide for their old age. We have created a real financial crisis for them.

The problem is not just one for that generation, but one for the public purse. That is the key point of our Select Committee’s report. I underline and echo many of the points made by my good friend and Committee colleague, the hon. Member for Northampton South (Mr Binley). In the unanimously agreed report we said that we were

“concerned that Government is rapidly approaching a tipping point for the financial viability of the student loans system.”

Our point about the tipping point is based on our assessment of the RAB charge. We have discussed that a great deal, and I will talk about it a bit more. The Government, like the right hon. Member for Havant, are keen now—it was not always thus—to talk down the importance of the RAB charge. He said earlier that we are not talking about spending, but about a forecast. That is absolutely right, but it is a forecast of costs that will fall on the public purse, and we cannot get away from that.

The Secretary of State for Business, Innovation and Skills was much more cavalier at last year’s Liberal Democrat conference, when he said:

“These losses crystallise in 30 or 40 years’ time—when I’m well over 100. I shan’t be sitting round, spending the rest of my life worrying about what happens in the year 2000 and whatever it is.”

Actually, the responsibility of this place is to worry about such issues.

It was a very different story when, back in December 2010, we debated proposals to treble fees and to shift the cost of higher education from the Exchequer to students. The Secretary of State was keen to justify the measure by reference to cost savings, and he talked a lot about the RAB charge. Of course, he talked about a RAB charge of 28%, which was subsequently amended to 30%.

At the time, many of us questioned the Government’s assumptions. Most notably, the Higher Education Policy Institute—now led by the former special adviser to the then Minister, the right hon. Member for Havant—argued that the Government had significantly underestimated the RAB charge, and published its own analysis suggesting that it would be about 40%.

When the Select Committee questioned the Secretary of State in October 2012, soon after the introduction of the new system, he was very quick to defend the RAB charge assessment. He refuted HEPI:

“We do not accept that they are right… We had the HEPI view put to us two years ago, when we were thinking of the current changes, so we are aware. But they are an outlier in this whole debate.”

At least in one respect, he was right and HEPI was wrong—not because it overestimated the charge, but because it underestimated it.

We now know that the Government have assessed the RAB charge at 45% and, in an exchange in the Select Committee last year, BIS acknowledged that it is modelling a RAB charge of more than 50%. That is important because once it exceeds 48.6% the new system will cost more than the system it replaced. The new system, introduced in response to the Browne review, was supposed to last for a generation, but after less than three years, it is broken.

The RAB charge is only one part of the problem. In the debate back in 2010, the Deputy Prime Minister desperately tried to save some face on the fees issue by saying that one of the new system’s benefits would be the introduction of loans for part-time students. He said that it was an important initiative and a progressive development, but he did not say that it would be linked to an increase in fees. It has contributed to a 50% fall in the number of part-time students between 2010-11 and 2013-14, according to Higher Education Funding Council for England analysis.

There was also a miscalculation of how fees for full-time students would be set. The assurances given to the House back then have proved worthless. In particular, I remember that the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) sought reassurances that fees of £9,000 would be exceptional. The Business Secretary gave him a clear pledge, saying that he would not allow another

“migration of all universities to the top of the range”.—[Official Report, 9 December 2010; Vol. 520, c. 547.]

Where did we end up? We saw precisely such a migration. Far from being exceptional, £9,000 became the norm, because universities needed to cover their costs, as they told the Government they would.

The Government’s objective was to create a market of fees set between £6,000 and £9,000. Rather than universities meeting their costs, the Government somehow expected them to set their fees in order of perceived quality, presumably with Oxbridge at the top and the rest neatly ranking themselves below. When that did not work, they started tinkering with the controls on student numbers. More recently, they have made an unfunded commitment to lift those controls altogether.

When the Chancellor announced that policy, he suggested that it would be funded from the sale of the income-contingent loan book. As it has become clear that the sale of the loan book is unachievable, the report asks how the Government will fund the expansion of student numbers—however desirable that objective might be—without creating a further £5.5 billion black hole in the Department’s books. Of course, there is already a smaller, but significant, black hole of some £650 million on loans and grants to students in private colleges. That is because of a lack of Department control, which the Select Committee has consistently raised.

There are other issues. Although it is not part of the report, we should not forget the way in which the Home Office’s approach to international students is limiting our ability to maximise university income and the wider economic benefits of a growing worldwide market, preferring to let our competitors benefit by increasing their market share, as the United States, Canada and Australia are doing. I particularly congratulate the right hon. Member for Havant on his comments about the further Home Office proposals that seemed to appear before Christmas but are now retreating.

Where do we go from here? We clearly need to look at alternatives to the current system, and that was the conclusion of the Higher Education Commission inquiry into the sustainability of the current funding model which, as the Chair of the BIS Committee pointed out, was co-led by Conservative peer Lord Norton of Louth. The inquiry involved Members of both Houses from all main parties and experts from the sector and from business. Over nine months they considered the risks to sustainability for student numbers, students, institutions and government, and concluded that it was

“the cumulative impact of these risks that is most concerning. The current funding system represents the worst of both worlds. We have created a system where everybody feels like they are getting a bad deal. This is not sustainable”.

The report went on to argue that we must look at alternatives. The first of those is tweaking the current system, which I guess is probably closest to the Minister’s thinking. I would therefore be grateful if when winding up the debate he answered three questions. First, there will be growing and understandable pressure from universities for an increase in fees. He suggested soon after taking his job that he did not accept that there was a case for increasing fees during the next Parliament, but is that still his view? Secondly, some top universities argue, as they always have done, for a substantial increase in the fee cap—I think the latest argument from the vice-chancellor of Oxford is for a cap of £16,000 a year. Does the Minister rule out any such increase? Thirdly, some have argued that the RAB charge could be reduced by lowering the salary threshold for repayments or increasing interest rates. Will he rule out any such changes?

The Higher Education Commission report offers six options. There are clearly more, and my right hon. Friend the Member for Southampton, Itchen (Mr Denham) made a convincing argument for a different approach. The commission’s second option is one that many of us have supported for years and has been mentioned in the debate, which is that of breaking with income-contingent loans and moving to a more progressive model that replaces fees with a graduate tax.

Although it does not endorse any of the options, the commission highlights the work of London Economics in providing strong evidence to back a graduate tax. That would break the link between the cost of tuition and repayments from students, moving to a graduate contribution that we all accept and that would be based on ability to pay and not on what a student needs to borrow to get through university. The right hon. Member for Havant will know that the modelling by London Economics is specific in the percentages it proposes for different levels of income and the period for which such a model might work. We would need to consider hypothecation and seek a system that covers all tertiary students, addresses the problems with undergraduate maintenance costs, establishes viable support for postgraduate taught courses, which risk becoming the new barrier to social mobility, and deals with issues of transition and historic debt. Those challenges have to be faced because we need a system that is fair and sustainable, and that is why the report calls for, and why we need, a comprehensive review.

13:44

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

This has been a simply excellent debate, and I am grateful that it has presented the Minister with an unanswerable case for the review called for by the Select Committee. Nobody listening to the arguments and evidence presented this afternoon could leave the Chamber and say that everything at the moment is fine and perfect and that nothing must change. Wide-ranging concerns have been raised across the House, and I hope that when he winds up the debate, the Minister will confirm that he will launch that review immediately.

I congratulate the members of the Select Committee on initiating this debate, and I pay particular tribute to the hon. Member for Northampton South (Mr Binley). This will be one of the last set-piece debates in which he participates, and we will all want to salute his sagacity, wisdom and wit, not just in this debate but in many other debates and Committees over the years. At the core of the speech that was referred to earlier, Harold Wilson made a great deal of the difference between amateurs and players, and Members across the House will share the view that the hon. Gentleman is not an amateur but very much a player. The House will be much poorer for his departure.

The reason this debate is so important was set out with great eloquence by my hon. Friend the Member for Huddersfield (Mr Sheerman) and by the Royal Society in its excellent report in 2011, “The Scientific Century: securing our future prosperity”. Unless we grow smarter as a country, we will grow poorer. Over the last century or two, about three quarters of economic growth has been driven by innovation, and there is no reason to doubt that that trend will continue into the future. That is why we need universities that are stronger, and world-class institutions that sit within a world-class system. It is not good enough just to have a country of great universities; we need a system that ensures that world-class universities work together pursuing excellence in mission in a good way. That is why it is not good enough to permit the current system to stand unadjusted and unaltered, because the basic truth revealed by this debate is that our system is falling off a cliff.

The Government are fond of rhetoric about a long-term economic plan, and we wish there were one. However, if we are to be candid with each other, we all know that the current student finance system was not the platonic design of the right hon. Member for Havant (Mr Willetts), but the outcome of a messy negotiation. The Liberal Democrats needed something back for breaking their pledge not to raise fees, and what they received were guarantees on income thresholds that have basically left us with a broken system that is not fit for the future and needs to change.

My next point is that there is tremendous urgency to this matter—that argument was made with much power and eloquence by the hon. Member for Northampton South. We all know that living standards need to rise, and that will be a big part of our debates over the next three or four months. We also know, however, that the only strategic way that Britain will lift itself out of the current cost of living crisis is first by creating a better supply of good, well-paid jobs, but also by building better ladders to those jobs for people, no matter where they start in life. Right now, that is not happening in enough places. In fact, in swathes of the country, the number of jobs in the knowledge economy is not increasing but decreasing.

I started my career flipping burgers in McDonald’s, and I have done every job under the sun. I have started a technology business; I have created jobs for others. I happen to think that any job is better than no job, but during my career I have also learned that a good job is better than a bad job, and right now in large parts of the country there are not enough good jobs. There are 22,000 fewer jobs in the knowledge economy in north-east England today than there were in 2009. In my region of the west midlands there are 2,000 fewer jobs in the knowledge economy, and there are also fewer such jobs in the south-west and in Scotland. All over the country people are tempted to vote for extremist parties because no one is giving them a sensible, realistic story about how we rebuild the opportunity economy for the years to come. Universities are critical to rebalancing our economy in a new way.

Having created those jobs, we have to build the ladders to them. Industry tells us—as I am sure it tells the Government parties—that the skills problem is becoming more and more pronounced. KPMG says that a third of manufacturers cannot reshore jobs to this country because of a skill shortage. Jaguar Land Rover, which works on my doorstep, reminds me that we need around 90,000 engineers a year in this country, and we have some 50,000 graduates—a 40% deficit each year. The Royal Academy of Engineering tells us that we will need 820,000 STEM professionals between now and 2020. We are just not producing enough of them.

The great tragedy in constituencies such as mine, which has the highest youth unemployment, is that we do not have a training and skills system—or a university system—that will create the people for the jobs in the good businesses that we actually have. I asked the Library this morning to tell me how many jobs have been added to the shortage occupation list. Hon. Members will know that if a job is on that list, people from outside the country can be fast-tracked in. I was told that 61 jobs have been added to the shortage occupation list since the last election. In part, that has allowed businesses to fast-track in nearly 200,000 people from outside Britain because they could not find the skills on these islands. Those people brought 142,000 dependants with them, so some 334,000 people have come to Britain because businesses could not find the skills here.

I am a supporter of an immigration system that is a little more generous than the Government have given us, especially when it comes to post-study work visas and students, but the fact that businesses are forced to recruit from abroad because they have failed a resident labour market test is an admission of failure and shows that our skills system is not working. That is why the Committee’s report is so important. As the Chair of the Committee pointed out with such eloquence, this report is not a one-off. It is now one of several reports that have been published over the last 18 months that tell us that the system is in crisis.

Most recently, we had the Higher Education Commission report that questioned the fundamental stability of the system. In April last year, the Institute for Fiscal Studies said that 73% of graduates will never pay back their loans in full. The Public Accounts Committee said that between £70 billion and £80 billion of loans will be written off by 2042—I make that about £500,000 of debt write-off every hour of every working day for the next 28 years. That should concern us all, because it is money that is not available for reinvestment in the future. What has happened over the last three or four years is probably one of the biggest off-balance sheet financing tricks in the history of the public finances. Up to £200 billion has been moved off the public books and shunted from the present into the future. The hon. Member for Northampton South mentioned the curse for future generations and that was a point well made.

In 10 years in this House, I have learned that if something sounds too good to be true, it probably is. That is why we should pay attention to all the warnings we have heard from the PAC, the IFS and now the Business, Innovation and Skills Committee and the Higher Education Commission. I am grateful for the opportunity to salute the contribution from the right hon. Member for Havant, but even he had to admit that the RAB charge, imperfectly constructed as it is, draws our attention to the risks of preserving in aspic every single precise feature of the current design, whether that is the sticker price of tuition fees, the earnings threshold or the rates of interest. The current RAB charge is telling us is that all is not well. The right hon. Gentleman did not say whether he thought that a 100% RAB charge was a bad thing, but I took from his remarks a general acceptance that a high RAB charge is bad and a low RAB charge is good. Therefore, the current trajectory is in the wrong direction and things should change. If things should change, good people should reflect on what those things should be. We should call that reflection a review—and that is what the Committee has called for. An unanswerable case has been made to the Minister this afternoon.

Two extra risks add to the urgency of the review. The first is the marketisation of the higher education system which is driving fiscal risk substantially. The University and College Union raised this issue as early as September 2010 and warned, in an excellent paper, of the fiscal risks of sub-prime education. The union asked us to look at the US, which has had problems of over-recruitment and inadequate safeguards on quality and academic freedom. Those issues have bedevilled higher education in some parts of the US. The union warns us to guard against those risks, but the truth is that we have seen a twentyfold increase in publicly backed funding to students at private colleges—the figure for this year is forecast to be £600 million. The PAC warned us that the Department

“went ahead with its reforms to expand the role of private colleges without ensuring there were controls in place”.

That is an added fiscal risk that we cannot ignore.

The second great risk, which several hon. Members have mentioned, is the hastily constructed plan to uncap student numbers. The rumours in the higher education sector suggest that the plan was largely cooked up in the Treasury rather than BIS. It was certainly unveiled with some speed in the final days—if not hours—before the last Budget and it proposes an ambitious expansion of student numbers, funded by the sale of the student loan book. Most of us were surprised when the Secretary of State for Business, Innovation and Skills told us that the loan book sale was off. We were even more surprised when the Minister answered a question by saying that civil servants were still working on it. In the letter, which he kindly provided yesterday, he was unable to tell me how much the Department is spending on a policy that the Secretary of State has ruled out—I guess that is the reality of coalition Government.

As these fiscal risks multiply, what has most concerned people is that the Department has refused to spell out the departmental expenditure limit provision for maintenance grants and teaching in 2016-17 and beyond. That will be the third year for the extra students who were taken on by universities last year. I suspect that people want to know that the unit cost of funding for 2016-17 will be protected, but that was the big omission from the Minister’s letter to me yesterday. I notice that the student loan book sale is still in the OBR’s fiscal forecasts, so perhaps it will magically appear from left field and save the day, but it would be a significant risk.

We have report after report saying that the current system is not sustainable. The former Minister who was the architect of the current system has told us that some features and functions might need to be adjusted over the next 20 years. We have the extra risks from marketisation and uncapping student numbers. The Minister, with his responsibility for science, is the champion of evidence-based policy making in the Government. I am not sure how he can hear the evidence that has been laid before him this afternoon and say that it is so underwhelming that we do not need a review and that the current system is perfect in design and should persist long into the future.

Especially welcome in this debate have been the contributions that have pointed towards the need for much bolder thinking about a different future for our higher education system, one that offers for the first time a proper, apprenticeship-based professional and technical route to degree-level skills. All of us agree that there is no prosperous future for people without skills, so we must transform—indeed, revolutionise—the number of people on an apprenticeship track who get the chance to go up to degree-level skills. The fact that only 2% of apprentices go on to that level of study is unacceptable and needs to be revolutionised.

I hope that one aspect of the new system will allow further and higher education institutions to come together in a more valuable way, both with each other and with the business communities that they serve. I also hope that the review that I know the Minister will promise in a moment will look at every possible option for protecting the unit cost of funding but also bringing down the cost to students. We know that reducing tuition fees will lower the RAB charge and therefore lower public sector net debt, which is the stated intention of the Government.

Finally, I would like to underline the point made in the excellent speech by my hon. Friend the Member for Sheffield Central (Paul Blomfield). We cannot abstract this debate from what is happening to our young people. Today’s generation is the first for a century who will be poorer than the generation who came before. There are now more young people living in poverty than there are pensioners. Unemployment for young people is still too high and apprenticeship numbers for the under-24s are now falling. We have to change that and it is incumbent on us to do so. That was the argument made in an excellent book called “The Pinch”, which was published towards the end of the previous Parliament.

When I was preparing my own thoughts on higher education reform, one of the documents that influenced me most was a paper prepared in 1962 and 1963 by a group of senior policy makers who wanted to persuade Harold Wilson to implement the Robbins review, which he subsequently did in 1964 and in the years thereafter. One of the phrases that rang out from those pages is that we must not and cannot be

“afraid to build splendidly for our young.”

As we approach the next election, those are good words to inspire us.

14:01

[The Minister for Universities, Science and Cities (Greg Clark)]

We have heard many good words to inspire us in what has been, as many Members have said, an excellent debate. The fact that three of the Members who have spoken will be leaving the House at the election invites us to pay tribute to the contribution they have made over the years. It could be, of course, that more than three may find themselves leaving the House, but three, at any rate, are planning to leave.

I am grateful to the Backbench Business Committee for granting us the opportunity to have this debate, and to the Select Committee, several of whose members have spoken. They have done a valuable job and I echo the tribute paid by my predecessor, my right hon. Friend the Member for Havant (Mr Willetts). They have an important job to do in scrutinising the implementation of the reforms to student finance. As the Chair will know, the Government have rightly adopted many of its specific recommendations, for example on continuously improving the forecasting methodology and on targets for the Student Loans Company. In a different context, I told the Committee that my experience in this House has always been to listen very carefully to the advice of Select Committees. I will always do so.

As the new system is gradually exposed to the clear light of how it works in practice and not in prospect, it is becoming increasingly plain that it is a very considerable achievement and a source of confidence in our future excellence and prosperity. My right hon. Friend the Member for Havant has reason to be very proud of his achievement in carrying through the reforms.

[Paul Farrelly]

Will the Minister give way?

[Greg Clark]

I want to make some progress. I have the least time of all, which is appropriate in a Backbench Business debate. However, if I have some time later, I will of course take an intervention.

Since the Committee took its evidence, which the Chair will acknowledge was about a year ago, the evidence in favour of the positive effects of the reforms has been mounting. We have discussed whether to undertake a review. I encourage the successor Select Committee in the next Parliament to undertake a stocktake of the system in practice. I suspect that it will draw the same conclusion as I have.

In the words of the OECD, which is widely regarded as the leading authority in the world on comparing education systems, the UK is one of the few countries that has figured out a sustainable approach to higher education finance and the investments pay-off for individuals and taxpayers:

“among all available approaches”—

the OECD includes 34 countries—

“the UK offers still the most…sustainable approach to university finance.”

In responding to the debate, I want to summarise how the advantages are clear for students, the taxpayer and universities.

The system is good for students, because it has allowed more of them than ever before to fulfil their dream of a place at university. Many Members have acknowledged the importance of achieving what has previously been beyond the reach of many of our fellow citizens. This autumn, for the first time in the history of this country, half a million applicants were placed in higher education. The head of UCAS put it this way just last month. It is, she said,

“a stunning account of social change, with the most disadvantaged young people over 10 per cent more likely to enter higher education than last year and a third more likely than just five years ago – 40 per cent more likely for higher tariff institutions.”

Despite predictions to the contrary, students have seen that going to university is an exceptional investment. Graduates earn on average £9,000 more than non-graduates. In the past year, the graduate premium for young graduates—those under 30—has risen to £6,000. Graduates are half as likely to be unemployed as non-graduates and two-thirds are in highly skilled jobs, a proportion that has been rising substantially as we recover from recession. Students know that they will pay nothing up front and that they will pay back only if and when they can afford to do so. It is important to be clear to the House that for a graduate earning £30,000, a high salary compared with the population as a whole, for the benefit of a three year degree they will repay £2.22 a day. That is an eminently reasonable reflection of the value they obtain from that degree. It is no wonder that students are responding with such alacrity—more than ever before.

Let me say why the system is good for taxpayers, as the OECD director said. The reforms have made it possible—without them it would not have been possible—to abolish the cap on student numbers. That is overwhelmingly in our national interests, as I think most Members would acknowledge. The earning power of graduates means that it is not just the graduates themselves who gain—the Exchequer gains hundreds of thousands of pounds over a graduate’s lifetime of employment. That is many times more than even the most conservative estimate of the so-called RAB charge. Andreas Schleicher of the OECD said that what one loses through non-payments is small versus the tax revenue uplift from more students earning more in work and that this premium is expanding.

It is important to emphasise—it has not been clear in some of the contributions—that this subsidy is nothing like a commercial loan, in which any debt that is written off is somehow a mistaken lending decision. It is not like that. It is a reflection of a set of deliberate policy choices to write off, for example, outstanding debt after 30 years, and to repay at 9% above earnings of £21,000. It is highly progressive, according to the Institute for Fiscal Studies: the lowest earning 10% get a 93% subsidy and the highest earning 10% get a 1% subsidy. For the record, I am perfectly content with all the policy choices that produce the published RAB charge.

[Mr Byrne]

Is the Minister therefore ruling out any further increase in the tuition fees ceiling if he is re-elected?

[Greg Clark]

I have been very clear on this. I am not persuaded that there is any reason to increase the ceiling. I think the ceiling at £9,000 is reflective of the costs of providing a good education to people.

[Paul Farrelly]

Will the Minister give way?

[Greg Clark]

Let me make a bit of progress, but I will come back to the hon. Gentleman.

As my right hon. Friend the Member for Havant said, the published RAB charge, as it is known, is notional and, in fact, ultra-conservative. I mentioned—to the mystification to the OECD, I might add—that it takes no account of the dependable tax revenue uplift that the Treasury takes. It also assumes, as my right hon. Friend said, that the Government’s cost of borrowing is 2.2% a year in real terms. In practice, it has been closer to 0% in real terms. The student loans system is therefore a good deal for students and a good deal for taxpayers.

[Paul Farrelly]

The Minister speaks of confidence in the system. Does he share the widespread concern across the country that other Government changes are making it more difficult for students to cast their verdicts on the fees and funding system they have inherited? The changes to electoral registration rules mean that universities cannot register their students en bloc. For example, at Keele university in Newcastle-under-Lyme just 144 students registered last month, and we have lost nearly 2,600. Is he concerned about the likely effect on student participation and their ability to give a verdict on the system in which he is so confident?

[Greg Clark]

Every Member takes great pains to encourage young people to register to vote. Through the online registration system, it is easier than ever, and I think that everyone in the House, over the next few months, will encourage people in schools and universities to register. The hon. Gentleman mentioned the university of Keele, but he has to accept that without the reforms that my right hon. Friend the Member for Havant introduced, there would be fewer students going to Keele university in the future than is now possible. That would be bad for the university, which I had the privilege to visit just before Christmas, and bad for the hon. Gentleman’s constituents, who benefit substantially from the presence of that fine university.

The system is excellent for universities too. It is an extraordinary achievement, at a time of financial stringency, that, according to the Institute for Fiscal Studies, the resources available to universities for teaching have on average increased significantly. It estimates an increase from £22,000 under the previous system to about £28,000 per student under the current system. The Institute for Public Policy Research, which tends towards the left in its assessments, said that the main strengths of the current system are that it has increased the resource flowing into higher education, which has enabled institutions to maintain or enhance their level of provision. This led the OECD to conclude that the UK is probably the only country in Europe, and one of the few in the world, to be able to support and sustain a big increase in participation and yet raise unit costs. No wonder that recruitment increased last year for all university types with higher tariff providers to record levels.

Our system of university finance offers extraordinary opportunities to students, universities and the taxpayer, which is why it is mystifying that the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) called for a review. It was not clear to me in his response whether that was the Opposition’s new policy. They have had four and half years to come up with a policy, but now it seems to be a review. Just a few weeks ago, he was speculating vaguely, just as the success was being recognised, about turning turtle on it. It is completely unclear what his policy is. Is it a review or a change? He has previously said that fees would be reduced by £3,000, but that would blow a £3 billion black hole in the public finances and force universities to go cap in hand to the Treasury every year just to maintain their funding. It would decimate that stunning social progress I referred to earlier, since it would obliterate the funds from the access agreements, which will be worth £718 million next year—I was surprised that the right hon. Member for Southampton, Itchen (Mr Denham) did not think they were worth having—and impose pressure to cut student numbers. The IPPR said that the pressure to cut student numbers would crowd out students from disadvantaged backgrounds.

[Mr Denham]

For the record, I judge that of the roughly £700 million, £300 million is replicating the work that Aimhigher used to do and is of real value in encouraging social mobility, but £400 million is spent on fees, reductions and bursaries, which has almost no value in persuading somebody to go to university.

[Greg Clark]

Those funds are available through the access regulator to be invested in the best way. Social progress has been made and people from my background now have the chance to go to university in increasing numbers. To rob universities and our young people of that help and assistance is an extraordinary suggestion from the Labour party.

For what purpose? It would reduce the payments not for poorer graduates but for the very richest. Those who pay off the £9,000 loans in full would be the only beneficiaries. I am talking about the richest 20% of earners, who would pay off their loans on average 28 years after graduation, when they are in middle age, and when they are earning on average £78,000, according to a think-tank. Ironically, this debate has been largely focused on the concerns that too high a proportion of loans is notionally projected to be written off, yet the Opposition want to write off 100% of loans over £6,000 for all graduates, even the ones who can comfortably pay.

I am not instinctively a partisan politician, and I believe it is strongly in our interest that policy questions about our universities should be, wherever possible, rooted in consensus and stability. That was the intention behind the Browne review, which the hon. Member for Huddersfield (Mr Sheerman) referred to, and which the previous Government set up. My right hon. Friend the Member for Havant implemented that dispassionate and thorough report. I hope that the right hon. Member for Birmingham, Hodge Hill will reflect on the ever more obvious success of the system, get behind it and drop his temptation to engage in a stunt that would plunge the financing of higher education into chaos.

[Mr Binley]

Will my right hon. Friend give way?

[Greg Clark]

I am just about to conclude.

If the right hon. Member for Birmingham, Hodge Hill does get behind the system, in the same spirit, he will attract praise, not opprobrium, from those on the Government Benches—I am sure that my right hon. Friend would be generous in acknowledging that—and he will earn the respect of the sector, which values the stability and the sustainability that we now have in the financing of higher education in this country.

[Mr Binley]

I am sorry that my right hon. Friend did not give way. I hope that that is on the record.

[Madam Deputy Speaker (Dame Dawn Primarolo)]

Order. I am sure it will be in the record, Mr Binley, as you said it very loudly. Even I heard it. It was just a shame that your right hon. Friend did not.

14:16

[Mr Bailey]

I would like to endorse the comments about the quality of today’s debate. It demonstrates the depth of expertise in the House on this issue. It is appropriate to pay tribute to the right hon. Member for Havant (Mr Willetts). We have had robust exchanges in the Select Committee in the past, but there has never been any doubt about his commitment to higher education and the expertise he brought to the issues it faces. Similarly, I thank my colleague on the Select Committee, the hon. Member for Northampton South (Mr Binley), who is a great believer in Select Committees and in going where the evidence leads. He has been prepared to back me even when, politically, it has been inconvenient for him to do so.

To summarise, the arguments for the review have been made largely, but not entirely, by Opposition Members, but, strangely and perversely, the arguments made by the former Minister and the current Minister in defence of the existing system underlined and reinforced the case for having a review. The right hon. Member for Havant seemed to argue that the current RAB charge calculations are essentially an accountancy issue. If that is the case, why not have a review to demonstrate it to everybody so that all those institutions that are criticising it can get some reassurance from the Government? The Minister’s and the OECD’s argument about the benefits of graduate education and investment in the industry are a given. I understand that. The problem is whether in the future the country finds the level of projected debt that will have to be funded politically acceptable in view of the benefits accruing from it. There is a big debate to be had here, and this review could kick-start it.

Whatever current and past Ministers have said in defence of the existing system does not take away from the opportunity that a review could create to refine and improve the system and address any issues.

Question put and agreed to.

Resolved,

That this House notes the Third Report from the Business, Innovation and Skills Committee, Student Loans, HC 558, and the Government response, HC 777; and calls on the Government to outline proposals that will sustain funding for the sector while addressing the projected deficit in public funding.

Gibraltar

Thursday 8th January 2015 Commons Chamber

14:19

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

I beg to move,

That this House notes the Second Report from the Foreign Affairs Committee, Gibraltar: Time to get off the fence, HC 461, and the Government response, Cm 8917; endorses the Committee’s position that the behaviour of the current Spanish government towards Gibraltar is unacceptable; regrets that trilateral dialogue between the UK, Gibraltar and Spain remains suspended; believes that the time has come for more concerted action; and invites the Government to review its policy towards Spain on Gibraltar.

This motion stands in my name and that of the hon. Member for Ilford South (Mike Gapes). It invites the Government to review their policy towards Spain and their dispute with Gibraltar. Gibraltar is a key strategic asset for Britain and its allies. It has provided employment and prosperity to the region for decades. It is steeped in history and is a notable tourist centre.

Gibraltar has, by extension, been a part of the European Union since the UK joined in 1973. Its membership is accepted in international law, and it is represented in the European Parliament by MEPs from the south-west region. Last year, its football team played its first European football match.

Gibraltar has inevitably been a source of controversy, but it faces a crisis that we all thought was behind us when Spain joined the EU in 1989. The fact is that Spain, a fellow member of the EU and a partner in NATO, is deliberately as a matter of policy undermining the economy of Gibraltar—a British overseas territory. Its hostile behaviour cannot be ignored any longer. Spain’s chosen method is aviation policy and random, unnecessary and superfluous searches of people and vehicles on the border causing, at times, delays of up to six hours or more.

Ironically, the impact is felt on both sides of the border. Up to 10,000 Spanish workers cross the border each day to work in Gibraltar. If someone is running a business and does not know whether the staff will turn up at 9 am or at lunch time, that business suffers. All this has a profound effect on the territory. Visitor numbers have dropped significantly in the last couple of years, with an estimated loss of almost £40 million in tourist expenditure. Interestingly, some of the strongest evidence the Select Committee received was from a Spanish workers’ organisation that was concerned about high unemployment and poverty on the Spanish side of the border. This is an unacceptable situation.

The UK has the responsibility of safeguarding Gibraltar’s territorial waters and ensuring that it is both treated and respected as a member of the EU. Last July, the Foreign Affairs Committee expressed the view that the Government should take a tougher line. In particular, we recommended that if there were no improvement within six months, the Government should invoke article 259 of the EU treaty for violation of EU obligations on the free movement of people. Six months have elapsed since then, and there are still incidents of long and unnecessary delays on the border—despite the personal intervention of the Prime Minister in conversations with the Spanish Prime Minister at the height of the crisis in 2013.

In what I can describe, regrettably, only as a weak response to our report, the Government said that they had not ruled out an article 259 action but would rather leave it to the European Commission to resolve the situation. I hope that the Minister will understand if that response causes some mirthless merriment on these Benches. It could be a long wait. Even worse, the Commission concluded in 2013 that, although the intensity of Spain’s checks was unjustified and it had serious concerns about it, there was no violation of EU law. So in his response to the debate, will the Minister set a deadline for the commencement of action under article 259?

The dispute has a 300-year history, but in the last three years, the Partido Popular Government in Spain have taken a more hard-line approach. They have significantly increased pressure on Gibraltar and its people, and the Gibraltarians have suffered. Apart from the border delays, they have had to put up with aggressive maritime incursions, calculated pressure at the EU and the UN and inflammatory rhetoric from Spanish Ministers about Gibraltar’s sovereignty and its economic affairs.

The difficulties faced by the current UK Government are, in part, a legacy of regrettable decisions made in 2001 to allow joint sovereignty discussions, which raised expectations on the Spanish side. After protests in Gibraltar and an overwhelming referendum supporting continued membership as a British overseas territory, the discussions were dropped.

Since 2004, the Government have sought to maintain a consistent message—first that no discussions will take place without the consent of the people of Gibraltar, and secondly, sovereignty will not be transferred against their wishes. This is the correct approach, and it should be consistently reaffirmed. This double lock has provided Gibraltar with security following a difficult period, and this guarantee of self-determination should never be abandoned again.

Also since 2004, consultations have taken place through a trilateral forum with Spain and Gibraltar. In 2006, the meeting held in Cordoba resulted in agreement on a number of issues—in particular on air movements, recognition of Gibraltarian dialling codes and improved flows at the border. It was also agreed that the UK could pay pensions to Spanish workers affected by Franco’s closure of the border from 1969 to 1982. This is projected to cost the UK taxpayer £73 million.

Following the election of Prime Minister Rajoy in November 2011, however, the trilateral talks have been summarily ended by Spain and some of the terms of the Cordoba agreement have been broken, although the UK, I am proud to say, is keeping its side of the bargain and meeting the agreed pension arrangements. Efforts have been made to hold ad hoc talks, but none have taken place. If a date has still not been fixed, I invite the Minister to assess whether we are being taken for a ride here and whether this might be telling him something—that Spain thinks we are a soft touch.

Meanwhile, the illegal incursions into Gibraltar’s territorial waters continue. These incursions are outside the right of safe passage and now number hundreds since their escalation in 2012. The Spanish vessels making the incursions, which include police vessels, refuse to recognise the authority of the Royal Gibraltar police or, more seriously, the Royal Navy. The aggressive tactics used, resulting in collisions and a danger of serious injury, make it difficult, if not impossible, for the police and the Royal Navy to enforce their authority and British sovereignty.

At worst, there is a danger of a potentially serious incident at sea. Are we going to respond, or are we just a soft touch? Has the Minister considered arresting a Spanish vessel? The Royal Navy has two patrol boats—quite ageing, but they are still working—and three ribs under the commander of British forces in Gibraltar. Will the Minister confirm in his response—this is important to many people—that there will be no reduction in this deployment? We welcome the increased number of warships transiting via Gibraltar, but we believe that there should be a more robust approach to defending Gibraltar’s territorial waters.

The Foreign Office rightly makes diplomatic protests about each incursion, but we were dismayed to discover that they are lodged sometimes weeks after the event. I welcome the Government’s confirmation that a maximum of seven days is now the norm and that an immediate summons of the ambassador applies in serious cases. The Government describe summoning as a

“very serious form of diplomatic protest”

and rightly summoned the ambassador to protest over traffic delays at the border. To digress for a second, that is in stark contrast to the Foreign Office’s refusal to summons the Chinese ambassador when the Foreign Affairs Committee was banned from entering Hong Kong. I am not sure what that tells us about the Foreign Office’s attitude towards the House.

Spain is now engaged in a full-on diplomatic offensive, using international institutions to manifest its hostility to Gibraltar’s sovereignty. In the EU, it has broken terms of the Cordoba agreement and is seeking to exclude Gibraltar from EU aviation legislation.

[Sir Gerald Howarth (Aldershot) (Con)]

I salute the work that my right hon. Friend and his Select Committee have done on this issue and the robust line it has taken. He mentions aviation. Will he confirm what our noble Friend Lord Astor said in the other place—that the Spanish will not apparently allow Royal Air Force aircraft to overfly Spanish airspace on their way to and from Gibraltar? The cost of that to the British taxpayer is an additional £5,000 to £10,000 for each flight. Is that not disgraceful behaviour from a NATO ally?

[Sir Richard Ottaway]

My right hon. Friend is absolutely right. Indeed, not just United Kingdom aircraft but all NATO aircraft are prevented from overflying Spain if they have taken off from Gibraltar. I shall say more about that later.

As I was saying, in the European Union, Spain has broken key terms of the Cordoba agreement and is seeking to exclude Gibraltar from EU aviation legislation. That is damaging the economy: I have heard reports of businesses relocating because of poor flight connections. As for Spain’s behaviour at December’s EU Transport Council, it amounted to nothing less than open hostility. Spain persuaded both the presidency and the Commission to amend the draft single European sky legislation on air traffic control to exclude Gibraltar.

I am pleased that the Under-Secretary of State for Transport, my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill) is present, and I was also pleased to hear that he had walked out of that meeting in protest. I am not sure that we would expect Foreign Office Ministers to walk out of meetings in protest—it is not quite their style—but I hope that the strong way in which my hon. Friend made his protest will have been noted. I should add that it is to the Government’s credit that they have threatened to veto the proposed EU-Ukraine aviation agreement if Gibraltar is excluded from it. However, the real issue, and what is of real concern, is why the Commission has come down on the side of Spain. So much for leaving the Commission to decide on the rights and wrongs of this dispute.

In the United Nations, Spain continues to lobby against the removal of Gibraltar from the list of non-self-governing territories. As it is obviously not such a territory, it should not be on the list. In May last year, Minister Joe Bassano told a UN special committee that Spain was running a campaign to deprive Gibraltar of its right to self-determination, using the arguments of Franco’s fascist Government. The response was, in the words of Gibraltar’s First Minister—who I am pleased to see is with us today—“a deafening silence”. All that is clear evidence of Spain’s politically motivated campaign. I invite the Minister to update us on developments in all those institutions, and, more important, on what the Government’s response will be—or are we just another soft touch?

In an increasingly troubled world, Spain’s behaviour as an ally is becoming increasingly unreliable. While refuelling Russian warships in its sovereign enclave of Ceuta, it continues to posture inside NATO, at a time when Russia is invading Ukraine and flexing its muscles in the Baltic and the northern approaches. Moreover—this brings me to the point raised by my hon. Friend the Member for Aldershot (Sir Gerald Howarth)—Spain’s ban on NATO forces moving directly between Spain and Gibraltar is immature and to the detriment of western security. If they are landing on or taking off from Gibraltar, the military aircraft of any NATO member are not allowed to overfly Spain.

In the event of trouble, Spain would quickly turn to NATO and the United Kingdom for military help, and would get it. Perhaps, at the moment, it does indeed think that we are a soft touch. In his evidence, the Minister told the Committee that, in the absence of any diplomatic initiative, the UK’s forces simply work around it. That is completely unacceptable. Will the Government review the issue and enlist the support of other NATO countries in ensuring that this strategically illiterate ban is lifted?

To date, the Government have sought to de-escalate tensions. That cautious approach is not producing dividends. The Government fear that a more muscular approach will only make things worse, but at times things must get worse before they can get better. If Gibraltar is prepared to accept the consequences of a more robust approach, we should embark on it. In our report, we said that the Government were “sitting on the fence”; in their response, they peevishly said they had

“never been on the fence”

in the first place. To be fair, however, the Government are continuing the policy that they inherited from the last Government, and the First Minister has acknowledged that the language now is more robust than it has been for 30 years.

Spain is a key partner for the United Kingdom, both bilaterally and in the EU and NATO. It is testimony to the importance that both states ascribe to the bilateral relationship that it remains strong, despite our differences. However, Spain should not be able to pursue aggressive policies towards Gibraltar without consequences for its relationship with the UK. The UK Government have shown restraint in response to provocation by Spain. The hard truth is that the UK’s approach of consistently trying to de-escalate tensions in the face of mounting provocation has had little discernible effect, apart from giving Gibraltarians the impression that not enough is being done. It is now time to end the policy of restraint and to think hard about what measures can be taken to discourage Spain from exerting pressure on Gibraltar in the future.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dame Dawn Primarolo)]

Order. I must advise Members who wish to speak in the debate that a time limit may not be necessary if speeches are curtailed to 10 minutes—give or take a minute or two on either side—with interventions. If the position changes during the afternoon, I will of course inform Members, but I think that we should get through the debate comfortably if each Member who has indicated a wish to speak does so for approximately 10 minutes, which will leave time for the winding-up speeches.

14:36

[Mike Gapes (Ilford South) (Lab/Co-op)]

Let me begin where the right hon. Member for Croydon South (Sir Richard Ottaway) ended. We in this country have important relations with Spain in the context of a number of issues. As the Committee itself made clear, Spain is an important European Union and NATO partner, and co-operates with the United Kingdom on a number of our strategic priorities. Some of those are listed in the report, including counter-terrorism and the combating of drug smuggling. There is an economic agenda within the European Union, and a reform agenda. Migration policy is a complex issue, and there are wider international and trade matters. Both the United Kingdom and Spain have historic associations with both north and south America that date from the colonial period, and both countries have a strong interest in the current talks on the transatlantic trade and investment partnership. Beyond that, both countries, as democratic, pluralistic societies, are appalled by terrorism, whether it is carried out in Paris or in countries such as Iraq and Syria.

We have a common agenda in many respects, and for that reason it is really shocking that the present right-wing Spanish Government, run by the Partido Popular, have decided to tear up the co-operation developed from 2004 onwards by the previous Labour Government and the previous socialist Government—run by the Partido Socialista Obrero Español—as well as the Cordoba agreement to which the right hon. Member for Croydon South referred.

We began our Gibraltar inquiry following our decision to conduct an inquiry into United Kingdom consular work, and to visit the consular hub that the Foreign and Commonwealth Office had established in Malaga, in southern Spain. From Malaga, we went to Gibraltar. Our visit to Malaga and our conversations with British people living and working in Spain—about 1 million people live there happily—showed us that Spanish people are hospitable, kind, friendly and supportive. Many Spanish people in the local authority that we visited were assisting British citizens who were resident in Spain.

Meanwhile, in the past two or three years an increasing number of Spanish people—predominantly young people—have come to work in London and other parts of the United Kingdom, including cities, because of the economic difficulties in Spain. There is two-way traffic. There are families consisting of children born in one country and parents from the two countries. There is a mixture consisting of many people with connections between the United Kingdom and Spain, including some senior political figures in our Government.

[Mr Nigel Evans (Ribble Valley) (Con)]

Does the hon. Gentleman agree that a huge number of Spanish people work in Gibraltar and get on very well with Gibraltarian people, and that we should respect that?

[Mike Gapes]

The hon. Gentleman pre-empts my next point.

It became apparent to me during the inquiry—the Committee Chairman touched on this—that there are 8,000 or 9,000 people who every day travel from Spain into Gibraltar to work, so a very large number of Spanish citizens depend on the Gibraltarian economy for their employment and prosperity. Why, then, are the Spanish Government behaving in such a stupid way by stopping those workers either travelling to work or coming home because they face queues and delays of two, three or four hours in getting across the border in their vehicles or, sometimes, on foot? This is an ideologically driven agenda designed by people in Madrid who clearly do not care about the livelihoods of the members of the trade unions I met here in the House of Commons who had come from the south of Spain to talk to British MPs about the difficulties they face. They were hosted by Unite, which has associations with workers both in Gibraltar and internationally in Spain.

A clue is provided by the politics of Andalucia and the south of Spain: they generally vote for the left, whereas the Government in Madrid are dominated by the right. Sadly, therefore, since the change in 2011 the Madrid Government have shown contempt for their own citizens and their economic interests by behaving in a vindictive way against Gibraltar and at the same time damaging the interests of Spanish people and workers.

The British Government should be doing more to highlight the situation, as should international organisations such as the International Labour Organisation and those that look at issues to do with human rights and free movement.

Why has this issue come up at this moment in time? In Spain—and, indeed, elsewhere—there has been a rise of populist opposition against the incumbent Government. The governing party might believe it can pander to those opponents by raising the nationalist card over Gibraltar and thereby diverting attention from the country’s internal economic problems. I do not think that is going to work in the long term, but we shall see, because Spain, like the UK, is supposed to have an election this year. I do not think the governing parties in either country will get the results they want, but I do not want to get diverted into domestic politics.

Our Government must be more robust on this matter internationally. We have seen in a number of international forums that when the British Government are determined, they can make a real difference, but we have not been strong enough or vocal enough on the issue of Gibraltar. There is clearly international support for the UK position in many countries, but we are not doing enough to build that support, whereas Spain is working very hard internationally in its own interests.

A resolution tabled in the US Congress last year referred to the rights of self-determination of the people of Gibraltar. It is clear from a letter that has only just become public that, from September, the Spanish ambassador to the United States lobbied extremely hard against it, using all kinds of implied threats about the consequences, to try to stop that bipartisan resolution being carried in the US House of Representatives.

Internationally, it is clear that the present Spanish Government, unlike their predecessors, are not interested in coming to a modus vivendi on these issues. The previous Spanish Government did not accept, and would never accept, that there was any question of British sovereignty of Gibraltar, but they accepted the reality that there was an agreement to differ and that they should therefore deal with the practical issues and leave the other issues to one side. That is how the improvements from 2004 onwards were achieved and sustained. The ideological approach of the current Spanish Government, however, seems to put a nationalist agenda before the interests of their own people, and ahead of co-operation with the UK and the interests of the people of Gibraltar.

Our report has highlighted an important issue. Apparently the situation has improved since we published it, with a reduction in the number and intensity of obstructions to people travelling into and out of Gibraltar, but that can be switched on or off at any time, as we saw when we visited. When we drove into Gibraltar, there was no queue. We went to our hotel and within an hour we had a call saying that suddenly there was a massive backlog at the border because the Spanish police were imposing restrictions and searching all vehicles. There was a big queue and the car park was full in the space of only about 40 minutes to an hour. This is politically motivated and it is being run by special paramilitary police from Madrid, not the local police. It is all part of a special, politically designed operation.

The truth needs to be told. We need to get this agenda out: there are people in Spain who have an agenda based on an ideological approach that damages the working of the EU—it damages the possibility of agreements within the EU being arrived at in a timely manner—as well as the interests of the Spanish people and the democratic, self-determination interests of the people of Gibraltar. I hope the Government will heed what is said in this debate and be more forceful and vocal on these matters in future.

14:39

[Dr Liam Fox (North Somerset) (Con)]

May I begin by congratulating the Committee on producing such an excellent and well thought out report and, perhaps more importantly, the people and the Government of Gibraltar on creating an undoubted international success story? Anyone who has visited Gibraltar in recent times will have seen that it has a vibrant, booming economy, not least because of the low-tax regime the Government operate, which this House would do well to look at.

Visitors to Gibraltar can see the level of investment, such as that by international hotel chains, which is testament to international investors’ confidence in Gibraltar’s future. They can see, as the hon. Member for Ilford South (Mike Gapes) said, the queues of those coming into Gibraltar to work from Spain, whose economy is less than robust at present. Shops in Gibraltar are crammed with Spanish consumers trying to buy goods at lower prices. This is a great opportunity not only for Gibraltar but for the wider region. It is an economic success story, in that only 7% of the Gibraltar economy is now dependent on military spending of any sort.

This is more than just an economic success, however. The population of Gibraltar is confident and secure in Gibraltar’s status as a British overseas territory. The population were given UK citizenship under the British Nationality Act 1981, and they have overwhelmingly restated their desire to remain British, reaffirming their democratic mandate in the 2002 referendum. I make these points because every single one of those facts puts the people of Gibraltar on the right side of international law, and our own Government should make that point clearly at every possible opportunity.

As a former Defence Secretary, I naturally look favourably on Gibraltar’s strategic advantage to the United Kingdom. It has played a major role in our security since it was ceded by Spain—in perpetuity, let us remember—under the treaty of Utrecht. It has always been an important base for the Royal Navy. It has associations with Trafalgar—the Trafalgar cemetery is testament to that—with Crimea, with world war two and with supporting the taskforce in the liberation of the Falklands. Those were all great contributions to our wider security. As Secretary of State, I visited Gibraltar to thank our Royal Navy personnel following the Libya situation, in which Gibraltar again played an important role.

This is not just about our security, however. As an important NATO base and an important signals intelligence gathering station, Gibraltar contributes to the wider security of the alliance. That includes the Spanish people themselves. The intelligence gathering that we do in Gibraltar is for our wider common security, but that is being undermined by the ridiculous antics of the Spanish Government. Gibraltar is also a major stopping-off point for our nuclear submarines and those of the United States, one of our most important allies. The US understands the importance of Gibraltar as a base.

[Sir Gerald Howarth]

My right hon. Friend mentions the United States. Some people there might indeed understand the importance of Gibraltar, but does he agree that, as the hon. Member for Ilford South (Mike Gapes) pointed out, there are many in the United States who are unfortunately tempted by the antics of the Spanish Government into believing that this is somehow about colonialism? Will my right hon. Friend pay tribute to our mutual friend Luke Coffey, who is the Margaret Thatcher Fellow at the Heritage Foundation in Washington? He has done a tremendous amount to raise awareness on Capitol hill of the importance of Gibraltar not only to the United Kingdom but to NATO and the United States.

[Dr Fox]

I am extremely grateful to my hon. Friend for his intervention. Luke Coffey is not only a mutual friend of ours; he was also a special adviser in the Ministry of Defence. His work at the Heritage Foundation has been instrumental in pushing understanding of the wider issues on Capitol hill. The hon. Member for Ilford South mentioned the resolution in Congress. I shall tell the House exactly what it said. It was a bipartisan resolution, as the hon. Gentleman correctly said, and it was put forward in the House of Representatives. It stated:

“Resolved, That it is the sense of the House of Representatives that—

(1) the United States honors the contribution that Gibraltar has made to advancing United States’ security interests in the Mediterranean region since 1801 and extends its deepest appreciation and thanks to the government of Gibraltar and its citizens;

(2) the views and rights of Gibraltarians should be taken into account in any discussion on the future of Gibraltar.”

Our American allies, and our colleagues in the House of Representatives, understand that being on the right side of international law is of prime importance. We need to make that point as clearly as we possibly can.

To be frank, Spain’s behaviour is at best bullying, petulant, childish and utterly hypocritical. The clearest example in recent times has been the air safety deal, which has already been mentioned. Whatever anyone might think of the merits or demerits of the single European sky, it is intended to reduce delays for European passengers and to minimise the risk of near misses, thus improving passenger safety. There is not, as the European Union has stated, a dispute between Britain and Spain over this matter. This is blatant interference by Spain in an EU project that was progressing very nicely, and this ridiculous obstruction will, by definition, make things less safe for Spanish air passengers. I should like to congratulate the Under-Secretary of State for Transport, my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill) on showing great leadership, clarity and courage in walking out of the meeting on these issues. Absenting himself from what was clearly an Alice in Wonderland situation was the best thing to do, and he deserves great support in the House for having done it.

As has already been mentioned, it is the maritime incursions that most clearly signpost Spain’s behaviour. They have become more frequent and more dangerous. Twice in 2014, the Spanish state survey ship, the Angeles Alvariño, under the command of Spain’s economic ministry, has been responsible for dangerous and irresponsible manoeuvring in British Gibraltarian territorial waters. The Minister for Europe, my right hon. Friend the Member for Aylesbury (Mr Lidington), has said:

“The irresponsible actions and dangerous manoeuvring of this vessel were not only unlawful but also presented a significant risk to the safety of Royal Navy personnel at sea. Under no circumstances should Spanish vessels be provoking a situation that could result in serious injury or a fatality.”

These are our own armed forces, and we must be willing to speak out in the strongest possible terms about the safety of our military personnel.

These activities are part of an attempt to destabilise not only Gibraltar but the wider region. It is worth pointing out what Spain’s behaviour is like in the wider region. She continues to be in disagreement with Morocco over maritime boundaries in the strait of Gibraltar. This is because of Spain’s hold over her north African enclaves and rocks, which she uses to interpret maritime boundaries in her favour. She effectively seeks to deny Morocco any degree of control in the strait. Of course, the Spanish ownership of those north African territories undermines almost every argument she makes about Gibraltar, and demonstrates the most breathtaking hypocrisy in current European policy that I can think of.

On 5 July 2013, Spain sent a letter of official complaint to the United Nations, which the hon. Member for Ilford South mentioned. It complained that Portugal’s Savage islands were rocks. The islands lie halfway between the Canary islands and Madeira. This was yet another attempt by Spain to increase her influence in the wider area. On 17 December 2014—just a month ago—Spain submitted to the Commission on the Limits of the Continental Shelf information on the limits of the shelf beyond 200 nautical miles from the baselines from which the breadth of its territorial sea is measured in respect of the area west of the Canary islands. Again, that move by Spain is at the expense of Portugal and Morocco. There is a clear pattern here; what is happening in Gibraltar is not an isolated incident.

Gibraltar is a great success story and will continue to be one. The people of Gibraltar deserve all the support we can give them. The message to our Spanish colleagues has to be that Gibraltar is British. They need to get over it and start working in a way that is consistent with being a NATO ally and an EU member. But Spain is serious about its approach to Gibraltar. It is time our Government were equally serious about our approach to Spain, if we are serious about Gibraltar ourselves.

14:58

[Jack Lopresti (Filton and Bradley Stoke) (Con)]

It is a great pleasure, if not slightly daunting, to follow my friend and neighbour, my right hon. Friend the Member for North Somerset (Dr Fox). I hope he will forgive me if I repeat one or two of the points he eloquently made.

First, I wish to declare an interest, in that I was honoured to be elected the chairman of the all-party group on Gibraltar in September last year. Unfortunately, it was in the worst of circumstances, following the very sad and sudden death of the former Member for Heywood and Middleton, Jim Dobbin. I am proud to say that Jim was a friend of mine; one of the nicest and most decent Members of Parliament I have ever met and worked with, he is an extremely tough act to follow as chairman. I have been a member of the all-party group since 2010, in which capacity I have been invited to Gibraltar by the Gibraltar Government and visited a number of times over the past four years.

I have got to know Gibraltar very well over the past 10 years or so, and it has important links with the south-west region. In 2004, Gibraltar was able to vote in the European elections for the first time and, as a candidate in that election for the south-west region, I spent many weeks campaigning in Gibraltar that year. When the case was made that Gibraltar should be in the South West region, it was specifically on the basis of the self-evident links that tie Gibraltar with my home region— shared coastal traditions; unique and intertwined maritime heritage; mutual support for defence capability; and interest in contemporary industries, such as tourism. Those dictate that there was no other logical outcome. The south-west is seen by most as the home of the Royal Marines, and it is no coincidence—indeed it is for a proud battle honour—that the cap badge of the Royal Marines is inscribed with the word “Gibraltar”.

Gibraltar is a vital strategic asset, commanding the straits of Gibraltar and being the gateway between the Atlantic and Mediterranean. It is one of the UK’s permanent joint operating bases. It is also used for the forward mounting of operations in the Mediterranean, north Africa and the Gulf and, as my right hon. Friend said, for vital intelligence gathering. I know that our comrades and friends in the United States also see Gibraltar as a vital strategic asset to NATO and to them. Gibraltar continues to be a crucial military base, with approximately 155 UK military personnel serving in the headquarters of the British forces Gibraltar. In addition, approximately 705 Ministry of Defence UK-based and locally employed civilian personnel provide support services to defence operations, including 95 serving in the Gibraltar defence police. The Royal Gibraltar Regiment comprises 226 full-time and 166 reserve personnel, who are routinely deployed on operations and exercises with other units in the British Army. The regiment’s personnel have been deployed to Iraq and Afghanistan, and have been decorated for service in these operational theatres.

I totally agree with what the Chief Minister of Gibraltar said to the Foreign Affairs Committee about his wish to see a larger Royal Navy presence in Gibraltar. I would also argue that too little progress has been made over the past 16 years towards lifting NATO’s reservation against ships travelling between Spanish and Gibraltarian ports, and on overflying rights, which have been mentioned by a couple of my colleagues. The Government should actively seek for this position to be overturned. I thank the Foreign Affairs Committee for its substantial and thorough report.

I fully agree that, while intensifying the diplomatic pressure, the Government have made it clear to the Spanish Government that Gibraltar is self-governing, and the Gibraltarians have consistently and democratically made clear their wish to stay British. In the 2002 referendum held by Gibraltar’s Government, almost 99% voted no to shared Spanish and British sovereignty, on about an 88% turnout. As the Prime Minister pledged in his speech on Gibraltar national day in 2013,

“the British Government wholeheartedly supports your right to determine your political future. As I have said before, we will never agree to any transfer of sovereignty—or even start a process of negotiation of sovereignty—without your consent. And I wouldn’t want us ever to go down that route. Gibraltar has been British for 300 years. Let’s keep it that way.”

The Spanish Government’s recent behaviour towards Gibraltar, be it the illegal and politically motivated border delays of often several hours, the illegal incursions into Gibraltarian territorial waters—in 2013 there were 496 such incursions—the threats against bunkering companies operating in British Gibraltarian territorial waters, which are a big part of Gibraltar’s economy, and the aim of limiting Gibraltar’s aviation rights, is appalling and completely unacceptable. The fact that the Spanish ambassador to the UK has had to be summoned by the Foreign Office five times in the last couple of years is shocking—on that front, our NATO and European ally is in the same group as Syria, Iran and North Korea, which is plainly and frankly ridiculous.

Given the Spanish Government’s ongoing behaviour, it is fully understandable that Gibraltarians feel threatened, bullied and under siege. As far as the incursions by the Spanish into Gibraltarian territory are concerned, the Government should use article 259 to take Spain to the European Court if the situation does not rapidly improve, and the Government should seek a much stronger response from the European Commission on Spain’s behaviour at the border crossing. The current Government of Spain’s attitude to Gibraltar shows complete hypocrisy given their own contested and larger overseas territories—Ceuta, which has been Spanish since 1668, and Melilla, which has been Spanish since 1497—which are surrounded and disputed by Morocco.

I welcome the Government’s response to the Select Committee’s report. Gibraltar should definitely be removed from the UN’s list of non self-governing territories. Indeed not removing it rather undermines the UN’s list as Gibraltar is obviously self-governing. I understand the Government’s response to this, but urge the Foreign Secretary and the Prime Minister to continue to exert pressure. We need more high-profile ministerial visits, which would highlight our solidarity and support for the people of Gibraltar. Is it not time, as others have said, that we have another royal visit to the Rock of Gibraltar?

Gibraltar is a success story of which we can all be proud. Recent economic growth stands at 7%. Its GDP is estimated at £1.4 billion in 2013-14, which is equivalent to just over £43,000 per head. That is considerably higher than the UK as a whole, which is about £26,000 per head, and Spain, which is under £20,000 per head. The GDP of the neighbouring Spanish province of Andalucia was estimated at £14,300 per head in 2013, which may explain why 7,000 to 10,000 Spanish citizens cross the border every day to work in Gibraltar. I understand that the local authorities in Andalucia have complained about border delays to the Spanish Government.

Finally, every time I visit Gibraltar, I marvel that on a small piece of land, the Rock, there is a fantastic melting pot of cultures and religions. We have Jews, Muslims, Hindus, Catholics, Protestants and Sikhs living in harmony and peace, thriving and secure. Indeed, Gibraltar is an example to the world, and I am hugely proud that it is part of the great British family.

15:05

[Robert Neill (Bromley and Chislehurst) (Con)]

I congratulate my right hon. Friend the Member for Croydon South (Sir Richard Ottaway) and his Committee on their excellent report and on giving us the opportunity to debate this important issue today. We have had excellent speeches from everybody in this debate so far. The hon. Member for Ilford South (Mike Gapes) and I may be able to look forward to the day when West Ham United sign up a Gibraltarian professional footballer if Gibraltar’s football team continues with its international success.

On a serious note, important issues have been raised. A key issue that we need to grasp—it was mentioned by the hon. Member for Ilford South and echoed by my right hon. Friend the Member for North Somerset (Dr Fox)—is that Gibraltar has become a central plank of Spanish foreign policy. I regret to say that the defence of the British citizens of Gibraltar is not generally perceived as a central plank of the policy agenda of the Foreign and Commonwealth Office. Although I cannot disagree factually with anything in the Government’s response to the report, the tone could and legitimately should be more assertive in the defence of Gibraltar as a British territory. Sometimes there is this sense, which I know is not shared by my right hon. Friend the Minister, that, going back to the errors of 2001-02, defending Gibraltar has been seen as a bit of an add-on in the Foreign and Commonwealth Office, and we need to do more to put that right.

One area where the Government’s response is not adequate is around the potential use of article 259. It is quite clear that Spain is in breach of its obligations as a member of NATO and of the European Union. Frankly, its behaviour is not consistent with that of a friend and an ally. That is the tragedy and the reality. Although there have been difficulties in the past, it might be worth noting that previous Parti Populaire Governments in Spain, while always wrongly maintaining their claim, have not felt it necessary to escalate the tensions at the border in the way that the current Rajoy Government do. The Aznar Government adopted a rather different approach. Of course the Government are right to want to de-escalate the situation, but it takes two to de-escalate. If Spain is not prepared to do so, and if it is in breach of its international legal obligations, we should not be afraid to use the mechanisms available to us.

May I say gently that I am concerned about the undue reliance on the European Commission in dealing with these matters? I say that because, as a junior Minister, I had experience of the workings of the Commission. History shows that the European Commission cannot be regarded as having acted even-handedly towards Gibraltar in the past. Appendix B of the report sets out the background to the legal dispute, which makes it very clear that Spain should never have been allowed by the Commission to include what is called the Estrecho Oriental—territorial waters site—on the list of sites of community interest under the habitats directive. The habitats directive makes it clear that member states are allowed to designate sites within their own territories. Under international law, the European Commission should not have permitted the area designated by Spain that includes parts of Gibraltan territorial waters to be included. It breached that fundamental requirement, but was not challenged by the Commission, so it is difficult for us to have complete faith in the Commission’s even hand in this regard.

The appendix also sets out what seems to me at least to be a significant charge of negligence against the Foreign Office—even though this happened before the Government came to office, I do not mean this as a party political point—in failing to present the designation of the site of community interest at the time. The previous junior Minister at the Foreign Office said:

“The UK had no reason to and did not check the thousand or so existing or proposed Spanish sites.”

I am sorry, but we know that Spain has consistently adopted a hostile policy towards Gibraltar and that, as my right hon. Friend the Member for North Somerset has said, Spain has consistently sought to adopt an aggressive stance on territorial waters. One might think that if the FCO could have checked that—there is no reason why it could not have—it would have been an obvious check to carry out. It did not check and that is a serious error on the part of the FCO, which needs to live it down by being more robust.

I hope that when my right hon. Friend the Minister replies he will be more robust than the written text put out by the FCO on the question of the hypocrisy over Ceuta and Melilla. The argument is a strong one and the Foreign Office’s written response is too dismissive, simply saying that it is a different case. That is a nice bit of legalese, but morally it is not a different case. We should not only be saying that and putting much more pressure on Spain in that regard, but encouraging the development of practical links with Morocco, which has adopted a very constructive attitude towards Gibraltar in the past. Morocco has a better record of dealing with its recent difficulties than many other north African states and that is something practical we could do to strengthen transport and other links.

My hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti) talked about the integration and community cohesion in Gibraltarian society. He is absolutely right and I have noticed that because I, too, had the pleasure of visiting Gibraltar in the autumn and I saw precisely that cohesion and harmony, including among many of the Moroccan residents who have come to Gibraltar and stayed there. Those are links we should develop. We should also remember that Gibraltar has a significant, active and welcome Jewish population. In current times, that is valuable and something we should cherish. Part of the reason for that is that Gibraltar is not only an economic and social success but benefits from a robust common law jurisdiction. During my visit, I had the opportunity to meet senior members of the judiciary and of the police and the legal profession.

At the beginning of last month, we had the opportunity in a Westminster Hall debate to refute some of the utterly false allegations that have been put about by the Spanish Government, which have been swallowed by one or two Members of this House who ought to have known better, that Gibraltar is in any way deficient in its dealing with those issues. It was made very clear—I am delighted to say that my hon. and learned Friend the Solicitor-General said this on behalf of the Government in absolutely unequivocal terms—that Gibraltar meets the highest standards of international legal co-operation. Its police force, its judiciary and its legal profession operate to exactly the same standards as we would expect of those within the United Kingdom.

I am sure that many of us will want to congratulate the Attorney-General of Gibraltar, Ricky Rhoda, on being awarded the honour of Commander of the British Empire. He will be retiring next year after some 15 years in service. He is a distinguished lawyer and a distinguished public servant who works to exactly the same standards as we see in the UK. We need to say that robustly, because part of Spain’s attempt to undermine Gibraltar’s economic interests has been to attack its financial regime, its legal regime and key economic interests such as bunkering, the gaming industry and the aviation industry. We need to be more assertive about this.

I have been critical of the Foreign and Commonwealth Office in some respects, but this autumn I also had the opportunity of visiting our embassy in Madrid and I pay tribute to Simon Manley, the ambassador, and his team there, who do a very professional job. What is required is a clear direction from the centre that we regard Gibraltar and its interests as of the same high priority as Foreign Minister García-Margall has made them for the Spanish Government. There is political will within the House to do that and it would have support on both sides of the House. I hope the debate has given us the opportunity to set out that approach.

We want Spain as an ally and partner within the EU and NATO, but that cannot be at the expense of undermining our protection for a dynamic British overseas territory with British citizens who meet the highest of British standards in every respect. They were—dare I say—developing a thriving democracy before that happened in their larger neighbour. There is irony in the attitude adopted by members of the current Government in Madrid, who have a very short view of history. The Government and the Foreign Office should not be afraid to stand up and say that robustly.

15:15

[Martin Horwood (Cheltenham) (LD)]

I commend the Foreign Affairs Committee for its report, which includes thoughtful analysis. This is a timely debate. The Liberal Democrats have a soft spot for Gibraltar currently. We do not often refer to the outcome of the 2014 European elections, but there was a 49% swing to the Liberal Democrats in Gibraltar, which must be some kind of record for representative democracy, let alone for the Liberal Democrats. That is obviously testament to the outstanding good sense of the people of Gibraltar, but it is also a tribute to the hard work and diligence of Sir Graham Watson, Gibraltar’s Member of the European Parliament, who for many years took a close interest in Gibraltarian matters and was a strong advocate for the people of Gibraltar. I was personally sad that he narrowly missed re-election on that day and pay tribute to his hard work and diligence for all the people of south-west England, but for Gibraltar particularly in the context of the debate. That underlines that Gibraltar is part of the European Union.

Spain’s behaviour towards Gibraltar is completely inappropriate for a fellow European state. There are many bonds of friendship and affection between Britain and Gibraltar, but the current situation is not about that, and not even about keeping Gibraltar British for ever—after all, as we have emphasised, it is a self-governing territory. It is about absolute support for the right to self-determination for the people of Gibraltar. It is also about the rule of law and the proper application of the rules of the European Union. Since the current Spanish Government were elected in 2011, they seem to have been on a singularly aggressive campaign to try to undermine both those principles, which is extremely unfortunate.

In passing, I should say that the Popular party is a member of the European People’s party. It is unfortunate that the Conservative party withdrew from that grouping and thereby lost an opportunity for regular informal dialogue with Spanish leaders, which might have softened the Spanish Government’s approach. That is speculation, but unfortunately, the hard fact is that their attitude has become more and not less aggressive. They have withdrawn from the trilateral forum for dialogue.

[Sir Edward Leigh (Gainsborough) (Con)]

With respect, I do not believe that Spain would alter its view if the Conservative party were in the European People’s party.

[Martin Horwood]

The hon. Gentleman might be right and I accept what he says in good part.

The Spanish Government have withdrawn from the trilateral forum for dialogue, which provided a framework for discussion between the three Governments. They have committed to unravel agreements entered into under the trilateral forum to which Spain had signed up. The Spanish Foreign Minister, Senor Margallo, has called that putting the toothpaste back into the tube. In response, we should tell him that that is generally a messy and pointless process. He has also used slightly more aggressive language. The Select Committee refers to his comment that “play time is over” with respect to Gibraltar, which is intimidating vocabulary. It is unfortunate that it comes from a fellow European democracy.

One arrangement entered into under the forum was that Spain promised to respect the inclusion of Gibraltar airport in EU civil aviation measures, which an hon. Member mentioned. In fact, Spain’s objections have disrupted the single European sky project. “Single European sky” is a phrase calculated to send Eurosceptic Members purple with rage, but it does not mean that Brussels is trying to take over our skies. It is a perfectly sensible and safe improvement to air traffic control measures. It includes Norway and Switzerland, so it does not require membership of the European Union.

[Sir Gerald Howarth]

I am not sure whether my hon. Friend and I have agreed on anything substantial before, but I thought it important to put on the record that what he says about the single European sky is absolutely right. As a Eurosceptic and an aviator, I am fully in support of this sensible co-operative measure.

[Martin Horwood]

The European Union has hidden benefits, which come out in detailed analysis.

Spanish aggression has not finished there. There continue to be delays at the border caused by intensive Spanish controls, which the European Commission has described as disproportionate and which seem to have got worse since the Committee’s report was published. I am told that the delay to enter Spain was about five hours on 1 December, and there have been regular delays of more than an hour going in the other direction. That does not just disrupt life for Gibraltarians; it disrupts life for the 10,000 cross-frontier workers, almost all of them Spanish. We have also seen serious incursions into British Gibraltar territorial waters by Spanish paramilitary or naval vessels. They entered Gibraltar waters more than 100 times just in December 2014, some incursions being rather more serious than others.

What do we do about this? The British Government have to strike a balance between the firm response that all hon. Members are calling for today and avoiding making the situation worse. Walking out of meetings is probably a manoeuvre that has to be used with some caution. We do not want needlessly to escalate or provoke a negative response from the Spanish. Yet, as the Committee’s report rightly points out, the idea of trying to defuse and de-escalate the dispute has not produced many results. Some detailed points in the report, such as those on the delays in lodging protests about some of the incursions into territorial waters, are well made. They send a bad diplomatic signal, and it is good that they have been tightened up.

Other measures can be considered. The UK Government should commit to taking legal action if Gibraltar airport is excluded from any EU civil aviation measures. That is a clear, calm, rational, legal process to enter into, and I would be interested to hear the Government’s response. We should certainly press the EU Commission to pay more attention to the monitoring of the border between Spain and Gibraltar, which it has said is unacceptable. It should send a permanent monitoring mission to that border to see exactly what is going on. I am sure that the British Government, and perhaps the Government of Gibraltar, would be willing to assist with that logistically and financially.

Another interesting possibility, which is discussed in the Select Committee’s report, is the idea of Gibraltar joining the Schengen agreement. That might well reduce some of the obvious problems in the areas of dispute if it was practically supported by other member states. The difficulty pointed out in the report is that the acquis is carefully defined in the European treaties, so it might require treaty change, but treaty change is in the air in Europe. There may be a possibility of treaty change in the next few years, and it might be worth taking up the opportunity of treaty change to include that as a de-escalatory measure. Technically, under Liberal Democrat policy, that would represent an increase in power, albeit a small one, from Britain to Brussels, and would therefore trigger an in-out referendum, but we might be able to embrace that at the time. We need to explore these possibilities in all seriousness. Even if a treaty change might not seem practical right now, if it is possible in the near future, we should consider it.

We should certainly look at what tougher action we can take to prevent and deter incursions into Gibraltar’s territorial waters. Serious sovereignty considerations are at stake here, and, as hon. Members have pointed out, there are fears for the safety of the crews of the Royal Navy, the Royal Gibraltar police and the Gibraltar defence police and of the Spanish vessels involved in these disputes and encounters, which in some cases are proving quite dangerous. Arresting the Spanish vessels might be seen as extremely provocative, but we need to hear from the Minister a new, robust approach to the matter in future.

The people of Gibraltar have a right to self-determination. Spain as well as this country should respect that fundamental democratic right, which is enshrined in the United Nations covenant on civil and political rights. In the past, the Government have supported the right of the people of Gibraltar to determine their own future. The Select Committee supports that right, and the House should support it today.

15:25

[Andrew Rosindell (Romford) (Con)]

I am delighted that we are debating the report today. I commend my right hon. Friend the Member for Croydon South (Sir Richard Ottaway). The debate would not be taking place today had it not been for his casting vote on the Committee to make sure that we have the report. It is right that we should address the multitude of issues that Gibraltar has faced over many years.

However, it is wrong that we as a Foreign Affairs Committee debate and discuss issues relating to a British territory. The Committee deals with the middle east, Europe and our relations with the United States and the wider world. There is only limited time to deal with matters relating to overseas territories that are sovereign British territories, are ultimately governed by this House and are subject to British law. A new arrangement is needed so that overseas territories issues are fast-tracked. There should be a way of dealing with those issues much more quickly to ensure that overseas territories that rely on the British Government to make decisions for them and to help them deal with important matters such as those that we are debating today are able to bring them to a Committee of the House, without having to wait a long time for a Select Committee to happen to look into the matter.

The hon. Member for Ilford South (Mike Gapes) said that the report on Gibraltar arose from a report we were doing on consular services. Had we not done that report and had we not gone to Malaga, I do not think we would ever have gone to Gibraltar to look into this serious issue. There must in future be a better way of dealing with issues relating to overseas territories; otherwise they will be overlooked and a serious debate such as we are having today will never take place.

As is evident from the speeches that we have heard, we are all proud of the special constitutional relationship Gibraltar has with the United Kingdom as a British overseas territory. Gibraltar is British. It has been British for over 300 years and I believe it will always remain British, not because we have decided that but because the people of the Rock have chosen that destiny. They have made their choice over and over again. The sad thing is that our Foreign Office—or our Foreign and Commonwealth Office, as it should be called—has never treated Gibraltar as equally British. It has always treated it like something down the road, to be looked at. We are always worried about upsetting Madrid, always worried about what Spain will say if we do anything on Gibraltar.

Having spoken on the subject for nearly 14 years in the Chamber, I am heartily fed up with the failure of the Foreign Office to acknowledge that Gibraltar should be defended in the same way as we would defend our own constituents. It is time that the Minister and the Foreign Office changed their approach not only to Gibraltar but to British overseas territories in general.

[Mr Nigel Evans]

I am sure my hon. Friend, like me, has had the opportunity to visit Gibraltar on its national day, when everybody turns out and says that they are proud to be from Gibraltar and proud to be British. If our own Minister has not had an opportunity to do so, would it not be a good idea if he visited Gibraltar on national day and joined in the celebrations of being British and being Gibraltarian?

[Andrew Rosindell]

My hon. Friend is right. I have been privileged to go to Gibraltar national day on many occasions over the years. It is impossible to find people who are prouder of their British nationality and more determined to retain that nationality, but who feel, as we do, part of the great British family, yet continually have to justify their desire to stay British. Gibraltar is not treated as equally British, as we would expect our constituencies to be treated if ever they were under threat or if ever they were attacked by a foreign power. We need a new arrangement to give our overseas territories, particularly Gibraltar and the Falkland Islands, which have a similar problem, the right to be heard in this House, via a Select Committee or by some other means.

My hon. Friend the Member for Ribble Valley (Mr Evans) referred to Gibraltar national day. I would like to commend our Prime Minister, who the year before last became the first to send a televised message for national day, which was shown in Casemates square in Gibraltar. However, it is time that he, or even the Minister, visited Gibraltar for national day. Furthermore, it is time that there was a royal visit to Gibraltar, as my hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti) said. It is more than 60 years since Her Majesty the Queen visited Gibraltar. There has not been a visit by the Queen of Gibraltar in over 60 years. I think that is completely unacceptable. I have raised the matter with the Minister many times but have never got an answer from anyone in the Government.

I am delighted to hear that the Queen is to make a state visit to Germany later this year. Gibraltar is not much further away, and I have no doubt that the Government of Gibraltar would extend a very warm invitation to Her Majesty, so I ask our Government, in the last few months of this Parliament, to clear any block there might be to a royal visit. Please allow the Queen of Gibraltar the opportunity to visit her people on the Rock. There could be no clearer signal that we are utterly committed to Gibraltar and determined to support it and give it the full recognition it deserves as a loyal territory of the Crown.

So much has been said today about the problems with the borders, the maritime disputes, the European Union’s failure properly to address the issues we are debating and the negligence of the Foreign Office. I am pleased that Members of Parliament now understand the situation better than they did 14 years ago. When I was first elected, many barely even knew what Gibraltar was. Now Members on both sides of the House understand that a British overseas territory is British and that we have a duty to look after and defend its people. Dreadful mistakes were made in 2001 and 2002, when the previous Government attempted to impose a joint sovereignty deal with Madrid. I do not think that any political party in this country would make such a horrendous mistake again. That is a good thing, because it means a lesson has been learnt.

However, we cannot move forward unless the Foreign and Commonwealth Office changes its approach root and branch. We must stop appeasing Madrid and being afraid of upsetting the Spanish Government in case they might not co-operate with us on the many areas that the hon. Member for Ilford South referred to. We want to co-operate, but there cannot be good relations with the kingdom of Spain as long as it bullies British subjects living close to its land. We must give Spain the message loud and clear that its attitude to Gibraltar is unacceptable to the British Parliament and to the British people. Only the Foreign Office has the authority to make those kinds of decisions in order to show Spain that its actions have consequences. For as long as Spain continues to behave in this fashion, there will be consequences. Relations between the United Kingdom and Spain will never be warm as long as it continues to bully the people of the Rock. We need a complete shake-up in Government policy. We require a more robust stance in dealing with the issues to which I and other hon. Members have referred today.

There is one other thing that we must do. It is, in my view, completely unacceptable that the only countries and territories within the Commonwealth that are continually denied the right to lay a wreath on Remembrance Sunday are the British overseas territories. It is inexcusable that no one from Gibraltar, the Falkland Islands or any other British territory is invited to lay a wreath. We know what the argument is going to be—that the Foreign Secretary does it on behalf of the overseas territories. Well, I have news for the Minister: the Foreign Secretary was not elected by the citizens of the overseas territories; he is the British Foreign Secretary elected by the British people. The people of Gibraltar have not chosen the Foreign Secretary to lay a wreath on their behalf. Gibraltar has sent soldiers to fight and die for king, queen and country over hundreds of years, and so have the other overseas territories. If they send soldiers to fight, they should be allowed to lay a wreath on behalf of those who have lost their lives. It is inexcusable. I have heard every excuse about the palace objecting, the Foreign Secretary not having a role any more, and so on. It is all nonsense; we all know the truth. It is time that the overseas territories were given this right.

I have here a letter to the Prime Minister from the chairman of the United Kingdom Overseas Territories Association, Albert Poggio GMH OBE, who, as we all know, is the excellent head of the Gibraltar Government office here in London. Let me quote some of his words:

“Countless numbers of persons from Gibraltar and the other Overseas Territories made the supreme sacrifice in the service of the Crown and the United Kingdom in all the Wars of the 20th Century, as well as in the more recent conflicts of the 21st Century. For the Representatives of their Governments to be excluded from the Remembrance Service is, to be frank, offensive and perverse…We believe that it is now time that each of the Overseas Territories had a wreath laid by each of the Territories’ UK Representatives, on the same basis and immediately following those wreaths laid by the Commonwealth High Commissioners.”

Who can argue with that point of view?

We must raise this issue and bring it to a head before the general election. I call on the Prime Minister to intervene personally and once and for all, for ever more, give the British overseas territories the right to lay a wreath on Remembrance Sunday, just as we have this year allowed the Irish Government—the Irish ambassador —to lay a wreath in recognition of the sacrifices that Irish citizens made in the first world war and in other conflicts. This matter is overdue for resolution. I urge the Minister to take it away and resolve it before Parliament is dissolved at the end of March.

We could speak about this issue for far longer than we have time for in this debate. I feel deeply passionate about Gibraltar and wholeheartedly endorse all the comments made by my right hon. and hon. Friends. The time has come to stop appeasing Madrid, to stop pussy-footing over this issue, and to show the people of Gibraltar that we are truly on their side. People have died throughout the centuries to defend British freedom, British democracy and British territories. By being so weak over Gibraltar, as we are at the moment, we are betraying all those people who have defended British freedom over all those centuries. It is time for this Government to show real action and to defend Gibraltar as it deserves to be defended: as a British territory—a territory of the Crown—that should always be British. We have a duty to stand by it.

15:38

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

I speak as a member of the all-party Gibraltar group. I add my congratulations to my right hon. Friend the Member for Croydon South (Sir Richard Ottaway), the Chairman of the Foreign Affairs Committee, on his excellent report.

A recurring message throughout the report is the sheer frustration of the Government, the Foreign Affairs Committee, the all-party group, and, most of all, Gibraltar itself, at the total failure of that toothless tiger, the EU Commission, to take decisive action to stop Spain’s well-documented illegal actions against Gibraltar.

Anyone who has visited Gibraltar for the joyous celebration on September 10, Gibraltar day, as members of the all-party group have, can be in no doubt about its loyalty to the Queen and to the United Kingdom. Gibraltar is a true friend, and it deserves our full and robust support.

Gratuitous delays of vehicles and pedestrians at the border between Gibraltar and Spain cause unnecessary inconvenience to Spanish people working in Gibraltar, as well as to Gibraltarians. In some cases, delays have lasted as long as seven hours in hot weather, and Guardia Civil officers have behaved aggressively towards local citizens and Spanish commuters. The delays are disproportionate, politically motivated and illegal. The fact that they are switched on and off at will demonstrates that they are simply used as a coercive tool against Gibraltar. Will my right hon. Friend say what prospect there is of a stronger response by the European Commission in more closely monitoring Spain’s activities to stop its exerting such pressure on Gibraltar?

The number of unjustifiable, illegal incursions into Gibraltar’s territorial waters has increased dramatically since 2012. The behaviour of Spanish state vessels is often dangerous, and there has been at least one collision with a Royal Gibraltar Police vessel. These incursions are a violation of sovereignty. I was pleased to read that the Government now send one note verbale for every incursion, and that all protests are made within seven days, but the incursions still continue. What naval or police options might be used in a more robust response to bring these incursions to an end? We must be ready to take whatever action is necessary to defend the sovereignty of Gibraltar.

The reason for the harassment is partly the legacy of the regrettable decision of the Labour Government in 2001-02 to allow joint sovereignty talks that raised expectations on the Spanish side. The guarantee of self-determination should never be abandoned again.

If we are to make progress, tripartite talks need to be resumed, but restraint on the part of the UK Government has not produced the desired result so far. The pressure needs to be intensified without damaging the overall relationship between Spain and the UK, which could be detrimental to Gibraltar in the long run.

Gibraltar is prosperous and entrepreneurial. There must be many other opportunities for mutual trade and business arrangements between Gibraltar and Spain that would benefit both in the area around the border. If Spain were to transfer its efforts from over-zealous border checks to commercial activity, the Spanish economy would surely improve along with relations between Spain and Gibraltar and the UK.

Does the Minister have any plans to visit Gibraltar this year—he will know that this Government’s demonstrations of support are appreciated greatly—and when better to visit than on 10 September? That would show resolve in responding to harassment by the Spanish Government, and reiterate our firm position on sovereignty: Gibraltar will remain British for as long as that is the wish of the people of Gibraltar.

15:40

[Bob Stewart (Beckenham) (Con)]

I rise to speak as a member of the all-party group on Gibraltar, as someone who spent many days and weeks in Gibraltar wearing uniform and as someone who loves Gibraltar and feels totally at home in the place. I therefore want to talk about the defence of Gibraltar.

As has been mentioned, the biggest military unit in Gibraltar is the Royal Gibraltar Regiment, which has both reservist and regular soldiers. The regiment’s primary duty is the defence of the Rock. Within the Rock are 34 miles of tunnels—twice the length of the entire road system around the Rock—which were dug with picks by British sappers. I say that because the Royal Gibraltar Regiment contains the British Army’s primary expertise on fighting in tunnels. In addition, it now sends its officers, non-commissioned officers and soldiers abroad with British military advisory training teams to train other nations. It is an integral part of our Army.

Morocco has already been mentioned, and since 2000 the Royal Gibraltar Regiment has been training the Moroccan army—there are quite close links—and it goes to Morocco every year as part of its overseas exercise. The chair of the all-party Gibraltar group, my hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti), who has briefly absented himself from the Chamber, mentioned the gallantry of soldiers from the Rock. Indeed, the last commanding officer of the Royal Gibraltar Regiment was awarded the military cross, the third highest decoration for gallantry in this country. Those people are very much part of our country.

The Royal Navy has a regular presence in Gibraltar with 22 officers and ratings. It has two 16-metre patrol launches: HMS Scimitar and its sister ship HMS Sabre. It also has three rigid inflatables—a very small manning level for somewhere as important as Gibraltar. The squadron spends almost all its time maintaining the security and integrity of British Gibraltan territorial waters, which is not easy. In December 2014, the Royal Gibraltar Police recorded 108 incursions into British Gibraltan territorial waters, and that small force is terribly overworked. In addition, its tiny vessels are far too often dwarfed by Spanish navy ships, and in my view our naval presence in Gibraltar is too small to deal with the continuing Spanish provocation. The RAF also maintains a small presence on Gibraltar with fewer than 10 personnel. No operational RAF aircraft are permanently based there, but the airfield, as has been noted, is always maintained as a forward operating base for British military aircraft, and it has a unique position at the western end of the Mediterranean.

I believe it is time that our Minister increased the military presence in Gibraltar—[Interruption.] He turned back when I said that. There are three reasons for that. First, as Members seem to have demonstrated today, despite our repeated diplomatic protests about the bullying on the frontier and naval incursions into British Gibraltan territorial waters, our NATO and European Union ally, Spain, does absolutely nothing to stop them. Of course no one wants confrontation with Spain—far from it—but that is effectively what the Spanish continue to do to Gibraltar. Fouling up the frontier and repeatedly sending Guardia Civil and Spanish naval vessels into British Gibraltan territorial waters is hardly the act of a close ally, and it is time that we gave a concrete demonstration about our irritation with the situation. Quiet diplomacy and reason have had no impact whatsoever over the years.

Secondly, vacant military facilities in Gibraltar could easily be revitalised with minor modifications, and there are good training facilities on and around the Rock—I used them myself when I was in the Army. For instance, it has a small military training area and ranges, as well as those miles of unused tunnels, which are great fun on exercise. I am sure that such a move would be very popular on the Rock. With its budget surplus, some of the additional costs might be paid by the Government of Gibraltar.

Regular troops from the UK already replace the Royal Gibraltar Regiment when it deploys on annual exercise to Morocco. Why not put a UK-based company there, maybe on rotation from a UK-based battalion? There is space and it could easily fit under command of the Royal Gibraltar Regiment, whose commander is just as qualified to command an infantry battalion as I was in my day.

I have been on HMS Scimitar, one of the two little and very old patrol vessels and, even to a landlubber like me, both Scimitar and Sabre are well past their sell-by dates. In face-offs with much larger Spanish vessels, those small Royal Navy vessels look plain daft and—as I know from my military experience—in a deterrent situation, looks matter. Although the Royal Navy does not have many ships left, one of them could quite easily be sent to Gibraltar and based there. I do not suggest that the Royal Air Force needs to, or indeed should, permanently position aircraft on the Rock, but the frequency of training visits could be increased.

In my view, deliberate breaching of sovereign waters by military vessels can be viewed as an act of war. Spain will not like us reinforcing our military presence on the Rock, but so what? They have tried to coerce Gibraltarians for far too long. In response, our laid-back, solely diplomatic responses have always been weak and remain so. I am sorry to say that the Foreign Office is far too wet on this matter. It is clear to everyone that periodic frontier problems and sea incursions are repeatedly organised by the Spanish Government on a systematic basis. That situation is iniquitous and I call upon our Government’s Foreign Office Ministers to get serious.

We should show that we will not budge in our views on Gibraltar and that we mean business. One way to do that is by putting more military power on Gibraltar. All this aggravation from Spain is totally unnecessary and undemocratic, and we do not like it. In short, Spain should get its hands off the Rock.

15:52

[Sir Edward Leigh (Gainsborough) (Con)]

I am not sure that I can follow the powerful rhetoric from my hon. Friend the Member for Beckenham (Bob Stewart), but I want to start by apologising to you, Madam Deputy Speaker. I had to chair Westminster Hall until 3 pm, so I apologise for my late arrival.

I also want to apologise to the people of Gibraltar. Although I have been a Member of Parliament for nearly 32 years, it was only last September that I went there—although I have always wanted to visit—as a guest of the Gibraltar Government at their national day celebrations. I declare that interest.

I am very interested in naval history so I have always taken a close interest in the history of Gibraltar. We should always remember that, but for Gibraltar, we would have lost the second world war, with all that would have pertained. We should never forget the courage of the people of Gibraltar over many years and the contribution that they have made to the defence and security of our country. That needs saying again and again.

We should also pay tribute to the courage of the Gibraltar people in the very difficult circumstances that they have faced over the last 60 years, especially when the border was closed entirely. It is very moving to talk to people from Gibraltar about those times, and their resolute determination to resist a completely illegal act.

This was the first time I went to Gibraltar. I pay tribute to my hon. Friends sitting around me who have spent years fighting the good fight. But for them, we would be in a much worse position. I urge all Members of Parliament to go to Gibraltar and, in particular, to stand in Casemates square on national day. It is a moving experience. We hear so much criticism from so many people of our country. To be in the square with 10,000 or 12,000 people who love our country, and are absolutely determined to remain a part of it, is a most moving experience.

I was speaking only on Tuesday in a debate on people who misuse their British passports to go on jihad and then try to come back. I said that there was deep anger among British people about people who do not understand our view that being British is about a love of our history and our country, and, above all, tolerance of all people. The thing about Gibraltar is that it is a wonderfully tolerant place. Over the centuries, it has been a superb melting pot for people of Jewish descent and Christians of all denominations. During the dark years of Spanish fascism, it was a beacon of light and democracy. I do not think that the people of Spain should forget that. I urge colleagues to go to Gibraltar. It is a most moving sight.

A lot of criticism has been made of both Spain and the Foreign Office. As I have been sitting here, I have been trying to understand their positions. I can quite understand that certain people in the Foreign Office take the view that Gibraltar is a very small place and Spain is a very important trading partner that we do not want to antagonise unduly. I suspect that the Foreign Office Minister accepts the argument that when one is dealing with a bully, trying to appease the bully simply makes things worse. The way to resolve this issue in the long term is for the Government, and not just us Back Benchers, to be absolutely robust. The Government say that this is a matter of self-determination, but they should mean it and prove it with their actions. When the previous Government proposed joint sovereignty, as I understand it 99% of people wanted to remain British. This principle is a rock on which we stand. There is no other principle at stake here apart from that of self-determination. I commend the words of the right hon. Member for East Renfrewshire (Mr Murphy), who has now risen very high to lead the Labour party in Scotland. When he was a Minister of the Crown he said:

“the UK Government will never—‘never’ is a seldom-used word in politics—enter into an agreement on sovereignty without the agreement of the Government of Gibraltar and their people. In fact, we will never even enter into a process without that agreement.”

We want to be like a rock in our determination—both Government and Members—to say to Spain that, whatever the provocation, it will not do any good. It could close the border entirely. It has tried it before. It could make the life of its workers coming into Gibraltar a misery. That is not going to work either. Whatever it does or says, and whatever aggravation it causes us in the Council of Ministers, we will remain like a rock in defending the right of people to remain British if they want to do so. They have after all been British for 300 years—a very long time.

We want Ministers like my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill). He made a forthright stand and was prepared to walk out of the Council of Ministers and bring the process to an end. That is the sort of language that is understood. I cannot emphasise this point enough: Spain will only be encouraged by weakness and a belief that, although there are Back Benchers around me who are very strong on this issue, there are other people in the Foreign Office who say that we should make some concessions. I hope, therefore, that when the Minister stands up, he will be robust on this point—as robust as all my colleagues who have spoken.

I have tried to understand the position of the Foreign Office. Now I will try to understand Spain’s position. I can understand that many people in Spain no doubt think it wrong that, as they see it, part of their mainland is British, but these things happen in other parts of the world. Reference has already been made to the Spanish enclaves in north Africa, but leaving that aside, would I really be tremendously agitated, would I lie awake at night, if, under the treaty of Utrecht in 1704, Portland bill had been given to Spain and there were only Spanish people living there and they wanted to remain Spanish? Would I not say to myself, “Well, it’s a long time ago. It’s a part of history. These people have a right to self-determination”? Would I not say to these people, “Well, I’m never going to achieve anything by trying to bully you by closing the border or making life intolerable”? No, I would try to love bomb them, I would try to draw them in, and that is what Spain should do.

I hesitate to give advice to Spain—who am I to give advice to Spain?—but I presume that someone in the Spanish embassy will read our debate and report back to the Government. If, over the years, Spain had kept the border entirely open and tried to encourage as much trade and movement as possible, the whole mood in Gibraltar would be different. I am not saying its people would have wanted to give up their British sovereignty, but look at Monaco! It is a city sate. Nobody in France cares that it is independent. One can drive to and fro between Monaco and the south of France. It is bustling with prosperity. All the regions around it are happy and bustling with prosperity. Instead of La Linea and other places in southern Spain being dead ends, with high unemployment, misery and all the rest of it, it could be an economic boom area. So I hope that someone from the Spanish embassy reads this debate. We do not want to be antagonistic to Spain; we want good relations. We want this to be an opportunity for—dare I use this word?—friendship, for moving things forward and for opening borders and exchanging ideas and views. If Spain were to do that, the whole situation could be transformed.

This debate has been a useful one, but before I sit down, I want to say one last thing. All the nations of Europe, particularly Germany—as my hon. Friend the Member for Romford (Andrew Rosindell) said, the Queen is going on a state visit there—proclaim the principle in the EU of the free movement of workers. It is embedded in the EU. It is why we are in the EU. Of course, Spain could knock this ball back into our court, but let us use this argument against it. A nation cannot interfere with the free movement of workers who want to work in Gibraltar. That is the cardinal spirit of the EU, and the Foreign Office has to be absolutely robust with the Commission on this. It is an appalling abuse.

Imagine if we were doing this to Spanish people trying to arrive in Heathrow or tourists arriving at Dover. Imagine the outrage if the Foreign Office retaliated in that way—I am not suggesting it should enflame these matters by doing so. It would be considered an outrage. What is happening on this border, in modern-day Europe, when we are supposed to be part of a European Union and trying to improve relations with each other and improve cross-border trade and movement and all the rest of it, is a throwback to the dark, bad world of the cold war and the 1950s and 1960s. We have to make it clear to the Commission and the Spanish Government that, in the view of the House of Commons, that is simply not acceptable.

16:04

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

I congratulate the Chairman of the Foreign Affairs Committee, the right hon. Member for Croydon South (Sir Richard Ottaway), and the rest of the Committee on producing the report that has given rise to this debate, and I thank all Members who have contributed, be they members of the Select Committee or the all-party group on Gibraltar or simply interested in the issue. The Select Committee report really concentrates on three areas: issues at the border; issues affecting British-Gibraltan territorial waters; and the international aspects.

Let me deal with the overall context of this debate, which as hon. Members have mentioned, should be—and could be even more—a good relationship between Britain and Spain. We are fellow members of the EU, fellow members of NATO and allies in many areas. It is therefore tragic that this issue has been rising in importance and has become a real cause of tension.

It makes no sense for the lives of the people of Gibraltar to be deliberately made more difficult as a result of a campaign by Spain to do so. That is wrong in itself and it undermines what is otherwise a strong and long-standing relationship between the UK and Spain.

The hon. Member for Gainsborough (Sir Edward Leigh) referred to comments made by my right hon. Friend the Member for East Renfrewshire (Mr Murphy) when he was a Minister. At that time, my right hon. Friend made it clear that this was a matter not of empire, but of popular will. He said that the constitutional status of Gibraltar would not be changed without the consent of the people of Gibraltar, and that the UK Government would not enter into discussions about that issue without the consent of those people. That was the position then, and it remains the position of my party now. This is the cornerstone of British policy on this issue: it is a position shared by the current Government and it is an important issue in common between us.

Once that is understood by all concerned, there is room for dialogue and co-operation on a number of issues. That was the kind of policy that was in place under the Cordoba agreement and, with good will, it could be resurrected and put in place again. It has to be made clear, however, that it is not the fault of the United Kingdom that the Cordoba agreement has become less effective. That is the result of decisions taken by Spain to adopt a harder line against Gibraltar.

My first question for the Minister—I would like him to address it in his summing up—is where do things stand with the so-called ad hoc discussions between Britain, Gibraltar and Spain? Has there been any indication from the Spanish Government that they are willing to resume these discussions, and do they accept Gibraltar’s place as a full participant in them?

The Select Committee report rightly and strongly criticises the unacceptable and deliberately organised delays at the border crossing, which cause major inconvenience to Gibraltarians, Spanish workers and the huge number of tourists who visit Gibraltar each year. As we have heard, these are causing delays of five, six or sometimes seven hours for cars at the crossing and 90 minutes or more for people crossing on foot. These border issues have had a direct impact on Gibraltar’s tourism trade and constitute an unwarranted and wholly disproportionate barrier to free movement between Gibraltar and Spain.

Let me pick up on another point made by the hon. Member for Gainsborough. Free movement, as we have heard in our broader debates in this House and this country over recent months, is held up as a cardinal principle of membership of the European Union. For a time, it seemed as though the UK Government wanted to compromise the principle of free movement. Many thought that was the implication when the Prime Minister said in his conference speech, “I will sort this issue.” However, his recent speech on EU migration, made just before Christmas, was widely seen as a retreat from that position. It was seen as dealing with issues relating to benefits, and as not compromising the United Kingdom’s attitude to the principle of free movement. If there was any doubt about that position, only yesterday, during his joint press conference with the German Chancellor, the Prime Minister attested to his own belief in, and support for, the principle of free movement. I am sure that that belief and support have been widely welcomed by his colleagues on the Back Benches.

My point to the Minister is that, now that the position has been made clear, he and his colleagues are in a stronger position to make it clear to the Spanish that it is wrong for them to interfere with the free movement of their own citizens who wish to work in Gibraltar, and the ability of the people of Gibraltar to travel freely back and forth across the border.

[Martin Horwood]

The right hon. Gentleman is making a very interesting and significant point. I can certainly say that the Liberal Democrat side of the coalition fully supports the free movement of peoples. It is a very important principle, which will benefit the people of Gibraltar in due course.

[Mr McFadden]

I thank the hon. Gentleman for his intervention. A serious aspect of this issue is that when we question such principles, we may sometimes do so without thinking about how they are used by our own citizens who, in possession of a British passport, can move freely—and live and work freely—throughout the European Union, as many do.

Given the principle of free movement, the Government are absolutely within their rights to complain to the European Commission about what is happening on the Gibraltar-Spain border. They have done so before; may I ask the Minister whether they will do so again, stressing the issue of the recent delays and the impact that they are having on the economy and citizens of Gibraltar? Will the Government also call for Commission visits to be made with little or no notice? As we have heard during the debate, the inconveniences and delays can be turned on and off. Obviously, if lengthy notice is given of a visit, it will be easy to step down the pressure and ensure that the inspectors do not see things as they sometimes are. It matters how such visits are conducted, and when they are conducted.

Paragraph 84 of the report suggests that the Government should consider using article 259 of the Lisbon treaty to take Spain to the European Court. May I ask the Minister for his response to that suggestion, which was also mentioned today by the right hon. Member for Croydon South?

The report gives detailed information about the sharply increased number of transgressions of British- Gibraltan territorial waters, which sometimes occur as often as 50 or 60 times a month. Let us be clear about the fact that this is not about free passage; it is about state-owned vessels violating sovereignty, and trying to erode the status and integrity of Gibraltar's territorial waters.

The Committee drew attention to the Government’s delays in lodging protests against those transgressions, fearing that such delays lessened the impact of our complaints and gave the impression that we were merely going through the motions. In their response to the report, the Government said that practice had changed, and that there was now a weekly submission to the Spanish Government. That is to be welcomed on one level, but the fact that the submission must be weekly prompts another question: what further means of reducing the number of transgressions, and thus the need for weekly submissions, have the Government considered?

I am sure the whole House agrees that the Royal Navy’s Gibraltar Squadron and the Royal Gibraltar Police do a difficult and dangerous job, showing admirable restraint when faced with repeated and sometimes dangerous provocation on the seas. The report also welcomes the use of Gibraltar as a staging post for larger Royal Navy vessels.

May I ask the Minister to address the points made by the hon. Member for Beckenham (Bob Stewart), whose military experience is always valuable in these debates? Is it still Ministers’ view that the squadron there has the ships, equipment and manpower to carry out the tasks assigned to it, or is there a need to reassess this in the way that the hon. Gentleman suggested?

The international aspects of this issue have also been mentioned in this debate. I am sure that the Minister agrees that it is unacceptable to use issues like EU aviation policy or the single European sky policy to put further pressure on Gibraltar. Why should not the airport in Gibraltar and the people travelling there have the same freedom and rights as people elsewhere in the EU?

My hon. Friend the Member for Ilford South (Mike Gapes) mentioned the resolution in Congress recognising Gibraltar’s right to self-determination. I am sure that the attempts by the Spanish Government, in the letter from the ambassador to Congress, to link their support for the coalition against ISIS with the issue of Gibraltarian self-determination would be rejected by all of us. As democratic countries defending pluralism, there should be no linkage between the battle against the ideology and practices of ISIS and self-determination for the people of Gibraltar.

[Mike Gapes]

Is it not also significant that Spain, as in the Madrid bombings of more than a decade ago, has suffered appalling acts of internationally organised terrorism, and it is deplorable that the current Spanish Government have such a short memory of the solidarity that was expressed by the whole world when Spain was attacked?

[Mr McFadden]

My hon. Friend makes a strong point. We have seen a great deal of solidarity with the people of France in the last 24 hours against the appalling acts of yesterday. When these things happen, and when democracies are faced with the ideology of those who would kill and attack pluralism and free speech, we do not seek a chain of other issues to connect to them. We do it because we defend our own values, which are under attack from the ideology that led to the bombings in Madrid, which has led to action in this country and drove those responsible for the terrible events in Paris yesterday. On these international issues, will the Minister say what efforts the UK Government are making to make it clear to the international community that Gibraltar’s status must not be used in this way?

[Sir Richard Ottaway]

The right hon. Gentleman has set out a very sensible, rational analysis of the situation, and analysed our report very accurately. However, does he agree with the central conclusion that a tougher line needs to be taken with Madrid?

[Mr McFadden]

The right hon. Gentleman makes a strong point. Through the Cordoba agreement, we had good co-operation on a number of day-to-day issues to make the relationship between Gibraltar and Spain work. It is not down to any change in the UK’s position that that co-operation has been eroded. We need to take the action necessary to get back to that situation.

A few years ago, we had constructive dialogue, and my message today is that we cannot continue with the current situation. The report says that the people of Gibraltar feel “under siege” by the repeated border delays and transgressions of territorial waters. This has not happened by accident, or because of a change in policy by us. It has happened because of a change in policy by Spain. It is hurting Gibraltar, but it is also hurting the people of Spain. It is in the interests of the United Kingdom, of Gibraltar and of Spain to try to get back to the kind of co-operation that we had a few years ago. With good will, that can happen.

I shall end where I began, by saying that we two countries are allies with much in common. We in the UK do not seek to raise tensions with Spain, and that is why restraint has been shown, but it cannot be right for such undue pressure to continue to be placed on Gibraltar. We must get back to the situation that we had a few years ago, because that is in everyone’s interests. The cornerstone of our policy is the wishes of the people of Gibraltar, and that cornerstone remains firmly in place.

16:20

[The Minister for Europe (Mr David Lidington)]

I thank my right hon. Friend the Member for Croydon South (Sir Richard Ottaway) and the hon. Member for Ilford South (Mike Gapes) for securing this opportunity to debate Gibraltar this afternoon. Before I proceed with my speech, I should like to observe that it seems odd for us to be debating Gibraltar without the presence of the late Jim Dobbin. My hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti) rightly paid tribute to Jim, who was chairman of the all-party parliamentary group on Gibraltar until his death last year. He was a great supporter of Gibraltar and its people, and he is greatly missed by his friends and colleagues on both sides of the House.

I want to set out the Government’s policy towards Spain on Gibraltar, the developments that have taken place and the progress that has been made since the Select Committee’s report and the Government’s response were produced last year. I shall start by making it clear that the entire Government will continue to be steadfast in our support for Gibraltar and for the sovereignty of the United Kingdom in Gibraltar. The United Kingdom has given a firm commitment that we will never enter into arrangements under which the people of Gibraltar would pass under the sovereignty of another state against their wishes. Furthermore, we have given an assurance that we would not even enter into a process of sovereignty negotiations with which Gibraltar was not content. The wishes of the people of Gibraltar to remain British must be respected, as my hon. Friend the Member for Gainsborough (Sir Edward Leigh) and others have pointed out. This is a matter of self-determination; at root, it is a matter of democracy at work, and that democratic will must be respected.

As the hon. Member for Ilford South said, there are important common interests between the United Kingdom and the kingdom of Spain. There are strategically significant issues on which we need to work together, ranging from working against terrorism and against the trafficking of narcotics and people to negotiations on international trade, which would enable the peoples of both countries to prosper, as well as on climate change and on innovative technology. It is striking, for example, that the United Kingdom and Spain have been on the same side in European Union discussions on genetically modified technology. That makes it even more a matter of regret that the short-sighted and, frankly, outmoded and anti-democratic attitude that the Spanish Government are taking towards Gibraltar has prevented that bilateral UK-Spain relationship from developing to the extent, or with the warmth, that we would have preferred.

We must be clear that our primary responsibility in respect of Gibraltar is to uphold the security of the territory and defend its international interests. I take that responsibility seriously, as does every Minister in this Government, but when considering what action to take, we must decide what action is most likely to deliver positive results. As my hon. Friend the Member for Hornchurch and Upminster (Dame Angela Watkinson) said, we are right to be firm in the defence of British sovereignty and the interests of the people of Gibraltar, but we must seek to do so in a way that does not end up inadvertently making their position worse. The mere facts of geography do put Spain in a position to exercise pressure, particularly at the borders.

As part of that work, the Government have sought, under successive Governments in the territory, to work increasingly closely with Her Majesty’s Government of Gibraltar. It is fair to say that this Chief Minister and his predecessor always continue to be firm in standing up for the interests of Gibraltar, but it is also accurate to say that there is a closer relationship now. There is a better habit of working together between the two Governments and of respecting the rules of the 2006 constitution than there has been for many years.

Let me move on to deal with some issues that have been at the centre of today’s debate, starting with EU legislation on aviation. Our starting point is that Gibraltar is, in respect of aviation laws, a part of the European Union. The treaties of the European Union apply to the territory of Gibraltar, except where certain parts are expressly disapplied. Article 355 of the treaty on the functioning of the European Union states clearly, in paragraph 3:

“The provisions of the Treaties shall apply to the European territories for whose external relations a Member State is responsible.”

Therefore, in respect of aviation and other important political questions, Gibraltar falls within the European Union. We are therefore more than disappointed—we are angry—that Spain is seeking to secure the suspension of Gibraltar from EU aviation dossiers. We have been very clear with the Commission and with other member state Governments throughout that such attempts by Spain to secure Gibraltar’s suspension are completely unacceptable, and would be illegal and, in our view, a breach of the European Union treaties.

The irony of all this is that several EU legislative measures now in draft would be of particular value to not only the UK aviation industry, but Europe’s aviation industry more generally. The British Air Transport Association estimates that the failure to make progress with draft legislation on air passenger rights is likely to cost British airlines up to £50 million a year—a figure that will be translated into higher air fares for passengers. The European Commission estimates that the single European sky initiative overall may provide up to €5 billion in greater efficiencies for the European aviation sector. Yet legislation in both policy areas—legislation that would bring practical benefits to citizens throughout Europe—is being stalled by Spain’s insistence on seeking to exclude Gibraltar from its application.

Let me deal with the debate at the Transport Council last year and what has happened since. Gibraltar continues to be included in existing single European sky II legislation, as required under the treaties. The Council has not reached full agreement on the replacement SES II measure, and therefore has no coherent position with which to take this issue to trilogue with the European Parliament. Following the Transport Council, which has been mentioned several times in this debate, the Government have engaged at a senior level with both the Italian and now the Latvian presidencies of the European Union and with the European Commission.

We have secured a clear assurance that this legislation will not be taken forward in a form that is unacceptable to us. I was asked whether, in the event of a measure being passed by qualified majority voting that excluded Gibraltar, we would take legal action. I prefer not to speculate too far on legal action in hypothetical circumstances because our objective is that treaties should be respected, and we believe that the Commission, with a duty to uphold the treaties, and other member state Governments who also have such an interest would support us in such an objective. I think that I have made it clear that we would regard the exclusion of Gibraltar as a breach of the article that I mentioned earlier in my remarks.

On unlawful incursions, we have continued to uphold British sovereignty over British Gibraltan territorial waters with the very professional work of the Royal Navy in Gibraltar to challenge incursions as they happen and by issuing swift diplomatic protests. Where incursions have been particularly serious, such as attempts to exercise jurisdiction in British Gibraltan waters by Spanish survey vessels, we have continued to take particularly strong diplomatic and political action. As was said earlier in the debate, the number of times we have summoned the Spanish ambassador is unprecedented for an EU NATO partner. The latest statistics I saw said that we had summoned the Spanish ambassador now more than the ambassador of any other country bar Assad’s Syria.

[Sir Gerald Howarth]

I am sure that we are all mightily impressed that the Spanish ambassador has been summoned to be reprimanded by my right hon. Friend, but what notice does Spain take? What is the result of his protests? What impact do they have?

[Mr Lidington]

After one summons in respect of an incursion by a survey vessel, that survey vessel’s time in Gibraltar waters was curtailed and the immediate crisis was ended. The various strong actions that we took—the Spanish Government know that a public summons is a very exceptional action for the UK Government to take—did contribute to making that difference. At that time, there were also direct political representations at ministerial and top official level to Madrid. It is not the case that a summons to an ambassador or a protest by note verbale are necessarily the only actions that we take. Such actions are often accompanied by political representations on the appropriate senior channels.

The number of unlawful incursions dropped from 496 in 2013 to 387 last year—about a 22% reduction—but that still leaves us with an unacceptably high number of incursions. We will continue to make it clear to Spain that, as an EU partner and a NATO ally, the escalation of tensions is bound to impose a cost on the bilateral relationship. The normal practice is that Spanish state vessels are challenged by the Royal Navy, and we follow that up with diplomatic and political protests. It is important to make it clear that, although incursions are a violation of sovereignty, they do not threaten or weaken sovereignty in the sense of undermining the strength of our legal case for sovereignty over those waters. That is what made the survey vessel incursions particularly serious. By purporting to exercise jurisdiction by going about survey work in British Gibraltan territorial waters, those survey vessels were acting in a way which, if unchallenged, could be interpreted as our acknowledging a loss or a diminution of our sovereignty over those waters. That accounts for the difference of the calibration of our response to those incursions compared with some of the others by, for example, Guardia Civil vessels.

I was asked about our assessment of naval resources. The Government’s assessment is that the assets, structure and procedures of the Royal Navy Gibraltar Squadron are commensurate with its tasking, including challenging unlawful maritime incursions within British Gibraltan territorial waters. We regularly assess the naval mission and the assets and people required to deliver it to ensure that its responsibilities can be carried out effectively, and I will certainly not rule out reinforcement of the naval mission or of other military assets in Gibraltar.

In making such a determination we would have to decide how such deployments would make a practical difference for good. For example, I was asked about arrests. The legal reality is that state vessels under international law have sovereign immunity from being boarded. That is a legal reality and a breach would have implications well beyond British Gibraltan issues and one would have to think through the possible consequences for British vessels in other circumstances and other parts of the world. When we discuss these questions in government and carry out these reviews, it is a question not just of which vessels and how many people are involved and so on but of which rules of engagement will apply if one dispatches additional reinforcements. We keep the matter under close watch and I have been having regular conversations with my right hon. Friend the Minister for the Armed Forces over recent months. The clear principle is that we will not budge in a resolute defence of British sovereignty over those waters.

We have been in close contact with the European Commission on border delays during the past few months and since the publication of the report and the Government’s response last year. At the request of the United Kingdom, the Commission sent a second border monitoring mission to Gibraltar on 2 July and subsequently wrote to both Gibraltar and Spain. The Commission has stated publicly that it has serious concerns about the lack of progress Spain has made in addressing its earlier recommendations and—critically, this has happened since the publication of the two reports—the Commission has said that checks that give rise to waits of several hours to cross the border are disproportionate. We are using the arguments about the freedom of movement of persons with the Commission, other member states and the Government of Spain. Spain has the right to impose such border checks as are proportionate and sufficient to provide safeguards against crime, smuggling and other illegal activities and it is a fact that not just we and the Gibraltan Government but the Commission, as guardian of that freedom of movement right under the treaties, is saying that those checks are disproportionate to the objectives laid down in European law. That is a significant step.

We continue to lobby the Commission on the need to ensure that Spain carries out its recommendations and to make it clear that we expect the Commission to take legal action should there be little movement.

My hon. Friend the Member for Cheltenham (Martin Horwood) asked about the possibility of a permanent monitoring force or unannounced inspections, as did the right hon. Member for Wolverhampton South East (Mr McFadden). I have already urged the Commission to carry out unannounced inspections and the Government of Gibraltar have made an offer to host a permanent monitoring mission if the new Commission is willing to undertake such an operation.

Spain has now begun construction work at the border area, saying that it is working to improve the system in line with the plans it has submitted to the European Commission, and we have started to see an overall downward trend in the delays, although the level of delays remains unacceptable. We continue to press the Commission to monitor the situation closely.

I do not rule out unilateral action by the United Kingdom under article 259 of the treaty on the functioning of the European Union. My caution about this option is that precedent shows that going to the European Court of Justice in such a way is not a swift process. My judgment for now is that we stand the better chance of securing the outcome we want for the people of Gibraltar if we work through pressure on the European Commission, using the arguments about enforcing European law, and seeing that Spain complies with it, than if we take unilateral action, which would put an end to the work in the European institutions to which we have committed ourselves to date.

[Sir Gerald Howarth]

My right hon. Friend is the embodiment of reasonableness—everything he has said about what his Department is doing is couched in terms of reasonableness and accordance with article this, that or the other—but people are fed up with the United Kingdom and our British overseas territory of Gibraltar being treated in a cavalier fashion by a NATO and European ally. We are looking for a bit of retaliation. To be perfectly candid, what he has done has had no effect. He said that we have reduced the number of incursions by 22%, but we need to send the Spanish defence attaché packing back to Madrid.

[Mr Lidington]

My hon. Friend may say that my manner belies this, but I can assure him that I am as fed up and frustrated as him or any of my hon. Friends about the way in which the Spanish Government have acted, but the Government collectively and I feel a grave responsibility to try to secure an outcome that will result in things getting better and not worse for the people of Gibraltar. That is guiding our judgments on precisely which actions we take.

I want to allow time for my right hon. Friend the Member for Croydon South to respond.

On the economy of Gibraltar and ad hoc talks, my right hon. Friend the Member for North Somerset (Dr Fox) pointed out that the economy of Gibraltar is flourishing despite all the problems thrown at it by Spain, with growth at about 10.3% per annum. In the Chief Minister’s budget speech last November, he said that those

“numbers will rank Gibraltar as one of the fastest growing economies in the world.”

In the past decade, Gibraltar has modernised and diversified its economy, and attracted new inward investment. It is an example to be admired. We need to be clear that, regardless of the extreme provocation that the Spanish tactics represent, they are not working—they are not stopping Gibraltar continue to grow and prosper. Gibraltar is thriving. I applaud the success and commitment that the Government and the people of Gibraltar have shown in defying the difficult circumstances that surround them.

The truth is that Andalucia, the poorest part of Spain, benefits hugely from the prosperity of Gibraltar, not only through the employment of thousands of Spanish citizens who travel to work in Gibraltar every day of the week, but through the spending power of Gibraltans in the Campo and southern Spain more widely. As my hon. Friend the Member for Gainsborough has said, that mutually beneficial economic relationship could be even stronger were Spain to see sense, open the border, and encourage cross-border links and mutual prosperity. That would benefit the people of the Rock and the people of Andalucia. I question why, at a time when about half of young people in Spain are tragically out of work, the Government of Spain resist the opportunity, even in that relatively small way, to enhance growth, prosperity and job creation in one of the most impoverished parts of their country.

[Dr Fox]

There is another way in which the prosperity of Gibraltar could be further enhanced, and that is if our NATO allies were to use the naval facilities in Gibraltar to an even greater extent. As I pointed out, the United States is one of the few allies that does this, largely because if any other ally even thinks about it inside NATO it comes under huge pressure from Spain, even intimidation and threats. Will my right hon. Friend take this opportunity to tell our NATO allies that they would be extremely welcome to use the naval facilities in Gibraltar, which would provide not only the alliance with something of a boost, but potentially employment and prosperity as well?

[Mr Lidington]

I am very happy to do so. Ships from any of our NATO allies would, I know, be more than welcome to call in to Gibraltar. When I went out with the Royal Navy Gibraltar Squadron during my last visit to the Rock, they pointed out to me with pride that they thought there was space in the docks in Gibraltar for one of the new aircraft carriers to moor when she is launched and able to visit that part of the world.

It remains our aim, and that of the Government of Gibraltar, to return to the trilateral forum—the dialogue between the UK, Spain and Gibraltar—which, as the right hon. Member for Wolverhampton South East said, did enable practical, mutually beneficial discussions between the three parties and helped to enhance trust between Administrations where there had been a lot of mistrust for historical reasons that we all understand. I deeply regret the fact that the Spanish Government have withdrawn formally from the trilateral process.

Despite that, we are working in the meantime on ad hoc talks that would be held at official level as a way of making progress on issues of mutual interest. The Spanish authorities have been involved in those conversations with us. We have at times been hopeful that the talks were about to come to fruition. So far we have not been able to strike that final agreement about the modalities of the talks. I hope that they can take place as soon as possible, because there are important practical questions to do with co-operation against smuggling and co-operation on issues to do with pollution, where I have seen complaints both from Gibraltar about Spain and Spain about Gibraltar. We need the two Governments to sit down and talk to each other, and it is important that the talks include all relevant parties, including the Government of Gibraltar and the Government of Spain.

The Government believe that there can be no compromise on the right of the people of Gibraltar to remain British for as long as they choose so to do. There can be no return to the bilateral discussions between the United Kingdom and Spain over sovereignty that characterised some of the talks in the past. Nor can there be any return to the idea of joint sovereignty, which was entertained by the previous Government in 2001 and 2002. The Government are determined to work to uphold and defend the interests of the people of Gibraltar, their right to live in freedom and prosperity, and it is that principle that will guide every aspect of our policy.

16:48

[Sir Richard Ottaway]

One traditionally at the end of these debates politely says what a great debate it has been. I thank all my colleagues for their contributions because it has been an excellent debate, but I have to confess that I am left with a feeling of disappointment about where we have got to with the debate. Concerns have been expressed about aviation, maritime activities and incursions, and border delays, and while we have been sitting here I hear reports of a delay on the border this afternoon. The Minister was asked whether he would rule out a reduction in the defence force, and while he said he did not rule out an increase, he did not say whether he ruled out a reduction. He was asked by Members on the Government Benches and on the Opposition Front Bench whether he would implement article 259, and he fundamentally said no, he did not accept this. The main reason was the delays, yet we have waited years to reach this point. If the process had started some years ago, perhaps that judgment would now have been reaching a conclusion.

There have been no fewer than nine speeches from the Back Benches today, every one of them calling for more robust action. This debate is taking place on a substantive motion that invites the Government to review their policy towards Gibraltar. I assume that unless the massed ranks turn up, the Government have accepted the motion. I have not heard whether my right hon. Friend intends to review the policy. I have the impression that there is no such review. He is concerned, he is frustrated, he feels thwarted, but there is to be no fundamental review. Hence, I feel that the debate has ended with a degree of disappointment.

Question put and agreed to.

Resolved,

That this House notes the Second Report from the Foreign Affairs Committee, Gibraltar: Time to get off the fence, HC 461, and the Government response, Cm 8917; endorses the Committee’s position that the behaviour of the current Spanish Government towards Gibraltar is unacceptable; regrets that trilateral dialogue between the UK, Gibraltar and Spain remains suspended; believes that the time has come for more concerted action; and invites the Government to review its policy towards Spain on Gibraltar.

Historic Properties (Disabled Access)

Thursday 8th January 2015 Commons Chamber

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

16:50

[Chris Skidmore (Kingswood) (Con)]

I start by declaring my interest as the secretary of the all-party group on disability.

This year marks the 20th anniversary of the passing of the Disability Discrimination Act 1995, a landmark piece of legislation that enshrined the right of disabled people to live their lives free from discrimination, to be treated equally to others, and to be given the same opportunities and experiences in life. The passing of the DDA ensured that it became unlawful for service providers to treat disabled people less favourably for a reason related to their disability. From October 1999, service providers had to make reasonable adjustments for disabled people, such as providing extra help or making changes to the way they provide their services. From October 2004, as the Act became fully implemented, service providers had to take reasonable steps to remove, alter or provide reasonable means of avoiding physical features that made it impossible or unreasonably difficult for disabled people to use a service.

The Disability Discrimination Act 2005 went further, making it unlawful for a public authority without justification to discriminate against a disabled person when exercising its functions. The DDA has been superseded by the Equality Act 2010, which places a duty upon service providers to make “reasonable adjustments” to ensure that disabled people are not placed at a substantial disadvantage in comparison with non-disabled people. This legal framework, protecting the rights of individuals and advancing equality of opportunity for all, has finally ensured that it is unlawful to fail to make a reasonable adjustment for access for a disabled person.

We have come a long way since 20 years ago, yet while we celebrate this historic milestone in legislation, I hope that in thinking about the 20th anniversary of the passing of the first Disability Discrimination Act, we can take the opportunity to understand that we can and should be doing more to campaign for equality of access for disabled people.

It is clear that this House has been determined to use legislation to ensure that discrimination is recognised as unacceptable, and that equal access for disabled people to all buildings, historic or not, is of paramount importance. Yet legislation can be effective only if we can at the same time enact a cultural change in attitudes and behaviour, and legislation is worthless without a determination to continually challenge ignorance and prejudice, intolerance and stigma associated with disability. Equally, our past achievements in law should not blind us to the reality that disabled people still face today. My hon. Friend the Minister may be wondering why I have raised the issue of disabled access to historic buildings in particular, but I believe that the particular issue is one that raises a far greater question about what we consider is acceptable for the treatment of disabled people when it comes to accessing some of the most important historic buildings in our land.

I ask my hon. Friend, when he walks out of this Chamber this evening, to look around and question whether Parliament itself, as a historic building, is really meeting the needs of disabled people. In this place of all places, where every man and woman is treated as equal, is it really acceptable that disabled people, upon entering these buildings, have to navigate entirely separate corridors of power? Is it acceptable that we have not managed to put our own House in order, to ensure that every citizen has the same right to access the same rooms and the same routes as any other?

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

I hope that my hon. Friend is happy to allow me to take this opportunity to thank the Speaker’s art fund, together with the Schefer foundation, for contributing to the cost of installing a ramp to allow those who use wheelchairs to access St Margaret’s church—our church here in Westminster—which has made life much easier for the elderly, people with children and many others.

[Chris Skidmore]

I thank my hon. Friend for that intervention. I have personal experience of the enormous benefits that the ramp has already brought to St Margaret’s church. In late November I got married in the church, and the ramp allowed my wife’s grandmother, Mabel Hurst, who occasionally uses a wheelchair, easy access. She would otherwise have had to be carried in, or she would have taken a while to get up the steps. Families are already extremely grateful for that improved access. The alterations have been made sensitively and beautifully. It shows that we can adapt listed building without compromising their aesthetic appeal or historic nature.

I believe that we could do more on this side of the road, in this historic royal palace, to make such adaptations. Parliament itself may comply with the Equality Act in providing reasonable access, but the question we must now ask ourselves is whether in such public buildings it is acceptable access. I do not believe that it is, and I hope that with any future refurbishment we can set an example to the rest of the country by providing truly equal access to Parliament and its facilities.

Twenty years on since the passing of the Disability Discrimination Act, I believe that we also need to confront and act upon some uncomfortable truths about attitudes towards disabled access to buildings. Yes, the legislation may now be in place, but change is far from being effected. Only last month the charity DisabledGo published research showing that 20% of high street shops were unable to provide access for wheelchair users because of steps and no ramps. It is clear that many of those high street stores were constructed long ago and that their historic nature has prevented their alteration so far, but today that can no longer be acceptable. The Minister, given his remit, will fully understand the value that culture and tourism can bring to this country. With 12 million people in this country with a disability, and an overall purchasing power of around £200 billion, according to the Department for Work and Pensions, it makes no sense whatsoever to shut the door in the face of people who have a very significant part to play in our economy.

English Heritage has done much to promote inclusive access to our historic buildings and environments. As its website explains,

“historic buildings, landscapes and monuments, the physical survivals of our past are protected for their sake and ours. They are irreplaceable but sometimes they need to be changed...In most cases access can be improved without compromising historic buildings. The key lies in the process of information gathering about the building, understanding its significance and vulnerabilities and knowledge about the needs of people with disabilities”.

In 2012 it provided owners of historic properties and buildings with two excellent guides—“Easy Access to Historic Buildings” and “Easy Access to Historic Landscapes”—that highlight the value of equal access, setting out how physical barriers can be overcome with alterations and adaptations while at the same time navigating the “Approved Document M” building regulations, BS 8300, planning permissions and listed building consent, as well as setting out clearly that an inclusive approach to access recognises everyone as a potential visitor or customer, setting the challenge that each visitor, regardless of age or disability, should have an equally satisfying experience.

The document publishes many excellent examples of the improvements to disabled access that have taken place so far. I wonder whether now is the time to implement a full audit of historic buildings to understand the challenges that remain in increasing disabled access—in particular, which buildings do not come up to an accepted standard. I note that the Department has launched a comprehensive review of the access arrangements for, and treatment of, disabled sports fans at sporting venues. It should ensure that a separate review is carried out into historic buildings and properties, recognising their value.

17:00

Motion lapsed (Standing Order No. 9(3)).

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

[Chris Skidmore]

When, in preparing for this debate, I asked English Heritage whether there was anything that it would like to raise, it said that it would welcome a

“stronger steer from DCMS about the importance of improving access to historic buildings. We do our best but it seems that other requirements (such as improving cafes or providing family friendly access) can take precedence, and in a time of limited funds, it would be good to be given the go ahead to prioritise good quality and innovative solutions.”

In this 20th anniversary year of the DDA, will the Minister look into arranging for one of the sessions of the inter-ministerial meetings on disability to discuss access to historic buildings so that a clear communication from the Department can be given about the value of increasing and furthering disabled access to historic buildings?

The DDA and the Equality Act have done much to remove the physical barriers to disabled access. We must now go further and broaden our horizons to understand that attitudes will be the barriers of the future. I draw the Minister’s attention to Scope’s “End the Awkward” campaign, which highlights the need, above all, for attitudinal change. Sadly, accompanying research shows that two thirds of the British public feel uncomfortable talking to disabled people; over four fifths, or 85%, of the British public believe that disabled people face prejudice; and a quarter, or 24%, of disabled people have experienced attitudes or behaviours in which other people expected less of them because of their disability. Scope has highlighted the fact that attitude is the barrier that needs to fall. With everyday interactions with disabled people and greater public education about disability will come, I hope, increased understanding and acceptance of disabled people.

In investigating how access arrangements can be improved for disabled people in historic buildings, the Minister might reflect that attitude is indeed crucial, and that expanding disabled access to historic buildings should be seen not merely as red tape or ticking a box, but as an historic achievement in itself, reflecting our continuing need, as a society, to make the past relevant to the present, and as a chance for future generations to look back on our own historic achievements in improving disabled access. The Department should encourage the staff of historic buildings and properties to team up with local disabled groups to enact a conversation about how disabled people themselves can help to influence what is important and necessary for change in their local properties and buildings.

Finally, I note that 17 January marks disability access day. I hope that many historic buildings and properties will take the opportunity to highlight their equal access arrangements, and that the Minister will ensure that his Department highlights this important opportunity for historic buildings and properties across the country.

17:03

[The Minister for Culture and the Digital Economy (Mr Edward Vaizey)]

I am grateful to my hon. Friend the Member for Kingswood (Chris Skidmore) for calling this debate. He rightly alluded to the 20th anniversary of the Disability Discrimination Act. It is interesting to reflect on what happens to us over a period of 20 years. If my memory serves me well, the Bill that became that Act was steered through the House by the then Minister for the disabled, my right hon. Friend the Member for Richmond (Yorks) (Mr Hague), who then went on to become Secretary of State for Wales, the leader of the Conservative party, and a very distinguished Foreign Secretary; and this year will see his retirement from this place. I believe that you were a special adviser at the time, Madam Deputy Speaker, and now you sit in that august Chair presiding over these proceedings. In the heartbeat of 20 years, what a rise to power.

I pay tribute to my hon. Friend the Member for Kingswood for the work he does on disabled issues. I am very interested in this issue, although a little frustrated, but let me elaborate on that. He asked whether I thought that Parliament was fit for purpose, and my answer is no, I do not think it is when it comes to access for disabled people. I remember a moment during my ministerial career when one of my officials, who is in a wheelchair, could not attend a meeting because the relevant lift to provide access to the meeting room was broken. That was a difficult occasion for him. We need to do much more in this place to lead by example. As discussions about the refurbishment of this place continue—various figures, which I am sure are far from the truth, about the cost to the public purse have been bandied about in the newspapers—I certainly hope that disabled access will be at the front and centre of our thinking. My hon. Friend put it extremely well when he said that no one with a disability should be denied access to any part of the estate where an able-bodied person can go.

[Sir Peter Bottomley]

May I tell the Minister that the House of Commons has done exceptionally well in one area? People going from this part of the building to Portcullis house through New Palace yard could roll a marble along the ramps, because little fillers have been put in to make sure the surface is smooth. I recommend that for other historic buildings and for every road. We should never have a ridge of even half an inch, when a bit of tarmac or some other filler can ensure that it is smooth. For someone in a wheelchair, we are doing better than anybody else on that, but not on the other things talked about by my hon. Friend the Member for Kingswood (Chris Skidmore).

[Mr Vaizey]

I take my hon. Friend’s point, which leads on to the debate about historic properties. I vividly remember taking a constituent of mine who is in a wheelchair around the town of Wallingford in my constituency a couple of years ago. It is effectively a mediaeval town: it got its charter in 1155, and still has its mediaeval pattern. Of course, it was hell on earth for him to go over the cobbles. For us, cobbles are a charming and wonderful part of the heritage of a historic town. That does not quite encapsulate the entirety of this debate, but it is a small insight into the circles that perhaps have to be squared.

I want to pick up another point made by my hon. Friend the Member for Kingswood. He said that we should not shut the door to people with disabilities in terms of their access to heritage properties. I would go further and say that if a visitor attraction—to use the jargon—opens the door to people with disabilities, it will get a really loyal customer. If it makes the effort to ensure that it can give people with disabilities good access to the property, they will come back. I cover disability issues in other parts of my portfolio, and people with disabilities tell me time and again that if theatres and sports stadiums take the trouble to make the visitor experience enjoyable for them, they will automatically think of that place when they are looking for something to do on a night out or a day out.

I take issue with the advice that my hon. Friend received from English Heritage. As a Minister, I have learned that when an arm’s length body does not have an answer for an assiduous MP, it tends to push the problem back on to the Government. One occasionally gets that from one national museum or another that says it cannot possibly do something because the Government have forbidden it, even though that is nonsense. I have never steered English Heritage towards putting its money into cafés or family-friendly facilities, although I would naturally applaud both, as somebody who likes a café and a family-friendly facility as much as a historic property.

I will certainly not stand in the way of English Heritage if it wants to put its money into facilities to enable disabled people to have access to its properties. It might come back and say that it does not have the money, but we are in the process of reforming English Heritage, which is something I have wanted to do for many years. Effectively, we are separating the two parts. My hon. Friend will be aware of its regulatory function. That is relevant to the debate because that part would sign off any changes to an historic property—for example, steps might have to be changed to provide disabled access. There are also the buildings that English Heritage looks after, and those will be owned by the Government and run by a charitable trust that has a contract with English Heritage. We are giving English Heritage £80 million to make that transition and effect repairs to its historic estate, to bring the buildings to the level of a first-class visitor attraction. I will take a steer from this debate and communicate to the chair of English Heritage my wish to know what plans he has to use that money to improve disabled access to its properties.

In one sense we are lucky to have just a few major players in terms of heritage properties, and we can get round a table five or six people who will probably represent 90% of the major heritage attractions in this country. They include the National Trust, Historic Royal Palaces—it is keen to help with Parliament, if you want to pass on that message Madam Deputy Speaker—and the Historic Houses Association. I therefore suggest a meeting with those key players, which I suggest my hon. Friend attends, to discuss their plans to improve access to historic buildings, and learn what plans are already in place and what changes have been made. It is a matter I feel strongly about.

Interestingly, access to heritage properties for people with disabilities has increased from just under 64% to around 67% of people with disabilities saying that they have visited a heritage property in the last year. The other key player that I should have named is the Heritage Lottery Fund, which gives grants to heritage organisations when there is a disabled element to the grant. The HLF was set up at roughly the same time as the Disability Discrimination Act 1995, and over the past 20 years it has awarded £36 million to 820 projects specifically aimed at benefiting disabled people, £18.5 million to more than 370 projects representing the interests of disabled people, and almost £9 million to 175 projects focused on disabled people exploring the history and heritage of disability.

As an example of what can be done, Historic Royal Palaces applied to HLF for a £1.6 million grant for Kew palace in London. It established an access panel of local disabled people who toured the building, echoing what my hon. Friend said in his speech about involving those who will use the building. It advised the project team on how best to maximise access, and made suggestions on a variety of issues, including graphics. The range of different issues on which advice can be given is interesting, and includes graphics, sound, tactile models and display case design. Physical improvements included a ramp to the main entrance, a lift to all floors that used the shaft of a former privy—that is a heritage term—and a lift to the undercroft where a new learning space was created. As a result of that project, people with mobility impairments gained access to all areas of the palace, and some parts of the building were made available not just to disabled people but to the public for the first time. Members of the project team developed their awareness of access issues faced by disabled people, and as a result, Historic Royal Palaces has established a successful model for working inclusively with local communities that will be used in other buildings under its care.

The HLF has also supported much smaller schemes such as the £4,500 grant to 365 Leeds stories, which uncovered and shared the hidden history of people with learning difficulties in Leeds by interviewing people who remembered Meanwood hospital. It has also supported performing arts group A Quiet Word, which joined members of Pyramid Arts, a learning disability arts group, and Leeds museum discovery centre to uncover and bring to life the hidden history of people with learning difficulties in Leeds.

Our heritage and arts organisations can also look at other issues. Only a few months ago, a visually impaired constituent came to see me because he was finding it very difficult to get a job. He has now secured a job with a private commercial company, but his real ambition was to work as a curator in a museum. I contacted a museum, which I had better not name in the Chamber, but it was not interested. It strikes me that it would be a huge opportunity if a museum employed someone who was visually impaired, because it could ask, “What is your experience when you come to our museum? What could we do to give you a meaningful experience, such as the opportunity to handle our exhibits and the provision of audio descriptions?” People think that all this stuff is too much trouble and cost, but when they get stuck into it, the cost ends up being much lower than they expect, and the enhancement of their facilities—and the opportunity to engage with a community that is too often shut out—is significant.

Finally, I want to express my frustration—as I often do in this House—about the silo nature of the way that Governments work. Like any Government, we have to work harder to join up policy. I had a meeting a couple of years ago with a previous Minister with responsibility for the disabled about access to music venues, but that ran into the sand. My Department does not have money for disabled policies, if I may put it that way. I do have the eAccessibility Forum, which is about encouraging the use of technology to provide access for disabled people to facilities. As a result, we have some video-relay systems so that when people ring a company, a sign-language interpreter is available on a video link. People said that we could not do that because it would cost £100 million. The first company to do it was BT and it cost £20,000. We have written twice now to the FTSE 100 companies to ask them to implement the system, but we are making slow progress. I have now said that I will not have another meeting of the forum unless the Minister for Disabled People, my the hon. Friend the Member for Forest of Dean (Mr Harper) is present. It is really important that policy is joined up.

I have opportunities as Minister for the digital economy, because technology is massively changing the opportunities for disabled people. I am also the Minister with responsibility for performing arts venues, museums and historic properties, all of which are visited by people with disabilities and can benefit from having an audience or visitors who will be very loyal if more attractions make significant efforts to improve access for them. The glass is half full, because many venues already make those efforts, but the more they do so, the more reward they will get from loyal and grateful customers.

Question put and agreed to.

17:18

House adjourned.