Fuel Prices

Lord Hanson of Flint Excerpts

Tuesday 15th February 2011 Westminster Hall

[Miss McIntosh]

I entirely take that point, and it is why one proposal that I will come on to is the rural rebate discount. I have no doubt in my mind that the fault for where we are lies very firmly at the door of the outgoing Government, and in particular of their Chancellor. In his 2009 Budget, he announced tax increases on roads, fuel, alcohol and tobacco, and set out fuel duty to increase by 2p per litre in September of that year, and then by 1p per litre above indexation each April for the next four years. The decision to increase duty rates in real terms was projected to raise £3.6 billion over the next three years from 2009-10 to 2011-12.

[Mr David Hanson (Delyn) (Lab)]

Will the hon. Lady tell us whether she voted for the recent VAT rise?

[Miss McIntosh]

I will come on to that in a moment, but it would be nice to hear from the shadow Minister whether he feels any pain or anguish, or any need to apologise for where we are, particularly as many hon. Members from all parts of the House have today said that we are where we are. We need an all-party approach to get out of this, and since we know for a fact, from reading Lord Mandelson’s book, that the Labour party, had it remained in government, would have been committed to increasing VAT, we will not take lectures from Labour Members today.

Motoring organisations and some road hauliers have set out their difficulties with a fuel duty stabiliser, and perhaps the Minister in her response will tell us what stage we are at concerning the assessment reached by the Office for Budget Responsibility about how the stabiliser will work in practice. Were a stabiliser to be introduced, is she convinced that the reduction would be passed on to the motorist? If the reduction remained with the oil companies, there would be no advantage in introducing a stabiliser.

Turning to the rebate for remote rural areas, I realise the difficulties in persuading the European Union of such a necessity, but having practised the art, both as a European Community lawyer—now a European Union lawyer—and during 10 years in the European Parliament, I am more well-versed than most in how to persuade the European Union and our fellow member states, many of whose citizens live in equally remote areas. People in rural areas should be entitled to a discount on the rate of duty.

With fuel duties, the principle would obviously have distribution effects, given the greater reliance in rural areas on both private and public transport. We can have a debate and an argument about how the reduction in duty can best be administered, and I realise that a differential duty would require special dispensation, but the UK, in looking to apply a derogation for a lower rate of duty for petrol sold in one area—Scotland, for example—fails to recognise areas such as Northern Ireland, where there is a land border with an area selling fuel at a lower rate of duty. Also, remote areas that are particularly rural and do not have large centres of population, where people do not have schools closer than 13 or 15 miles and have to travel some distance to do a weekly shop, will be particularly penalised.

--- Later in debate ---

[Mr David Hanson (Delyn) (Lab)]

I congratulate the hon. Member for Thirsk and Malton (Miss McIntosh) on securing this debate, which has drawn a great deal of interest. The fact that some 20 Members from all parts of the United Kingdom—Northern Ireland, Wales, Scotland and England—contributed to it shows how important the issue is across the whole of the UK. I confess that for a moment I felt like the 24th Regiment of Foot at Rorke’s Drift—I felt that I was surrounded by thousands of Government Members—but I was pleased that at some point the focus of the debate shifted to the Minister rather than the Opposition.

[Miss McIntosh]

I am delighted to see that the right hon. Gentleman has been joined by a reinforcement on his side. Does he think there is any reason for this issue registering so little in the interests of members of his party that no one else has turned up to participate in the debate?

[Mr Hanson]

I have hon. Friends who represent rural areas. I myself represent a rural constituency. In 2000, the well-known fuel dispute commenced in my constituency because of concerns over fuel prices—we have an interest in the matter.

My first point in response to what the hon. Lady said is that the previous Labour Government did try to address the issue. She will know that striking the right balance between taxation, the environment and affordability of car transport is critical, and that is why Labour, when in government, postponed fuel duty rises when the cost of petrol was high. In October 2008, we postponed the 2p per litre rise to help alleviate the pressures that we recognised were there.

When the fuel dispute took place in my constituency, petrol was around £1.06 to £1.07 per litre. In my constituency, it is now around £1.28 per litre—slightly less than has been mentioned today but a big difference—and, as Members have said, that impacts on businesses, schools, commuters and a range of issues generally. My first thought was, if that is the case, what have the coalition Government, who have had the opportunity to tackle the issue, done since last May? In an intervention, I explained to the hon. Lady that she voted for VAT increases which, according to the House of Commons Library, have added around 2.6p per litre to the price of petrol. Those are important issues. I do not want to focus on the negative, but we cannot get away from the fact that the price of petrol is higher now than it was when Labour left office, and it is higher because of the VAT increases for which she voted.

[Miss McIntosh]

Is the right hon. Gentleman denying that it was his Government’s policy, had they continued in government after the election, to introduce VAT increases which would have had a negative impact?

--- Later in debate ---

[Mr Hanson]

There is a range of issues. We would have had to see what we would have done. We had a range of plans to tackle the deficit, but, in my view, VAT is a regressive tax.

[Miss McIntosh]

That is a yes.

[Mr Hanson]

The hon. Lady might want to, but she cannot hide from the fact that her vote—and the votes of all hon. Members who have spoken today from the Government Benches—has added to the increase in the price of fuel since May last year. That is an uncomfortable fact for them, but that is what they have done. Again, I do not want to focus on the negative, because we have had some positive discussions. However, when attacked, I tend to fight back. Unfortunately, that point was made, so I have to reply on the record.

We have had a number of suggestions, all worthy of consideration. I will look at each in turn. The hon. Lady discussed the issue of the fuel duty stabiliser. The issue was raised during the election, and the hon. Members for South East Cornwall (Sheryll Murray) and for High Peak (Andrew Bingham) also touched upon it today. The fuel duty stabiliser involves some problems, so an explanation from the Minister as to where the Government are on their election pledge from last May would be worth while. The Government’s own Office for Budget Responsibility said recently that the idea of a fuel duty stabiliser is unworkable. I share that view, on behalf of the official Opposition.

In principle, the concept is simple: as oil prices go up, fuel duty will go down; and as oil prices drop, fuel duty goes up. The motorist, therefore, pays more or less the same for fuel and the Exchequer gets more or less the same in revenue. However, in reality, the suggestion is far from simple. On 14 September, the Office for Budget Responsibility published an assessment of the effect of oil price fluctuations on public finances, with the aim of informing the debate. The report found that a temporary rise in oil prices would have a negligible effect on UK public finances, while a permanent rise would create a loss. The Government would find introducing a fair fuel duty stabiliser difficult because, as the head of the OBR, Robert Chote, suggested a couple of weeks ago,

“a fair fuel stabiliser would be likely to make the public finances less stable rather than more stable”.

A 1% reduction in petrol duty would cost the Exchequer around £130 million. The fuel duty stabiliser, depending how it was operated, could cost between £3 billion and £5 billion of public expenditure. The stabiliser was a manifesto commitment, which the Conservative Government wish to carry out, but they need to explain how they will do so and how they will compensate for the loss to the public purse of such a sum. My rural constituents, as well as my urban constituents, will have to find that money from somewhere else, whether in public service cuts or extra taxation. The then Liberal Democrat spokesman, now the Secretary of State for Business, Innovation and Skills, said in opposition that he believed a fuel duty stabiliser would be “unbelievably complicated and unpredictable”, which the OBR has confirmed. We need an explanation of where we are. Is the fuel duty stabiliser still a live option? Do the Government intend to keep their manifesto commitments? What would the cost to the public purse be of the potential loss of income from the stabiliser? Since the election, all we have seen is a rise in VAT to 20%, which has increased petrol prices, not decreased them.

The hon. Members for High Peak, for South East Cornwall, for Montgomeryshire (Glyn Davies), for Carmarthen West and South Pembrokeshire (Simon Hart) and for North Antrim (Ian Paisley) suggested that we look at the idea of a rural derogation, which the Liberal Democrats proposed in their manifesto. The idea seems to have been adopted by the coalition. However, the pilot at the moment is simply for the Northern Isles and for the Isles of Scilly. We have also had representations today for the “island of Ulster”, as the hon. Member for North Antrim called it, as well as from Cornwall and mid-Wales—a very rural area, I know, as pointed out by the hon. Members for Brecon and Radnorshire (Roger Williams) and for Montgomeryshire—and from the hon. Members for High Peak, for Thirsk and Malton and for Skipton and Ripon (Julian Smith). Such areas should be included in such an issue.

How would the Government define a rural area, given the issues raised? Half of my constituency is extremely rural and half extremely urban. Throughout the Chamber, we have had discussion about where the border falls. The difficulties are real. First, why have the areas chosen for the pilot been selected? I could make a strong case for parts of Northern Ireland, where I served as a Minister, parts of mid-Wales, which I know very well, or parts of North Yorkshire.

[Andrew Bingham]

The right hon. Gentleman called for the rural derogation, which I am not against. However, that worries me, because I sort of agree with him. My constituency is rural, but includes two fairly sizeable towns, so where the lines are drawn would concern me. We could have that same problem of people shipping petrol across the lines.

[Mr Hanson]

The issues are real. Again, in response, can the Minister tell me why the pilot areas were chosen? What is the assessment of rolling out a rural derogation throughout the United Kingdom? What are the cost assessments for the pilot areas and, indeed, for the other areas bidding today? How do we change the current scheme of taxing oil when it leaves the refinery, rather than at point of sale?

[Roger Williams]

On people travelling to get cheaper fuel, the idea of a derogation is to equalise the price between areas, not that it is cheaper in rural areas than in urban areas.

[Mr Hanson]

As the hon. Gentleman knows, that still involves a cost. We have already seen great bids from a number of parts of the United Kingdom for the derogation to be applied.

Currently, tax on oil is levied on leaving the refinery, rather than at point of sale. The complex issues of a derogation involve not just fairness but also applicability and how to achieve the aims wanted on the ground. The Government must reconsider the real issues.

Finally, one of the big issues in the Chamber that has not been explored was touched on briefly by the hon. Member for Montgomeryshire: the role of the oil companies in the price of petrol. Shell will have made £1.6 million in profit during the hour and 10 minutes of today’s debate. Even after the cost of the Mexican gulf oil spill—£7.7 billion—British Petroleum made £1.8 billion in profit in the third quarter of 2010.

The Government have their responsibility for the price of petrol, but I am also interested to know what steps they are taking internationally about oil company profits—made, quite rightly, in part, from the cost of petrol. Are steps being taken to look at such levels of profit and at whether we can take action among Governments to make a difference? The issue has no easy solutions. We took action as a Government to reduce the price of fuel when it was under pressure. In the Budget, the Government have the opportunity to do the same with the proposed rise. I am interested in what the Minister has to say. The solutions proposed today are not all simple, applicable or desirable. We need to have cross-party consensus, and I appreciate that the Minister has a difficult job. She must now know what we knew in government: none of the issues are easy, without real pain to communities at large. I welcome hearing what she has to say.

Oral Answers to Questions

Lord Hanson of Flint Excerpts

Tuesday 8th February 2011 Commons Chamber

[Mr Speaker]

Order. Two things: first, I want to hear both questions and answers; secondly, can I—[Interruption.] Order. Can I just ask Members on both sides of the House to give some thought to how our proceedings are regarded by the people whose support we were busily seeking less than a year ago?

[Mr David Hanson (Delyn) (Lab)]

Will the Chief Secretary first confirm that public sector debt was 42.5% in 1997 and 36.5% in 2008, the second-lowest debt of any G7 country? Will he secondly accept that investment during the last two years of the Labour Government was designed to keep people in their jobs and homes, expenditure that he supported at the time? Given the disastrous economic figures and the CBI’s comments before Christmas, will he just admit that what he is missing is a growth strategy, not the cuts that he opposed during the election?

[Danny Alexander]

What was missing from that was any reference to the subject of the question, which was the deficit. Labour Members seem keen to talk about everything except the deficit, which they left for this Government to clean up. I do not apologise at all for the tough decisions we have had to take to sort out that deficit, to introduce tax rises and to deal with public spending to ensure that this country gets back on track. They maxed out the credit card; we have to pay it off.

National Insurance Contributions Bill

Lord Hanson of Flint Excerpts

Thursday 13th January 2011 Commons Chamber

[Mr David Hanson (Delyn) (Lab)]

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

[Mr Speaker]

With this it will be convenient to discuss the following:

Amendment 5, page 2, line 20, clause 4, leave out ‘2013’ and insert ‘2012’.

Amendment 6, line 20, at end insert

‘The Treasury will carry out a review of the Regional Secondary Contributions Holiday before 5 December 2011 and may extend the relevant period until 5 September 2013.’.

[Mr Hanson]

The clue to the proposed changes before us is in the words that the Clerk read out, “not amended in the Public Bill Committee”. The proposals were reflected on and discussed in Committee, and I hope that the Exchequer Secretary to the Treasury has had time, with a good break behind him over Christmas, to reflect on the common sense in them.

I would find it amazing if the Minister were not able to accept new clause 1, because it simply asks for information that, if he looks carefully, he knows I could table questions—with probably more work for him and his officials—to secure in due course. It is important that he assesses the scheme to ensure that we have a national insurance holiday, which, under the current Bill, includes the whole United Kingdom minus three regions—London, the east and the south-east.

The Opposition support, welcome and recognise the Government’s objectives in seeking to use the mechanism of forgoing national insurance income to encourage businesses, but it is important that the Government, the Opposition and, indeed, the House, who endorse that proposal, know its impact over the relevant period.

New clause 1 asks the House to ensure that, following Royal Assent, there is an annual report to Parliament on the outcomes of the scheme, meaning that between now and 2013 we would potentially have three annual reports with the information outlined in the new clause. Essentially, that would include the total sum of national insurance expenditure saved by businesses under the scheme by constituency, but, if the Minister wanted to reflect on the proposal and have it brought back in another place, I would be happy for the information to be listed by sub-region or by region. The information would also include the number of businesses availing themselves of the secondary contributions holidays, the number of employees in each business and the total expenditure saved by businesses under the scheme.

I tabled new clause 1 for several reasons. It is important that we know the facts. The Minister said in Committee that he expects about 400,000 businesses to take part in the scheme during its operation. That figure is a valuable indication and a good benchmark by which we can judge the success of the scheme. When the Committee sat before Christmas, we were already effectively five to six months into the operation of the scheme and about 1,100 businesses had applied for it. An annual review to Parliament would not only have provided an indication of whether Parliament should pass the Bill but would have ensured that we know exactly the take-up of the scheme. New clause 1 refers to the fact that we would also know the take-up by constituency and by businesses.

That is important for two reasons. We need to know the trajectory of the take-up. Is the figure of 1,100 to date what was expected? What will the trajectory be for those businesses in 2011 and 2012? If we have our first annual report in, let us say, December 2011—when the scheme will have been operating for 18 months—what will the take-up of the scheme be? Is the trajectory for the remaining two years likely to mean we get to the 400,000 figure that the Minister has mentioned? An annual report would provide transparency and openness, to which the Government are committed, on those issues and those take-ups. There would be nothing in the report that I could not ask the Minister in a parliamentary question in December this year, next year or the year after. It would simply be good business for the Government to supply that information as a whole.

It is important to consider the number of businesses in each constituency, and we will return to the exclusion of London, the south-east and the east region when we discuss other amendments. Given the deprivation in many of the London constituencies represented by my hon. Friends in the Chamber this afternoon, we feel particularly strongly about that matter. The Bill will have a significant impact on 400,000 businesses across the remainder of the United Kingdom, but will it and the proposed holiday impact on areas that have the highest public sector employment, which is the Minister’s primary objective, and areas of high deprivation and unemployment?

We discussed unemployment and deprivation in areas of the United Kingdom a number of times in Committee. For the purposes of explanation, I shall randomly look at constituencies that currently benefit from the national holiday under the scheme and will benefit if the scheme goes ahead. The annual report is important because unemployment in the Tatton constituency of the Chancellor of the Exchequer is about 2.1%, in the Richmond constituency of the Foreign Secretary it is about 1.8% and in the Rushcliffe constituency of the Justice Secretary it is about 2%.

It is important that we look at where the scheme ultimately is taken up and who will benefit. If businesses are opening in Tatton, Rushcliffe, Richmond and, indeed, other constituencies with low unemployment, that is all well and good, but it will not tackle deprivation in Manchester Central, Liverpool, Riverside or Newcastle upon Tyne East, which ultimately also might benefit from the scheme. For transparency, it is important that the Minister produces an annual report showing not only how many people and businesses have taken up the scheme, but in which constituencies it was taken up outside London, the south-east and the east region.

[Kelvin Hopkins (Luton North) (Lab)]

I very much welcome what my right hon. Friend is saying. One of the estimates we should perhaps make is whether the loss of jobs as a result of the VAT hike will wipe out any possible advantage of the Bill?

[Mr Hanson]

My hon. Friend makes an important point. He will know that the Opposition are extremely concerned about the impact of the VAT rise on businesses, on consumer confidence and on consumer expenditure. Although the measure is not directly linked to the VAT increase, its aim is to help businesses in difficult times. From the Minister’s perspective, the measure is primarily designed to help businesses take up the slack caused by the massive 500,000 people who will lose their jobs as a result of public spending cuts. We will come back to the impact of that on London, the south-east and the east region, where many public sector related employment opportunities will be lost and there will be no benefit from the scheme.

It is important that the Minister not only takes on board where job losses will be but that he looks outside the three excluded regions at the benefits that the scheme will bring to England, Wales, Scotland and Northern Ireland. The production of an annual report will show with full transparency where the businesses are that benefit from and take up the scheme. If those businesses are in areas where there is already low unemployment and deprivation, or they are in areas in the rest of England or Wales where there is not high public sector employment, the objectives set by the Minister will not have been met. In the interests of transparency, it is important to have such a report.

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

We support the Bill and the right hon. Gentleman’s new clause because we fear that the measure will not go far enough and that an annual report would show the need for further countervailing measures. Does he agree?

[Mr Hanson]

The purpose of the Bill, which the Opposition support, is to consider how we give limited help to start-up businesses through a national insurance holiday, so that we can get employment going across the United Kingdom with the exclusion, which we are trying to tackle, of London, the south-east and the east region.

Micro and macro-economic policy will need to be looked at again in many areas. My hon. Friend the Member for Luton North (Kelvin Hopkins) mentioned VAT. Hon. Members are concerned about the impact of public spending cuts on job losses. The issue of the economy generally is also extremely important, as are matters such as employment in west Wales. The annual report would clearly show where new businesses are commencing because of the scheme proposed by the Minister in the Bill and whether those new business commencements can be married to areas where there are high levels of public sector job losses, deprivation and unemployment and therefore where there is a necessity for new businesses to commence. If new businesses are starting up in areas where there is already prosperity, wealth and low unemployment, the loss of the £940 million of national insurance revenue that the Minister is proposing in the Bill could have been used elsewhere to meet the objectives of tackling deprivation and unemployment in a much more concerted manner.

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

My right hon. Friend will know that the temporary Secretary of State for Business, Innovation and Skills represents a London constituency. Does he agree that it is deplorable that someone who represents a London constituency has not fought in Government for the interests of people living in London, including people in my constituency, who will be adversely affected by the measures?

[Mr Hanson]

This is a Treasury-led issue, but it will self-evidently have an impact on businesses. I would have expected the right hon. Member for Twickenham (Vince Cable) to use his Business Secretary responsibilities to bat very hard to ensure that the measure has an impact on London, the south-east and the east. Amendments that we will talk to later focus on those areas and show key issues that will be highlighted by the annual report, even if the Bill does not include London, the south-east and east regions.

If I look randomly at the figures before me, I can see that the unemployment rate in the constituency of my hon. Friend the Member for West Ham (Lyn Brown) is 6.8%, compared with the 1.6% unemployment rate in the North Somerset constituency of the Secretary of State for Defence. His constituency will get the benefit of the scheme; my hon. Friend’s will not. The annual report to Parliament will show whether businesses are being drawn to North Somerset at the expense of, for example, the micro-region of Somerset—Bristol and other areas—where there might be even higher levels of unemployment.

[Joan Ruddock (Lewisham, Deptford) (Lab)]

In my constituency, sadly, unemployment is even higher, but I want to make a different point to my right hon. Friend. Is there not a need to provide this assistance where there is the greatest risk of companies failing in their first year? In some of the most deprived areas, people with the fewest resources face the greatest difficulties in setting up businesses, and their business failure rate in the first year is highest. If we are to be fair, we should not be giving so much money to areas where that does not apply, and that is another reason for looking again at the distribution of this measure.

[Mr Hanson]

My right hon. Friend touches on an important point to which I will return when we discuss the group of amendments on London’s exclusion. She will be interested to know that the number of business deaths in London was 13.7% higher than anywhere else in the country. While business births are higher in London, at 12.6%, the figure for business deaths shows that there is a higher turnover and a greater loss of businesses in London than anywhere else.

London, the south-east and east region is not included in the Bill. However, even with the Bill as currently constituted, an annual report by constituency would clearly show where the business successes are, where new start-ups take place, and how many employees are being employed as result of the scheme—in other words, it would clearly show its success in meeting the Minister’s stated objectives. Without the annual report, I will have to table questions to find out that information. The Minister will need to have the information to monitor the progress of the scheme and look at its take-up and distribution, but it will not be public unless we have an annual report.

[Kelvin Hopkins]

On business deaths and bankruptcies, does my right hon. Friend agree that we have yet to see the full impact of the cuts in the school building programme, which will affect many small sub-contractors who work in the construction sector—precisely the businesses that might have benefited from the Bill had they continued to exist?

[Mr Hanson]

Indeed; my hon. Friend makes an extremely important point. The Minister’s objective in the Bill is to help new businesses to develop to compensate for the loss and shrinkage of public sector businesses in other parts of the country; that is his main focus. The annual report would clearly show not only where new businesses are commencing but, through other information that we will be able to glean, where businesses such as construction firms are shrinking because of cuts in public expenditure on schools, hospitals and other major capital projects. I can think of building firms in my own constituency in north Wales that depend on public sector contracts in housing, education and health for their work. As my hon. Friend says, if that sector shrinks, those employment opportunities will shrink too.

I would be interested to know how many new businesses commence, and how many people are employed in each of them, in my own area in north Wales as a result of this measure, but I will not have that information unless I table parliamentary questions.

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

I do not understand why one could not simply put a call through to Companies House. Why do we need a report from London about the minutiae of how British enterprise is developing as a result of this fantastic Bill?

[Mr Hanson]

We are forgoing £940 million of taxpayers’ money, in the shape of national insurance contributions, to pay for this scheme—£940 million that could be put into the Building Schools for the Future programme and hospital expenditure. I would have thought that the hon. Gentleman was interested in where and how that money was being spent and whether it was being spent effectively. The annual report would show clearly how that £940 million of forgone expenditure was being spent, and which constituencies or regions were receiving the benefit and which were not. My main focus is to ensure, from my perspective and that of my right and hon. Friends, that areas of unemployment, deprivation and high public expenditure get that resource, not areas that already have low levels of unemployment and high levels of prosperity, and do not require this level of resource.

The House is bound to consider how we expend public resources, and it is incumbent on the Government to provide that information. The Minister will have it as he monitors and receives reports on progress on projects, as I did when I was a Minister, and I do not see why he cannot publish it. Ultimately we can drag it out of him through parliamentary questions, but it would be far better for him to be transparent and open, in accordance with this proposal.

[Kelvin Hopkins]

On the point made by the hon. Member for Skipton and Ripon (Julian Smith), is it not important to disaggregate the statistics to show the specific impact of this Bill rather than taking them out of the general trends in small business creation and so on?

[Mr Hanson]

That is absolutely right. One of the key tenets of any objective in society has to be that if we set out on a course of action for which we have clear objectives, as the Minister has, then we need, at some point in time, to evaluate whether it has achieved what was claimed for it. The Minister’s objective is to ensure that this scheme benefits areas with high levels of public sector employment that are losing jobs because of public spending cuts. The annual report would show progress towards that objective. This is not meant to be threatening to the Minister—it is simply meant to say to him that the information that he will have, we should have, as a matter of course, so that we know exactly what the scheme has achieved. There is nothing wrong with that. We support the scheme. We are not complaining about the scheme—we are simply saying, “Let’s look at how it has operated in practice.”

Amendments 5 and 6 deal with the same issue in a different way. I suggest in amendment 5 that we should consider reducing the end of the scheme’s operational period from 2013 to 2012. That is not to say that we should stop the scheme in 2012, but that we should, as suggested in amendment 6, review it at the end of December 2011 and

“may extend the relevant period until 5 September 2013.”

The Minister’s scheme may well take off—the 400,000 businesses that he anticipates taking it up do so, and his objectives are being clearly and specifically achieved. However, it is also possible that only 200,000 businesses will have taken up the scheme by the end of the first or second year, and it might then be appropriate for him to amend it accordingly and consider widening its scope. Amendments 5 and 6 offer the Minister the opportunity, without scrapping the scheme, to evaluate it at a break point in December 2011. It is worth our examining whether the take-up he has promised has been achieved and, if not, whether we need to expand or modify the scheme accordingly.

The Minister has indicated that public sector employment is key to his objectives. The constituencies of Edinburgh South; Liverpool, West Derby; Glasgow North; Wansbeck; Wirral West; Blackpool North and Cleveleys; Plymouth, Moor View; Birmingham, Selly Oak; and Glasgow North East are in the top 10 on the scale of public sector employment. If, at the end of two years, there has not been business take-up in those constituencies, but there has been take-up in constituencies much lower down the scale, that would be a reason to review the operation of the scheme.

It may be appropriate to consider including London, the south-east and east region in the scheme. If the Minister cannot do that today through later amendments, he could consider doing so at a later date, and the proposed review point in the scheme would give him that opportunity. The Thames Gateway London Partnership, which is made up not only of authorities under Labour control but those under Conservative and Liberal Democrat control, says in a briefing sent to Members of this House:

“We urge the government to commit to an annual review of the National Insurance Holiday scheme. At this time should the minister find that some areas currently benefitting from the scheme already have a high rate of business survival and a low level of public sector job dependence we would urge him to consider retargeting the measure to allow some of the more deprived authorities in the Thames Gateway to take advantage of the benefits conferred by the scheme.

That reflects amendments that I will come to later. The briefing gives an example that is of particular interest to my hon. Friend the Member for West Ham:

“At a Local Authority level, Newham, which has a public sector employment level of 33.6% would not be eligible for the proposed NI Holiday, however, Macclesfield, which has a public sector employment rate of only 11.8% will benefit from the National Insurance holiday”.

Those issues could be reflected on and taken into account during the break in the operation of the scheme proposed in amendments 5 and 6.

The Minister would have my full support—even if he cannot accept including London, the south-east and east today—if he came back to the House in a year’s time to say that the Government had reviewed the scheme, come up with an annual report, and as a result would like to extend it to Luton South, Walthamstow, Lewisham Deptford, Ilford South, Luton North and Leyton and Wanstead, to give but six constituencies of Members in the House today. I am sure that my hon. Friends would welcome that move from the Minister; they would even say well done to him, invite him to visit the new businesses in their constituencies and cheer him from the rafters. I know that he would appreciate that greatly. I see no reason why he cannot say that he will review the scheme, even if he cannot accept the inclusion of other regions under later amendments. If the review shows that the benefit from the national insurance holiday is going to constituencies with low levels of unemployment, deprivation and public sector employment, he should consider bringing in those other constituencies by extending the scheme to a wider area.

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

Those figures might also draw out the effects on constituencies that border areas that are covered, where there might be a differential effect on job growth and creation, which is an issue that came up in Committee.

[Mr Hanson]

Indeed. My hon. Friend knows that there are issues relating to the borders between London, the south-east and east and other regions, because there could be differentials relating to new businesses. He made that important point in Committee, and the hon. Member for Portsmouth North (Penny Mordaunt) has made it in parliamentary questions to the Minister. On Second Reading, Government Members asked questions similar to mine on why the scheme was not applicable to their regions.

I am not being aggressive, but am trying to give the Minister a chance to listen to the case. I hope that he accepts that there is a case for producing information, so that he can evaluate it and so that we as taxpayers know how the almost £1 billion of resource has been spent: where it is going, who is benefiting from it and how, and what levels of employment it is creating and where. Amendments 5 and 6 give the Minister an opportunity to have a break after about a year to review the scheme formally and to consider the issues that we will discuss later, which are important to my hon. Friends.

It does not matter where one is unemployed, because an unemployed person is 100% unemployed. For the Minister to say that we do not need to worry if public sector jobs are lost in London, the south-east and east, or in other regions of high employment, and that the scheme does not apply there, is not a positive way forward. I hope that he reflects on the proposals genuinely. I know that he is a reasonable chap and that he will consider them positively. He knows that the Bill will be considered in another place and that these matters can be discussed there, if not agreed today. I believe that a sensible case has been made for the proposals—although I would say that—and I commend them to the House and the Minister.

[Stephen Hammond (Wimbledon) (Con)]

I did not have the benefit of sitting on the Committee, although I did attend Second Reading and I think that I made a short intervention on the Minister.

I will make a short contribution in response to the new clause. I listened carefully to the Opposition spokesman’s speech, and to his closing remark that this is a sensible case that the Minister should accept. I ask the Minister to think carefully about the case that has been put to him. First, the full impact of the policy will inevitably not be shown after the first or second year. With such policies, there can be a significant cumulative effect, which is what the Government are looking for.

Secondly, it has been estimated that the scheme will have considerable benefits. The Opposition spokesman did not query the basis of the estimates made by the Government and outside bodies on the impact of the holiday. We have a pretty good assessment of its impact, so the Government should consider whether the annual report would add to that.

Thirdly, I ask the Minister to consider that the policy is temporary. Although it is a recurring cost, it is only for three years. Were the policy extant for a longer period, the Opposition spokesman’s arguments might have more basis.

Fourthly, the Opposition spokesman made the point several times to the Minister that he could table questions. He did not say whether he thought an annual report would be cheaper than that. If he wanted to do so, he should have given a cost analysis. I fear that the proposal is an expensive way of getting at the information that he wants, and probably does not cover everything.

Finally, when the panoply of talent on the Conservative Front Bench was not as great, I spent four years as an Opposition spokesman. I spoke on various measures that, like the Bill, were extant for the life of the Parliament, such as the Concessionary Bus Travel Act 2007. I made similar requests for annual reports and, time after time, Ministers told me that such proposals would be costly and serve no purpose; that they would of course keep the scheme under review; and that there was transparency through other sources of information available to me. Therefore, before the Minister is tempted by the beguiling words of the Opposition spokesman on transparency and the need to review the policy, I ask him gently to remember that, freed from the responsibility of Government, the Opposition are not accepting the arguments that they made in government.

--- Later in debate ---

[Mr Gauke]

My hon. Friend is absolutely right. Certain compliance problems would arise. Could we tell whether an address was for work or home? The scheme would become more complicated. Those claiming would need to ensure that they were in one particular postcode area or another, and there would be issues with boundaries. Distortions could be much greater than under the simpler scheme that we have introduced with essentially one boundary and three excluded regions. A host of difficulties would arise if we tried to follow the sub-regional route. Where would we draw the line? Would we end up considering boroughs, wards or polling districts? Exactly how would that work? We will revert to the matter later, but my hon. Friend is right.

Amendments 5 and 6 are aimed at providing flexibility to reduce the duration of the regional employer national insurance contributions holiday for new businesses. This would reduce the cost of the holiday to the Exchequer, and correspondingly reduce the benefit to new businesses. As I have explained, the Government want to target available resources to the regions most dependent on public sector employment. We do not intend to widen geographical coverage, and therefore have no need to find ways of reducing costs. We know that this scheme will reduce labour costs for new businesses, and has been widely welcomed by their representatives.

We have acknowledged that beyond this there is a good deal of uncertainty about exactly how the scheme will pan out in practice. However, introducing some flexibility to change the details of the scheme as proposed in these amendments would increase uncertainty for those who might potentially benefit, and could risk inhibiting decision making. This particular proposal could affect those who are already benefiting from the scheme, or those who are currently considering setting up a new business bearing in mind the Government’s policy. For example, a new business set up this month, which plans to take on employees towards the end of this year, would not get the full year’s holiday for these employees if we were to stop the scheme in September 2012.

I hope that the right hon. Member for Delyn would agree that we were right to start operating the scheme as soon as we could, in anticipation of legislation being passed. Had we not done so, the benefit to businesses would have been delayed, and new businesses that had planned to start operation might have delayed in order to benefit fully from the scheme. I am conscious of the fact that the scheme requires the consent of Parliament, and we have been very clear about that in our guidance to potential beneficiaries. We are not pre-empting the decisions of Parliament. However, I hope that hon. Members would agree that it would not be desirable to withdraw the benefits we had planned to give to entrepreneurs who have already decided to set up in business. That risk applies to these amendments, and I am advised that as drafted the amendment is insufficient to provide a mechanism for extending the holiday, and does not therefore meet the intended aim.

With the commitment I have made today on the reports, I hope that the right hon. Gentleman will withdraw new clause 1 and, in the light of my comments, not press amendments 5 and 6.

[Mr Hanson]

We have had a useful debate. I tabled the new clause and amendments to secure from the Exchequer Secretary a commitment that the expenditure that we are forgoing—some £940 million—will be monitored and reviewed for effectiveness, that a mechanism will be put in place by which we can judge where, for whom and how it is having a benefit, and that we will review take-up over the three years of the scheme. I am reassured that he has reaffirmed what he said in Committee and will produce information on take-up on a regional basis. I genuinely welcome that.

It might help if the Exchequer Secretary could indicate—he did not do this in his response—the current level of take-up of the scheme. In early December, at the end of the Committee stage, he mentioned that about 1,100 businesses had taken it up. One of our concerns was that his ambitious target of 400,000 over the duration of the scheme would not be met because of the slow take-up in the first six months. It would help initially if he could give that information now.

[Mr Gauke]

I am grateful to the right hon. Gentleman for letting me intervene. The latest number we have is 1,500, which has increased, obviously, from the 1,100 just before Christmas.

[Mr Hanson]

The key issue—this is one reason I have suggested an annual report—is that 1,500 is significantly less than the trajectory we would hope for and which is necessary to achieve a take-up of 400,000 by the end of the scheme. It is already six or seven months since the Exchequer Secretary announced the scheme, and we effectively have two years this September—until September 2013—before completion. A target take-up of 400,000 and today’s take-up of 1,500 show that the trajectory is not there.

I intend to withdraw the new clause—the Minister can relax in that knowledge and take it as a helpful contribution to the debate—but I hope he will still reflect on the fact that one reason we have asked for an annual report is to ensure that we are able to know every year what the trajectory of the take-up is and in which regions and sub-regions it is occurring. If, for example, by the end of 2011, 30,000 or 40,000 businesses have taken up the scheme, and there is a capacity of 400,000 and just two years left of the scheme, a considerable effort would be needed to generate those new businesses in the two years.

If the Minister does not want to build in failure to his scheme, he needs to monitor that and, if need be, consider the suggestions we will make later about expanding the scheme into other regions, such as London and the south-east, to ensure that the 400,000 take-up that he wants is met. I will make the case later, supported by my right hon. and hon. Friends, that high levels of public sector employment in London and the south-east region will be hit by public spending cuts; without the necessary debate on those issues generally, that will happen as much in London and the south-east as in north Wales, the north-west, Yorkshire, Scotland, Northern Ireland and other parts of the United Kingdom.

If we do not have the trajectory of take-up that the Minister anticipates, we might end up with a scheme that, after three years, does not deliver a take-up of 400,000. At the same time, colleagues in London and the south-east and eastern regions will have been impacted by public spending cuts, but their constituents will not have benefited from that scheme. In tabling the new clause and amendments, I was trying to give the Exchequer Secretary some flexibility to enable him to design the scheme, review it and bring back suggestions accordingly. More importantly, hon. Members on both sides of the House, including the hon. Member for Wimbledon (Stephen Hammond), whose constituency will not benefit from the scheme, can assess its impact.

We welcome the holiday and think it will have a positive impact, although it will not compensate for the things that my hon. Friend the Member for Luton North (Kelvin Hopkins) mentioned. We will have to consider what its outputs are, whether we achieve them and whether the scheme is successful, and we will return to these matters in parliamentary questions. I hope that the Exchequer Secretary will reflect on some of those issues before the Bill reaches another place. I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

Clause 3

Increased product of additional rates to be paid into National Insurance Fund

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

I beg to move amendment 8, page 2, line 2, at end insert

‘The National Audit Office shall report to Parliament by the time of Royal Assent on the Finance Act 2011 on the sum that would be required from the product of additional rates in order for the health service allocation to grow in real terms in every year.’.

It is good once again to face the Exchequer Secretary across the Dispatch Box, although not so good to do so from the Opposition side and with him on the Government side. However, he is a serious Minister doing a serious job. He showed that in the way he responded to my right hon. Friend the Member for Delyn (Mr Hanson) and the debate on the first group of amendments. I hope that the Exchequer Secretary will feel that amendment 8 and the amendments that were not selected were intended to be helpful to the Government. With them, we are offering to him, his boss the Chancellor and his colleagues in government the opportunity to act to prove to the public that they will honour the promises the Government made about protecting NHS funding and ensuring it sees a real funding increase each year, not a real cut.

The Bill and national insurance contributions legislation more generally are about raising and allocating national insurance funds and contributions paid into that fund. The NHS has had a special place in that legislation certainly since 2002, when we decided to move, from April 2003, to raise an extra 1% on earnings above £43,800 and to allocate all that extra income to the health service and the NHS. The amendments we tabled, including amendment 8, give the Government the chance to do the right thing by the NHS and the British people. Amendment 8 in particular lays the groundwork for the Exchequer Secretary and his colleague the Chancellor to make the right decisions in order to honour their promises in the Budget.

There were big improvements as a result of Labour’s investment in the NHS over the past decade—51,000 extra doctors, 98,000 extra nurses, patient satisfaction at an all-time high—and it is hard to remember that in 1997 there were more than 280,000 people waiting more than six months to get into hospital for the operations they needed. I make that point to explain the broader context to amendment 8, as I am conscious that the House is debating a relatively narrow provision.

--- Later in debate ---

[Mr Hanson]

I beg to move amendment 1, page 2, line 9, leave out paragraph (b).

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this we will discuss the following:

Amendment 2, page 2, line 21, leave out subsection (5).

Amendment 3, in clause 11, page 6, leave out lines 24 to 29.

Amendment 4, page 6, leave out lines 35 to 41.

--- Later in debate ---

[Mr Hanson]

The purpose of the amendments is self-evident and clear. We discussed this issue at great length in Committee but it is worth revisiting today to see whether the Minister has reflected over Christmas and the new year on the views that we put forward in Committee. The amendments would do one simple thing: include the regions of London, the south-east and the east in the regional secondary contributions holiday in the Bill. As I have said in relation to earlier amendments and throughout the Bill’s proceedings, we welcome the idea of a payment holiday but we do not believe that its implementation is fair or that it meets the objectives that the Minister has outlined of helping to tackle problems in areas with high public sector employment that will be disadvantaged by the pending public sector cuts, which will impact on both local government and central Government services throughout the country.

I accept, as my hon. Friend the Member for Luton North (Kelvin Hopkins) has said, that the Bill as a whole is not a panacea for tackling long-term unemployment or, indeed, the impact of public spending cuts and further potential unemployment across the board. What it does do, however, with its limited scope, is ensure that we provide an incentive over a short period—the next three years—for new businesses to be established. They will receive a payment holiday for national insurance contributions, which will be a small but a significant help towards the establishment of new businesses.

The Minister’s logic is that the scheme will operate in the selected regions because it should be used to help businesses where there has been a major impact on public sector employment, and he has specifically excluded the whole of the London, south-east and east regions. Let me chide him slightly, because I think he has fallen into the trap of believing that the whole of the London, south-east and east regions are similar in characteristic, have low levels of unemployment, low levels of deprivation and a low level of public sector employment. If the Government did not believe those things, he would have included those three regions in the scheme.

There are certainly high levels of employment and great prosperity in the east and south-east regions and there are certainly constituencies and even sub-regions with low levels of public-sector employment. However, there are also areas, as I am sure my hon. Friends who represent those areas will testify today, with extremely high levels of deprivation, unemployment and dependency on public sector employment that will be excluded from the potential benefits of the secondary benefits holiday because the Minister has excluded those three regions from the scheme.

[Joan Ruddock]

Perhaps my right hon. Friend is aware that the average level of public sector employment in the UK is 21.7%, but the figure in my constituency is 30%. Does he share my astonishment that my constituency and other parts of London with such a high level of public sector employment—leading, I am sorry to say, in these times, to high public sector unemployment—are being excluded?

[Mr Hanson]

My right hon. Friend makes that point in relation to Lewisham and her constituency, but as I shall discuss, it is not just her constituency and Lewisham borough that will be excluded and disadvantaged by the scheme. For example, the constituencies of Oxford East; Luton North; Lewisham East; Canterbury; Southampton, Test; Eltham; West Ham; North Thanet; Hackney North and Stoke Newington; Tooting; Islington North; Dulwich and West Norwood; and Brighton, Kemptown all fall, by the Minister’s own criteria, in the top 60 constituencies for public sector employment, but they will not be eligible for the scheme because the Minister is excluding them from it.

If the Minister looks, as he has, at the House of Commons figures that I raised with him in Committee, he will see that 23 of the top 100 constituencies for public sector employment in England, Wales, Scotland and Northern Ireland fall within the three regions that are excluded from the scheme. So my right hon. Friend makes a clear and telling point on behalf of her constituents, but 23 of the top 100 constituencies fall into the same category.

[Jonathan Edwards]

I accept the point made by the right hon. Gentleman, but does he not recognise the need to rebalance the economy on a geographical basis? If he does not support this measure, what measures would he like to introduce?

[Mr Hanson]

I certainly would not have abolished the regional development agencies or cut public spending with the speed and to the extent that the Government are doing. I certainly would not have cut the Welsh Assembly Government’s budget in our own areas to the extent that the Government will do over the next two to three years. That would have helped to manage the necessary downturn in public spending that we needed to make to readjust the economy in a way that was proportionate, fair and met our constituents’ needs for public services and for employment.

[Mike Gapes]

My right hon. Friend refers to 23 of the top 100 constituencies, but if he extends the list to 105 constituencies to include Ilford South—my constituency—all those next five constituencies are also in the relevant regions, so he could refer to 28 of 105, and there is 38% public sector employment in my constituency.

[Mr Hanson]

I am grateful to my hon. Friend. Would I ever try to miss out the good constituency of Ilford South? My purpose was to indicate that the inclusion criterion that the Minister has selected is based on one simple issue: how to compensate for and deal with public sector job losses and provide a mechanism to help to support the creation of new jobs where public sector jobs are lost. On his criterion, 23 of the 100—or 28 of the 105, to take my hon. Friend’s figures—show that those issues are not being dealt with in the way in which the Minister has said.

If I look at the impact of the possible 490,000 public sector job losses, I see that they will hit hardest those constituencies with public sector employees. If I add to that, as I have to do, the benefits of job creation and look at local authorities on the economic deprivation index, I see that no fewer than seven of the top 12 of those economically deprived boroughs fall within areas that are excluded from the scheme. The boroughs of Hackney, Newham, which is represented here today by my right hon. Friend the Member for East Ham (Stephen Timms) and my hon. Friend the Member for West Ham (Lyn Brown), Tower Hamlets, Islington, Barking and Dagenham, Haringey and Lambeth are all in the top 12 economically deprived boroughs, yet they cannot avail themselves of the scheme.

Other constituencies throughout the country—again, I will alight on Tatton, because its is the Chancellor’s constituency and one that I know well—where unemployment is low and there are many business start-ups and great pockets of wealth, will benefit from the scheme and can apply to include businesses in the scheme, while boroughs such as Newham, Tower Hamlets and others that I have mentioned will not be able to do so. If we look at the unemployment rate across the United Kingdom, which is 7.9% on the latest figures, we see that unemployment in London is 9.1%.

[Henry Smith (Crawley) (Con)]

As an MP from the south-east, I resent being put into this invidious situation. But why does the right hon. Gentleman think that we are in this invidious situation, whereby we must make tough choices to re-stimulate the economy after the economic disaster in which the Labour party left the country?

[Mr Hanson]

I am happy to discuss macro and micro-economic issues with the hon. Gentleman. There is a clear divide between the current Government and the previous Government. We had a deficit reduction plan over three years. We would have cut public expenditure and made savings. In the Department in which I was a Minister in the last Government, we had earmarked £1.5 billion of savings over the next three years. We would have done that.

There is a difference about the scale and depth of the cuts. The hon. Gentleman and I can argue about that, but he needs to recognise that, if he walks through the Lobby to vote against the amendment today, he will be denying new businesses in his constituency the ability to gain access to the scheme, while allowing areas with lower unemployment and lower deprivation, perhaps in parts of the north of England, which are not completely a desert, to benefit from the scheme. He has to wrestle with that issue. Let me advise him that however he deals with it, we have the ability to let the residents of Crawley know what he will do on the issue. He and others need to look at that. There is still time for him to vote with the Government today, but then to speak to the Minister privately, to get his colleagues from Kent, other parts of Sussex, Berkshire and Hampshire together, to get them to talk to the Minister, and to get the Minister to reflect on this in the other place, so that we can make the scheme much wider. Colleagues from London and I would give him credit for doing that.

I put this to the Minister: the unemployment rate in London is higher than in the south-west, in my region and in that of the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), in Wales. It is higher than in Scotland, the east midlands and the north-west, and it is above the UK average. The unemployment rate in the constituency of my hon. Friend the Member for West Ham was 6.8% at the last count. The rate is 7.7% in Tottenham, and 6% in Camberwell and Peckham; in Tatton, Richmond and Derbyshire Dales, it is under 2%.

I have no objection to a scheme being developed to help create employment where employment is lost, but if the logic of the scheme is what the Minister has made it out to be—to deal with public sector employment —I should point out that at the moment 23 of the 100 constituencies with the highest levels of public sector employment are not included. If it is to deal with unemployment, which is higher in the places that I have mentioned than in other parts of the country, the Minister needs to reflect on that in relation to what he has done today.

The Minister does not need to listen to me; John Walker, the national chairman of the Federation of Small Businesses, has said:

“With small firms in the South East most likely to be working below capacity, this shows how wrong the Government is to not include this vital region, as well as the East and London, in its proposals for a National Insurance holiday…With 600,000 public sector jobs expected to be lost, stimulating private sector job creation…in small firms, will be vital to rebalancing the economy.”

The Thames Gateway London Partnership makes similar points:

“the data clearly shows that…the National Insurance Holiday is unfair as it excludes areas in the Thames Gateway which we believe would otherwise be targeted for government support.”

The partnership has helpfully shown—this backs up what my right hon. Friend the Member for Lewisham, Deptford (Joan Ruddock) has said—that there are high levels of public sector employment in the London area, which would benefit from the scheme.

[Joan Ruddock]

I am most grateful to my right hon. Friend for giving way yet again. He may be aware that of the 10 Thames Gateway London boroughs, seven are in the 40 boroughs with the highest levels of multiple deprivation. My borough is at No. 39. Surely we have to be included in the scheme.

[Mr Hanson]

My right hon. Friend makes an important point supporting my central argument. I am trying to argue on the Minister’s own grounds. He argues that the scheme aims to help where there is loss of public sector employment. If 23 of the 100 constituencies with the highest levels of public sector employment do not benefit, the Minister’s scheme is not meeting the needs that he has set it to meet.

Let us look at public sector employment in the London Thames Gateway region. Some 21% of people employed in Barking and Dagenham work in the public sector. The figure is as high as 31% in Greenwich, 30% in Lewisham, 33.6% in the borough of Newham, 28.4% in Redbridge, and 26.6% in Waltham Forest, in the constituency of my hon. Friend the Member for Walthamstow (Dr Creasy). The Thames Gateway London partnership has helpfully provided me with information on the subject. Even boroughs represented by two Conservative Members of Parliament, such as Southend-on-Sea, will not benefit from the scheme, although it has 24.66% of people employed in the public sector. Let us look at authorities in Kent, represented not by Labour Members of Parliament, but by Conservatives. In Medway, nearly 24% of people are employed in the public sector. In Gravesham, it is 22.2%, and in Swale it is 19.7%. Those are areas with high public sector employment that will not benefit from the scheme.

--- Later in debate ---

[Mr Gauke]

The Government are doing a great deal to help London. We need only consider the transport infrastructure as well as the fact that we are protecting investment in Crossrail, in upgrading the tube and in Thameslink. We are taking a number of steps. I think it is astonishing that Labour is complaining about the fact that some businesses will not receive a reduction in their national insurance contributions when its policy at the last general election was that businesses should be paying more.

It is very helpful to look at the well-remembered interview with the shadow Chancellor on the “Today” programme on 4 January, when he said that we need to get the structural deficit eradicated and that there was no argument about that. He recognised the existence of a structural deficit and did not particularly differ from the Government’s position on the size of the structural deficit. There was a disagreement on timing—I think he disagreed with his own policy on timing, but he disagreed with the Government’s, too. He said that the balance between public spending cuts—we do not know which of our proposed public spending cuts the Opposition support—and tax rises should be 60:40. I think that the proportion for tax rises was 40%, although it was not entirely clear.

The shadow Chancellor was asked by Evan Davis:

“In principle you would like VAT not to go up and instead, at some point, not now, National Insurance to go up by more?”

The shadow Chancellor’s response was, “Yes.” He said that that was the Labour party’s argument at the general election and that it was still its argument now, because national insurance is a better tax. That is the Opposition’s position—they want to increase employers’ national insurance contributions. They oppose all the cuts and they oppose our VAT increase, but they want to increase national insurance contributions. Yet when we have a Bill in this House that provides a reduction in national insurance in some areas, their biggest complaint is that they want to do it in more areas. How incredible is that? How lacking in coherence is that policy?

[Mr Hanson]

Will the hon. Gentleman tell the House why the net benefit of this Bill as a whole is a £1.42 billion increase in national insurance for employers, even after the thresholds he has introduced?

[Mr Gauke]

The right hon. Gentleman knows the state of the public finances that we have inherited. We have pursued the policy that we set out in our party manifesto before the general election and have reversed the most serious effect of Labour’s jobs tax. The Opposition’s policy is to go further—they want a bigger jobs tax. The increase in the rate for employers’ national insurance contributions, which is mitigated by the increase in the threshold, involves the rate going up from 12.8% to 13.8%—I say that for the benefit of any Labour Members, including the shadow Chancellor, who are not quite aware of that. To raise the same amount of tax as the VAT increase would have done, Labour would have had to increase that rate not just to 13.8% but to 16.7%. What do hon. Members think that the impact on the Thames Gateway, east London and jobs in Walthamstow would have been if we had pursued that policy, which the Labour party believes in? It does not have much by way of economic policy, but that is one of them.

--- Later in debate ---

[Mr Gauke]

That is the same Federation of Small Businesses that said that the Labour party’s policy to increase national insurance contributions would cost about 52,000 jobs just among its own members.

We have touched on the fact that labour markets are much bigger than ward, borough or constituency boundaries. It is not quite clear what the Labour party would do if it were to extend the scheme. Its policy seems to be that it would remove the scheme from some parts of the regions that would currently benefit. It is not quite clear how the Labour party would do that. I do not know—perhaps the right hon. Member for Delyn could explain—whether the plan is that the scheme would be available in Flint but not in Prestatyn. I am not quite sure what the Labour party has in mind. Perhaps it thinks that the scheme should be available in Oldham but not in Saddleworth. I really do not know what the Labour party wants to do with the scheme, but it clearly wants to increase national insurance contributions, not to reduce them, despite what we have heard this afternoon.

The NICs holiday is targeted at regions and countries with the highest proportion of public sector dependence, to encourage new businesses to start up and take on employees. Expanding the holiday to the whole economy would undermine the policy rationale. I therefore ask the right hon. Member for Delyn to withdraw the amendment.

[Mr Hanson]

We have had a very good debate, and my right hon. Friend the Member for East Ham (Stephen Timms) and my hon. Friends the Members for Walthamstow (Dr Creasy), for Luton South (Gavin Shuker), for Ilford South (Mike Gapes) and for Luton North (Kelvin Hopkins) have put the case strongly for their constituents to be included in the scheme.

The scheme does not do what is says on the tin. It will not fulfil the Minister’s objectives. It will not help regions and areas with the highest public sector employment. I reiterate for the House’s benefit that 23 of the top 100 constituencies in the country for public sector employment will not benefit from the scheme. The Minister knows that we have suggested alternatives, and my hon. Friend the Member for Luton South mentioned a range of ways that we could cut the cake to include London, the south-east and east, so that those areas of high deprivation with high public sector employment could benefit from the scheme. I am not satisfied with the Minister’s response. We need to ensure that the scheme is fair and equitable. I therefore intend to press the amendment to a Division.

Question put, That the amendment be made.

--- Later in debate ---

[Mr Hanson]

This is the fourth Treasury Bill that I have dealt with as Opposition Treasury spokesman in four months, and it is the fourth Bill that has reached this stage without a single amendment being passed, so I am continuing with my fine record of scrutiny but little success in making changes.

I want to be clear at the start that despite concerns about some aspects of the Bill, we support the broad thrust of the measures before us. I note, however, that despite the rhetoric about national insurance that occurred at the general election, the Bill takes through the national insurance contribution increase of 1%. I accept that the Minister has included in the Bill changes to the employers’ threshold, which will make a contribution towards those costs. However, even after that has taken place, the Bill still brings in a rise that will cost businesses about £1.4 billion a year. I make no complaint about that, because we proposed to do it at the election; my complaint is that there has been a lot of smoke and mirrors from the Government in their approach to national insurance.

[Mr Gauke]

As the right hon. Gentleman will know, the policy that we are pursuing is entirely consistent with what we set out in our manifesto. Given the position of his party and the shadow Chancellor on this, presumably they will be opposing the increase in the threshold for national insurance contributions that will be introduced very shortly.

[Mr Hanson]

The electoral rhetoric does not match the actuality of this Bill. The Minister has rightly said that threshold increases were trailed in the election manifesto, but £1.4 billion of extra expenditure on businesses is still being put forward in the Bill. I make no complaint about that, as it formed part of our manifesto commitments. However, we should examine the electoral rhetoric. During the election the Conservatives said, “Let’s Stop Labour’s Jobs Tax”, but they are still executing, through this Bill, some £1.4 billion-worth of extra costs on employers; again, we have no objection to that. We will look at all these matters in due course and make our judgments when we see the proposals that the Government bring forward. However, given what was said at the election, there is still a sting in the tail for employers in the small print of what the Minister has brought forward today.

My right hon. Friend the Member for Edinburgh South West (Mr Darling) announced in the pre-Budget statement on 9 December 2009 that we would increase national insurance contributions by 1%. However, in this Bill there is not only that increase but, side by side with it, the 2.5% increase in VAT that the Government have introduced. The Minister has put an extra £1.4 billion on national insurance and, at the same time, increased VAT. At least we were clear about our objectives in the election. However, we will support the Bill today.

We support the national insurance holiday, which engendered most debate in Committee and on the Floor of the House. We think it is important to consider measures that encourage business, but we disagree with the exclusion of London and the south-east and eastern regions. We have made the case on that issue and I hope that the Exchequer Secretary will reflect on it.

This debate has been very positive. I thank my right hon. and hon. Friends who have contributed, particularly those from London and the south-east and eastern regions. I thank my hon. Friend the Member for Nottingham East (Chris Leslie) and the Whip, my hon. Friend the Member for West Ham (Lyn Brown), for their help and support during the course of the Bill. We will not vote against the Bill this evening, but we will undoubtedly return to the scrutiny of it in another place shortly. Some of the arguments bear further repetition in Committee and on the Floor of the House there. Finally, I thank the Minister for his patience and co-operation. I look forward to seeing him on numerous occasions in the future.

Oral Answers to Questions

Lord Hanson of Flint Excerpts

Tuesday 21st December 2010 Commons Chamber

[Mr Speaker]

Order. The Chancellor does not need to bear that in mind. He has explained his position very clearly, and we are grateful to him. I now call Tobias Ellwood, as his question is also in this group. He is not here. Oh, dear. I call Mr David Hanson.

[Mr David Hanson (Delyn) (Lab)]

Will the Chancellor confirm that in adopting his policy on tuition fees he has raised the Government borrowing requirement to £10.7 billion by 2015—a rise of £5.6 billion—in addition to cutting at least £800 million from the university budget and tripling fees, which will deter poorer students? Will he now for once confirm to the House that his choice on tuition fees is about ideology, not deficit reduction?

[Mr Osborne]

What we are doing is taking the report commissioned by the Labour Government and improving on it so that it is more progressive. [Interruption.] Yes, we are increasing borrowing to help students; that is part of what we are doing to fund our higher education institutions.

The truth is this, and the shadow Chancellor said it this month: it would

“be very difficult to make a graduate tax a workable proposition.”

That was the shadow Chancellor, who is now advocating as an official policy of the Labour party something that he says would be difficult to make a workable proposition. We have come forward with workable propositions on higher education, which the Opposition used to agree with when they were in government. They have now mistaken opportunism for opportunity.

Public Accounts Committee

Lord Hanson of Flint Excerpts

Thursday 16th December 2010 Commons Chamber

[Mr David Hanson (Delyn) (Lab)]

I have sat through the debate and found it extremely positive in its approach to the issues. There is a great deal of cross-party support for making how we manage issues in government a key focus.

May I begin by paying tribute to my right hon. Friend the Member for Barking (Margaret Hodge)? It is already clear that she has not only a grasp of the role of the Public Accounts Committee but the respect and support of Members on both sides of the House. It is crucial to consider the PAC’s role by leaving aside party politics and examining where systemic failures in Government expenditure occur.

May I also echo my right hon. Friend’s thanks and support for the hon. Member for Gainsborough (Mr Leigh)? He served the House of Commons well during his period in office, when he produced more than 400 reports on a range of issues. I can honestly say that during the last Parliament I appeared to wake up most mornings to the hon. Gentleman on the radio, kicking somebody. As a Minister in the last Government, I was often grateful that it was not me.

I welcome the approach taken in the motion. I will support it as I recognise that it contains elements that will help to strengthen the accountability of Ministers for acting upon the reports that they have accepted as recommendations from the PAC. Anything that puts in place a mechanism that will make Ministers and their civil servants know that they have to report back to the House on progress on measures that they have accepted and agreed to do is extremely important.

I am grateful for the speeches made by right hon. and hon. Members on both sides of the House. Several key themes have come out of the debate. First, we have seen the importance of the scrutiny role that the PAC will perform and has performed. The hon. Member for Orpington (Joseph Johnson) pointed out the recent report on the activities undertaken by DFID.

The hon. Member for South Norfolk (Mr Bacon) referred to not just scrutiny but to the positive actions taken on hospital-acquired infection as a result of reports undertaken by the PAC. Indeed, he mentioned the improvements that are taking place in the Home Office. I can speak from personal experience as for a short period I was subject to a report as a Minister in the Ministry of Justice. It was on the National Offender Management Service’s C-NOMIS programme, which is an interesting point to which I shall return later. I became a Minister three and a half years after the programme commenced, froze the project three months after my inauguration in the Department and was subject to a PAC report that considered a range of issues. Civil servants had come, gone and left before I came and, after I left, civil servants were still managing that project. There are important lessons that we need to consider.

The scrutiny role of the PAC is important, but key issues to do with good governance have arisen in today’s debate and they are equally important. The hon. Member for North East Cambridgeshire (Stephen Barclay) listed clearly what is required of good governance in any project management. It is the sort of project management that anybody in the private sector or the voluntary sector who has responsibility for resources will undertake. Even in our private lives, most of us will undertake such good governance to ensure that we meet collective objectives. The hon. Gentleman’s point was also reflected in the comments of the hon. Member for Thurrock (Jackie Doyle-Price) on the leadership that is required for the role of good governance. The hon. Member for Southport (Dr Pugh) also touched on that.

Good governance relates to some key issues that were reflected in what the hon. Member for Redcar (Ian Swales) said about self-evident truths that recur. They should be the key issues that the Committee focuses on as part of its future role, and they involve simple issues such as having a proper business plan, clarity of objectives and clarity and responsibility for budgeting. It is also about having a reporting mechanism so that people know what is being spent when, how and for what purpose, and it involves the good governance of civil servants, which the hon. Member for South Norfolk mentioned, and good ministerial governance. That was reflected in the comments of my hon. Friend the Member for Walthamstow (Dr Creasy) about her constituent. Now that he has been elevated to the Lords, I am afraid that however he voted at the last general election, he will not be able to vote in the next one.

The issue is how to put in place and systemically manage the overall issues. It comes down to key issues of personal accountability for civil servants and Ministers. There is a role for the Committee, which is echoed in the motion, and it relates to the accountability of individuals—Ministers and at civil servant level—for the decisions they take and for how they manage the good governance issues I have outlined.

Delivery is key. The hon. Member for Stockton South (James Wharton), who showed real commitment to the Committee by missing his constituency party, focused on the issue in his area about how the political aspirations of whichever party is in government are delivered on the ground. What Ministers decide, how civil servants protect the taxpayer against reckless ministerial decisions and how they implement positive ministerial decisions is key. The points that the hon. Gentleman made were very important in relation to the health aspirations he discussed, but this is ultimately about value for money and making sure that whatever objectives Ministers have set are delivered in a timely, sensible and forward-looking fashion.

My right hon. Friend the Member for Stirling (Mrs McGuire) highlighted some of the challenges we will face in the future. I do not want to politicise this debate, but the current Government’s focus on greater localism, devolution of power and distribution of responsibility will mean that the food chain of accountability that she mentioned will be equally important in future.

As a background to all this, we are in a time of increasingly reducing resources. The Government’s Budget proposals mean reductions of £32 billion a year and additional net tax increases of £8 billion a year by 2014-15. Departmental losses include figures such as a 49% reduction in the capital budget in the Home Office and reductions in revenue budgets of 23% and 24% at the Ministry of Justice and the Home Office. Whatever our views on those matters, and we all have our own views, it is even more important at this time of diminishing resources that they are spent with a clear focus on value for money, that they deliver what they are meant to deliver and that they are managed by Ministers through the civil service. As we have seen recently, the Committee’s reports on the Ministry of Defence’s major projects review, which my right hon. Friend the Member for Barking has ably led on this week, and on the private finance initiative contracts with the Highways Agency to widen the M25 show that, retrospectively, there are real issues that will be common themes that we need to address for the future.

Before I conclude, let me make a simple point about how stability relates to political accountability. I was a Minister for 12 of the 13 years of the previous Government and not once did I hold a job for more than a couple of years. I was the longest-serving Minister with responsibility for prisons and probation in the history of the Labour Government—I served for two years and one month. I had to pick up, learn about, develop and manage projects that had started before I was in the post and carried on after I left to go to the Home Office. As well as accountability for civil servants, it is important that we have accountability for Ministers. The motion would ensure that Ministers who make agreements and accept recommendations report back to the House on what they have done. I hope they will have longer in office so that they can see projects through from start to finish. They would thus remain personally accountable and, on behalf of the House, they could hold civil servants to account, too.

I commend the motion to the House, and I look forward to hearing the Minister. I thank Members on both sides of the House for their contributions.

Terrorist Asset-Freezing etc. Bill [Lords]

Lord Hanson of Flint Excerpts

Tuesday 14th December 2010 Commons Chamber

[Dr Huppert]

I am delighted to move amendment 2, and to speak to amendments 3, 5 and 11, which are also in my name. They reflect recommendations from the Joint Committee on Human Rights, and Members might wish to see its more detailed report if they have not done so already. The amendments are all about ensuring proportionality and a fair hearing.

We should clearly be able to restrict funds that help terrorists in their activities, but people who are accused of such activities should not automatically lose their regular status in this country. We have a great principle in this country whereby a person is innocent until proven guilty; it is a great British tradition and one that we should support. We should also accept, however, that errors are made in legal processes, by the court and by Governments, and that is why we should have principles of fair hearing and high thresholds before we take state action.

Amendment 2 is about errors and the thresholds that we require. How can we be sure that the courts or the Treasury are making the right decision? How much error is acceptable? Various thresholds are already used for various decisions. We have the threshold of beyond reasonable doubt, which roughly equates to our saying that we do not accept even a 1% error—to the extent that we can attach numbers to it. Then, we have the civil standard, or the balance of probabilities, whereby we want to be sure that we are probably right. We want at least a 50:50 chance—in other words, with the balance of probabilities, we say that we want to be wrong less than half the time; we want to be probably sure that we are right.

If we go any lower with a threshold, we take steps—we punish people—when we say that we believe that they were probably not involved in the given situation. That is the consequence of a threshold below the balance of probabilities. None of us wants that, and none of us wants to take steps against people when we think that they were probably not involved in the first place.

I accept the principle of a lower threshold for interim designations. It is more akin to arrest, which takes place at a much lower threshold, but that is not the same as the permanent designation. I strongly urge the Government to reconsider their proposal. They should consider taking such steps against people only when the Treasury believes that they were probably involved, rather than on the basis of anything lower.

Amendment 3 is a simple requirement. A fair hearing must mean knowing the accusations—the reasons why the Treasury believes that somebody has been involved in funding terrorist activities. The amendment includes an important safeguard for public interest in non-disclosure, so damaging information would not come out, only that which we could afford to release. Again, I should have thought that we all agree with such a position.

During the Bill’s passage, the Government have said that, effectively, the amendment’s intention will be achieved but they do not want to see it in legislation. I am always concerned, however, about the principle that we should not write things into legislation but trust in the benevolence of Governments—this or any future Government. If the Minister will not accept the amendment, will he clearly commit to disclose such reasons subject to the public interest requirement, as the amendment says—even if that takes place in a non-legislative way?

Amendments 5 and 11 deal with the hearing itself. Section 67(3)(c) of the Counter-Terrorism Act 2008 puts a heavy weight on the principle of non-disclosure. Although that is an important principle, we must counter it with the principle of a fair hearing. Currently, the balance goes far too far in the direction of non-disclosure.

In the case of AF, it was held that similar rules are not appropriate to control orders, so I find it hard to see why the courts will not in time hold the same principle on terrorist asset freezing. There are more details on that reasoning in the Joint Committee’s report. The courts have yet to take such a decision, but surely as a principle it would be better not to go through costly legal action, but to save time by making the changes now.

There is a review of the use of sensitive material in judicial proceedings, and I welcome the fact that there will be a consistent approach. If the Minister will not agree to including such safeguards in the Bill, will he commit to the Bill being updated when the review is complete in order to reflect that consistent approach and to introduce a better system throughout those areas? I shall listen carefully to the Minister’s comments on all those suggestions, and I hope he takes on board what has been said.

[Mr David Hanson (Delyn) (Lab)]

I am grateful to the hon. Member for Cambridge (Dr Huppert) for introducing the amendments, which represent important issues that the Joint Committee on Human Rights considered. However, the Opposition believe that the test of reasonable belief is appropriate to the circumstances covered by the Bill. Indeed, I said so in Committee.

The tests for the asset-freezing regime are strict. In clause 2(1)(a)(i) to (iii), the Treasury has to consider real issues about the involvement of individuals in terrorist activity before such powers can be invoked. Those considerations are:

“(i) that the person is or has been involved in terrorist activity,

(ii) that the person is owned or controlled directly or indirectly by a person within sub-paragraph (i), or

(iii) that the person is acting on behalf of or at the direction of a person within sub-paragraph (i)”.

If we changed from reasonable belief to a situation in which the Treasury had to satisfy the balance of probabilities, as the amendment proposes, we would water down the ability of the Treasury and, therefore, the Government to take early action on the use of resources to finance terrorist activity in relation to the items detailed in clause 2. The asset-freezing regime must be preventive to be effective. One must be able to use it at an early stage to disrupt and prevent terrorist acts, and a threshold of a balance of probabilities would not enable the Government to act when action is needed.

The balance of probabilities test is applied by the courts in the context of civil proceedings and requires one party to demonstrate to the court that it is more likely than not that a particular fact is true. If that test were applied to asset freezing, it would require the Treasury and, indeed, the Minister to be satisfied and able to demonstrate to a court that a person is more likely than not to be, or to have been, involved in terrorism. That is too high a burden at the moment, because the burden of proof would rest with the Treasury.

If the Treasury brings forward proposals under this legislation in due course, I rest assured that it will have had solid grounds, from the intelligence and information provided to it, for doing so. If the picture were unclear, and an equally plausible argument could be made for an individual not being involved in terrorism, the Treasury would not be able to impose an asset freeze. That might put the constituents of Cambridge and, in my case, north Wales, or any constituent in the country, at risk of terrorist attack.

[Dr Huppert]

I am sure that the right hon. Gentleman knows of the existing power for an interim designation. It has a much lower threshold, so in emergency cases, such as those that he mentions, there would be no problem and we would be safe. I am delighted that he cares about the people of Cambridge so much, but the amendments are about longer-term designations.

[Mr Hanson]

Indeed, but I speak as somebody who in the previous Parliament was the Minister responsible for terrorist issues and policing. Those are serious matters, and the Government need to take action on them. There is always a balance to be struck between the civil liberties of individuals and the civil liberty of ordinary people to live their lives in peace without the threat of terrorist activity. On balance, my judgement is that we need to support the Government’s proposals in the Bill, which initially had its genesis in the previous Government, so that all measures are taken to ensure that the asset freeze can take place and action can be taken accordingly.

I understand the concerns of the hon. Member for Cambridge; they are valid and should be explored. However, in clause 26 there is a right of appeal for designation both at an interim and final stage. If an individual feels aggrieved, he can undertake to exercise that right of appeal. However, very few people will do so if the Bill becomes law, because the Treasury will have taken steps to ensure that those individuals are rightly in the frame, for the reasons that the asset regime has been introduced, and I trust the Treasury to take those actions; that is not something we say all the time but, on this occasion, I have done so.

I hope that the hon. Gentleman feels that he has raised the issues of concern. I am sure that the Minister will give, almost word for word, the exact response that I would give. I am happy to talk about the amendments in more detail, but my message to the hon. Member for Cambridge is clear: in the event of him pushing the matter to a vote, he will find not just the Financial Secretary against him, but the shadow Minister.

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

I shall respond to each of the amendments proposed by the hon. Member for Cambridge (Dr Huppert). I welcome the approach adopted by the right hon. Member for Delyn (Mr Hanson), who speaks with some authority on these matters, having dealt with them in government. Looking around the Chamber, he is probably the Member with the most experience of tackling these issues. The amendments were considered in Committee. They were tabled by the hon. Member for Carshalton and Wallington (Tom Brake), and I made the same comments in response to them then as I do today. He sought to withdraw them in Committee and I hope that the hon. Member for Cambridge will do the same today.

As I said in Committee, amendment 2 would change the threshold for the making of a final designation from the Treasury from reasonably believing a person is or has been involved in terrorism, to needing to be satisfied on the balance of probabilities. As I emphasised on Second Reading and in Committee, the asset-freezing regime needs to be preventive to fulfil our UN Security Council obligations and to meet our national security needs. In other words, it must be capable of being used at an early stage to disrupt and prevent terrorist acts.

In our view, a threshold on the balance of probabilities would not enable us to act when needed. The balance of probabilities test is applied by courts in the context of civil proceedings and requires one party to demonstrate to the court that it is more likely than not that a particular fact is true. If that test were applied to asset freezing, it would require the Treasury to be satisfied and to be able to demonstrate to a court that a person is more likely than not to be or to have been involved in terrorism.

That may sound reasonable but—to echo the words of the right hon. Member for Delyn—it is, in fact, a high burden. The fact that the burden of proof would rest with the Treasury means, for example, that if the picture were unclear and an equally plausible argument could be made that an individual was or was not involved in terrorism, the Treasury would be unable to impose an asset freeze. The serious threat posed by terrorism means that in such cases where the reasonable belief standard is met, the Treasury should be able to freeze assets on a preventive basis to protect the public. The alternative is to hold back until further evidence is accumulated. However, that runs the risk of an individual being able to carry out a terrorist act without preventive action being taken.

I hope that the hon. Member for Cambridge bears it in mind that—as eminent judges such as Lord Justice Laws and Lord Rodgers have remarked—we need to be mindful of the fact that material available to the authorities about terrorist plots may be fragmentary and incomplete. The picture may not be complete for good reasons, but that does not mean that the material is wrong. Such a situation simply reflects a number of real-world facts about terrorism: that intelligence has to be gathered covertly; that terrorists take considerable steps to disguise their activities; and that the need to protect the public sometimes means that plots have to be disrupted at an early stage, rather than allowed to run on further to accumulate more evidence. For those reasons, moving to a balance of probabilities test would have significant risks for our national security.

I also explained in Committee that a balance of probabilities test would be out of line with international best practice. The Financial Action Task Force makes it clear in its guidance on terrorist asset freezing that a legal threshold of reasonable suspicion or reasonable belief should be used. We are not aware of any other country that uses a balance of probabilities test to freeze terrorist assets in accordance with UN Security Council resolution 1373. As I set out on Second Reading and in Committee, for those reasons we remain convinced that a reasonable belief test is the right threshold for making a designation and that it strikes the right balance between protecting our national security on the one hand and protecting civil liberties on the other.

[Mr Hanson]

Will the Minister confirm again what I think he said in Committee, which was that whatever the outcome of the review of terrorist legislation—including the review of the case of AF and control orders—the Bill will stand as it is now without amendment in that respect?

[Mr Hoban]

If we assume that the legislation will receive Royal Assent, it will stand. However, clearly, all terrorism legislation is kept under review and it would be wrong to prejudge the outcome of any other court case. We have taken forward the best form of the legislation, which was, as the right hon. Gentleman knows, based on the previous Government’s proposals. The Bill reflects case law as it stands.

Despite the approach we have taken on reasonable belief, the Bill will not result in the Treasury making decisions where it thinks it is more likely than not a person is not involved in terrorism. The point is that the decision maker should believe, from a careful assessment of what may well be a complicated intelligence picture, that a person is involved in terrorism. The threshold of reasonable belief for a decision is one used in many contexts, including in decisions made about terrorism, such as under the Anti-terrorism, Crime and Security Act 2001 and under schedule 7 to the Counter-Terrorism Act 2008. The courts are then asked on an appeal or review to determine whether there are reasonable grounds for that belief. That is the right test. It provides an assurance that a proper burden is placed on those seeking to impose a designation but, at the same time, it enables action to be taken to protect national security when needed.

Let me move on to amendment 3, which, as the hon. Member for Cambridge pointed out, reflects the report by the Joint Committee on Human Rights. I understand that the amendment would ensure that individuals are sufficiently informed of the reasons for their designation at the point their assets are frozen in order to enable them to mount an effective challenge. As I stated in Committee, the Government do not believe it is necessary to include such an obligation in the Bill because the JCHR’s proposal was intended only to ensure that the Treasury complies with the basic administrative law principle of giving reasons for such decisions. It is the Government’s view that administrative law principles apply regardless of whether a duty is specified in this legislation. Writing such an obligation into the Bill is therefore unnecessary. I think that that was the commitment the hon. Gentleman was seeking.

Amendments 5 and 11 were considered in the other place and in Committee. It is worth reminding the House that the Prime Minister announced in July that the Government will review the whole matter of the use of sensitive material in judicial proceedings and will issue a Green Paper next year. We expect the Green Paper to be published in the summer. The Government do not consider it appropriate to pre-empt it, which we would certainly be doing if we were to accept amendment 5.

Let me consider the amendment in detail. It seeks to create a new subsection within section 67 of the Counter-Terrorism Act 2008, which provides for the content of court rules about disclosure in financial restrictions proceedings and which will apply to court rules made in relation to challenges to decisions under the Bill. The amendment would place a requirement for the court rules, which are to be made initially by the Lord Chancellor for England and Wales and Northern Ireland, to ensure that the Treasury provides sufficient open disclosure to enable the designated person to give effective instructions to the special advocate. That form of words is based on the European Court of Human Rights judgment in the case of A, which was applied by the House of Lords in the case of AF and others to the stringent control orders that were before it. The effect of the amendment would therefore be to apply “AF No. 3” principles to challenges to final designations. I reassure the hon. Member for Cambridge that persons designated by the Treasury will have the full protections afforded them under article 6 of the European convention on human rights. Section 67(6) of the 2008 Act states:

“Nothing in this section, or in the rules of court made under it, is to be read as requiring the court to act in a manner inconsistent with article 6 of the Human Rights Convention.”

It is therefore absolutely clear that article 6 rights apply in full to asset freezing.

--- Later in debate ---

[Dr Huppert]

I thank the Minister for his comments and for the assurances and commitments that he was able to give. I continue to disagree with him about the standard that should be required, and I still find it concerning that we are not moving towards a balance of probabilities. However, I will not press the matter to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 31

Independent review of operation of Part 1

[Mr Hanson]

I beg to move amendment 1, page 15, line 25, leave out ‘a person’ and insert ‘the Independent Reviewer of Terrorist Legislation, as appointed under section 36 of the Terrorism Act 2006.’.

[Mr Deputy Speaker (Mr Nigel Evans)]

With this it will be convenient to discuss amendment 6, page 15, line 25, at end insert—

‘( ) A person may not be appointed under subsection (1) unless—

(a) the Secretary of State lays a report before both Houses of Parliament which recommends the person and sets out the process by which he was chosen,

(b) a Minister of the Crown tables a motion in both Houses to approve the report laid under this subsection, and appoint the person, and

(c) such a motion is agreed by a resolution of both Houses of Parliament.’.

Amendment 7, page 15, line 31, leave out ‘send the Treasury a’.

Amendment 8, page 15, line 32, after ‘report’, insert ‘to Parliament’.

Amendment 9, page 15, line 34, leave out subsection (4).

Amendment 10, page 15, line 37, at end add—

‘( ) Appointment under subsection (1) shall be for a non-renewable term of five years.’.

[Mr Hanson]

We had a good debate on this issue in Committee. It is my contention that if we are to create a post to review the operation of this Bill once it achieves Royal Assent, it makes eminently logical sense for the person who is appointed by the Treasury to review the legislation to be the same person as the one appointed by the Home Office under section 36 of the Terrorism Act 2006 to review terrorist legislation and its impact from the Home Office perspective. As the House will know, Lord Carlile is currently appointed to that position. He is independent of government; he has an office outside the Home Office as well as a secure office in the Home Office; and he provides an independent review of a range of issues, including control orders and other legislation under the 2006 Act. Clause 31 of this Bill allows for an individual to be appointed by the Treasury. In Committee, I tested the Minister on whether he had discussed with the Home Secretary the possibility of appointing the same person under clause 31 to review part 1 of this potential Act as is currently appointed by the Home Office to review legislation under the 2006 Act.

Whatever our agreements in Committee, there is also, I hope, an agreement that we do not want to see duplication of these roles. The role of reviewing whether a designation has been made fairly and is being operated fairly is the same as that of reviewing whether an individual’s control order has been judged and operated fairly. I accept that there are differences, as alluded to by the Minister in Committee, but in broad terms an individual appointed under clause 31 to review part 1 of this potential Act will be dealing with similar issues and similar evidence—sometimes evidence supplied by agencies within government—and undertaking similar assessments of the effectiveness and fairness of the operation of the legislation.

The current reviewer, Lord Carlile, will finish his tenure in that role very shortly. Mr David Anderson QC will be the new independent reviewer of terrorism legislation from, I think, 1 January next year. He has expertise in the European Union, in public law and in human rights. He is a Queen’s counsel of more than 10 years’ standing, and he is a recorder and a visiting professor at King’s college London. The skills that are required to review control orders under the 2006 Act are, in my view, the same as those required to review the provisions in this Bill. I am making this proposal because there could be synergy between the two posts.

I am equally interested—I know that the Minister will have a wry smile at this—in the costings and the operation of the parallel regimes in the event of the Minister appointing somebody different to review the provisions of this Bill when enacted. The Home Office supplies the reviewer with administrative facilities, office support and research support as needed. He has an independent private office in central London as well as secure rooms in the Home Office that he uses to deal with information to help him in his task. I question the need to establish a parallel regime with a separate person being appointed through a separate recruitment procedure and having separate offices inside and outside the Treasury, given that very often, and potentially even more so in this current age, the individual may be reviewing activities that impact on the same small group of people who are seeking to do harm to our citizens in the United Kingdom as a whole.

I would welcome an update from the Minister on my suggestion and on whether he has had an opportunity to talk to the Home Secretary about this matter. Has the Minister had an opportunity to consider whether the person who will be appointed under clause 31 should be the same person who is appointed by the Government to review Home Office legislation under the 2006 Act?

My amendment has been unduly twinned with the rest of the amendments in the group, which were tabled by the hon. Member for Cambridge (Dr Huppert). They relate to the method for appointing the reviewer—whether they are appointed as under my proposal or as under the Bill. The hon. Gentleman has again drawn on the report of the Joint Committee on Human Rights in proposing that the House of Commons should ultimately be the appointing body for the independent reviewer.

Unusually, I think that I will find myself agreeing with the Minister. Whatever my views on a range of issues, I cannot accept amendment 6, because the post of the independent reviewer must ultimately be a Government appointment. It reports to and supplies information to Ministers, and it is ultimately funded by the Government to provide that information. It is crucial, however, that the post is independent of Ministers. It reports to them, provides them with information and is funded by them, but it ultimately acts independently of them. It advises them and can cause difficult issues for them, because of its independence. If the post was appointed and supported by a resolution of both Houses of Parliament, it would be in a very different position from an independent reviewer of legislation.

Lord Carlile was independent. Never once did he ask me for information that he could not access appropriately. Never once was he compromised by Ministers, of whatever hue, in relation to his jurisdiction and duties. He has provided a fair assessment of the operation of the legislation to date.

I hope that the Minister reflects positively on amendment 1. I suspect that he will not support amendments 6 to 10, which were tabled by the hon. Member for Cambridge, because the independence of the post is crucial. If we tie it to the Minister or to the House of Commons, we will betray that independence and do a disservice to the role. If the Minister cannot give me good news on amendment 1, I hope that he can encourage me generally on the appointment. I look forward, also, to hearing the hon. Member for Cambridge speak to his amendments.

[Dr Huppert]

I will speak briefly to amendments 6 to 10, which come from the Joint Committee on Human Rights, on which I am privileged to serve. I agree with the right hon. Member for Delyn (Mr Hanson) that the key issue is the independence of the reviewer. The amendments seek to strengthen that independence, by ensuring that the reviewer is a creature not of Government, but of Parliament. Being nominated by Government and approved by Parliament would give the reviewer greater independence.

There is also a question of accountability. Who should hold accountability on behalf of the British public—Parliament or Government? Should the reviewer’s report go directly to Parliament, or should there be the potential for it to be filtered by Government? Although I accept that that does not generally happen, there is the potential for it to happen.

[Mr Hanson]

I ask the hon. Gentleman to consider that Ministers are accountable to Parliament. I rose because of his use of the word filter. When I was the Minister with responsibility for policing and terrorism, not once did I change a single word of a reviewer’s report to Parliament, even though such reports were produced ultimately by Ministers for this House. I do not expect that any other Minister would do so, because the independent reviewer would make a play of it and the relationship would be devalued tremendously.

[Dr Huppert]

Indeed, I was saying that I did not believe that that had ever happened, and I am grateful for the assurance that it never has. That shows exactly why amendment 6 makes sense. If no Minister would ever filter such reports, there should be no requirement for them to go through Ministers. That creates a potential filter that we hope will never be used. I hope that the Government simply agree with my position, so I will not labour the point. However, I doubt that the Minister will say that he agrees.

I will raise something that I mentioned on Second Reading, which might provide a compromise. As the Minister is aware, there is a recent precedent for Select Committees to approve independent appointments. That happened with the Office for Budget Responsibility and I hope that it will happen with other bodies. Perhaps the Minister will agree that it would be helpful for the reviewer to be confirmed by an appropriate Select Committee in a similar way, to ensure that there is certainty for Parliament as well as Government that the reviewer will perform their role properly and independently.

[Mr Hoban]

I did not know that we were going to proceed at such a quick pace this evening, although perhaps it is not as quick as you, Mr Deputy Speaker, and other colleagues might have hoped. I hope that we will not detain the House too much longer on the matters before us.

I will deal with amendments 6 to 10 first, before returning to amendment 1. As the right hon. Member for Delyn (Mr Hanson) pointed out, amendment 1 relates to a topic that gave rise to one of the longer debates in Committee.

The amendments tabled by my hon. Friend the Member for Cambridge (Dr Huppert) relate to the appointment of the independent reviewer and the terms by which he will report. My hon. Friend and other hon. Members will be aware that such amendments were debated at length during the Bill’s passage in the other place and in Committee. As I said in Committee, the proposals are based on the provisions of the Prevention of Terrorism Act 2005 that relate to the independent reviewer of terrorism legislation. That provides an effective and suitable model for the statutory independent asset-freezing reviewer.

Amendment 6 would require the independent reviewer to be approved by Parliament. I believe that the intention is to ensure that the reviewer is suitably independent of Government. I hope that I can reassure my hon. Friend that the Government are fully committed to the independence of the reviewer. Independent oversight is an essential element of the safeguards that the coalition Government have introduced into the Bill, and it will be the principal objective of any appointment. I will touch on the recruitment process later.

We do not believe that it is necessary for Parliament to approve the independent reviewer. That would be a significant departure from standard practice. The appointment of the reviewer by Government reflects the long-standing principle of ministerial responsibility. It is Ministers who are accountable to Parliament and to the public for the people whom they appoint. Parliament will, of course, be able to scrutinise the work of the reviewer and to hold him or her to account through existing mechanisms—for example, through Select Committee scrutiny.

My hon. Friend proposed the compromise of a requirement that an appropriate Select Committee approve the appointment of the reviewer. The Minister for the Cabinet Office and Paymaster General is due to meet the Liaison Committee shortly to discuss the pre-appointment hearing process. A decision to add new appointments to the list of posts subject to pre-appointment scrutiny may be announced as a result of that meeting.

Amendments 7, 8 and 9 would replace the independent reviewer’s obligation to report to the Treasury and the Treasury’s obligation to lay that report before Parliament with an obligation for the reviewer to report directly to Parliament. To draw a comparison, all the annual reports and ad hoc reports produced by Lord Carlile, the current independent reviewer of terrorism legislation, have been provided in the first instance to the Home Office to check that they do not inadvertently contain any classified material that cannot be published. Hon. Members will recognise that asset freezing deals with sensitive and classified information. That is why the Government believe that a similar approach is appropriate.

The independent reviewer will have access to all relevant papers and evidence, including highly classified intelligence reports and, on occasion, material that is being considered as part of a separate criminal prosecution. It is important to ensure that published reports do not include classified or sub judice material, and Parliament could not undertake such a check. I reassure my hon. Friend that the Government will not seek to influence the outcome of any report. The reports will be provided to Parliament as quickly as possible after they have been delivered, and they will be available to the public.

Amendment 10 suggests that the appointment of the independent reviewer should be for five years, and that it should not be renewable. We do not believe it necessary or desirable to have a statutory limit on the length of time that a reviewer should remain in post. There might be valid reasons why someone wishes to step down at an earlier stage, but there might also be valid reasons why they wish to occupy the position for a longer period. They will build up significant experience and significant knowledge of how legislation works, and that will be invaluable.

It is important to take the opportunity to learn from the experience of the current reviewer and see how he feels the system should work. In the debate in the other place, Lord Carlile said about appointment procedures:

“As to the way in which the independent reviewer is appointed, I do not have any very strong views. Appointment by a Minister does not make the reviewer any less independent. Many public appointments have sprung surprises on government; for example, chief inspectors of prisons. Independence is in the way the person concerned operates.”—[Official Report, House of Lords, 25 October 2010; Vol. 721, c. 1085.]

I notice that the right hon. Member for Delyn raises his eyebrows at the reference to the chief inspector of prisons—he clearly knows from his own experience how independent such people can be once they are appointed.

On the question of whether submitting reports to the Government, rather than directly to Parliament, would run the risk of reports being altered in any way, Lord Carlile said:

“I cannot imagine any circumstances in which any honourable person appointed to this role would be prepared to change their report at the behest of a Minister or civil servant for political reasons. It has never happened. It did not happen with any of the reviewers before I was appointed, it has not happened during my period of tenure, and I do not think it will happen with any successor I can foresee under the present or changed arrangements.”—[Official Report, House of Lords, 25 October 2010; Vol. 721, c. 1086.]

That reinforces the right hon. Gentleman’s experiences.

It is essential that the independent review of the asset-freezing regime is robust, impartial and transparent, and we are satisfied that the provisions in the Bill regarding the appointment and operation of the reviewer are appropriate to achieve that. I therefore hope that my hon. Friend the Member for Cambridge will not press his amendments.

Amendment 1, tabled by the right hon. Member for Delyn, would, as he said, ensure that whoever fulfilled the role of Home Office independent reviewer of terrorism legislation would also fulfil the role of independent reviewer of asset freezing. I shall provide the House with an update on the Treasury’s position on the appointment of an independent reviewer, but first I wish to set out why we do not support the amendment.

The Government do not accept that the independent reviewer for asset freezing must always be the same person as the Home Office counter-terrorism reviewer. Requiring them to be the same person would unnecessarily reduce flexibility, and could therefore constrain the Government’s ability to appoint the best person to the post. There might be good reasons why, in a particular case, both roles could not be held by the same person. For example, the best qualified person for the job might simply not have the time to carry out both roles to the level required.

We have to remember that both roles are demanding and important. Counter-terrorism legislation is an expansive and complex area, and the issues raised concerning the balance between protecting security and protecting civil liberties are of fundamental importance. Moreover, individuals may well wish to combine their work as independent reviewers with other ongoing professional commitments. That is entirely reasonable, as long as it does not give rise to conflicts of interest. In the light of that, it would be wrong to say that we must only ever appoint somebody who can perform both roles. We need to retain flexibility and always look for the most suitable person to do the job.

We recognise, however, that there are good arguments for combining the two roles where it is possible and desirable to do so. That might produce greater consistency and coherence and better value for money, as the right hon. Member for Delyn said in Committee. As I have said, however, we need to consider the matter on a case-by-case basis and not just assume that combining the two roles is the only approach that can work.

I now turn to the current situation. My officials have been in close contact with Home Office and Cabinet Office officials to explore the matter further. There has also been an initial discussion with the incoming counter-terrorism reviewer, David Anderson, to explore whether he would be willing to be considered for the asset freezing reviewer post. Mr Anderson has indicated that he would be willing to take up the post were it to be offered to him, and that neither he nor the Treasury is aware of any impediment to his taking on the role were it to be offered.

At this stage, the Treasury has not made an offer of appointment to the role, and in our view it would be premature to do so. After all, the Bill is not yet law and the post does not yet exist. However, I reassure the House that the Treasury is considering all the relevant issues, including value for money and the interconnection of the two roles. The process of appointing a reviewer is on track, and the appointment will be made in plenty of time for the reviewer to prepare their first report, which is due nine months after the Bill comes into force. I hope that that update will reassure Members of the progress that the Treasury is making in filling the post, and of its recognition of the points made today about costs and the interconnection of the two roles. On that basis, I hope that the right hon. Gentleman will be willing to withdraw his amendment.

[Mr Hanson]

I think I will take that as a sort of yes from the Minister about the principle behind the amendment, even though he is not accepting it. I feel reassured by what he has said. He has been very fair in his assessment that there are synergies between the two roles and potential cost savings. An individual could undertake both roles, and from my experience the two posts may be reviewing a similar pool of people. I believe that progress has been made.

The Bill obviously needs Royal Assent very quickly, because of the expiry of the previous legislation. I urge the Minister to ensure that, upon his final approval of a person to review the operation of the Bill, he tables a written ministerial statement. The individual needs to be in post prior to the time set out in clause 31(2) for the production of the first set of reviews, which is nine months after part 1 comes into force. It is important for the House to have feedback on that, and that will keep the House informed, at least in part, of matters related to the other amendments in this group.

I am very pleased to “bag” my amendment. The Minister has made his case and come as near as he can to saying what will happen. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Third Reading

--- Later in debate ---

[Mr Hanson]

I simply want to say on behalf of the official Opposition that we welcome the Bill, which, as the Minister has said, had its genesis with the previous Government. Previous Treasury Ministers have worked with officials to develop a regime that is, in my view, about protecting civil liberties. We hear a lot about civil liberties in these debates, and the Bill is about protecting those liberties and protecting individuals’ rights to live their lives without fear of terrorist attack. The terrorist asset-freezing regime that is in place and that will be in place once the Bill receives Royal Assent will help to develop still further the protections to ensure that those who wish to do harm to our society do not use such resources to do that harm.

The Bill has obviously been subject to great and detailed scrutiny, not just here but in the other place. It has also been scrutinised by the Joint Committee on Human Rights. As a House, we have considered the arguments put to us about several issues and we have ultimately decided that they do not hold merit. That is an important part of the process. The Bill leaves us with the full support of the Opposition. It will, I hope, provide greater safety for our community and help to ensure that we take action against those who use finance to undertake terrorist acts.

I am pleased that the Minister has given a strong indication that he will consider seriously the two roles of the reviewer. One is set out in clause 31 and the other—the reviewer of terrorist activity, who will soon be David Anderson, QC—is set out in previous legislation. There is merit in that synergy. Having heard what the Minister has said today, I wish the Bill well and the Opposition support it.

National Insurance Contributions Bill

Lord Hanson of Flint Excerpts

Tuesday 23rd November 2010 Commons Chamber

[Mr Gauke]

Compared with the plans that we inherited, the impact of the increase in threshold will be such that employers will pay £3 billion less in employer’s national insurance contributions. The overall reduction of the burden on employment will be £6 billion as a consequence of the overall package.

[Mr David Hanson (Delyn) (Lab)]

Will the Minister confirm, however, that about £1.4 billion is not being compensated for by the threshold? I want us to be clear. He says that he has offset the threshold, but he has offset only about £3 billion, not the whole amount of the rise.

[Mr Gauke]

The fact is that the Labour party would have raised the full amount. We are offsetting £3 billion, which will be most helpful for employers whose employees earn under £20,000. The package is good for employment and, given the fiscal mess that we inherited, I am very proud that this Government are able to reform national insurance contributions exactly as we set out in our manifesto at the general election, and in the coalition agreement.

As far as we can deduce it, the Labour party’s position is that it wants to do more to reduce the deficit by raising taxation and it does not believe in increasing VAT, which will bring in £13 billion a year. We can assume only that it would favour greater increases in national insurance contributions than it had already set out.

We are not going to take any lectures; this Government have managed to reverse a very painful and damaging policy that would have meant employers’ contributions rising for every single employee paying national insurance—and in a way that would have damaged jobs in this country.

--- Later in debate ---

[Mr Gauke]

A charitable entity that is located in one of the relevant regions and that carries on a trade, vocation or business will benefit. That is likely to apply to, for example, shops that are run by charities. Such entities must meet that criterion to benefit, but not all charities will necessarily do so.

[Mr Hanson]

Will the Minister tell the House, for the sake of clarity, how many businesses have to date applied for the holiday?

[Mr Gauke]

At this early stage, we have had around 1,000 applications, but we expect more as awareness of the policy becomes greater and as businesses contact their professional advisers. We are keen to publicise the policy, and I encourage hon. Members for any of the relevant regions to notify businesses in their areas. The Government and our policy aim to help businesses and those who want to start a business and get it going. In contrast, the previous Government increased such taxes. Start-up and existing businesses throughout the country faced rising taxes and employers’ national insurance contributions, which was a particularly deeply damaging tax.

The Bill is an important part of the Government’s plan to reduce Labour’s taxation, help those on the lowest incomes, and support private enterprise and employment in the parts of the country that need them most. It is a simple and important Bill, and I commend it to the House.

[Mr David Hanson (Delyn) (Lab)]

I am grateful to the Minister for his exposition of the Bill. We will test aspects of it in Committee and at other stages in its passage. As he said, it divides effectively into two parts. The first part is the increase in national insurance contributions by 1%, which we will support because we want to ensure that we protect services and support our economy. The second part introduces a three-year regional national insurance holiday for new employers. As the Minister said, many businesses will qualify for their first 10 employees in their first year of business; I shall return later in detail to the question of the regions and areas that will not qualify.

Let us first consider the national insurance contributions. The Minister rightly said that this policy was set out both in the Labour manifesto and elsewhere in the period before the general election in May. My right hon. Friend the Member for Edinburgh South West (Mr Darling), the then Chancellor, announced in the pre-Budget statement on 9 December 2009 that the previous Government would increase national insurance contributions by 1% to protect public services. We had a choice, and we were straight about it both before and during the election. Raising national insurance contributions was a tough decision, but we ensured that we would protect those earning less than £20,000 a year.

The Conservatives condemned that national insurance rise throughout the election, but—surprise, surprise!—they have now decided to go ahead with it. In the Conservative manifesto, which I have come to recognise is not worth the paper it was written on, the party committed itself to raising the thresholds for national insurance by £24 a week, the upper earnings limit by £29 a week, and the secondary threshold at which employers start paying national insurance by £21 a week. I look forward to seeing the details in the secondary legislation.

My intervention on the Exchequer Secretary showed that although the Government are raising the thresholds, there is still a shortfall of about £1.4 billion in employer national insurance contributions. The Labour party was open about that in the run-up to, and during, the general election, but the Conservative party was not. In my view, this is all smoke and mirrors.

[Mr Gauke]

Page 8 of our manifesto stated that we would

“raise the secondary threshold at which employers start paying National Insurance by £21 a week.”

The secondary legislation will increase the secondary threshold at which employers start paying national insurance by £21 a week, so we are doing exactly what we said in the manifesto.

[Mr Hanson]

But there were no caveats about a shortfall in the Budget proposals of about £1.4 billion. I think it is smoke and mirrors—and, as my hon. Friend the Member for Edmonton (Mr Love) said, it is coupled with the increase in VAT from next year. The VAT rise will impact more than three times as much as the increase to national insurance contributions would have done, and will affect 250,000 jobs.

[Charlie Elphicke]

Will the right hon. Gentleman give way?

[Mr Hanson]

I will give way to the hon. Member for Dover (Charlie Elphicke); the national insurance holiday will not apply in his constituency.

[Charlie Elphicke]

The right hon. Gentleman is right that the national insurance holiday will not apply in my constituency—a matter that I regret. Nevertheless, I welcome the fact that 1,400 of the least well-off people in my constituency will be taken out of tax altogether. It seems that he opposes the increase in the personal allowance and would rather cut national insurance, which we originally planned to do. Instead, we are helping the least well-off. Surely he would welcome that.

[Mr Hanson]

I look forward to the hon. Gentleman going back to Dover to explain why he is supporting not only a Bill that does not give a national insurance holiday to his constituents, but the VAT rise elsewhere in the Budget proposals—we need to look at that in the round—which will impact on pensioners, the low paid and everybody in his community. This is not a topic for today, but the debate on the national insurance rise was open and honest on our side. During and after the election, the Conservative party argued against the rise, but it is now implementing it. On top of that, it is not meeting the objectives in its manifesto and has increased VAT. I think that a VAT rise is a regressive tax policy that will hit the poorest hardest, but that is the choice that the Conservative party has made.

I want to focus most of my remarks on the second part of the Bill. The decision to introduce a regional employer national insurance holiday is welcome, but it specifically excludes new businesses in Greater London, the south-east and the eastern region. We tabled a reasoned amendment that has not been selected, but which would have declined to give a Second Reading to the Bill because of those exclusions. I sense that the hon. Members for Portsmouth North (Penny Mordaunt), for Meon Valley (George Hollingbery) and for Basildon and Billericay (Mr Baron), who spoke earlier, will have expressed their concerns about how the choices on the national insurance holiday were made. [Interruption.] The Economic Secretary to the Treasury says that we would have increased national insurance contributions across the board.

[Madam Deputy Speaker]

Order. We cannot have comments shouted across the Floor from a sedentary position. It makes it very difficult for Hansard to record our proceedings, particularly when the comments are then referred to without having been recorded. Will the hon. Lady make her point from the Dispatch Box, so that the right hon. Gentleman can answer it?

[The Economic Secretary to the Treasury (Justine Greening)]

My point was that the Labour party would have increased NICs for absolutely everybody.

[Mr Hanson]

The hon. Lady knows that that was a clear and honest policy that we put to the electorate. The Government have now introduced proposals for a national insurance holiday for new businesses in certain regions. I will explore shortly why we think that that choice is unfair in the context of the resources the Government are trying to save.

[Justine Greening]

Can the right hon. Gentleman tell us whether it is still his party’s policy to go ahead with those NIC rises?

[Mr Hanson]

I have said what I have said. We were open and honest during the election campaign, and we will support the rise proposed in the Bill, because we expected to do that. During the election campaign, the Economic Secretary and the Exchequer Secretary attacked the NIC rise without proposing the alternative that they have seen through in practice.

Let us put that aside, because the key issue before the House is the payment holiday. We do not believe that it is being proposed fairly, honestly or openly, and we do not believe that it will help the poorest and most deprived areas of the UK, which in great part are excluded from the scheme. Of the top 12 most deprived local authorities on the economic deprivation index, no fewer than seven will be excluded from the payment holiday. The seven boroughs of Hackney, Newham, Tower Hamlets, Islington, Barking and Dagenham, Haringey and Lambeth are excluded from the scheme.

In his written statement on 6 September, the Exchequer Secretary said:

“The Government are determined that all parts of the UK benefit from sustainable economic growth”.—[Official Report, 6 September 2010; Vol. 515, c. 1WS.]

If we are having a holiday from national insurance contributions, I do not understand how excluding those areas from the payment holiday will do that.

I want to challenge the Government’s logic. They claim that the reasoning behind the policy is that areas outside London, the south-east and the east are more reliant on public sector employment. Will the Exchequer Secretary confirm that that is his logic?

[Mr Gauke]

indicated assent.

[Mr Hanson]

The Minister has confirmed that. Tomorrow’s business leaders who want to start businesses in the constituencies of Oxford East, of Luton North, of Lewisham East, of Canterbury, of Southampton, Test, of Eltham, of West Ham, of North Thanet, of Hackney North and Stoke Newington, of Tooting, of Islington North, of Dulwich and West Norwood, and of Brighton, Kemptown will miss out. I mention those constituencies specifically because they are in the top 10% in the country with the highest percentage of public sector employment.

As the hon. Gentleman knows, there are 650 constituencies. His policy is supposed to help compensate for possible loss of employment in the public sector. Those concerns have been reflected today, and I pay tribute to the hon. Members for Portsmouth North, for Meon Valley and for Basildon and Billericay, who have defended their constituencies and raised their concerns about how the policy will be applied.

If there is to be a holiday, it can be applied in different ways. It could be applied regionally, as the Minister has done, or on the basis of unemployment levels or regional levels of public sector employment per constituency, instead of the blanket regional approach that the Minister has chosen.

[Mel Stride (Central Devon) (Con)]

The shadow Minister has heard that rolling the scheme out across the entire country would cost an additional £660 million. Will he explain whether he would propose to raise that by increasing our deficit, by cutting expenditure—in which case what expenditure would he cut—or by raising taxes, in which case what taxes would he raise?

[Mr Hanson]

That is a fair and valid point. Yesterday, in reply to a parliamentary question, the Minister emphasised the cost of the scheme for the regions covered. My purpose today is to challenge the Minister’s logic for allocating the resources for the payment holiday to the regions that he has selected, because that distribution does not necessarily reflect the level of deprivation or public sector employment. The cake that the Minister has allocated may be sliced in several ways, but he has sliced it to exclude the constituencies represented by my hon. Friends in London and those who represent seats in the south.

[Barry Gardiner (Brent North) (Lab)]

Will my right hon. Friend give way?

[Mr Hanson]

How can I resist my hon. Friend from London?

[Barry Gardiner]

Is my right hon. Friend aware that Tottenham, which has the eighth highest number of jobseeker’s allowance claimants in the country, will not benefit, although Tatton, which has the 509th highest number of JSA claimants, will receive the NI break? Is that fair?

[Mr Hanson]

My hon. Friend makes a very valid point. I do not begrudge the people of Tatton anything, and I will tell him why. I was once a Labour councillor in the Tatton constituency. I represented the ward of Rudheath and Whatcroft, and I was the leader of the Labour council that covered half the constituency at that time. I have absolute faith in those areas, but there is deprivation in Tatton. In fact, Neil Hamilton, a former Member of this House for that area, was my pair when I first came here. Such is life! But that is another story.

Tatton has one of the lowest levels of unemployment in the country. That constituency, which is represented by the Chancellor of the Exchequer, will get the benefit of the national insurance holiday to start 10 employees, but Portsmouth North will not. Neither will Brent North, Edmonton or Lewisham. The constituency of my hon. Friend the Member for Leyton and Wanstead (John Cryer) will not get that benefit either—

[Stephen Pound]

Neither will Ealing.

[Mr Hanson]

Indeed, and neither will the constituencies of my hon. Friends the Members for West Ham (Lyn Brown) and for Ilford South (Mike Gapes). We are talking about encouraging growth and promoting job opportunities, and how we split the cake is very important, as the hon. Member for Central Devon (Mel Stride) has pointed out. My hon. Friend the Member for Brent North (Barry Gardiner) mentioned the different figures for jobseeker’s allowance across the country. We need to address those significant differences.

[Mr Love]

For the record, unemployment in my constituency is about the 50th highest in the country, and my constituents want to know why they will not be getting the benefit of these measures in the Bill. The fallacy behind the Government’s argument is that the affluent part of the region will raise employment in my constituency, but all the evidence shows that there are hard-core pockets of unemployment, and that even during the economic good times over the past 13 years, unemployment there did not come down. The only way to address that fallacy is to apply the provisions of the Bill to all the regions of the country, as my hon. Friend suggests.

[Mr Hanson]

I am grateful to my hon. Friend. The question that the Minister needs to reflect on, here or in Committee, is how we should split the national insurance holiday cake. There are many ways of doing that, but his way is unfair to the areas of greatest need, to the areas with the highest public sector employment, and to areas that contain seas of prosperity as well as deprivation.

The Minister has mentioned areas of high public sector employment, but I have already shown him the fallacy behind his argument as it affects many of our constituents throughout the country. Figures for jobseeker’s allowance show that the rate of unemployment is currently higher in London than in the south-west, part of which is represented by the hon. Member for Central Devon, in North Wales, where my constituency is, or in Scotland, where it is 3.8%. Unemployment is also higher in London than in the east midlands or the north-west—[Interruption.] The Economic Secretary to the Treasury did not take your strictures to heart, Madam Deputy Speaker. She is continuing to heckle from a sedentary position. I would be happy to give way to her if she wants to intervene.

However we measure unemployment, the levels of jobseeker’s allowance claims in London are higher than in the south-west, Wales, Scotland, the east midlands and the north-west. Indeed, they are above the UK average. That is a key point when we are thinking about how to divide the cake up.

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

I must say that the enthusiasm being shown by the right hon. Gentleman, and by so many Opposition Members for this fantastic Conservative policy, or coalition policy, on national insurance holidays is absolutely heart-warming.

--- Later in debate ---

[Mr Hanson]

The hon. Gentleman will know that North West Leicestershire will benefit from the scheme, but I hope that he will look slightly beyond the confines of Leicestershire and talk to the hon. Members for Portsmouth North, for Meon Valley and for Basildon and Billericay, who have all expressed concern about the proposals.

[Charlie Elphicke]

rose—

[Mr Hanson]

Perhaps the hon. Gentleman can tell us whether he is in favour of his constituents not having this benefit at this time.

[Charlie Elphicke]

I spoke on the subject of regionalisation in the Finance Bill, and we have to take the rough with the smooth. Does the right hon. Gentleman welcome the fact that in places such as Delyn, 500 new jobs have been created in the past six months? In Dover 500 new jobs have also been created in the past six months. Across the country as a whole, about 300,000 new private sector jobs have been created in the past six months. Does he not welcome that?

[Mr Hanson]

I think I know Delyn better than the hon. Gentleman. If he would like to come to me to talk to the 320 people who lost their jobs yesterday at Headland Foods in Flint, I should be happy to discuss the issue. That happened only yesterday in my constituency, so I will not take any lessons from him about what happens on my patch in north Wales.

I will tell the hon. Gentleman straight away, however, that West Ham has 6.8% unemployment, Tottenham 7.4% and Camberwell 6%. That is more than three times the level of unemployment in Tatton, in Richmond (Yorks), represented by the Foreign Secretary, and in Derbyshire Dales, represented by the Government Chief Whip. Indeed, it is four times the level in Sheffield Hallam, represented by the Deputy Prime Minister. All those areas will benefit from the scheme, while areas of severe deprivation in London will not.

Let us look at the constituencies of coalition Cabinet members. Berwickshire, Roxburgh and Selkirk has 2.8% unemployment, North East Somerset has 1.6%, Tatton has 2.1%—

[Jacob Rees-Mogg (North East Somerset) (Con)]

Will the right hon. Gentleman give way?

[Mr Hanson]

In a moment. [Interruption.] Not North East Somerset. The hon. Gentleman knows that I meant the Defence Secretary’s constituency. I am sure that the hon. Member for North East Somerset (Jacob Rees-Mogg) will eventually make the Cabinet, however, because he is an assiduous attender of the Chamber.

Richmond (Yorks) has 1.8% unemployment, Derbyshire Dales has 1.6%, Rushcliffe has 2%, Sheffield Hallam has 1.8%, Sutton Coldfield has 2.6%, North Shropshire has 2.7%, and Inverness has 2.3%. All the Cabinet members representing those constituencies will benefit from the payment holiday, while colleagues representing seats in Walthamstow, Islington, Mitcham, Luton North, Luton South, Tottenham, Tooting, Dulwich, Streatham, Hampstead, Vauxhall, Hammersmith and the two in Hackney will not.

If we are to make the scheme fair, taking the point that the hon. Member for Central Devon made, we should divvy up the benefits that the Government are bringing forward in a way that tackles the central issues of deprivation and unemployment.

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

We as a party welcome the initiative, and I am sure the Government will be happy to hear that. It is an important countervailing measure, and we need further such measures. Have the Opposition assessed how much it would cost to roll out the scheme as they suggest in their amendment, and how that would be funded?

[Mr Hanson]

If the scheme were applied to Greater London, the east and the south-east, and taken up at the level that the Minister expects, it would—according to figures that he gave me only last night—cost about £660 million. He says that there are about 1,000 interested companies to date, but I do not know what the take-up would be.

The cost could be offset by new employment and new taxes, because let us remember that the scheme under discussion is for new businesses, so the holiday period offset will be a cost to the Treasury, but it could be offset by increased growth, increased taxation paid by individuals who are employed and by the increased growth of businesses. The cost of the scheme downstream, at the end of the three years, is debatable, but, equally, there are ways in which we could divvy up the money that the Minister has allocated to the regions of Wales—one of which the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) represents—and all others. We could think about whether to divvy them up differently, so as to tackle areas of high unemployment in London or—if the Minister’s criterion is high public sector employment—areas with high public sector employment, such as those that I mentioned. They are in the 10% of areas with the highest such employment, and include seats that the current scheme will not cover.

[Andrew Bridgen]

Will the right hon. Gentleman clarify his statement? Did he just suggest that we cut taxes to increase growth in order to increase the tax take overall? If so, I welcome the right hon. Gentleman as a believer in the Laffer curve.

[Mr Hanson]

The hon. Gentleman knows that the Opposition have a growth strategy. We had one prior to the election.

The measure under discussion has been proposed to give new businesses a national insurance holiday to help them with their costs for three years. The Minister estimates the costs for the three regions as £650 million to £660 million, based on the scheme’s anticipated roll-out in those regions. My simple point is that these are new employment jobs and new businesses, so they will presumably entail new employment areas and new people employed to fill them, who will pay new taxes. All that is part of the growth strategy, which will be hit hard by VAT increases and public spending cuts. That is a separate issue.

If we are thinking about a payment holiday, the question for me is whether it will achieve its objectives by being available in the areas of the highest public sector employment, or whether it will go to areas such as Tatton, Richmond or other wealthy areas of the north and midlands. In those areas jobs will be created, but the people who most need them will not be able to get them. That is the crucial issue for debate.

Without making a party political point of it, I would argue that Government Members have participated constructively both in previous debates on this subject and in today’s debate. John Walker, the chairman of the Federation of Small Businesses has said:

“With small firms in the South East most likely to be working below capacity, this shows how wrong the Government is to not include this vital region, as well as the East and London, in its proposals for a National Insurance holiday for start-up businesses.”

I have already said that we are not going to vote against the Bill—although if the reasoned amendment had been selected we would have voted for that. However, it is important both to consider the issue in the round and for the Minister to reflect on the concerns expressed, by his hon. Friends as well as by Labour Members, about the application of the national insurance holiday.

At the same time as implementing this Bill, the Minister is scrapping completely the regional growth strategy for different departments, and scrapping the regional development agencies and replacing them with local enterprise partnerships, which in my view will not help with regional development to the extent that we would want. The Under-Secretary of State for Defence, the hon. Member for Mid Worcestershire (Peter Luff) has said that that sends out the wrong message about the work that has been done.

We need to look towards a better application of this policy, and the Minister needs to reflect further on the concerns expressed in our debate. Although we will disagree politically, I am most interested in ensuring that any national insurance holiday is of benefit to the people who most need it. Sadly, the Bill misses the mark in that respect, and fails to address those key issues.

I repeat that we will give the Bill a fair passage and not vote against it this evening. We welcome the rise in national insurance, which we too would have implemented. We welcome the holiday provisions as far as they go, but they need further reflection, so we will take every opportunity in Committee to try to persuade the Minister to look at more imaginative schemes, which might use the same amount of money in different ways, or extend the holiday to areas where it would be a valued resource and help reduce unemployment in the constituencies in the south-east, London and the east that most need that.

I hope that what I have said is helpful to the Minister. I look forward to spending the next few weeks in Committee with him, just as I have spent the last few weeks in Committee with him and his colleagues on various other Bills. To make a wholly non-partisan point, the Treasury appears to be one of the busiest Departments at the moment, and we are all having fun. I am sure that our discussions will shortly continue elsewhere.

Savings Accounts and Health in Pregnancy Grant Bill

Lord Hanson of Flint Excerpts

Monday 22nd November 2010 Commons Chamber

[Mr David Hanson (Delyn) (Lab)]

I beg to move amendment 1, page 1, line 1, leave out Clause 1.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

Amendment 17, page 1, line 6 , leave out ‘3rd January 2011’ and insert

‘a date to be set by regulations made by the Secretary of State by statutory instrument’.

Amendment 4, page 1, line 6, leave out ‘2011’ and insert ‘2016’.

Amendment 18, page 1, line 8, leave out ‘3rd January 2011’ and insert

‘a date to be set by regulations made by the Secretary of State by statutory instrument’.

Amendment 5, page 1, line 8, leave out ‘2011’ and insert ‘2016’.

Amendment 19, page 1, line 14, leave out ‘3rd January 2011’ and insert

‘a date to be set by regulations made by the Secretary of State by statutory instrument’.

Amendment 6, page 1, line 15, leave out ‘2011’ and insert ‘2016’.

Amendment 20, page 1, line 17, leave out ‘3rd January 2011’ and insert

‘a date to be set by regulations made by the Secretary of State by statutory instrument’.

Amendment 7, page 1, line 17, leave out ‘2011’ and insert ‘2016’.

Amendment 21, page 1, line 18, leave out ‘3rd April 2011’ and insert

‘a date to be set by regulations made by the Secretary of State by statutory instrument’.

Amendment 8, page 1, line 18, leave out ‘2011’ and insert ‘2016’.

Amendment 22, page 1, line 21, leave out ‘3rd January 2011’ and insert

‘a date to be set by regulations made by the Secretary of State by statutory instrument’.

Amendment 9, page 1, line 22, leave out ‘2011’ and insert ‘2016’.

Amendment 23, page 2, line 2, leave out ‘3rd April 2011’ and insert

‘a date to be set by regulations made by the Secretary of State by statutory instrument’.

Amendment 10, page 2, line 2, leave out ‘2011’ and insert ‘2016’.

Amendment 24, page 2, line 4, leave out ‘3rd January 2011’ and insert

‘a date to be set by regulations made by the Secretary of State by statutory instrument’.

Amendment 11, page 2, line 4, leave out ‘2011’ and insert ‘2016’.

Amendment 25, page 2, line 5, leave out ‘3rd April 2011’ and insert

‘a date to be set by regulations made by the Secretary of State by statutory instrument’.

Amendment 12, page 2, line 5, leave out ‘2011’ and insert ‘2016’.

Amendment 26, page 2, line 8, at end insert—

‘(5) Regulations made under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.’.

Amendment 51, page 2, line 8, at end insert—

‘( ) The Chancellor of the Exchequer must lay a report before Parliament no later than 31 December 2011 on the impact of section 1 on looked-after children in England, Wales, Scotland and Northern Ireland.’.

Amendment 52, page 2, line 8, at end insert—

‘( ) The Chancellor of the Exchequer must lay a report before Parliament no later than 31 December 2011 on the uptake of tax free savings accounts by looked-after children in England, Wales, Scotland and Northern Ireland following the implementation of section 1.’.

Amendment 36, in title,  line 1, leave out

‘To make provision about eligibility for a child trust fund;’.

[Mr Hanson]

The Bill was considered in Committee but it was not amended, despite the fact that we had some 19 Divisions, which showed the strength of feeling among Labour Members. I am pleased to see so many of my hon. Friends who served in Committee in their places today.

The Labour Opposition’s objection to clause 1 was well rehearsed on Second Reading and in Committee, but I regret to tell the House that it will be rehearsed again as we continue to explain our objection to the clause. As ever, I wish to help the Minister and be pragmatic by giving him the opportunity to reflect on the mistake he is making in proposing clause 1 and on the issues we raised in Committee, which my right hon. and hon. Friends want to debate again.

My main concern is to delete clause 1, which amendment 1 is designed to achieve, unless we can get the Minister to reconsider some of the amendments we tabled in Committee, which are before us today. I refer particularly to amendment 17, which would delay the abolition of the child trust fund until such time as the proposed child ISA—individual savings account—came into play. We had that debate in Committee and I will refer to it again later.

Amendment 4 would allow the abolition of the child trust fund to be delayed until 2016. Again, I want to help the Minister and give him an opportunity to fulfil his manifesto commitment to help the poorest third of children in society. At the general election in May, he said that he would not wish to see them disadvantaged by the abolition of the child trust fund.

I also support amendments 51 and 52, tabled by my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins), which raise issues that my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) aired in Westminster Hall relating to looked-after children. It is important to return to those issues again today.

Amendment 1 would delete clause 1. I want the Minister and the House to know that, however pragmatic our approach to the abolition of the child trust fund, our fundamental objective is to ensure that the fund remains for all children, as proposed by the previous Labour Government.

I say that for three reasons. First, we believe that the child trust fund promotes saving, encourages financial education and ensures that all young people have a financial asset at the age of 18, which is particularly important for those who come from poorer families. The child trust fund scheme, introduced by the Labour Government, was having a positive effect between April 2008 and April 2009: a massive 823,504 vouchers were issued—about 70,000 a month; more than 74% of the accounts were opened by parents; and about £2 billion is held in funds. By the end of this year, it is likely that more than 6 million child trust funds would have been opened. That is a success by any stretch of the imagination—a success now being torn up by the coalition Government. Those child trust funds would have helped to support our children when they reached the age of 18. That would have been a progressive measure, which is why Labour Members oppose clause 1.

--- Later in debate ---

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

I am grateful for the opportunity to pass comment on the Opposition’s continued attempts to retain child trust funds. I am struck, in particular, by the nature of their opposition: rather than concentrating on the effectiveness or otherwise of child trust funds as savings vehicles, they appear to have reduced their argument to one about generic usefulness. There seems to be a growing objection to abolishing child trust funds, because somehow the Opposition have inadequate confidence in the junior ISAs or child ISAs that are due to replace them. That is particularly concerning.

I remind those Members who sat on the Public Bill Committee with me, and inform those who did not, of a quote from the director general of the Building Societies Association, Mr Adrian Coles, who said:

“let us not pretend that we need to rely on the Government or the public sector to do all of this. The 49 building societies and other mutuals offer about 100 children’s savings accounts in the free market, which have been pretty successful over the years”.––[Official Report, Savings Accounts and Health in Pregnancy Grant Bill Public Bill Committee, 2 November 2010; c. 26, Q67.]

I know that in Committee concerns were expressed that the customers who take out ISAs might be the more affluent or the more elderly. It was made clear at the time that 12 million people on incomes under £20,000 have ISAs, and that 40% of them are under the age of 44, compared with just 20% who are over the age of 64, so any concerns that younger families are not sharing in ISAs are unfounded.

I was particularly concerned when I heard continued doubts about the ability of families on lower incomes to cope with the financial complexity of an ISA. We need to trust people. A great deal of work is going into financial education—an increasing amount. It is a trend initiated by the previous Government, and I congratulate them on that. We are building on it, so we can have confidence in ISAs as a potential future savings vehicle.

Another reason for opposing the abolition of the child trust fund was the impact that that could have on the needs of families with disabled children. I was shocked by one of the statements by the shadow Minister, the right hon. Member for Delyn (Mr Hanson), when he said that

“the proposal for providing 8,000 week-long respite breaks each year for disabled children in England . . . trivialises the nature of the child trust fund”.––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 9 November 2010; c. 228.]

I found that a disquieting comment. I do not regard respite breaks for children as trivial in any way, shape or form.

[Mr Hanson]

There are two points about those discussions in Committee about which the hon. Gentleman is aware. First, the abolition of the child trust fund takes away a resource that is applicable in Scotland, Northern Ireland, England and Wales, and replaces it with a provision that is available only in England. Secondly, provision for respite care is entirely different from building a capital asset for individuals at the age of 18. That was the objective of the revised proposals from the Minister.

[Paul Maynard]

I thank the right hon. Gentleman for that effort to bring clarity. None the less, I regret the use of the word “trivialise”, if only because I have spoken to many families in my constituency with disabled children. When speaking just a fortnight ago to one family who had benefited from the family fund and had their first holiday in five years, the mother broke down in tears.

I raise the matter not to have a go at the shadow Minister, but to highlight one of the wider issues that was illuminated in Committee: the difference between the accessibility of an asset that is locked away until the young person is aged 18, and the changing needs of families with disabled children—and of looked-after children, for that matter. If we are seeking to target the child trust fund at those in the community who are the most vulnerable, who have the most chaotic lives, who are subject to the most pressures, to whom unexpected things occur, is it truly sensible to tie them into something that can be delivered only when the individual reaches the age of 18?

--- Later in debate ---

[Mr Hanson]

I am grateful to the Minister for his response to the debate. It is self-evident that I am disappointed with the fact that he wishes to continue to seek the abolition of the child trust fund. I did not expect him to accept amendments 1 and 4, both of which gave him an opportunity to stick to his manifesto commitments and save some remnant of the child trust fund.

I have some concerns about the Minister’s responses. I hope to encourage my noble Friends to return to the matter raised in amendment 17, because it is about ensuring that we do not have a hiatus between the abolition of the child trust fund and the establishment of the new child ISA. It simply gives the Minister an opportunity to reflect on the fact that he can delay the abolition for what may be only six or seven months to ensure that he does not have to backdate the child ISA and confuse parents. He can put a product in place and ensure that we know about it by the time of the abolition. I suspect that there will be further debates on the matter in another place, and I hope that amendments will be tabled there to support the aims behind amendment 17.

On the amendments tabled by my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins), I am grateful that the Minister is continuing to discuss what we should do about looked-after children, who are a vulnerable group of individuals. I wish to ensure that he—[Interruption.] I hope that the Minister will listen to this point. He has just said to the House that he is in discussion with his colleagues in the Department for Education about how we deal with looked-after children. I am pleased about that, but I remind him that the current child trust fund is a UK-wide facility funded by the Treasury, which applies in the constituencies of my hon. Friends in Scotland and Northern Ireland as well as in mine in north Wales. If he just brings forward an England-only solution with the Department for Education, that will not satisfy my hon. Friends. I hope that he will reflect on the fact that the current child trust fund is a UK-wide provision for looked-after children. My right hon. Friend is trying to ensure that that is what it remains at a relatively low cost to looked-after children and the state. I do not expect my right hon. Friend to press his amendments, but I do expect the Minister, in the context of the discussions that we will have in another place, to look at a UK-wide solution, not a solution that simply involves him having discussions about England with his hon. Friend in the Department for Education.

[Paul Goggins]

In addition to the points made by the Minister, my right hon. Friend has raised a very serious issue. Any replacement provision for looked-after children would have to be UK-wide to be fair, so his point is clear. I share his thinking on whether I should press amendments 51 and 52 to a vote. When somebody with whom one has a disagreement reaches across and begins to come halfway, one probably does not poke them in the eye just at that moment. I am not tempted to press amendments 51 and 52 to a vote, but my right hon. Friend knows me well enough to know that, the Minister having made the commitment, I will be closely on his tail every inch of the way to make sure that he delivers something for looked-after children right across the United Kingdom.

--- Later in debate ---

[Mr Hanson]

I know my right hon. Friend very well and I know that he will do that. In coming to a solution, will the Minister make sure that it is UK-wide? Will he make sure that it is not based on a postcode lottery, under which one local authority might contribute for looked-after children, while another local authority might not? We want to ensure, at the very least, that we salvage something from this train crash, and that is help and support for looked-after children in our society as a whole.

Based on what the Minister has said, I have no alternative but to press amendment 1, because the abolition of the child trust fund is wrong. Opposition Members believed that it was wrong on Second Reading, we believed that it was wrong in Committee and we believe that it is wrong on Report, so we will press amendment 1 to a Division.

Question put, That the amendment be made.

--- Later in debate ---

Repeal of Saving Gateway Accounts Act 2009

[Mr Hanson]

I beg to move amendment 2, page 2, line 9, leave out Clause 2.

[Madam Deputy Speaker (Dawn Primarolo)]

With this it will be convenient to discuss the following:

Amendment 13, page 2, line 10, at end insert ‘with effect from 1st January 2014’.

Amendment 14, page 2, line 10, at end insert—

‘(1A) The provisions in subsections (2) to (5) come into force with effect from 1st January 2014.’.

Amendment 15, page 2, line 36, in clause 4, leave out subsection (2).

Amendment 16, page 2, line 39, leave out ‘The rest of this Act ‘ and insert ‘This Act, apart from section 2’.

Amendment 27, page 2, line 39, leave out ‘The rest of’.

Amendment 40, page 3, line 1, leave out subsection (4).

Amendment 28, page 3, line 1, leave out from beginning to ‘3(1)’ and insert ‘Section’.

Amendment 29, page 3, line 2, leave out ‘extend’ and insert ‘extends’.

Amendment 41, page 3, line 4, leave out subsection (5).

Amendment 31, page 3, line 4, leave out from beginning to ‘3(2)’ in line 5 and insert ‘Section’.

Amendment 32, page 3, line 6, leave out ‘extend’ and insert ‘extends’.

Amendment 39, page 3, line 7, leave out ‘The rest of’.

Amendment 37, in title, line 1, leave out ‘to repeal the Saving Gateway Accounts Act 2009;’.

[Mr Hanson]

We are in danger of repeating discussions that we had in Committee, but the Prime Minister has said that opposition is an important constitutional duty, and I intend to fulfil it in the next hour on the question of saving gateway accounts.

Amendment 2 seeks to remove the abolition of those accounts by removing clause 2. As ever, and as I said in relation to the first group of amendments, I am trying to be pragmatic. The Minister will note that amendment 13 seeks merely to delay the abolition of the saving gateway until 1 January 2014 to allow him and his officials a period of reflection in which they can examine whether abolition is required.

The saving gateway, which was originally introduced in the Saving Gateway Accounts Act 2009, is important—[Interruption.]

[Madam Deputy Speaker]

Order. One conversation in the Chamber is quite enough at any one time, and the conversation we are supposed to be hearing is the shadow Minister addressing the House.

--- Later in debate ---

[Mr Hanson]

I am grateful, Madam Deputy Speaker. This debate is about how we help poorer people in society and save resources. Of course, that might not interest all hon. Members in the Chamber today, but that is another discussion—[Interruption.]

The Saving Gateway Accounts Act was introduced to pave the way for a national scheme. Members will be aware that the saving gateway was to be a cash savings account for those on lower incomes. It was to provide a financial incentive to save, with the Government making a matching contribution for each pound that people saved in the scheme. The saving gateway was first proposed in 2001, after which it was consulted upon and piloted twice. In total, more than 22,000 people took part in the pilots, achieving an additional £15 million of savings. As Members will know, accounts would have run for two years and would have been offered by financial institutions such as banks, building societies and credit unions. The Government would have contributed 50p for each pound saved, which would have been paid at the end of the accounts.

The criteria for opening a saving gateway account were fairly straightforward. If an individual in the community was on income support, jobseeker’s allowance, incapacity benefit, employment support allowance, severe disablement allowance or carer’s allowance, or if they were on tax credits and their income was less than £16,040 a year, they would qualify for the saving gateway scheme. The objectives of the saving gateway scheme were quite simple: to kick-start a savings habit among people on lower incomes, by providing a strong incentive to save through a matching fund contribution from the Government; and to promote financial inclusion by encouraging people to engage with mainstream financial services.

The pilots, which were successful, were delivered in partnership with the then Department for Education and Skills, with the Halifax bank—now HBOS plc—providing banking facilities. The first pilot ran from August 2002 to November 2004, with individual accounts open for an 18-month period. In the first pilots, about 1,500 people took part, and the scheme covered five areas: Cambridge, east London, Hull, Cumbria and Manchester. People living in those areas were eligible to open an account if they were of working age—between 16 and 65—and had household earnings of less than £15,000 or individual earnings of less than £11,000, or if they were out of work and receiving benefits, as I have described. Individuals in the first pilot were allowed to save up to a limit of £25 a month in the account, up to a maximum of £375 overall, for which they received a pound-for-pound match when the account matured. A final evaluation of the first pilot was produced in March 2005. Based on that pilot, the largest saving gateway pilot was run in the same five locations, as well as in another area, south Yorkshire. That pilot started in March 2005, and the accounts were open for 18 months, as in the first pilot. In total, around 22,000 accounts were opened and the second pilot was opened to a wider income group, including households with incomes of less than £50,000, individuals with incomes of less than £25,000 a year and, similarly, those receiving benefits.

The point of the pilots was to establish whether the scheme would be successful and whether it would meet the objectives that we had set, which were to encourage lower-income savers and to ensure that individuals saved resources that they would not have saved previously. The key findings from the pilots were that the saving gateway scheme generated new savers, that new saving was generated among existing savers and that the scheme brought individuals into contact with mainstream financial institutions for the first time. Research from the pilots showed that 60% of participants were still saving regularly two years after they had ended, and that three in 10 participants who were not saving regularly before the pilot were now doing so. Participants were extremely positive about the saving gateway. I quoted in Committee the fact that 98% of people involved in the pilots said that they would open another saving gateway account if offered the chance, while an astonishing 99% would recommend it to a friend.

--- Later in debate ---

[Mr Hanson]

I am a realist—the Government have changed—but any realist would say that before the election the Conservative party and the Liberal Democrats supported the then Bill, along with my right hon. Friend the Member for Edinburgh South West, the then Chancellor, and his team, and every other Labour Member. Nothing has changed since except for the change of Government, which has meant that the Minister and the Liberal Democrats have stood on their heads and jettisoned the scheme, which would have been in place in July and would have helped to support the poorest in our society.

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

There is another significant change since that time, which is the financial mess that we found we had inherited. This Bill, along with other measures, has to sort out our finances. When the Public Bill Committee took evidence, Carl Emmerson of the Institute for Fiscal Studies said:

“I think that £1,000 at age 18 will improve their life outcomes and will help. I think that the money spent on education or on increasing their family’s incomes over those first 18 years is probably going to help more.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 12, Q23.]

Does the right hon. Gentleman agree?

[Mr Hanson]

There are two points about that. I do not wish to cause the hon. Lady any difficulty, but I think that her intervention relates to the previous group of amendments, on the child trust fund. We are now talking about the saving gateway account, which is for poorer people. It does not relate to people under the age of 18, and if she looks at Hansard, I think that she will realise that she is talking to the previous group of amendments.

However, I should also say that if the hon. Lady thinks that the current financial situation is difficult, I look forward to her supporting amendment 13 in the Lobby, because it would give the Minister time to reflect. Amendment 13 says that we should delay scrapping the saving gateway until 2014. We have had the saving gateway account—which the Minister and the Liberal Democrats supported in opposition and which Labour supported in government—which has had its pilots. The pilots have proved successful, and by any assessment more people have saved, resources have been generated and people on low incomes have learned the saving habit. The Bill abolishes the saving gateway account that was to be implemented in July this year, until the Minister put that on hold.

Two amendments are the focus of the debate. Amendment 2 would delete clause 2, so that the saving gateway account would not be abolished. However, I am being pragmatic, and I tabled an amendment to abolish the saving gateway account on 1 January 2014. That would provide a three-year gap in which the Minister could, as the hon. Member for Truro and Falmouth (Sarah Newton) said, look at the economic situation and assess whether the financial contributions are practical and desirable. I happen to believe that they are, and that the scheme is affordable now, but I will park that debate for the moment, and simply tell the Minister and the hon. Lady that if they accepted amendment 13, they would accept minimal cost, if not almost no cost, to the Treasury. All that would be abolished, effectively, is the pilots, and their assessment. The saving gateway scheme has not started, and there would be no financial contribution to it because it did not commence in July 2010.

The Minister could accept amendment 13 and not commence the scheme next year. He could accept it and not commence it in 2012, or 2013. He could make an assessment in 2014 of the principles that he espoused in Opposition with his hon. Friend the Member for Taunton Deane—that the scheme is a positive one that brings benefits. If the economic situation improves during those three years—the Minister presumably believes it will as a result of his other economic policies—he could consider returning to the saving gateway scheme without repealing the Saving Gateway Accounts Act, which is what the clause will do, and end any possibility of the scheme being introduced.

I am offering the Minister an opportunity. He need not abolish the scheme, but could reflect on it. He could delay its commencement until 2014, and not rip up a scheme that he supported in opposition, and on which valuable work was done in five areas in the first pilot, and in those areas plus south Yorkshire in the second pilot.

The Minister has a duty to explain why he believes the scheme should not progress now. If the reason is finance, amendment 13 provides the opportunity to reflect on that. The Opposition would swallow our pride and support him in not having the saving gateway scheme starting this year, next year or the year after. That would be a big step for us, but we might consider it if he would accept amendment 13.

[Bill Esterson]

Is not the truth about the Government’s position on the saving gateway that if they were serious about using it as part of tackling the deficit, as the hon. Member for Truro and Falmouth (Sarah Newton) said, they would support amendment 13 and delay repeal of the 2009 Act, because improving the financial habits of people from the poorest backgrounds is part of what the coalition Government say is their solution to the country’s financial problems?

[Mr Hanson]

I thank my hon. Friend for his intervention. He emphasises that amendment 13 would not cost the Government anything. If it cost anything, it would be a minuscule amount to maintain the scheme because it has not yet started. The Minister froze it, and said that he would not start it in July 2010, as planned by the previous Labour Government. All the expense to date has been on the pilots in phase 1 and phase 2. I remind him that the legislation had his support and that of his hon. Friends the Liberal Democrats without a vote on Third Reading, and with warm words being spoken by them in Opposition. The situation now—it is self-evident to my hon. Friends—is that we have a scheme that is on the statute book and that has been successfully piloted but has not commenced. Amendment 13 gives the Minister the opportunity to delay its commencement until at least 1 January 2014.

If the situation improves and the Minister’s economic policies ensure that we tackle the deficit, build a strong economy, recoup our money from Ireland and consider all the issues that we have talked about during debates on the economy over the past few months, he will be able, if he wants, to go back to his electorate in Fareham, Truro, Falmouth and everywhere else and say, “Not only have we helped to tackle the deficit, we have not hit poor people in doing so.” He will have secured a scheme that he can continue to implement because he will be able to repeal the 1 January 2014 date later. Presumably, both the Liberal Democrats and the Conservatives thought that it was a good thing in February last year, or they would have voted against it on Third Reading, and would not have used such warm words to describe it from the Opposition Dispatch Box.

[Sarah Newton]

I agree that the coalition definitely wants to enable people to make better financial decisions, and I am sure that the Minister will detail all the ways in which we plan to do that, but I want to bring the right hon. Gentleman back to the evidence that we heard about the saving gateway from the Institute for Fiscal Studies:

“There was not any really strong evidence from the saving gateway that it led to more overall saving from lower-income households.”

I could go on. There is not the strong evidence base that the right hon. Gentleman refers to.

[Mr Hanson]

That is not what the pilots showed. They showed that there were new savings, engagements and increased resources. Does the hon. Lady believe that, at no cost, we could maintain the saving gateway on the statute book, allow it to develop for the next two to three years, and not abolish the scheme until 1 January 2014? If she voted for amendment 13 tonight, she would vote not to spend any money or to start the scheme but simply to say, “Let’s note the pilots that have taken place and that the legislation is on the statute book, but let’s not repeal it until a future date.”

That option would allow the Minister to accept the amendment and reflect on the matter. I remind him that not only did he and the hon. Member for Taunton Deane support the measure in February, but nowhere in the coalition agreement or at the general election was there a manifesto commitment to abolish the saving gateway account—[Interruption.] The hon. Member for Birmingham, Yardley (John Hemming) asks whether it was in our manifesto. No, it was not. The Minister knows that it was not in his manifesto, but it was certainly in ours to maintain it once it had started.

We heard warm words about the scheme before the general election, no words about its abolition during the election and no manifesto commitment to do so. We have had successful pilots, and there is an opportunity tonight for me to put aside my wish for it to start in July and to ask the Minister not to abolish the scheme now, but to reflect on it and allow it to stay on the statute book. If it is a good scheme, as it presumably was in February and at the election, the Minister could return to it in the future and decide whether the Government can afford to contribute to it.

The pilots showed that the scheme increased poorer people’s savings. They were successful, and I hope that the Minister will not throw it out and stand on its head what he said in February 2009. He has had plenty of other opportunities to do that.

--- Later in debate ---

[John Hemming]

Indeed. The difference with this particular scheme was that it was to provide a way of matching funds that people put into their savings. If we go back to the evidence session, we find that the Institute for Fiscal Studies was asked whether it thought the child trust fund did no harm; in fact, it showed that this particular scheme had the potential to do harm by encouraging people to put money into the savings account rather than pay off the debt at the time. The Royal College of Midwives said that if people have just had a baby, it is better for them not to save money, but to spend it on healthy living and feeding the baby well. I believe that this is where the Opposition are fundamentally wrong. According to the IFS—again, I stress the IFS rather than the Government or the previous Government —there was no strong evidence that greater saving was encouraged.

[Mr Hanson]

I would be grateful if the hon. Gentleman could tell us why the Minister of State, Foreign and Commonwealth Office, his hon. Friend the Member for Taunton Deane (Mr Browne) supported the scheme prior to the election, did not oppose it during the election and did not vote against it on Third Reading?

[John Hemming]

We need to find some way of reducing this country’s borrowing. We do not want to end up like Ireland or Greece. If, on looking around, we find something that costs £115 million—

[Mr Hanson]

Why not support amendment 13 to delay the abolition for three years and see whether the economy picks up?

[John Hemming]

If there were an amendment to say that we should delay it until it is instituted by order, I would find that more reasonable, but I do not think we should set a date in the future. If there is not sufficient independent evidence that this scheme achieves a result and there are good arguments to show that there are better ways of helping people in these circumstances, I would press the Government to consider them and work with organisations such as the credit union movement to ensure that everyone has access to accounts, is encouraged to balance out their financial positions and gain wider access to crisis loans.

--- Later in debate ---

[Mr Hoban]

Let me make some progress and explain why we are repealing the Saving Gateway Accounts Act 2009. The repeal is part of our deficit reduction policy. The right hon. Member for Delyn (Mr Hanson) quoted from my Second Reading speech. It was the third time that I had heard him use the same quotation. Let me now, for the third time, expand a little on what I said on that occasion. I said:

“The pilot scheme demonstrated some benefits, but it demonstrated some challenges too… What are the long-term benefits? What are we getting in return for the quite generous bonus that we are giving to savers?.. In the second pilot, questions were raised about whether the scheme was effective… First, there was no statistically significant evidence that, in delivering genuinely new savings, the saving gateway accounts delivered higher overall net worth.”

I referred to a

“number of anecdotes, rather than hard evidence, used to support the proposal”,

and added:

“It appears that money was moved from one set of savings to another, perhaps from a current account to a savings gateway account, simply to secure the Government match.”—[Official Report, 13 January 2009; Vol. 486, c. 145.]

While accepting the principle behind the saving gateway account, we nevertheless flagged significant concerns about its effectiveness.

The right hon. Gentleman mentioned the pilots. According to the conclusion from the second pilot,

“when we look at a broader measure of net worth (including investments as well as all cash deposit accounts), there is no statistically significant evidence that funds held in these forms have increased… we nevertheless do not find statistically significant evidence of an increase in overall net worth among this group.”

Carl Emmerson said in his evidence to the Committee:

“There was not any really strong evidence from the saving gateway that it led to more overall saving from lower-income households.”––[Official Report, Saving Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 18, Q42.]

Given the fiscal constraints that we face, we must question the value for money to be obtained from this project. It would be nice to be able to proceed with it, but the evidence suggests that it does not increase saving and does not possess the benefits ascribed to it by Labour Members. Not only is the evidence of its effectiveness in question, but it would cost more than £300 million over the next five years, which makes it unaffordable in the light of the need to reduce the deficit.

The other strand of the argument, touched on by the hon. Member for Makerfield (Yvonne Fovargue), is access. Who would be able to gain access to the saving gateway account? My hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) echoed Adrian Coles, the director general of the Building Societies Association, who said that

“no building society had committed to offering a saving gateway account”.

Eric Leenders of the British Bankers’ Association said

“there were only a couple of providers who felt that it was suitably beneficial for them to provide the account.”

The banks that said they would provide accounts were Royal Bank of Scotland and Lloyds. The Post Office would take part in the scheme only if it received more taxpayers’ money.

I do not think we would have seen the easy access that the hon. Lady believed to be a key part of the scheme’s attraction. The only credit union outlet in my constituency is in a deprived area, and is open for only a short time each week. In my constituency, credit unions would not have been a vehicle for access to the saving gateway account.

Given that we do not intend to proceed with the scheme, we should leave no room for uncertainty among financial institutions or advice-giving bodies, and the best way in which to be clear about our intentions is to repeal the 2009 Act. I believe that if a future Government revisited the scheme, they would design it very differently. If the right hon. Gentleman wishes to press his amendment to the vote, I will ask my hon. Friends to oppose it.

[Mr Hanson]

I am disappointed by the Minister’s response, but that is the nature of the role that I currently fulfil. He did not oppose the saving gateway in opposition or in the general election; he did not vote against Third Reading of the Saving Gateway Accounts Bill; and he could have taken the opportunity today to accept the amendment enabling him to delay the repeal of the Act until a later date in order to judge how the economic situation developed. I have to assume that he says one thing in opposition and another in government, and that he is abolishing the scheme on the basis of dogma rather than the economic situation. I urge my hon. Friends to reject clause 2, and to support the amendment.

Question put, That the amendment be made.

--- Later in debate ---

[Mr Hanson]

I thank the Minister for his opening remarks on Third Reading. He and I have got to know each other, as Minister and Opposition spokesperson, and other members of the Committee quite well over the past few weeks. We have now discussed the key issues on Third Reading. He will know that we have had a total of 23 votes on Second Reading, in Committee and on Report. I hope that that illustrates the strength of feeling about the Bill among Labour Members. It contains only four clauses, yet we have managed to have 23 votes on a range of issues as we continue to oppose the Bill. We have fought the Bill at every opportunity, and will continue to do so in another place shortly.

We oppose the Bill because the abolition of the child trust fund will reduce the opportunity for the poorest in our society to have a capital asset at 18. We oppose it because the abolition of the saving gateway scheme will reduce saving opportunities for the poorest in our society. We also oppose it because it will reduce the help available to pregnant women by stopping the £190 grant that is available to them in the 25th week of their pregnancy. Again, I must point out, for the Minister’s benefit, that that will hit the poorest in our society the hardest.

As Opposition spokesman, I have tried to be as pragmatic and helpful to the Minister as possible on a number of occasions. I have tried to help him by giving him an opportunity to delay the implementation of the Bill, so that we could see whether some of our economic woes—which are difficult and challenging at the moment—are overcome in the next three years. We offered the Minister the opportunity to postpone implementation of the bill until 2014, or 2016, but he rejected it. We offered him the opportunity to have payment holidays, but he rejected it. We also offered him the opportunity to deal with Wales, Scotland and Northern Ireland differently, but he rejected it.

We offered the Minister the opportunity to fulfil his manifesto commitment to keep the child trust fund for the poorest third of our society, for those on disability living allowance and for looked-after children—a point that my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins) has particularly focused on during the debate. We have considered a range of issues, including whether the Bill needed a proper equality impact assessment, but the Minister has chosen to reject them all. Well, so be it; that is his prerogative. I believe that he has made the wrong choices in relation to tackling the deficit, by putting women, children and the poorest at the forefront of his deficit reduction plan.

In doing that, the Minister has broken his manifesto commitments on the child trust fund for the poorest third, for looked-after children and for those on DLA. He has made a U-turn by abolishing the saving gateway scheme, which he supported during the election and right up to the moment when the Bill was introduced, and by abolishing the health in the pregnancy grant, for which he had no mandate. He never argued for its abolition at the general election, or mentioned having to cut it; he never said that he was concerned about it at all. He must have known at that stage that there would be, as there are, challenges for whoever won the general election to ensure that we met those needs.

The Bill abolishes the child trust fund completely; it abolishes the saving gateway completely; it abolishes the health in pregnancy grant completely. It is the deficit reduction plan hitting women, children and the poorest in our society the hardest. The Minister will know that the child trust fund was introduced by the Labour Government not just as a way of helping poorer people to save, but as a means of ensuring that we have individuals with a capital asset at the age of 18. He will know that there was a take-up of about 70,000 a month until he introduced this measure in July; with this Bill, we now look to 3 January 2011. He will know that 6 million families and people have the child trust fund in operation at the moment, but that in future that opportunity will be denied to individuals across the UK because this Minister has chosen—of all the choices he could have made—to ensure that the deficit reduction plan falls on those people who need the help and support the most. The Minister will also know that £2 billion of saving has been generated by the child trust fund to date. He will know that it might not be generated in future because the partnership between Government, the state and individuals will no longer be there in future.

In its place, the Minister wafts in front of us the prospect of a child ISA for the future. I await the details, but so rushed is this proposal that it was not even worked out fully for the Committee. So rushed is this Minister that he brings a proposal before the House today, yet he cannot even say what the child ISA scheme will be in detail. He cannot say when it will definitely be introduced. He cannot say whether contributions from looked-after children—an issue brought to our attention by my right hon. Friend the Member for Wythenshawe and Sale East—will be possible. He cannot say how much will be involved or how the scheme will operate downstream, yet he asks us today to abolish the child trust fund, which has had a proven record of saving success to date.

The Minister brings forward the abolition of the saving gateway, doing away with the Saving Gateway Accounts Act introduced in 2009, even though it was not opposed by the Conservatives on Third Reading. The purpose of that scheme was to promote savings habits among working-age people on lower incomes. He will know that we have had two pilots, neither of which was criticised by the Minister at the time, and they involved 22,000 people generating £15 million of savings—helping poorer people to save for the future. He does this at a time when his deficit reduction plan is going to put 500,000 people in the public sector on the dole. With VAT increases, with loan sharks operating in the community and with the collapse of schemes such as Farepak, which my hon. Friend the Member for Makerfield (Yvonne Fovargue) mentioned in Committee, the Minister will find that the need to give help and support to poorer savers is even greater now than before. But, no, the Minister will not even allow a three-year gap to see whether the economy recovers. The scheme would not cost him a penny in the next three years, but he wishes to abolish it because of dogma—nothing else but dogma.

When he abolishes the saving gateway scheme and when Government Members vote for that abolition this evening, they need to know that they are voting to ensure that people on working tax credit, income support, incapacity benefit and jobseeker’s allowance, and other low-income people will be denied the benefits of that scheme. Let us remind the Minister that a Labour Government would have brought this into play in July 2010, supported by our Chancellor and supported by a deficit reduction plan in last March’s Budget that would have ensured that we halved the deficit within four years.

Last of all, the Government are abolishing the health in pregnancy grant—a one-off tax-free payment of £190 to mothers-to-be who are 25 weeks pregnant. We can debate it and have debated it in detail, but nobody can deny that a £190 grant would have helped the poorest pregnant mothers in our society to meet the costs of their pregnancy and to ensure, as my hon. Friend the Member for Bristol East (Kerry McCarthy) said, that they receive further help and support through medical advice in the 25th week and beyond, linked to medical visits. The Minister knows that 750,000 qualifying pregnancies each year will not receive the grant. Again, he has hit women—pregnant women—and children hardest.

It would be different if the Government’s proposals were due merely to the fact that these were Labour Government initiatives. However, Mike O’Connor, chief executive of the watchdog group Consumer Focus, has said:

“The Saving Gateway would have been a great opportunity”.

The Child Poverty Action Group, which was led with distinction by my hon. Friend the Member for Stretford and Urmston (Kate Green), has said:

“It’s a real shame that this move to help people build up savings to deal with crises… should be scrapped.”

The National Childbirth Trust has said:

“At a time when families are trying to make ends meet, the Coalition Government has hit parents particularly hard. Cutting pregnancy and maternity grants”.

The Royal College of Midwives—this answers the point made by the hon. Member for Central Suffolk and North Ipswich (Dr Poulter)—has said that it is

“disappointed at the decisions to abolish the Health in Pregnancy Grant”.

A common thread runs through the Bill. The Government are hitting the poorest hardest. They are ensuring that those who need the help, support and partnership of the state are hit hardest; and although they claim to be doing it in the name of deficit reduction, they are actually doing it in the name of dogma. I urge my right hon. and hon. Friends to reject the Bill, but I also urge the Minister to reflect on the fact that, although there is much on which we have disagreed today, there are still areas on which we can reach agreement.

I particularly hope that the Minister will examine in detail the methods and discussions being undertaken by my right hon. Friend the Member for Wythenshawe and Sale East in regard to looked-after children, and that he will return with positive proposals so that, although the Bill has not been amended in this House, amendments may be made in another place. Whatever the Minister says about the need to abolish help and support through the child trust fund, or about the removal of the saving gateway or pregnancy grants, he must know that looked-after children do not have parents who are responsible for them. Their parents may be dead, or they may be in difficult circumstances—they may be in prison, or involved with alcohol or drugs. But the Minister knows that those parents are not there to support their children, and he should know that in that instance, if in no other, the state needs to step in.

[Graeme Morrice (Livingston) (Lab)]

I agree with my right hon. Friend that the Government’s proposals are a direct attack on the poor. In my constituency 7,824 children, many from backgrounds that are less than affluent, currently benefit from the child trust fund. The Minister said earlier that it was a luxury that we could not afford. Does my right hon. Friend agree that that is an affront to all those people in my constituency and throughout the country, many of whom are impoverished?

[Mr Hanson]

I am grateful for my hon. Friend’s comments. The Minister and the Conservative party—and let us not forget their partners, the Liberal Democrats—are ensuring that they hit such people hardest in abolishing the child trust funds, particularly looked-after children and those whom they said they would defend, the poorest third. They are hitting people on jobseeker’s allowance who would have benefited from the saving gateway. As for the removal of the health in pregnancy grant, the loss of £190 may not be the end of the world for many people, but for the poorest in our society it was a contribution on which they depended to ensure that they met the costs of pregnancy.

Whatever disagreements the Minister and I have had—and we have had many over the past few weeks—I hope that he will take the opportunity to consider some of the key issues that he can still salvage. I hope that he will at least ensure that we can provide a partnership for looked-after children. Undoubtedly all the promises that he made before the election will be quoted again in another place, and every one of the issues will be tackled again there. We shall see what is said in the other place, but I hope that the Minister will reflect on those issues. In the meantime—with some pride in what the Labour Government did—I urge my hon. Friends to reject the Conservative-Liberal Democrat proposals.

Oral Answers to Questions

Lord Hanson of Flint Excerpts

Tuesday 16th November 2010 Commons Chamber

[Mr David Hanson (Delyn) (Lab)]

Will the Minister take time to remind the House of the Government’s manifesto commitment in the May general election to retain the child trust fund for the poorest third of children in society? Does she accept that looked-after children predominantly will fall into that poorest third? Will she therefore consider the amendments to the Savings Accounts and Health in Pregnancy Grant Bill so that she can meet her manifesto commitments, or will it be a case, again, of hitting the poorest hardest?

[Justine Greening]

I do not accept that we did not follow our manifesto commitment. The House had another difficult debate on Second Reading of the Bill, and yet again the Labour party seemed to want simply to ignore the challenges that our country faces. In doing so, it does the public a disservice.

Terrorist Asset-Freezing etc. Bill [Lords]

Lord Hanson of Flint Excerpts

Monday 15th November 2010 Commons Chamber

[Mr David Hanson (Delyn) (Lab)]

For the avoidance of any doubt, I should say that the Opposition support the aims and objectives of the Bill, are grateful for the Minister’s explanation and will not oppose the Bill this evening. Indeed, as the hon. Gentleman said, the Bill had a considerable genesis in the work of previous Governments on these matters. Its purpose is to continue the asset-freezing regime that the previous Labour Government put in place, and to put it on a more secure legislative platform. It is an aim that we support, and one that, but for the election, we would have progressed ourselves.

At the heart of the Bill is the ambition to maintain a strong, effective and proportionate system in order to tackle the continued threat of terrorism, which the Minister mentioned. The legislation has been sent to us from another place, where it has been carefully scrutinised, and some amendments have been made to ensure that the actions remain proportionate to the threat that we face.

As the Minister said, the Bill had its genesis not only in our international obligations, but in our own assessment of how we tackle the international terrorist threat. There have been a series of United Nations Security Council resolutions, demanding that states take action, including by asset freezing. In response to 9/11, the Security Council passed a further set of resolutions, requiring states to take greater steps to freeze the assets of those involved in terrorism. The Minister mentioned resolution 1267, which, in 1999, provided for the freezing of funds and other financial resources derived or generated from property owned or controlled by the Taliban; and resolution 1333 took that further by stating that states should freeze the funds of Osama bin Laden. In the aftermath of September 2001, the Security Council broadened its approach, requiring that action be taken against everyone who had committed or attempted to commit terrorist acts or facilitated their commission.

As the Minister said, the United Kingdom gave effect to those and other resolutions through Orders in Council under the United Nations Act 1946, and he also mentioned the decision on the challenge to those orders in the case of Ahmed and others v. HM Treasury. Indeed, it was the first ever hearing of the Supreme Court, which is just over the road. The Minister will know and the House should know that, on behalf of the Labour Government, the former Minister and Member for Portsmouth North, my then hon. Friend, Sarah McCarthy-Fry, brought forward fast-track primary legislation to restore the UK’s asset-freezing regime. We intended to go on and produce a piece of permanent legislation, of which the Bill before the House is a part, after consultation.

We know that, because the existing terrorist asset-freezing legislation that the then Labour Government introduced is only temporary, new legislation is required, and we welcome this attempt to put the measures on a more secure and durable footing today. That is not to say that we will not fulfil our constructive role as an Opposition and scrutinise the measures in Committee and on the Floor of the House. I hope that the Minister would expect nothing less. I am sure that he would have done the same—[Interruption.] He says that he is used to it. The Minister and I have had a number of constructive run-ins over the past few weeks on Bills, and we have a few more to come. On this Bill, I can assure him that there will not be the conflict that we have had in previous discussions, but I am sure that he would want us to test it in Committee.

Indeed, the Committee stage will give the Minister the opportunity to comment on this week’s report from the Joint Committee on Human Rights, which is on the Table of the House. The Joint Committee has looked at the Bill in detail and raised a number of issues, including the need for a higher standard of proof, the need for transparency on the use of closed material and the proposal that the reviewer should be appointed by Parliament rather than by Government.

I say to the Minister that those suggestions do not necessarily have the support of the Opposition; indeed, we may not have supported them in government. However, it is important that they are considered and that the Minister responds to them, so that there is clarity about the Government position and the Opposition position on this issue, and so that we do not just ignore the concerns that have been expressed but at least respond to them in due course.

[Dr Hywel Francis (Aberavon) (Lab)]

rose—

[Mr Hanson]

I am pleased to see that the Chairman of the Joint Committee is in the Chamber and I will certainly give way to him.

[Dr Francis]

I thank my right hon. Friend for giving way and for his warm words of support for our report. Can he elaborate on why he would not necessarily support our proposed amendments?

[Mr Hanson]

My hon. Friend has raised a number of issues in the report, and those need to be examined. However, regarding the three points that I have mentioned—including a higher standard of proof—it is my view that the key issue for the Government and the Opposition is to ensure that we take action to stem the flow of funds to terrorists. That means that there are potentially some issues whereby that lower standard of proof would achieve that objective and is still open, as the Minister himself said, to challenge and review. On closed material, very often information crosses Ministers’ desks—I was the Minister with responsibility for policing and terrorism in the previous Government—that they are aware of and act upon, but the disclosure of which could potentially compromise the security of the United Kingdom.

There is a debate to be had—I thank my hon. Friend the Member for Aberavon (Dr Francis) for raising this point—about who the reviewer of this legislation is accountable to. In the Joint Committee’s report, he suggests that the reviewer should be accountable to Parliament rather than Government. We currently have a reviewer of terrorist legislation that is independent of Government but accountable to the Home Office.

We need to have some clarity on those issues, and I think that they are worthy of debate. I am not closing the book on any of them, but I do not wish to come to final conclusions today based on the Joint Committee report, which was produced only over the weekend.

[Dr Huppert]

On the subject of the standard of proof, is the right hon. Gentleman saying that it is the Opposition’s policy that we should be applying measures to people where we think it is more likely that they were not involved with any terrorist activity than that they were? That is the implication of what he is saying.

[Mr Hanson]

The official Opposition’s view is the same as that underlying the Bill that is before the House. We have always held the view that there is a need to take action, as set out in the clauses in the Bill that indicate that, when there is information, the Minister can bring forward an order and designate the individual according to a standard of proof that may not be a conviction standard of proof but responds to a level of concern that leads the Minister to want to take action. We support that.

As I said to my hon. Friend the Member for Aberavon, we will look at the suggestions that were raised on Friday in the final draft of the Joint Committee’s report. However, there are proposals in the report that I suspect I would not have supported as a Minister and that I will therefore not necessarily support as an Opposition spokesman. Nevertheless, we will give them due consideration; indeed, I may even table amendments that reflect the Joint Committee’s deliberations while ultimately allowing the Minister the opportunity to respond to them, so that there is a debate. I may not even necessarily force those amendments to a vote.

[Keith Vaz]

Although I obviously accept the thrust of what my right hon. Friend says, there seems to be something of a love-in going on between the two Front Benchers on this issue, and it always worries me when Front Benchers are in agreement over everything.

I am concerned about those who have had their assets frozen and who have now had their orders revoked; there are 13 people in that situation, according to the written ministerial statement. What do we say to them? They have had their bank accounts frozen and, in a sense, someone has believed that they have in some way been linked to terrorism; there is a reasonable suspicion of that. It will be pretty difficult for them now, will it not?

[Mr Hanson]

First, may I assure my right hon. Friend that there is no love-in between the Minister and myself? We have been jackets-off for the past week and a half in a Committee dealing with another Bill, and I suspect that we will be jackets-off next Monday dealing with the same Bill. However, where there is agreement on this issue, we will maintain that agreement, and I think that the Minister and I agree that the powers before us are proportionate. In the cases that my right hon. Friend mentioned, people will have an opportunity under the Bill to appeal, and there will be independent oversight. Those are important safeguards.

Ultimately, the most important liberty of all must be people’s right to live in a society free from the fear of terrorist attack and from incidents such as those that we have seen not far from the House of Commons in our capital city of London in recent years. We need to ensure that we take action, but that it is proportionate in cracking down on those who look to perpetrate acts of terrorism.

Having said that, I did not intervene on the Minister and I would still welcome some clarification. It is particularly important to know how the role of the independent reviewer of asset freezing will be constituted, and such clarification might, indeed, help my right hon. Friend. I would like to hear from the Minister about certain issues at some point—I give him due notice that these are issues for Committee. How will the independent reviewer be appointed? Will he or she be the same person as reviews terrorism legislation? Currently, that is Lord Carlile, but the appointment of David Anderson QC, was recently announced. Will this be a completely different role or a parallel role? What will the budget for the office be and how will the office work?

We need to look separately at some of the considerable powers that the Bill gives the Treasury; for example, in clause 31, which deals with appointing the reviewer, and in clause 3, on the notification of final designation. Clause 3(3)(iii) gives the Treasury powers to do things that are

“in the interests of justice”,

but that term can be defined quite widely. I will therefore be testing the Minister in Committee, not out of broad opposition to the proposals, but so that he can clarify these issues. Those who ultimately read the proposals that we make in Committee and on Second Reading will then understand the powers that we are giving the Treasury and, in particular, how the Treasury will disclose matters and use those powers. I give the Minister notice that although we are giving him a free ride today, we will still look in Committee at how powers such as those in clause 3 are intended to be used, what

“in the interests of justice”

means, what we define as being

“in the interests of national security”

and what

“for reasons connected with the prevention or detection of serious crime”

actually means. Although we support the Bill, we will continue to look at such issues.

The Minister gave us a powerful reminder of the types of terrorist attacks and actions that individuals and groups have undertaken, and will continue to undertake, as they attack not only our way of life, but innocent individuals across the United Kingdom and, indeed, abroad. The recent discovery of an explosive device on a courier aircraft that had landed at East Midlands airport en route from Cologne to Chicago powerfully brings home to us again the fact that that terrorist threat remains in the United Kingdom.

The Bill will impose severe financial restrictions on those whom Treasury officials “reasonably believe” have

“been involved in terrorist activity”.

I support that test, which will give us the opportunity to use asset freezing as a tool across the international community to prevent the financing of terrorism. We know how devastating and indiscriminate terrorist attacks on our shores and abroad can be.

It will be of interest to the House to know that the attack in London in 2005 cost less than £10,000 to carry out. As of July, as the Minister said, about £150,000 remained frozen in the UK under the regime. If freezing assets intended for terrorist purposes can prevent attacks and potentially save lives, and if blocking the flow of money and working alongside our international partners can disrupt international terrorist networks, we should, quite frankly, do those things. We should do them while cognisant of the human rights implications that my hon. Friend the Member for Aberavon and his Committee have raised, but do them we should.

Any measures that we take forward in the House must delicately weigh up national security and civil liberty implications. We will discuss that in Committee, but I will look at the debate in the other place and the changes made there. I recognise that those are important, but ultimately our purpose is to protect citizens in the country whom terrorists would attack.

Interestingly, in another place, Members raised concerns about how the Bill will fit into the wider counter-terrorism review, which raises further concerns that we will need to explore both this evening, including when the Minister responds, and in Committee. I confess again that I have concerns about the coalition’s position on the counter-terrorism strategy generally. Having been a terrorism Minister in the last Government, I know that things such as section 44, control orders and CCTV usage are important and help to prevent terrorist attacks. That is a debate for another day, but I note the concerns that the Bill might be subsumed by some of the outcomes of the review. I would therefore like to know either in Committee, or even this evening, whether this is stand-alone legislation or whether it will be further amended in light of any review coming out of the counter-terrorism strategy as a whole. I do not wish to waste the time of the House or the Committee discussing issues only to find that the noble Lord Macdonald throws up concerns that have to be incorporated in another Bill dealing not just with this issue but with those to which we might return, such as section 44 and control orders.

The Commercial Secretary to the Treasury said in another place that

“where the review’s conclusions are relevant to asset freezing, and should those conclusions alter the balance in favour of introducing additional safeguards, we will take them into account and bring forward any amendments that may be appropriate to the Bill.”—[Official Report, House of Lords, 27 July 2010; Vol. 720, c. 1252-1253.]

Presumably that also means that if Lord Macdonald says that they are disproportionate, proposals might be introduced watering down the Bill’s provisions. The Minister needs to reflect on that and indicate clearly in his winding-up speech whether the Bill is separate from, or part of, the review.

It would also be useful to know the time scale of the ongoing general review. Under tonight’s programme order, we will complete the Committee stage of the Bill in short order—by 25 November—and will be returning on Report shortly after that. If Lord Macdonald’s report has not been completed by then, will we go immediately to Royal Assent? I need some indication from the Minister of the time scales in order to know the product and concerns we are dealing with.

I want to raise another matter—I hope that I am being supportive—that Ministers need to reflect on. Again, it is something we will return to in Committee. There is a grey area between terrorist financing and some aspects of organised crime. I noticed that my hon. Friend the Member for—

[David Simpson (Upper Bann) (DUP)]

Upper Bann.

[Mr Hanson]

I worked in Northern Ireland for two years, but my mind went completely blank then. My hon. Friend the Member for Upper Bann (David Simpson) will know that there is a great deal of linkage in Northern Ireland particularly between organised crime and terrorist financing. We need to be clear about the Bill’s purpose in relation to that activity. There might be areas where financial activity under organised crime, while being an organised crime issue, ultimately goes towards financing terrorism. Particularly in the Northern Ireland context, it is worth while our examining that area and whether there will be any consideration downstream of reviewing and harmonising asset freezing in those areas as a whole. I think of the case of Mr and Mrs Chandler today, where allegedly money might have been passed to those who kidnapped them. I do not know whether that is true, but it relates to potentially criminal, terrorist or other activity where these powers could be used. Clarity there will be important in our Committee discussions, so that we are aware of those things in due course.

My only potential criticism of the Minister over this proposal is that it might lead to a state of limbo in the asset-freezing provisions after the counter-terrorism review. It would be helpful if the Minister clarified those issues when winding up today, and in Committee.

In general, as I have said, terrorism is a still a real threat in this country, and although people have a statutory and historic right to civil liberties and freedoms, they also have a right to go about their daily lives without fear of serious threat to their safety. The key test for the Government is to balance those liberties with the actions that we must take to ensure that we secure those liberties for the future.

The Opposition support the Government’s attempts to maintain an effective, proportionate and fair terrorist asset-freezing regime that meets our United Nations obligations, protects national security by disrupting the flow of terrorists’ finance, and safeguards human rights. We believe that the Bill is necessary to help to combat the terrorist threat in this country, and we look forward to scrutinising it. I have indicated to the Minister the sort of areas that will need discussion during its passage through the House, but in broad terms, we wish it well and we will support it this evening.

[Matthew Hancock (West Suffolk) (Con)]

I think that hon. Members on both sides of the House recognise the importance of the Bill, of implementing it and of a legislative structure for freezing terrorist assets. The ministerial statement says that 205 people currently have assets frozen up to a value of £290,000. Most importantly, the measure is part of a global system of freezing assets, which is crucial in this interconnected world.

I do not believe that I need to declare an interest, but I have a history in this area because I worked in the Bank of England on the freezing of assets under the jurisdiction of EC and UN orders. It is surprising that we are talking about this in November 2010, because it has been clear for a while that we need substantive legislation on the statute book to provide a framework for the freezing of terrorist assets. I am glad to be speaking in this debate, but it is a shame that that has not already happened.

I am glad that the Bill has all-party support, but I was surprised by the comment that it is being rushed through. There has been widespread consultation and the Bill has been through the full process in the other place, which included a day of debate on the Floor of the House. It is now going through the full process in this place. The suggestion that it is being rushed through is odd. What is more, it was clear earlier this year, during the previous Session, that there would be a Bill to put asset freezing on a permanent basis. The shadow Minister said that if the Labour party had won the general election, it would have introduced such a Bill.

The system that is now in place is based on UN resolutions 1267 in 1998, 1333, which specifically targeted Osama bin Laden, and 1373, which went through very quickly after the 9/11attacks. As those resolutions were being passed, it was clear that the structure of terrorist asset freezing was becoming more comprehensive, and more important to our national armoury against terrorism. That was supported by terrorism orders in 2001, 2006 and 2009, so the process has been ongoing for many years. In 2002, New Zealand put on its statute book permanent legislation covering a formal structure, which was based on modern statutes for dealing with terrorist financing. Australia has introduced similar legislation.

Over the past decade, we have had many opportunities in terrorism and crime Acts to put such legislation on the statute book. The Ahmed case was started in 2008 on the back of 2006 terrorism orders. It is surprising that anyone can say that the Bill is being rushed through. What is more, for the Opposition to say that it is too soon to put it on the statute book because we need first to know the conclusions of the Home Office’s broader review does not take into account the importance of doing so by the end of December, when the temporary measures will lapse, and we will be back in the same position as when the Supreme Court struck down the previous legislation. It is at least timely, and perhaps too late to be standing here discussing the matter.

A broader question arises about the Supreme Court’s action. It concluded that the United Nations Act 1946 did not intend to support actions on terrorist financing, such as were then carried out under UN and EC structures. We all recognise that it was appropriate for the Supreme Court to give the then Government the ability to put through temporary legislation to ensure that assets were not unfrozen. It is important to note that because of the widespread public policy need for such freezing the Supreme Court recognised the importance of continuing to freeze assets, even while the formal legislative structure was being put in place.

My final question concerns the standard of proof. I am particularly interested in the extent of cross-party support for changes to the standard of proof. I have previously argued that the balance between civil liberties and protection against terrorism in this country has swung too far in favour of autocracy and away from civil liberties. I am pleased to see the new threshold of over 30 days of reasonable belief, rather than reasonable suspicion. I am also pleased that an appeal process is being put in place. However, I was surprised to hear the shadow Minister say that that may not have the support of the Opposition and that they need clarification of the position. The Home Office’s review will look into a much wider array of issues, including control orders, CCTV, border controls and indeed terrorist assets, and I hope that it will ensure that we can go forward and that the freezing of assets will continue to receive cross-party support.

[Mr Hanson]

For the sake of clarification, my right hon. Friend the Member for Morley and Outwood (Ed Balls) will look closely at those issues. As a Government, we obviously had in place the section 44 regime on control orders and CCTV, and we were introducing legislation. We will examine all those matters, but the balance between civil liberties and the protection of individuals, and securing action against terrorists must be right. That is the balance that I hope the review will seek.

[Matthew Hancock]

I am sure that the review will seek that balance. My question is whether the Opposition will have a position when the review comes out. I am glad that the Opposition believe that the measures are proportionate, and that at this stage there is cross-party agreement.

That brings me to my conclusion that far from being rushed through, the Bill is timely, and far from its being introduced too soon, given that a review is under way, it is important that it is enacted within the timetable, no matter the Macdonald review’s timetable. No doubt it will suggest amendments to many pieces of legislation from the previous decade that have been too autocratic and have not sufficiently respected civil liberties, but we must ensure that any amendments are part of that much bigger picture, rather than criticising the timing of this important legislation, which I would argue is about 10 years too late.

--- Later in debate ---

[Mr Gauke]

Given the flexibility that we need, I believe that we have struck the right balance by allowing an interim arrangement on the basis of reasonable suspicion followed by a longer-term arrangement on the basis of reasonable belief. Sometimes, it is a question of timing and we may need to act first on freezing assets and subsequently to make an arrest—we must remember that after all, the vast majority of those in the UK who have been subject to a freezing order have gone on to be arrested. For example, if we limited the Treasury’s freezing powers to those charged or convicted, we could prevent the UK from co-operating with international partners when we are trying to prevent funding getting to international terrorists and terrorist groups. For those reasons, the Government remain convinced that the legal test as set out in the Bill—reasonable suspicion for an interim period of 30 days and reasonable belief for a final designation—strikes the right balance.

My hon. Friend the Member for Cambridge mentioned the role of the courts, which has also been raised by civil liberties groups. They have called for a mandatory court involvement in asset-freezing. They want freezing decisions either to be made by the courts or to be approved by them mandatorily, but the Government do not support those proposals. Decisions to freeze assets are national security measures taken on operational advice from law enforcement and intelligence agencies, and fall squarely within the remit of decisions that Ministers should and do make on other matters, such as prescription, deportation and exclusion. Ministers are accountable for their designations both to Parliament and to the courts.

We also do not believe that mandatory court approval for asset freezes is the right approach. Only a very small minority of asset-freezing cases—around 10% of current cases—concern people in the UK who have not been prosecuted for a terrorist offence. The remaining 90% of cases concern either individuals in the UK who have been prosecuted or individuals and groups overseas. Mandatory court approval would therefore add no value in those 90% of cases. Indeed, it might even be unhelpful. For example, overseas terrorist groups who do not currently challenge asset freezes would nevertheless have their designations subjected to mandatory court scrutiny.

My hon. Friend also mentioned written reasons. We heard today that the JCHR recommends that an express requirement to provide reasons for a designation, subject to public interest requirements of non-disclosure, be written into the Bill. The Committee’s reasons for that were eloquently put, but the Government are not convinced that an express obligation on the Treasury to provide reasons for a person’s designation is necessary. It is already a requirement of the basic principles of administrative law to provide reasons for a designation where possible, subject to public interest requirements. If this Government or any other were to write into a Bill all the Treasury’s obligations under administrative law, such a Bill would be considerably longer. I do not see that as desirable. The time available for parliamentary scrutiny should not be spent debating unnecessary provisions. I should also make it clear that there will be times when the Government cannot divulge the case against a person or the reason for a designation, such as when sensitive intelligence has been relied on for a decision and there is an obvious case for withholding information. None the less, where possible, the Government disclose information when that can be done without, for example, damage to a pending prosecution or to national security. There is no sensible reason to go beyond that and write such a requirement into the Bill.

The JCHR also sought to convince hon. Members that the Government should accept the principle set out in the House of Lords in the case of AF on the use of special advocates and closed-source material. It said that that principle should apply to asset-freezing provisions. I am sure that hon. Members have read Hansard and are aware of the debate on that in the other place. I can but restate the points that the Government made then. First, the courts have not considered whether AF applies in asset-freezing cases, and it is not the role of the Government to prejudge what the courts would say. Secondly, the Supreme Court will consider the wider application of AF (No. 3) in January 2011 when it hears the Tariq case. Thirdly, the Government are committed to ensuring that any challenge to a Treasury decision is heard fairly. Finally, the application of AF (No. 3) is part of a wider debate on the use of special advocates and intelligence material, and we have already announced that we will be considering the use of special advocates and closed-source evidence as part of a Green Paper next year.

There will be plenty of opportunity for the JCHR and other interested parties to relay their views as part of the consultation that informs that Green Paper. It is right and proper that the Government give all parties the option of commenting on such an important mechanism without prejudging the outcome.

The final matter raised by the JCHR is the question of transparency and accountability. The Bill strengthens transparency and accountability in two ways. First, we are enshrining in legislation the Treasury’s existing practice of presenting quarterly reports to Parliament on the operation of the powers in the Bill. That will guarantee transparency on the quarterly operation of the regime. Hon. Members will note that the most recent quarterly report was laid today. Secondly, we have written into the Bill that the operation of the regime should be independently reviewed nine months after the Bill is passed and every 12 months thereafter.

The JCHR maintains that the provision in the Bill for an independent reviewer does not go far enough and that the independent reviewer should be more independent of the Government—the right hon. Member for Delyn made that point in the debate. I am sure that that will be debated further in Committee, but the Government cannot accept the JCHR position. We are committed to effective scrutiny of the asset-freezing regime and the independence of the reviewer will be a principal objective of any appointment, but for Parliament to approve the independent reviewer would be a significant departure from standard practice. The appointment of the reviewer by the Government reflects the long-standing principle that Ministers are directly accountable to Parliament and the public for those whom they appoint and for the operation of the regime.

[Mr Hanson]

I tend to agree with the Minister, as I indicated in my discussions, but can he tell the House whether the reviewer for this piece of legislation is likely to be the same one as is currently in post, which is Lord Carlile, who is soon to be replaced by David Anderson QC?

[Mr Gauke]

I am grateful for the point that the right hon. Gentleman makes. The final decision on that is still to be made, so if he will just be a little patient, he will receive the answer in due course.