House of Commons
Prayers
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Oral Answers to Questions
Neil Carmichael (Stroud) (Con)
1. What assessment he has made of the likely level of take-up of domestic solar power by 2020.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
Analysis undertaken by the Department for Energy and Climate Change in February 2010 estimated that the feed-in tariff scheme would lead to the deployment of about 700,000 domestic solar photovoltaic installations by 2020. In the light of the reforms to the schemes and the falling costs, I believe that we can do significantly better than that.
Neil Carmichael
In view of the need for certainty in Government policy, what representations has the Minister received from the investment community since the announcement of the review of the fast-track tariff in relation to solar power?
Gregory Barker
The investors who were looking to invest in larger schemes are disappointed; that is coming through as part of the consultation. This was a difficult decision, and I can assure my hon. Friend that it was not taken lightly. We are, however, absolutely convinced that it was the right thing to do. We inherited from the previous Government a complete mess of a scheme with no proper financial controls or economic modelling, but we have now taken measures that mean we will avoid the boom and bust that we have seen in other countries across Europe. We are providing a platform for long-term growth.
Mr David Hanson (Delyn) (Lab)
The decision on the feed-in tariff regime has caused great consternation in north Wales—so much so that the managing director of Kingspan, a company in my constituency, has written to me to say:
“DECC has potentially destroyed a renewables sector that is only some 11 months old and taken with it the jobs and growth opportunity that it would have provided for the UK economy in general and North Wales in particular.”
In the light of that comment from the managing director of a manufacturing company, will the Minister meet me, my hon. Friend the Member for Wrexham (Ian Lucas) and others to discuss this bad decision?
Gregory Barker
I profoundly disagree with the right hon. Gentleman. We have not cut the budget for the feed-in tariff scheme. We have put in place proper financial controls to ensure that there is money in the system through to 2014. I would be happy to meet him to discuss this matter further, but he must remember that the tariff changes apply only to systems larger than 50 kW, which is equivalent to the size of two tennis courts, and not to domestic housing.
Dan Rogerson (North Cornwall) (LD)
Will my hon. Friend consider the letter has been sent to the Secretary of State from the Wadebridge Renewable Energy Network—the WREN group—in my constituency about community-based projects that might be bigger than the new threshold?
Gregory Barker
Community-based projects that are larger than 50 kW—about the size of two tennis courts—and up to 150 kW, which is significantly larger, will still get a tariff comparable to that paid in Germany. We should be competitive with Europe, and the pressure should be on manufacturers to reduce the cost of their products rather than to provide bonuses. We hope that many community projects, particularly those around the 100 kW size, will still be able to go ahead, but the pressure must be on manufacturers to bring down their prices.
Huw Irranca-Davies (Ogmore) (Lab)
The Minister has single-handedly destroyed the confidence of the solar sector and the wider renewables sector at a stroke, and personally shredded the Government’s green credentials. The Renewable Energy Association says that the industry has been “strangled at birth”. Sharp’s in Wrexham states that this was
“terrible news—effectively destroying the solar sector”.
The Solar Trade Association calls the decision “a total disaster”, and the Micro-Power Council says:
“The 50 kW plus sector may well wither on the vine: many jobs will go and businesses will see demand dry up.”
Is it not just sheer blind arrogance for the Minister to suggest that all those bodies are wrong and that only he is right?
Gregory Barker
The fact is that we inherited a complete pig’s ear of a scheme from the previous Government. The hon. Gentleman and the hon. Member for Hackney South and Shoreditch (Meg Hillier) voted against the scheme in 2008, yet they are now the heroes of the feed-in tariff. We have put in proper financial controls and the investment that will guarantee the system for the long term. I would have thought that, having driven the country into the ground, Opposition Members would be more financially prudent, but behold, on the Opposition Front Bench—
Mr Speaker
Order. Order. Let me just make it clear that when I say “Order”, the hon. Gentleman resumes his seat. It is as simple and unmistakable as that.
Huw Irranca-Davies
Thank you, Mr Speaker. I can understand why the Minister is getting so agitated. I have only one more thing to add. Does he at least agree with this eminent expert on the importance of projects of up to 5 GW, who says:
“The idea behind it is to allow the inclusion of non-commercial scale projects, such as those that will be installed by homeowners, small businesses, local authorities, community groups, farmers and others. That would help out hospitals and schools that want to facilitate greater use of renewables and ensure low emissions as part of our 2020 targets.”—[Official Report, 18 November 2008; Vol. 483, c. 144.]
Those are the words of the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry), then the shadow Minister. Why is he wrong on this as well, and why is the Minister of State the fount of all knowledge?
Gregory Barker
Not for the first time, the hon. Gentleman has his numbers wrong: it is not 5 GW, but 5 MW—and 5 MW is still the equivalent of heating 1,500 homes. The fact of the matter is that the scheme we inherited from the previous Government—[Interruption] If the hon. Gentleman calms down, he will have the answer. Given the scheme we inherited, we had some choices to make: we supported either people in their homes, small businesses and communities or very large-scale schemes. We decided to support home owners and consumers; the hon. Gentleman can support big single investors. As I say, it is a clear choice.
Lilian Greenwood (Nottingham South) (Lab)
2. What steps he is taking to provide funding for further carbon capture and storage demonstration projects.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
We remain committed to providing public investment for four carbon capture and storage projects and last year announced up to £1 billion for the capital costs of the first project. Decisions on the provision of funding for further projects will be subject to receiving suitable proposals from industry and considerations on value for money and affordability. As the Chancellor announced yesterday, the funding will be provided from general taxation.
Lilian Greenwood
I thank the Minister for that response. Last week, I met young research scientists from the university of Nottingham who were undertaking exciting research into carbon capture and storage. Without detail and clarity on future projects, however, the UK could lose the opportunity to be a world leader in this vital technology, so what is the timetable and the guaranteed funding for demonstration projects 2, 3 and 4?
Charles Hendry
I would be delighted to meet the students the hon. Lady mentions because the skills in our universities form a very important part of the UK’s ambition to lead in this technology. We have made it clear up front that there is public funding for projects, with capital up front, and real progress was announced yesterday.
Andrew Bridgen (North West Leicestershire) (Con)
Does my hon. Friend agree that, in contrast to the Opposition’s array of red tape on funding, the coalition Government need to ensure that the funding for large, important projects such as CCS is as simple and straightforward as possible?
Charles Hendry
My hon. Friend is absolutely right, which is why the Chancellor made his announcement yesterday. This is a simpler way of getting the funding in; it provides the funding up front rather than it being based on output, and it is a significant step forward.
Malcolm Wicks (Croydon North) (Lab)
Given the abandonment of the levy and a reliance on Government money from general taxation, the words “blood out of a stone” come to mind, in view of my own experience with the Treasury. Will the Minister assure us that public spending will be made available in addition to what has already been announced to ensure the future of this technology, which is absolutely vital to our fight against global warming?
Charles Hendry
The right hon. Gentleman has tremendous knowledge in these areas, so he will also be aware of the European scheme NER300, to which the United Kingdom has submitted nine projects out of a total of 22 across Europe. That provides capital up-front funding. What the Chancellor announced yesterday removes the tremendous complexity from the levy and provides a much more straightforward scheme to drive this technology forward.
Jesse Norman (Hereford and South Herefordshire) (Con)
3. What recent steps he has taken to ensure security of energy supplies in response to the political situation in the middle east.
The Secretary of State for Energy and Climate Change (Chris Huhne)
The UK has diverse sources of oil and gas, including our own substantial North sea production. Political unrest in the middle east has not led to any oil or gas shortages so far. My Department has been in close contact with the International Energy Agency and International Energy Forum partners, and Organisation of Petroleum Exporting Countries members. Saudi Arabia has said it will make up any shortfall through increased oil production. The IEA has confirmed its readiness to use emergency stocks, if required.
Jesse Norman
I thank the Secretary of State for his reply. Microgeneration is a key part of our future energy security. What impact does my right hon. Friend expect his Department’s decisions on feed-in tariffs to have on the number of home owners able to generate their own electricity?
Chris Huhne
I expect the decisions we are taking on feed-in tariffs to ensure a steady and sustained growth in the industry, which will protect householders, who are completely unaffected by the review, in respect of any amount below 50 kW. As the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Bexhill and Battle (Gregory Barker) pointed out, that amounts to two tennis courts and it is absolutely unaffected. We therefore expect that the number of households generating their own electricity will rise.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The Secretary of State surely knows that solar is a very important part of future energy security in our country. The recent decision to backtrack on solar means that community groups that were going to make a real contribution now feel deserted. Their banks have deserted them, so this sort of solar initiative will no longer go ahead.
Chris Huhne
I am glad that the hon. Gentleman has taken up this issue. Let me be clear that the decisions we took were designed to ensure sustainable and strong growth in the solar industry. That is absolutely key. We are precisely trying to avoid boom and bust in this sector. If it had gone on growing, the large-scale plants would have gobbled up all the money available for small-scale plants. That would have meant slamming on the brakes, after which there would have been a much greater threat to the industry. We are going to have sustainable growth, which is as it should be.
Sir Peter Tapsell (Louth and Horncastle) (Con)
May I put it to the Minister that in the current dangerous and complex circumstances the most important key to the preservation of oil supplies is that Bahrain should remain in friendly hands, and that from the British point of view it is strategically far more important than Libya?
Chris Huhne
The hon. Gentleman has made an interesting and important point. Bahrain is a long-standing friend of this country. We have watched with interest over the years as it has increasingly experimented with becoming a more open society, and it is very regrettable that that process is where it is. I note what my hon. Friend has said, and we are watching the situation closely.
Mr David Burrowes (Enfield, Southgate) (Con)
4. What recent representations he has received on the effect on consumers of high oil prices.
Karl MᶜCartney (Lincoln) (Con)
18. What recent representations he has received on the effect on consumers of high oil prices.
Andrew Stephenson (Pendle) (Con)
19. What recent representations he has received on the effect on consumers of high oil prices.
Laura Sandys (South Thanet) (Con)
20. What recent representations he has received on the effect on consumers of high oil prices.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
I have received a number of representations on the effect of high oil prices on consumers. The Government are aware of the significant impacts that they are having. That is why the Chancellor has announced a £1.9 billion package to ease the burden on motorists, and why I have asked the Office of Fair Trading to investigate the domestic oil market.
Mr Burrowes
How does my hon. Friend expect renewable energy in particular to help off-grid customers who have previously had no alternative to traditional supplies such as heating oil?
Charles Hendry
My hon. Friend has raised an extremely important point. One of the purposes of our world-leading renewable heat incentive is to encourage businesses and, subsequently, homes to install renewable energy equipment. That is an important way of helping people who currently rely on off-grid mechanisms such as oil and gas.
Karl MᶜCartney
I hope that my hon. Friend was as pleased as I was when the Chancellor announced in his Budget statement the scrapping of the fuel duty escalator and the introduction of a fuel duty stabiliser. Does he agree that that will go at least some way towards helping my hard-pressed constituents and fellow drivers in Lincoln and throughout the country, who before the general election were faced with an escalator that involved seven fuel duty increases?
Charles Hendry
I am delighted to join my hon. Friend in his pleasure at yesterday’s announcement, and the relief that it will bring his constituents and many others throughout the country. Scrapping the escalator imposed by the previous Administration was a significant change of policy, and all our constituents will be grateful for the steps the Chancellor has taken.
Andrew Stephenson
Given the significant number of households in Pendle and the 3.6 million in the United Kingdom as a whole that are off the gas grid, how soon does my hon. Friend expect the OFT’s investigation to be concluded?
Charles Hendry
That is another important point. I have asked the OFT to complete the work quickly. I want to have its report by the autumn, so that we can learn any necessary lessons and make any necessary changes before next winter in order to protect customers who are off the grid.
Laura Sandys
I join my hon. Friends in commending the Chancellor of the Exchequer’s announcement yesterday. Many of my constituents will be very, very pleased about it. However, will the Department, during its investigation of the market, look into the discrepancies between pump prices across the country? I do not understand why the prices in my constituency are among the highest, and I am not sure that my constituents do either.
Charles Hendry
The investigation relates chiefly to the domestic oil and gas market, but if there is evidence of unfair and anti-competitive practices in relation to fuel prices on forecourts, I hope that my hon. Friend will write to the OFT, and I should be grateful if she copied me into the correspondence so that I can see the evidence for myself.
Mr Nigel Dodds (Belfast North) (DUP)
Seventy per cent. of households in Northern Ireland depend on domestic heating oil. What discussions has the Minister had with the Northern Ireland Minister of Enterprise, Trade and Investment about possible regulation of the home heating oil industry and the exorbitant prices that households are now being charged?
Charles Hendry
That too is an important point. The fact that Northern Ireland is significantly more exposed than other parts of the United Kingdom in this regard was one of the driving forces behind our request for the OFT investigation. We will work with the devolved Administrations in any way we can to ensure that any particular examples of difficulties in different parts of the country are taken into account.
Kerry McCarthy (Bristol East) (Lab)
About a year ago, the then Secretary of State and I were fortunate enough to be taken up on to the roof of Redland Park united reformed church in Bristol by Rev. Douglas Burnett to look at the solar panels installed there, which had made a huge difference to the church’s fuel bills—it was not having to pay for fuel at all, and was making money selling electricity back to the grid. Is it not therefore ridiculous that under the new feed-in tariffs other churches in Bristol will not be able to follow suit?
Charles Hendry
As my fellow Minister of State has made clear, the previous Government got their estimates wrong. They assumed there would be no large-scale solar developments in this country by 2013, but there have been a significant number of large-scale applications. That would have blown the budget and made it more difficult to deliver for domestic installations, and we are therefore right to review this process.
Mark Durkan (Foyle) (SDLP)
What assessment have the Government made of the effect of speculative commodity indices activity on wholesale commodity prices, and what steps are they taking to restrain such activity by banks here and international funds?
Charles Hendry
There is varying evidence on the effect. There is certainly some evidence that it has pushed up prices, but there is also evidence that hedging can help consumers. We have had discussions with countries, including Saudi Arabia, and it is willing to increase oil production to deal with any market shortages that might arise. I am satisfied from those discussions that demand can be met by increased supply, so shortages should not be a factor in pushing up prices.
Amber Rudd (Hastings and Rye) (Con)
5. What recent assessment he has made of the adequacy of the nuclear safety regime in the UK; and if he will make a statement.
Bob Blackman (Harrow East) (Con)
8. What recent assessment he has made of the adequacy of the nuclear safety regime in the UK; and if he will make a statement.
Sajid Javid (Bromsgrove) (Con)
11. What recent assessment he has made of the adequacy of the nuclear safety regime in the UK; and if he will make a statement.
The Secretary of State for Energy and Climate Change (Chris Huhne)
The International Atomic Energy Agency integrated regulatory review service—IRRS—recently noted that the UK has a mature and transparent regulatory system, an advanced review process, and highly trained, expert and experienced nuclear inspectors. Nevertheless, we take the recent unprecedented events in Japan extremely seriously, and I have asked the chief nuclear inspector, Dr Mike Weightman, to provide a report to the Government on the implications and the lessons to be learned for the UK nuclear industry.
Amber Rudd
I thank the Secretary of State for that answer, but I must tell him that a number of residents of Hastings and Rye have written to me, and although they share heartfelt sympathy for the people of Japan, as they live next to Dungeness they now have additional concerns. They want to know what action can be taken to ensure that our country’s nuclear facilities are made even more safe.
Chris Huhne
Let me reassure the hon. Lady first and foremost that there are very substantial differences between our situation and that in Japan. We refused to authorise the boiling-water reactor type used in Japan when that was proposed for use in the UK. Secondly, we do not, of course, live in an earthquake zone. The strength of the most severe earthquake in the UK was a mere fraction of the strength of that in Japan—the recent Japan earthquake was stronger than the 1931 Dogger Bank earthquake by, I think, a factor of 60,000—and nor do we have the associated tsunamis. We are not complacent, however, and we are looking into this. We do have extreme weather events, and Dr Weightman has asked all our existing nuclear sites to check that they can withstand the extreme weather events that we experience.
Bob Blackman
With the advent of the electric car, there will clearly be a requirement for much more baseload overnight so that people can recharge their electric cars, which means the case for nuclear power advances quite rapidly. What we need in this country is safe nuclear power. What consideration has the Secretary of State given to ensuring it is produced quickly and safely?
Chris Huhne
As my hon. Friend knows, the coalition Government’s plans clearly envisage an important role for nuclear. We aim to bring the first new nuclear on stream for 2018. It is our view that new nuclear can play an important part, and unless Dr Weightman’s report gives us any particular reason to reassess that, I see no reason why that should not remain our view.
Sajid Javid
There are undoubtedly lessons to learn from the tragedy unfolding in Japan, and I am pleased that my right hon. Friend says we will learn them. Nevertheless, does he agree that the only realistic way we can meet the expected huge increase in domestic demand for energy is through the domestic production of nuclear power?
Chris Huhne
As I have just said, our plans clearly envisage an important role for new nuclear. When people visit the departmental website, they can access an interesting pathways model called “My2050”, which allows them to see the effort that would have to be made if we did not have nuclear. We would have to make enormously greater efforts on both renewables and carbon capture and storage. That is physically possible, but the costs would be very substantial.
Mr Dennis Skinner (Bolsover) (Lab)
The nuclear industry is in serious trouble as a result of what has happened in Japan, we are running out of supplies of North sea oil and fighting all over the place in the middle east is massively increasing the price of oil, so is it not time for king coal again?
Chris Huhne
The hon. Gentleman makes a good point. The entire departmental strategy on energy is to have diverse supplies; it is not to put all our eggs in one basket, be it coal, nuclear or renewables. The reality is that coal will have a role to play in a low-carbon future, as will other diverse supplies.
Albert Owen (Ynys Môn) (Lab)
It is right to review the implications of UK civil nuclear power in the light of what happened in Japan. Does the Secretary of State agree that it is also right to explain that strategic site assessments and generic nuclear installation designs have been approved by this House and by the Government, and that we need not only to make it clear to the public that safety is paramount, but to make it clear to business that it is right to invest in nuclear?
Chris Huhne
I assure the hon. Gentleman that I have made it clear in every statement I have been asked to make on this issue that safety is absolutely paramount. That is precisely why I want Dr Mike Weightman to examine all the lessons from Japan, and for us to base any debate on the facts and the evidence, and not on knee-jerk reactions. There have been knee-jerk reactions in other countries, but that is not the right basis for British policy.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
It is fascinating hearing the Secretary of State dance around on this issue. I welcome his remarks as far as they go—clearly safety is paramount in nuclear power—but he has made some comments over the past few days and has today failed to be emphatic about the Government’s position on nuclear. Will he make it clear? He has used words—[Interruption.] I can hear chuntering from those on the Government Front Bench. He has used words such as “we envisage a role”; he has pointed again to a study of a future without nuclear on his departmental website; and he has talked in The Observer about an
“80% reduction in emissions…without new nuclear”
if we invest more in renewables. Those are red herring statements. Will he be emphatic and make it clear to investors what the Government’s position is on new nuclear? Will he tell us clearly: is he backing new nuclear?
Chris Huhne
I do not think investors are under any illusions about the position. At the Nuclear Development Forum, I said very clearly that we continue with the plans as set out in the coalition agreement, and that we envisage a role for new nuclear and want to see new nuclear come on, but that we have to put an emphasis on safety. That is why we commissioned Dr Mike Weightman’s report. I do not anticipate that it will lead to enormous changes, but we will have to wait to see its results and base the debate on the facts.
Claire Perry (Devizes) (Con)
6. What recent discussions he has had with his EU counterparts on the setting of an EU-wide 30% carbon dioxide emissions reduction target by 2020.
The Secretary of State for Energy and Climate Change (Chris Huhne)
I have had numerous discussions with my EU colleagues in recent months on the importance of the EU low-carbon transition, including the role of an EU-wide 30% target. In response to the publication of the Commission’s 2050 low-carbon road map on 8 March, I wrote an open letter jointly with my ministerial colleagues from Denmark, Greece, Germany, Portugal, Spain and Sweden urging an open debate on a 30% target. I continue to use opportunities such as the discussion of the road map at the forthcoming informal Environment Council meeting to make the case for an early move to a 30% target.
Claire Perry
I thank the Secretary of State for his reply. Does he agree that the Chancellor’s Budget statement yesterday confirming the capitalisation, timing and role of the green investment bank will do much to inspire confidence in Britain’s ability to achieve its own emissions targets by 2020?
Chris Huhne
I entirely agree with my hon. Friend. One of the most important announcements made yesterday was the one on the green investment bank and the fact that we have trebled the amount of capital found for its capitalisation during this spending round. We will try to do our bit on asset sales, but if they cannot be found, they will be guaranteed by the Treasury. In addition, the fact that the bank can begin to borrow and lend before the large amount of energy investment in offshore wind is crucial.
Nia Griffith (Llanelli) (Lab)
I welcome the Secretary of State’s comments about working with other European countries to seek a reduction in carbon emissions. Will he explain, then, why his Government have just announced a unilateral carbon floor that is making steel companies, such as Tata in my constituency, extremely jittery and is making them consider pulling out from investing here to invest in other countries in Europe? We will simply be uncompetitive, even with our European partners.
Chris Huhne
The reasons for the carbon price floor were set out clearly by the Chancellor. We need to send out clear signals to investors about the transition to the low-carbon economy. This measure will do that, and it will also, operating within the power sector, ensure that we use low-carbon sources of electricity through the whole process and the transition rather than merely using high-carbon ones. It is an important part of our transition to a low-carbon economy.
Mr Kevan Jones (North Durham) (Lab)
7. Whether he plans to bring forward proposals to encourage households to take up the green deal.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
The green deal will be a real game changer, but the Government fully recognise that the deal might need to provide additional drivers if we are to achieve the full scale of our ambitions to retrofit more than 14 million homes by 2020. We are working closely with a range of stakeholders to identify additional triggers that will steer customers towards the green deal and in the Energy Bill we are seeking powers to require changes to poorly insulated private rented accommodation.
Gregory Barker
The green deal is one of a number of tools, but clearly its effectiveness will be tested by the number of homes we manage to insulate and bring up to a decent standard. We have said that our ambition is 14 million homes by 2020. Clearly, that is the huge target that we must meet if we are to meet our carbon budgets.
Roger Williams (Brecon and Radnorshire) (LD)
Many of the materials that will feature in the green deal to improve the heat efficiency of homes attract VAT at a rate of 5% but some, such as double glazing, still attract it at a rate of 20%. Does the Minister agree that it would encourage people into the green deal if all the materials were taxed at 5%? Will the Minister investigate to find out whether that can be achieved?
Gregory Barker
The hon. Gentleman makes a good point. Obviously, this policy is primarily led by the Treasury, but I did have a good discussion with Pilkington on exactly this matter only last week. We will continue to look at it.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I was very interested to hear the Minister’s response on the green deal. As yet, we have seen no targets in the Energy Bill and nothing to link it to the Climate Change Act 2008 so that it can create a tangible emission reduction. Yesterday, we heard the Chancellor talk up the green deal in the Budget, but not so loud was his announcement on page 117 of the plan for growth that the Government have scrapped the requirement for new homes to be truly zero carbon. Does the Minister agree with WWF, which said that this announcement of the destruction of the policy sweeps away
“years of work and ambition”?
What representations did he make to his colleagues in the Department for Communities and Local Government and the Treasury before the decision was made?
Gregory Barker
This is a DCLG lead, but there should be no doubt about our commitment to the transformation of the housing stock. We know that the Opposition are still addicted to targets, but the difference is that the Government are addicted to real progress and to transformational change. They can carry on creating new targets and we will get on with making real changes in real life.
Mr Mike Weir (Angus) (SNP)
9. What recent discussions he has had with ministerial colleagues on the construction of new nuclear power stations.
The Secretary of State for Energy and Climate Change (Chris Huhne)
I have had discussions with Cabinet and other colleagues in government on energy policy including new nuclear build. We take the recent unprecedented events in Japan extremely seriously and I am having continuing discussions on the subject of new nuclear power stations in the light of the ongoing situation.
Mr Weir
Given that analysis released by Redpoint Energy shows that yesterday’s carbon price floor announcement will lead to a windfall profit for existing nuclear stations of £1.33 billion—let alone what it will mean for new stations—how does that sit with Ministers’ repeated pronouncements that there will be no public subsidy for nuclear?
Chris Huhne
The carbon price floor is designed to encourage low-carbon sources of energy and it is not in any way designed to attract particular support for one low-carbon source or another. One could equally argue that it is benefiting renewables. That is why it will lead to the switching effect that we find desirable, so that we rely more on low carbon than on high carbon. In addition, the hon. Gentleman will note that the Treasury is considering the impact on existing operators and will keep that under review.
Mr Dominic Raab (Esher and Walton) (Con)
This week, the former UK chief scientific adviser Sir David King has said that the real lesson from Japan was that
“nuclear power is even safer than we thought…by far the safest method of power generation”.
Will the Secretary of State be mindful of that advice and does he agree with that assessment?
Chris Huhne
I am mindful of it. That is an interesting argument which has been made in many quarters. It is absolutely crucial, comparing the debate in this country with those in other countries such as Germany, that we should base it on the facts and the evidence. That is precisely why I asked Dr Mike Weightman to produce a report—so that we can have a sensible and measured debate based on the facts and the evidence.
Caroline Lucas (Brighton, Pavilion) (Green)
Could the Secretary of State say a little more about the assessment he has made of the potential rise in costs of the fleet of new nuclear following the Fukushima disaster? Will he comment in particular on the likelihood that the Japan accident will make it more difficult for private investors to raise capital to build the eight new reactors that are planned by the Government?
Chris Huhne
On the first point, it is too early to answer the hon. Lady until we have had the report from Dr Weightman and we can understand whether we need improvements in our regulatory regime and whether there are lessons to be learned. There are substantial differences between the Japanese situation and ours but I am determined that we should learn any lessons we can. On the second point, although I spent many years in financial markets I do not claim to know how they will react to particular events as they can often react in a rather faddish and fashionable manner. I think we will just have to wait and see.
Julie Hilling (Bolton West) (Lab)
10. What steps he is taking to ensure that consumers receive advice on energy-saving measures.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
Reliable advice will form an important part of the new green deal framework to be introduced in 2012. Having a comprehensive assessment setting out energy efficiency measures that are likely to be suitable for each individual property along with the potential opportunities for microgeneration and renewable heat will be a crucial step in every green deal journey.
Julie Hilling
I have been doing energy surgeries with E.ON in Bolton West, where it has a large base, to advise constituents on ways in which they can cut energy, reduce bills and stay warm. Considerable concern has been raised about the complexity of tariffs and the difficulty, especially for the elderly, of finding the cheapest supply. What can the Government do to help?
Gregory Barker
This is something we are looking at. We have engaged with all the major energy suppliers to create far simpler tariffs. The hon. Lady is absolutely right and if she has something to add—it sounds as though she has—I would be very happy to meet her to harvest her ideas and make sure they are included in the new, improved tariff arrangements that we are bringing forward later this year.
Miss Anne McIntosh (Thirsk and Malton) (Con)
One of the easiest ways of introducing immediate energy reduction is educating people to heat hot water only when they need it. What plans do the Government have to bring forward the Walker proposals in this regard?
Gregory Barker
There are no such current plans that I am aware of, but my hon. Friend is absolutely right. We would certainly be happy to consider whether there is a way of incorporating those proposals into our existing plans, because we need to do a great deal more.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
12. Whether he has made an assessment of the potential effects of the outcome of the 2011 Budget on the development of low-carbon technologies.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
The Budget announced several new policies which will support the development of low-carbon technologies including £2 billion of additional capital for the green investment bank, a carbon floor price to provide a stronger, more stable signal to investment in low-carbon generation, and preferential company car tax treatment for low-carbon vehicles. All that is in addition to the creation of 21 enterprise zones and a £100-million boost for science that will further drive green growth.
Bridget Phillipson
The north-east has led the way with the development of low-carbon electric vehicles, as the Minister will know, and with the network of charging points. He will be aware that if those vehicles are to have mass-market appeal there needs to be a comprehensive network of charging points. What further action will the Government take to support a nationwide roll-out of such charging points?
Gregory Barker
We are working closely with our colleagues in the Department for Transport because—the hon. Lady is absolutely right—there needs to be a concerted, joined-up strategy if we are to realise the potential of electric vehicles. There will be more details on that, but I assure her that a lot of work is going on in Government and that the Departments are working effectively together.
Andrew George (St Ives) (LD)
The Treasury has resisted the establishment of a public investment bank since the 1930s, so I congratulate my hon. Friends on having achieved that, but it will not be effective until 2015. What can be done to speed up the implementation of the green investment bank?
Gregory Barker
The Chancellor announced yesterday that the green investment bank will be up and ready for business in 2012 and will have £2 billion of additional capital. The key is that it will be able to raise funds from 2015 at scale, in the bond market for example, that will allow it to make a meaningful contribution to the billions of pounds that we will need to raise in the second half of the decade to finance the vital renewable energy infrastructure projects.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Is the Minister really happy that the green investment bank will deliver the necessary investment in green industries as quickly as possible?
Gregory Barker
Yes, I am. I would point out to the hon. Lady that Bob Wigley, who chaired the green investment bank commission, said yesterday:
“The Chancellor has found a pragmatic way of getting the bank up and running with a significant level of seed equity, allowing it to develop its activities without risk to fiscal prudence.”
That is absolutely spot on. We think that it will make a substantial difference not only in the next few years, but in the next couple of decades and beyond. This is a key time in the development of financial services.
Meg Hillier
The Opposition welcome the green investment bank, which is something we supported, but we have concerns. The other week we had Government green growth week—I forgive you, Mr Speaker, if you missed it—with a series of rehashed announcements. Yesterday’s announcement about the green investment bank worried me because there will be no real investment opportunity for four years. The Minister might be insulated from business, but I meet businesses all the time that need that investment now, so can he tell them when they can approach the bank to borrow money?
Gregory Barker
From 2012, when it opens for business. It is pretty clear. That is why the chairman of the green investment bank, who knows a lot more about business than Members on the Labour Front Bench, was very pleased with the announcement. The £3 billion is an awful lot more than Labour pledged in its manifesto.
Damian Hinds (East Hampshire) (Con)
13. When he plans to respond to the Committee on Climate Change’s fourth carbon budget report.
Simon Wright (Norwich South) (LD)
15. When he plans to respond to the Committee on Climate Change’s fourth carbon budget report.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
The Climate Change Act 2008 requires the Government to set the fourth carbon budget level in law no later than 30 June 2011. I anticipate that a statutory instrument will be laid before the House after the Easer recess.
Damian Hinds
The carbon budget plan is still back-ended, calling for reductions of 4.7% compound after 2030 but only 3.2% before. That is credible so long as investment in research and development is strong at the front end. What more can the Minister do, working with colleagues in Government, to stimulate the development of low-carbon vans and heavy goods vehicles as well as power?
Gregory Barker
My hon. Friend is right: there is a whole range of measures, but transport is also key. The recent spending review announced that the Government have provided up to £400 million for measures to promote the uptake of ultra-low carbon vehicle technologies, including support for consumer incentives, the development of recharging infrastructure and a programme of research and development work, which we continue to add to.
Simon Wright
The Committee on Climate Change recommended a tightening of the second and third carbon budgets in the light of the impact of the recession. Does the Minister agree that we must deliver on that recommendation and use the Committee’s report as a means of strengthening the UK’s global leadership in encouraging our international partners to tighten their emissions targets?
Gregory Barker
My hon. Friend is absolutely right. We must maintain our global leadership position, not only because it is important for tackling dangerous climate change, but because we want to grab market share in the new clean technology markets around the world, which are growing fast. We need to assert our leadership in the low-carbon markets, and to do so we need an ambitious policy to drive it at home.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
When my hon. Friend heard Lord Adair Turner spell out his fourth five-year plan, was he, like me, reminded of the old Soviet planning system? I am sure that if anyone could have made the Soviet Gosplan system work it would have been him. Will my hon. Friend treat with great caution forecasts 15 years ahead for the costs to which we are committed, given that the Barclays and Accenture plan reckons that meeting current targets for 2020 will cost €3 trillion?
Gregory Barker
Clearly there is a huge investment agenda, and my right hon. Friend is right, but we see that as an opportunity as well as a cost. He will also know that the cost of doing nothing and standing by while climate change hits the world progressively through this century will be considerably greater than prudent early action.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
14. What recent discussions he has had with ministerial colleagues on attracting private sector investment into low-carbon technologies.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
The Secretary of State regularly meets ministerial colleagues, and attracting private sector investment is one of many topics considered in their discussions on promoting a low-carbon economy and long-term green growth.
Chi Onwurah
As the Secretary of State knows, many innovative clean-tech start-ups throughout the north-east are crying out for funding. Given that the green investment bank cannot borrow and £3 billion is not going to build us our green future, what will he do to ensure that more funding is available?
Gregory Barker
I think the hon. Lady misunderstands the role of the green investment bank. It is there to spur private sector growth and investment, which is ultimately going to deliver the green investment and green growth that we need. The bank, with £3 billion, which is considerably more than the Labour party proposed, is going to be a real engine for growth, but it is not the only show in town; there is a whole range of other policies that we need to promote a green enterprise recovery.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
Following the Chancellor’s commitment to rebalance our economy, does my hon. Friend agree that Plymouth, with a very fine reputation for marine science and research, has a significant part to play in developing a green and low-carbon economy? Is he willing to come to Plymouth to see the very real work that the university and other authorities are doing within the city?
Gregory Barker
I gladly accept the invitation from my hon. Friend, who is a great champion of Plymouth. With its long maritime history, port facilities and engineering expertise, it is extremely well placed to benefit from that type of green growth, particularly in the marine area, and I look forward to seeing it at first hand.
Mr Iain Wright (Hartlepool) (Lab)
16. What recent discussions he has had with representatives of energy-intensive industries on electricity market reform.
The Secretary of State for Energy and Climate Change (Chris Huhne)
Concerted efforts are made by all Ministers and officials in the Department to engage stakeholders with an interest in electricity market reform, including representatives of energy-intensive industries.
Mr Wright
It does not make much sense, either economically or environmentally, when the steel that will be used in the rush to a low-carbon economy is imported from Russia and Ukraine because of electricity market reform and regulatory differences. Tata Steel has a world-class pipe mill in my constituency, and it really wants to play a leading role in the supply chain for the national infrastructure. Will the Secretary of State listen to Tata’s concerns, level the playing field for UK firms and ensure that the competitiveness of firms in this country is not hindered?
Chris Huhne
We are very keen to listen to Tata’s concerns, and both myself and the Secretary of State for Business have been very aware of energy-intensive industries. It is important to recognise that the costs of a move to the low-carbon economy depend on what we think the costs of staying with the fossil fuel economy are, and judging by recent moves in the oil market we may find that that is a volatile source of supply—and a rather costly one.
Dr Alan Whitehead (Southampton, Test) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Energy and Climate Change (Chris Huhne)
In addition to my normal departmental responsibilities, we have commissioned a report from the chief nuclear inspector on the implications of the situation in Japan and the lessons to be learned. We have launched the renewable heat incentive to provide long-term guaranteed financial support for renewable heat technologies, and the Energy Bill has now been introduced to the Commons from the Lords.
Dr Whitehead
Can the Secretary of State clarify whether the carbon floor price that starts in 2013 will be £16 per tonne, as the Chancellor suggested yesterday, or £4.94 per tonne plus the European Union emissions trading scheme amount, as the accompanying Treasury document sets out? If the latter is the case, does the Secretary of State think that it will produce a considerable differential between electricity imported through interconnectors and electricity produced domestically, and what are his plans to deal with that?
Chris Huhne
The Chancellor is absolutely correct, because there is a carbon floor price, and it is designed to ensure that the price, which is composed of the emissions trading scheme and the carbon floor price, is as applied to electricity generators. He is very well aware, I know, of the potential implications of the carbon floor price for interconnection, and that has been taken into account in the Treasury’s decision.
Damian Collins (Folkestone and Hythe) (Con)
T2. The Government’s report, “The Plan for Growth”, published yesterday, states that the Secretary of State for Energy “will also place significant weight on the need to support the economic recovery in related”—planning—“consent regimes”. Can he confirm that the Government will now consider the benefits to the local economy of building a new power station at Dungeness as part of their consultation on new nuclear sites?
Chris Huhne
I am aware that my hon. Friend has an important constituency interest in this. He has been a great champion of the interests of his constituents in securing another new plant at Dungeness. I am reluctant completely to redraw the national planning statements, which have already been going out for consultation, but the interests of the national economy certainly need to be taken into account, and they will be.
Mr Iain Wright (Hartlepool) (Lab)
T7. Yesterday’s announcement from the Chancellor about a supplementary charge for oil and gas producers places a question mark over investment decisions and the possible supply chain, and it might increase still further our reliance on imported oil and gas. Teesside is a major hub for offshore engineering, with many jobs reliant on it. Will the Minister guarantee that no jobs will be lost in Teesside, which is an unemployment hotspot, as a result of the Chancellor’s decision?
Chris Huhne
The Chancellor is keen to see new jobs in Teesside; that is precisely why he announced that one of the enterprise zones will be coming to the Tees valley. We have a great commitment to new jobs in Teesside and, indeed, the whole of the north-east. On the hon. Gentleman’s specific point, I anticipate, because of the rise in the oil price, that we will have a lot of resources available to operators in the North sea, and I would be surprised if there was not a continued increase in investment.
Mr Steve Brine (Winchester) (Con)
T3. In the past, park home residents in Winchester and Chandler’s Ford have expressed to me their grave disappointment that they have not been eligible for the Warm Front scheme. Like the omission of a specific park home option on the 2011 census form, this rather feeds the view of many park home residents that they are treated differently. Does the green deal offer them cause for hope, or at least some excitement?
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
Yes, it certainly does. I can confirm to my hon. Friend that in relation to funding energy efficiency improvements, the green deal should apply to park homes if they have an appropriate energy meter and qualify under the normal rules. Later this year, we will consult on the size and scope of the energy obligation, including the types of property and householders qualifying for support, and that will include park homes.
Julie Hilling (Bolton West) (Lab)
T8. With around 30,000 people dying of cold each winter, the introduction of smart meters and ever-increasing fuel bills, will the Minister meet me to discuss the promotion of cold meters, which sound the alarm when the temperature dips below safe levels? That is particularly important for elderly people.
Gregory Barker
Yes, I will certainly meet the hon. Lady to discuss that. It is not an idea that I have heard a lot about, but it sounds very sensible. The great thing about the green deal is that we want to encourage the introduction of new technologies that will help the consumer.
Mr David Burrowes (Enfield, Southgate) (Con)
T4. Enfield has a welcome commitment to increase the supply of decentralised renewable and low-carbon energy. May I invite the Minister to come to Enfield to see for himself these innovative plans, particularly on capturing energy from waste, and to see that when it comes to supporting renewables, instead of chasing mega-business deals, small and local is often beautiful?
Gregory Barker
My hon. Friend is absolutely right; small and beautiful is our vision for a much more decentralised energy economy. I would be delighted to come to Enfield to see the real strides that people are making to achieve that.
Helen Goodman (Bishop Auckland) (Lab)
Earlier we heard the Secretary of State boasting about his experience of financial markets. The rules of the Office for National Statistics about how to classify things are absolutely clear. It is more than 20 years since private finance initiatives were set up, so why has he been so incompetent in the way that he has structured the green investment bank, which has been classified in the public sector, giving the Treasury the excuse to delay its borrowing powers for four years?
Chris Huhne
The hon. Lady, as a former Treasury official, knows about this from the inside. I can assure her, however, that I was not boasting of my expertise in financial markets, but drawing attention to the fact that, although I had been in those markets for a considerable period, I was completely incapable of forecasting how they would react in these particular circumstances. I do not believe that we are going to have the problems with the green investment bank that she anticipates. It is clear that this is a historic moment. For the first time, the Treasury and the whole Government are agreeing to set up an institution that will be able to borrow, in its own right, just before the point at which it will need those resources. It will be able to borrow because the offshore wind investments will be there in the second half of the decade. As an ex-Treasury official, the hon. Lady well knows that given all those years in the 1930s when we became the only industrialised country not to set up a public development bank, this is an extraordinary achievement, and I hope that Labour Members recognise it as such.
Simon Kirby (Brighton, Kemptown) (Con)
T5. Does the Minister agree that offshore wind farms, such as the one that has been proposed for off the coast of Brighton, will not only help energy supplies and counter the effects of climate change, but boost the local economy?
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
My hon. Friend is absolutely right. Wind farms bring significant job opportunities. I have been to the port at Newhaven to talk about those opportunities. This will be an important part of our energy infrastructure going forward. Britain already leads the world in the deployment of offshore wind, and we intend to build on that and to secure supply chain jobs in Britain.
Mr Geoffrey Robinson (Coventry North West) (Lab)
My question relates to the renewable heat initiative. I am sure that the Minister remembers the productive meeting that we had with Geothermal International, a small company in Coventry. Although the outcome on the commercial applications side has been very good, the continuing delays on the domestic side are holding back the industry. It is a very important industry in the small and medium-sized enterprises sector, which is being targeted by the Government. If he could hurry up with that, we would be able to make more progress.
Gregory Barker
I assure the hon. Gentleman that the domestic launch is not being delayed at all. The only difference is that at the same time as we launch the industrial scheme this year, we will launch the renewable heat premium. The premium will reach more consumers in the first year than the ordinary tariff under the original model was anticipated to reach. I assure him that the premium will add to the scheme, not detract from it.
Mr Robin Walker (Worcester) (Con)
T6. Recent announcements, including that on the premium, have been welcomed warmly by Worcester, Bosch Group, which employs more than 1,000 people in Worcester. It wants the domestic roll-out of the scheme to succeed, and feels that the key to that is winning over installers. Will the Minister update the House on his plans to engage with installers, and will he visit the training centre with me, where more than 10,000 installers are trained each year?
Gregory Barker
My hon. Friend is absolutely right that installation is key, particularly for such new, innovative technologies, which are not all as tried and tested as we would like. We are working closely with installers. My officials meet regularly with firms and liaise closely with the industry. I would be delighted to accept my hon. Friend’s invitation and see it for myself.
Angela Smith (Penistone and Stocksbridge) (Lab)
I have a range of energy-intensive industries in my constituency, including steel, glass, paper and the entire clay pipe manufacturing capacity of the UK. How can south Yorkshire develop its manufacturing capacity and encourage economic growth if the international competitiveness of its current engineering capacity is being undermined by the Government’s energy market reforms?
Chris Huhne
In answer to a previous question, I made it clear that we are listening to energy-intensive industries carefully, and using all the means that we can to ensure that we can offset any demonstrable effects. We have had those discussions in the context not just of the carbon floor price, but of the European Union’s emissions trading scheme. We will continue to watch this situation carefully because I want to see many new jobs in south Yorkshire and everywhere else in the country.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
T9. Earlier, the Secretary of State said that in the long term, the costs of unrestrained climate change will exceed the costs of doing something about it. Surely he is aware that the Stern report states that over the whole of this century, the costs of the programme that he is advocating exceed any benefits from reducing climate change, so that—[Interruption.] That is in the Stern report on page 167. Surely the Minister is aware of it.
Chris Huhne
Let me answer my right hon. Friend. This is not just a question of assessing the costs to the world in the long run if unrestrained climate change is allowed to proceed; it is also a question of energy security in this country and of the costs of the alternative. Given that the oil markets have gone from $60 a barrel two years ago to $80 a barrel last year, and are now at $115 a barrel, my right hon. Friend should be well aware that relying on fossil fuel markets could be extremely damaging to our economic health.
Ian Lavery (Wansbeck) (Lab)
The Committee on Climate Change has recommended that the carbon intensity of electricity should be reduced from today’s 500 grams of CO2 per kWh to the highly challenging figure of 50 grams of CO2 per kWh by 2030. The Energy and Climate Change Committee suggests that the target should be about 100 grams of CO2 per kWh. Will the Minister or the Secretary of State explain how difficult it would be to achieve the recommendation of the Committee on Climate Change?
Charles Hendry
We are both keen to answer that because it is such a good question and we have such a good answer. We see a whole range of opportunities, and carbon capture and storage will be a fundamental one. It brings a real opportunity for coal to be part of the mix. We can look at the number of bids that we have had in—nine bids have come to Britain for the European scheme, out of 22 across the whole of Europe. Seven of those are for coal and two are for gas, which shows that there is a real opportunity for clean coal in the UK mix, which will be a world-beating achievement.
Greg Mulholland (Leeds North West) (LD)
Given the Government’s commitment to both a low-carbon future and localism, do Ministers agree that everything should be done to encourage local carbon budgets, which can clearly play an important part in achieving our national targets?
Chris Huhne
I agree that local carbon budgets are important, which is one reason why we have continued with the pilots of databases that allow local authorities to know what their carbon emissions are and to continue to set targets. I do not want to impose those on local authorities, because they are a matter for localism, but it is right that they should have the information on which they can base informed decisions.
Diana Johnson (Kingston upon Hull North) (Lab)
The vital ring-fenced support for the marine renewables deployment fund ends next week. With the green investment bank some way off, no news on the low-carbon innovation fund until the summer and nothing in the Budget, will the Minister clarify what backing the industry can expect, or does he prefer the jobs to go abroad?
Gregory Barker
Absolutely not. We have gripped this agenda, as the enthusiasm of the new marine programme energy board made clear when we met in Exeter. I can tell the hon. Lady that we will announce the allocation from the Department of Energy and Climate Change’s budget for supporting low-carbon technologies very shortly, and the results of the review of the renewables obligation that the Minister of State, my hon. Friend the Member for Wealden (Charles Hendry), brought forward will also be announced in due course.
Andrew George (St Ives) (LD)
On the idea that there is no public subsidy for new nuclear, the Government will of course effectively have to underwrite new nuclear in respect of events that we all hope will never happen. How is the carbon floor price not effectively a back-door subsidy for new nuclear?
Chris Huhne
My hon. Friend should be aware that we are not providing underwriting funds or soft loans. In the United States, for example, the Obama Administration are proceeding with $35 billion of soft loans for the nuclear industry, but we have explicitly said that new nuclear will be built here without public subsidy. We have also said that, as Lord Stern pointed out, climate change is the greatest market failure of all time. We have to offset that market failure with a clear signal to the markets, whether through the emissions trading scheme or the carbon floor price, that low carbon is here to stay and we must accelerate it.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
Yesterday, in response to the Budget, Karl-Ulrich Köhler, chief executive officer of Tata Steel Europe, said that
“the introduction of the Carbon Floor Price…represents a potentially severe blow to the sustainability of UK steelmaking.”
Does the Secretary of State believe that the CFP announced yesterday is the type of state intervention that is good for British steel making on Teesside?
Chris Huhne
I have said in answer to previous questions that we will engage in ongoing discussions with energy-intensive users. We want them to use low-carbon electricity, and a number of them are doing that, including by moving to biomass. There are alternatives, and there is flexibility in, for example, the EU emissions trading scheme, which allows us to help.
Caroline Lucas (Brighton, Pavilion) (Green)
What assessment has the Secretary of State made of the damage done to business confidence by his extraordinary U-turn on support for mid-sized solar installations, and of the 14,000 new jobs that were in the UK solar industry precisely because of that? How many of those jobs will be lost as a result of that extraordinary decision?
Chris Huhne
The hon. Lady has to be aware that sadly, in the world in which Ministers operate, we have to assess the alternatives. Had we not acted, the alternative would have been a much greater boom and bust and a much greater destruction of confidence. I am absolutely unhesitating in assuring her that solar industry confidence is substantially higher than it would have been if we had taken the action that she suggests.
European Summit
(13 years, 1 month ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
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Mr William Cash (Stone) (Con)
(Urgent Question): To ask the Chancellor of the Exchequer whether the decision described as the draft decision in the motion to approve the treaty change on the European financial stability mechanism without a referendum, which was passed by the House yesterday, is now under review.
The Financial Secretary to the Treasury (Mr Mark Hoban)
I am grateful for this opportunity to make a statement to the House about Portugal and the European stability mechanism. I understand that hon. Members are concerned about the events that unfolded in Portugal, which has faced difficult challenges for some time.
Yesterday, the Portuguese Prime Minister resigned after Parliament rejected his austerity Budget. However, let us be clear: Portugal has made no request for assistance, and I hope that hon. Members will understand that it would be inappropriate for me to engage in any speculation about what may happen. It is not for me to say whether Portugal should ask for help, just as I would not tell it how to run any part of its economy. However, I assure the House that we will keep hon. Members informed of any developments.
Hon Members may wish to reflect on the fact that, as my right hon. Friend the Chancellor said yesterday, our deficit is larger than Portugal’s, but market rates in the UK are similar to those of Germany. That reinforces the fact that it is right to pursue the course that we set last year to tackle the deficit.
My hon. Friend the Member for Stone (Mr Cash) has also raised questions about the European stability mechanism. A strong and stable euro area is important for British business. Over 40% of our exports go to the euro area, but we are not a member of the monetary union, and it is not our responsibility to deal with the euro area’s problems. That is why we have welcomed the progress that has been made on the European stability mechanism. In the design of the ESM, we had to ensure that there was no transfer of powers from the UK to the EU. We would never have accepted that.
The treaty change applies only to euro area member states. There is no transfer of power or competence from the UK to Brussels. The ESM puts no obligation, legal or political, on the UK to contribute. That is why we have supported the agreement, which makes the euro area’s responsibilities absolutely clear. In 2013, the European stability mechanism will come into effect. Also in 2013, the European financial stability mechanism will come to an end, and the UK will not be part of it.
Several countries, including Germany, have strong views about how the ESM should be designed, but that cannot change the fundamental aspects of the mechanism, because the ESM will be developed under article 136 of the treaty and it can apply only to member states whose currency is the euro. The UK cannot join the ESM without joining the euro. As my hon. Friends know, that will not happen in the lifetime of this Parliament.
Furthermore, we have ensured that the recitals—the preamble—to the draft decision by the Heads of State and Government at the December Council meeting stated that article 122, which was used to create the temporary funding mechanism,
“will no longer be needed”
and “should not be used” to ensure financial stability for the euro area as a whole once the permanent mechanism is in place.
Should there be any suggestion of amending the draft decision at the European Council, the Prime Minister could not legally agree to it without first coming back to the House for additional approval after a further debate. The House and the other place would have to ratify any change to the treaty.
Mr Cash
I asked the question, first, because the existing European financial stability mechanism, to which we are potentially exposed in respect of Portugal, was described in the report of the European Scrutiny Committee, which I have the honour to chair, as “legally unsound”; and, secondly, because it involves the United Kingdom underwriting approximately €8 billion to eurozone countries until 2013.
The motion for a treaty change to create the new mechanism, which was passed yesterday, provides for amending article 136 of the European treaty without a referendum, but the amendment prescribes strict conditionality. What are those conditions? The motion that was passed yesterday now appears to be vitiated. Will the Government renegotiate the decision so that the European stability mechanism, if proceeded with at all, is agreed by the British Government with unanimity only if the legally unsound existing European financial stability mechanism, to which we are wrongly exposed, is repealed? The United Kingdom would thus not be required to contribute to the bail-out of other eurozone countries such as Portugal, which would amount to approximately €4 billion. That course of action is open to the Prime Minister in his negotiations at the summit today, and it would relieve the hard-pressed British taxpayer.
If my proposal were accepted, I feel sure that the Government would have an improved chance of obtaining the European Scrutiny Committee’s clearance for any new decision and the passage of any subsequent Bill required under the House’s procedures. Will my proposal be accepted?
Mr Hoban
My hon. Friend and I have debated this subject before, and my right hon. Friend the Minister for Europe opened a lengthy debate on it on 16 March. The Government are clear that the European stability mechanism is an important tool, but it is for the euro area to fund it. The ESM will lead to the extinction, as it were, of the EFSM. I do not feel it appropriate to engage in further speculation on events elsewhere.
Chris Leslie (Nottingham East) (Lab/Co-op)
Clearly, it would be troubling if the situation in Portugal reignited a round of eurozone bond market anxieties. The Opposition agree that it would be inappropriate either for us or the Government to engage in a running commentary on the likely impact of events in Portuguese politics or Portugal’s debt-financing capabilities. That is for the eurozone countries to resolve, and I would not expect the UK taxpayer to be drawn into the situation.
However, I have a number of specific questions for the Minister. For general information and the interest of the House, will he say a little more about the UK’s relationship with the Portuguese economy, including our trade relationships and UK banks’ interests in Portuguese bonds and so forth? Will the Minister update us on the Finance Ministers meeting that took place—I think—on Monday as a prelude to today’s EU summit? Originally, there were reports of an expectation that today’s summit would find its way towards resolving the permanent bail-out mechanism, yet we now hear that because of various disagreements, that will be kicked into the long grass again, until June. Does the Minister agree that it would be quite bad not to resolve that ongoing problem until the summer?
What are the Prime Minister and Chancellor doing to expedite negotiations and agreement on the permanent mechanism? Is it acceptable that the Prime Minister did not actually attend the meeting of 17 countries at the last summit at the beginning of the month, when we clearly have an interest in resolving those questions? Is it correct that the eurozone countries have invited the UK and other non-eurozone countries to have a say in debates on the new permanent mechanism? Quite honestly, we have an indirect interest in what happens, so it is surely in our interests to ensure that the eurozone countries resolve those questions quickly. It is not acceptable for the UK to absent itself at the critical moment, when it should be putting pressure on them to resolve those questions. Ultimately, we need stronger leadership from the Government to ensure that those matters are resolved in Europe and the eurozone. The longer they remain unresolved, the more likely it is that our interests will be affected.
Mr Hoban
The hon. Gentleman makes an important point. It is vital that there is stability in the eurozone and that agreement is reached on the ESM. My understanding is that the issues raised by the German Government and German Chancellor are not about the fundamental design of the mechanism, but about its detailed terms. We will discuss that at this weekend’s European Council, on which the Prime Minister will report to the House on Monday, as is customary.
The hon. Gentleman asked about the UK economy’s exposure to Portugal. Our exposure is relatively small—smaller than that of a number of other European countries. Our bilateral trade in 2010 was about £4 billion, so we do not have a significant exposure, although Portugal is of course an important trading partner.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
Can we just have a reality check? There will be no stability in the euro area until at least some of the countries currently in it leave. There seems to be little doubt about that.
May I remind my hon. Friend that we have just had an austerity Budget—another one? In my constituency, people are talking about having to make NHS savings of £84 million over the current planning period. Can he imagine how absolutely furious British voters will be if it turns out that the British taxpayer must continue to contribute to the bail-out of euro countries even though we are not a member? Why does he not take the opportunity—before agreeing to the new stability mechanism—to get our European partners to agree that we shall be released from any obligation to the temporary stability mechanism for which we are currently liable?
Mr Hoban
My hon. Friend forgets that we have already agreed with our European partners that the European stability mechanism will replace the temporary structures that were put in place, and of course we should not forget that we are part of the EFSM as a consequence of decisions made by the previous Government, not this Government.
Mr Denis MacShane (Rotherham) (Lab)
Obrigado, Mr Speaker.
The plain fact is that Portugal is our oldest ally. It is in trouble and we should help. When Margaret Thatcher brought the rebate back, she was questioned by a Eurosceptic on the Labour Benches who asked, “Why are you allowing more money to go from the British taxpayer to all these new countries?” She replied: “We should help Portugal”. We should do the same tonight. I hope that our Prime Minister will remember our longest, oldest friendship with any European country, and ignore the Eurosceptic waffle from those sitting behind the Front Bench.
Mr Peter Bone (Wellingborough) (Con)
On the Portuguese potential bail-out, will the Minister agree to make a statement to the House before we are committed to any bail-out? What provision has been made in the Budget for such a bail-out?
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
For clarity—and in the hope of getting at least one sensible answer out of this debate—will the Minister confirm that because we do not have a veto over the bail-out mechanism, if Portugal applied for a bail-out, we could be exposed to liabilities of up to €4 billion? We have no veto, which means that we would be forced to do it, irrespective of which Government negotiated the position. I would like a yes or no.
Sajid Javid (Bromsgrove) (Con)
Portugal finds itself in this sorry state today because yesterday its Parliament failed to pass a budget that would have allowed foreign investors to continue investing in its sovereign bonds. Does my hon. Friend realise that had we not had a change of Government in our country 10 months ago, we could just as easily have found ourselves in a very similar situation?
Sir Stuart Bell (Middlesbrough) (Lab)
Listening to what my right hon. Friend the Member for Rotherham (Mr MacShane) said about Portugal being our oldest ally, I was reminded of the only word that survived the Peninsular war. It was “vamos”—the Portuguese and Spanish ran away. It seems from the speeches of the hon. Members for Stone (Mr Cash) and for Harwich and North Essex (Mr Jenkin) that they wish to run away from the European Union. They have been running away from it since its beginning. In response to a question from me, the Prime Minister said recently that he believed in “a healthy eurozone”. Is it not better for the eurozone to have its competitive pact and its financial stability system? Furthermore, building on the point made by my hon. Friend the Member for Nottingham East (Chris Leslie), is the Minister not worried that 17 member states in the eurozone will create a two-speed Europe?
Mr Hoban
It is absolutely right that Europe should be competitive and able to compete with companies in north America, Asia and south America in what are becoming increasingly challenging global markets. Europe needs to address its competitiveness, which is why we engaged in the economic taskforce led by Herman van Rompuy. We need to see changes in Europe, and my right hon. Friend the Prime Minister will be pressing for that at the summit.
Chris Heaton-Harris (Daventry) (Con)
The Minister will know that although Portugal has not so far requested any help, it is in a similar situation to Ireland, in that Ireland did not request any help at the very beginning, but was forced to take it later. Yesterday, we voted—essentially—on a treaty change. Will the Minister confirm that, if the change is made in the coming weeks—the Prime Minister having come back to the House—the UK Government will still have a veto to play, or will the veto be played this weekend, meaning that we cannot change anything in the future?
Mr Hoban
I do not know whether my hon. Friend was present for the debate in the House on 16 March when we discussed the ESM, but let me remind him of what my right hon. Friend the Minister for Europe said:
“Should there be any suggestion of amending the draft decision at the European Council—there is no such suggestion from any quarter at present—the Prime Minister could not legally agree to it at the European Council without first coming back to this House and the other place for additional approval after a further debate.”—[Official Report, 16 March 2011; Vol. 525, c. 424.]
Of course, there can be no change to the treaty unless primary legislation passes through both this place and the other place.
Thomas Docherty (Dunfermline and West Fife) (Lab)
Will the Minister confirm that had we joined the euro, we would have been expected beyond 2013 to make a significant contribution? Has he had a chance to ask the Chief Secretary to the Treasury whether he has abandoned his policy of joining the euro at the earliest possible date?
Martin Horwood (Cheltenham) (LD)
Do Ministers agree that, having just put in place the most comprehensive system of democratic checks on further transfers of power to the European level of government, it is now high time that this Government got on with the priority of providing a positive leadership role for Britain in all European decision-making forums, and that the anti-European guerrilla warfare from the Back Benches really does not help?
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
The Minister and colleagues on the Government Benches are again keen to draw an analogy between this country and, this time, Portugal—previously it was Ireland and Greece. Can he confirm that the UK is in an entirely different position from those countries, given that it controls its own interest rates and its own currency?
Matthew Hancock (West Suffolk) (Con)
Will the Minister confirm that the contingent liability under the scheme was set up after Labour had lost the election by the then Labour Chancellor? Does what is happening in Portugal, where interest rates have today risen above 8%, not provide the most eloquent lesson on what would happen here if we did not get a grip?
Mr Hoban
My hon. Friend is absolutely right. The decision taken by the previous Chancellor meant that we became part of the ESFM, and that is why the liability exists today. My hon. Friend is absolutely spot on: we have taken difficult decisions in this country. This Government have decided to tackle the deficit that Labour left behind, and we have a clear plan to do it. The Opposition have no ideas. Under a Labour Government, this country would be running out of steam.
Nadhim Zahawi (Stratford-on-Avon) (Con)
The events last night in Portugal bring into sharp focus why it is important to maintain the confidence of the markets. Is the Minister glad that this Prime Minister did not attend the meeting of the 17 eurozone countries, because the last Prime Minister attended and gave away our rebate?
Mr Hoban
Certainly, the previous Government very rarely showed any backbone in dealing with our European partners on the rebate or other matters. This Government stand up for Britain’s interests when it comes to the debate in Europe. We have done that on the rebate, on the budget and on this mechanism.
Bob Blackman (Harrow East) (Con)
When Ireland was in trouble, we helped out. Ministers brought forward a proposal to give a loan to Ireland to help sort out their finances. I appreciate that at the moment there is no proposal to do the same for Portugal, but will the Minister give an assurance that we as a House will be given the opportunity to debate any such proposal that comes forward?
Business of the House
(13 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Hilary Benn (Leeds Central) (Lab)
Will the Leader of the House give us the forthcoming business?
The Leader of the House of Commons (Sir George Young)
The business for next week will be:
Monday 28 March—Continuation of the Budget debate.
Tuesday 29 March—Conclusion of the Budget debate.
Wednesday 30 March—Remaining stages of the Police Reform and Social Responsibility Bill (Day 1).
Thursday 31 March—Conclusion of remaining stages of the Police Reform and Social Responsibility Bill (Day 2).
Friday 1 April—Private Members’ Bills.
The provisional business for the week commencing 4 April will include:
Monday 4 April—Opposition Day (14th allotted day). There will be a debate on an Opposition motion, subject to be announced.
Tuesday 5 April—General debate on Britain’s contribution to humanitarian relief in Libya, followed by a general debate on matters to be raised before the forthcoming Adjournment. The latter debate has been nominated by the Backbench Business Committee.
I should also like to inform the House that the business in Westminster Hall for 31 March 2011 will be:
Thursday 31 March 2011—A debate on high-speed rail.
Hilary Benn
I am grateful to the Leader of the House for that reply. The House will welcome today’s statement on Libya and will look forward to being further updated.
The Welfare Reform Bill will involve a large number of regulations being presented to the House. Will the Leader of the House assure Members that they will appear in good time to allow for full parliamentary scrutiny?
The Government gave a clear undertaking that they would talk to the Opposition about their draft legislation to increase—in a terrorist emergency—the number of days for which someone can be held from 14 to 28. To date, the shadow Home Secretary has not been consulted, despite a number of requests to the Home Secretary. Will the Leader of the House encourage his colleague to respond?
On section 44 stop-and-search powers, the Home Secretary has got herself into a difficulty and has had to introduce, by way of a remedial order, the new provisions on stop and search that were due to be included in the Protection of Freedoms Bill. She has done that by means of a written statement, thereby denying the House the chance to debate and scrutinise the change before it was made. May we have an explanation of why that happened?
Given that just about everything that we heard in yesterday's Budget statement had already been leaked to the media in advance, could the Leader of the House look at a different system for next year? Perhaps the Chancellor could get up, simply say, “I refer the House to the briefing I gave the newspapers a few days ago,” add anything new and sit down. Then we could move straight on to the Leader of the Opposition and the debate. It might help some Members to stay awake.
Will the Business Secretary make a statement on the failure of the Government’s much trumpeted one in, one out policy on new regulations? For the Department for Business, Innovation and Skills—the Department meant to be leading on the policy—it has been a case of 46 regulations in since May, and no regulations out. In fact, the majority of Departments have introduced more regulations than they have removed.
It seems that the policy is being observed only by the Liberal Democrats, although in their case they are applying it not to regulations, but to their principles. One principle out—opposition to trebling tuition fees; one new principle in—helping to undermine the NHS. We also read with interest that the Liberal Democrats are planning to issue a pocket-sized card listing every one of their many achievements in government. Will the Leader of the House find time for a statement on that? After all, it would not take very long.
May we have a statement from the Health Secretary explaining why the latest polling results from Ipsos MORI on public satisfaction with the NHS have still not been published, six months after they were submitted to the Department of Health? It is reported that they show that more members of the public than ever believe that the NHS is doing a good job—not exactly the message that Ministers have been seeking to convey. This is a very curious case of Ministers trying to bury good news.
Also on the health service, we read with great interest this week that the Deputy Prime Minister has told his MPs that he will be “taking the lead” in reining in his own Government’s plans for the national health service. He is said to be determined to make changes to the Health and Social Care Bill, which is currently in Committee, and a senior party source said that he had decided to “front up” the issue with the Health Secretary.
This is quite extraordinary, and presents a bit of a parliamentary challenge for the Leader of the House. Now, the right hon. Gentleman is a reformer, so I wonder whether he would be prepared to break new ground by organising a joint statement at the Dispatch Box from the Deputy Prime Minister and the Health Secretary, so that they can slug it out under the full glare of parliamentary accountability. Or perhaps we could make use of the Procedure Committee’s welcome recommendation—published in the last hour—that we allow the use of iPhones and iPads in the Chamber in place of paper, and the two members of the Cabinet can have an online argument instead. It could probably work, as long as Vodafone kept us all connected.
Finally, on Westminster council’s infamous ban on feeding the homeless, I am sure that the Leader of the House was as pleased as I was to read last week that a Home Office spokesman had said:
“The Home Secretary has no plans to ban soup runs.”
I am delighted that the coalition—if I may describe it as such—between the right hon. Gentleman and me has forced the Government finally to make their position clear. Will he simply confirm for us today that when Westminster’s draft byelaw is put to the Department for approval, it will be treated with the contempt that it deserves and sent packing?
Sir George Young
That was a marvellous smokescreen for the rather disappointing performance by the Leader of the Opposition yesterday. The shadow Leader of the House might want to recalibrate his performance in order to avoid this unhappy contrast.
On the Welfare Reform Bill, of course we will seek to publish the appropriate regulations well in advance so that the House has an opportunity to reflect on them. I will pass on the right hon. Gentleman’s request for more consultation between the shadow Home Secretary and my right hon. Friend the Home Secretary. On the Protection of Freedoms Bill and the written ministerial statement, the Bill is now before the House and I hope that there will be adequate opportunity for the House to cross-examine Ministers.
As for leaks, the right hon. Gentleman will know that there has always been a good deal of speculation before Budgets—and I have to say that he does not have much of a leg to stand on in this regard. He was a special adviser in 1997, and most of the Labour Government’s first Budget was systematically leaked to the Financial Times before the Chancellor had even got to his feet. Some years later, a BBC reporter interviewing the Treasury spin doctor Charlie Whelan asked him directly whether he had been responsible for the leak. Whelan replied:
“I might well have been. I can’t remember, to be honest. Probably was me. It could be Ed Balls, it could be me.”
So I hope that we will hear no more from Labour about Budget leaks.
If there is one person who is known to be able to stay awake during Budgets, it is my right hon. and learned Friend the Lord Chancellor, who delivered six excellent Budgets when he was Chancellor of the Exchequer. On the issue of regulations and the Department for Business, Innovation and Skills, my right hon. Friend the Business Secretary will be taking part in a debate later today about regulations, and will therefore have an ample opportunity to deal with the one in, one out policy.
Labour has had more than one policy on tuition fees over the past few years, and it would do well to reflect on that before starting to make that its currency. As for joint appearances at the Dispatch Box, I wonder how the then Prime Minister Tony Blair and the then Chancellor Gordon Brown would have got on if they had both appeared at the Dispatch Box, as members of the same party, to hammer out an agreed policy.
On health and social care, I do not think that the right hon. Gentleman should believe absolutely everything he reads in the press.
On Westminster city council, the right hon. Gentleman might know that the consultation ends on 25 March. The portfolio holder on the council has made it clear that he wants a non-legislative solution. He plans to have discussions with those running the soup runs, and two soup run providers have already agreed to provide their services in a more settled environment. I welcome that. The right hon. Gentleman might also look at some of the comments from those helping rough sleepers about the desirability of focusing the soup runs within an established building, rather than their acting as a magnet that attracts rough sleepers from all over the capital. I very much hope that he and I are at one on rough sleepers, and that we can support Westminster city council and the enlightened approach that it is now taking.
Mr Speaker
Order. Many colleagues are seeking to catch my eye, but I remind the House that there is a statement by the Foreign Secretary to follow, and a heavily subscribed continuation to the Budget debate. If I am to accommodate this level of interest, brevity will be of the essence.
Laura Sandys (South Thanet) (Con)
Will the Leader of the House find time for a debate on the Department of Health’s drugs procurement process in relation to companies such as Pfizer, to ensure that corporate social responsibility comes into the process?
Sir George Young
I applaud my hon. Friend’s campaign on behalf of those in her constituency who are threatened by the decision taken by Pfizer. I will certainly draw the attention of my right hon. Friend the Secretary of State for Health to her request for more corporate social responsibility. It might also be appropriate for her to intervene during the Budget debate, as that is a direct matter for businesses in this country.
Natascha Engel (North East Derbyshire) (Lab)
I thank the Leader of the House for his business statement, as well as for his written ministerial statement yesterday on extra time for private Members’ Bills, Opposition days and time allocated to Back Benchers. Will he tell the House exactly how many extra days will be allocated to Back Benchers? Will he also tell us how many of those debates will be in the Chamber? He has just announced that the pre-recess Adjournment debate—a Back-Bench debate—has been reduced from the normal six hours to three, to give the House the chance to have an important debate on Libya and humanitarian aid. I acknowledge how important it will be to have that debate, just before we break up for the recess, but will he explain why he cannot simply add an extra day on to the parliamentary calendar in order to give the pre-recess Adjournment debate and that important debate on Libya and humanitarian aid a whole day each? It is in the Government’s gift to do that. I am sure that this would never have crossed the mind of the Leader of the House, but perhaps that will not happen because the extra day would be a Wednesday, and the Prime Minister would therefore be forced to come to the Dispatch Box to answer questions.
Sir George Young
Let me rebut instantly the hon. Lady’s final suggestion. My right hon. Friend the Prime Minister looks forward to every Wednesday with relish. On her question about the extra days, we have tabled a motion to extend the number of days for private Members’ Bills. We do not need to lay a comparable motion to deal with the days for the Backbench Business Committee. Since the Committee was established last July we have allocated roughly one day a week to it, and I propose to continue to do that. We do not need to table a motion in order to do so, however.
On the question of extending the sitting days to include next Wednesday, the House values the certainty of having a calendar published well in advance, and there are precedents for the pre-recess Adjournment debate taking half a day rather than a whole day. We have tried to reconcile the need for certainty with the need for the House to be updated on the difficult position on Libya and to contribute to that debate, as well as respecting the demands of the pre-recess Adjournment debate. I hope that we have struck a fair balance between those three demands. I can tell the hon. Lady that I propose to table a business motion so that the protected time of three hours for the pre-recess Adjournment debate will not suffer any injury as a result of any statements or other events on that day. I hope that when I table that motion, she will smile at it.
Mr John Redwood (Wokingham) (Con)
May we have a debate in Government time on the future of the euro and the economic governance arrangements in the European Union? Those of us who fought long and hard, and successfully, to keep Britain out of the euro would like ministerial reassurance that we are not going to be dragged into any of the financial or governmental consequences of its current problems, and that we will get something back for Britain when those countries need our consent to change.
Sir George Young
I understand my right hon. Friend’s concerns, but I cannot promise an imminent debate on that subject. Following the important meeting of the European Council that begins today, however, there might well be a statement early next week, which would give him an opportunity to share his concerns with my right hon. Friend the Prime Minister.
Ms Karen Buck (Westminster North) (Lab)
Today, 30,000 14 to 15-year-olds from 815 schools in every part of the country are working with the BBC to make the news, and 30,000 other young people have taken part in news-related projects during the year. Will the Leader of the House find time for a debate on how we can support the BBC in that work and recognise the incredible importance of the work in developing civic awareness and an understanding of the news among young people?
Sir George Young
I applaud the BBC’s initiative; I saw one of the programmes before I came into the Chamber. I cannot promise a debate, but there is an unallocated Opposition day on Monday week. The right hon. Member for Leeds Central (Hilary Benn) will have heard the hon. Lady’s bid; perhaps part of that day could involve a debate on that important subject.
Harriett Baldwin (West Worcestershire) (Con)
The House holds the principle of one person, one vote to be absolutely sacrosanct. Will the Government find time between now and the referendum on 5 May to hold a debate in the Chamber on the referendum question?
Sir George Young
My hon. Friend asks a very good question. We have not had a recent debate on the alternative vote, although we debated the matter when the legislation was going through. There is some confusion on AV. One person, when asked what the AV referendum was all about, thought that it was about whether Aston Villa would come top of the league this year. I hope that between now and 5 May there will be a good public debate on this matter. Again, the Opposition have not yet chosen their subject for Monday week. However, we know that there is some difference of opinion on AV within the Labour party, and for that reason it might not choose the subject for discussion on that day.
Nick Smith (Blaenau Gwent) (Lab)
Will the Government make time for a debate on the proposed changes to the DNA database, following evidence to the Protection of Freedoms Public Bill Committee by the chief constable of the West Midlands, who said that 1,000 criminals would go free as a result of this Government’s changes?
Sir George Young
The Protection of Freedoms Bill is before Parliament at the moment; it is in a Public Bill Committee. Within that Bill are the clauses on DNA to which the hon. Gentleman has referred. I know that my hon. Friend the Minister who is taking the Bill through the House would like to respond to the hon. Gentleman’s assertion, with which the Government disagree.
Nick de Bois (Enfield North) (Con)
Any large corporations that enjoy public contracts also enjoy favourable payment terms. However, many of the small and medium-sized enterprises that support the same contracts do not benefit from equally favourable terms. Will my right hon. Friend require a statement from the Cabinet Office to ensure that current and future contracts are reviewed to help our SME businesses?
Sir George Young
I am sure that the Government want to be an enlightened party to contracts and wish to discharge their obligations and pay their bills on time. I will certainly convey my hon. Friend’s suggestion to my right hon. Friend the Minister for the Cabinet Office and make it clear that in his opinion—I think it is a widely shared view—the Government should not make SMEs wait for payment due to them from the public sector.
Mr John Spellar (Warley) (Lab)
Parliamentary questions are an essential mechanism by which the House is able to hold Ministers to account. There are, however, some gaps in the system. One of those is a member of the Cabinet, Baroness Warsi, who last year claimed that the Conservatives failed to win an overall majority at the general election because of electoral fraud, predominantly within the Asian community. Will the Leader of the House find time next week for a statement at which the Baroness could either justify that statement or profoundly apologise for it?
Sir George Young
As the right hon. Gentleman knows, I cannot find time for such a debate, because the right hon. Lady would not be able to appear in this Chamber. However, I am sure she will have heard what the right hon. Gentleman has said and will want to respond to it in the appropriate way.
Tessa Munt (Wells) (LD)
When I was elected, I tried to do the right thing and save money by using second-class post. I discovered that of the five small envelopes used, three are, illogically, more expensive if second-class post is used rather than first-class post. One of the differences amounts to £2.24 for a 250 batch. According to my back-of-the-envelope maths, including the printing costs for two types of envelopes based on 2009 usage, a saving of £15,500 a year could be made. The print runs are huge; the set-up costs are minimal. The House of Commons uses 2,000,703 first-class envelopes, costing £1,000,646. If 5% were urgent and 95% were sent second class, the postage savings would amount to more than £250,000 of taxpayers’ money. Will the Business Secretary please promote and encourage the use of second-class envelopes by—
Mr Speaker
We have got the gist, but I am afraid that the question is too long. We have got the thrust of it, and we are grateful.
Sir George Young
I am sure that the envelope on which my hon. Friend did the maths was a second-class one! I will draw her comments to the attention of the House authorities, and I applaud the steps she is taking to save money by using second-class envelopes where appropriate. It seems anomalous if the position is as she described it, so, as I say, I will pass her comments on to the House authorities.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
Constituents regularly tell me of the difficulties they face in accessing local bus services—ranging from high fares and a lack of services after 6 o’clock to there being no direct routes to the hospital or to GP surgeries. In response, I have launched a campaign to improve local bus services. May we have a debate on what steps the Government are taking to improve accountability and value for money when it comes to local people having their say over bus services?
Sir George Young
I applaud the hon. Lady’s campaign to make bus services more accessible to her constituents, particularly when they need to go to hospital. I announced a few moments ago that we will have the normal pre-Easter recess Adjournment debate, and it strikes me that this would be an appropriate subject for her to raise on that occasion.
Robert Halfon (Harlow) (Con)
Following the Budget announcement yesterday about university technical colleges, will my right hon. Friend find time for a debate on UTCs—not just because they will transform vocational education for our youngsters but because Lord Baker visited Harlow college, which is leading a bid, with local businesses, to have a UTC there?
Sir George Young
I am grateful to my hon. Friend for his kind words about my right hon. Friend Lord Baker, who listened with interest to yesterday’s statement that there would be not 12 but 24 high-quality, technically oriented UTCs. We are aware—and if we were not, we are now—of Harlow college’s interest in submitting an application. I can tell my hon. Friend that the intention is to select the first round of new technical academies to go forward by the early summer, following a competitive selection process.
Mr Dave Watts (St Helens North) (Lab)
May we have a statement on how the Government intend to ensure that the announced increases in tax on the fuel companies will not be passed on directly to hard-pressed motorists? Are we to take it from the statement that any further increases will be referred for scrutiny before they are allowed?
Sir George Young
Of course I understand the hon. Gentleman’s concern—but I do not know whether he has had time to look at the regulatory impact assessment carried out in 2006, when his party was in government, on increased taxation on North sea producers. It said:
“Oil companies are price-takers, facing a globally-determined market price for their output, and so will absorb all costs. They will be unable to pass any costs on to consumers, and the impact will be distributed proportionately across producers with no adverse effects on competition”.
I hope that gives the hon. Gentleman the reassurance he was seeking.
Kwasi Kwarteng (Spelthorne) (Con)
Will the House have the opportunity to debate the Independent Parliamentary Standards Authority review of MPs’ expenses, which will be published tomorrow?
Sir George Young
My hon. Friend reminds the House that at one minute past midnight IPSA is due to publish the outcome of its review of the scheme. I understand that it hopes to inform hon. Members of its contents before then. As my hon. Friend will know, there is now a group that liaises between the House and IPSA and has regular meetings to discuss the scheme. I suggest that my hon. Friend, and indeed others, use that channel to communicate their views on the revised scheme, as they already do now.
Steve McCabe (Birmingham, Selly Oak) (Lab)
May we have a debate or a statement from the Transport Secretary on London Midland’s proposals to break the franchise commitment to staff all stations from the first to the last train. I believe that that has serious implications for the safety of passengers using those stations, and I am worried about the ease with which it is prepared to break its commitment. We need a statement or a debate.
Sir George Young
I understand the hon. Gentleman’s concern, and I will draw the matter to the attention of my right hon. Friend the Transport Secretary. If it is a term of the contract that these services should be provided, they cannot be unilaterally abrogated.
Julian Sturdy (York Outer) (Con)
May we have a debate on the provision of critical care beds, which are of such importance to our NHS generally, and particularly, in my part of the world, to my local hospital in York? I know that it will welcome the recently announced extra 3,700 beds.
Sir George Young
The Health and Social Care Bill will shortly return to the Floor of the House after its Committee stage. My hon. Friend is right: the Department of Health announced last month that 3,747 critical care beds were available in January this year—the highest number ever recorded. I am sure that the whole House will rejoice in those figures.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
There is some disquiet about the UK Government’s proposed Calman-like process for Wales, which has implications for the way in which the Welsh Government are funded. Will the right hon. Gentleman ask the Secretary of State for Wales to make an oral statement on the Floor of the House so that we can debate this issue?
Sir George Young
I will pass on the hon. Gentleman’s concerns to my right hon. Friend and ensure that she communicates with him before the Easter recess.
John Hemming (Birmingham, Yardley) (LD)
What happened on Monday was a good example of why business sometimes needs to change at short notice—but there has obviously been confusion about what is happening to the pre-recess Adjournment debate. What progress have the Government made in discussions about having a House business Committee, which might introduce greater transparency in the process of managing business?
Sir George Young
The coalition Government made a commitment that the previous Government did not make—that we would introduce a House business Committee. We remain committed to doing that within three years of the commencement of this Parliament. We propose to review how the Backbench Business Committee has worked after its first year, and then have discussions about the introduction of a House business Committee.
Kate Green (Stretford and Urmston) (Lab)
Will the Leader of the House ensure that we have a statement next week on the Government’s child poverty strategy? Under the Child Poverty Act 2010 the Government are required to publish such a strategy by tomorrow, yet in a written answer from the Minister with responsibility for disabled people earlier this week, I was informed that she has not yet even seen fit to appoint the commission that is intended to advise on such a strategy.
Sir George Young
The hon. Lady has made a valid point, which has been addressed in a written ministerial statement. I know that my right hon. Friend the Secretary of State for Work and Pensions will want to regularise the position as soon as he can, and I will ensure that he informs the House in the near future of how he proposes to do that.
Greg Hands (Chelsea and Fulham) (Con)
May we have a debate on our country’s gold reserves? As my right hon. Friend will recall, the gold price crashed a decade ago when Britain sold its reserves, an event that became known as the “Brown bottom”. Does he think that this month’s record high will become known as the “Balls-up”?
Sir George Young
We are in the middle of a four-day debate on the Budget, during which I am sure it will be appropriate for my hon. Friend to amplify his remarks at greater length.
Thomas Docherty (Dunfermline and West Fife) (Lab)
The House will be shocked to learn that children as young as seven are being issued with firearms licences. Can the Leader of the House tell us when the Home Office plans to respond to the report that the Home Affairs Committee published before Christmas?
Sir George Young
I am sure that other Members will have heard a feature on the “Today” programme which highlighted the freedom of information responses to which the hon. Gentleman is referring. In fact we have some of the toughest gun controls in the world, and we are having another look at them. The age limits in the firearms law reflect the different levels of risk posed by different guns in different circumstances. If young people do have access to firearms and shotguns, it must be safe and controlled. We are considering the recommendations of the Home Affairs Committee, and we expect to respond in May or June.
Martin Horwood (Cheltenham) (LD)
The very long parliamentary Session offered the tantalising prospect of successful private Members’ legislation, which I hoped would include my Tied Public Houses (Code of Practice) Bill, but my aim has been frustrated by the fact that all the newly available sitting Fridays are dominated by dozens of Bills promoted by one or two Members. Would you, Mr Speaker, or the Leader of the House care to comment on the situation, and on whether it is frustrating the whole point of private Members’ legislation?
Sir George Young
I understand my hon. Friend’s frustration. However, the Bills that were successful in the ballot will take priority over those that may follow. I tried to extend the number of days available for private Members’ Bills by tabling a motion yesterday. We cannot make progress with that motion because an amendment to it has been tabled by my hon. Friend the Member for Wellingborough (Mr Bone), but the Government intend to make more time available for private Members’ Bills, to reflect the length of the session.
Anas Sarwar (Glasgow Central) (Lab)
There is huge concern in Scotland over reports that the Scottish National party is to repeat its use of slogans on Scottish election ballot papers. Following the 2007 election fiasco during which nearly 150,000 papers were spoilt, the Gould review found that the use of slogans such as “Alex Salmond for First Minister” were “confusing and potentially misleading” for the electorate, and it was thought that it would be outlawed. May we have an urgent statement from the Secretary of State for Scotland to clarify the issue and avoid a repeat of what happened in 2007?
Sir George Young
I will draw the hon. Gentleman’s comments to the attention of my right hon. Friend the Secretary of State of Scotland, unless the matter falls within the responsibility of the Scottish Electoral Commission. In either event, whoever is responsible will write to him.
Andrew Bridgen (North West Leicestershire) (Con)
Minerals can be extracted only from where they lie, and many mineral reserves lie in my constituency. My right hon. Friend will be well aware that minerals policy has been specifically excluded from the Localism Bill. Will he find time for a debate on minerals policy, and in particular on the distribution of the aggregates levy? I think it important for communities that suffer the blight of mineral extraction to have a fair share of the levy as a form of compensation.
Sir George Young
Many Members whose constituents contain aggregate sources such as gravel pits will share my hon. Friend’s concern, and the Backbench Business Committee may wish to find time for a debate. As my hon. Friend says, the aggregates levy sustainability fund reduces the environmental impact of the extraction of aggregates, but as a result of the October spending review settlement, the Government will have to discontinue the programme of work after the end of the current financial year. I will draw my hon. Friend’s concern to the attention of my colleagues who have responsibility for the matter.
Grahame M. Morris (Easington) (Lab)
Will the Leader of the House make time for a debate or statement on an announcement made yesterday indicating that 900 million records of medicines prescribed by family doctors are to be published on line? That has many implications, not least the usefulness of such information to private drug companies and the impact on civil liberties.
Sir George Young
I understand the hon. Gentleman’s concern, and will draw the matter to the attention of my right hon. Friend the Secretary of State for Health. It may be another suitable subject for the pre-Easter recess Adjournment debate on Tuesday week.
Priti Patel (Witham) (Con)
Last month the Planning Inspectorate decided to impose a travelling showpeople’s site on the village of Tolleshunt Knights in my constituency. The decision was based on the regional spatial strategy and planning circulars issued by the last Government. Can my right hon. Friend tell us why those circulars are still in place, and when they will be scrapped?
Sir George Young
As I think my hon. Friend knows, we have announced our intention to withdraw the circulars and replace them with a new light-touch planning policy. We want to move quickly, but there is a proper process to be followed. Our proposed new policy will be published for public consultation shortly.
Bill Esterson (Sefton Central) (Lab)
Given the Prime Minister’s apparent confusion yesterday over the future of the disability living allowance, may I raise the case of my constituent Scott Sheard, who has been refused the mobility component of DLA? He needs the allowance so that he can live at home, but he also needs to make a gradual transition. Will the Leader of the House ask his right hon. Friend the Secretary of State for Work and Pensions to reconsider Scott’s case, and those of many other people with disabilities who need the mobility component in order to live independently?
Sir George Young
The regime that affects the hon. Gentleman’s constituent is the regime that we inherited. We propose to make changes to the DLA, but they require primary legislation, which will have to be approved by the House. We want to move from the current regime, which has not been examined for 20 years and results in conflict and overlap, to a new regime based on personal independence payments. We want to enhance the mobility and independence of people who are entitled to payments at the moment. This is not about saving money, but about introducing a better regime for those with real needs.
Mr Edward Timpson (Crewe and Nantwich) (Con)
May we have a debate on the Government’s commitment to delivering 250,000 more apprenticeships by 2015? That would allow us to discuss the crucial role played by apprenticeships in developing skills in our engineering sector, especially in the rail and motor industries that are so important to our economy, both in Crewe and Nantwich and elsewhere in the country.
Sir George Young
I believe that yesterday’s announcement in the Budget of more resources for apprenticeships and work experience was warmly received. In a few moments my right hon. Friend the Business Secretary will be in his place. Today’s debate will provide a good opportunity for the House to discuss the value of apprenticeships to the community, and in particular, their reinforcement of our manufacturing and engineering capability, which has such a high profile in my hon. Friend’s constituency.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
My hon. Friend the Member for Easington (Grahame M. Morris) drew attention to the possible publication of 900 million medical prescription records online. Given that banks, lenders, insurers, private health care employers, neighbours, foreign agencies and Governments would be able to gain access to those records, may we have a debate on the Floor of the House on how the proposal relates to the Data Protection Act, employment law and other legislation?
Sir George Young
I repeat the undertaking that I gave a few moments ago—and on Tuesday the Health Secretary will be answering questions in the House, when the hon. Gentleman may have an opportunity to raise the matter in either a direct or a topical question.
Andrew Stephenson (Pendle) (Con)
Will the Leader of the House find time for a debate on the good news announced yesterday about the Government’s council tax freeze initiative? Both Pendle borough council and Lancashire county council have agreed not to increase the tax, but the initiative was not covered in recent debates on the local government finance settlement.
Sir George Young
My hon. Friend has drawn a contrast between the doubling of council tax under the Labour Government and the freeze introduced by the current Government. He may also know that we have abandoned plans for a council tax revaluation that would have meant soaring bills for millions of homes.
Steve Rotheram (Liverpool, Walton) (Lab)
The Leader of the House turned down my previous request, but will he now find time for a debate on pay structures in banks, following the revelation that last year RBS paid 323 staff more than £1 million each, Barclays paid 231 staff more than £1 million each, and HSBC paid 280 staff more than £1 million each? Does he agree that that requires an urgent debate, given that yesterday’s Budget failed to tackle such excess?
Sir George Young
If that requires an urgent debate, which I concede may well be the case, that urgent debate can take place over the next three days. My right hon. Friend the Chancellor has announced an increase in the bank levy. However, it would be perfectly in order for the hon. Gentleman to catch your eye, Mr Speaker, today or on Monday or Tuesday, and to receive a response from one of my Treasury colleagues.
Karl MᶜCartney (Lincoln) (Con)
Will my right hon. Friend find time for a debate on the role of the Electoral Commission? It is no longer offering guidance and advice to election officers, most of whom have a wealth of experience of running elections very well for many years, and has taken to bullying and imposing expensive and excessively bureaucratic top-down diktats ahead of the local elections and referendum that will take place in six weeks’ time.
Sir George Young
I will draw my hon. Friend’s comments to the attention of the chair of the Electoral Commission. There is the opportunity to cross-examine my hon. Friend the Member for South West Devon (Mr Streeter), who speaks for the Electoral Commission, on the Floor of the House, and my hon. Friend the Member for Lincoln (Karl MᶜCartney) could also raise the matter with him informally outside the Chamber.
Ian Lavery (Wansbeck) (Lab)
Many MPs are very unhappy about the lack of clarity and content in departmental written answers. The responses to many questions are fudged, and many are answered as “unknown”. Will the Leader of the House make time for a debate on this?
Sir George Young
The hon. Gentleman is entitled to receive enlightened and informed answers to written questions. It might help if he could be slightly more specific about which answers have caused concern, and if he does so I will raise the matter with the appropriate colleague.
Pauline Latham (Mid Derbyshire) (Con)
Will my right hon. Friend the Leader of the House outline how business leaders in my constituency and Derbyshire in general can put their ideas to the Chancellor in respect of his announcement yesterday on establishing more enterprise zones?
Sir George Young
As my hon. Friend will know, the Cabinet recently met in Derby in her county. We met wealth creators in Derby, and they pressed the case for more investment in the town and the county. Members will have an opportunity in today’s debate on the Budget and subsequent debates to make the case for an enterprise zone in their constituency, and I note that my hon. Friend has made an early bid.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
The last Government put in place the victims of overseas terrorism compensation scheme. May we have a debate in Government time to ascertain when British victims of overseas terrorism will begin to receive compensation?
Sir George Young
The hon. Gentleman raises a serious issue that has already been raised on a number of occasions. As he knows, the Ministry of Justice is carrying out a review. I hope it will be completed shortly, because I understand the concern that is felt on both sides of House about the delay.
Bob Blackman (Harrow East) (Con)
Seven schools in Harrow are currently consulting on becoming academies. They are doing so in the teeth of a campaign of misinformation by Labour-run Harrow council and outright hostility from the teaching unions. May we have an urgent statement from the Secretary of State for Education on what he is going to do to stop councils giving misinformation to schools that are trying to break free of the dead hand of the local education authority?
Sir George Young
I welcome that initiative in my hon. Friend’s constituency, which shows that parents want to use the freedoms given to them under this Government’s legislation. I will draw his concern to the attention of my right hon. Friend the Secretary of State for Education, so we can see whether further steps need to be taken to make sure that those who want to establish free schools or academies are not intimidated as a result of misinformation.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Further to the request made by my hon. Friend the Member for Westminster North (Ms Buck), I draw the Leader of the House’s attention to early-day motion 1640, tabled yesterday, which seeks to save BBC Radio Merseyside.
[That this House believes BBC Radio Merseyside is a loved and valuable institution within Merseyside, providing local news and entertainment to over 300,000 listeners; notes that BBC local radio offers exceptional value for money at a cost of 3.2 pence per listener hour, in comparison with other stations such as BBC Parliament (14.1 pence) and Radio 3 (6.3 pence); further notes that BBC Radio Merseyside is the most listened to BBC local radio station outside London; further notes that for a third of its listeners, 100,000 people, it is the only BBC radio station that they choose to listen to; is highly concerned at proposals that would end daytime programming; and calls on the BBC to protect its proud history of broadcasting on Merseyside with a commitment to fund BBC Radio Merseyside.
There are no fewer than 40 BBC local radio stations throughout the UK, all of which are cherished by their communities and provide excellent value for money at 3.2p per listener hour, but the news that local programming may be scaled back to “drive time” and breakfast time is extremely worrying. Please may we have an urgent debate on the future of BBC local radio programming?
Sir George Young
I understand the hon. Lady’s concern. It strikes me that this would be an appropriate subject for a Backbench Business Committee debate or an intervention during the pre-Easter recess Adjournment debate, but she has just made her case very effectively.
Mr Peter Bone (Wellingborough) (Con)
If passed, motion 7 on the Order Paper would have the effect of cancelling all currently scheduled private Members’ sitting days and replacing them with four new days. Instead of getting the additional 13 days we should have because this is a two-year parliamentary Session, we would finish up with only four days. I think that is more cock-up than conspiracy, but may we have a debate on the matter next week?
Sir George Young
I am not sure that my hon. Friend has interpreted the motion correctly. The Government want to provide four more days to debate private Members’ Bills. My hon. Friend has blocked that by tabling an amendment which means that, as of today, that extra time will not be given. I very much hope we can resolve the matter. We have a bit of time, because we have announced the dates up to the end of the summer. I hope that between now and then we can find a satisfactory solution, and that my hon. Friend will not stand in the way of what the Government are trying to do, which is to give more time for private Members’ Bills.
Nadhim Zahawi (Stratford-on-Avon) (Con)
People have welcomed the council tax freeze nationally, but may we have a debate on what people in my constituency and elsewhere can do if their council puts through large council tax rises in future?
Sir George Young
Help is on the way, because the Localism Bill contains a provision for local people to have a referendum if their local authority proposes high council tax increases.
Christopher Pincher (Tamworth) (Con)
Thank you, Mr Speaker; I know my place.
Many of my constituents have raised concerns about clinical services in local hospitals, notably Good Hope hospital. May we have a debate on NHS staffing levels, so that we may learn about the progress being made in increasing the number of doctors and nurses and reducing the number of bureaucrats so beloved of the last Government?
Sir George Young
Since we took office, the number of managers has fallen by some 3,000, I think, and the number of doctors has increased by some 2,000, so help is on the way.
North Africa and the Middle East
(13 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
With permission, Mr Speaker, I should like to make a statement updating the House on the actions we are taking to protect civilians in Libya and other issues of concern in the middle east.
First, I must confirm the sad news that a British national was killed in a bus-bombing in Jerusalem yesterday, which injured over 30 Israelis, eight of them seriously. Her family was informed last night. Our embassy in Tel Aviv and consulate-general in Jerusalem are doing everything possible to assist her family and those who were travelling with her. I know the House will join me in sending our deepest condolences to her family at this tragic time, as well as in expressing our solidarity with the people of Israel in the face of such a shocking and despicable act of terrorism. I condemn this attack in the strongest terms and call for those responsible to be held to account.
I am also gravely concerned about renewed rocket attacks on Israel from Gaza and the deaths of Palestinian civilians in Gaza. I urge all parties to restore calm and to work to achieve the two states that are the only lasting hope for peace.
On Libya, we continue to take robust action to implement UN Security Council resolution 1973, which authorised military action to put in place a no-fly zone to prevent air attacks on Libyan people and take all necessary measures to stop attacks on civilians while ruling out an occupation force. The case for this action remains utterly compelling. Appalling violence against Libyan citizens continues to take place, exposing the regime’s claims to have ordered a ceasefire to be an utter sham.
Misrata has been under siege for days by regime ground forces, although coalition air strikes are helping to relieve the pressure on its citizens, many of whom have been trapped in their homes without electricity or communications, with dwindling supplies of food and water, and facing sniper fire if they venture into the streets, while the local hospital is swamped with casualties. Ajdabiya continues to be under attack, with reports of civilian deaths from tank shells. This underlines the appalling danger its inhabitants would be in without coalition action, as do continued threats by Gaddafi forces to “massacre” residents in areas under bombardment.
There is universal condemnation of what the Libyan regime is doing from the United Nations, the Arab League, the African Union and from Europe. The regime’s actions strengthen our resolve to continue our current operations and our support for the work of the International Criminal Court. Our action is saving lives and protecting hundreds of thousands of civilians in Benghazi and Misrata from the fate that otherwise awaited them. That is what UN Security Council resolution 1973 was for, and that is why we are implementing it.
We are taking the utmost care to minimise the risk of civilian casualties. The only forces acting indiscriminately or deliberately inflicting casualties are the forces of the Gaddafi regime. UK forces have undertaken a total of 59 aerial missions over Libya, in addition to missile strikes. Last night, our forces again participated in a co-ordinated strike against Libyan air defence systems. A no-fly zone has now been established and the regime’s integrated air defence system has been comprehensively degraded. There are no Libyan military aircraft flying.
Over 150 coalition planes have been involved in military operations, including Typhoon and Tornado aircraft from the Royal Air Force. Thirteen nations have currently deployed aircraft to the region. A number of additional nations have made offers of aircraft and other military support, which are in the process of being agreed. Royal Navy vessels are in the region supporting the arms embargo. Those coalition operations are currently under United States command, but we want them to transition to NATO command and control as quickly as possible. NATO has already launched its operation to enforce the arms embargo, its planning is complete for the no-fly zone and we are making progress on NATO taking on all measures under resolution 1973 needed to protect civilians from Gaddafi’s attacks. We need agreement to unified command and control for it to be robust, and we expect to get that agreement soon.
Resolution 1973 lays out very clear conditions that must be met, including an immediate ceasefire, a halt to all attacks on civilians and full humanitarian access to those in need. We will continue our efforts until these conditions are fulfilled, and the Libyan regime will be judged by its actions not its words. Our message to the Gaddafi regime is that the international community will not stand by and watch it kill civilians—that is a view that this House overwhelmingly endorsed last week. To his forces we say that if they continue to take part in Gaddafi’s war against his own people, they will continue to face the military force of the coalition, and if they commit crimes against Libyan people, they will be held to account.
I announced yesterday that Britain will host an international conference next Tuesday to take forward the implementation of UN Security Council resolution 1973. We are inviting NATO allies, key international organisations, including the UN, the Arab League and the African Union, and many Arab nations. We continue to engage in intensive diplomatic activity to increase the multilateral pressure on the Libyan regime. Further UN and European Union sanctions have been agreed targeting Gaddafi and his associates, and those Libyan organisations responsible for funding his regime. As of today, the EU has designated the National Oil Corporation of Libya, thus cutting the regime off from future oil revenues.
We are gravely concerned about the well-being of up to 80,000 internally displaced people. The Secretary of State for International Development is in close communication with his counterparts in international organisations about immediate and longer-term support to the Libyan people. The United Kingdom is beginning preliminary consultations with international partners and organisations on an internationally led stabilisation effort to get Libya back on its feet in the longer term.
It is not for us to choose the Government of Libya. That is for the Libyan people themselves, but they have a far greater chance of making that choice now than seemed likely on Saturday, when the opposition forces were on the verge of defeat and the lives of so many were in danger. We continue to deepen our contacts with the Libyan opposition, including the interim national council based in Benghazi. I spoke to Mahmoud Jabril, the special envoy of the council, on Tuesday to discuss the situation on the ground and to invite him to visit London. In the words of the Arab League resolution, the current regime has completely lost its legitimacy. We call on all those, including the interim national council, who believe that Colonel Gaddafi has led the people of Libya into an impasse to begin to organise a transition process.
In Syria, there are reports of many deaths and the use of live rounds after security forces cleared a mosque in Deraa. We call on the Government of Syria to respect their people’s right to peaceful protest and to take action about their legitimate grievances. We also call for the utmost restraint on all sides, including by the Syrian security forces, during the further protests that have been called for tomorrow in Syria. In Bahrain, we support a process of dialogue leading to political reform that can address the legitimate aspirations of all the people of Bahrain, and I urge all parties to join, without preconditions, the proposed national dialogue.
In Yemen, a state of emergency has been declared by the Government and a day of marches is planned in Sana’a tomorrow. There has been looting and disorder in that city and in other cities, and more than 50 protesters died in Sana’a last Friday. We call even now on the opposition, the Government and the various factions of the Government to engage in dialogue. There are still some British nationals who have chosen to remain in Yemen. Since October, we have been unable to provide consular assistance in Yemen because of the significant terrorist threat. There are many parts of Yemen that the ambassador and his staff are unable to reach. In the light of the rapidly deteriorating security situation and the protests tomorrow, I have temporarily withdrawn part of the British embassy team in Sana’a, leaving a small core of staff in place. Commercial flights to and from Yemen are still operating, although that could clearly change. Should there be further violence in Yemen, normal means of leaving, particularly through the commercial airport in Sana’a, could be blocked, and the ability to travel around Yemen will be severely restricted. On 12 March, we advised all British nationals to leave Yemen as soon as they could. As the situation has deteriorated further since, I want to make it absolutely clear today that all British nationals remaining in Yemen should leave without delay.
The United Kingdom believes that the people of all these countries must be able to determine their own futures. That is why in all of them we argue for reform not repression, and why in Libya, supported by the full authority of the United Nations, we have acted to save many lives threatened by one of the most repressive regimes of them all. This will continue to be our approach as change continues to gather pace in the middle east.
Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)
I thank the right hon. Gentleman for his statement and for allowing me advance sight of it this morning. May I join him in condemning the act of murder witnessed on the streets of Jerusalem yesterday, where a British national lost her life? This atrocity should be unequivocally condemned across the world, and our condolences are with the people of Israel and the families of those affected, including those in this country.
The right hon. Gentleman talked about the situation in Yemen, which the House will know is deeply concerning. Amid the worrying developments, Britain must be consistent in urging the embrace of more democratic government by countries in the region. The Government are therefore right to urge progress on national dialogue with opposition parties and democratic reforms. Now that our embassy team has been withdrawn, for reasons that I fully appreciate, will he tell the House how and through what mechanisms Britain will continue to urge restraint and reform on the Yemini authorities? He explicitly urged UK nationals to leave Yemen, but can he also assure the House that all appropriate contingency plans are in place for any remaining UK nationals?
The BBC reports that at least 10 people have been killed and dozens wounded after Syrian police opened fire on people protesting in Deraa. Given the Foreign Secretary’s very recent visit to Damascus, will he update the House on his views as to whether any further protests are likely to be met with reform or with further repression? Will he also take this opportunity to update the House on any recent discussions the British Government have had with the King of Bahrain about the recent unrest in that country? Will he also inform the House what steps the Government have taken to get a clear picture from the authorities in Saudi Arabia of their intentions towards Bahrain? He will of course understand the risk not only that the legitimate demands of the people of Bahrain are suppressed, but that the country becomes a fulcrum of violence in the region.
I shall now address the pressing situation in Libya. May I associate myself and all Labour Members with the Foreign Secretary’s words of support and admiration for the role our armed forces are playing in this action? Last Monday, the Prime Minister and the Foreign Secretary made the case in this House for enforcing UN resolution 1973. My right hon. Friend the Leader of the Opposition made it clear that we support the Government in this action to protect the Libyan people, but it is the Opposition’s responsibility in offering this support also to scrutinise the Government’s actions in implementing the mission.
Many hon. Members on both sides of the House made it clear in Monday’s debate how important it was for this mission to have and to retain broad international and regional support, and therefore welcomed the endorsement of the Arab League. I have been calling for more than a fortnight for a joint meeting of representatives of the Arab League and the European Union, so I welcome today’s news that London will host a meeting next to help to bring together nations involved in this effort. The Prime Minister indicated at the Dispatch Box on Monday that coalition meetings would be a regular occurrence. How regular will they be? Will they be at foreign ministerial or Heads of Government level?
Will the Foreign Secretary update the House on the details of the Arab military involvement that has materialised so far and on what has been promised for the immediate future? He updated the House by saying that the UK has undertaken a total of 59 aerial missions, but House how many missions including planes from Arab countries have been undertaken? Will he also be clearer about the UK Government’s position on the NATO command and control structure for this mission? In particular, will he let us know whether he would wish the operations degrading Gaddafi’s assets to be overseen by an ad hoc group of Ministers or to be answerable to the full North Atlantic Council? Does he agree that although the focus at the moment is understandably on the military pressure, it is vital that we maintain and increase pressure on the regime in other ways?
Given the importance placed by resolution 1973 on the prevention of mercenaries arriving in Libya from other countries, will the Foreign Secretary assess the accuracy of reports that mercenaries are still arriving in Libya? What action is being taken against those countries providing mercenaries and will he tell the House what progress has been made on investigating at least the possibility of an escrow account for Libyan oil money that could contribute to a fund to address post-conflict reconstruction in Libya?
Does the Foreign Secretary believe that a lead individual of international standing should be appointed to take charge of co-ordinating post-conflict planning? The whole House and the public will want to know what work is under way on contingency planning. I heard his remarks about an international stabilisation effort and the work of the International Development Secretary. What, in the British Government’s view, are the structures equal to this immense task, who will lead the work and how will the House be assured that this vital work is being done?
Let me ask one final question. Will the Foreign Secretary assure Members that in the light of the coming recess the Government will ensure that Members are kept updated and, if necessary, that the House will be recalled if circumstances merit that course of action? We continue to support the Government and our armed forces as they act to protect the Libyan people and we will continue with that support and with detailed scrutiny of the Government’s decisions in the days ahead.
Mr Hague
I am very grateful to the right hon. Gentleman and for the continued strong unity across the Floor of the House on so many of these issues—on all of them, at the moment. Of course, he joined me in condemning the bomb attack in Israel.
In answer to the right hon. Gentleman’s questions about Yemen, not all the embassy team has been removed. A core of staff remains, including the ambassador, but as I saw for myself when I was in Yemen last month it is not easy for our staff to move around. Last year, there were two separate attempts to kill our ambassador and the embassy staff, and moving around even in the capital is a very difficult process. To move around more broadly in the country is dramatically more difficult and that is why it is so difficult to give consular assistance to British nationals who might be scattered in different parts of Yemen.
I can assure the right hon. Gentleman that there are detailed contingency plans that can go into operation at very short notice for the evacuation of the British nationals who remain, but if we had to trigger them it would have to be a military-only evacuation, possibly in very difficult circumstances. It would therefore be difficult to be assured that we would be able to bring out everybody from remote parts of Yemen. That is the importance of stressing now that British nationals should leave. There are reports that oil companies are withdrawing their staff from Yemen. I want to emphasise that we will give every assistance we can and that we have contingency plans ready to go at any time, but that does not guarantee that we could get everybody out.
The right hon. Gentleman asked whether further protests in Syria are likely to be met with repression. The evidence is that yes, they would be. Of course, we will use all our diplomatic efforts with the Syrian authorities to say that they should not do so, but that is what has happened and there are reports this morning that up to 25 people have been killed in the protests over the last couple of days.
We are in regular touch with the Government in Bahrain. I think I mentioned a few days ago that the Prime Minister spoke to the King of Bahrain and I spoke to the Foreign Minister a week ago. I hope to speak to the Crown Prince of Bahrain again shortly about the status of the national dialogue that he attempted to launch. Clearly, there have been difficulties on both sides of the argument in Bahrain as regards participating in that national dialogue and it is important that they are all ready to enter into it. The forces that have entered Bahrain from Saudi Arabia, the United Arab Emirates and other Gulf states are there legitimately at the invitation of Bahrain. They are not engaged in crowd control or in dealing with the protests, but are safeguarding installations. I discussed this at length with Prince Saud, the Saudi Foreign Minister, who was here with us two days ago. The British Government are encouraging dialogue in Bahrain and we look to Saudi Arabia to encourage that as well, and we look to all the Gulf states to play a constructive role, which I believe they wish to do.
On the right hon. Gentleman’s questions about Libya, the work of our armed forces continues to enjoy strong international and regional support. I think we should be clear about that. There were some doubts when the House debated the matter on Monday about the position of the Arab League, but it has subsequently made statements giving robust support for the implementation of UN resolution 1973.
We are still working out some of the questions about command and control. The simplest and most effective solution is for all the operations conducted within NATO to come under the North Atlantic Council and for other countries to plug into that and to work with it. We have made a great deal of progress, as I said in my statement. We should understand that this is a new coalition, put together last week and very quickly, for obvious reasons. There are bound to be issues to sort out in its management, but we are getting through them pretty well. I will discuss the remaining issues with Secretary Clinton and with my French and Turkish counterparts later this afternoon to try to iron out the remaining difficulties with future NATO command and control. I should stress that representatives of the nations involved in this operation can meet in Brussels on a regular basis, so the regularity of the meetings is established.
On Arab involvement, the forces of Qatar are taking part in the missions to enforce the no-fly zone. Other Arab nations have not yet sent a military contribution, although they remain strongly supportive of the mission. We are still in discussions with some of them about sending further military contributions to those operations. The right hon. Gentleman is quite right to draw attention to reports of mercenaries entering Libya. Given the danger they might pose to civilians, they do so at their peril and they should be aware of that.
I mentioned how the designation of the National Oil Corporation of Libya means that future oil revenues are stopped. Oil has not been lifted from Libya over the past few weeks, so the flow of oil cash to the regime has stopped for the moment in any case. We are still discussing the idea raised by the right hon. Gentleman about an escrow account.
My right hon. Friend the International Development Secretary is working hard on the post-conflict situation. In our view, this must be a unilateral and UN-led effort and we will be able to have discussions about that with other nations at the conference next week. Of course, we will want to keep the House updated. I and my right hon. Friends the Secretaries of State for Defence and for International Development will make further statements as necessary. The Leader of the House has announced a debate just before the House rises for the recess in the week after next. It is probably too early to speculate about the recall of Parliament two weeks before the recess, but we will of course do whatever is necessary to keep the House informed.
Mr Speaker
Order. Many colleagues are seeking to catch my eye, but the House might like to know that no fewer than 35 hon. and right hon. Members are seeking to contribute to the Budget debate, so economy is of the essence if I am to be able to accommodate the level of interest.
Richard Ottaway (Croydon South) (Con)
I welcome the Foreign Secretary’s statement and, in particular, his point about sanctions being strengthened and the National Oil Corporation being listed. That should focus minds. He was quizzed quite hard last week about the arms embargo. Has he reviewed the position and is there any way that support in some form or another can be given to the rebels, who are facing a fairly unequal battle?
Mr Hague
We are continuing to review the position and I do not have a new announcement to make to the House or to my hon. Friend about that. There are a variety of legal opinions about the relevant paragraph of the UN resolution. Whatever we do, on this and all the issues involved, must be in strict accordance with the UN resolution and we must maintain the legal, moral and international authority that comes from that. We will not do anything that we think would transgress that resolution. We are looking at it in that light and I will update the House when we have come to any conclusions about it.
Mike Gapes (Ilford South) (Lab/Co-op)
The Foreign Secretary mentioned the meeting to be held in London and said that the African Union will be involved in it. The African Union is specifically mentioned in Security Council resolution 1973 as having a mission that is engaged in the area. Will he update us as to whether there is potential for the African Union to play a positive role in getting a peaceful resolution to the conflict in the near future?
Mr Hague
Yes, there is a role, but a peaceful resolution would require the Gaddafi regime to observe resolution 1973. If that happened, all concerned could be in discussions with the African Union, but that requires a ceasefire, an end to violence and an end to attacks on civilians. There is certainly a role for the African Union and I hope we will be able to discuss that with it. I do not yet have confirmation of who will attend the conference in London, but it has been invited to attend and this is exactly the sort of thing we want to discuss with it.
Sir Menzies Campbell (North East Fife) (LD)
I hope that my right hon. Friend will excuse me if I press him a little further on the issue of command, which has both military and political implications. While it is clear that the present arrangements have not impaired in any way the military effectiveness of the operations, it is equally clear that they are not sustainable in the long term. Will he tell us what undertakings, if any, he has received from Secretary of State Clinton to the effect that any transition will not be hurried and will be both effective and smooth?
Mr Hague
My right hon. and learned Friend is absolutely right to point out that the discussions about this issue have in no way impaired the military operations that have taken place so far. All the nations concerned have that very much in our minds during our discussions and our absolute priority is to implement the resolution and get these organisational questions sorted out while we are getting on with that. I have already mentioned in my response to the shadow Foreign Secretary that I will discuss these issues with Secretary Clinton later today. I think there is a common determination among all the nations involved to sort this out. We are in the business of seeking not that kind of undertaking but a solution regarding the command and control of operations going forward, and I hope that we are close to achieving that.
Mr Ben Bradshaw (Exeter) (Lab)
Is it not clear, given the brutal suppression of protests in Bahrain, that most Gulf countries do not recognise the need for the sort of political reform that the Secretary of State has spoken about? In order to maintain support for what we are doing in Libya, which I strongly endorse, do we not need to be wholly consistent in our approach to democracy and human rights in the middle east?
Mr Hague
We do need to be consistent, but we also need to recognise where countries make reform efforts. If I may say so, it is something of a generalisation to say that the Gulf countries do not recognise the need for reform because many of them have embarked on such reform in recent times. Kuwait has introduced considerable reforms, including the election of its Parliament, the Sultan of Oman has made very substantial reforms, including major changes in his Government in the past few weeks, and Prince Saud was describing to me, when he was here on Tuesday, some of the reforms being contemplated in Saudi Arabia. I think there is a recognition, including in the Gulf states, that it is necessary across the Arab world for reform to take place. That reform will be at a different pace and of a different nature according to the culture of each country, but I think they are seized of that fact. My right hon. Friend the Prime Minister gave a powerful speech about this in the Kuwaiti Parliament last month and there has been a strong measure of support for that among the Gulf states. In addition, other countries, such as Morocco, are adopting very serious reforms. That kind of peaceful evolutionary reform is what we have to encourage, rather than the violence we have seen in so many countries.
Mr James Arbuthnot (North East Hampshire) (Con)
Will my right hon. Friend say something about the relationship between the action we are taking in Libya and the strategic defence and security review? Might we need to reconsider some of the decisions taken in that review, such as the scrapping of some reconnaissance aircraft and even some ships?
Mr Hague
The Prime Minister has made the position on this clear. It was precisely in order to be able to deal with more than one situation or conflict at a time that we came to the conclusions we did in the review, and that means we are able to continue our operations in Afghanistan while also conducting this operation. That is also why we chose to adopt the adaptable posture in the defence review, as my right hon. Friend the Defence Secretary has often explained, and why we chose to retain such a wide spectrum of military capabilities, so that many of them could be expanded in future if necessary. We must continue to work in the framework of our defence review. We are able to bring the necessary equipment into this operation with the forces we have now, so the issues that my right hon. Friend the Member for North East Hampshire (Mr Arbuthnot) raises are really for the longer term.
Keith Vaz (Leicester East) (Lab)
Both the Foreign Secretary and the shadow Foreign Secretary have spoken about the critical situation in Yemen and we know that it is going to get worse with the declaration of a state of emergency. We appreciate the efforts being taken by the Foreign Secretary, but is it not necessary to try to bring sides together? May I urge him or the Prime Minister to make that call to the President of Yemen to see whether we can get both sides together? We are hugely respected there and this is our time to act.
Mr Hague
Yes, I will absolutely respond to the right hon. Gentleman’s urging. As he well knows, there has been no shortage of effort on the part of this country to do that urging. That is why I went there myself last month and met not only the President but opposition groups and urged them all to be generous to each other in their dealings. I cannot say that our urging has yet been heeded, but we will continue it over the coming days, doing exactly as he says.
Mr John Baron (Basildon and Billericay) (Con)
With unrest spreading throughout the region and civilian casualties rising at the hands of autocratic leaders, what circumstances would need to exist, if any, for Britain to instigate or consider instigating a no-fly zone in other countries?
Mr Hague
I must again stress something that the Prime Minister has explained: just because we cannot do everything does not mean that we should not do something where there is a particularly grave situation that particularly offends our belief in human rights, especially the right to live. That has been the situation in Libya. Whatever we do in any other country, we will always be guided by the criteria we established before the passing of the UN resolution, which are that there must be a demonstrable need and a clear legal basis for any British involvement and that there must be strong support from within the region. The establishment of those principles has put us in a very strong position in relation to the crisis in Libya and those principles would guide us elsewhere.
Sir Gerald Kaufman (Manchester, Gorton) (Lab)
In condemning utterly the barbarous attack on the bus stop in Jerusalem, with the consequent loss of innocent life, and the Israeli attacks in Gaza that have resulted in the deaths of many civilians, including a grandfather who was playing football with his teenage grandchildren, will the right hon. Gentleman make it clear to the Government of Israel that Israel cannot be exempted from the wave of yearning for emancipation that is sweeping the middle east? Will he also make it clear that unless the Israeli Government respond, there will be no peace for Israel and the country’s future existence will be placed in jeopardy?
Mr Hague
As the right hon. Gentleman will have heard in my statement, I condemn all those attacks and the deaths on both sides—of Palestinians in Gaza and of those who died in the terrible terrorist attacks on Israel in recent days. In the middle of the important developments and dramatic change in the middle east, I have underlined and will continue to underline that those events add to the urgency of the peace process. It is important that both Israeli and Palestinian leaders understand that and that they are prepared to make the necessary compromises to get direct talks towards a two-state solution going again. I have put that in my own way, but what I have said is strongly in accordance with the sentiments the right hon. Gentleman has expressed.
Dr Julian Lewis (New Forest East) (Con)
When the Government decided to withdraw the last of our carriers and the Harrier force with it, they did so at the last minute and for financial reasons. Now that both the Prime Minister and the Chancellor have confirmed what I sought to establish previously—that these operations will receive extra funding from the Treasury reserve—will the Foreign Secretary have urgent discussions with the Secretary of State for Defence on reactivating HMS Ark Royal and some of the Harriers, because, I assure him, people who know about these matters know how versatile and valuable such a capacity would be?
Mr Hague
No. I have urgent discussions every hour or so with my right hon. Friend the Secretary of State for Defence, but it is important to implement the strategic defence and security review and to bear in mind that fundamental to our national security is the restoration of our national finances. Yes, we have had to do some things that in an ideal world we would not have done, and the defence budget has had to be controlled, but we have been able to do, and continue to do, what is necessary in Libya without the equipment to which my hon. Friend refers. Our operations are conducted by Typhoon aircraft and, for ground attacks, by Tornado aircraft. These are flying from land bases in the Mediterranean and are able to conduct the operations very easily without, in this case, the need for an aircraft carrier.
Mr David Winnick (Walsall North) (Lab)
Like everyone else, I deplore Gaddafi’s continued military offensive, which undoubtedly is costing the lives of many civilians. Will the Foreign Secretary tell us whether any diplomatic efforts are being made by countries such as Russia, China, and particularly Turkey, to see what can be done to persuade Gaddafi to stop the fighting?
Mr Hague
I think that the whole world is pretty much united on urging Gaddafi not only to stop the fighting, but to leave the scene. That is the view even of countries that did not support the UN Security Council resolution. This is a worldwide view. However, Colonel Gaddafi is clearly not easily persuaded to engage in a dialogue to reach out to the opposition. We hope he will see that the situation is such that it is necessary for him to go, and that is the only way forward for the Libyan people. The countries to which the hon. Gentleman refers are certainly of that opinion as well and certainly do not want the Gaddafi regime to continue.
Mr Edward Leigh (Gainsborough) (Con)
On that very point about the Gaddafi regime continuing, some of us were briefed this week by the BBC journalist who had been detained in horrendous circumstances in Tripoli. He is clearly no apologist for the regime, but he said that it was remarkable how quiet Tripoli was, with demonstrations confined to one suburb and engaging only 200 or 300 people. Clearly the people there are cowed and massive subsidies are being poured at them. As some of us have asked constantly, what will happen if Gaddafi simply beds down in Tripoli? What is the game plan? What are we trying to achieve? Will the Foreign Secretary confirm that we are only on a humanitarian operation to protect the people of Benghazi and no more?
Mr Hague
Almost, as it is not just the people of Benghazi we need to protect. Although UN resolution 1973 specifically mentions Benghazi, it also calls for the taking of all necessary measures to protect the civilian population and populated areas in other parts of Libya. That is our mission. Our military mission is defined as clearly as any military mission has ever been by a UN resolution, and we will stick to that resolution. Clearly it is highly desirable for Gaddafi to go, as we have said for many weeks, but in military terms what we have set out to do is enforce the resolution. That means protecting Libya’s civilian population, attempting to bring about a ceasefire and not putting any occupation force on to any part of Libyan soil. We will stick strictly to the resolution.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
Since Turkey has said it would supply ships and submarines to enforce the arms embargo, that leaves Germany as the only major NATO member state that is not contributing to the actions in Libya. Will Germany be invited to the conference next Tuesday?
Mr Hague
Yes, Germany will be invited. It is a crucial partner of this country in the European Union and in NATO. The different countries in NATO have of course taken varying decisions about their level of participation, and indeed on whether to participate, but Germany has not been unhelpful or obstructive and has not attempted to block the work we need to do in NATO. It set out its position at the UN Security Council and did not vote for the resolution, which we must respect, but it has not been unhelpful in so many other ways. I hope that it will attend the conference in London.
Martin Horwood (Cheltenham) (LD)
I welcome the Foreign Secretary’s statement, particularly the positive news of contact with the interim national council in Libya. I know that a review and revocation of arms export licences to Libya has already taken place, but will all arms export licences to the Governments of Yemen, Syria and Bahrain now urgently be cancelled if they have not been already?
Mr Hague
My hon. Friend will be aware that more than 100 licences have been revoked in the case of Libya, that many have been revoked in the case of Bahrain and that successive Governments have been extremely careful about the licences granted in the case of other countries, such as Syria. We constantly review these licences in the light of changing developments in the middle east. I do not have a new announcement to make about that today. If we think it necessary to revoke other licences for the countries he mentioned, we will certainly do so, and I will keep the House updated on that.
Mr Geoffrey Robinson (Coventry North West) (Lab)
May I thank the Foreign Secretary for the promptness and fullness of his briefing to the House? We look forward to the conference next Tuesday, for which we expect a similar briefing. Will he take that opportunity to make it quite clear that, in so far as we know what the end game will be for this complex situation, the commitment of British ground troops will not be part of it?
Mr Hague
As I said in answer to my hon. Friend the Member for Gainsborough (Mr Leigh), we will stick very strictly to the terms of the UN resolution. As the hon. Gentleman is aware, that rules out any occupation force in any part of Libya. He can be absolutely assured that there will be no invasion of Libya. To give a fuller answer, there have already been occasions on which we have sent special forces into Libya, for instance to rescue the oil workers in the desert three weekends ago. We can neither exclude such necessary, small-scale things, nor anticipate what might come up, but we are not preparing for a ground invasion of Libya and will not be doing so.
Tony Baldry (Banbury) (Con)
My right hon. Friend was right to underscore the Government’s support for the work of the International Criminal Court, but will he expand a little on his understanding of what the ICC is doing to ensure that those close to and around Gaddafi appreciate and understand that if they are responsible for directing attacks that inflict civilian casualties, they too stand liable to be indicted for war crimes and crimes against humanity?
Mr Hague
My hon. Friend makes an important point, and every time we make that point we are doing what he is calling for, which is stressing to the people involved that they may well have to answer in future to the ICC. The prosecutor of the Court has begun the necessary investigations, so material can now be gathered and sent to it. The best way to communicate that is through the media, which is why my right hon. and hon. Friends and I, and our colleagues in other countries, have stressed very strongly in the international media, including al-Jazeera and other channels, that this is what is now set in train and that people must remember when they contemplate any crime or atrocity in Libya that the reach of international justice can be very long.
Natascha Engel (North East Derbyshire) (Lab)
What, to the Foreign Secretary, does operational success in Libya actually look like? Further to that, what then will be his exit strategy?
Mr Hague
It means the implementation of the UN resolution. I cannot stress this strongly enough—that we operate within international law and under the mandate of UN resolution 1973. So success requires a real ceasefire, not the fake ceasefires announced by the Gaddafi regime in recent days, and a real ceasefire means disengaging from areas of conflict, ceasing attacks on civilians, an end to violence and harassing and menacing civilians, and the full establishment, which we have now achieved, of a no-fly zone over Libya. Those are the requirements of the resolution, and that is the mission that we are embarked on. It is too early to say what will happen when that point has been achieved, because we are still working hard to achieve the protection of civilians and the bringing about of a ceasefire, but that is as far as our military mission in Libya goes.
Robert Halfon (Harlow) (Con)
The country will welcome my right hon. Friend’s remarks about the tragic loss of the innocent British citizen to Palestinian terrorists in Jerusalem yesterday, but on his remarks about Syria, and given that the Syrian Government attacked a funeral in recent days, what steps can the British Government take to make sure that we do not see a repeat of the tragic massacre in 1982 of thousands and thousands—up to 40,000—Syrians by the Assad regime?
Mr Hague
The steps that we can take at the moment are diplomatic steps to make it clear to the Syrian Government that the forcible suppression of protest and the killing of protesters is wrong, morally and legally, and also very unwise, because experience throughout the middle east is showing that violence on the part of the authorities does not bring about a solution to such issues or to disorder in various parts of the region. We will of course continue to stress that to the Syrian authorities and redouble our efforts to do so.
Graham Stringer (Blackley and Broughton) (Lab)
I have received strong representations from the Shi’a community in Cheetham Hill and Crumpsall in my constituency. It is extremely concerned about a possible deterioration of the situation in Bahrain and worried about the protection of the Shi’a community there. Can the Foreign Secretary give any assurances, beyond supporting increased dialogue, about how the British Government could protect the Shi’a community in Bahrain?
Mr Hague
The sectarian aspect of the problems in Bahrain is deeply worrying, particularly if the stand-off continues and tensions are raised on both sides of that sectarian divide—there are clearly concerns on the Shi’a and Sunni sides of it. It is in the interests of the Shi’a community in Bahrain for a dialogue to be successful, because when we think about it we find that there is no other way forward for Bahrain, other than a constitutional settlement between the two sides of that sectarian divide. It is a country with a Shi’a majority, but it has a Sunni minority of about 40% of the population, so they have to find an agreed way forward if the country is to function.
That is why we stress the need for dialogue, but we do not just stress the need for it here: we urge it on the leaders of the Government in Bahrain, through our regular contacts with them, and our ambassador has also urged it through all our contacts—and we have good contacts—with the opposition groups and human rights organisations in Bahrain. We are one of the countries with the strongest such contacts, so we are taking practical action on both sides to encourage dialogue.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We have quite a few Members standing, so could we have shorter questions and shorter answers? Then we will hopefully get everybody in.
Jo Swinson (East Dunbartonshire) (LD)
The scale of the foreign policy challenge in the middle east and in north Africa is immense, with the UN action in Libya and the situation in any one of Bahrain, Syria and Yemen having the potential to become a major crisis. Despite that, will the Foreign Secretary assure the House that he will not take his eye off the ball elsewhere, particularly in providing vital support to the democracy building in Tunisia and in Egypt which is crucial to the future stability of the whole region?
Mr Hague
Yes. My hon. Friend is quite right, because overarching all that we have discussed in today’s statement is what I referred to in the House on Monday: the need for a bold, ambitious and historic programme on the part of the United Kingdom and the European Union to provide a magnet for positive change to the countries of north Africa and the middle east. Although today we are discussing the detail of what is happening in individual countries, that is all under the umbrella of a European policy towards the region that has to be drastically revised to come up with solutions and offers that match the unprecedented—in this century—challenge that we all now face.
Mr Andy Slaughter (Hammersmith) (Lab)
With so much international attention focused on Libya for obvious reasons, other regimes in the region appear to think that they can use military force against civilians with impunity. The Foreign Secretary has commented on the matter already, but what specific steps will he take with Syria, which is killing its civilians in Deraa, and with Israel, which is almost daily killing civilians in the Gaza strip?
Mr Hague
In answer to earlier questions, I have made clear the position on Israelis and on Palestinians, and the need for them all to make the necessary compromises. We have also discussed Syria and the strong messages that we have sent to the Syrian regime, but the hon. Gentleman does not provide an exhaustive list. At this time, Iran has imprisoned opposition leaders and become one of the most oppressive regimes in the world. It also has one of the worst human rights records in the world. We will of course vigorously continue to raise those issues as well.
Mr Andrew Tyrie (Chichester) (Con)
The Foreign Secretary said that it was desirable for Gaddafi to go. Given what we know about Gaddafi, is it plausible to imply that we can fulfil our humanitarian objectives while he stays?
Mr Hague
I cannot see—so many Government throughout the world have said this so many times over the past few weeks—any peaceful or viable future for the people of Libya if Gaddafi is still there. It is more than desirable; I put that in its politest form. It is essential that he gets out; it is essential that he goes. I hope my hon. Friend will not mistake in any way the strength of our message and the international community’s message on that. Let me also stress, however, as I did in answer to the hon. Member for North East Derbyshire (Natascha Engel), that our military mission is to implement the United Nations resolution, and that we will stick strictly to its implementation.
Mr Dave Watts (St Helens North) (Lab)
Given the responses to earlier questions, how would the Government deal with a situation where it became clear that Gaddafi was going to stay in power for the foreseeable future? Would we leave our forces and sanctions in place indefinitely?
Mr Hague
I am not sure that in this situation it is helpful to get into all the hypothetical scenarios of what may come. Clearly, we are planning for scenarios, particularly on the humanitarian and stabilisation side, as I said, but we have to concentrate on the implementation of the resolution and on taking such work forward. A whole variety of scenarios could be foreseen, but to get into providing a commentary and speculating on each of them would be helpful neither to our forces involved at the moment nor in achieving our immediate objectives.
Alec Shelbrooke (Elmet and Rothwell) (Con)
May I congratulate the Foreign Secretary on the work that he not just did, but continues to do, with the UN in making sure that the action is wholly legal? It restores faith in this place after the years that have gone by. Has he considered, or has an assessment been made of, the potential situation in Lebanon, and is the diplomatic service in high-level talks with Israel to ensure that that border situation does not exacerbate the situation crossing the region?
Mr Hague
My hon. Friend draws attention to another point of tension in the middle east, one that I discussed intensively with President Assad when I visited Syria at the end of January. Of course, we want to see stability in Lebanon. In particular, we want to see the special tribunal for Lebanon continue to conduct its work, so that it is clear that crimes cannot be committed with impunity there; and of course, we want to see stability on that border. It underlines the importance and urgency of taking forward the middle east peace process, as several other hon. Members have said, because that is one way to bring about a greater assurance of stability between Israel and Lebanon.
Mark Durkan (Foyle) (SDLP)
I join the Foreign Secretary in condemning the terrorist murder in Jerusalem, and equally the deadly attacks on civilians on Gaza.
The Foreign Secretary has said that the conference on Tuesday will be very much aimed at looking at the whole of the UN resolution. The second item of that refers not only to the high delegation from the African Union but to the UN special envoy. It is also the part that refers to a peaceful and sustainable solution. Will he ensure that that is given due consideration on Tuesday, because there needs to be greater understanding about its meaning and its prospects, and we need to ensure that any pursuit of it is not undermined by any military measures undertaken through other mandates in the resolution?
Mr Hague
Yes—basically. It is important to have regard to all elements of the resolution and to ensure that all the international organisations to which the hon. Gentleman refers are involved. I would stress that the creation of a ceasefire and bringing about an end to violence, which is what we are engaged in now—the protection of civilians and implementing those aspects of the resolution—are essential to the kind of work to which he refers, because at the moment there is not the right atmosphere for any of that other work to take place. We will have regard to the whole of the resolution at the meeting in London.
Mr Peter Bone (Wellingborough) (Con)
Would the House be correct in interpreting the Foreign Secretary as saying, in effect, that if there was a ceasefire—a real ceasefire—and attacks on civilians ceased and there was no danger to them, a divided Libya would be a successful outcome of the operation?
Mr Hague
No. Of course, we support the territorial integrity of Libya; I stress, though, that it is our military mission that is laid down in the resolution. That is because we will always stay within international law, with international support and with regional support—and that very much continues to be the case. We are not looking for a divided or a partitioned Libya. We want the people of Libya to be able to determine their own future, and it is only in the event of an end to violence, and the ceasefire that the resolution calls for, that they will be able to do that.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
With specific reference to the Foreign Secretary’s update on the involvement of the Arab League, will he clarify whether the Qataris have been involved in flying over Libya?
Duncan Hames (Chippenham) (LD)
In these troubled times, Governments are swift to announce asset freezes for these astonishingly wealthy ruling elites. When a regime ultimately falls, as may turn out to be the case in Libya, what then happens to those assets?
Mr Hague
These assets belong to the people of Libya, and so in all normal circumstances—if we can describe any of these circumstances as normal—they would be available to a future Government of Libya. They are frozen, not confiscated. In this case, of course, they are very substantial. In the UK, we have frozen £12 billion of assets; in the United States, I think there were $30 billion of assets. That just shows that the Libyan people could have a much more prosperous future if they had a more economically open and politically free approach. Those assets are held for them.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Now that the no-fly zone is operational, does the Secretary of State agree that there is little justification for the continuation of bombing of Libyan infrastructure and idle assets, and that offensive enforcement of a no-fly zone should be targeted only at mobilised Libyan Government military forces?
Mr Hague
Operations have been directed against military forces or against the command and control of those forces. As my right hon. Friend the Defence Secretary always stresses in our meetings, we take the greatest care to avoid civilian casualties, and there have been no confirmed civilian casualties caused by coalition activities so far. We do everything we can to minimise the risks of that. Certainly, the air strikes and missile strikes that we have authorised are on military targets—on air defence systems, on forces that are threatening the civilian population of Libya, or on the command and control of those systems. Those are all wholly legitimate targets.
Thomas Docherty (Dunfermline and West Fife) (Lab)
Given the vital nature of sustaining the coalition, may I press the Foreign Secretary to clarify for the House how often meetings of the coalition will take place, and at what level?
Mr Hague
As I mentioned earlier, there is a regular meeting in Brussels between contributing nations—representatives of the countries involved. Many of those are, for instance, permanent representatives to NATO. That takes place all the time. We are also, at a ministerial level, in daily touch across the coalition through telephone calls and visits from one country to another. The conference that we will host in London on Tuesday is at the broadest level—the highest strategic level—to look at future stabilisation and humanitarian questions, as well as at what is going on in Libya now. I assure the hon. Gentleman that all those things together form a mass of consultation and involvement—with daily conversations with the Arab League, for instance. The Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North East Bedfordshire (Alistair Burt), and I speak to Amr Moussa, the secretary-general of the Arab League, pretty much every day. There is extensive consultation.
Dan Jarvis (Barnsley Central) (Lab)
May I push the Foreign Secretary a little further on any international stabilisation force? What is the Government’s thinking on which UN agency should lead any post-conflict work, and which individual would lead such a potentially huge task?
Mr Hague
Those are perfectly legitimate questions, but slightly in advance of where we have got to. My right hon. Friend the International Development Secretary is engaged in discussions about that. There are a variety of agencies and a variety of individuals who can lead it. That is one of the things that we will be able to discuss with our partners at the conference next week.
Ann Clwyd (Cynon Valley) (Lab)
Next week the Government intend to change the law on universal jurisdiction, making it more difficult to get an arrest warrant in this country for those accused of war crimes. Where is the logic in that?
Mr Hague
The logic is that it will still be possible to get an arrest warrant if there is a reasonable chance of prosecution. It makes this country rather ridiculous if people can get an arrest warrant for people from other countries where there is no realistic chance of prosecution. It is therefore important to change that law. The law as it stands has been abused in relation to visitors from several other countries. It was abused, in my view, when there was a threat to the proposed visit of Mrs Livni to the United Kingdom. She is an Israeli politician of great importance, and a strong advocate of the peace process, but she feels unable to visit the United Kingdom because of that law. If we want, as we do, to be able to engage in pushing forward the peace process, we need such people to be able to visit the United Kingdom.
Points of Order
Helen Jones (Warrington North) (Lab)
On a point of order, Mr Deputy Speaker. On Tuesday, a member of the trade union USDAW who was attending an event in this House was not allowed to enter because security officials objected to one of the slogans on the board he was bringing in. They did not object to his bringing in a board per se, but merely to the slogan, which said: “Child Benefit Frozen by the Tories”. The USDAW One was kept in a room near the security entrance until I went down to free him, when he was allowed to come through. Will you investigate this matter, Mr Deputy Speaker, and can it be made clear that entrance to this House should be denied only on the grounds of security, and not on the grounds of the views that people wish to express?
Mr Deputy Speaker (Mr Lindsay Hoyle)
I am grateful to the hon. Lady for giving me notice of her point of order. This is not a matter on which I can readily comment. I invite her to discuss it with the Serjeant at Arms. As the hon. Lady knows, we do not discuss security arrangements on the Floor of the House, but I hope that some arrangement may be come to.
Ben Gummer (Ipswich) (Con)
On a point of order, Mr Deputy Speaker. Following comments made by a senior member of the Opposition Front Bench on the “Today” programme this morning, I wonder whether you could clarify a point of order for me, as a new Member of this House unsure of all its rules. I know that it is not in order to accuse an hon. Member of lying following comments made inside the Chamber, but I wonder whether it is in order to accuse an hon. Member of lying on the basis of comments made outside the Chamber.
Mr Deputy Speaker
I thank the hon. Gentleman for letting me know about that point of order. The position on reflections made on Members of the House, and others, is set out on pages 438 and 439 of “Erskine May”. Reflections on Members’ conduct cannot be made in debate unless based on a substantive motion. That applies to reflections made on conduct either inside or outside the Chamber.
Bills Presented
European Convention on Human Rights (Withdrawal) Bill
Presentation and First Reading (Standing Order No. 57)
Mr Peter Bone, supported by Mr Philip Hollobone, Mr Christopher Chope, Mr Nigel Dodds, Mr Douglas Carswell, Mark Reckless, Richard Drax, Philip Davies and Dr Julian Lewis, presented a Bill to make provision for the withdrawal of the United Kingdom from the European Convention on Human Rights.
Bill read the First time; to be read a Second time on Friday 9 September, and to be printed (Bill 172).
Common Fisheries Policy (Withdrawal) Bill
Presentation and First Reading (Standing Order No. 57)
Mr Peter Bone, supported by Mr Philip Hollobone, Steve Baker, Mr Christopher Chope, Mr Nigel Dodds, Mr Douglas Carswell, Mark Reckless, Richard Drax, Philip Davies, Andrew Percy and Dr Julian Lewis, presented a Bill to make provision for the withdrawal of the United Kingdom from the Common Fisheries Policy.
Bill read the First time; to be read a Second time on Friday 21 October, and to be printed (Bill 171).
European Union (Freedom of Movement) (Amendment) Bill
Presentation and First Reading (Standing Order No. 57)
Mr Peter Bone, supported by Mr Philip Hollobone, Mr Christopher Chope, Mr Nigel Dodds, Mr Douglas Carswell, Mark Reckless, Richard Drax, Philip Davies, Zac Goldsmith and Andrew Percy, presented a Bill to make provision for the United Kingdom to establish immigration controls for European Union nationals independent of the European Union.
Bill read the First time; to be read a Second time on Friday 25 November, and to be printed (Bill 170).
European Union (Exemption from Value Added Tax Regulation) Bill
Presentation and First Reading (Standing Order No. 57)
Mr Peter Bone, supported by Mr Philip Hollobone, Steve Baker, Mr Christopher Chope, Mr Nigel Dodds, Mr Douglas Carswell, Mark Reckless, Richard Drax, Philip Davies and Zac Goldsmith, presented a Bill to make provision for the United Kingdom to set Value Added Tax rates without regard to the rules set by the European Union.
Bill read the First time; to be read a Second time on Friday 20 January 2012, and to be printed (Bill 169).
Ways and Means
Budget Resolutions and Economic Situation
Amendment of the Law
(13 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ed Balls (Morley and Outwood) (Lab/Co-op)
For a fleeting moment, I thought that I was in the wrong debate. It is always interesting to hear proposals put before the House by the hon. Member for Wellingborough (Mr Bone).
Twelve months ago, at the time of last year’s Budget, unemployment was falling, growth was rising, inflation was low and stable, and we were on track to halve the deficit in four years. Indeed, because more people were in work, paying taxes and not receiving benefits, borrowing ended up £12 billion lower last year than was forecast the autumn before. However, there was still a long way to go. Following the biggest global financial crisis of the past century, we were getting back on the right track to get the deficit down and to restore our economy to sustainable growth.
One year on, the economic context for this Budget is radically different. Inflation is up to 4.4%, increasing prices for everyone and threatening a rise in mortgage rates. Unemployment, which was falling, is now rising to its highest level for 17 years. Consumer confidence has seen its biggest fall for nearly 20 years. Our economy, which was growing, has ground to a halt according to the latest figures. Just a few months ago in the autumn, we were told by the Prime Minister, among others, that the economy was out of the danger zone. However, on growth, inflation and unemployment, it appears that we are now re-entering the danger zone.
The question that families and businesses up and down the country will be asking is what changed over the past 12 months. Let me set out for the House what did change over the past 12 months. Yes, commodity prices have gone up. Yes, world oil prices are higher. Yes, we had a bad winter. However, other countries such as America, Germany and France have been similarly affected by higher oil and commodity prices and by bad weather, and their economies are still growing, unlike the British economy. Germany had worse snow than Britain, there was a big freeze in France and the US had the worst blizzards for decades, but their economies grew in the fourth quarter of last year. While our growth forecasts have worsened, theirs have improved. The German economy is forecast to grow more strongly than it was last year, as is the American economy. Growth in the world economy has been revised up. Which is the major economy that is now downgrading its growth forecasts? It is the United Kingdom.
Matthew Hancock (West Suffolk) (Con)
Will the right hon. Gentleman accept and welcome the fact that the British economy is growing faster than the EU average, or will he continue to talk down the economy?
Ed Balls
On the latest figures, the British economy was not growing at all—in fact, it had contracted by 0.6%.
I see the hon. Gentleman’s press releases regularly. They come across my desk two or three times a day. I want to give him some support. [Interruption.] I want to give him some support. The hon. Gentleman has a campaign to reverse the cancellation of funding for a dilapidated school in his constituency following the cancellation of Building Schools for the Future. I am right behind him. He has called for a new pedestrian crossing and to unblock the money for it, which is being blocked by a Tory council. I am with him. He has campaigned to keep his local library open. I am right behind him on that one. He wants to keep Thetford forest safe. Yes, I am with him on that one. He asks how we can deal with the pressures on the voluntary sector. I have to say, I think that he is in the wrong party.
Under Labour’s plan, the economy was set to grow strongly. [Interruption.] I have just given the hon. Gentleman more publicity than he had in three months from all those press releases.
Ben Gummer (Ipswich) (Con)
On the Labour plan, the right hon. Gentleman said this morning on the “Today” programme that we went into the recession with a low deficit. Is an average deficit of 2.9% low in his mind, or was that a mis-speak?
Ed Balls
I do not want to give the hon. Gentleman an economics lesson, but he needs to be able to differentiate his deficits from his debts. The fact is that we went into the downturn with a low deficit. We were borrowing to invest. Our national debt was lower than that of America, Germany, France and Italy, and lower than the national debt that we inherited from the Conservatives. We will not take any lectures from them on fiscal profligacy. Who was it who raised taxes 22 times in the 1990s?
Under Labour’s plan, the economy was set to grow strongly, unemployment was falling, and we were on track to halve the deficit in four years. Everything has now changed. But what changed? The change was the arrival of a new Conservative Chancellor who was determined not to halve the deficit in a Parliament, but to eliminate it entirely with an immediate hike to VAT, the deepest spending cuts our country has experienced in 70 years and the largest spending cuts of any major country in the world. America has a big deficit, but it is cutting it at a steadier pace and keeping its jobs programme in place. Its economy is now growing strongly and unemployment is falling.
Mr Peter Bone (Wellingborough) (Con)
Will the right hon. Gentleman give way?
Ed Balls
In a second, but I certainly will.
In Britain, we have to make some tough choices to get the deficit down. That means fair tax rises and spending cuts, but the Chancellor’s policy is going too far and too fast, and we are paying the price in lost jobs and slower growth.
Jesse Norman (Hereford and South Herefordshire) (Con)
I am not sure quite which hallucinogenic substances are being ingested on the Opposition Benches, but if I may ask a question—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I think that we will reconsider the suggestion about drug taking.
Jesse Norman
I am happy to withdraw the suggestion and to make it clear that the substances in question were not hallucinogenic. May I simply ask the shadow Chancellor—
Mr Deputy Speaker
I take it that you have withdrawn the suggestion, Mr Norman. I accept that. Are you now going to pose a very quick question?
Jesse Norman
Will the shadow Chancellor enlighten us on why WPP left this country under the last Administration, and why it has now returned, as has been announced in the news today?
Ed Balls
I am very pleased that WPP has returned to this country, and I am very disappointed about the 3,500 jobs lost at Pfizer in Kent. That is why we need to be careful about how we proceed.
I have to say that I have never in my life taken a hallucinogenic substance. I am happy to take any intervention from Government Front Benchers on that subject.
Mr Bone
I am grateful to the shadow Chancellor for giving way; he is being extremely generous, as always.
Why should we take any lectures from Labour on unemployment, when every single Labour Government have been kicked out with a higher level of unemployment than when they got into power, and when the last Government doubled unemployment in Wellingborough?
Ed Balls
It is a bit rich to have a lecture from the hon. Gentleman, who used to say that the national minimum wage would cost millions of jobs. We, unlike Members on the Government Benches, do not think unemployment is a price worth paying.
The Chancellor is going too far and too fast, and we are paying the price in lost jobs and lost growth. That is because a vicious circle is now taking hold in our economy. If the economy is not growing and hundreds of thousands of people lose their jobs, then fewer people pay tax, more people claim benefits and it is harder to get the deficit down. By cutting too far and too fast, the Chancellor is not solving the problem, he is making it worse. That was why yesterday, we heard from the OBR that growth had been downgraded for last year, this year and next year; that unemployment was forecast to be higher in every year of the forecast period; and that up to 200,000 more people would be unemployed than the Chancellor said last summer. Our borrowing was coming in £20 billion lower, but the Chancellor has now been forced to revise up his borrowing over the next four years by £45 billion.
The Chancellor said yesterday that he would put fuel in the tank of the British economy. Is not the truth that, as a result of his Budget, it is confidence in the British economy that is now tanking, and he who is running out of fuel?
Mr Brian Binley (Northampton South) (Con)
May I remind the right hon. Gentleman that in the mid-1990s my constituency was 440th in the jobseeker’s allowance list, but that by 2010 it was 132nd? Why should my constituents believe him having seen that record of unemployment under Labour?
Ed Balls
Because a year ago unemployment was falling, and now it is rising. [Interruption.] The Chancellor sits on the Front Bench and says, “This is so bad.” Does he mean growth being downgraded? Unemployment going up? I will take his intervention at any point he wants, but if he does not want to make interventions from the Dispatch Box, maybe he should not be doing it from a sedentary position. [Interruption.] If he wants to intervene, I will allow him. I have made my pledge.
None of what I am saying will come as any surprise to the Secretary of State for Business, Innovation and Skills. He warned of it a year ago. In fact, I remember standing with him on the green on Budget day a year ago, and he said:
“We must not cut Government spending too soon and risk plunging a fragile recovery back into recession. Cuts without economic growth will not deal with the deficit”.
Wise words, and how right he has proved to be. Even after the election, and even after his colleagues decided to bury their worries and go along with immediate spending cuts and a VAT rise, the Business Secretary was still warning of the risks to come. He said on “Newsnight” last May, after the general election, that the speed of the cuts had to be based on the condition of the economy. He said:
“These things will have to be judged at the time of the Budget, and of course I don’t present the Budget personally but I’ll make an input into it.”
He went on:
“Over the course of this Parliament judgments about the speed of cuts have got to take account of the changing conditions that are coming, and that is basic economic policy based on evidence, which is what I’m in favour of…We don’t know what the impact of these cuts will be on employment.”
Wise words again, and he was right. The cuts are too fast and too deep, confidence is tanking and unemployment is up. This Budget was the time to change course, before it was too late. Sadly, the Business Secretary has not been heard.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
Does the right hon. Gentleman not accept that public spending is not actually falling but continuing to rise? The sad thing is that we all have to take our share in bearing more than £120 million a day in interest payments on the debt left behind by the last Government.
Ed Balls
The hon. Lady is right—deficits went up. They went up in Britain, Germany, France, America and all around the world. They did not go up because spending or the national debt was too high in Britain. That is a Conservative myth put about to try to justify the Government’s cuts to police, the national health service and schools. The reason deficits became big was that we had the biggest global financial crisis in 100 years. If we had not let the deficits go up when the tax revenues went down, it would have been not a world recession but a world depression. It was only our actions—here in Britain and around the world—that saved our financial system from disaster. We nationalised the banks, let the deficit go up and got unemployment down—all of which was opposed by the present Chancellor.
Michael Fallon (Sevenoaks) (Con)
If all that is true, can the shadow Chancellor explain why the deficit here was the worst in the G20?
Ed Balls
The hon. Gentleman knows the answer. We went into the downturn with a deficit that was low and covered our borrowing for investment. [Interruption.] It was low. We had low national debt—lower than France, Germany or Japan. We then had a global financial crisis, which hit the American and British economies hard. Our economy had a larger financial services sector than others—that was precisely why we did not join the single currency in 2003—so of course America and Britain were harder hit than other countries by the financially driven recession.
If we had not let the deficit go up, which some hon. Members now seem to think we should not have done, the result would have been unemployment above 3 million rather than it peaking at 2.5 million. The economy would have gone from recession into depression. That is the economics of the situation. The question is, who did a good job of getting the deficit down? We had the deficit coming down, unemployment coming down and growth going up, but a year later we have unemployment going up, inflation going up and the economy ground to a halt. As a result, borrowing will be £45 billion higher, not lower.
John Mann (Bassetlaw) (Lab)
My right hon. Friend may be able to assist me with some statistics that are missing from the Government’s document “The Plan for Growth”. I can see nothing in it about what has happened in the past 15 years. The chart showing growth under the last Government is missing. Similarly, there are no international comparisons showing what is happening to our growth compared with other countries, and what was happening under the last Government.
Ed Balls
The reality was that we had a long period of sustained growth and low inflation, and we reversed the high unemployment of the 1980s and 1990s. We put behind us the instability of the Tory years by making—[Interruption.] If the Chancellor wants to make an intervention, we are still waiting.
The Chancellor of the Exchequer (Mr George Osborne)
Is the shadow Chancellor saying that the last Government abolished boom and bust?
Ed Balls
I noticed that the Chancellor did not choose to intervene with the answer that I was hoping for, but there we are. The fact is, when we came into government in 1997, we made the Bank of England independent and he opposed it.
We had a period of sustained growth and rising employment. The Conservatives said that the national minimum wage would cost jobs, but employment went up. Under the Conservatives child poverty doubled; under Labour it came down.
We had the longest sustained period of investment in the NHS since the second world war, but there was a global financial recession, which affected countries around the world. Who dealt with that? The British people should be thankful that it was not the Chancellor and his friends, because opposing nationalisation of the Royal Bank of Scotland and Northern Rock would have been a catastrophe for the British economy.
Mr Mark Field (Cities of London and Westminster) (Con)
Although the right hon. Gentleman is right to say that there was global downturn, and he also rightly points out that there had been continued growth between 2000 and 2007, in each and every one of those years a deficit was being run up. That is our point—an unsustainable deficit was run up in the good times, before the global crisis began.
Ed Balls
I have studied the Chancellor’s new fiscal mandate. He says that he wants to get the national debt on a downward trend by the end of the Parliament. We had national debt on a downward trend in 1997, 1998, 1999, 2000 and 2001. Before the financial crisis hit, our national debt was lower than the debt we inherited from the Conservatives. [Interruption.] Hon. Members are barracking—but let me answer the hon. Gentleman, because at least he asked a serious question, unlike some of the nonsense we have heard from other hon. Members on the Government side of the House. The second part of the fiscal mandate is to get the budget, excluding investment—the current balance—back into balance by 2015. Yet that is the golden rule.
The golden rule is getting, over the cycle, the current budget, excluding investment, into balance. That never happened in the 1980s and the 1990s, but it happened for a sustained period under Labour. However, it is true that, throughout that period, we borrowed to invest. Of course we did. Our infrastructure—our schools and hospitals—had not been invested in for 20 or 30 years. Throughout the period before the financial crisis, national debt was below the level that we inherited from the previous Conservative Government.
Elizabeth Truss (South West Norfolk) (Con)
Is not it the case that in 1997 Labour cancelled the road-building programme, which would have been an investment in infrastructure?
Ed Balls
If I remember rightly, our mistake was not to reverse the cancellation of the road-building programme that we inherited from the previous Government. We inherited an environment Department that did not want to build roads and a transport Department that had given up asking for transport investment. When we came into government it took time to build schools, because in the previous 18 years so few new schools had been built that local authorities had lost the capacity and the ability to build them. That is the reality.
Ed Balls
I will make a bit more progress before giving way.
Let me return to the Business Secretary, because he was wise to say that those matters should be judged at the time of the Budget, based on the economic conditions. That is why we have argued that the Budget was an opportunity to change course from the reckless cuts. The problem is that the Business Secretary has not been heard. The blinkered Chancellor is ploughing on regardless, oblivious to what happens around him.
The Business Secretary needs to change tack. “Newsnight” is clearly not the way to get his message out. It does not get him on to the front pages; it does not make people listen to him. Why does he not do what he did last time? Perhaps he needs to call in some more young constituents for another candid conversation, another avuncular chat. It worked last time. The Chancellor certainly knew about his views on media ownership and News International. It is a pity he did not also share his thoughts on the risk to growth and jobs from the Chancellor’s reckless cuts.
The Business Secretary knows that the Chancellor is taking a massive and reckless gamble. He knows that it is the wrong thing to do, just as he knows that scrapping the future jobs fund and education maintenance allowances, hiking up tuition fees, raising VAT and cutting benefits for disabled people is wrong. It is one thing to want to be in power, but sacrificing one’s principles and beliefs for power is quite another. They used to call him Saint Vince, the wise economist. He had a reputation for telling it like it is. Why does he not tell us what he really thinks today? He knows that the economic strategy of the Government of which he is now a part is deeply flawed, misguided and unfair.
Lorely Burt (Solihull) (LD)
The right hon. Gentleman is right—the Business Secretary is very wise. He warned the right hon. Gentleman when he was a business Minister with responsibility for the City that there was far too little regulation for the banks. Does he now regret the fact that he said at the time that we should have light-touch regulation for the banks, which eventually proved so disastrous?
Ed Balls
We all look back and say that we should have been tougher on the banks. Of course we should have been. The irony is that the Business Secretary is in government, sitting next to a Chancellor who criticised us in 2005 and 2006 for being too heavy-handed in our regulation of the banks. We were told that too much heavy-handed regulation from Europe was stifling the competitiveness of the City of London. The Conservative party called for light-touch regulation: that was the reality at the time.
As for the Business Secretary’s other regular critique, that we allow too much household debt in our economy, it was interesting to note from looking at the OBR Budget Book last night that household debt as a percentage of income is now forecast to rise next year, the following year, the subsequent year, the year after that and the year after that—five years of household debt as a percentage of income rising every year, while the savings ratio stays low and stable. He is part of a Government that are certainly not delivering what he said was the prospectus for the future.
Mr Edward Timpson (Crewe and Nantwich) (Con)
The shadow Chancellor is keen to tell us what happened to the national debt between 1997 and 2001, but is silent about what happened to it after that. Perhaps he could enlighten us about what happened to the national debt between 2001 and when he left office?
Ed Balls
I have not been silent at all. I said that there was a global financial crisis, which meant that our deficit and our debt rose, as it did in America, France, Germany and Japan. It is a good job that we went into the crisis with a lower national debt than we inherited, and a lower level of national debt than France, Germany, America and Japan. It is a good job that we did not listen to the Conservative party, or our debt would have been higher, our unemployment would have risen and we would still be in a depression.
Jacob Rees-Mogg
Thank you. I am grateful for such widespread support.
May I draw the shadow Chancellor’s attention to page 8 of the Red Book? He referred to private sector debt, which rose from 200% of GDP to 450% of GDP when the Labour Government were in office. That fundamental instability led to our troubles. It was great while debt was rising—it led to full Government coffers—but it got out of control and that is the root cause of the problem.
Ed Balls
As I said, the OBR says that subdued consumption outlook requires households to dip into their savings again in 2011, so the savings ratio continues to fall back from its post-recession peak. It also says that the savings ratio is now forecast to be historically low. Household debt as a percentage of income rises every year from 2010, even though it fell in 2009-10. Those are the facts.
Yesterday we needed a plan from the Chancellor to help hard-pressed families facing the squeeze, to get people back into work and to get our economy growing again. That is what we needed, and that is what we did not get. There was no change to a deficit reduction plan that is faster than that of any other major economy in the world. It pushes growth down and unemployment up. The Chancellor fails to realise that cutting too deep and too fast will make it harder to get our deficit down. He also failed to understand that while he gives the banks a tax cut this year, ordinary families are being hit hard now. It was a smoke-and-mirrors Budget.
Rory Stewart (Penrith and The Border) (Con)
Will the right hon. Gentleman please share his plan and growth strategy with us?
Ed Balls
I will gladly share our plan. First, the economy was strengthening and unemployment was falling—[Interruption.] The Chancellor’s Parliamentary Private Secretary shouts too loudly. Why does he not calm down a little? That may be how they do things in Chelsea and Fulham, but we do not do that in the House of Commons.
Unemployment was falling and growth was rising because we were halving the deficit over the four years. The Chancellor has gone from halving the deficit to trying to get rid of it entirely in four years, by implementing the largest cuts to spending and tax rises of any economy in the world. It is not working. In fact, we heard today that Moody’s, the credit rating agency, is looking at whether it needs to downgrade the British economy because of the threats to growth following yesterday’s Budget.
Secondly, Labour would repeat the bank bonus tax now, raise £2 billion for a second year, and use that to build 25,000 more homes and create 110,000 more jobs for young people who are now not going to get help from the future jobs fund. That was our second plan—and that option was entirely open to the Chancellor, but he chose not to repeat the bank bonus tax, but instead to give a tax cut to the banks.
Thirdly, we would have reversed the rise in VAT on fuel, because the Chancellor’s 1p cut in the Budget—there is still doubt whether that will actually get to motorists—is outweighed by the 3p a litre rise in fuel prices because of the VAT increase that he introduced just a few weeks ago. We cannot blame the Chancellor for the rise in world oil prices resulting from the middle east crisis. He made the right decision not to go ahead with the duty rise, and we would have done the same, given the level of world oil prices. However, the rise in VAT was a complete own goal. It pushed up inflation and prices and cut family budgets. It was a mistake. It was the wrong tax at the wrong time. The Chancellor should just admit that he got it wrong, go to his European partners and say, “Can I reverse this mistake before it’s too late?”
That is our plan, and the Chancellor—[Interruption.] Government Members shout, “Is that it?” but they do not understand the economics of this and the previous Budget. Halving the deficit over four years was ambitious but deliverable. Eliminating the budget deficit in four years means a massive fiscal contraction. Unless we suspend all the laws of economics, assume that no international evidence counts, and believe that fiscal multipliers do not count in our kind of economy, that kind of contraction in fiscal policy and its impact on the public and private sectors is crushing. Only Greece is trying to go faster. We have already seen the biggest fall in consumer confidence for 20 years, and unemployment is up before the cuts have really started to bite.
People are looking to the future and are worried, and the Chancellor is not listening. In his world, that is not a concern. He does not worry about what is happening out there in the real economy but for businesses and families up and down the country, the prospect of rising unemployment year by year, of slow growth last year, this year and next year, and of falling confidence, is a real concern. My advice to the Chancellor is this: take the blinkers off and look at what is actually happening in our economy. It is hurting, but it is not working.
Stephen Hammond (Wimbledon) (Con)
We just heard that the shadow Chancellor’s plan is to halve the deficit over the lifetime of this Parliament. For clarity’s sake, will he tell us what the implications of that would be for the cost of borrowing? What advice has he taken on the yields on 10-year gilts, which would clearly move if we cut borrowing?
Ed Balls
The hon. Gentleman needs to look at what is actually happening to the yield curve, the term structure and long-term interest rates. He will know that before the election, when the previous Government had a plan to halve the deficit over four years, the long-term interest rate level was pretty much identical to the rate now. That is the fact. Our debt maturity is long, our long-term interest rates are low, and there has been no problem getting our gilt auctions away at any point in the last two or three years. The idea that there was some big impending crisis is a myth invented by the Chancellor of the Exchequer and the leader of the Liberal Democrats to justify the biggest and most unfair U-turn on a manifesto that we have seen in the last 100 years of British political history.
Duncan Hames
The shadow Chancellor wants to slow the pace of spending cuts, so will he tell us what spending cuts he wants in the coming year?
Ed Balls
I think the rise in VAT was a mistake, and I think the hon. Gentleman used to agree. I think that spending cuts this year are a mistake, and I think he used to agree with that too. I would halve the deficit over four years, and borrowing would have come in £20 billion lower—[Interruption.] I will answer the question. I set out more detailed spending cuts—in schools—than any other Cabinet Minister at that time. We said we would cut £1 billion from policing, and, for example, that we would go ahead with the disability living allowance gateway reforms. However, the scale and pace of the Government’s cuts are too deep and too fast, which is destabilising our economy. We were right to say, “Don’t make the cuts until the recovery is secure. If you make cuts on this scale before the recovery is secure, what do you end up with? No recovery at all.” That is the situation today.
Albert Owen (Ynys Môn) (Lab)
The shadow Chancellor was right to remind the Liberal Democrats that they once thought that a VAT increase would be a bombshell, but does he also remember the Prime Minister, when he was Leader of the Opposition, saying that VAT was a regressive tax that would hit the poor the hardest, and that he had no intention of increasing it?
Ed Balls
I also remember the Chancellor saying that the Budget was progressive, and it turned out to be regressive, but my hon. Friend is being unfair to Liberal Democrat colleagues. They were not against a VAT rise; they were against a Tory VAT rise. Nick Clegg’s general election leaflets said, “Stop the Tory VAT bombshell,” and he never said, “Stop the Tory-Liberal Democrat VAT bombshell,” so my hon. Friend is being a little harsh on colleagues.
Matthew Hancock
The right hon. Gentleman talks about international evidence, but why should we listen to him rather than to the OECD, the International Monetary Fund, the European Commission and all major business organisations, which support the concept of dealing with our debt?
Ed Balls
The hon. Gentleman needs to be careful with boastful interventions. Let me read out a quotation:
“The measures we have taken have been commended by international bodies such as the European Central Bank, the European Commission, the IMF and the OECD. They have also won the approval of the international markets.”
That is the financial statement of 9 December 2009 from the Irish Finance Minister. He is no longer in office, because he had OECD and IMF approval for a policy that drove unemployment up, growth down, confidence down and the deficit up. Does that not sound somewhat familiar? [Interruption.] If the hon. Gentleman wants to make a third intervention, I shall happily take it, but perhaps he should reflect a little further before he puts out his next press release.
The Chancellor said yesterday that this was not a tax-raising Budget and he did not need to ask for a penny more. However, when we study the details of the Red Book—in table 2.1 on personal tax, the tax cuts from the personal allowance and the tax increases from the switch to the consumer prices index, and changes to national insurance contributions—we find that the tax increases are bigger than the tax cuts. That is the fact. The increase in the personal allowance, which the Liberal Democrats boasted about with such enthusiasm yesterday, is completely crushed by the CPI increase: that is there in the Red Book. The Chancellor said that he would not come along and mislead the House in his Budget, but that is exactly what he did.
We also found out that because the Government changed the indexation of national insurance and the personal allowance, and because many people in our country—disproportionately women—are in part-time work and on low wages, and pay national insurance but not income tax, yesterday was a tax rise for 400,000 of the lowest-paid workers in our country, disproportionately women and part-time workers. That never made it into the Chancellor’s speech, nor did he say that the personal allowance changes were worth £48 a year, but the VAT rise will cost the average family with children £450; that never cropped up in the speech either. Nor did he point out that the upgrading of the GDP deflator—the inflation measure—means that despite the Prime Minister’s promises last year that NHS spending would rise in real terms year by year, it will actually fall year by year. That is another broken promise from the Prime Minister.
Many business people will be asking, “Why didn’t we have a Budget that did a bit more for growth?” It looks as if I was right in Treasury questions on Tuesday when I suggested to the Chancellor that his growth strategy was so flimsy he needed to beef it up, because he has now cut corporation tax by 1p, which is welcome, and is paying for it through measures on tax avoidance, which is also welcome. However, paragraph B.13 of the OBR’s Budget document reads:
“The OBR was notified of the change to corporation tax and the 1p cut in fuel duty…too late to incorporate any indirect effect of these measures in the economy forecast.”
I do not think he told the OBR until the afternoon before. However, it was able to give some clarity. It said that it believed that
“any such effects would have been minimal.”
This growth strategy has been produced with fanfare and much delay, but since publication his own independent auditor, the OBR, has said that it will have no impact on growth and jobs in our economy. Is that not the reality?
An alternative was open to the Chancellor, and it was one that I have set down. He could have decided to follow the American example and cut the deficit at a steadier pace in order to strengthen growth and lower unemployment.
Angela Smith (Penistone and Stocksbridge) (Lab)
Moody’s credit rating agency warned today that the UK’s triple A credit rating could be affected by slower growth. Does that not undermine entirely the Conservative party’s too-fast, too-deep cuts strategy and show that growth is the important aspect of this country’s economic policy?
Ed Balls
I accept my hon. Friend’s point. I was tempted earlier to go down that road, because the fact is that in 2006, 2007 and 2008, the credit rating agencies entirely failed to spot the financial crisis in the first place. The Conservative party and the Liberal Democrats are keen to quote credit agencies when they support their case, but not when they do not support their case. The truth is that the credit agencies failed in the crisis, and quoting them at all is very risky indeed.
As I said, the Chancellor should have adopted our plan for deficit reduction, growth and jobs. He also ought to have adopted our plan to repeat the bank bonus tax for a second year, and used it to give immediate help to young people and jobs, rather than cancelling—in fact abolishing—the future jobs fund. As I have also argued, he should have cut VAT on fuel. That would have been a fairer and more substantial approach. However, the fact is that this year, as a result of the Chancellor’s tax decisions in the Budget, fuel tax will not fall; it will rise by 2p per litre. That is the reality.
The Chancellor should have reversed the VAT rise. That was a big mistake. Two years ago, when we proposed a cut in VAT, which got growth moving and unemployment down, he said, “People won’t notice the VAT cuts.” I am sure that he did not notice them himself, and he probably thinks that people will not notice the VAT rise either. The fact is, however, that with consumer confidence and growth down, and unemployment up, people are noticing what is happening and what he is doing. That is why they are so worried.
Mr Dave Watts (St Helens North) (Lab)
Does my right hon. Friend agree that the Government are yet to spell out how they will ensure that the increases for fuel companies are not passed on to motorists?
Ed Balls
There has been some confusion on this over the past 24 hours. We know from the OBR that it was told of the 1p cut in fuel duty so late that it could not even get it into its economic forecast. The Chancellor realised at the weekend that he was behind the curve, that he was not setting the agenda, that living standards were a rising issue and that Labour was making the case for fuel tax cuts, so he jumped in late with his 1p cut, but he did not have the courage to reverse his 3p rise. That is the reality. Had the Chancellor done things properly—I can give him some advice on this, because I know how to do things properly on North sea oil tax—he would have consulted the oil companies in plenty of time, explained what was happening, made the case, got their agreement, and then announced the policy in the Budget. I think that many of the oil companies did not find out about it until it was announced in the Budget. That was the problem.
Yesterday afternoon the Chief Secretary to the Treasury—as always, he is not here—was on a television programme about the Budget. He was asked, “How will you stop the oil companies simply passing on the cost in consumer prices?” He said that he did not know, but that he would monitor the oil companies closely. That was the problem. The Government did not do the work, and this was cobbled together at the last minute. That is why it has caused so much confusion and consternation in the past 24 hours. He needed a headline and a flourish to his speech, but he did not want to announce that they were cutting the winter fuel allowance—an announcement we would never have had at the end of a Labour Budget—so instead he announced a cobbled-together, last-minute 1p cut in petrol tax.
The Chancellor is not listening.
Mr George Osborne
I can see that the right hon. Gentleman wants to get this point on the winter fuel payment going. Will he confirm, therefore, that I am only following the plan set out in the last Labour Budget on the winter fuel payment?
Ed Balls
A plan was set out in the last Labour Budget for a 1p rise in petrol tax, but the Chancellor reversed it. If he could reverse it on petrol tax, why could he not reverse it on the windfall tax? The fact is that it was not his priority. When we entered government in 1997, what did pensioners get? They got £10 in a Christmas bonus. What did they get from Labour? They got £200, and the poorest pensioners got £300. What did we do? We confirmed in Budgets that we could carry on with the £300 in a sensible and proper way for a period of years. It would have been for the Chancellor to decide in this Budget what then to do, but I can tell hon. Members that a Labour Chancellor would have extended it. Instead, a Tory Chancellor cuts it. That is the truth.
The Chancellor is not listening. He just does not get it. He does not get how hard people are being hit by higher VAT and cuts in local services. He does not get what it means to face the fear or reality of unemployment. For the sake of our country’s future, he needs to think again and start putting jobs first—and he needs to start doing that right now.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
I want to talk about how we progress from the painful but very necessary deficit cuts to achieving growth that is balanced and sustainable. However, I shall start by addressing the shadow Chancellor’s attack. His starting point seems to be that the past is another country, and that 2010 was year zero. I am afraid, however, that all his rather bumptious self-confidence cannot conceal his massive legacy: the biggest deficit in the G20, an overweight and damaged banking system, and an economy that was hopelessly unbalanced.
The right hon. Gentleman’s criticism is built around the downgrading of the growth forecast, but before we get any more of this “Growth is down! Growth is down!”, let us remember what happened to growth in the last two years of the Labour Government—it was down to minus 4%. By the last quarter of the Labour Government, GDP was back where it was in 2006. Indeed, if we look at growth on a per capita basis—that is, living standards—we find that five years of Labour Government produced a decline in per capita incomes in Britain. The only time in history that this had happened previously was shortly after the first world war, so we do not need any lessons on growth. As the Chancellor pointed out yesterday, the European Union and the IMF has Britain’s projected growth comparing favourably with that of France—the shadow Chancellor’s favourite country—Italy, Spain, the eurozone and the whole of the European Union of 27. Our projection is better than any of those.
Mr Chuka Umunna (Streatham) (Lab)
This morning at the Treasury Committee, the former chief economist in the Cabinet Office, Jonathan Portes, remarked that—as my hon. Friend the Member for Bassetlaw (John Mann) has also pointed out—“The Plan for Growth” that the Business Secretary has published does not show the average growth from 2000 to 2010. Why is that? Presumably the Business Secretary knows the numbers, so does he agree that the performance was not terribly bad, which is precisely what Jonathan Portes said?
Vince Cable
For six of those 10 years, we were dealing with an artificial boom based on a property bubble, an overweight banking system and, as the shadow Chancellor has acknowledged, gross levels of personal debt. That was why there was rapid growth in the early part of that period. However, if we look at that period as a whole, including the last period of Labour Government, we see a decline in per capita income that was unprecedented even in 20th-century history. That is the record that we are dealing with.
Let me deal with the shadow Chancellor’s pessimism about employment. We are all rightly concerned about unemployment—we have to be—but let us remember that last year growth was 1.3%, which is lower than the projected growth for the coming year. In that time, there were 428,000 new private sector jobs—300,000 were in the second half of last year—which by a long way more than offset the 132,000 job losses in the public sector, many of which, incidentally, were a result of the cuts that the last Government were starting to introduce. Our responsibility—this was the purpose of the Budget—was to ensure that we have sufficient private sector confidence so that companies hire people and invest.
Vince Cable
We are sticking very firmly with plan A, because plan A is right. The hon. Gentleman will know that flexibility is built into economic management, primarily through monetary policy, and that is the mix that we will continue.
The shadow Chancellor is right. There is of course concern about a squeeze on people’s living standards, and we are concerned about that no less than he is. The Chancellor has tried to alleviate the problem through action on fuel duty and by lifting the income tax threshold. I would like to spend a few moments looking at the two proposals that the shadow Chancellor has made—he has repeated them today—to deal with the problem. The first proposal turned out to be illegal under European Union law. Like me, he is a good European—we would both like to observe European Union law—and to change that law would have taken roughly five years, which will not provide much relief.
After the fiasco of the shadow Chancellor’s “VAT relief on petrol” idea, his other big idea, which he elaborated on today, was to finance jobs through the tax on bank bonuses. I remind him that he and I have some form on this issue. When the last Government were in power, I was critical of the idea of taxing bank bonuses as I did not think it would work. It is to the credit of the former Chancellor that, through his ingenuity, he made it work. In the year in which the measure operated, he raised £2.5 billion—not the £3.5 billion that is often cited, because that takes no account of the offset in corporation tax. Because of his skill in making the bonus tax work, we have to listen to his advice when he says:
“I think it will be a one-off thing because, frankly, the very people you are after here are very good at getting out of these things and…find all sorts of imaginative ways of avoiding it in…future”.
He has counselled very strongly against a repeat of the bonus tax. He was—to use the word—wise.
There is another reason why I am surprised that the shadow Chancellor has returned to the bonus tax issue. He may remember that back in 2006, when he was the City Minister, a big debate opened in the Labour party when Bob Diamond was having one of his early years of extremely generous bonuses. The deputy leader of the Labour party declared “war” on “fat City bonuses”. She was promptly slapped down by the then City Minister, who reminded us that such pay-outs were good for tax revenues and for job creation. In that particular Labour party debate, I was very much on the side of the deputy leader.
If the previous Government are serious about taxing banks, why did they allow a situation to arise in which only two of the 15 major banks had in place an agreement to stop large-scale tax avoidance? We have now stopped it. Every single bank is now covered by the HMRC code on tax avoidance. Additionally, we have put in place the levy on banks’ balance sheets, raising £10 billion, which is four times as much as the one-off bonus tax would have raised.
Ed Balls
I am concerned by that comment, and I am not sure whether the Chancellor would agree with it. The fact is that hundreds of thousands of people in our country work in financial services, often on low or average earnings of around £20,000 to £25,000 a year. Is the Business Secretary really saying that those jobs are not important, and that job creation in financial services can be dismissed? He is not one of those people who says, “Let the financial sector go to Switzerland”, is he? He is supposed to be the Business Secretary.
Vince Cable
I really do not know what the right hon. Gentleman is talking about. We started by talking about excessive bonuses in one very large investment bank, and he has now extended that to the whole of the financial services sector. Of course that sector is valuable. Of course the jobs and the tax revenue are valuable, but that is not what he was talking about in his ideological dispute with his deputy leader.
Let me return to the right hon. Gentleman’s central message that the Government should abandon, or substantially modify, their fiscal strategy. I shared a platform last week at the London School of Economics with Angel Gurría of the OECD. He was asked what the Government should do. He had a simple message, which was that we should “stick with it”. He is not some pro-coalition politician or right-wing ideologue; he is the head of an organisation representing 25 Governments. Opposition Members should ask themselves—the shadow Chancellor was asked this but he neatly evaded the question—why all the major international institutions, including the International Monetary Fund, the European Commission and the G20, support the strategy that we have adopted. The reason is that they are all painfully aware that we are in an economically dangerous world in which crises of sovereign debt are not very far away.
Ian Murray (Edinburgh South) (Lab)
The Business Secretary is going through a list of international organisations that evidently support his plan. However, as a result of the plan, the UK will have the smallest public sector in the G7 by 2015—smaller even than that of America. Does not that tell the right hon. Gentleman, who was on our side of the argument before the election, that this is an ideological attack on public services in this country?
Vince Cable
I cannot see how it can be ideological to have a public sector that, by the end of this Parliament, will have a share of GDP comparable to what it was when the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) became Prime Minister. Whatever criticisms the Opposition might want to make, ideology has absolutely nothing to do with this.
The comments of the international organisations are reflected in those of the business community. The former head of the CBI has often been quoted on this, because he was critical of the Government. He had some strong criticisms, which we have taken to heart. However, it is worth remembering how he started the speech that is now so frequently quoted. He said:
“This coalition Government has been single-minded—some might even say ruthless—in its approach to spending cuts…That policy is strongly supported by business, on the grounds that sound public finances are an essential foundation for a sound economy.”
I want to deal more specifically with the suggestion that we are cutting too much too soon. The shadow Chancellor has quoted me on this, and he is quite right. I said on “Newsnight”, and I will continue to say, that there is a serious economic debate that we must constantly have on striking the right balance between not choking off recovery and not risking a financial crisis. That is the calculation that we are having to make. Our approach has been vindicated by the evidence, and the evidence is the response of the financial markets. The bond yields, which are important not just as an indicator but because they set the cost of capital for business and investment, are 3.5% for 10-year bonds, which is close to the rates in France, Germany, the Netherlands and Sweden, compared with 5.2% in Spain, 7.5% in Portugal, 9% in Ireland and 12% in Greece. That is a fair comparison with what they were a year ago when the Labour party was in power. Since then, the differential has widened by 1.5% in respect of Spain, 3.5% for Portugal and 5% for Greece and Ireland. In real terms, the cost of capital—long-term capital in this country—is now zero. The reason why that matters was summarised many years ago by John Maynard Keynes. Labour Members may revere his memory, as do some of us. During the crisis of the 1930s, Keynes wrote to Roosevelt:
“The turn of the tide in Great Britain is largely attributable to the reduction in the long-term rate of interest.”
That is the basis on which we have to take account of interest rates.
Mr Umunna
Of course Keynes also said that if the facts changed, he changed his mind. Does the Business Secretary agree with the Energy Secretary who said that the Government should not be “lashed to the mast” of their economic policy? On 29 November, the Chancellor said that he would stick to his fiscal mandate to allow the Monetary Policy Committee maximum flexibility to loosen monetary policy. If inflation remains as per the central prediction at the moment, I see no real prospect of the MPC being able to loosen monetary policy further. That means that if growth is sluggish, the Government will surely have to look to a contingency plan. That seems to be what the Energy Secretary was suggesting. Does the right hon. Gentleman agree?
Vince Cable
I am not sure that what Keynes said was a matter of changing his mind in response to a change in fact. He was stating one of the basic principles of Keynesian economics—that the cost of capital has to be kept low.
Mr Pat McFadden (Wolverhampton South East) (Lab)
The Secretary of State said that the evidence had borne out his decision to change his mind on the scale and pace of deficit reduction, but what evidence does he need? Since he made that decision, the unemployment forecasts have risen, the inflation forecasts have risen, the growth forecasts have fallen, the debt repayment forecasts have risen, and as for bond yields he has no evidence that at the time of the election they were causing any problem for the UK’s financing of its debt under the last Government. What evidence is there to suggest that he was right to change his mind?
Vince Cable
I do not know when the right hon. Gentleman last opened a financial newspaper. If he had done so recently, he would know that all the countries on the periphery of Europe that have been hit by the rising cost of capital are in very acute financial crisis, which we have avoided. We have German interest rates, and at the same time we are carrying a deficit on the scale of the most debt-ridden economies such as Ireland and Portugal.
Mr Geoffrey Robinson (Coventry North West) (Lab)
One thing the Opposition can claim is that there was stability in the bond market, which we have been able to continue this year in order to borrow at reasonable rates. As the Business Secretary knows, directly and indirectly, although we have long-term rates in the bond markets, the main problem is that if small companies can borrow at all—very few of the small and medium sector singled out by the Chancellor and the Government as the key area of expansion are able to do so—it is only at exorbitant rates. What are the Government going to do about it?
Vince Cable
In the earlier part of his comments, the hon. Gentleman was right to acknowledge how important interest rates are. He is also right to say that because of the badly damaged banking system, small companies have an extreme problem with lending. That is why the Chancellor and I have been dealing with the banks to try to get them to reach an agreement, which they now have, to extend considerably the amount of lending to small and medium-sized enterprises. That was one of the earliest decisions we had to make—to focus on access to capital.
While we are dealing with the issue of what has to be cut, I would like to ask the Opposition what they would do. The right hon. Member for Wolverhampton South East (Mr McFadden) wants us to run a bigger deficit. What would the Opposition cut? It is a question I often pose to my opposite numbers in the BIS team. They had planned a 25% cut in departmental spending, which is what I am doing. We are cutting a lot of things—very painfully—so I ask the Opposition what they would do, but we have not yet had a single suggestion about what they would do instead.
Government Members often raise that sort of question, but it is becoming obvious that the natives opposite are also getting restless. I noticed that the right hon. Member for Salford and Eccles (Hazel Blears)recently said that the Labour party needs to be
“explicit about cuts… The public expects us to at least give a broad direction—but I think they are worried that we haven’t been as clear as we ought to be”.
Another senior Labour Member of Parliament—who, perhaps wisely, remained anonymous—told the Financial Times:
“It can’t be that hard for us to say what we would cut, or at least give a few examples, for goodness’ sake.”
[Interruption.] Beneath the shouting, those are the questions that Labour Members are asking themselves, and they are absolutely right to do so.
Jesse Norman
On the question of evidence, is my right hon. Friend aware that institutions as wide ranging as the Institute for Fiscal Studies and the Bank of England have calculated independently that we would be borrowing between £7 billion and £10 billion more if interest rates had been allowed to stay at the same level, without the fiscal austerity programme that was introduced by the Chancellor?
Vince Cable
Yes, indeed. There is clearly a close link between the level of the budget deficit and interest rates, both long-term interest rates in the markets and short-term interest rates set by the Bank of England. That is why maintaining a monetary policy that is supportive of growth—which is what we are doing—requires fiscal discipline.
Let me now deal with how we can achieve sustainable, balanced growth, and what “sustainable, balanced growth” actually means.
Steve Rotheram (Liverpool, Walton) (Lab)
It has taken the Secretary of State 20 minutes to reach this stage.
Vince Cable
I have been dealing with a great many interventions from members of the hon. Gentleman’s party. I am always happy to do that.
I must begin by acknowledging that the task is a massive one, although there are some encouraging signs. Manufacturing is growing at its fastest pace for 16 years, the car industry is growing by 12% a year, and we are seeing a real-terms growth of 5.5% in exports. However, when it comes to rebalancing the economy, I do not pretend that we are anywhere other than at the beginning of a very long march. It is a long march because we inherited a structure that was horribly unbalanced and unsustainable.
Let me remind Opposition Members of some of the things that we inherited, quite apart from the deficit. There was a hollowed-out manufacturing sector that, under the last decade of Labour government, declined by more than the manufacturing sector in any other western country, from 21% to 12% of GDP. Exports were growing at half the rate of growth of world trade. As we were reminded by the shadow Chancellor himself, household debt was running at 170% of GDP, a higher rate than in any country in the world as far as our statistics can establish. We had a property bubble that was more extreme than that in the United States, and banks were encouraged to grow until their balance sheets amounted to more than 400% of the British economy. We had grotesquely distorted pay structures and lending behaviour, and a financial vulnerability of Irish and Icelandic proportions.
Joan Walley (Stoke-on-Trent North) (Lab)
The Secretary of State has talked of sustainable economic growth. How does that square with the Government’s claim to be the greenest Government ever? Given that the Office for Budget Responsibility has been set up so as not to take account of green considerations, is there not a real risk that if the green investment bank is not a proper functioning bank from day one, it will not be able to lever in investment that could otherwise have contributed to the growth recovery that we need?
Vince Cable
The claim to be the greenest Government ever has been vindicated in significant part by some of the key announcements in the Budget—of, for instance, the establishment of the carbon floor price, which is the first effective carbon tax system in the world, and the green investment bank, to which the hon. Lady referred. It has been made clear for the first time that it will be a proper bank—a borrowing bank—although, as a public sector institution, it will have to reflect the position of the public finances.
Angela Smith
The carbon floor price, which the Secretary of State has just mentioned, could threaten the international competitiveness of key intensive energy users such as the steel, glass, paper and ceramics industries. How will the right hon. Gentleman ensure that growth does not suffer as a result of the policy?
Vince Cable
The hon. Lady makes a valid point. I have already spoken to representatives of the steel industry about precisely that issue.
The Budget referred to the climate change agreements and to more extensive relief. Energy-intensive industries are an issue, but any Government who are serious about carbon reduction will have to deal with such industries in a balanced way.
Graham Jones (Hyndburn) (Lab)
Does the right hon. Gentleman agree that exports are being driven by the decision to stay out of the euro and the low value of the pound?
Vince Cable
The low value of the pound has certainly been very helpful, and that is supported by low interest rates. That is indeed a supporting factor for exports. It is not just a question of exchange rates. That is why I introduced the trade White Paper a few weeks ago. We are extending export credit support for small-scale business. The current export boom must be sustained, and it definitely was not sustained under the last Labour Government.
When we consider the catalogue of ways in which the economy became unbalanced under the Labour Government, it becomes clear that there was not just a problem of deficit denial, but there was manufacturing denial, trade denial, debt denial and banking denial. There was denial of many of the fundamental weaknesses that emerged in the economy. We are picking up the pieces and trying to create the conditions for sustainable growth.
Ben Gummer
Would my right hon. Friend add job denial to his list because, as under every single Labour Government, when the last Administration left office unemployment was higher than when they came into office?
Vince Cable
That is right, and I am sure that if we reflected a little we could add further to the list.
Let me talk about employment.
Vince Cable
Let me press on a little first, and then I will take an intervention.
In future, growth and jobs will come from the private sector, and in particular from small-scale business. Taken in conjunction with the trade White Paper to which I have referred, the Budget’s commitment to lower and stable corporation tax gives the strong signal that we are open for business and we warmly welcome inward investors. Growth and jobs also depend on small companies, which provided a giant proportion of the 300,000 additional jobs created in the private sector in the past six months, and they will be helped by the Budget’s extension of small company business rate relief and cuts in small company corporation tax.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
On inward investment, this Administration’s “ The Plan for Growth” states
“the Government will provide a bespoke service to key inward investors, giving them direct access to UK ministers and speedy resolution of bureaucratic obstacles to investment”.
Does the right hon. Gentleman not think that that could leave the Government open to rather difficult situations with foreign investors, and how does he think British businessmen will feel when they see inward investors getting priority access to Ministers that they do not enjoy?
Vince Cable
I would have thought that Opposition Members who want the economy to flourish and new jobs in their constituencies welcomed the fact that I and other Ministers spend a lot of our time talking to potential inward investors. That is good not only for them but for the British companies that then become part of their supply chain and whose confidence is reinforced.
Especially for small businesses, growth requires the Government not to put unnecessary obstacles in the way. When we searched the archives, we discovered that we had inherited a stock of 21,800 regulations and that the last Government were responsible for roughly 10,000 of them. Rather sad people like me who have spent some of the best years of our political lives in Statutory Instrument Committees will have seen all of that happening.
We have taken action to stop the gold-plating of EU regulations, to ensure that every new regulation is matched by the value of an “out”, and to mandate sunset clauses. We have launched a reform of the expensive and time-consuming tribunal system, and we have injected common sense into Health and Safety Executive inspections. The Budget confirmed the statement I made last week that there will be a three-year moratorium on new regulation affecting micro-businesses with fewer than 10 employees.
Vince Cable
Not at all; we should be proud of lifting regulation from small companies that generate employment, which every Member should be concerned about.
Vince Cable
No, I have taken a lot of interventions, and the hon. Gentleman has already made his intervention from a sedentary position.
The role of government is not only to get out of the way when they are blocking growth, but to intervene when there is a genuine market failure. Training is one such area, and we are seeking to alleviate the problem by supporting apprenticeships. When we came into office, 150,000 apprenticeships were planned for 2010-11 to be part-funded by government. We have increased that number, even in an environment of cuts, by 75,000 over the spending review period and in this Budget we have added another 50,000. The problems of training are massive. Let us remind ourselves that we inherited a system in which 14% of the adult population have poor literacy skills—we are talking about the reading age of a 12-year-old—and 19% have grossly inadequate mathematical skills. That is the base from which we start. [Interruption.] A lot of people, both in this House and outside it, would take this issue of innumeracy among the public much more seriously than the Labour Front-Bench team.
In the Budget, the Government have also invested further in science, particularly in research infrastructure. Through a combination of policies—the protection of the ring-fencing of the science budget; the legislative action to protect scientists and others from libel action; and the launching of the technology and innovation centre and advanced manufacturing—we have made a very firm declaration of support for the science community and the commercial application of science.
Joan Walley
Before the Secretary of State leaves the issue of apprenticeships, will he tell the House whether the new money for apprenticeships will be dependent on employers coming forward? In my constituency, in the city of Stoke-on-Trent, employers have not come forward in the way we need them to do, so there is a real danger that the new apprenticeships will go to other areas of the country, where they are not needed so badly.
Vince Cable
It is new money and of course this has to be employer-led; otherwise, there would be no job to follow the apprenticeship. That is why it has got to come from the private sector and why this is the best way of investing in training.
In my concluding comments, I wish to move on to the issue of fairness. It is a legitimate challenge to any Budget to ask about its distributional impact.
Mr Don Foster (Bath) (LD)
I confess that I am about to be disappointed here. In 46 minutes, we heard hardly any news from the shadow Chancellor about what a Labour Government would do. My right hon. Friend is about to disappoint me by not even mentioning some of the other fantastic things he has done for businesses, such as the research and development tax credit, the entrepreneurs’ relief, the increased bank lending, the developments in the enterprise investment scheme and so on. Why is he not referring to these many other good things?
Vince Cable
I probably was going to disappoint my right hon. Friend, because the Chancellor covered those issues very well yesterday. However, there is a lot more where that came from.
Vince Cable
I am not going to take any more interventions.
I return to the issue of fairness. When we first came into office, the major attack from the Opposition was that we were going to hit the poorest hardest. When it became clear that we were producing policies to protect the state pension, increase child tax credits, give preferential treatment to low-paid workers in the public sector and lift low-paid workers out of tax, attention shifted to the so-called “squeezed middle”, which has been variously defined to encompass 90% of the population.
The truth of the situation is that as a result of the financial crash and the recession that followed, Britain is a significantly poorer country than we were several years ago, so living standards have been squeezed. As the Governor of the Bank of England said,
“the real consequences of this crisis are only now beginning to be felt.”
What we have done in the Budget is take concrete action on fuel duty and on lifting the thresholds at which low earners pay tax. I shall dwell on that point a little—
Vince Cable
Let me finish this point. One genuine philosophical difference we have with the Opposition is on how best to help those on low and modest pay. The Opposition believe in using targeted means-tested benefits. By contrast, we believe that the best way of doing this is by lifting low earners out of tax—880,000 on 1 April and 260,000 more next year. In this way, we not only lift them out of tax but reinforce the incentive to work and to save alongside the welfare reforms. Other taxpayers received £200 in cash last year and will get £126 more next year. We believe that in tough times, we should let taxpayers—especially the low-paid—keep more of their own money, rather than taking it off them and giving some back through complex means-tested benefits.
The test of the Budget will not be the response of the political world or this debate. It will be the response of the business community, which has to invest for recovery. It is worth reviewing what the business community has said about the Budget as it has often been critical of Budgets in the past. The British Chamber of Commerce said:
“Despite tight fiscal conditions we are encouraged that the Chancellor has prioritised business growth and private sector expansion alongside deficit reduction”.
The Engineering Employers Federation—the manufacturers —commented:
“The Growth Review has now started to deliver tangible progress in removing the barriers to growth investment and job creation in the UK”.
And the CBI concluded:
“This budget will help businesses grow and create jobs”.
The Government recognise that the road back to balanced, sustainable recovery will be painful and difficult, but we are on the right track. As the head of the OECD put it, we must “stick with it”.
Madam Deputy Speaker (Dawn Primarolo)
Order. I remind hon. Members that there is now an eight-minute limit on all Back-Bench speeches and 30 or more Members wish to participate, so will each Member bear in mind that they have a colleague who might also like to make a contribution? It is not compulsory to use the full eight minutes; you could always leave time for somebody else.
Mr Geoffrey Robinson (Coventry North West) (Lab)
I am very pleased to follow the Secretary of State for Business, Innovation and Skills, but, unfortunately, by the end of his speech he still had not told us a single practical thing from the strategy for encouraging growth. Despite all the pages in “The Plan for Growth”, the Office for Budget Responsibility stated yesterday that it found nothing that it could measure as contributing to an improvement in the UK’s growth prospects. He goes on about low interest rates, but I wonder whether he has tried to borrow, or knows of any small company that has had to borrow, in the current difficult market and has been able to do so at the low or zero interest rates to which he referred. That is absolute nonsense. It is divorced from the real world and he knows it.
The Business Secretary knows that when we were both in different places in the Chamber he used to say that we had either to establish a national bank or its equivalent or to make the banks lend. He has come up with no solution to the problem and the fact remains that the single biggest inhibitor to growth in the vital sector of small and medium-sized enterprises still remains, and that is their inability to access credit. How can they grow in a difficult situation when markets are flat without access to credit? That is the question he has not answered and until he has answered it, he has no credibility as a Business Secretary. We need definite plans for doing that at some stage.
Mr Robinson
I shall in a moment.
It is no good the Business Secretary asking us for our plans. He now has responsibility, he chose to take it and he chose, also, to go into this coalition, having been convinced by a concerted effort by the Governor of the Bank of England and others that the Liberal Democrats were wrong before the election—that within one week of the election campaign, everything had been turned on its head and we faced an imminent crisis, the outcome of which was that we would face interest rate rises and an inability to borrow nationally, along the lines of the situation faced by Greece and Portugal. He knows that he did not even meet the Governor for a working over, because his leader, the Deputy Prime Minister, had already been worked over. Nobody else on the Government side needed to be worked over—the Governor had worked them over before and during the election campaign. The implicit deal was, “Go along with this huge deflationary package, and I will keep monetary policy so loose that you don’t need to worry—you’ll still get growth.” I believe that that is the sort of Faustian deal to which the Business Secretary referred in his reply to the Budget debate last year.
What have we seen since? Interest rates are still low and policy has been loose. No doubt it might even continue to be loose for a period of time, but I am sure that interest rates will go up in the near future. Irrespective of that, there is still no credit for the SMEs from which, as Sir Richard Lambert pointed out, the vast majority of jobs must come if the commercial and business sector—the private sector—is to recover. However, there is still no prospect of their being able to borrow. Why does the Business Secretary say, therefore, that there is no alternative because the OECD says so? The OECD is as wrong as everyone else. We heard last night from Robert Chote that all those forecasts are a “load of rubbish”. One cannot always be right about such things; nobody ever is. One might ask what the point of them is. Certainly, to invoke the OECD, which can be as wrong as anyone else, and say, “It says that we have to go on with this strategy, so therefore we will,” in the face of all the mounting evidence that the strategy is not working is perverse and not worthy of the intellectual distinction that the Business Secretary is capable of bringing to these problems.
The only thing that could be said in favour of the Government’s policies is that they have not had enough time yet—not quite a year—to have worked, but it is obvious that they are not working.
Mr Robinson
I shall in a moment, but the hon. Member for Penrith and The Border (Rory Stewart) is first.
The figures for every crucial forecast area of activity are pointing in the wrong direction. Unemployment is up, growth is down, inflation is up, bizarrely, and Government borrowing is up—the very thing they are meant to be getting down—as measured against the OBR forecasts. Those are the only measures we can use to judge whether their policies are working. We can look at the past and it is clear that they are not, but to see whether they are working, we have to look at the forecasts. The Government’s whole policy is predicated on such forecasts, but look at the figures now—down, down, down! Every single indicator is going the wrong way, but they still say that we have to press on with their programme—plan A or whatever it is. I think I heard the Business Secretary say, in response to an intervention from an Opposition Member, that some flexibility is built into the Government’s plan A. I do not know whether he will elaborate on that or whether I misheard—we will see in tomorrow’s Hansard whether I did. I did not raise the issue at the time because I was not sure whether I had heard right—I could not believe it. If there is some flexibility, the sooner it is acknowledged, built in and practised the better.
Rory Stewart
Clearly, it is very difficult to get banks lending to small and medium-sized enterprises and to balance the need for that against the problems caused by credit in the first place. What solutions does the hon. Gentleman propose?
Mr Robinson
I do think it is pathetic when the only answer that the Government, who are charged with handling the nation’s affairs, can come up with is, “What are the Opposition going to do?” If the Government want to vacate those Benches, my right hon. Friend the shadow Chancellor is not slow in coming forward and would be over there on the Government Front Bench faster than anyone. We have instead a Business Secretary who preached about these matters very eloquently when he was in opposition and said that he would be practical, but he has done nothing.
What do we have now that the current Government are in office? We have inflation going up to 4.4% or perhaps even 5% and the deficit reduction that was to come from growth being hindered because growth and the forecasts are all down. Each forecast, whether for borrowing, inflation, unemployment or growth, is heading in the wrong direction. Those are the facts. All indicators, whether for last year, this year, next year or even the year after that, are headed in the wrong direction. Perhaps the Government should fix the electoral cycle to have 10-year terms and then some latter-day outcome might eventually catch up with what they forecast at the beginning. It should be clear to anyone looking objectively at the evidence that the Government’s plan is not working, that it needs to be changed and that there are alternatives that could be pursued.
If we are talking about getting growth in the economy—the right sort of growth—I agree entirely that we need business employment and development in the private sector. Let us consider HS2—the stupid vanity project that I am sure the Business Secretary would have opposed when in opposition. It is being proceeded with despite the eventual cost of some £32 billion. I cannot believe that the Treasury is going along with it, but I am told that the Chancellor is, bizarrely, in favour of it. Why do we not switch from that to the simple plan that was set out in Atkins’ alternatives—I think it was alternative 2 —for an investment that could be proceeded with immediately, that would give us what is most needed right away and that would help Coventry: four-tracking the line between Coventry and Birmingham? That could have been given the go ahead this year, had effect next year and made a direct contribution.
Why cannot we get the schools programme back on track? Make it quicker, make it simpler—we would accept all the criticisms if that would make it easier for the Business Secretary to go ahead with it. In Coventry, we have not had a single school built—not one! One school in my constituency has been propped up by scaffolding for the past three years. I was on the shadow Chancellor’s back all the time about that when he was the Education Secretary, asking, “Why can’t we get it done quicker? Why can’t we do it?” I was told that procedures had to be gone through and all the rest of it. The Government should speed it up and get on with it, but they should not cut it and stop those projects as they are doing at the moment. I still believe that they should go ahead with some of the other important projects that we could do, particularly in transport, and that they should go ahead with building projects.
To take the example of building projects and the construction industry, I read a couple of days ago in the Financial Times that orders in the industry over the past six months are down 50% on the previous six months. Much of that would be good, constructive infrastructure investment of the kind we are want to see, creating employment and skills and making a real contribution to long-term growth in the private sector, and yet we have cut it by 50% in six months. That cannot make sense, and in the meantime unemployment, borrowing and inflation are going up—all the wrong indicators.
In my remaining minute I will focus on Coventry. I heard today that we have lost another 400 jobs in an insurance company there. Since the Government came in, around 2,500 jobs have gone in Coventry. If the Business Secretary is open to meeting companies inwardly investing in this country, which he says he is, will he come to Coventry to see the investment problems we have? We have nothing to take back to those people who have lost their jobs. I say to him that he should have the confidence and courage of his convictions and stand up to the Treasury and his so-called coalition partners, because things are going to get worse, and he faces returning here with his whimpering excuses to his own increasing embarrassment.
Mr Sam Gyimah (East Surrey) (Con)
I have sat here today with a sense of déjà vu, first because I sat here yesterday for a number of hours and did not make it into the debate—as it wore on today I felt that the same thing was going to happen—and secondly because of the arguments from the Opposition, especially those put forward by the right hon. Member for Morley and Outwood (Ed Balls). If we were to listen to him and completely ignore the fact that we had a general election in which they lost and we won and formed a coalition Government—[Interruption.] The British people clearly did not believe that Labour’s stewardship of the economy had been exemplary, which is why they were kicked out of office. That is why in places such as Erewash, a seat that Labour won in 1997, we had a 10% swing back to the Conservatives. Let us not allow Labour to pretend that their stewardship of the economy was somehow exemplary. Until they learn to accept, in front of the British public, that they made mistakes, they do not have the credibility to be part of the economic argument. Let us not allow the right hon. Gentleman to rewrite history.
I will take up the gauntlet laid down by the right hon. Member for Bath (Mr Foster). Rather than allowing Labour to push us into debating the fiscal plan that we set out last year and the implications for growth and interest rates now, let us talk about some of the excellent measures that are in “The Plan for Growth”, because Government Members owe it to the British people to explain them rather than letting the Opposition muddy the water on what happened in 2008-09, when they clearly mismanaged the economy and were kicked out of office.
Mr Mark Field
My hon. Friend is absolutely right. “The Plan for Growth”, particularly in relation to the smallest start-up businesses and the idea of exempting them from much of new regulation and legislation or putting a moratorium on it, is a very positive way forward. I hope he will explore that a little further.
Mr Gyimah
I agree with my hon. Friend entirely. One of the great things about “The Plan for Growth” is that the Chancellor did not try to say that there is a silver bullet for creating growth in the economy, or that we can pick winners. No bureaucracy or Government can really pick winners to generate economic growth. I am reminded of a story—perhaps apocryphal, but certainly instructive—about McKinsey, the strategy consultancy firm, which produced an economic outlook for the 2000s that completely omitted the internet when identifying the key drivers of economic growth. Today the internet is a massive sector worth, I think, £100 billion and employing thousands of people. It is right that we have not tried to pick winners.
Looking at what the Chancellor has done, I note that it is we, rather than Opposition Members, who recognise that growth will come from the private sector, not from a state-led programme. That is why I agree with the four objectives that he laid out: to be competitive on taxes; to be one of the best places to start, finance and grow a business; to encourage investment in exports as a route to a more balanced economy; and to create a more educated work force.
I will focus on just one of those areas—starting, financing and growing small businesses—partly because I have an interest in it because my constituency is full of small businesses. Nationally, however, there are 4.8 million small and medium-sized enterprises, and they are responsible for 50% of private sector output and 60% of jobs. If we really want to create the growth that drives jobs, we should surely look to do so from the private sector.
Research by the National Endowment for Science, Technology and the Arts points out that 6% of the fastest-growing companies create 50% of the jobs, not just in the south-east, but throughout all regions and sectors. In other words, the start-up, survival and eventual success of small companies is vital for public policy and for creating growth.
The hon. Member for Coventry North West (Mr Robinson) mentioned bank lending, but fast-growing companies’ revenues are often volatile and their cash flows can be unpredictable. Banks do not want to lend to them, so we need to be able to create an environment for equity lending. One thing we know in the UK is that, if people want to raise amounts below £2 million, they find it incredibly difficult to do so. Such risk capital, however, encourages businesses to take a risk—to take on the new plant, to hire new staff—so it is great that there are so many changes to the enterprise investment scheme in “The Plan for Growth”.
Increasing relief to 30% means that someone who is going to invest in a business knows that they can offset 30% of their investment against tax. It will encourage people to take sensible risks and invest in those companies that will drive growth. Raising the relevant annual limit to £1 million and to £10 million per company means that companies can seek capital from high net-worth and private individuals, not just from institutions. Anybody who is involved in small businesses knows that people often rely on friends and family to support their business in its early stages, so it is good to see the Government backing those who are ready and willing to take such risks.
Raising the limit on qualifying companies to 250 employees means that the measure will apply not just to start-up companies, where the failure rate can be quite high, but to well-established companies that need capital to grow. I would like to see what more the Government can do to allow connected persons to enjoy such tax reliefs, because connected persons—directors—cannot enjoy them at the moment, and that is where businesses get much of the expertise that they need. By making investment in small businesses easier, the Budget recognises and encourages people who are willing to take risks.
Mr Andrew Love (Edmonton) (Lab/Co-op)
I am listening very carefully to the hon. Gentleman. Does he agree that the real problem for small businesses is not in formation, as a number of them will inevitably die after a few years, but in taking a small business and making it into a larger business? I take his point about venture capital trusts, business angels and all the other mechanisms, but the only way in which we can achieve such growth is through bank lending. That is the real source of capital for small businesses, so how do we improve bank lending?
Mr Gyimah
I take the hon. Gentleman’s point and thank him very much for it. Anybody who has ever tried to start a business knows that banks do not lend to businesses with unpredictable revenues or cash flows. One has to raise equity to support small businesses, and the Budget includes a raft of measures to encourage individuals and institutions to invest in them. Entrepreneurs do not always mind whether it is a bank or an individual who is willing to invest in their business either in the early stages or when they need new plant; what they want is the money to grow their business and to hire new staff. That is how they look at it, and there are many appropriate measures in the Budget to address that.
The Budget also seeks, through the entrepreneurs’ relief and raising the cap on capital gains from £5 million to £10 million, to reward people who mortgage their home, take a low salary and start a business. That will not make the newspaper headlines, but in competitive terms it makes the UK a centre for investment. I have spoken to several people in the venture capital industry who say that they will now be thinking of coming to the UK to look for small business assets to invest in. It also means that an entrepreneur who lives in another country will come to the UK to set up a business such as Skype because he is more likely to attract investment—and yes, they might be from abroad, but they will employ UK residents. That is what is great about this Budget. Unless we understand that the engine of growth is enterprise—that it is individuals and their efforts who will drive growth—we will be barking up the wrong tree as we discuss this Budget.
In addition, we have measures such as the research and development tax credits; I cannot go through them all in the short time that I have available. It is good that small businesses that invest a lot in R and D can get some of that back in the form of a tax break. I am reminded of a husband and wife who came to my surgery. They had set up a business, having developed equipment to treat club foot, and needed R and D tax credits, but they had to move to Cornwall to do so. I hope that the tax relief that we are providing will not only be regionally based but that people will be able to access it wherever they are in the country.
Last week, Opposition Members came up with their growth plan—the right hon. Member for Morley and Outwood reiterated it today—which would levy the bank tax again and spend it on a series of Government programmes. What I like about this Budget is that it does not seek a Keynesian stimulus—we cannot have that because we have maxed out the credit card—but backs enterprise. It relies on the endeavour, the ingenuity and the efforts of the British people to get our country back on its feet again, in contrast to what the Opposition did, which was to get the country into a mess.
Chris Williamson (Derby North) (Lab)
In listening to the debate today, and certainly yesterday, I was interested to note that George Orwell’s Ministry of Truth is still alive and well and speaking through the Chancellor of the Exchequer. His relentless Newspeak mantra that we are all in it together just will not wash. When we consider that poverty is increasing, unemployment is going up, and the Government Benches are stuffed full of millionaires and people who are doing extremely well for themselves, it is complete and utter nonsense to suggest that we are all in it together.
It is not only wrong to suggest that for those reasons, but because the cuts are very unevenly spread, and depending on which part of the country someone happens to be from, a different level of cuts are being imposed. They are far greater in the more deprived parts than in the more affluent parts. The reality is that the poorest people in Britain will bear the biggest burden of the cuts imposed by this Administration.
According to a new report by the Institute for Fiscal Studies, the British people are suffering the biggest drop in their living standards for 30 years. It is no coincidence that 30 years ago another Tory Government presided over the last drop in living standards. The Business Secretary said today that he was happy to have the worst public services in the G7 countries by 2014-15. What an admission from a member of a party that used to claim to be a progressive party that stood up for ordinary working people! Clearly, that is a long way in the past.
Mr Mark Field
The hon. Gentleman makes great play of the idea of reduced living standards. That is not a phenomenon that has arisen only over the past nine months. Indeed, it was when the credit and debt bubble was built up for many years during the last Labour Administration that living standards for ordinary people began to be undermined. As for saying that we are all in this together, that is the very reason that the Chancellor has bravely decided, although it does not make a lot of economic sense, to keep the highest rate of tax at 50%. I fear, however, that he is doing grave damage in ensuring that some people who should be developing businesses here are leaving these shores, which is not in anyone’s interests, rich or poor.
Chris Williamson
There is nothing brave about what the Chancellor is doing. In fact, he is behaving like a bully; he is picking on the poorest and weakest members of our community. As I have said, the poorest in our society will bear the biggest burden of these cuts. If Labour had won the last general election, the measures that we would have put in place would have ensured that the poorest people in our country did not bear the biggest burden. That is an absolute fact, as was made clear by my right hon. Friend the Member for Morley and Outwood (Ed Balls) in his speech.
The Chancellor claims that this is a Budget for growth, he says that he wants a private sector-led recovery, and he argues that his catastrophic cuts are necessary. However, this Budget will not deliver the growth that the country needs, it will not precipitate a private sector-led recovery, and it will not create the jobs that the country desperately needs. While other countries are seeing their economies grow, the UK’s growth forecasts have once again been revised down—for the third time in 10 months. That is dreadful.
Gordon Banks (Ochil and South Perthshire) (Lab)
Does my hon. Friend agree that the Government and the Government parties seem to lack an understanding of the interdependence between the public and private sectors? Without a strong public sector and a strong private sector, this country will go nowhere.
Chris Williamson
That is a point that I will come to later in my speech.
The Chancellor is presiding over the highest and longest squeeze on public spending since world war two. My fear is that the Budget and the unprecedented cuts being pursued by the Government will impede economic recovery. As my hon. Friend said, the Chancellor refuses to accept that there is an umbilical link between the public and private sectors. Taking an axe to one causes catastrophic bleeding in the other. Last year’s PricewaterhouseCoopers report highlighted that connection admirably in pointing out that the half a million job losses in the public sector will be replicated in the private sector.
Chris Williamson
No, I will not give way any more.
This Budget does little or nothing to ameliorate the public service cuts. The cuts to local council budgets in particular are vindictive, gratuitous and counter-productive. The Department for Communities and Local Government budget is set to experience a whopping real-terms reduction of 67.8% over the next four years.
The Chancellor needs to create demand in the economy. My hon. Friend the Member for Coventry North West (Mr Robinson) referred to the importance of the construction industry. Every pound invested in construction generates £2.84 in total economic activity, and 92p of every pound spent on construction is retained in the UK. Every pound invested by the public sector yields a return of 56p to the Exchequer, making it a net investment of just 44p. In spite of those facts, house building is at an all-time low, Building Schools for the Future was scrapped and housing targets have been abolished. The £250 million announced in yesterday’s Budget to support first-time buyers is not enough.
The proposed changes to the planning system, which as the Chancellor said will introduce a presumption in favour of sustainable development, contradict the proposals in the Government’s Localism Bill. What is going on? On the DCLG website, the Minister of State, the right hon. Member for Tunbridge Wells (Greg Clark), who has responsibility for decentralisation, is quoted as saying that the Localism Bill
“will enact new rights allowing local people to shape and influence the places where they live, revolutionising the planning process by passing power down to those who know best about their neighbourhoods.”
A Budget briefing from the UK Contractors Group states that
“it has been much harder to obtain definite information on investment intentions from a number of key public sector clients. Indeed, there appears to be some deliberate attempts to delay decisions and to obfuscate on forward plans. A prime example of this is the future of the school building programme. The Sebastian James review was originally scheduled to report to ministers before Christmas. In March, we are still waiting for the Department for Education to signal its intentions. Equally on energy supply, the industry stands ready to support the enormous amount of investment needed but to deliver this support effectively and efficiently we need a clear understanding of the future programme.”
It goes on to say how the health reforms have caused further confusion.
I turn to the Chancellor’s modest reduction in fuel duty. As other Members have said, it is more than offset by the imposition of the VAT rise. I have been lobbied heavily by small businesses and residents in my constituency, who say that the VAT rise on petrol is hurting and needs to be reversed. It is not acceptable for the Government to argue that they are prevented from doing so by the European Union—that simply will not wash.
The Economic Secretary to the Treasury (Justine Greening)
Will the hon. Gentleman give way?
Chris Williamson
I will not give way any further, I am afraid.
The Chancellor should have done more to support manufacturing. The growth fund is inadequate—nowhere near as much as the regional development agencies were spending—business confidence is falling and the enterprise zones will not generate growth either. It is simply a case of rearranging the deckchairs. Let us not forget that it was the Tories who decimated manufacturing industries when they came to power in 1979. They also put all their eggs in the financial services basket, and that is why this country was overexposed when the financial bubble burst.
There are also problems with the Government’s ambitions on welfare reform. A Financial Times survey of businesses showed that three quarters of them said that they could not absorb lost public sector jobs, and that 57% were not interested in doing so. What hope do long-term unemployed people have of being able to get employment, given the welfare reforms and the so-called private sector-led recovery, which is not happening? They will simply not be able to get employment, given the cuts that the Government are bringing about.
Further to that, an investigation by my local paper, the Derby Telegraph, has shown that unemployed workers are being discriminated against by the insurance industry, which is saying that landlords who let their properties to unemployed workers will not be able to obtain insurance. A lot more people will be facing that situation as a result of the cuts, with more and more people losing their jobs.
We are in an economic downward spiral, and we need a virtuous circle. We need public sector investment to create jobs and demand in the economy, which in turn would create more demand and then more jobs. Yesterday, the Chancellor claimed that his decisions had brought economic stability, but the reality is that they have created a toxic cocktail of falling growth, increasing poverty and rising unemployment.
The inconvenient truth for the Chancellor is that his decisions have left this country facing the spectre of stagflation. To add insult to injury, he is borrowing an extra £44.5 billion a year, and for what? It is to pay for unemployment and lower growth. It is clear that he has lost the plot, and that we need a plan B. He said that
“society should not just be judged by the strength of its economy alone, but also by the compassion of its people”.—[Official Report, 23 March 2011; Vol. 525, c. 961.]
He certainly fails on the first point, and he is making the second very difficult. I am afraid that unless we get a plan B, this country is doomed to further decline.
Mr Charles Kennedy (Ross, Skye and Lochaber) (LD)
The hon. Member for Coventry North West (Mr Robinson) has had to leave the Chamber, but for reasons that I well appreciate he went to the heart of much of the economic debate since the general election, which has been about whether the pace and depth of the Government’s public expenditure cutting strategy is too far and too fast, and what implications it will have for other indicators. I suspect that that debate will go on for the remainder of this Parliament and for many years into the future.
The hon. Gentleman knows that, as something of an unreconstructed Keynesian myself, I have every sympathy with his side of the argument and have expressed my view on many occasions over the past year about the rapidity and depth of the public expenditure constraint and cutting strategy. None the less, whether or not it is too far and too fast, reading into it quite what he did is too much, too soon. The Government set sail so firmly last year that they and their economic policy are tightly lashed to the mast this year and will remain so in the years ahead. Their consistency of purpose has shown that. The Budget should be seen in that context.
The coalition Government’s economic fate will be sealed in the third to fourth year of the Parliament, when so many of the genuine longer-term implications of the strategy that is being pursued become clear. Despite the views that I have expressed in the Chamber and elsewhere in the past year, it must be acknowledged—I genuinely do so—that, within the severe self-constraints that the Government have imposed, there is much welcome ingenuity in the Budget.
I want to draw particular attention to the continuing pressure and policy direction on income tax personal allowances. I would like to underscore that, because the Liberal Democrats have been wedded to the principle and policy for many years. As a result of the proposals that the Chancellor outlined yesterday, in the financial year 2011-12, more than 1 million people will be lifted out of income tax altogether, and 25 million people will be better off. Women and part-time workers will be the primary beneficiaries of such a policy. I welcome that. Those figures have been verified today by our most authoritative independent source in this place—the House of Commons Library—in an excellent briefing note on the Budget, which has been circulated. It is important to place that on the record and demonstrate that, thanks to the Liberal Democrat input into the coalition Government, social conscience is continuing to be emphasised at the heart of Government policy.
I want to make two specific points from a constituency viewpoint. First, I welcome the fuel policy measures. Some 20 years ago, when Jim Wallace, a long-standing friend, was still a Member of the House, he and I embarked on a series of meetings and visits with the European Commission in Brussels. We were astounded to discover that a derogation was available to member states—it was a much smaller European Union in those days—on fuel policy. For the best part of those two decades, I and many others have hammered away at successive Governments, Conservative and Labour, to pursue such a policy, only to meet, every time, a brick wall. The Treasury hates that sort of thing, and I have no doubt that the Treasury institutionally continues to hate it and is not rubbing its hands with glee at the commitment that was given in the Budget. However, at last, the Government are applying for the scheme, which will be introduced for the most peripheral island communities as a means of lowering fuel prices. That is great.
Having argued for such a policy for nearly 20 years, it would be churlish not to welcome it. I simply make the point that the Government have to start somewhere, and self-defined island communities make sense. Equally, many more remote mainland communities have problems that are not essentially dissimilar, but for obvious reasons of definition, they cannot be included in the scheme. In my area, there are such communities around Lochalsh and Wester Ross. I hope that when the analysis of the scheme is examined, the impact on those areas will not be overlooked and that their continuing needs will be taken into account in the years ahead.
Secondly, the acceleration of the policy on the green investment bank through the Budget is welcome. An increase of £2 billion in the start-up funds that will be available to the bank was announced, and it continues to be a big priority for the Government. I say that because the Kishorn site in Wester Ross, a remote part of the western highlands, is a prime UK site to take advantage of the potential in offshore renewable technology. I have raised that issue many times, and the Secretaries of State for Scotland and for Energy and Climate Change are taking a great interest, which I welcome. The impetus that the Government give to the green investment bank will be critical in that respect.
Other aspects of oil policy in the Budget are controversial, but I offer one reflection from my constituency in conclusion. A great concrete platform—a classic historical example—for the North sea was built at Kishorn. To this day it extracts oil, but it was a case of boom and bust. The opportunity from renewables would mean sustained employment in that community, and that technology harvests natural resources, which can continue, essentially, in perpetuity. It is important that the Government continue to emphasise that.
In welcoming those important developments in this week’s Budget, and their potential impact on the economy, social fairness and areas such as mine, I hope that we can look forward to continuing resolve from the Government.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
As Chair of the Select Committee on Business, Innovation and Skills, I wish to address my remarks to the so-called plan for growth. It is fair to say that I share with many people a sense of bafflement that the plan was published in the context of a Budget that shows that this year’s projected growth rates are lower than last year’s. That makes me wonder how a plan for growth works within the Government’s overall policies. This is the first plan for growth that I have ever known to predict a drop in the growth rate.
The plan is conspicuously devoid of references to jobs. If we have a plan for growth, we should reasonably expect an element of job creation to be included. The private sector is supposed to be mopping up those cut from the public sector as a result of cuts in public spending, and we ought reasonably to be able to expect to see how the plan deals with that.
The problem is that the plan incorporates a series of micro-measures. I approve of some and would not object to others, but they are intended to deal with a macro-economic programme that fundamentally undermines their objectives. The statistics have been reeled out several times, but the most important one is that the Government, in trying to keep interest rates down, have a fiscal policy that includes VAT increases. Those push inflation up, therefore increasing the chances that interest rates will go up. That could fundamentally damage the potential for growth in our economic capacity.
I welcome some elements of the plan, not least because some, such as the export credit insurance measures, were recommended by my Committee. I have to hand it to the Government, because I pushed for those when I was a Government Member, but I did not make much progress. At least on the surface, those measures address some of the issues that the manufacturing industry raises. I do not know whether they will be successful, but they are a step in the right direction.
Similarly, the creation of a creative industry council addresses a gap in the recognition that the creative industries play in exports and employment. My churlish quibble might be that among the 32 or so industrial ambassadors who promote our industries abroad there is not a representative of the creative industries. Given the huge export market of our creative industries, and in the light of some of the issues involving IPT abroad in particular, I would ask the Government to consider that point in order to reinforce the measures they have already taken.
Many of the objectives and plans of other Departments cut across what the Department for Business, Innovation and Skills is trying to do. We are just recovering—I hope—from the damage that the visa issue has inflicted on our export potential and ability to attract bright research students and undergraduates into our universities. All the feedback that the Select Committee received during its recent visit to China demonstrated that in the country that will be the economic driver of the world economy over the next 30 years, that issue has given the impression that Britain is not open for business. It is too early to say whether the measures announced on Tuesday will address that problem, but the initial indications from universities are that they will go some way towards doing so. However, damage has been done that is fundamentally at odds with all the objectives incorporated in the plan.
Mr Binley
I am delighted that the hon. Gentleman has found space in his speech to make the point about visas. I had the good fortune, owing to the sad occurrence that happened to the Chairman of the Select Committee, to lead that delegation to China, and I want to impress on the House how many people in both the British and the Chinese business community made the same point. This is a really important issue, because they think that Britain is closed for business. We need to change that perception. Does he agree that the Home Secretary needs to do more to ensure that the message gets through loud and clear in China?
Mr Bailey
I thank the hon. Gentleman for that intervention. For personal reasons, I could not join the Committee’s visit to China. However, he put those proposals to me forcefully, and I have spent the morning with the appropriate Ministers pressing that very point, because a lot of damage has been done. We need to rectify it if we are to realise any of the potential in the document.
On the localism agenda, noises were made in the Budget about improving planning for local businesses. Despite the fact, however, that the Localism Bill places planning priorities in the hands of local communities and neighbour planners, the local organisations set up by the Government—the local enterprise partnerships—have no defined role in that. I do not understand how we can have a legal process for devising planning programmes locally without incorporating the representatives of the local business community. There is enormous concern among the business community about the potential damage that that could cause.
Mr Bailey
I am sorry but I am not taking any more interventions, because a lot of Members want to speak.
There are a number of measures that in themselves might be good, but which I do not think address the scale of the problem created by the Government’s macro- economic policy. First, research and development tax credits are very welcome. Business has been pushing for them, particularly in high-quality manufacturing, but at the end of the day they will affect only a few thousand businesses. They are very welcome but will not in themselves transform the economic landscape. Entrepreneur reliefs are also welcome, but they affect only a few hundred people. National insurance holidays for start-ups were announced some time ago, but so far only some 1,500 of the 400,000 that it was thought would apply have done so. The Government need to look at that again.
I have mixed feelings about enterprise zones. There will be one in my area, which I very much hope will work—I will certainly be working with the black country business community to ensure that it does. However, the reality is that enterprise zones are a recycled policy from the 1980s, which was not even very successful then. Indeed, those fears were expressed yesterday by the hon. Member for Chichester (Mr Tyrie), the Conservative Chair of the Treasury Committee. If the policy is to succeed, we have to prevent existing businesses from relocating just to pay less tax, while not necessarily employing more people. I am concerned that we may end up trying to prevent that by incorporating a lot of regulations that will defeat the purpose of having enterprise zones in the first place.
Although there are some measures in the plan that are good, they are not sufficient to address the core problem of the macro-economic policy that undermines them. They are hot on rhetoric, but they will not deliver very much, I am afraid—although my Committee will be probing and supporting those that can.
Stephen Hammond (Wimbledon) (Con)
Before I start, let me refer the House to the register. I give advice on transport matters to the Confederation of Passenger Transport, and economic advice to the Professional Contractors Group.
I am delighted to follow the hon. Member for West Bromwich West (Mr Bailey), the Chairman of the Business, Innovation and Skills Committee, who welcomed a number of the measures in the Budget. Some will clearly be helpful, so it was perhaps disappointing that the shadow Chancellor did not acknowledge them. He will probably be relieved to learn that I have little in common with him, apart from the fact that we were both economics undergraduates—I suspect that he was rather more distinguished than I was. I remember one of the first tutorials given by Maurice Peston, now Lord Peston, a former Labour adviser who taught us about economic debate. I just wonder whether the shadow Chancellor needs to reflect on how his proposition that the cuts are being made too fast and too deep is equally a subject of economic debate, and whether, as could be argued, he is being just as ideological and dogmatic as he claims the Government are.
For there are some economic facts—some economic truths—even if the shadow Chancellor did not want to accept them this afternoon. Whatever he says, this Government were left with the biggest peacetime deficit—a deficit that was 11% of GDP, twice that of Germany and Italy, while France had 8.6%. Borrowing is costing £120 million, and let us be clear: the total stock of debt tripled over the lifetime of the Labour Government. Those are facts.
Mr Mark Field
Does my hon. Friend also accept that the brutal truth is that for many years we have collectively lived well beyond our means? Only our near-zero interest rates are disguising just how damaging that is.
Stephen Hammond
My hon. Friend makes a correct point, and those are true facts. The causes of those facts may be in dispute. There is a clamour from the Labour party about the financial crisis. No one is suggesting that it did not happen, but equally the Labour party cannot escape the fact that this country had a structural deficit before the financial crisis or that Labour contributed at least partly to that crisis, because the regulatory regime that the previous Government put in place made no estimation of systemic risk.
There are risks to the Budget strategy—although I should say from the outset that I support it wholeheartedly. Those risks concern the lack of growth in places such as Brazil, India and China—which are slowing dramatically compared with previous levels—global inflation and the eurozone crisis, which the Prime Minister is talking about today. There are risks to the Budget strategy; it is just that the risks that the Opposition are talking about are not the risks that are real. Their strategy relies on their comment about the cuts being “too fast, too deep”. This is not just about the fact that no international economic body agrees with them, or about their plan to halve the deficit over the lifetime of this Parliament—which the shadow Chancellor reiterated again this afternoon, albeit without giving any detail. That deficit might or might not halve, but the total stock of debt would still rise, as would the cost of servicing it, even at this level.
The shadow Chancellor was wrong blindly to dismiss what is happening in the gilt markets. I read the yield curve this morning, just as he did, and it is clear that 10-year gilts yields are low at the moment. If the market believed that the Government’s debt reduction plan was going to change, those yields would undoubtedly rise and the cost of borrowing would rise substantially from £120 million a day, ruling out any prospect of more of the things that we really want to spend public money on. Labour Members shouted out, “Too fast, too deep,” yesterday, but they should remember that there are risks involved, and that theirs is an equally dogmatic strategy.
It has been interesting to observe the movement in the past year from the Opposition Benches to the Government Benches. Year after year, as we sat on the Opposition Benches, we listened to Chancellors changing their forecasts and changing the length of economic cycles. I would gently say to the Opposition that we have growth in the economy, and that there is growth for the next four years. Its overall level might be tinkered with slightly, but the forecasts often change—
Chris Leslie (Nottingham East) (Lab/Co-op)
Growth forecasts are going down.
Stephen Hammond
No, far from it. The hon. Gentleman was not in the last Parliament, when the Chancellor consistently got it all wrong. The Opposition say that the Government’s position is dogmatic, but my contention is that theirs is equally dogmatic.
Mr Mark Field
Does my hon. Friend also recognise the massive distinction, in the context of forecasts on growth and throughout the economic sphere, between what happened before the election and what has happened since May 2010? In the past the Chancellor of the Exchequer made the forecasts in his own interests. We have instituted the independent Office for Budget Responsibility, and it is a sign of the robustness of its independence that it has issued the downgrades in the forecasts to reflect changing circumstances.
Stephen Hammond
Indeed; I am grateful to my hon. Friend.
The shadow Chancellor, in contending today that the changes were too fast and too deep, once again relied on the Keynesian multiplier. He is an eminent economist, and he should know better than to rely too heavily on that mechanism. It has traditionally held out the prospect that public sector investment has an impact on the private sector, so there could be an element of crowding out and of limiting of growth potential. If the right hon. Gentleman has read the recent academic research, however, he will also know that the size of the multiplier in the growth phase of an economy is about a third of the size of the multiplier when an economy is going into recession. To rely on that thesis is therefore to rely on a very weak economic mechanism.
But let us leave the world of deficit denial behind, and welcome a Budget that does not bow to pressure. It is hugely important that the Government should stick to their policy of deficit reduction, as that is the only way to achieve long-term growth in the economy. Market rates clearly indicate that there is confidence in what the Government are doing, and to be blown off course would result in a loss of confidence. The cost of borrowing and the yields on 10-year gilts, which are important for the cost of industry borrowing and UK Government borrowing, would change. Domestic inflation would rise in those circumstances, and any indication of making a special case for one would result in having to make a special case for another. The Government are therefore to be congratulated on sticking to their policy.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Will the hon. Gentleman give way?
Stephen Hammond
I am sorry; I have no more time.
Many colleagues on both sides of the House, including the Chairman of the Select Committee, the hon. Member for West Bromwich West, have made the point that the macro is always based on the micro. The devil is always in the detail. This is the first Budget for many years in which the detail has matched the rhetoric, and in which the detail on the micro side supports the detail on the macro side. Measures include the corporation tax rate, and the 21 new enterprise zones. Far from being a failed policy of the 1980s, this was a great success. Only earlier last year, when I travelled to Merseyside and Manchester to talk to business people there in my role as a shadow Transport Minister, I found that people were asking for this and were keen for it to come through.
The measures to support small and medium-sized enterprises include research and development tax credits and the change in the enterprise investment scheme, which, alongside what is happening with the banks, will bring new capital into the country. These are micro-economic reforms that will come through to build macro-economic success through growth. The simplification of the tax code, the abolition of regulation, the acknowledgement that the 50% tax rate must be only temporary—these are all key levers of growth. They are a sign that in this Budget, the rhetoric is matched by the detail and the commitment.
Finally, growth must come in order to be fair to families, and again with this Budget, the rhetoric matches the detail. The increases in personal allowances, taking the lowest income earners out of paying tax altogether, ensuring that the 40% tax band is not extended, the freeze in council tax—those measures will all impact on real people, and it is real people and the private sector, not just the Government, who build the growth of the economy. The Budget is to be commended; it is the first for some time in which the detail has matched the rhetoric.
John McDonnell (Hayes and Harlington) (Lab)
I listened to the Budget debate yesterday as well as today, and I want to take up some of the points raised in it. I clearly come from a different economic school from the hon. Member for Wimbledon (Stephen Hammond)—and I probably come from a different one from his erstwhile colleague the shadow Chancellor as well!
The premise of the debate so far has been that as a result of profligate public expenditure by the last Government, we have an economic crisis on our hands. The conclusion is that we can solve the deficit largely by cutting public expenditure. My hon. Friend the Member for Bassetlaw (John Mann), who is no longer in his place, referred to various Treasury charts, and I have to say that one that was published a short while ago demonstrates that the profligate expenditure argument is simply not true.
Let us consider the recent Treasury chart about public spending under the last Government and previous Governments as a percentage of gross domestic product. It shows that public expenditure under the last Government was, in fact, less than it was at the height of Thatcherism and under John Major’s period in office. I shall circulate this chart to Members. I know this is true because for many of the years the last Labour Government were in office, I was attacking them for not spending enough and for poor expenditure. I fully agree with the criticisms made of the private finance initiative; I opposed every PFI scheme that was proposed.
If we look at the chart to find out when expenditure as a proportion of gross domestic product rose dramatically, we discover that it was, as the shadow Chancellor said, only when the economic crisis hit and we had to pump out the quantitative easing into the economy. In my view, the deficit occurred as a result of the failure to match expenditure with tax justice. We had large levels of tax evasion and avoidance and, in addition, we failed to develop a whole range of other tax bases within the economy. Genuine criticisms can be made of over-dependence on the financial sector and the failure to develop the manufacturing sector during that period.
What do we do now? It is not all about cutting expenditure. In yesterday’s debate, reference was made to the crisis of the 1930s and the lessons that can be learned from it. It is worth Members returning to J.K. Galbraith, who I believe wrote the best book on the crisis, “The Great Crash 1929”. What Galbraith says is that although economic structures can be put in place, what will defend us most against a repeat of the crisis is memory. We seem to forget that the cause of that crisis was the cause of this crisis—speculation by the banks and other speculators and, yes, a Government who failed to regulate. I have to say, however, that when a number of Members called for bank regulation in this House, there was an element of quietude on all sides. I remember fighting for four years, in almost a solitary capacity, to secure the passage of the City of London (Ward Elections) Bill at a time when we were pressing for regulation.
One of the lessons of the 1930s is that the one thing we should not do in a recession is cut public expenditure, because that will turn a recession into a depression. However, it is exactly what the Government seem to be doing. At present 2.5 million people are unemployed, 1 million young people are unemployed, according to recent statistics 1.7 million people are in voluntary and part-time employment, and the £80 billion cuts proposed by the Government will make at least another 1.2 million people unemployed.
What I am really anxious about, however, and what we should all be anxious about, are the cuts in capital expenditure. We are told that there will be a 4% cut next year and a 6% cut in the year after that, and that local government capital expenditure is to be cut by 30%—possibly more, according to the Red Book. I believe that if that element of demand is removed from the economy, we will experience either a deflationary spiral or the worst of all worlds, stagflation: increasing inflation along with stagnation in the real economy. I do not believe that there will be a double dip. My fear is that we will become like Japan, where asset values are falling, and will scrape along the bottom of economic activity for perhaps a decade.
People ask what the alternative is. I have mentioned the lessons of the 1930s, and Keynes’s name has been bandied about many times today. It is true that Keynes concentrated on the bond market, but one of the main lessons to be learned from him is that the key issue is unemployment. I think we should be declaring, across parties, that our objective must be the return of full employment, which appears no longer to be cited as a policy objective. As has already been pointed out, the most effective way of restoring investment is through capital investment—the development of capital programmes in housing, renewable energy and transport. I ask Members to look at the green new deal and to examine the “One Million Climate Jobs” booklet produced by trade unions including the Public and Commercial Services Union, which sets out a capital investment programme that could get people back to work.
How would that be paid for? Let me list just a few short-term measures. I am very pleased that windfall taxes have come back into fashion, and I commend the Government for that, but I do not think that the windfall taxes on the banks go nearly far enough. The lending rates on personal loans in particular are exploitative and extortionate in the markets. I also think that if we are to consider organisations that have profiteered during the recession, we should consider the supermarkets. Commodity inflation is about 3%, but they have increased prices by 6% and above, and they have been profiteering for a number of years.
I think that a windfall tax on energy is appropriate. The current profits of British Gas average 24%, and Ofgem has reported an average profit margin of 38% per customer since last November. That is profiteering during a recession. Some economists have suggested that a windfall tax in those three areas would produce up to £10 billion to get people back to work.
Let me make clear, however, as I did under the last Government, what should happen in the longer term if we are to avoid future deficits. Yes, it is about careful expenditure and it is about having confidence in local and regional decision making, but it is also about achieving a fair and just tax system that will fund our expenditure. First, we must tackle tax evasion and avoidance. What has been done about that by past Governments and by the present Government is trivial. According to Richard Murphy and John Christensen of the Tax Justice Network, £150 billion a year is potentially available to us. Secondly, we need a financial transaction tax. We have been talking about a Robin Hood tax for too long, and we should now be implementing it. Thirdly, I think we should deal with land speculation. I believe that now is the time for land value taxation. If we tax the wealth in land, we will encourage development rather than preventing it.
On Saturday, there is to be a “march for the alternative”. I expect at least half a million people to march in the streets against the cuts, and I want them to march for a just alternative. I believe that one of the alternatives they will expect us to implement in the House is a fair taxation system allowing investment in public services so that we can all share in that wealth.
Julian Smith (Skipton and Ripon) (Con)
I refer Members to my entry in the Register of Members’ Financial Interests.
I am delighted that business, as well as families, took centre stage in yesterday’s Budget. Enterprise zones will be a beacon for growth. There will be two in Yorkshire: one in Leeds and one in Sheffield.
Mr Binley
My hon. Friend might also be pleased to know that West Northamptonshire Development Corporation will shortly submit an application to create an enterprise zone in Northampton, which will bring 10,000 new jobs to an area that is supposed to be building 50,000 new homes over the next 15 years. Does that not show that the Budget is particularly about promoting growth, and that this is just one way to achieve that?
Julian Smith
My hon. Friend is absolutely right, but he will be facing stiff competition from the North Yorkshire local enterprise partnership, which will be seeking to get ahead of his proposal.
The most exciting aspect of yesterday’s Budget was the direction of travel the Chancellor set in respect of the conditions for business that he wants in Britain, because growth will ultimately be achieved through the individual efforts of business leaders, not through Government. The 2% cut in corporation tax signals to companies that Britain is once again open for business. It is now clear to every potential investor, in the UK and overseas, that this Government are committed to putting in place the best corporation tax rates in the G20 by the end of this Parliament. Overnight, global companies such as WPP have said that that will make a difference to their decisions on where to invest. That is great news.
The Budget also encourages those who want to set up a business to go for it. It contains a big nudge from the Government for people to give entrepreneurship a go. There is a golden carrot to dangle before those thinking of taking a risk: a 10% capital gains tax rate up to £10 million. The profit motive is a motivator, and the Budget clearly says, “If you believe in your business, take the risks and are successful, you will be much better off financially.” Therefore the message is, “Unless you’re a cracking singer or can dance like the Business Secretary, forget ‘The X Factor’ and ‘Strictly’; this Budget gives you a golden ticket to join start-up Britain.”
The moratorium on new legislation for small businesses with fewer than 10 employees will be a big relief for entrepreneurs, who need to be fully focused on jobs and growth rather than the latest wheeze from Whitehall. When I was a small business owner, dealing with employment law took more time than any other management responsibility. Employment laws and regulations have been piled on British business since 1997.
Julian Smith
Not at the moment.
Let us be clear: employers want to get on with running their business. They want to allow their workers flexibility in their jobs and to give them training, but they also want to make decisions themselves. The changes in the Budget will provide welcome relief from administration, rules and red tape, which always come from new legislation. Opposition Members have already started putting about the myth of this being about “nasty Tories” who have no interest in equal rights. It is nothing of the sort. Labour took some good steps on employment, and we have accepted many of them, but the last Government ultimately failed to see that adding on regulation after regulation was counter-productive; they just did not know when to stop.
This Budget establishes two principles: first, that micro-business needs to be treated differently from other business, which is very important for my constituency; and, secondly, that creating jobs is more important than adding more regulations to existing ones. Everything we do should encourage business and make things easier for risk takers. Only by doing that will we get this country’s economy growing to its full potential. Jam-packed with other measures as well as the ones I have talked about, this Budget has set us firmly on the right course.
Mr Pat McFadden (Wolverhampton South East) (Lab)
The first thing to say about this Budget is that it has to be seen in the context of last year’s Budget, because that gave us a large-scale fiscal adjustment of some 6.9% of gross domestic product over the course of the Parliament and the measures announced this year were inevitably going to be smaller in scale and focus. So our discussion is not so much about the measures about to be taken, but, inevitably, largely about the measures already taken: the VAT rise; the shift from the retail prices index to the consumer prices index for so many things; the pay freezes; the child benefit freezes; and the cuts to public expenditure. All those are going to have a far larger impact on household finances and on businesses than anything announced yesterday.
The one headline the Chancellor did not want to see in today’s newspapers was anything that smacked of a U-turn or a reversion to a plan B in terms of his broader strategy. What that means for the public is set out in the forecasts published alongside the Budget by the Office for Budget Responsibility. For the third time since the election, we have seen a downgrading of growth forecasts—growth down last year, this year and next year. Inflation forecasts are up and unemployment is at a 17-year high. The forecasts for borrowing and the interest to be paid on borrowing are also up, even though dealing with that is supposed to be the central purpose of his grand economic strategy. Those forecasts underline the fact that growth is needed and although the Chancellor will continue to claim that any problems he is addressing are Labour’s fault, he will find out that, to use his own metaphor, this particular tank of political fuel runs out over time.
My right hon. Friend the shadow Chancellor fairly pointed out that growth was increasing at the time of the general election, before falling back sharply at the end of the year. I am not sure that even the Chancellor believes that that was about snow. It was about confidence, as the country realised what a tough time lay ahead for family budgets over the next couple of years. The central antidote to all this bad news about cuts was supposed to be the growth plan published yesterday. The Chancellor announced a stream of measures on innovation, tax, planning, training and so on. It was tempting to close one’s eyes, just as the Justice Secretary did, imagine a different accent and be reminded of some of the Budgets that the Chancellor used to attack so strongly for their blizzard of initiatives. We can imagine a range of groups being invited to the Treasury and the Department for Business, Innovation and Skills to be asked what was on their shopping lists. The question for us is whether the sum of these various parts adds up to a plan for growth or whether they are a list of things to insulate the Government against the accusation of having no plan for growth—the two are certainly not the same thing.
I wish to discuss a few of the individual measures, because I believe that my party should adopt a level-headed approach to them. Some of them may work, some of them may not and some of them are, in fact, Labour party policy. The technology and innovation centres announced by the Government are welcome. They were recommended by Dr Hermann Hauser in a report to the Labour Government last year and are based on the successful Fraunhofer institutes in Germany. Their essential task is to bridge the gap between concept and production—between the great idea and the manufactured product. We have long heard commentators say that Britain is less successful at doing that than other countries, so I am glad that the Government have carried on this idea begun under the Labour Government.
The Chancellor also made much yesterday of his new regime for short-life assets in manufacturing, which is designed to encourage investment in new machinery. That has been welcomed by manufacturers over the past 24 hours, but before the Government get too carried away we have also to remember what the Chancellor announced last year: a hit of almost £3 billion on manufacturing to pay for his corporation tax cut by cutting capital and investment allowances. In other words, he made manufacturing—the part of the economy that needs to invest in new plant and machinery—pay for a tax cut for the parts of the economy less reliant on such investment. This is not, as he claimed yesterday, a conversion to support for making things; this is the Chancellor applying a dressing to a wound that he created last year. What he has given back in the measures on short-term assets is a lot less than he took last year—[Interruption.] If there is any doubt about that, I refer the Economic Secretary to pages 42 and 44 of the Red Book, which clearly set it out.
The Chancellor also announced 21 new enterprise zones, with the relaxation of planning control, business rates and so on. If they can create jobs in areas such as the black country, which I represent, they should be welcomed. I sense in the proposals, however, the spirit of Lord Heseltine, who was also involved in the regional growth fund. We had enterprise zones back in the 1980s, when unemployment was 3 million and industry was collapsing all around us. I hope that in reaching for them now the Government are not privately expecting a repeat of the circumstances that gave birth to them in the first place. I also hope that they are not a consolation prize for local enterprise partnerships that are disappointed when the results of the first round bids for the regional growth fund are announced in a week or two’s time.
Some of the measures are worthy of consideration and support, but do they add up to the plan for growth that the Government have claimed they are? Surely to answer that we need to return to the broader context. There is no denying that, had the outcome of the election been different, there would have been difficult decisions to take. It is important for all of us to say that to the electorate. The deficit cannot just be wished away, but there is a legitimate debate to be had about the speed and scale of deficit reduction and its impact on families up and down the country.
The deficit is not there because the Labour Government lost control of the public finances; it is there because of the hit that our public finances took as a result of having a large financial sector and because of the measures we took to stop recession turning into depression. That is not a loss of control, but a Government acting to stop recession having a more painful impact on the public and on business than would otherwise have been the case.
The Budget claims to be a Budget for growth, but there is no escaping the fact that the growth forecasts have been reduced. That is what will matter to businesses and families throughout the country.
Jesse Norman (Hereford and South Herefordshire) (Con)
I speak not merely as a member of the Treasury Committee but on behalf of tens of thousands of working people in my county of Herefordshire. It is a county where the average income is £21,000, where residents face the very high costs of living in a rural area—especially for fuel and transport—and where there is a very high relative number of small businesses. These are real people putting in the hours to support themselves and their families at a difficult economic time.
I welcome the Budget and especially several measures that will have a direct impact on the well-being of my constituents. The first is the cut in fuel duty, which we have pushed for very hard with the Treasury. The second is the rise in the income tax threshold, which will take many Herefordians out of income tax all together. The third is the support for small businesses and entrepreneurship; for apprenticeships; for local housing; for the university technical colleges; for the green investment bank; and, finally—a measure that is perhaps as important as any of those—for filling in potholes, an area in which Herefordshire rather specialises.
The Budget marks a further decisive step in dealing with the disastrous legacy of the previous Government. We know the brute economic facts, but it is important to remind ourselves of the wider picture: that this country now faces paying nearly five times more in debt interest every day than it does on care for the elderly; and that we have, in addition to the disclosed public debt numbers, £200 billion-plus of off-balance sheet debt for the private finance initiative. The wider story, however, concerns the atmosphere of unreality on the Labour Benches, and particularly on the Front Bench, which one might describe as a fog enshrouding planet Balls.
The intention seems to be to rewrite history and to deny, as the shadow Chancellor did today, the fact that in 2007-08 the previous Government created a 3% budget deficit at a time of 3% economic growth—a structural deficit that had existed at that point for seven years. It is unrealistic to pretend that America and Germany are parallel cases to ours in terms of economic recovery. America has the global reserve currency in the dollar and therefore has a far greater intrinsic ability to inflate its way out of trouble, and Germany has benefited massively over the past year or two from the expansion in the American purchasing of industrial goods. Their situations are not parallel to ours. The truth is that our economy is grossly unbalanced and that that is what exposed us to the situation we find ourselves in.
Also unrealistic is the Opposition’s refusal to acknowledge the weight of expert opinion supporting the present policy, including from the G20, the IMF, the OECD, the US Treasury Secretary and even Tony Blair. The Bank of England testified only a couple of weeks ago that without the current austerity measures, our borrowing costs would be 3% higher. Given the amount of refinancing we have to do over the next two or three years, that implies additional borrowing of some £10 billion. If one has any doubts about this issue, one need only look at Portugal, which is close to economic meltdown.
Finally, we have the shadow Chancellor’s denial, which we heard again today, that any deficit ever existed. As they say, “De Nile is not just a river in Egypt.” [Interruption.] I am in town all week! Labour’s strategy has been pretty clear: ignore economic reality, disavow the previous Chancellor’s own plans to make cuts and increase taxes, attack the coalition wherever possible and hope the voters do not notice. The result has been a refusal to articulate any constructive, concrete proposals at all. I note the contrast with the Republicans in the US, who have opposed the Democrats with great vigour. Whatever their personal merits, the fact is that the Republicans in Congress have created positive alternative plans that have to be debated. That is in sharp contrast to the actions of the Opposition in this House.
The truth is simple: this country has suffered the biggest economic shock since the great depression. It will take years to recover fully from that shock and the world’s economic system remains very fragile. The USA took slightly longer than a decade to rebuild after the great crash of 1929. Japan started to recover from the asset-based deflation of the early 1990s only a few years ago and it will be a doubly cruel blow if the earthquake sets back its recovery any further. The idea being pushed by the Opposition that this Government are in any way responsible for the current economic mess is laughable.
Martin Horwood
The hon. Gentleman makes a powerful case about the Opposition’s economic strategy, or lack of one. Does he agree that what they might also have done is risk an increase in interest rates that would have hit everyone with a mortgage, everyone with an overdraft and every new business seeking to borrow?
Jesse Norman
I thank the hon. Gentleman for that intervention. It is certainly true that if we had higher borrowing costs and a tighter monetary policy, interest rates would be higher, mortgage rates would be higher and the average mortgage holder and household would be suffering considerably.
I welcome the fact that the Budget is a reforming Budget that has not shied away from taking difficult long-term decisions, such as the proposals to merge income tax and national insurance. A properly functioning system of social insurance could have been a very fine thing—indeed, that was what Beveridge originally anticipated—but the system has been allowed to slip away from the contributory principle into a disguised income stealth tax. The new reform will bring home to people just how heavily they are taxed and will encourage them to demand better public services for their money.
In short, the country is emerging from a time of fake capitalism that was matched by fake government—a time when Fred Goodwin could destroy an august 200-year old financial institution, squander billions in shareholder value and then walk away with a fortune and have a Minister sign off on his pension. The economy became grossly unbalanced in that time and executive compensation soared both inside and outside the financial sector with little or no relation to performance. It was a time of increased complexity, short-termism, bureaucracy and regulation. As every Herefordian knows, what we need now is real capitalism, with real people taking real risks, investing real time in real work and reaping real rewards for their efforts, and this Budget is a very important step in that direction.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
The Budget was billed as a Budget for growth, which my constituents wanted and the Sunderland economy needed, but it is not a Budget for growth. In fact, it is a Budget in which the Chancellor has had to admit that he is failing to create growth. What is growing after this Budget and the tax and spending announcements of the past 10 months? I will tell you, Madam Deputy Speaker, what is growing: the Chancellor’s nose. It is the dole queues that will be growing, with all the projected job losses. The cost of living will be growing, with the Government’s regressive VAT hike, which hits the poorest families hardest. The number of young people not in education, employment or training will be growing, due to the scrapping of the future jobs fund and the education maintenance allowance.
Mrs Hodgson
Not at the moment.
John Campbell from Washington e-mailed me yesterday. He currently receives £30 a week in EMA to support his studies. He asked me what support he would now get. I cannot answer, because Ministers have not told us yet, despite repeated hints from the right hon. Member for Bermondsey and Old Southwark (Simon Hughes). I share the disappointment that he will no doubt have felt yesterday. Students are making choices about their future now. How can they do so while this silence persists?
We heard that the Chancellor will lift the tax-free allowance by £630 in 2012. I am sure that those of my constituents who will be lucky enough still to have a job this time next year will be very grateful for the extra 92p a week they will get. Perhaps they could use it towards the increased prices of their weekly shopping and energy bills, or to offset their loss in tax credits or frozen child benefit. What this Chancellor gives with one hand, he takes away many more times over with the other.
I remember, as I am sure do my hon. Friends, the furore in 1999 when the Government of the day announced an increase in the state pension of 75p a week, which was widely decried as an insult, despite being part of a wider package of measures that included the introduction of the winter fuel allowance and free TV licences. I checked with the Library this morning and found that 75p in 1999 is equivalent to around £1.05 today, which is 14% higher than 92p. Using that reasoning, the Budget’s increase is an even bigger insult. The right hon. Member for Havant (Mr Willetts), who was shadow Minister for social security, asked my right hon. Friend the Member for Edinburgh South West (Mr Darling) at the time whether he felt guilty about cutting taxes for business at the same time as making such a derisory offer. I wonder whether the right hon. Member for Havant feels guilty today.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
I am grateful to my hon. Friend for giving way and for highlighting the effect of the proposals on her constituents, but she is perhaps being a little unfair to the Government on pensions. After all, they are solving some of the problems by bringing forward proposals that will eventually mean that some people might not be able to retire until they are 80. Is that not the kind of measure they should have highlighted more yesterday, rather than the ones they chose to highlight?
Mrs Hodgson
Although we all acknowledge that we will have to work longer because we are living longer, I do not think that anyone in this Chamber would want still to be working when they are 80.
At the Liberal Democrats’ spring conference last week the Deputy Prime Minister referred to the 75p increase in 1999 as an indignity, so I wonder how he views the 92p increase announced yesterday. Family income is vital to our growth prospects, as squeezing household budgets means less consumer spending, which in turn means lost profits and jobs in the sectors that depend on it.
How will growth be encouraged in Sunderland and the north-east? We heard yesterday that 21 local enterprise zones will be created and that one of them will be in the north-east local enterprise partnership on Tyneside. Seeing as we have an LEP for the whole north-east, leaving aside Tees valley, which is being given its own LEP and enterprise zone, why can we not have an enterprise zone that covered a wider area or more areas within the north-east enterprise zone, such as Wearside, in which Sunderland sits, which has both the need and potential, which are two criteria?
I was interested to read today in my local paper, the Sunderland Echo, that the Chancellor may have made an error in announcing that the local enterprise zone was going to be in Tyneside, because the location of the zone has not yet been decided. The Energy Secretary spoke to the Echo on that point and said that there was going to be a zone in the north-east local enterprise partnership area, and that the north-east LEP would help to choose where it was. He may need to go back to school and re-take his English baccalaureate—perhaps he does not have one—in geography, however, because Tyneside and the north-east are two very different areas.
That aside, we all know that if the Government were serious about stimulating the private sector they would never have abolished One North East or slashed funding for regional development. The Chancellor said that he wanted his Government to be the greenest ever, and he told us that funding for the green investment bank would be increased, in turn increasing the amount that it could leverage from private sources. I will not complain about any measures to increase investment in the low-carbon sector, particularly when that investment is going to help companies to innovate and create jobs in the north-east, but the Government could and should be doing so much more. Germany and China are taking action right now to stimulate green growth, so surely it is in this country’s economic interests to do the same and attract businesses before they locate to the countries that are taking action.
I also have concerns about the much heralded renewable heat incentive. A business man with a small to medium-sized enterprise in my constituency wrote to me to make the point that, had the scheme started next month, it had the potential to provide a big boost to the solar thermal sector. As it is, it will not start until October next year, and at a much reduced level to that which was expected. So, in effect, and even with the premium payment, the whole industry is on hold for 18 months, because who would invest now when they could get an incentive to do so in the next 18 months? That does not help the renewable energy sector; it puts the industry in limbo, and it puts jobs and innovation at risk.
My constituents may be pleased that the Chancellor has taken some action on fuel duty, however—an issue that many of them have contacted me about in the past few weeks. Cutting the duty on fuel by a penny will have made for some good headlines, and we all know that he needs those, but he failed to tell my constituents watching yesterday that a 1p cut in duty will not make up for the 3p VAT increase that he introduced at the beginning of the year. Again, he gives with one hand and takes much more away with the other.
There is so much more that I wanted to raise, but I will do so another time. Like so many of this Tory-led Government’s policies, this Budget is for the few, not the many. The bottom line is that this so-called Budget for growth has caused the Office for Budget Responsibility to revise down growth predictions; it had failed before it was even printed. The Chancellor spoke for an hour yesterday, but he provided almost nothing from which my constituents could draw any comfort. So, on behalf of those constituents, in particular the young and the struggling families, I urge him and his ministerial colleagues to listen seriously to the concerns that hon. Members have raised today.
Jessica Lee (Erewash) (Con)
Thank you, Madam Deputy Speaker, for calling me to speak in this important debate. I, for one, welcome the Chancellor’s Budget statement, and I look forward to voting on all its details and recommendations. In particular, I am relieved to be able to say that Britain is once again open for, and backing, business.
Before I was elected last year and since, in my meetings with and speeches to the business community in Erewash, I have always reflected on how important it is that we in this country make things again. I was pleased to hear Sir James Dyson speak a few years ago, and I think my right hon. Friend the Chancellor referred to him in his speech yesterday. To hear somebody of such experience, gravitas and talent speak is really encouraging, and from that I saw the real need to support budding scientists and entrepreneurs. In particular, there is a genuine need to support young women who are thinking about a science career. We all know that, for whatever reason, engineering and science, as a profession, has had a lower uptake of young women wanting to pursue it. That is a shame. Some of the measures set out in the Budget statement and by the Business Secretary do all they can to encourage young women by saying, “Now is the time. You can have a career in science and engineering—it is for you, and there are the opportunities to do well.”
In Erewash, we have a proud history of manufacturing, including traditional lace-making, furniture-making and engineering. Sad to say, the traditional lace-making, in particular, has declined over the past 10 years or so; indeed, we have just one such factory left. The people there have used their entrepreneurship and ingenuity to keep it going. I am sure that everyone in the House can imagine that that brings with it daily challenges, such as finding appropriately qualified mechanics to repair the machines and finding new business, but they are trying their best and doing well. However, we also see, unfortunately, a number of empty lace factories where once they were busy and flourishing. Under the last Labour Government, manufacturing halved as a share of gross domestic product, and jobs in that sector declined by 40%.
Moving on to the many positives about business and entrepreneurship in my constituency, we have several successful small and medium-sized enterprises, particularly in high-tech engineering and aerospace manufacturing, and there is a great need to support them at this time. Geographically, there are many advantages to my constituency, which is based right in the heart of the country. We have nearby large employers such as Rolls-Royce and Toyota, as well as the universities of Derby, Nottingham and Loughborough, all with very successful business departments.
We all know—the figure is startling every time it is said—that £120 million per day is paid in debt interest. That is more than the schools budget and the defence budget. There is always moaning and groaning from the Labour Benches whenever that is mentioned, but we have to deal with the facts as they are. When my constituents come to my weekly surgery, they always start by saying, “We know that the country has a lot of debt, and we know that we have to sort it out.” There is a realism and a level of acceptance about it, and that is how we have to move the debate forward.
For me, the Budget statement marked a line in the sand. What I heard is that Britain is back, and that Britain is backing business. This morning, we saw the headlines saying that in the light of the measures announced yesterday, the WPP agency may well return to the UK with its business. I suspect that it will be the first of many important businesses that are going to come back and invest. That is a great start.
The Budget contains several steps that will help business. First and foremost, there is the cutting of corporation tax by 1%, which will take it down to 23% by 2014. There will be 50,000 more apprenticeships, taking their number to more than 250,000. Locally, we have a strong history of supporting apprenticeships, and that will further encourage new jobs, investment and training for young people. The doubling in the number of university technical colleges is a positive, as is extending the small business rate relief holiday to October 2012.
I was particularly delighted to hear the announcement about the establishment of an enterprise zone for Derbyshire and Nottinghamshire. My constituency is right in the heart of that area, and I will do my best to ensure that we are its beating heart; I will fight for an appropriate level of investment. We also have some of the centres of innovative manufacturing that were announced yesterday, at Loughborough university and the university of Nottingham. Again, many young people in my constituency could benefit from that training and help, and I will do all I can to make those facilities available to them.
The enterprise zones will follow the structure set out in the local enterprise partnerships. We were lucky to have a strong LEP application for Derbyshire and Nottinghamshire from the outset, and it was one of the first to be accepted. That group is already taking great steps towards being up and running, so that it can take in bids and bring in investment and jobs. I think that the enterprise zone will assist in that even further.
Finally, the freezing of council tax will benefit hard-working families in my constituency. We are lucky in Erewash because this is the second year running in which the borough council has frozen council tax. That will really help people.
I welcome the Budget speech. I will fight for investment for my constituency, and I certainly back the move to help manufacturing.
Ian Murray (Edinburgh South) (Lab)
There was so much and yet so little in yesterday’s Budget that could be talked about this afternoon, but I will concentrate on the growth section.
The first line of the foreword to the Government’s document, “The Plan for Growth”, states:
“This Plan for Growth is an urgent call for action.”
At last, after almost a year of the coalition Government, they have finally realised that hard-pressed businesses and families up and down this country need an urgent call to action for growth. However, I do not see a call to action for growth in cutting public spending too deep and too fast; the highest unemployment since 1994; the highest youth unemployment since records began, with no plan to get it down; inflation on the march, with the retail prices index at its highest level in 20 years; the largest squeeze on living standards in modern times; increasing VAT to 20%, which puts more pressure on consumer confidence and further compounds business insecurity; a continued lack of liquidity in lending markets through our banks; fuel prices that are out of control; consumer confidence at its lowest level in more than 20 years; and an overwhelming, ideologically driven attack on public services. That is certainly hurting people in my constituency, but it definitely is not working. We have all that, and the real effects of the VAT increase and the public sector job losses are still to feed through to the real economy. This does not seem to me to be a call to action for growth; it is no plan for growth, or perhaps a panic plan for growth.
That point is made clearly by the Office for Budget Responsibility, the independent body set up by the Chancellor, which we debated a few days ago in this Chamber. Even after the Chancellor’s “Budget for growth”, which, to use his words, should add fuel to the economy, the OBR has reduced its growth forecast for this year and next year, as it did last year. It is surely a huge embarrassment for the Chancellor that his Budget for growth actually downgrades growth. It is extraordinary that it does, given the urgent call for growth in the Government’s own document and the Chancellor’s own words that it would be a Budget for growth. This must be a historical first.
The Chancellor has failed to realise that cutting too deep and too fast is damaging our economy. The public and private sectors are inextricably linked. Slow growth and rising unemployment will make it harder to get the deficit down. The move from 2.1% to 1.7% is a reduction. Unemployment has been revised up to 8.2%. As someone said to me at my surgery a few weeks ago, “How can you possibly pay back debt from the dole queue?” They were absolutely right.
Martin Horwood
In its submission to the comprehensive spending review, the hon. Gentleman’s party suggested that the cuts in unprotected Departments should be no more than 20%. What the Government actually delivered was only 19%. Does he think Labour’s proposed cuts were going too far and too fast?
Ian Murray
I find it surprising that the Liberal Democrats always jump to their feet during these debates and throw out statistical analysis of stuff that is, quite frankly, not true. The Liberal Democrats’ leaflets from the general election, which I still leaf through, tell me time and time again that they supported what we were doing on the economy, that the banks were all to blame, that VAT would not have to go up and that employment was the key to growth. The Secretary of State for Business, Innovation and Skills said that to Jeremy Paxman after the general election.
Ian Murray
I will carry on, if the hon. Lady does not mind, because our colleagues want to contribute to the debate and our time is restricted.
What we heard yesterday was a big Budget con. My right hon. Friend the Member for Wolverhampton South East (Mr McFadden), who is not in his place at the moment, said that this Budget could not be seen in isolation from the last one. It is a continued attack on the cost of living. As has been said, the Institute for Fiscal Studies said yesterday that the Chancellor is giving with one hand but taking it back not just with the other hand, but with
“lots and lots of other hands”.
Does that not show how out of touch he is? Did he not realise that people would see the Budget con?
The Government trumpeted the increase in the tax threshold, but changed the threshold increase mechanism to the consumer prices index, which will totally offset the increase. Page 42 of the Red Book shows that the Government will hand out £1.2 billion in a tax cut but take £1 billion back over time through the change to the threshold indexation. Of course, the biggest con of all is that indirect taxes will continue to rise by the retail prices index, which of course is the highest measure of inflation.
I have not even touched on the millions of families who will lose their child benefit, or the fact that every family earning less than £26,000 a year will lose their tax credits. It is a Budget con for families. The Budget confirms that although ordinary people will be thrown a little bit of corn, there is little doubt that they will be hit the hardest by this uncaring and out-of-touch Government.
The second con that I wish to examine is the fuel con. We all welcome the 1p cut on fuel. I am not a car driver, but I appreciate how much it costs to drive. My constituents constantly tell me about the pressure on small businesses that have to fill up vans and cars. However, at 7 pm on Monday, the petrol station next to my constituency office was charging £1.28 a litre. On Tuesday night it was charging £1.30 a litre, and on Wednesday night, after the 1p decrease, it was charging £1.29 a litre. The 2.5% VAT increase makes up 3.25p of that price. That is the fuel cut con—the price is 1p down due the Chancellor’s decision, but 3.25p up to due to another decision of the same Chancellor.
As has already been asked, who is to say that oil companies will not just pass the additional tax costs back to the consumer? Oil and Gas UK has said in the past 24 hours that there will be job losses and a reduction in production in the North sea as a direct result of the Government’s policies. We are left in a quandary. Do we have more job losses and less production in the North sea, which could be catastrophic for the Scottish economy, for what might be absolutely no benefit to consumers at the pumps? The IFS said yesterday of the fair fuel stabiliser:
“If oil prices stay high but volatile, this policy will do little to stabilise pump prices.”
It is a policy that does not help hard-working families fill their cars, and may cost jobs.
According to the Government’s own figures, this Budget does nothing for growth. The Chancellor needs to think again before it is too late and he sends this country into a spiral from which it may never recover.
Michael Fallon (Sevenoaks) (Con)
I remind the House of the interests recorded in the Register of Members’ Financial Interests.
I am sorry that the shadow Chancellor is no longer with us, because a couple of elements were missing from his speech. First, any sense of humility was lacking in one of the architects of banking supervision, who started with 10 well-funded banks and ended with only five. Secondly, there was no apology for the appalling deficit that we inherited. Let us be clear: it is 10 years to the month since the Labour Government balanced a Budget. That is nothing to do with something that happened in 2007 or 2008. They made the mistake of letting the deficit grow in the good years as well as the bad.
The Budget’s most important feature is that it does not change the fiscal consolidation plan. We remain on track to balance the budget again by removing the structural deficit by 2015. The Office for Budget Responsibility’s forecast is that we maintain our position on track to being able to do that.
Most of the meat of the Budget is also extremely welcome, and I am glad that Opposition Members have picked out pieces that they, too, can welcome as helping their constituencies. Simpler taxation and less regulation are the drivers of a successful economy. Businesses have enough to worry about at the moment; the Government should not be one of their worries. Reducing the weight of tax and red tape on our businesses is essential. I urge Ministers to stick to their task, regulation by regulation, tax by tax, until we can genuinely say that we have one of the most competitive economies in the west.
I also welcome the Budget’s emphasis on the longer term, backing the newer technologies, especially in energy and the environment, and taking the measures necessary to improve the employability of that huge pool that we inherited of people under 25 who are simply outside the labour market.
I am struck in my constituency by how many companies succeeded in growing even under the previous Government, without direct subsidy or specific grants. I visited three recently. The Sevenoaks energy academy, which I had the honour of opening last year, trains hundreds of engineers in renewable energies, providing courses in fitting solar panels, rainwater harvesting and so on. One of Sevenoaks’s most dynamic business women, Julie Walker, made a £1.5 million investment in that academy, and I welcome that.
Michael Fallon
I will not, if the hon. Gentleman will excuse me.
Secondly, Vine Publishing is a new media company in my constituency that is heavily involved in all kinds of print and digital work. Its turnover now approaches more than £3.25 million and it employs 12 people. It was founded by three entrepreneurs, who dropped out of university because they preferred to go into business.
Thirdly, I attended the opening of the Ideal Waste Paper Company this month. It has built a major new recycling facility at Swanley—a £14 million investment, creating 60 new jobs and recycling more than 250,000 tonnes a year.
Those are examples of companies of the future, in the new technologies, the new energies and the new media. We should all ask ourselves how we get more of them. Of course, getting the long-term climate is right, but we must also address how to make it easier for people to set up such companies.
First, we must consider how we make it easier for them to start up. Like my hon. Friend and neighbour the Member for East Surrey (Mr Gyimah), who made an excellent speech, I support the Government’s enterprise incentive scheme, the entrepreneurs’ relief and the relaxation of planning. I would also like us to return to share ownership and consider how we can spread it more widely among those who work for start-up companies, particularly in the payment of dividends.
Secondly, we should consider how we make it easier for such companies to employ those who have been shut out of the labour market, and who might be viewed as too expensive or too risky to hire.
I welcome the Government’s initiative to reduce the number of cases going before employment tribunals. That is still a very serious barrier to employing more staff for small businesses. Finally, we need to make it easier for such companies to access the capital that they need; a number of hon. Members on both sides of the House have spoken about that.
I welcome the agreement on lending targets in the Merlin negotiations. Those need to be met, especially for smaller and medium-sized enterprises. Of course the banks are right to want more certainty on the capital and liquidity requirements, which are now being emphasised on all sides, from the Financial Services Authority to the G20 and so on, but I hope that there will be more focus on simpler business models with stronger regional networks, which can make lending to small businesses more worth while. We need such businesses to flourish, because they will create the jobs of the future.
The Chancellor was right in the Budget to help people to cope with the unexpected increases in the cost of living over the last few months, but I hope the Budget will also be welcomed for its long-term effects: keeping the public finances on track so that we eliminate the structural deficit that we inherited, putting Britain back into the black without huge changes in the tax and spending measures already announced, and helping to pump the oxygen of enterprise around the economy. It is nice, after 13 years under the previous Government, to welcome a Budget from a Government who believe in enterprise and are prepared to back it.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
I was most impressed by the list of businesses that the hon. Member for Sevenoaks (Michael Fallon) has recently opened or visited in his constituency. Things could not have been too bad under the Labour Government if there is such vibrant activity, could they?
That aside, given the limited time available I want to concentrate on just one of the issues that I would otherwise have covered: the Budget announcements on the green investment bank. I am pleased that the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker), is in the Chamber alongside Treasury Ministers.
I welcome the fact that the initial capitalisation of the green investment bank will be increased to £3 billion. However, I note that the increase in funding is to come from asset sales, and I would be interested to know how certain we can be that those proceeds will materialise as funding for the bank. As all hon. Members know, such funds can be diverted elsewhere if there are other urgent public finance needs, so I hope for a reassurance that that sum will materialise.
Although £3 billion is clearly better than £1 billion, it is still short of the sums that many say should make up the initial capitalisation of the bank. An Ernst and Young accountant said this morning that the bank should have been granted £4 billion to £6 billion, and I have heard that figure from other sources.
I and others are also concerned that the bank will not be allowed to borrow until 2015, and that it might not be able to borrow at all if the Government are unable to meet their debt reduction targets. The chief executive of the UK Sustainable Investment and Finance Association today said that linking funding of the bank
“to progress on the deficit does not give investors the certainty they need”,
which is worrying.
However, it is not just that the bank will be unable to borrow until 2015. Today’s comments suggest that that reflects a decision on what kind of bank the GIB will be. One commentator said:
“The decision was a victory for the Treasury, which for months had been embroiled in a tussle with green enthusiasts within the government, including climate change secretary Chris Huhne, over the powers the bank should have. It was originally intended much like a private sector institution, funding investments by taking on loans and issuing financial products such as green ISAs and bonds. One by one, these powers were whittled away.”
I hope that that is just press speculation, and I would welcome any ministerial refutation of it. There is a view within the Government that it is not a problem if the green investment bank cannot borrow until 2015, because the projects that will be devolved will be large projects that will take time to get going. I am concerned, however, that if the bank cannot borrow until 2015, it will send the message that it is too closely linked to the Treasury and could have its funding turned on, turned off or even taken back by the Treasury, depending on the wider financial priorities of the Government. Again, I would welcome reassurance from the Government that that is not the case.
Hon. Members will not be surprised to hear my second point: I want to emphasise the case for the green investment bank headquarters to be established in Edinburgh. I say that not just because it serves the interests of my city—although obviously it does—but because I genuinely believe it is the best location in the UK for it to be based. I would argue strongly that its headquarters should not be in London—too much of the financial services industry is concentrated there anyway—and it would certainly be a mistake for it to be run out of the Treasury, as some have suggested. It needs to be outside and independent of the Government.
If the green investment bank is to add to what can be provided by existing financial institutions, and not just be a brass plaque that reads “Green Investment Bank” without doing much that is different from what happens now, it needs to be proactive and to work with the energy and renewables sector, in particular; to work with industry and academics; and to have a good close relationship with financial experts. In my view, Edinburgh has the best combination in the UK of these sectors and skills, and I believe that basing the green investment bank headquarters in Edinburgh would be good not just for Edinburgh and Scotland, but for the north of England and Northern Ireland, and would be a good sign for the renewables and low-carbon sector throughout the UK.
I hope that the Minister can give a decision on Edinburgh in her winding-up speech. However, if she feels that she cannot, as I suspect she might, I hope that the Government will still give serious consideration to the matter. I think the view is shared across political parties that locating the bank’s headquarters in Edinburgh would allow us to make the best of the skills and expertise in many areas.
Lorely Burt (Solihull) (LD)
On behalf of the Liberal Democrat part of the coalition, I would like to make a few remarks on the business, innovation and skills measures in the Budget. Last year, we delivered a very tough Budget—one that members of neither coalition party would have wished to bring in as our first Budget—but it had to be done. Labour Members have conveniently forgotten just what a mess they left: they increased public spending by 5% year on year for 10 years so that the state accounted for more than half of all income; overheated the economy based on borrowing that this country could not sustain when the global banking problems struck; and left behind a deficit bigger than anywhere in the G20. And now they appear to be living in a parallel reality. They said that there would need to be cuts, but they never had the decency to tell the public where the axe was going to fall, and despite all the speeches we have heard this afternoon, they still have not.
We have an Opposition party that continues to oppose everything while proposing nothing. The simple truth is that if we had not taken strong measures, the country would today be in the same situation as Portugal: a whisker away from needing a bail-out and with all the draconian measures of higher taxes and bigger spending cuts that Greece and Ireland have had to endure. Our measures were tough, but they are doing the trick. They were endorsed by the International Monetary Fund, the OECD, the European Commission and, most important of all, the credit rating agencies, which confirmed our triple A credit rating. Today, therefore, families are not paying 12.9% interest rates like those in Greece, or 10% like those in Portugal, but 3.6%.
With this Budget, we need to support the growth that will pull us out of the situation we are in. The first thing we have to do is to start rebalancing the economy. We have arguably the best financial sector in the world—and we need it. We need it for jobs and we need it for tax revenues. Labour supported the financial sector. The then City Minister—now the shadow Chancellor—feted it with soothing words about light-touch regulation, and we all know what happened after that.
While Labour was in thrall to the financial sector, it neglected the manufacturing sector. Shockingly, the previous Government oversaw a decline in manufacturing that was greater than that seen in the days of Margaret Thatcher. My region in the west midlands has the invidious distinction of being the only region to lose private sector jobs when they were on the increase everywhere else, in the so-called good times. What do we have in the Budget to help to redress that imbalance? Not 10, but 21 enterprise zones have been announced. Each zone has a metaphorical “Open for business” sign outside, to attract the inward investment that each area desperately needs. The predicted 1% lowering of corporation tax this April has been doubled to 2%. By 2014, we will have the lowest corporation tax in the G7, which will attract more businesses and jobs to the UK.
For a long time we have been lobbied by small businesses about the burden of regulation. They are drowning under red tape. We have already made a start in that regard, with the one in, one out rule, the introduction of sunset clauses and the establishment of the Cabinet’s reducing regulation committee. I welcome the announcements that will assist local business: no more domestic regulatory burden for micro-businesses—that is, businesses with fewer than 10 employees—for the next three years; 200% R and D tax credits for small and medium-sized enterprises; increased entrepreneurship relief; and the extension of the small business rate relief. I could go on, but I shall not, in view of how many Members still wish to speak. I think the House gets the point, although I would like also to mention that more than £350 million of regulation for the smallest businesses has been done away with. However, we will need to look at equality legislation, which embodies rights that should be available to every working person, regardless of the size of the company for which they work.
Much mention has been made of young people. We need to encourage and develop our skills agenda. We have announced a further 50,000 traineeships and 80,000 work experience placements. We have also had the welcome doubling of the number of university technical colleges.
Fuel and transport costs—a tough area for the Treasury—are clearly things that business has lobbied about. However, business is suffering very badly, and although Opposition Members may mock the 1p reduction, let us not forget that their plans were for a 5p rise in the cost of fuel. At today’s prices, that would have increased the cost of filling up an average-sized car by more than £200 a year. I am glad that we have scrapped it.
However, it is important that we do not lose sight of our desire to be the greenest Government ever. That is an agenda that the Liberal Democrats are particularly keen to promote. The green investment bank will receive treble the capitalisation and be able to facilitate investment of £18 billion by 2014-15. It will also act like a real bank, able to borrow and invest from 2015. We have also set a carbon floor price, which will drive investment in low-carbon industry.
There is a lot more in the Budget that I would like to talk about, but I am conscious that other colleagues wish to speak. Together with all the other measures already announced, I am sure that the Budget will not only give business a helping hand, but put the “Open for business” sign up clearly outside the door of Great Britain plc.
Angela Smith (Penistone and Stocksbridge) (Lab)
All I can say about the contribution from the hon. Member for Solihull (Lorely Burt) is that it is a bit rich to hear her talk about the stance and policies of the Opposition when she represents a party that, over the years, has perfected and polished the art of opposition based on opportunism.
Some Budgets are remembered for decades to come. Some are instantly forgotten, and some are seen as a missed opportunity. I suppose that only time will tell how this Budget will be remembered. However, my best guess is that it will be seen as a missed opportunity to turn on to a different road that would lead to jobs, growth and long-term sustainable investment in our future.
Yesterday, we needed to see a change of direction, but what we got was more of the same from the Tories. Unemployment is now at its highest level for 17 years, and even more worrying is the latest youth unemployment figure, which now stands at 1 million. That is not only a tragedy for the individuals involved but a national catastrophe. The promise to help 100,000 youngsters is welcome, but it goes nowhere near far enough. It also raises the question of why the Chancellor abolished the future jobs fund last summer, condemning many of our young people to a bleak future. The real fear is that this Government are creating another lost generation, to go with the one that they created in the 1980s. That is my generation, and it has never recovered from the years of Thatcherism. If that happens, the Government will deserve all the scorn that will be directed at them.
Yesterday, we needed to hear how the Government were going to help to get people back to work, but, unfortunately, we heard very little of that. What is being offered pales into insignificance when compared with what the Chancellor has already done to damage our prospects for growth. The fact is that £80 billion is being taken out of the economy over the next four years as a result of the comprehensive spending review. That is twice the amount that we believe to be sustainable.
The 1.2% growth in the economy experienced in the spring of last year vanished in the cold of winter, to the extent that the economy contracted by 0.6% in the last quarter. With the first quarter figures for this year not expected to be much better, there is a real possibility of the country slipping back into the danger zone. Consumer confidence is at its lowest level ever, unemployment is on the up, living costs are squeezing people’s incomes hard, and the full ferocity of the spending cuts will start to bite in April, which is just a few days away.
All these factors have led the independent Office for Budget Responsibility to revise downwards its growth forecast for 2011, from 2.3% when this Government took power, to 2.1% after the emergency Budget, and now to 1.7%. Many people expect even that figure to prove optimistic, with the possibility of growth being even lower over the next couple of years. Even if the OBR is right, the lower growth figures will have dire consequences for people’s jobs and living standards. It is already being said that lower growth figures will add £10 billion a year to Government spending, because of increases in unemployment and welfare benefit costs. To me, that is the economics of the madhouse.
It does not have to be like this. In countries such as America, growth estimates are being revised upwards, not downwards. However, according to Mervyn King himself, we are now seeing the longest fall in disposable income since the 1920s as a result of this Chancellor’s policies, and the Institute for Fiscal Studies is saying that households will be 6% worse off than they would have expected to be for the period from 2008 to 2011.
There is more to come, with cuts in housing benefit and tax credits in April. Tax credits played an important role in cushioning people during the recession. They provided a cushion for many people who were put on short working hours and had their incomes cut following the financial crisis. I saw men at Corus being put on short time to save the company, and Corus was able to do that successfully, with the co-operation of the union, because tax credits helped to keep those men’s incomes at a high enough level to prevent them from hitting the poverty line.
On top of those cuts, many people are being badly affected by inflation, which is now running at 5.5% on the retail prices index, which is more indicative of the situation. That is much higher than the Chancellor’s initial forecast. We know that one of the reasons for that is the rise in VAT to 20% in January. When they were in opposition, the Conservatives and the Liberal Democrats promised that they would not raise VAT. It is no wonder that consumer confidence has fallen to record low levels over the last few months, yet this Budget does not offer any help for hard-pressed people who are struggling to cope.
While the increase in personal allowances is to be welcomed, it in no way fully compensates for the previous increases in VAT and other tax rises being implemented. In a sleight of hand, the Chancellor has moved the uprating of tax allowances, as we now know, from the retail prices index to the consumer prices index, which will cost every taxpayer dearly and bring in an extra £l billion to the Treasury by the end of the Parliament—more than covering the increase in personal allowances.
Even the Institute of Directors, not generally given to rigorous criticism of the Conservatives, commented recently that average earnings were falling and that household disposable income faced a big squeeze. It concluded that this was, at best,
“the jobless and joyless recovery”—
not exactly a ringing endorsement of the Chancellor’s policies.
This Budget gave the Government the chance to alter course, to reflect on a vastly changing global situation, to calmly look at the evidence and to realise that the country is not recovering. They talk about rebalancing the economy, and they could have changed their minds and invested in Sheffield Forgemasters rather than leave it hanging in the wind, but that is what they did.
What we have had instead from this Budget is the same old Tories making the same old mistakes and it is the ordinary people who will suffer with their jobs. We have a politically motivated Chancellor who is making cuts now to offer tax cuts at the next election. This is a Chancellor who puts his party and his politics first and the economic situation and prospects for the country last. The Chancellor said this Budget was all about growth, but independent growth forecasts have downgraded the prospects for it. In my opinion, this Budget is a missed opportunity to invest in the UK, to rebalance the economy and to help hard-pressed families all around the country to make ends meet. There is no doubt that the Chancellor’s policies are hurting, but in the end, just as under Thatcher, we will not see them working.
Damian Collins (Folkestone and Hythe) (Con)
To listen to some of the speeches of Labour Members one would think that the debate about the prosperity of hard-working families and individuals is somehow totally separate from the debate about reducing the deficit and getting our country’s finances back into balance. The two, of course, are intrinsically linked. We cannot have long-lasting peace and prosperity for our people unless we live within our means. The Government are no different from any business, any family or any household in that regard.
In his opening remarks, the shadow Chancellor wanted to take us back to the period in the run-up to the last Budget. The forecasts coming from the City of London about British Government debt and the state of our economy spoke of a dire situation. I am not talking about only forecasting companies and organisations, some of which were criticised earlier, but organisations that have skin in the game, so to speak, whose job is to advise investors.
The managing director of one such company, PIMCO, which is one of the world’s largest fund management companies and also the employer of the shadow Chancellor’s brother, said in the run-up to the last Budget that British Government debt was
“resting on a bed of nitroglycerine”.
He published a chart of a “ring of fire” in which Britain appeared alongside other countries such as Ireland, Portugal and Mexico that have terrible problems with their debts. That situation, however, has been transformed by this Government’s policies. Everyone in this country should be glad about that; we will reap the rewards from that change in the future.
Household debt has been mentioned. Anyone looking at the Red Book can see that levels of household debt rose continuously during the 13 years of the last Government. That problem was driven by unsustainable levels of credit, with which this Government have had to deal, as it was an underlying problem in our economy.
Income tax has also been touched on. Like all Government Members, I welcome steps to take the poorest people and families out of income tax altogether. More than 1 million people have been taken out of it. We all know that one of the greatest stealth taxes pushed by the last Government was the failure to keep the income tax thresholds moving in line with inflation, so millions of people were paying taxes at higher rates and levels than they otherwise might have done. This Government have done something to address that.
I want to say a little about the plan for growth. Like many other Members, I take a keen interest in the enterprise zones proposed in the Budget. My part of east Kent contains pockets of considerable deprivation in national terms as well as in comparison with the rest of the south-east of England. Along with colleagues, I will use my local enterprise partnership to lobby for the creation of an enterprise zone in our area.
One of the aspects of enterprise zones that interests me most is that areas will keep the uplift in business rates generated by the zones to reinvest in their communities. A White Paper on local growth published last year by the Department for Business, Innovation and Skills proposed giving councils more powers and more incentives to generate greater business activity in their areas, and to keep that business rate uplift to reinvest in their communities. Local authorities throughout the country, whether or not they end up being part of enterprise zones, may be able to develop their own business plans for local growth. There is the potential for mini and micro enterprise zones in every area, or even on every high street, in the country.
I also welcome the announcement of incentives for local authorities and planning bodies to promote growth and increased business activity in their areas. During Question Time this morning, I asked the Secretary of State for Energy and Climate Change whether that announcement would apply to the national policy statement on energy, on which the Department is currently consulting. Nuclear power stations are deemed to be part of the national infrastructure rather than a matter for local authorities, but they can provide considerable economic benefits, and I have been campaigning for a new nuclear power station at Dungeness in my constituency. There is considerable economic deprivation in that part of Kent, which is part of an economic zone that also includes Pfizer’s Sandwich plant. The establishment of a new power station at Dungeness would boost the local economy and create thousands of high-skilled jobs, and if it can be achieved through the measures in the Budget, it will be greatly welcomed by my constituents.
The Budget also contains measures to boost the creative economy. The Select Committee on Culture, Media and Sport, of which I am a member, has been considering the funding of the arts and heritage, and our report will be published next week. It was completed before the Budget statement. I am particularly encouraged by the measures to incentivise private giving through legacies and gift aid, which will benefit charities to the tune of hundreds of millions of pounds. I believe all Members will welcome that. The Budget also provides for breaks for smaller businesses in the creative sector. A number of Members have referred to the measures to increase investment in small businesses. Many creative and high-tech businesses, such as those involved in the digital economy, are small and entrepreneurial. My hon. Friend the Member for East Surrey (Mr Gyimah) spoke eloquently about the benefits that the Budget provides for such businesses.
I also note from their paper “The Plan for Growth” that the Government intend to relax the restrictions on the performance of live music, especially in smaller venues. There has been considerable debate in the music industry about the restrictions introduced by the last Government in the Licensing Act 2003, which made it harder for people to organise live events by imposing more regulation and costs. The Government will introduce measures to make the position easier not just for live musical performances but for theatre and cinema, and I think we can all welcome those as well.
This was a Budget for growth, featuring a series of bold plans not only to make some of the poorest people in the country wealthier by reducing their income taxes, but to increase investment in smaller companies and the micro-economy to benefit people and businesses throughout the country and particularly in my constituency.
Mr Chuka Umunna (Streatham) (Lab)
Before I make my substantive point, let me make two observations, on growth and employment and on business confidence.
I do not think there is any disagreement between the two sides of the House on the need to reduce our debts. The controversial issue is the time frame within which we should do that. If we want to reduce the deficit, we will obviously need to produce growth and jobs, because people who are out of work do not pay income tax and we have to pay benefit. I believe that the cost of every 100,000 people out of work is about £500 million in benefit payments. According to the latest figures, 4,000 people in my constituency are claiming jobseeker’s allowance. I hope that we can get them back to work very soon.
The Office for Budget Responsibility’s downgrading of the growth forecast has been widely reported, but its revision of its autumn estimate of the number of jobseeker’s allowance claimants has not been commented on. The OBR revised upwards its forecast of the number of JSA claimants in this year and the following four years. For this year, unemployment has been revised upwards, and the number of people claiming JSA has been revised up by 50,000 compared with the autumn forecast. For next year, the forecast has been revised up by 120,000, and for 2013 it has been revised up by 130,000.
Angela Smith
Does my hon. Friend agree that such statistics say nothing about the tragedy that unemployment visits on the lives of individuals, and especially on the lives of our young people and on their prospects for the future?
Mr Umunna
I absolutely agree. As a former employment lawyer, I am well aware of the huge impact that loss of work has on individuals and their families.
We are entitled to ask why the unemployment forecasts have been revised upwards. That has happened because of sluggish growth, and the OBR’s autumn forecast clearly states that the sluggish growth has been caused in no small part by the extreme fiscal consolidation embarked on by the Government. Therefore, there are more people out of work, claiming benefit and not paying income tax due to the policies of this Government. The OBR has said that.
The Chancellor’s strategy on business confidence and investment is clear. As the Government hack off chunks of the public sector—causing, of course, mass public sector job losses—he says that the private sector will automatically step in to fill the gap, and he foresees private sector growth fuelled by a boom in exports and business investment. Business confidence is key, and since this Government took office confidence has fallen. The latest Institute of Chartered Accountants in England and Wales and Grant Thornton UK business confidence monitor shows a continuing downward trend in business confidence in this country for the fourth consecutive quarter. I sincerely hope that that confidence returns, because the people in the communities I represent in Streatham and parts of Clapham, Balham, Tulse Hill and Brixton will be among those who suffer.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Does my hon. Friend share the concerns that were raised with me yesterday and today by many green businesses that this Budget could have been an opportunity for growth specifically in the green sector, yet the ability of the green investment bank to lend has been delayed until 2015—if it will be able to lend at all? The Government talked yesterday about the green deal, but there are no details about what incentives to many householders across the country might be.
Mr Umunna
I agree, and my hon. Friend’s comments bring me neatly to the topic of the Business Secretary’s document, “The Plan for Growth.”
Aside from the two observations that I wanted to make, I want in particular to comment on the document’s proposal to scrap the planned extension of the right to request flexible working to parents of 17-year-olds. That has been cited as a way to ease the burdens of employment regulation on business. “The Plan for Growth” says the administrative burden of extending that flexible working will cost about £500,000. That figure is taken from the Government’s own impact assessment of the measure, published in October last year.
Although “The Plan for Growth” mentions the £500,000 figure, it does not tell the whole story. The assessment agrees that there are additional procedural costs to business in extending the right to request flexible working, which it quantifies as £1.3 million, including the administrative costs I have just mentioned. In addition, there is a £975,000 cost in making adjustments to working patterns. However, that is far outweighed by the savings to business, which are listed in the Government’s impact assessment: £1.1 million from higher productivity, £1.2 million from lower labour turnover and £63,000 from reduced absenteeism, totalling £2.4 million in the first year. Overall, the “net present value” of introducing the measure—the benefit to business—would be £41.2 million. Again that is not my figure, but the Government’s. Therefore, on pure cost grounds, I do not understand how that decision makes any sense.
It is a shame that the Minister for Employment Relations, Consumer and Postal Affairs is not here, because he signed off the impact assessment with the following statement:
“I have read the Impact Assessment and I am satisfied that…it represents a fair and reasonable view of the expected costs, benefits and impact of the policy, and…the benefits justify the costs”.
Never mind the costs of the measure, because there are some things in society that we do not price up and put a market value on—one is the time we spend with our family. That is presumably why the Prime Minister said on 22 January 2010 that he intended to head up the
“most family friendly Government we’ve ever had”
and why, in the lead-up to the general election, the Deputy Prime Minister said:
“We are not casual about the pressure that many parents feel”.
The impact assessment is clear, because under the heading “key non-monetised benefits”, it says that the measure will improve health and well-being, help employees achieve a better work-life balance and help improve family life. For me and my constituents, that is incredibly important, because we face a problem whereby a minority of our young people are engaging in serious violence. A number of stabbings and shootings are taking place in my constituency almost every month. There are many reasons for that, and there is no one magic solution to resolving these issues, but I am clear that we need to help adults spend more time with their families. Extending the right to request flexible working to parents of 17-year-olds—teenagers in that key group—is essential to helping them provide the guidance that many young people need in my community.
Mr Umunna
I will give way shortly.
I have come to the Chamber from this morning’s Treasury Committee sitting, where I asked Jonathan Portes, who until February was chief economist at the Cabinet Office, about this issue. I asked him whether abolishing the right to request flexible working for the parents of 17-year-olds would make a big difference in increasing GDP or growth. He made it very clear that scrapping the extension will “do nothing for growth”. I then asked HSBC’s chief economist whether he would be revising his GDP figures as a result of the scrapping of the measure, and he told me that he would not.
This measure seems to be a gimmick, which tends to suggest that the Government think that watering down employee rights is a substitute for a properly thought out growth strategy. All the figures I have just presented and all the arguments I have just made for the introduction of the extension, which was planned for April, are in the Government’s own impact assessment of the measure. Will the Government think again about it? I grant that they do not and will not accept our arguments to revise their plan for fiscal consolidation, but I suggest that it would be very wise for them to think again on this small measure.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I call Gavin Williamson, who has until 5.42 pm—about three minutes. I am sorry about that.
Gavin Williamson (South Staffordshire) (Con)
Thank you for calling me to speak, Mr Deputy Speaker. I am for ever astounded by Opposition Members and their total denial that their party had anything to do with the financial mess that this Government are sorting out. My grandfather always used to say to me, “You spend what you earn and you never borrow on the never-never.” The only economics that Labour Members seem to understand are the economics of the never-never—never worrying about how much money they were borrowing and never worrying about how much money they would ever have to pay back.
Ever since I left university in 1997, I have worked in manufacturing. I am proud of that and I am proud that the Government are doing something for manufacturing to reverse the decline we have suffered. It is about time that we had a Government who care about this and who will sweep away the regulations that have stifled manufacturing. When I was running a pottery business, I used to go to many countries across the globe—I can even proudly boast to be probably the only Member of Parliament who has sold chinaware to the Chinese— and whether I was in Germany, Italy or France, the Governments spoke to their businesses and wanted to know how to help them best, minimising regulation and helping businesses to succeed. That is the ethos that I believe has been spelled out in this Budget and it is one that I welcome.
I also want to pass on my thanks to the Chancellor for the fact that he has listened to representations from me and many other colleagues on community investment tax relief. In my constituency, that will help the Black Country Reinvestment Society, an organisation that is helping businesses, giving them small loans to help them grow and prosper. That will have a positive impact and I thank the Chancellor and colleagues on the Front Bench for listening.
This country faces many great challenges, which we have to deal with, and rebalancing the economy is the core one. I believe that this Budget makes strides to achieve that and that it will do so.
Ian Lucas (Wrexham) (Lab)
We have had an important debate this afternoon on a vital subject, following on from yesterday’s Budget statement—a statement that, unfortunately, largely followed the course mapped out by the Tory Government, with their allies, in the announcements that they have made in the last year.
I hoped today that the long-trumpeted plan for growth, which has been so elusive as far as the Department for Business, Innovation and Skills is concerned, would be revealed in more detail. We have had the document, but the Secretary of State barely referred to it. In his speech he did not even mention enterprise zones, or provide any more detail or information to expand on the fairly threadbare set of initiatives in the document.
The Government inherited growth and have taken it away, they inherited falling unemployment and have caused it to rise, and they have squandered the low inflation that they inherited. The result, in constituencies up and down the country, is a profound lack of confidence in the future. The prospect of falling living standards is restricting demand, businesses are failing to invest, and as a consequence, joblessness continues to grow. The Government need to recognise the malign effects of their policies, but unfortunately the Budget offers more of the same—the same policies that have taken the country backwards, not forwards.
At least now the Government are talking of growth. They took a long time even to do that, and they have now given us a document, but that document takes us backwards again—back to a Thatcherite prescription for what is wrong with the economy, reheating policies that led to an unemployment count of 3.5 million twice under Tory Governments in the 1980s and 1990s. As we have just heard from my hon. Friend the Member for Streatham (Mr Umunna), the same thing is beginning to happen again. The OBR has identified that unemployment will be higher than it predicted last year because of the Government’s policies.
Lest we forget, the legacy of those years in the ’80s and ’90s was not success but a wasted generation of young people. What is so depressing about this Budget is the realisation that the Tories have learned nothing from history and intend to repeat it instead—and it is shameful that the Liberal Democrat allies they now have are acting as their accomplices. It makes me sick to the stomach to see the Liberal Democrats being more vehement than the Tories in their defence of Government policy in the Chamber, because they stood on the hustings and told the people who were fooled into voting for them exactly the opposite when they were asking for those people’s support.
The proposals put forward by the Government offer nothing new. Even the names bring back memories of the 1980s, with enterprise zones coming back from the dead. Those of us whose politics were defined by the mistakes of the 1980s remember that enterprise zones were not a success then. As Helen Miller, a senior research economist at the Institute for Fiscal Studies, said in response to the Budget:
“Past UK experience with enterprise zones suggests that their main effect may be to cause activity to relocate rather than to create new activity.”
We must recognise that the introduction of enterprise zones follows the dismantling of machinery to deliver regional growth. Local enterprise partnerships are still nascent and the Budget does nothing either to resource them adequately or to take them forward any further. They must do their work without assets or resources, and decisions on the allocation of resources are still being made not locally but centrally by the centralised regional growth fund. The hon. Member for Redcar (Ian Swales), who is not here today, pointed out in a debate in Westminster Hall earlier this week that 97% of grants given out by One North East were for less than £1 million, which is below the threshold for securing financial assistance from the regional growth fund. Where will small businesses secure the finance that was previously available to them? We must wait to see the detail of the proposal for enterprise zones, as we did not hear any more detail about them today, but I suggest that there is a vital gap in relation to small businesses, which needs to be dealt with.
The Budget is made in the context of a crisis in the construction industry, but the Secretary of State did not mention that industry in his statement. This week, the Federation of Master Builders reported that the proportion of firms reporting higher work loads fell from 22% in the fourth quarter of 2010 to 19% in the first quarter of 2011. Even this Government have finally recognised that their rhetoric on planning change and localism has had a profoundly negative effect on the construction sector and the housing market. Their move, in the Budget, to introduce a presumption in favour of development is a tacit admission of that fact. Equally, the crisis regarding first-time buyers, which the Government have ignored until now, is real and has had a profound impact. Any move to assist first-time buyers is welcome, but the help for only 10,000 for only one year is, as the Construction Products Association has today pointed out,
“a very modest step and is unlikely to make much of a dent in the 100,000 shortfall of new build that this sector is currently facing.”
We hear a lot of rhetoric from the Government about deregulation, but the action is less convincing. We have the “one in, one out” soundbite, but what about the groundwork—the hard work—of taking forward the regulation agenda of the Better Regulation Executive and the Regulatory Policy Committee? Where is the Government’s forward regulatory programme? Will what was produced by the previous Government finally come through? I would love to see that programme, because the Government need to come clean about the regulations that are going to be introduced.
Ian Lucas
I do not have any time to give way; I am sorry. I know that the hon. Gentleman had only three minutes, but I have only nine.
We agree that the country needs to rebalance the economy, and that is why the Labour Government set up the Advanced Manufacturing Centre in Rotherham and the National Composites Centre in Bristol. I encourage the Secretary of State not just to reannounce projects that were set up by the previous Government, but to support manufacturing with some projects of his own. We welcome the progress made on the back of favourable exchange rates, but there are worrying signs in leading companies such as Pfizer and Novartis that we may be losing the edge that we previously enjoyed in hi-tech industry. There are real concerns that cuts in our universities sector will threaten our primacy in science.
When this Government set their course last year they made the wrong choice. Labour’s plan to reduce the deficit was measured and it was working. The Tory Government’s plan is reckless and is not working, a fact evidenced by the ending of growth in the last quarter. The Budget’s downgrading of growth figures is also a fact. They have undermined the fundamentals needed to deliver growth—adequate demand and confidence in the economy—and replaced them with a lack of confidence among businesses and consumers. The result is that there is a real risk of slipping back into recession. We believe that the evidence is there to justify the need for the Government to take a different course. They must change course before they create a further Tory—and this time Liberal Democrat—wasted generation.
The Economic Secretary to the Treasury (Justine Greening)
We have had an important and, in many respects, illuminating debate this afternoon. I will try to refer to all the contributions that have been made, but time is short so it will be difficult for me to take interventions.
We have been talking about two halves of a solution to a problem that itself has two halves. The first half of the problem relates to the economy: the imbalance in jobs and a business model for UK plc that was simply unsustainable in relation to the sectors and its regional impact. The second half of the problem relates to what we can do to tackle the huge problem in the public finances and the structural deficit handed over by the previous Government.
The first point to consider is the broken business model that the previous Government created for UK plc, which was simply unsustainable. First, it was unsustainable in terms of sectors. An uncontrolled boom took place broadly in one sector—financial services—and in one region. During the mid noughties, for every 10 jobs created in the south-east and London, only one was in the private sector and outside financial services, which clearly shows that the previous Government’s model simply was not working. That had a huge cost, as my right hon. Friend the Secretary of State for Business, Innovation and Skills has said. Since 1997 manufacturing has been halved and lost two fifths of its work force, and exports from the UK fell behind the rate of growth seen in the rest of the world. Meanwhile, household debt ballooned. We had a huge property bubble that was worse than the USA’s. As the shadow Chancellor knows very well, he allowed the banking sector to get dramatically out of control. The sectors across the UK economy were totally unbalanced, and we need to change that.
Secondly, the imbalance was regional. There was huge job creation in the south-east, but what about the rest of the country? That shows why we are right to make proposals in the growth review for enterprise zones, and I very much hope that Opposition Members will not allow their political prejudices to get in the way of their local communities being able to ask to be part of the enterprise zones as they are developed.
On the public finances, I listened to the hon. Member for Hayes and Harlington (John McDonnell), with whom I have previously made common cause on other issues. I have great respect for him and for his consistency, but I must say that on this occasion I disagree with his analysis of what we need to do, which seems to be broadly in line with that of his party. What is their solution in a boom? It is to spend more. What is their solution in a bust? It is to spend more. That simply is not a sustainable way to run an economy. In fact, the previous Government left our country and our people weighed down with public debt after maxing out the nation’s credit card. They eventually decided that they did not support tackling the deficit now. Instead, we hear from the shadow Chancellor today that he wants to do that later. He wants to pass on Labour’s debt to our children and grandchildren, which is totally unacceptable.
The hon. Member for Derby North (Chris Williamson) talked about decline, but what does he think happened under the previous Government? He should go and talk to people in manufacturing who saw their own competitiveness decline dramatically.
My right hon. Friend the Secretary of State for Business, Innovation and Skills and my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) talked about the utter denial that still exists among the Opposition, about not just the deficit and the public finances, but their thoroughly broken approach to running the UK economy. There was no humility or apology for any of that, as my hon. Friend the Member for Sevenoaks (Michael Fallon) said, and the fact that there is no recognition of the problem surely means that there will never be any solution from the Opposition.
The right hon. Member for Wolverhampton South East (Mr McFadden) seemed to think that we could suddenly wish away those problems and get over them incredibly quickly, but the challenges that the Labour party left this Government—two parties that have come together to work in the national interest to sort out that huge mess—will take some time to be met. There will be no quick fix, but we have early, immediate and continuing steps to resolve the problems that have been left for the UK economy and for our people.
We took immediate steps in the spending review and in the emergency Budget to lift people out of income tax. The hon. Member for Washington and Sunderland West (Mrs Hodgson) seemed quite dismissive of them, but I hope that she will not vote against them when the time comes. We took steps in the spending review to bring public spending back under control, and yesterday we took the next step, which was a Budget for reform and recovery and a growth plan to rebalance our economy and put growth and sector issues back on a sustainable footing.
Opposition Members seemed to suggest that we have not talked to business, but we have actually had more than 1,000 meetings, and if they look through the growth review and “The Plan for Growth” they will see that we have taken well over 100 steps to help businesses throughout Britain. Our message to them is that Britain is open for business.
We will have the most competitive tax system in the G20; we will make sure that Britain is the best place in Europe to start, finance and grow a business, which, as my hon. Friends the Members for East Surrey (Mr Gyimah) and for Skipton and Ripon (Julian Smith) said, is absolutely critical; we will have a more balanced economy by encouraging exports and investment; and we will have a more educated work force, who are the most flexible in Europe. Those are the ingredients for a rebalanced economy that creates sustainable jobs.
The hon. Member for West Bromwich West (Mr Bailey) did talk about jobs, but if he is concerned he should read the OBR report to the end, because it clearly says that our plans are projected to create a net 1 million jobs over this Parliament. I hope that Members from all parts of the House will support that. By the time we have finished, we will have a corporation tax rate lower than America’s, France’s and Germany’s, giving us the lowest rate in the G7.
Our second ambition is to make sure that Britain is a great place to start, finance and grow a business. In the World Economic Forum global competitiveness index, we fell from fourth to 12th. The shadow Chancellor breathes out in frustration at me reading out that statistic, but it is absolutely true, and we have had to combat it by abolishing £300 million of regulations and by introducing a moratorium, exempting businesses employing fewer than 10 people from new domestic regulation for the next three years. But, we are going to go further than that. To stimulate growth, we will double entrepreneurs’ relief and help SMEs by extending the small companies business rate relief for an extra year. We are doing our bit to help business, and I wish the Opposition would support that.
We have a whole range of plans to support different sectors, but manufacturing is crucial to rebalancing our economy, as my hon. Friend the Member for Erewash (Jessica Lee) and the hon. Member for Solihull (Lorely Burt) said. One reason why our economy became so unbalanced, and so regionally unbalanced, was the skew towards financial services, and we have to encourage other parts of our economy to grow, so we will do what we can to help manufacturing in particular.
On enterprise zones, the boom left too many communities behind, and we are determined to ensure that as our economy grows, the communities that can benefit most from that will do so.
Our country should never again have to accept the economic decline that has taken place over the past decade —an irresponsible boom and bust, and an unbalanced economy that overheated and took our country to the brink of bankruptcy. The shadow Chancellor was at the heart of the decisions that were so catastrophic for our country: selling gold, PFI arrangements, structural deficit and catastrophic bank regulation. His utter denial of the role that his Government played in leading our country so near to ruin will leave the British public shocked and utterly bewildered as they watch this debate.
In conclusion, this Government are looking to right the wrongs of the past. Where others have failed, we will succeed.
Business without Debate
Mr Deputy Speaker (Mr Lindsay Hoyle)
Since there is an amendment not supported by the Member in charge, I will follow the practice of my predecessors and treat it as an objection to the motion. Objection taken.
Maternity Services (Hastings)
(13 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Amber Rudd (Hastings and Rye) (Con)
I am worried and my constituents are worried. There are many issues that Members of Parliament campaign on in their constituencies, but those to do with health provision must be the most important. We can all agree that maternity services deserve to be a high priority in health planning. This is about the safety of mothers and babies.
Our hospital in Hastings, the Conquest, has a full-service, consultant-led maternity unit. Within East Sussex Hospitals NHS Trust, which we are part of, Eastbourne also has a full-service maternity unit. Four years ago, it was proposed that one of those units should close, and that we should have one midwife-led service and only one full maternity service for the area. The community rose up in arms. We campaigned in our thousands. We marched with babies and with prams. Every local MP objected, and we did not let up until we won—and win we did. I would like to pay tribute to the able, determined and dedicated campaign leaders, Margaret Williams and Liz Walke.
In September 2008, the decision was made by the Independent Reconfiguration Panel, which advised the then Secretary of State for Health, that both units should stay open with their full service. The chair of the IRP said:
“The needs of local women and their families were at the heart of this review…we concluded that women’s access to and choice of services would be seriously compromised if the proposals were implemented.”
The campaigners already knew that, but we were reassured and, indeed, jubilant that the final decision makers also took that view. This was nearly three years ago. Some people might, ask “What’s the issue now?” or “Why are you campaigning when there is no formal proposal for closure of either units currently on the table?” They would not share my concern—my unease—about the latest information coming out of East Sussex Hospitals NHS Trust. It is being signalled that there may be change in the air. It is not change itself we are frightened of, but the possible outcomes for mothers and babies.
The Care Quality Commission visited both hospitals in February this year, and it has raised concerns about the maternity services. The hospital trust, to its credit, was swift to contact stakeholders and MPs to inform them of this and to reassure us that action was immediately being taken to ensure high standards of safety and to address the concerns that the CQC had raised. I would like to thank the chief executive of the trust, Darren Grayson, for his swift action in disclosing this important information. I must confess, however, that we are not entirely reassured. We, the campaigners—my constituents—are still worried. I am not reading any motive or plan into the trust’s response to the CQC; I am simply here to highlight, once more, that the outcome of these concerns must not lead us down the very road we have travelled before—namely, having to protect our full-service maternity units.
We do not want to stick our heads in the sand. If there are problems with the maternity units that might impact on safety in any way, we must address them. However, this must not be a shortcut back on to the damaging road of trying to shut one of our units. We will not accept that. I urge the trust not to present that as the answer to the current problems. I would like the Minister to consider that in her response.
There are other answers, and they are in the very problem that the trust is highlighting—namely, staffing. The original decision to maintain both units urged the trust to address the issue of staffing by getting the right and safe mix of experience and qualifications among the doctors and consultants. The report of three years ago accepted that staffing was a problem, but critically it urged the PCT to
“consider alternative staffing models which have not been explored so far”.
It stated:
“It is incumbent on the local NHS to explore the potential of these roles to develop midwifery careers and support doctors’ roles locally.”
It agreed that there was a problem, but urged the local NHS to develop a strategy to deal with it. But here we are. As was anticipated by the report three years ago, we have a staffing problem that may be impacting on the service, and in such a way that doubt is once more being cast on the viability of having two full-service units.
Each hospital handles about 2,000 births a year. I am pleased to say that the strategic health authority recently commissioned an external head of midwifery to review midwifery, leadership and staffing levels, and she confirmed that the trust was safe. The latest annual regional report also praised the trust for having the lowest caesarean section rates in the region, thereby supporting women to experience a normal birth.
Eleven consultants cover both sites, and we have our designated number of junior doctors. However, we are short of middle grade doctors. There should be eight at each site, but there are only seven at the Conquest hospital and six at the Eastbourne district general hospital. The gap is filled by locums, which is expensive. An agency locum costs approximately £79 per hour, which equates to £18,000 per agency doctor per month, as against a trust doctor, who costs approximately £9,000 per month. In these times of increased pressure on funds, even though NHS funding is ring-fenced the NHS is still being asked to make efficiency savings and to improve services. The locum costs are therefore an unpleasant and substantial addition to the hospital overheads.
Unfortunately, the staffing issue is exacerbated by the European working time directive. I know that the arguments against the directive for parts of the medical profession are being examined, but in the meantime the outcome of restricting working time to 48 hours per week simply puts yet more pressure on the staffing levels in these units.
I appreciate that some might say that I am panicking early. We have been reassured by the trust’s chief executive that there are currently no plans to close either unit, and a consultation is about to be launched on how to maintain a top service at both units. In this reassurance, there is a sting. It signals that the challenges of staffing may require a change. I fear that that could include the closure of one of the units. We must not let that happen.
The town of Hastings in my constituency has high levels of deprivation. Its teenage pregnancy rate is one of the highest in the country and, as we know, this country has the highest rate in Europe. Some 22% of its residents are in the bottom 10% according to assessments of deprivation. Local doctors, to whom I speak regularly, tell me that young women can be reluctant to attend antenatal classes and often miss their appointments. These are the women who may encounter unforeseen difficulties, and who may need a full-service maternity unit at their hospital. They are not the women who are likely to hop in their car to go to Eastbourne for their check-up. In fact, in many parts of Hastings car ownership is running at only 40%, so many would have to rely on the local bus services and the local roads. If the maternity service were closed, it would effectively put up barriers to safety for that group of young women.
I wish to say a word about the local roads, on which I hope to secure a separate debate. If we look on the map, we see that Hastings is just over 20 miles from Eastbourne, and the AA tells us that the journey can be done in approximately 20 to 30 minutes. It is quite wrong. It is in fact the equivalent of a 40 or 50-mile journey elsewhere, and in my experience it takes at least an hour. The Royal College of Obstetricians and Gynaecologists recognises the need for investment to support smaller units, such as ours, where there are significant distances involved. That is what we have in Hastings and Eastbourne—because of the nature of the roads, the towns are a significant distance apart.
Those of us who campaigned on the issue before know the arguments well, but we are up against what feels like the establishment. It is creating a tide that pushes us one way—to super-size maternity units, beloved of managers and some doctors but not particularly of mothers. Expectant women want choice, safety and accessibility. I can quite understand management’s preference for large units. It is easier to manage a larger group of people, more efficient for those delivering the service, more convenient for the consultants who are in overall charge and more flexible for training junior and middle-ranking doctors. However, we must not let the one-size-fits-all principle dominate our maternity services. We must remain aware of local issues that are relevant to any changes in configuration. In Hastings, I have mentioned geography, deprivation and the particular needs of some of the youngest, most vulnerable mothers in my constituency.
Although I speak up for the residents of my constituency, I urge the Minister to pay attention to the trend of addressing staffing issues in hospitals by moving towards super-sized units, particularly maternity units. “Bigger is not necessarily better”—that may sound like an extract from a nursery rhyme, but it is actually part of the name of a highly respected paper about the centralisation of hospital services. Even the well respected King’s Fund questions the assumption that outcomes are improved in bigger units.
Despite the conflicting views about smaller or larger maternity units, one thing is clear: the staffing issue is about preparing and planning. That was highlighted to the health trust more than three years ago in Hastings. We must demand more from our trust now, and we do not accept that closure should be considered for either of our full-service sites. We need the complete service. We need in our communities the delivery of a safe, efficient local service, for the continued delivery of safe and healthy babies.
Stephen Lloyd (Eastbourne) (LD)
I thank my hon. Friend the Member for Hastings and Rye (Amber Rudd) for giving me an opportunity to speak in her Adjournment debate. I concur with everything that she said. I will take a limited time, because we want to listen to the Minister, but I wish to focus on a couple of separate matters. I add that my hon. Friend the Member for Lewes (Norman Baker) expressed specific concerns to me this morning, because many of his constituents in Polegate and Seaford use the district general hospital in Eastbourne.
I feel as though I have walked about 150 miles over the past few years for the “Save the DGH” campaign. It was an enormous, cross-party campaign with cross-community support, led in Eastbourne by a splendid lady, Liz Walke, and in Hastings by Margaret Williams. They are two fantastic, community-focused individuals who did a superb job in rallying their towns and all the political parties.
I shall quickly make a couple of points. I have never been a conspiracy theorist, but there is an exception to every rule. Just because I do not believe that there are conspiracies everywhere does not mean that they cannot sometimes exist. I have some good contacts in the district general hospital and I spent eight and a half years working in Eastbourne before gratifyingly winning the seat in the general election last year. I have developed some good contacts in the trust and, sadly, I must tell the Minister that I believe that the single-siters who originally wanted to move to one consultant-led maternity service have not gone away, despite being turned down by the Independent Reconfiguration Panel. I am afraid that they have used the pretext of the Care Quality Commission report to begin the process of moving to a single site.
As soon as we heard that, we were very active and we blitzed the media for 10 days solid. I believe that that led the trust’s chief executive to say that there were currently no plans to close one of the maternity wards even temporarily. The blunt reality is that there were such plans.
My hon. Friend the Member for Hastings and Rye mentioned middle grade doctors. Around the country, more than 30 different trusts with maternity wards deliver an outstanding quality of service without eight middle grade doctors. The issue is a smokescreen, I think that it has been seen as such and I will not tolerate it. I ask the Minister to speak to the trust board, expressly remind its members of the content of the IRP report and tell them to consider seriously options other than middle grade doctors. I think that this last option suits some of the consultants rather than the patients.
I am terribly keen to hear the Minister’s comments, so I will finish with a quote. I wrote to the IRP within 24 hours of the issue blowing up again two weeks ago. The other day, I got a response. For Hansard, I shall quote from it. It states:
“Dear Mr Lloyd…
As you note, in July 2008, the IRP completed a full review of the proposals to close the Eastbourne obstetrics service and advised that the case to do so had not been made. The IRP also made recommendations about what further action should be taken, all of which were accepted by the then Secretary of State for Health in making his decision.”
I urge the Minister to assist my hon. Friend the Member for Hastings and Rye and me to keep an eye on the trust over the next few months and years because we, my hon. Friend the Member for Lewes, and thousands of residents in Eastbourne and Hastings are not prepared to countenance in any way, shape or form the closure of either of the consultant-led maternity wards in Eastbourne.
The Parliamentary Under-Secretary of State for Health (Anne Milton)
I congratulate my hon. Friend the Member for Hastings and Rye (Amber Rudd) on securing the debate. There is no more important issue for a politician or, indeed, a politician’s constituents than the health services available in their constituency. My hon. Friend spoke with passion about her concerns and those of her constituents. I note that she and the hon. Member for Eastbourne (Stephen Lloyd) paid tribute to Margaret Williams and Liz Walke, the campaigners from last time. They must have a heavy heart listening to or reading tonight’s debate. I do not think that my hon. Friend is panicking early. She is doing exactly what is right: highlighting early her concerns and fears in the light of some vigorous campaigning three years ago.
I would like to join my hon. Friend, as I am sure other Members for the area would, in paying tribute to the NHS staff in her constituency for their hard work and dedication. In common with NHS staff throughout the country, the health and well-being of the public is their driving motivation day in, day out. It is not an easy time for them, and we should not lose sight of that. The Government will support them and ensure that they have the power to provide people with the health outcomes that are consistently among the best in the world.
It would be remiss to pretend that the NHS is free from problems. It is right for people to be concerned when they see something going wrong. I can therefore understand why people in Hastings may have been anxious following the Care Quality Commission’s recent inspection. As my hon. Friend knows, the commission found that inadequate staffing was putting patients at risk, and that that affected the quality of services being provided in the maternity units and in A and E. From the very beginning, the Government have made it clear that safety must be at the heart of the NHS, and that substandard care will not be tolerated. I trained as a nurse and worked in the NHS for 25 years, and from my point of view, nothing but the best well do for the people of this country.
We expect the trust to work hard to resolve the issues raised, and my hon. Friend spoke quite warmly of its response. I understand that it is working closely with the PCT and the strategic health authorities to address the issues by 31 March. I hope and expect that it will meet that deadline.
My hon. Friend spoke of her constituents’ fears that the CQC’s concerns about the safety of the local maternity units will lead to the Conquest’s consultant-led maternity service being closed, and of the previous campaign on that. My constituency is not so very far away from hers. My constituents were also victims of “Creating an NHS fit for the future”, which I felt at all times was fit only for the bin.
I know that in 2008 the independent review panel advised the then Secretary of State for Health that consultant-led services should be retained in both Conquest and Eastbourne hospitals. Both my hon. Friend and the hon. Member for Eastbourne felt that that would be an end to matters, and I understand why people in East Sussex now worry about a new threat.
I gather that East Sussex Hospitals NHS Trust has sought to calm those fears by stating publicly that there are no plans for the closure of either maternity unit. However cynical we might become when we have campaigned over time on local issues, we must take what we hear at face value and believe it. I am also aware that the trust has advised local MPs that it will look at various options for the future of maternity services, and that those services will be linked closely to paediatrics, emergency services and gynaecology. The review will have input from external clinical experts, which is crucial for the confidence of local people. Irrespective of their cynicism, it is important to stress that no decision has been made in advance, and that the trust has no plans to close any of the units.
However, I understand the concerns of local people and my hon. Friend. Whatever decisions are made, they must be guided by the trust’s principal responsibility to provide high-quality and safe care. Decisions must be made in an open and transparent way, with the involvement of GP commissioners, staff, patients and public, and with full, real and meaningful consultation. As she knows, I cannot speculate on or prejudge the optimum size of the unit or the outcome of the exercise.
It is right that decisions are made locally without central interference. The Government believe passionately that local decision making is essential in improving outcomes, and in driving up the quality and sustainability of services for different communities. My hon. Friend ably highlighted some of the deprivation and health inequalities in her constituency.
To that end, the Health Secretary has identified four crucial tests that all service changes must pass: they must have the support of GP commissioners; arrangements for public and patient engagement must be strengthened; there should be greater clarity on the clinical evidence base underpinning any proposals; and any proposals must take into account the need to develop and support patient choice, which my hon. Friend mentioned. That means that service changes that do not have the support of GPs, local clinicians, patients and the local community should not happen, which gives patients, local professionals and local councils a far greater role in how services are shaped and developed, and ensures that changes will lead to the best outcomes for local people. That is in line with our proposals in the Health and Social Care Bill, in which we have said that local NHS services must be centred on patients, led by local clinicians and free from political interference, whether from this House or the various layers of NHS management.
My hon. Friend raised, in particular, the working time directive. The coalition Government are committed to limiting the application of the directive in the UK. It has caused immense problems in the health service, and the Health Secretary will support the Secretary of State for Business, Innovation and Skills in taking a robust approach to future negotiations on the revision of the directive to achieve that greater flexibility.
I also draw my hon. Friend’s attention to the King’s Fund paper that questions the assumptions that outcomes improve in bigger units. The King’s Fund is right that an effective skills mix is important to get the best out of maternity units, and the Department of Health has commissioned the national perinatal epidemiology unit to undertake a study comparing the outcomes of births planned at home, in different types of midwifery units and in hospital units with obstetric services. That report is expected in autumn 2011 and will be very important in providing the evidence for further action on choice of place of birth.
I fully understand my hon. Friend’s reasons for calling this debate. She is right to raise the matter at this very early stage, so that local people are clear that they are getting the support from their local MP—that was quite apparent from the passion with which she spoke—and so that all those working in the health service are aware of her close involvement. I applaud her determination to press for local health services that best meet the needs of patients, and to ensure that whatever measures are taken, following the CQC report and this review, the overriding concern of those services must be the interests of the local people.
Question put and agreed to.