Oral Answers to Questions

Julian Lewis Excerpts

Tuesday 10th March 2015 Commons Chamber

[Danny Alexander]

I do not recall ever having had any conversations about investment in infrastructure with Lord Green. Matters relating to ministerial appointments are, of course, a matter for the Prime Minister. What matters is making sure that in this country we have a zero-tolerance approach to tax evasion and tax avoidance, and that where organisations are facilitating or encouraging tax evasion, we put in place the proper penalties.

[Dr Julian Lewis (New Forest East) (Con)]

Does the Chief Secretary agree that no British Government should fail to invest in the infrastructure, the personnel and the equipment of the armed forces at a rate less than the NATO-recommended minimum? Will he have a word with his leader and with mine to make sure that the necessary commitment is given before the general election?

[Danny Alexander]

We have met that commitment in the present Parliament, and we will do so in 2015-16 as well. Spending on defence will, of course. be a matter for the next spending round. However, I suggest that the hon. Gentleman should have regard not just to the total amount spent, but to the efficiency of the expenditure. We have made great progress during this Parliament in securing better value, in terms of defence equipment and output, for the limited money that we have to spend as a country.

Holiday Pricing

Julian Lewis Excerpts

Monday 24th February 2014 Westminster Hall

[John Hemming]

I thank the hon. Lady for making that excellent point. I would happily have made it myself, but I now no longer need to.

[Dr Julian Lewis (New Forest East) (Con)]

I draw the hon. Gentleman’s attention to the situation of my constituent Amanda Wooding, who is a child care specialist. She, of course, finds herself particularly in demand during the school holidays, but she has children of her own, so she can never take them on holiday at other times because of her profession.

[John Hemming]

The hon. Gentleman makes an excellent point. The issue is all about considering individual cases. Perhaps the hardest case is that of the police, who not only often do not have any choice as to when they take holiday, but also can be fired if they are fined. That is a double whammy. Not only is taking holiday difficult; they also face losing their job. That is clearly unfair to those people.

Another constituent of mine says that they have one family holiday a year. Until this year they have been fortunate enough to take it for a week during the school term, always authorised by the school, but they cannot afford to take the same holiday during the school holidays, although their children’s attendance is otherwise excellent. That is my constituent’s point: they ensure that their children’s attendance is excellent and that they maintain their educational standards, do work and so on. Now, from a cost-effectiveness point of view, it is cheaper to pay the fines. It is not very good to have a structure in society that effectively encourages people to break the criminal law because it would cost them thousands of pounds not to.

I have another story from some people from Australia who have difficulty visiting family if there is no flexibility at all. They say:

“What is clear is that this ruling actually favours the rich. Those who can afford it pay the fine for taking their children out—I know of one family who recently took themselves skiing to do this—while those on low incomes who cannot afford the fine but feel they must go will get a criminal record. The ruling is draconian.”

Similarly, I have a constituent with links to Pakistan who has concerns that the ruling is damaging their family links as well. Those examples give us some idea of the exceptions that are now not being treated as exceptions.

On mechanisms for change, we should first look to the Taylor report itself, as that drove the changes. Recommendation 6 was that

“changes are made to the pupil registration regulations to strengthen the rules on term time holidays. While head teachers should continue to have discretion, holidays in term time should be the exception rather than the rule.”

Actually, they are not happening at all now. One obvious question in all this is what pressure Ofsted is placing on head teachers to reduce the numbers. The numbers were that 7.5% of absence in primary schools and 2.5% in secondary schools was related to holidays. Obviously, if head teachers are under pressure to reduce those numbers, there will be an effect.

We must consider the mechanisms for change. One is for the Government to produce guidance saying clearly that going to a great-uncle’s funeral, for instance, is reasonable. Secondly, the Government could introduce a new statutory instrument changing the regulations. The final question is whether a judicial review under article 8 of the European convention on human rights, or using the UN convention on the rights of the child—a point made in one of the other petitions—could have an effect.

There is undoubtedly a problem. The fact that so many constituents have highlighted the issue and so many people have signed online petitions about it demonstrates that. There are numerous solutions, including working with schools to stagger school holidays or changing regulations. We need to do something.

--- Later in debate ---

[Damian Hinds]

The hon. Lady is correct that the rises coincide with school holidays. To some extent, the existence of those holidays creates those spikes, but the holidays themselves coincide with the high season. As I outlined earlier, the prices for holidays marketed to couples, older people, singles, groups and clubbers typically go up in late July and August because that is the most popular time of the year, particularly to visit European, sun-based resort destinations.

This debate is no place to start deconstructing the profit and loss accounts of holiday companies, but contribution to profit is a key concept. I will talk about hotels, but the same logic applies to airlines and other travel products. The direct marginal cost of someone staying in a hotel room is rather low. Globally, the figure is somewhere between $15 and $20. That is the cost of laundering towels and sheets, issuing soap and providing heat, light and power, and so on. On one level, a hotel will make a profit if it charges anything over $20. The problem is that there are other, fixed costs. For an airline or hotel, the biggest fixed cost is the building or aircraft—loan repayments do not go up and down. Taken together, the cost per night goes up from $20 to, say, $100, which is a big difference. In the off-season, a hotel room might be sold for $80, $70, $60 or $50 a night. In other words, a hotel might deliberately make a loss. Why would a hotel do that? It does it because as long as it charges more than $20 a night, which is the direct marginal cost, it is contributing to profit. If a hotel tried to charge the $100 profitable rate, it would not sell the room.

[Dr Julian Lewis]

I fully appreciate my hon. Friend’s argument that the rich seasons help airlines and the tourist industry to function during the off-seasons. What does he think would happen if some flexibility were introduced so that schools in different areas took their school holidays at different times? Would he anticipate prices remaining low during those times, or would he anticipate the travel industry increasing prices to reflect such an expansion of the season?

[Damian Hinds]

My hon. Friend makes a good point. The short answer is that such a measure would be welcomed by the travel business because it would extend the season, which would be good for capacity utilisation. There would be an effect, but the effect would not be nearly as big as many people anticipate. The season might be extended by a week or two, but those would still be shoulder periods. They would not be peak periods, so there would be a difference, but the difference would not be huge.

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[Penny Mordaunt]

rose—

[Dr Lewis]

rose—

[Mr Mudie]

I said that I would give way to the hon. Lady.

--- Later in debate ---

[Mr Mudie]

I will answer my hon. Friend when I come on to the DFE. I was thanking the people who have signed the petition, because they have performed a great feat in putting the matter in the public consciousness and the political arena. However, we would be making a grave mistake if we chased after the Department for Business, Innovation and Skills. From the answer it gave to the e-petition, I am sure that the Department would not bother if we chased after it, because its answer is quite dusty, but I have some sympathy for it, as the people who should be answering are in the DFE.

[Dr Julian Lewis]

I am slightly conflicted over the whole issue. The hon. Gentleman made the point about people needing to save money. A constituent of mine, Joy Drake, took her children on a once-in-a-lifetime holiday and saved £1,000 on the air fares. Does he not agree that, if the issue is left to individual head teachers and schools, they will be put in an invidious position in deciding which families get to save on the air fares and which families do not? Therefore, should we not look at something that enables the general discretion to be applied—other than, of course, bereavements and similar things—as to when the holiday is taken by everyone, rather than just flexibility on an individual case by an individual head teacher?

[Mrs Annette Brooke in the Chair]

[Mr Mudie]

That is an important point.

One of the things that has come from this e-petition is a request from the travel and tourism industries to get together with the Government and local authorities to see if they can work something out to alleviate the problem. The option of regional staggering has been mentioned on more than a couple of occasions. That is one thing that the industry has suggested it wishes to talk about. It has asked for talks, and I look to BIS for an acceptance of that invitation and to get the industry around the table as soon as possible to start talks. I say that not because a quick solution would be forthcoming, but because it will take such a time to get a solution that the sooner they start, the better.

[Mr Andrew Turner in the Chair]

Let me return to the point made by my hon. Friend the Member for Wirral South (Alison McGovern). In this place, roles are reversed at a bewildering speed. If I was standing here giving the education policy of a future Labour Government, I would be told, “You don’t trust the professionals. Leave it to the doctors and teachers”. When the solution—this is coming from a Labour MP—is about trusting head teachers, suddenly that is not enough.

I have discussed this matter—more than anything else this past week—with my wife, who is a head teacher, and all I get is common sense. None of us would be prepared to stand here and say this, particularly as two weeks ago, my wife had Ofsted in at 24 hours’ notice, but head teachers have great discretion, great judgment— on the whole—and great empathy. They have great relations with parents and know them. They can look at the attendance records and do all the things that have been suggested as a matter of common sense and as part of being a good head running a good school. I would be content to leave it at that.

I would like hon. Members to say if they had a problem with kids’ attendance when families could take an in-term holiday. Where were the letters about that? Where were the public complaints? They were not there—it was not a problem. What did the Secretary of State for Education do? I do not want to make the issue political; I have been gently asking him, for once in his life, just to act with a bit of humility and take the measure off the table, and I do not want to make it easy for him not to do it by being political. That is all he needs to do, because the situation was okay.

Due to the fuss that has gone on and the hurt that has happened, why should the Government not just take the measure off the table? The Secretary of State has caused it, so he has in his hands a remedy. If he wants change, he should get together with all the parties. Even the travel trade is saying that it has to lay people off because the measure is affecting its business.

What have the Government done? They have put through the measure without any real consultation. The first bad thing the Secretary of State did was to push through the measure to operate from last September, but people had already made their arrangements for holidays. They had taken the advice of the travel trade and got in quick, seeking the cheapest bookings. Suddenly, it was illegal to do so. There was no consultation. The measure was peremptorily introduced, smuggled through the Joint Committee on Statutory Instruments.

The second bad thing is that the Secretary of State will fine the parents £60 if they do it, and it could be £120 if they are late in paying.

Trident Alternatives Review

Julian Lewis Excerpts

Wednesday 17th July 2013 Commons Chamber

[The Chief Secretary to the Treasury (Danny Alexander)]

I beg to move,

That this House has considered the Trident Alternatives Review.

Thank you, Mr Speaker; I shall certainly do as you say. I will also tailor the number of interventions I take to meet your invocation.

Yesterday, the Prime Minister and the Deputy Prime Minister published the Trident alternatives review—the most thorough review of nuclear weapon systems and postures that the UK has undertaken for decades, and the most comprehensive analysis ever made public. For the first time in a generation—

[Dr Julian Lewis (New Forest East) (Con)]

rose—

[Danny Alexander]

I will make some progress before giving way.

For the first time in a generation, the Trident alternatives review shows that there are credible and viable alternatives to the United Kingdom’s current approach to nuclear deterrence. A different approach would allow the UK to contribute meaningfully to the new multilateral drive for disarmament initiated by President Obama, while maintaining our national security and our ultimate insurance policy against future threats.

--- Later in debate ---

[Danny Alexander]

I will take some interventions later, but in the light of what Mr Speaker has said, I will make some progress.

A different approach could allow long-term savings—about £4 billion over the life of the system—to be made against current plans. Let me be clear: this does not change current Government policy to maintain Britain’s nuclear deterrent and prepare for a successor system. It does mean that we can at last have an open and much more informed debate about what our nuclear weapons are for and how they should be deployed—a debate that provides our country with a chance to change course before the main-gate decision for a successor system is taken in 2016.

[Dr Julian Lewis]

I am grateful to the Chief Secretary for giving way. He says this is the most comprehensive examination for many years—that is open to question—but will he explain why it considered only the four-boat and three-boat options for Trident, not the two-boat options that the Liberal Democrats plan to put to their conference as Liberal Democrat policy?

--- Later in debate ---

[Mr Jones]

I think that the right hon. and learned Gentleman has had enough time, and the time is limited.

There was another option that was deemed unworthy of examination by what is otherwise a thorough and forensic document: sending two unarmed submarines out on patrol with the intention of stepping up our posture in a time of crisis. That is the policy the Chief Secretary has just proposed.

[Dr Julian Lewis]

I read that report in The Times, and it seems to me that what was being said was that the Labour party is committed to continuous-at-sea deterrence and the only question is whether it can do it with three submarines or whether it would have to do it with four. The one thing that is absolutely certain from the report is that it cannot be done with two, yet the Chief Secretary’s position is that if a crisis arose they would step up their performance. How could we build a third or fourth extra submarine in time to step up our performance if a crisis arose?

[Mr Jones]

I know that the hon. Gentleman has studied this subject thoroughly and is an expert. I totally agree with him. As I said, the Chief Secretary clearly has not read his own report because, as the hon. Gentleman rightly says, it outlines the problem with having only two submarines.

The Liberal Democrats briefed the newspapers earlier this week that the two-boat option would be a way forward, and the Chief Secretary has just re-outlined that ludicrous policy. My right hon. Friend the Member for East Renfrewshire (Mr Murphy) hit the nail on the head yesterday when he said that it was a little like installing a very expensive burglar alarm on one’s house with no batteries and putting up a sign saying, “Burglars, come in.” The only difference is that this would be a multi-billion pound deterrent that would not deter.

--- Later in debate ---

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

I will begin by saying that this is not the most comprehensive review of this subject carried out in recent years: the previous Labour Government carried out a comprehensive review. I can say that with some confidence, because one of the first things I did as Defence Secretary when we came into government was to ask to see that work and check whether its assumptions and costs were still valid. It was my view that they were, and that continuous-at-sea deterrence still represented the best system and best value for our nuclear deterrence.

In our review, we looked at the previous Government’s review and at the systems that have since been rejected again. No Member wants to have an air-launch system or a silo-based system in their constituency. At the time, the Liberal Democrats put forward a proposal on the cruise-based system that they believed to be credible. We, of course, maintained our belief that CASD was the best, along with a replacement for the Trident programme.

There are a number of reasons why I was happy for the review to go ahead. In particular, it would show the Liberal Democrats that the cruise-based system was a non-starter. First, it would be too expensive. It would require research and development for the missile system and for changes to the submarine programme. It would be slower and more easily intercepted. It would require our submarines to be closer to target, and therefore more likely to be detected. It would also—no small point—be illegal under the treaty on the non-proliferation of nuclear weapons. It was a non-starter. I am therefore pleased that the Chief Secretary, who is not in his place at the moment, came to the conclusion, rather belatedly, that it would be good to keep the Trident replacement system. It is a gain for the whole House and the country that the Liberal Democrats have seen sense.

What is deeply depressing, however, is the willingness of the Liberal Democrats to abandon CASD. It has been the position of both major parties—the Labour party and the Conservative party—to have CASD based on four boats, or fewer if technology allowed. Let us be frank: in the foreseeable future, technology will not allow us to go below four boats. We need one going out, one coming in, one in refit and one in training. It is not possible to maintain what we have and what we want at lower levels than that, given present technology. If we go down to three, CASD cannot be guaranteed. If we go to two boats, we cannot have it at all, so that is an unrealistic proposition.

What are the Liberal Democrats saying with this policy? They are saying that we would abandon CASD, but deploy at times of increased international tension. What does any Member think would happen to international tension if we deployed a nuclear system that was not otherwise deployed? That would be a crazy foreign policy. I have to say to my Liberal Democrat colleagues that it is all very well to talk about stepping down the ladder, but if the bottom of the ladder is hanging off a cliff, that is not exactly a sensible manoeuvre.

On cost, the Chief Secretary said that they would save £4 billion over the lifetime of the programme—£4 billion over a 34 to 50-year period. That £4 billion is the equivalent to less than two weeks’ spending on the national health service, or six days of what we spend on pensions and welfare. This is supposed to be value for money. For that infinitesimally small saving over a 50-year period, they would abandon a crucial element of our national security—a very interesting definition of value for money.

[Dr Julian Lewis]

For the sake of clarity, it is important to stress that in the report the only options for Trident are a four-boat fleet or a three-boat fleet. That is where the £4 billion would come into it. The report does not even consider or cost a two-boat fleet, because it would be impossible to reinstate to a higher level of readiness.

[Dr Fox]

It is not possible to put in monetary terms the risk that moving to a two-boat fleet would pose to the UK. They are completely different currencies. It is ridiculous to say that there would be a £4 billion saving, given the monumental disruption it would cause to our submarine-building programme and all the jobs likely to be lost, as the hon. Member for Barrow and Furness (John Woodcock) pointed out many times. The calculations in the report are fraudulent economics.

The crucial question to be asked by anyone who wants to dismantle or diminish the CASD posture is: what will the world look like in 30, 40 or 50 years? It is all very well to say, “The risk assessments says that at the moment it’s okay”, but we do not know what the risk assessments will be in the future, and it is not our job to play roulette with the security of future generations in our country. We are being offered 50 years of protection from nuclear blackmail for the people of our country. There are those who say that £20 billion or more of capital costs is too much for 50 years’ protection from nuclear blackmail, but that it was all right to spend £9.5 billion for six weeks for the Olympics. We need to get our priorities right in this country and recognise what is important in the longer term.

CASD gives us secure insurance that is proven. It is the best deterrent, and to say anything other is political posturing, I am afraid. As has been said, we could drive a nuclear submarine through this report. We all like a good joke in politics, but this is no laughing matter. If it is a joke, however, let us hope it rebounds on the Liberal Democrats, not on the people of this country.

--- Later in debate ---

[Sir Nick Harvey (North Devon) (LD)]

I commend my right hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) on bringing this piece of work to fruition, and I believe it has genuinely taken an open-minded look at the whole issue. The review did not set out at the beginning by offering preconceived conclusions to those carrying out the work, and I believe it has been a worthwhile exercise. I also note that the principal reason why alternative systems were found not to be viable was not—as some have suggested—because they were not technically viable. In contrast, it was because the length of time such alternatives would take, and the amount of money it would involve to equip a warhead to an alternative system, would make such alternatives prohibitive in the medium term. That is the expert view of those tasked with looking at the matter. If that is the conclusion to which they have come, I for one would not seek to question it and we must accept it.

The second part of the study, which looks at alternative postures, concerns the debate that this report can now seek to inform and trigger.

[Dr Julian Lewis]

Will the hon. Gentleman give way?

[Sir Nick Harvey]

Not at the moment.

Given that this report was commissioned by a Government who are a coalition of two parties with fundamentally different opinions on the issue, it was never going to come forward with proposals. It was about considering the alternatives and informing the debate that might follow.

I contend that nobody can rationally argue that the nature and scale of the nuclear threat that the United Kingdom faces in 2013 is the same as it was at the height of the cold war. Then we had a known nuclear adversary, the Soviet Union, that had British targets in its sights and we, similarly, had Soviet targets in our sights. We believed that it might strike at a moment’s notice and we therefore thought it was essential that we were ready at a moment’s notice to strike back. But 25 years after the Berlin wall came down, one cannot rationally argue that the threat we face today is the same as it was then. We can debate what threats we might face in the future, but we cannot argue that the threat we face today is the same as it was in 1980.

--- Later in debate ---

[Sir Nick Harvey]

I agree entirely with my right hon. Friend that we must consider the threat we might face in 20, 30 or 40 years’ time, so we must therefore ensure that we have a nuclear deterrent in 20, 30 or 40 years’ time that is capable of deterring the threat that we might face at that point. My point is simply that the threat we face today is not the same as it was at the height of the cold war. It therefore cannot make sense to operate it on a 24/7 continuous basis facing a threat that simply does not exist at the moment.

I understand the view of those who say that we must retain enough capability to ensure that, in the future when we face threats we cannot anticipate today but know intuitively could come, there is enough of a deterrent to repel them. That is perfectly logical, but it does not make sense for the nuclear deterrent—uniquely among our military capability—to be on patrol the whole time when even our national security strategy has stressed that it is for a second-tier threat and when we do not use our military capability to deter the primary threats on that continuous patrolling basis.

To answer the points made by my right hon. Friend the former Defence Secretary, I am not saying that it might not be necessary in the future to crank up to a more rigorous posture—it might well be—but I do not see how anyone can rationally argue that we have to do that at the moment. The idea that the nuclear capability has a deterrent effect at all only by being patrolled 24/7 is clearly absurd. All the rest of our capability has a deterrent effect against a variety of aggressors in a variety of scenarios and we do not see the need to exercise any of it on a 24/7 basis.

[Dr Julian Lewis]

I could just about stay with the hon. Gentleman’s argument if he was saying that we ought to build four submarines but not send them all to sea until the situation became worse, but he is not saying that. He is saying that we should build only two or three such submarines, which would mean if the situation got worse, we would not be able to reinstate continuous-at-sea deterrence because we would not have the submarines. Without the submarines, we cannot have the posture, much as he might like to reinstate it when the situation gets worse.

[Sir Nick Harvey]

I can agree to the extent that we must ensure that we build enough capability that we can mount the deterrent we will need at the point that we need it. What that will comprise is a matter for further debate and further study and I note with interest that even those on the Labour Front Bench and the former Defence Secretary, the right hon. Member for Coventry North East (Mr Ainsworth), acknowledge that it remains to be seen whether we need four or three to do that.

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[John Woodcock]

I would describe it as a complete collapse in the Liberal Democrats’ position. Two years on, we have a taxpayer-funded document—how much did this process cost the taxpayer, by the way? The document basically confirms what we duped fools have been arguing for years—that unless people show their true colours and come out as unilateral disarmers, and in doing so advocate a path that we strongly believe would make the horror of a nuclear war more likely, there is no credible, cost-effective alternative to the fundamentals of the existing plan to replace our fleet of deterrent submarines.

The alternative review rejects as unworkable and even more expensive what had long been the Liberal Democrats’ preferred option—some sort of mini-deterrent. Then the fall-back plan of halving the number of replacement Vanguard submarines to two, fervently briefed to the newspapers over the weekend, turns out not to have been considered by the review at all. Would anyone like to explain this? Have Liberal Democrats realised that every idea they have put forward so far has collapsed under scrutiny? Did they come to a view that it was best not to test this one in the official review, lest those pesky facts and figures ruin it like all the others?

[Dr Julian Lewis]

The hon. Gentleman may be aware that all the talk about the Liberal Democrat conference considering a two-boat option comes from a Liberal Democrat document that has been drawn up by a Liberal Democrat group. When I asked the Chief Secretary earlier today at a briefing whether any copy of the review was going to be taken to the Liberal Democrat conference for consideration, he said, “Well, I might take a copy, but it will just be in my briefcase.” In other words, the review is not the document that the Liberal Democrats are going to consider. They are going to consider a completely different document making completely different recommendations, which the review did not even bother to consider.

[John Woodcock]

The hon. Gentleman is right. If we were living through a Monty Python sketch, this would be the point when the army major intervenes and says that this is all getting too silly and we have to stop it at once. But of course the consequences for the nation’s security, and the 13,000 people directly employed in Barrow and across the UK, would be bitterly serious if the Liberal Democrats had their way on their part-time deterrent idea. That is why it would be a very good thing if this shambolic process now sunk without trace. Even their own document makes it clear just how hopeless an alternative a part-time deterrent would be. It states that

“a 3-boat fleet would risk multiple unplanned breaks in continuous covert patrolling as well as requiring regular planned breaks for maintenance and/or training.”

They are effectively suggesting that we pay billions for something that we cannot be sure will be available to do the deterring when needed.

Proper analysis of the figures makes clear the economic folly of the argument. The Chief Secretary told me that he had considered the cost of maintaining Britain’s submarine-building capacity at Barrow and elsewhere, but his own document makes no suggestion, as far as I can see, that the savings take account of that. It suggests that the extra costs from 2025 of bringing forward the next submarine programme—the successors to the Astute—to avoid a crippling gap in the order book of the shipyard are simply not considered in the £4 billion saving. When he sums up, will the Minister finally confirm what the Chief Secretary has so far avoided admitting—that these relatively modest savings would be completely wiped out by the extra cost?

The choice that the next Government but one would face would be either to leave a gap in construction so large that it could end the country’s capacity to build submarines for ever, sacrificing all those 13,000 jobs, or to end up saving no money at all by embarking on a whole new submarine-building enterprise before it is needed by the Royal Navy.

--- Later in debate ---

[Dr Julian Lewis (New Forest East) (Con)]

In the past few months we have had several opportunities to debate nuclear deterrence. The hon. Members for Islington North (Jeremy Corbyn) and for Brighton, Pavilion (Caroline Lucas) and I, from our respectively opposite sides of the argument, successfully procured a debate on 17 January. Strangely enough, I did not hear many of these Liberal Democrat midway positions articulated on that occasion. The hon. Member for Islington North then secured a debate in Westminster Hall on nuclear deterrence and the non-proliferation treaty on 22 June, and I seem to remember that there were no Liberal Democrat contributions to that debate at all.

I think that it is possible to make a principled and coherent case either that we should have an effective and continuous nuclear deterrent or that we should not, but one cannot make a sensible case for having a part-time deterrent. I have looked at the report in some detail and will pick out a couple of elements that I regard as particularly significant. The very first sentence of the executive summary states:

“Deterrence rests on the notion of ‘unacceptable loss’—the ability to inflict a level of damage that a potential aggressor would judge outweighed any benefit they might gain by a particular course of action.”

Well, yes and no. It does not just rest on the notion of unacceptable loss; it rests on the twin notions of unacceptable loss and unavoidable loss. That is where the whole concept of continuous-at-sea deterrence is central, because if one thinks one has a chance of avoiding an unacceptable level of retaliation, one might well take that chance in the hope that one will not have to face up to it.

I have quoted before, and I will quote it again tonight, what was stated the first time a senior British defence specialist considered the concept of what in those days would have been called atomic deterrence. That was in June 1945 in a top secret report drawn up by a committee of defence scientists headed by Professor Sir Henry Tizard. He made a comparison between the atomic bomb, which at the time had not yet been tested or used against Japan, and the concept and practice of duelling:

“Duelling was a recognised method of settling quarrels between men of high social standing so long as the duellists stood twenty paces apart and fired at each other with pistols of a primitive type. If the rule had been that they should stand a yard apart with pistols at each other’s hearts, we doubt whether it would long have remained a recognised method of settling affairs of honour.”

However, if the duellists do not know whether the pistol is loaded, then even if they are standing only a yard apart they might just be reckless enough—“reckless” is the word that we hear time and again in the context of this Lib Dem policy—to take a chance. The whole point about nuclear deterrence is that it is unacceptable and unavoidable that a country will suffer nuclear destruction if it uses its nuclear weapons against a similarly armed country.

In the document, which was prepared by two civil servants in the Cabinet Office specially seconded from the Ministry of Defence, a number of strange concepts are articulated. One of them is familiar—continuous deterrence, which is referred to without quotation marks. Then the document refers to things called “focused deterrence”, “sustained deterrence”, “responsive deterrence” and “preserved deterrence”. I have studied this subject for at least 31 years and I have never come across those terms before. At a briefing earlier today, the two civil servants were good enough to admit that in fact they had made them up. That is perfectly okay, except for one thing—the use of the word “deterrence”. They could just as easily have referred to something like “intermittent deterrence”, “semi-deterrence”, microscopic deterrence” or “virtually zero deterrence”. It is not really deterrence unless it is certain; that is why it used to be called “mutually assured destruction”. It is not enough to be able to threaten destruction; it has to be assured because otherwise the person may not be deterred.

It may seem as though the Liberals’ policy is in disarray, but they could still emerge, at the end of this process, as the winners. I will explain why. At the next general election, we could have another hung Parliament, as my hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile) suggested. The Liberal Democrats could then say to the Leader of the Opposition, “All that stands between you and entering No. 10 Downing street is to get rid of this weapons system.” They would not say, “Go down to two boats”; they would say, “Get rid of it completely”, because that is what they have wanted all along.

[Hugh Bayley (York Central) (Lab)]

In the unlikely scenario that the hon. Gentleman paints of our having another hung Parliament, the Liberal Democrats would presumably negotiate both with his party and with mine. I think he is going to give me a firm view of what the answer would be from his party, and our Front Benchers have already given a firm view of what the answer would be from our party.

[Dr Lewis]

I am delighted by that intervention, because it not only gives me an extra minute but anticipates the next part of my argument.

If the Leader of the Opposition accepted that deal, then knowing the Liberal Democrats, they would start making the same offer to the current Prime Minister, who would have to think to himself, “Well, if I say no and the leader of the Labour party has said yes, Trident is doomed anyway, so I may as well say yes as well.” Who knows how these things might work out?

However, a solution is at hand: we could sign the main-gate contracts for some or all of the submarines in advance of the next general election. The only reason we put that off was to enable the Liberal Democrats to have their alternative study. They have had their alternative study, and it did not even consider a two-boat solution; it considered only a three-boat or four-boat solution. It could hardly be a breach of the coalition agreement if we were to challenge the Liberal Democrats to accept signing the contracts on the first two boats, if not the first three. That would at least prevent them from blackmailing either party, in the event of a hung Parliament, to get rid of the deterrent entirely.

At the most recent Defence questions I think I heard from the Opposition a commitment to try to bring forward the main-gate decision to this side of the election. I urge Opposition Members who believe in deterrence to join Conservative Members and put relentless pressure on our leaders for a grand coalition to bring forward the main-gate decision and secure the future of the nuclear deterrent—

[Mr Speaker]

Order.

--- Later in debate ---

[Jeremy Corbyn (Islington North) (Lab)]

I am pleased we are having this debate and that the hon. Member for New Forest East (Dr Lewis) has spoken, because he sincerely believes in nuclear weapons as much as I sincerely disbelieve in them. Interestingly, he quoted Tizard as one of the main scientists involved in the Manhattan project and the development of nuclear weapons, but we should also recall that many of the others involved, including Joseph Rotblat and Einstein himself, were later appalled at what they had discovered, at how it had been used and at the consequences for humanity of possessing nuclear weapons at all.

I hope that the hon. Member for Brighton, Pavilion (Caroline Lucas), I and one or two others might manage to bring to the Floor of the House a sense that there are alternatives to Trident. The review that the Liberal Democrats have asked for and that was no doubt produced at enormous expense is not a discussion of the alternatives. It is a discussion of weaponry and, in part, of perceptions of security and risk, but it is not a discussion of the alternative to Trident and nuclear weapons, which is not to have them at all and instead to aspire to a nuclear-free world. Interestingly, when those who support nuclear weapons are challenged, they all say they want to live in a nuclear-free world—

[Dr Julian Lewis]

indicated dissent.

[Jeremy Corbyn]

Not all of them. I beg the hon. Gentleman’s pardon. I exempt him from my last remark. He wants to live in a nuclear world, but many who agree with him about the decision on Trident want to live in a nuclear-free world, yet they go on to say that they cannot do anything about it, because now is not the time to do it, and then they head off rapidly down the road of weaponry and cold war attitudes towards deterrence and defence.

One or two fundamental questions need to be asked. A nuclear weapon is not a targeted weapon. Let us imagine we set off a nuclear weapon against, say, France. Let us suppose a Conservative Government got very angry with President Hollande. They are frequently angry with the French on most matters. They have never quite forgiven them for the 100 years war or the French revolution—[Interruption.] See, they are cheering up now. They are licking their lips at the prospect of war with France. Indeed, this whole building is festooned with memorabilia about the French revolution and the defeat of Napoleon. If they wanted to teach the French a lesson by sending a nuclear weapon against them, it would not take out a military establishment or an airport; it would take out millions of people in the civilian population, just as it would if used against Moscow, Pyongyang, Tehran or anywhere else. A nuclear weapon is a weapon of indiscriminate mass destruction against a civilian population. Small nuclear weapons were used in 1945 over Hiroshima and Nagasaki. They were tiny in comparison with one warhead on one part of a Trident submarine now, and the cancers from those weapons have existed and lasted for 60 years. The use of a nuclear weapon sets off a nuclear winter and an environmental disaster for those affected.

To those who want us to spend, in reality, £100 billion on Trident, I say that by 2020—if the main-gate decision is taken in 2016—a large proportion of the defence budget will be taken up in building new submarines and the warheads to accommodate them. Will defence chiefs at that time accept cuts in every other area of defence expenditure to accommodate the construction of those new submarines and new missile systems? I seriously doubt it. Those in the House who talk so glibly about nuclear weapons know full well that there is a serious debate in the Royal United Services Institute and the defence establishment about targeting defence expenditure on nuclear weapons when so many other demands are apparently being put forward by different service chiefs.

To my colleagues in the Labour party, who have been through this debate on nuclear weapons many times, I say that if we win an election in 2015—obviously, I hope we do—the demands on that incoming Government about apprenticeships, student fees, benefits, hospitals, schools, council housing, railways, roads, and a whole range of things, will be massive. Will we say to our supporters, “Sorry, the priority is weapons of mass destruction. The priority is nuclear weapons”? I like to think we would not.

Yes, we face threats in this world, including from terrorists, but holding nuclear weapons did not do the USA much good on 9/11, or us much good on 7/7, and it has not done anybody else much good. We must look to the causes and the humanitarian effects of war. A 1996 International Court of Justice ruling stated that

“the threat or use of nuclear weapons would be generally contrary to the rules of international law applicable in armed conflict, and in particular the principles and rules of humanitarian law.”

Let us look for alternatives such as nuclear weapon-free zones, supporting a non-proliferation treaty, or a conference of middle eastern states to bring about a nuclear weapon-free middle east. The review is not an alternative document but one that leads us down the road of nuclear proliferation and danger. The real alternative, produced by the Campaign for Nuclear Disarmament, sets out an agenda for peace and investment in people, jobs and a good future for this country, not investing in weapons of mass destruction.

I hope I have managed at least to bring an alternative view to this debate.

Saville Products Ltd and HMRC

Julian Lewis Excerpts

Tuesday 2nd July 2013 Westminster Hall

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

It is a great pleasure to serve under your chairmanship again, Mr Crausby. I am grateful to have the opportunity to respond to the speech made by my hon. Friend the Member for Altrincham and Sale West (Mr Brady) who, as ever, represented his constituents with great eloquence and made a good case on their behalf.

I should state that in the case raised by my hon. Friend, Her Majesty’s Revenue and Customs—or the Inland Revenue, which was the relevant organisation for much of the time—clearly did not carry out its investigation appropriately and did not complete its review process to the standards expected. I am aware, both from his comments today and from the previous meeting to which he referred, of the distress and worry that his constituents have suffered as a consequence, and I offer my sincere sympathies and apologies for their experiences during that period.

I feel that it would be of most use to address two issues in the course of the debate. First, I shall set out the procedures in place to ensure that all taxpayers, such as my hon. Friend’s constituents, can receive a fair and independent review of any grievance. Secondly, I will address the issues that he has specifically raised involving Mr and Mrs Nelson.

On the first point, I should start by stating that employees of HMRC clearly must understand fully that compliance checks can be stressful to taxpayers. To be fair to HMRC, it sets high standards for professionalism and customer service, and deals with the vast majority of cases fairly and efficiently. With more than 500,000 compliance checks undertaken annually, there are likely to be some cases when claimants feel that those standards have not been met. In such circumstances, it is absolutely right that taxpayers, or their agents, can submit a complaint about the action of HMRC.

HMRC has a well-established two-tier complaints process for such situations and makes a concerted effort to resolve all complaints at the first opportunity. That involves a fully trained and experienced case handler who undertakes a full review of all aspects of the complaint. If the customer remains unhappy following that process, they can ask for the complaint to be looked at again. This second-tier—or tier 2—review is carried out by a different case handler to help to provide an independent perspective on the case. Again, it is worth noting that the vast majority of cases are resolved over the first two tiers. In the tax year 2011-12, HMRC successfully resolved 98% of complaints over the two tiers.

In cases when the taxpayer remains dissatisfied with the response, such as in the case involving Mr and Mrs Nelson, it is right that they can ask the adjudicator or the Parliamentary and Health Service Ombudsman to look into their complaint. The adjudicator is a fair and unbiased referee, and the service provided is free to the taxpayer, provided that the complaint falls within the adjudicator’s remit.

The adjudicator’s role is to investigate and help to resolve complaints from individuals and businesses that remain unhappy about how HMRC, the Valuation Office Agency or the Insolvency Service have handled their affairs, after they have exhausted the relevant organisation’s complaints handling procedure. That can include complaints about mistakes, delays, poor advice, inappropriate staff behaviour or the use of discretion.

As my hon. Friend is aware, a customer can also ask their Member of Parliament to refer the complaint to the Parliamentary and Health Service Ombudsman. The ombudsman is independent of the Government and investigates complaints impartially, specifically on allegations of complicity or malpractice. Investigations by the ombudsman are conducted in private, and the relevant legislation restricts her ability to provide detailed information about specific investigations.

I can confirm that if the ombudsman decides that a Department or an arm’s length body has made a mistake, she will work with it to correct that error. That could involve acknowledging the mistake, issuing an apology and paying compensation. In all cases, it should involve ensuring that the same mistake does not happen again.

That leads me to the second part of my response: my hon. Friend’s interest in the specific case of his constituents. As I mentioned at the outset, it is clear to me, having taken a personal interest in the case, that significant mistakes were made by HMRC and its predecessor organisation. The original investigation was not handled well, and that was further compounded by the failure of HMRC complaints handlers to acknowledge that.

In the case of all complaints that are referred to either the adjudicator or the ombudsman and that are upheld, HMRC undertakes a thorough internal review and, as would be expected, steps are taken to ensure that lessons are learned by not just the individuals involved, but the entire body, in an effort to ensure that mistakes are not repeated elsewhere. One area in which HMRC has learned lessons from such complaints and improved its processes is alternative dispute resolution. It uses the skills of an independent HMRC facilitator to work with customers, agents and caseworkers to try to reach an agreement and resolve disputes.

HMRC has held a successful pilot and is now rolling out that approach more widely, and I hope that that provides some reassurance that action has been taken, following the ombudsman’s report to improve performance in this area. However, I have seen from correspondence that my hon. Friend’s constituents raise concerns about the “agenda” of the ombudsman in failing to uphold entirely the complaint made, and suggest that if I accept the conclusions reached by her, I am condoning “dishonesty, deceit and collusion”. Although I have every sympathy with my hon. Friend’s constituents, and I understand the frustrations that they have experienced, I strongly contest that suggestion. There can be no doubt about the independence of the ombudsman from HMRC—or indeed any Government Department—and I therefore believe her judgment in this matter to be sound.

My hon. Friend’s constituents have been critical of the level of payment awarded, as it is significantly below the amount they believe would represent sufficient recompense for the expense incurred and anxiety caused by the compliance check. Compensation has, however, been paid for the identifiable and evidenced expense incurred as a result of the extended investigation and, additionally, a compensation payment has been made for the unnecessary suffering caused by HMRC’s handling of the matter, in accordance with the instructions of the ombudsman. As my hon. Friend rightly points out, the payment is much higher than is normally the case in such circumstances. However, the ombudsman did not find sufficient evidence of economic loss and accordingly did not direct HMRC to pay any compensation in that regard.

I reiterate my apologies and sympathies to my hon. Friend’s constituents for the undoubted worry and distress caused to them as a result of failings at HMRC or the Inland Revenue, as it was for much of that time. It is always regrettable when avoidable errors such as those made during this investigation result in the kind of personal hardship that no amount of financial compensation can eradicate.

[Dr Julian Lewis (New Forest East) (Con)]

I have been listening to this debate with great interest and I must say that Mr and Mrs Nelson have inherited the fighting spirit of the great admiral who shared their surname. I have a similar case in which HMRC is pursuing a medium-sized firm for about £1 million in notional lost tax for goods that were bound for export but were stolen. The firm was an innocent party and the tax is notional, but HMRC is threatening the livelihoods of 40 employees and will not let the matter go. When the Minister says that such cases are always unfortunate and that we should put up our hands and say sorry, will he take a sympathetic view and have a word with the organisation to say that sometimes it is better to prevent the wrong from taking place in the first place, rather than having to apologise for it afterwards?

[Mr Gauke]

I am grateful for my hon. Friend’s intervention. It is not possible for me to comment on individual cases, although I know that he has taken a close interest in that matter for some time. Perhaps we can have a quiet word about it afterwards. It is not possible for me, as a Minister, to intervene in operational matters, but it is right that HMRC has the correct procedures in place.

To return to the case raised by my hon. Friend the Member for Altrincham and Sale West, it is perhaps worth reflecting on the fact that it originated in 2001. The UK’s tax authority has undergone radical changes since then, not least with the formation of HMRC itself. While that does not in any way excuse the errors that were made, the organisation has made significant improvements in the past 12 years. Furthermore, let me reaffirm my faith in the work of the parliamentary ombudsman—in the context of HMRC and beyond. I have trust in her impartiality and independence. Although I appreciate that this is not the answer that my hon. Friend is looking for, and I have no doubt that he will continue to represent the case of Mr and Mrs Nelson strongly, the ombudsman has reached her conclusion and it should be respected.

Fuel Duty

Julian Lewis Excerpts

Monday 12th November 2012 Commons Chamber

[Robert Halfon]

Unfortunately, I am just a brand-new MP and I do not have the luxury of having discussions with the Chancellor. I have no idea what is in his lunchbox, but I do know that the Government have a record of cutting fuel duty. That is something that I am proud of and to which I can give strong support.

[Dr Julian Lewis (New Forest East) (Con)]

Will my hon. Friend accept the assurance, as least from Government Members, that if the rise does not go ahead it will have far more to do with his campaign than anything the Opposition have done?

Beer Duty Escalator

Julian Lewis Excerpts

Thursday 1st November 2012 Commons Chamber

[Mr Denham]

The hon. Gentleman again makes a fair point. I say to the Treasury Minister on the Front Bench, the hon. Member for Bromsgrove (Sajid Javid), that in addition to reviewing beer duty and changing the planning laws, the way in which these big companies operate needs to be looked at.

The hon. Member for Bristol North West (Charlotte Leslie) talked about the big society. We cannot have a big society if two big companies shut the community out. Labour Members talk about responsible capitalism; it is not responsible capitalism if big companies collude to stop small entrepreneurs starting up businesses of the sort we want to see in our communities.

In every one of the cases I have raised where a Southampton pub has been turned into a convenience store, that pub offered a safe, social environment for the responsible consumption of alcohol, and it was replaced by an off-licence that trades on cheap booze. I am not saying nothing ever goes wrong in a pub, but there are social constraints on how much people drink and how they behave. If the outcome of public policy is that we lose the places where alcohol is consumed responsibly and replace them with outlets for cut-price booze that encourage people to drink too much at home, where those constraints might not exist, there is something wrong with public policy. The message from Members on both sides of the House is that the Government need to look at beer duty and the wider context.

The Minister on the Front Bench and other current Treasury Ministers, along with previous Treasury Ministers over many years, have all said—because this is in the word processor in the Treasury—that it is difficult to untangle the impact of beer duty from the other factors affecting pubs. Of course that is true, but that is no reason for not looking at beer duty and all the other factors affecting pubs.

[Dr Julian Lewis (New Forest East) (Con)]

I thank the right hon. Gentleman, my near neighbour, for giving way. To encourage him in his line of argument, may I say that when my party was in opposition we had a standard letter to send to people who inquired about beer duty, saying we were launching a campaign entitled “save the great British pub” and urging them to sign the online petition? I am sure, therefore, that the Minister will want to give a positive response to the right hon. Gentleman’s excellent speech.

[Mr Denham]

I am sure the last thing the Minister would want to do is embarrass his party colleague by causing him to tear up the letters he was honestly, and with integrity, sending out just a few months ago.

IMF

Julian Lewis Excerpts

Monday 23rd April 2012 Commons Chamber

[Mr Speaker]

Order. There is still extensive interest in the subject, which I am keen to accommodate, but if I am to do so, brevity is of the essence.

[Dr Julian Lewis (New Forest East) (Con)]

When one’s friends are trapped in a burning building, is not the kindest thing to do to lead them in the direction of the exits in an orderly way, rather than give them billions to stay exactly where they are?

[Mr Osborne]

I would say that it is to make sure that the fire brigade has enough water to deal with the problem.

Oral Answers to Questions

Julian Lewis Excerpts

Tuesday 1st November 2011 Commons Chamber

The Chancellor of the Exchequer was asked—

[Dr Julian Lewis (New Forest East) (Con)]

1. What assessment he has made of the potential effects on UK interests of the creation of an economic government of the Eurozone.

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

We have had positive gross domestic product numbers this morning, but the biggest single boost to the British economy this autumn would be a lasting resolution of the euro crisis. Such a resolution requires, among many other things, greater fiscal integration within the eurozone as it follows the remorseless logic of monetary union. We have made it clear that Britain will not be part of that fiscal integration, and that issues affecting Britain, such as the single market and financial services regulation, must continue to be decided at EU level.

[Dr Lewis]

If the Liberal Democrats had had their way, we would have joined the euro with disastrous consequences. Now, the liberal Conservatives are advising us to support fiscal union in the eurozone, which will lead to economic union and a single government. How does my right hon. Friend really feel about a policy undermining the system of democratic states in Europe that gave the continent peace for more than half a century?

[Mr Osborne]

Those who were against Britain joining the euro, including my hon. Friend and me, were against it partly because we felt that it would lead to greater fiscal integration. That was one of the arguments for keeping Britain out. There is a remorseless logic driving monetary union towards greater fiscal integration, but it is in Britain’s overwhelming economic national interest to have stability in the eurozone, so I think that that fiscal integration is part of what is required. Of course, we have to ensure that Britain’s interests are protected, that we are not part of that fiscal integration, and that issues such as the single market and financial regulation are conducted at the level of the 27.

--- Later in debate ---

[Mr Osborne]

The right hon. Gentleman shakes his head, but in 2011 the British economy has grown at exactly the same rate as the United States economy. It has taken a completely different course from the one that he suggested as shadow Chancellor and yet it has the same growth, which shows that what we are doing is bringing stability to the British economy. Frankly, for him to get up every week and say that we need a deficit reduction plan, but not to give us any details, shows how hopelessly out of touch he is.

[Dr Julian Lewis (New Forest East) (Con)]

T4. If the Greeks can have a referendum on Europe, why can’t we?

European Union Fiscal Union

Julian Lewis Excerpts

Wednesday 14th September 2011 Westminster Hall

[Mr Hanson]

On many occasions I voted differently, because the purpose of the Opposition was to keep the Government on their toes and divided—as, indeed, we see today in the interactions between Back Benchers and the Minister.

I pay tribute to other Members who have spoken. The consistency of my hon. Friend the Member for Luton North (Kelvin Hopkins) is unparalleled, although his approach has differed from that of Labour Front Benchers. The hon. Members for Northampton South (Mr Binley) and for Witham (Priti Patel) hold strong convictions on this subject, which does not come as a surprise to hon. Members or to their constituents.

I confess that I feel like an onion in a strawberry patch, as I take a different view of the benefits of our relationship with Europe and with the European Community. I want the Government to engage positively, not within the potential framework of withdrawal—the tone that percolates through the comments of the hon. Member for Stone and his colleagues and of my hon. Friend the Member for Luton North—but in tackling deep and serious issues of economic policy, and ensuring growth, stability and fairness across the European Community.

As I said, I feel like an onion in a strawberry patch because I hold positive views about Europe and the European Community. Our EU membership gives British companies full and direct access to 500 million consumers —the single market that Governments of all parties have supported. The 3 million jobs in the United Kingdom—10% of the work force—linked directly to the export of goods and services to the EU exist partly because of the structures of the European Community.

Our EU membership makes the UK an attractive place for investment from Europe and creates stability for the emerging countries in the east, the growing markets. Furthermore, the EU brings democracy to countries that when I was first elected were still under dictatorships and were not the positive members of Europe that they are becoming today.

[Dr Julian Lewis (New Forest East) (Con)]

I thank the right hon. Gentleman for giving way, but this really will not do. He is making a general defence of the European Union in a debate on fiscal union, and the fact remains, as many of us have argued for many years, that there cannot be a single currency without a single economy, there cannot be a single economy without a single Government and there cannot be a single Government without a single state. That is why the Eurofederalists want fiscal union, and regardless of whether it works or fails they say we should have more union. The reality is that it is failing and we must disentangle ourselves from this mess, not have a general debate on trade in the European Union.

[Mr Hanson]

If the hon. Gentleman allows me, I shall cover some of those points in a moment. It is important to record the fact that we have economic growth partly because of co-operation, because of the single market, because of the widening of the European Community to the east and because of EU investment in this country.

--- Later in debate ---

[Mr Hoban]

I think that there is a great deal of work to be done on this and that it is my hon. Friend who is putting his head in the sand. We need a successful euro area if we are to protect jobs and businesses in this country. We can see some of the impact on the economy today as a consequence of the uncertainty in the eurozone. We have seen the impact in the form of growth in France and Germany being below the rate of growth in the UK in the second quarter. These issues have an immediate impact on what happens in our constituencies and businesses. We need to ensure that the eurozone is successful if we are to continue to have a successful economy.

[Dr Julian Lewis]

Will the Minister give way?

[Mr Hoban]

No, I am going to continue. [Interruption.] No, I have four minutes left and there are more things that I need to say. My hon. Friend would have had a chance to speak earlier if there had been a more even division of time.

The situation in the euro area remains one of great concern. Market tensions have persisted since the euro area summit of 21 July. The European Central Bank’s purchase of an additional €70 billion of euro area bonds since early August has been accompanied by an alleviation of some of those tensions, but Greek 10-year bond yields are at a new high of about 20% and Italian and Spanish 10-year bond yields remain high. Commitments were made at the summit of 21 July to enhance the scope and flexibility of the European financial stability facility, to lengthen the maturity of euro area loans and to lower interest rates. Those commitments must be implemented in full. Euro area countries need to get ahead of the curve and move towards a more permanent, comprehensive solution to the ongoing crisis.

Several further proposals for greater fiscal integration in the eurozone have been put forward, most notably by President Sarkozy and Chancellor Merkel following their summit of 16 August. There will be further debate about that, but let me be clear: nothing in the agreement of 21 July or in the current proposals put forward by Chancellor Merkel and President Sarkozy requires a treaty change or a transfer of powers from the UK to the EU. That is the state of play at the moment, but it is clearly not possible to say where the debate on fiscal integration may end up.

As the Chancellor has already told the House, more radical proposals should be considered as part of a permanent solution for the euro area, including measures such as euro bonds or other forms of guarantee. However—this goes back to the point made by my hon. Friend the Member for Northampton South—any move in that direction needs to be matched by more effective economic governance in the euro area to ensure that fiscal responsibility is hard-wired into the system. I am pleased that he recognised the need for those monitoring controls to be in place.

Although euro bonds or other guarantees could be designed in a number of ways, it is possible that such a proposal would require a treaty change. If that were to happen, the Government would act to protect the UK’s national interest, as we did last December when leaders agreed to amend the treaty to allow the creation of the new, permanent crisis resolution mechanism. As my right hon. Friend the Prime Minister said when he appeared before the Liaison Committee last week, we will take that opportunity seriously. He said that

“when there is a treaty change, you have an opportunity to put forward what you want in your country’s national interest. I have done that once already, and I would do it again in the future.”

He also said:

“Britain should think carefully about how to maximise our national interest if that”—

treaty change—

“were to come about, but I think that it is some way down the road.”

We need to ensure that there is a strong eurozone and, as hon. Members said, a clear growth agenda in the EU. The current position is one of the barriers to those countries digging themselves out of the recession. However, we should not underestimate the value of the European Union to this country. It adds £600 billion a year to the economy. Further liberalisation could add a further £800 billion to the value of the economy. We need to ensure that we get this right. It is in our national interest to get it right, and we will work to ensure that we do so.

Equitable Life (Payments) Bill

Julian Lewis Excerpts

Tuesday 14th September 2010 Commons Chamber

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

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

The Government want to see justice for Equitable Life’s policyholders and that is clearly reflected in the actions that we have taken since coming to office. In our programme for government, we pledged to implement the Parliamentary and Health Service Ombudsman’s recommendation to make fair and transparent payments to Equitable Life policyholders. As a constituency MP and as the Financial Secretary to the Treasury, I receive plenty of correspondence on this matter, I have answered a series of parliamentary questions about it and I have had a number of oral representations from colleagues on it, all of which have stressed the need for a fair resolution. I understand the strength of feeling and, given my role in the past five years in opposition and now in government, I hope that hon. Members will recognise my commitment to policyholders.

We need a swift resolution, but, vitally, one that is transparent and fair. I am pleased to report to the House that more progress has been made to address the plight of Equitable Life policyholders during the first few months of the coalition Government than was achieved over the past decade. We have published Sir John Chadwick’s independent report setting out his approach to calculating payments. I commissioned the first bottom-up estimates of losses suffered by policyholders, calculated at each individual stage of Sir John’s methodology, and published those estimates in July.

[Dr Julian Lewis (New Forest East) (Con)]

As one of the many people who signed the Equitable Life representatives’ pledge before the election, I am very concerned that there should be a fair settlement. Will the Minister comment on the statement by the parliamentary ombudsman in her letter to all MPs of 26 July that

“the Chadwick proposals seem to me to be an unsafe and unsound basis on which to proceed”?

[Mr Hoban]

My hon. Friend was one of a number of colleagues on both sides of the House, including me, who signed the pledge. I am determined to make sure that we honour the pledge and that justice is delivered to Equitable Life policyholders. I met the ombudsman yesterday to discuss her letter and her comments on Sir John’s report. That is one of a number of representations that I have received about the report. I shall talk about the others in more detail later, but let me say that the starting point of Sir John’s work is a basis for calculating external relative loss. That is the first such basis that has been proposed to us and we need to look at how it could work as a basis for calculating the losses. I am determined to make sure that in deciding the loss figure we should take into account all the representations that have been received, including those of the parliamentary ombudsman.

--- Later in debate ---

[Dr Lewis]

My hon. Friend is extremely generous in giving way a second time. Does he accept that whatever calculations are done, any outcome that results in only a small fraction of the relative loss being made good to the policyholders would be deemed unacceptable by the policyholders, and dishonourable behaviour by those of us who signed that pledge in good faith?

[Mr Hoban]

I draw my hon. Friend’s attention to the ombudsman’s report. She set out a process for assessing relative loss, but she was very clear in her report that we need to take into account the impact on the public purse of any compensation scheme.

--- Later in debate ---

[Stephen Timms]

I wish the hon. Lady success. I believe that she is one of those who signed the pledge, and I am sure that she will be training her fire on Ministers. As I have said—and as EMAG has made crystal clear—we are currently heading for the breaking of that pledge.

[Dr Julian Lewis]

Does the shadow Minister feel that people who made dodgy investments in Icelandic banks are more worthy of compensation than people who trusted the Government and the regulatory authorities over Equitable Life?

[Stephen Timms]

I am not sure which investors the hon. Gentleman is thinking of, but I think it essential for us now to move quickly to a scheme. We need a timetable, and we need the details of a scheme, so that this long-standing matter can be resolved.