House of Commons

Wednesday 11th January 2012 Commons Chamber

Wednesday 11 January 2012

The House met at half-past Eleven o’clock

Prayers

Wednesday 11th January 2012 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 11th January 2012 Commons Chamber

The Secretary of State was asked—

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

1. What discussions he has had with the Secretary of State for Defence about Ministry of Defence police numbers in Scotland.

[The Secretary of State for Scotland (Michael Moore)]

We have regular discussions with ministerial colleagues on defence matters relating to Scotland. The Under-Secretary of State for Scotland, my right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), last spoke about the issue to the Under-Secretary of State for Defence, my right hon. Friend the Member for South Leicestershire (Mr Robathan) —who is responsible for defence personnel, welfare and veterans—earlier this week.

[Dr Whiteford]

As recently as November last year, the Prime Minister said that

“there are no current plans to reduce the number of Ministry of Defence police at the Faslane or Coulport naval bases.”—[Official Report, 23 November 2011; Vol. 536, c. 295.]

Since then, however, the Government have confirmed plans to cut the MOD police budget by 50%. I am curious to know whether the Prime Minister’s assurances hold water. May I ask the Secretary of State what proportion of that cut will fall in Scotland, and whether he believes that the threats to our national security have diminished sufficiently in recent months to justify a 50% cut?

[Michael Moore]

What the Prime Minister said stands. There are no current plans for the MOD to reduce the core police role relating to the security of our national institutions, such as nuclear safety at Coulport or Faslane. National security, including the security of our defence installations, is our highest priority. The reason we have so many MOD police in Scotland in the first place is our huge defence imprint, which would be put at risk immediately if the country were to become independent.

[Mr Alan Reid (Argyll and Bute) (LD)]

I am delighted by what the Secretary of State says about the importance of security at Faslane and Coulport, and by his assurance that there are no current plans to reduce the number of MOD police. I hope he will also be able to assure the House that the Government will never adopt any plans to reduce security at Faslane and Coulport, given the importance of the nuclear installations there.

[Michael Moore]

As I have said, national security and the defence of our security installations are our highest priority, and we will do nothing that would compromise that security.

[John Robertson (Glasgow North West) (Lab)]

2. What assessment he has made of the effect of the autumn statement on child tax credit payments in Scotland.

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

The welfare system must remain fair and affordable, while protecting the most vulnerable. Most working-age benefits, benefits for disabled people and the basic state pension will increase by 5.2% in April. In order to remain on course with the debt consolidation plan and meet their fiscal mandate, the Government will increase the child element of child tax credit by the rate of inflation.

[John Robertson]

According to the House of Commons Library, the Government’s decision not to proceed with the £110 increase in the child element of child tax credit will take £41 million away from nearly 400,000 children in Scotland alone. Worst hit in Scotland will be Glasgow city, where 44,000 children are set to miss out on £4.8 million. When will the Secretary of State stand up for the children of Scotland?

[David Mundell]

The Government are standing up for the children of Scotland. That is why our priority is sorting out the mess that the Labour Government made of our economy. The hon. Gentleman would do well to heed the words of the former Secretary of State for Scotland, the right hon. Member for East Renfrewshire (Mr Murphy):

“The truth is the Labour party would have to make cuts if we were in power.”

[John Stevenson (Carlisle) (Con)]

We all accept that these are difficult economic times, but does the Minister agree that one of the most effective ways of helping the lowest-paid families is raising the income tax threshold to £10,000 and beyond?

[David Mundell]

I entirely agree. The measure has had a significant impact in Scotland, and more than 2 million basic-rate taxpayers will benefit from it during the current Parliament.

[Anas Sarwar (Glasgow Central) (Lab)]

After another week that has been dominated by political debate and headlines relating to Scotland’s constitution, we must not ignore a report by End Child Poverty showing that 50% of local authority areas in Scotland contain wards in which 30% of children are living in poverty, and that in some wards in my constituency the figure is 50%. What action is the Secretary of State taking, along with the Scottish Government, to ensure that every child in Scotland is given the best start and opportunities in life?

[David Mundell]

The hon. Gentleman raises important issues, such as the fact that many of the levers relating to child poverty rest with the Scottish Government. As a result of the autumn statement, the Scottish Government received more than £500 million in additional revenue. I should have thought it would be better if they focused on how to deploy that revenue to deal with such problems as child poverty than to obsess about the constitution.

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

3. What steps he is taking to promote Scotland as a destination for international inward investment.

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

My right hon. Friend the Secretary of State and I firmly believe that Scotland is the ideal destination for international inward investment, and we have taken a range of actions to promote such investment. My right hon. Friend recently led the largest ever Scottish trade delegation to Brazil to promote closer business links with a key emerging market for the Scottish economy.

[Alun Cairns]

Does my hon. Friend accept that, in an ever more competitive world, uncertainty about independence has not helped the cause of Scotland or any other part of the United Kingdom that is seeking to attract much-needed inward investment?

[David Mundell]

I entirely agree with my hon. Friend, which is why I believe it is better that a referendum on Scottish independence be held sooner rather than later.

[Angus Robertson (Moray) (SNP)]

In contrast to the previous intervention, will the Minister acknowledge that international companies investing in Scotland since the re-election of the Scottish National party Scottish Government include INEOS, PetroChina, Dell, Gamesa, Amazon, Hewlett Packard and Mitsubishi Power Systems? Does he acknowledge that and welcome the investment?

[David Mundell]

I acknowledge that those companies have invested in spite of the uncertainty. We should consider the level of investment that Scotland could achieve if there was not that uncertainty.

[Angus Robertson]

That is the usual mantra that we hear from Government Members. Will the Minister respond to Scotland’s leading entrepreneur, Jim McColl, who said on this very subject that business is “not concerned” about the

“independence referendum…What many of us in business are convinced about is that a productive and prosperous future for this country depends on securing real economic powers for the Parliament through constitutional change”?

Will the UK Government drop their foolish conditions, so that we can secure that change in the autumn of 2014?

[David Mundell]

I am sure the hon. Gentleman will agree that Mr McColl is entitled to his opinion, as is any other citizen of Scotland. I am sure you will encourage them, as your own party’s Scottish Government already have, to contribute to our consultation on the independence referendum.

[Mr Speaker]

Order. Let me just point out to the Minister that I do not have my own Scottish Government.

[Mr Philip Hollobone (Kettering) (Con)]

Does my right hon. Friend believe that were Scotland to become separate from the United Kingdom, and were it to be forced to join the eurozone as a condition of re-entry into the European Union, that would hinder or help inward investment into Scotland?

[David Mundell]

Uncertainty over Scotland’s position in the EU, and uncertainty over which currency Scotland would use if it were ever to become independent, would certainly hinder inward investment into Scotland.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

4. How many young people are not in employment, training or education in Scotland.

[The Secretary of State for Scotland (Michael Moore)]

The annual population survey of 2010 estimates that 36,000 18 to 19-year-olds in Scotland were not in education, employment or training between 2009 and 2010.

[Mr Donohoe]

I thank the Secretary of State for that response, but it does not really answer the question of what is happening between the ages of 16 and 18, which is as important, if not more important. What is he doing to encourage youngsters to enter industry and to enable them to take up apprenticeships as joiners, electricians and plumbers, because this Government have failed to attract people into those industries? Does he agree that the idea, which I suggested to him at a meeting, of setting up schools-industry liaison committees is worth supporting?

[Michael Moore]

The hon. Gentleman rightly continues to focus on this issue. We are all deeply concerned about youth unemployment. I have visited his constituency, and I have also had other meetings in Ayrshire and elsewhere, and it is right that we should join the Scottish Government, employers and all the agencies to help young people—aged between 16 and 18 and of any age—to find work or support. The youth contract that we announced before Christmas will bring £1 billion of extra investment into supporting the young unemployed, whether through wage incentives, additional work experience and opportunities or money to the Scottish Government. That money could also be used to create the school-industry liaison groups the hon. Gentleman wants.

[Jo Swinson (East Dunbartonshire) (LD)]

As the Secretary of State says, youth unemployment is a huge concern for Members of all parties and for people across Scotland. The youth contract will help by providing 40,000 opportunities for young people in Scotland, but this problem will not be solved easily, so what will my right hon. Friend do to bring together people from the UK Government, the jobcentres and the Scottish Government, as well as business employers and education representatives, to offer the opportunities that young people in Scotland need?

[Michael Moore]

Over many months now, I have been bringing together exactly those groups in different parts of Scotland—including Ayrshire, Falkirk and the borders. At the end of March, I, along with the Secretary of State for Work and Pensions and the Scottish Finance Secretary, will bring everybody together so we can focus as two Governments and as all the interested parties on tackling this scourge that we must get rid of.

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

The problem with the Secretary of State’s complacent answers is that he simply does not grasp the scale of the crisis of slumping demand, employment and confidence that grips Scotland’s economy due to the crushing austerity being imposed by this Government. Does he not share the real fears of young people that, with youth unemployment at over 21% and seven people chasing every vacancy in Scotland, there simply are not enough jobs to go around, and is it not time to change course by boosting demand through a cut in VAT now, before this Government’s failing economic plan plunges Scotland into the misery of another downturn?

[Michael Moore]

I think it is wrong for the Labour party to be complacent about its record on the economy, which landed us in this mess in the first place. The shadow Defence Secretary, one of my predecessors as Scottish Secretary, said this week that Labour has to face up to the realities of the economy and the deficit, and the hon. Gentleman should do that, too. We want to work with everybody so that we can reduce youth unemployment, and I invite him to look at the youth contract in more detail.

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

5. What assessment he has made of the effect of the autumn statement on levels of poverty in Scotland.

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

The Government took action at the autumn statement to build a stronger and more balanced economy. As a result, more than £500 million has been added to the existing Scottish budget by the UK Government, which provides the Scottish Government with additional resources in these uncertain times.

[Cathy Jamieson]

I thank the Minister for that answer. Does he agree that one of the most important ways of tackling poverty is ensuring full employment? Does he therefore share my concern that Mahle Engine Systems in my constituency seems set to remove jobs from an area hit by high unemployment, taking those jobs out of Scotland and out of the UK?

[David Mundell]

I would be very disappointed if that were the case. I know that the hon. Lady is a doughty campaigner for employment in her constituency. We must continue to stress the benefits of employers remaining in Scotland, which is why the current constitutional uncertainty is so damaging.

[Mr Jim Hood (Lanark and Hamilton East) (Lab)]

On Monday, when 700 of my constituents employed by WJ Harte Construction returned to work, they were told that the company had gone into administration, without any consultation whatsoever. I am told that Scottish Enterprise and the trade unions were not even aware of this. The MSP was not aware of it, and the MP certainly was not. The company was taken over by a venture capitalist more than two years ago, when it had a turnover of £100 million. It has now been run into the ground and the executives have run away with the money. Will the Minister meet me to discuss what we can do to save as many of these 700 jobs as possible? This is a disgraceful situation.

[David Mundell]

Obviously, as a fellow south Lanarkshire MP I am very disappointed to hear what the hon. Gentleman has to relate, and I should be very pleased to meet him to ensure that employment continues to be secured in south Lanarkshire.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

6. What discussions he has had with the Secretary of State for Work and Pensions on the work capability assessment in Scotland.

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

My right hon. Friend the Secretary of State and I are in regular contact with Ministers from the Department for Work and Pensions on a range of issues concerning welfare reform. We also recently met Professor Malcolm Harrington to discuss his second review of the work capability assessment.

[Tom Greatrex]

I thank the Minister for that answer. I am sure he will be aware of a report published today by Citizens Advice entitled “Right First Time?”, which examines the high level of incorrect and inaccurate decisions made in the work capability assessment. Given the amount of money that Atos Healthcare receives from the public purse for undertaking these assessments, is it not now time for the Government to consider the report’s recommendation that financial penalties be imposed on Atos for a number of those incorrect assessments? [Interruption.]

[David Mundell]

This was one of the issues that the Secretary of State and I discussed with Professor Harrington, and as he prepares his further report, this is inevitably one of the issues he will address. [Interruption.]

[Mr Speaker]

Order. There are far too many noisy private conversations taking place in the Chamber. I would like to hear Dame Anne Begg.

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

Now that the move from incapacity benefit to employment and support allowance is well under way, anecdotally, it would appear that Atos is finding it very difficult to carry out the necessary work capability assessments, so there could be extra delays. Will the Minister please engage with his fellow Ministers in the DWP to make sure that Atos can deliver on the contract?

[David Mundell]

I can certainly assure the hon. Lady that I will pass on her concerns to the Department.

[Iain Stewart (Milton Keynes South) (Con)]

7. What representations he has received from the Scottish Government on the holding of a referendum in Scotland on independence from the UK.

[Fiona Bruce (Congleton) (Con)]

8. What representations he has received from the Scottish Government on the holding of a referendum in Scotland on independence from the UK.

[Mark Menzies (Fylde) (Con)]

10. What representations he has received from the Scottish Government on the holding of a referendum in Scotland on independence from the UK.

[Lindsay Roy (Glenrothes) (Lab)]

11. What recent discussions he has had with the First Minister for Scotland on the referendum proposed by the Scottish Government on Scotland’s independence from the UK.

[The Secretary of State for Scotland (Michael Moore)]

Yesterday, I made a statement announcing a consultation to seek views on how any referendum can be made legal, fair and decisive. I discussed this yesterday with the First Minister, and I hope to have further discussions with the Scottish Government, along with other politicians and people from across Scottish civic society, during the consultation.

[Iain Stewart]

The House of Commons Library has given me strong evidence to show that the economies of Quebec and Canada as a whole suffered in the 1990s due to constitutional uncertainty. For the sake of jobs in Scotland and England, does my right hon. Friend agree that the last thing we need is a prolonged period of constitutional uncertainty, and that the First Minister should stop playing politics and get on with it?

[Michael Moore]

My hon. Friend is correct to point to that independent analysis and the experience of Quebec and the rest of Canada. It is vital that the economic uncertainty we now face because of the referendum is resolved, which is why we have brought forward proposals to make the referendum legal, fair and decisive. I want it to happen as soon as possible.

[Fiona Bruce]

Can my right hon. Friend confirm that if the UK Government do not facilitate an independence referendum, one cannot take place?

[Michael Moore]

The central issue arising from the consultation that I launched yesterday is that, as things stand, the Scottish Parliament does not have the legal power to hold a referendum, regardless of how that is described, and we need to provide that power by working with it. I am committed to working with the Scottish Government, and with people from across the country, so that we can get the power devolved to Scotland, the Scottish Government can then develop the question and we can get on with the referendum, which will be made in Scotland, for the people of Scotland.

[Mark Menzies]

Has my right hon. Friend had any conversations to establish what impact an independent Scotland would have on our relationship with the European Union and the euro?

[Michael Moore]

My hon. Friend is focusing on some of the central issues that we need to be able to get on to debate in the decision about whether Scotland should go its own way or continue to be part of the most successful multi-nation state in the history of the world, as I think it is vital it does. So let us get on and devolve the power to make it a legal referendum. Let us have a fair referendum and let us make sure it is decisive.

[Lindsay Roy]

The Select Committee on Scottish Affairs has already embarked on an inquiry to identify those issues, such as defence, which need to be resolved before a referendum is held. Does the Secretary of State plan to contribute to that debate with the Select Committee?

[Michael Moore]

I certainly do. What is really important is not just our debate now about the future of Scotland, but ensuring that everybody in the country gets the opportunity to participate in the consultation on the shape of the referendum, and I hope that people will respond to that. I hope that everybody across the country—not just politicians—will get involved in debating defence, welfare and the state of our economy, all of which, I believe, are much safer within the United Kingdom. [Interruption.]

[Mr Speaker]

Order. We are discussing extremely important matters and we should do so in an atmosphere of mutual respect.

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

We now know that there will be an independence referendum in the autumn of 1914—[Laughter.] That, of course, was the year that the great war started. There will be an independence referendum in 2014, designed and decided by the people of Scotland. If the Secretary of State is so concerned about the legal powers for the referendum, why does he not just devolve the powers, through section 30, without condition? I see that the Prime Minister has walked into this debate. I really hope that the Secretary of State can encourage the Prime Minister to come to Scotland as much as possible in the next two weeks, because the Prime Minister is the best recruiting sergeant for a “yes” to independence vote that we have.

[Michael Moore]

My right hon. Friend the Prime Minister will be a full participant in the debate, as will all people across the United Kingdom. For us, it is important that we have a referendum that is made in Scotland for the people of Scotland about our future in Scotland. The First Minister and now the hon. Gentleman —who gave a slightly different date—have put forward their preference for when that referendum should be, but before we can get anywhere near it we must ensure that it is legal. I hope that the Scottish Government will work with us to ensure that that is the case.

[Margaret Curran (Glasgow East) (Lab)]

Does the Secretary of State recognise that following this week’s important developments, the referendum campaign on Scotland’s future is now effectively under way and it is time to get on to the substance of the issue? What is more, given that the Scottish Government have said that they have been involved for some time in considering the details of the prospects for Scotland, will the Secretary of State tell the House whether any UK Government officials have been involved in any discussions on the future of the Scottish economy and, in particular, on whether a separate Scotland will keep the pound, join the euro or have a separate currency?

[Michael Moore]

The hon. Lady is right to focus on those key issues about the future of Scotland. I believe that Scotland is best served by continuing to be part of the United Kingdom, where our economy is stronger and our defence more secure, where we have much greater clout internationally and where our welfare system will be more generous and better. I hope that the Scottish Government will publish their plans about what they think should happen in an independent Scotland and in the meantime, as the hon. Lady says, let the debate commence.

[Margaret Curran]

I thank the Secretary of State for that answer. Does he agree that one of Britain’s greatest achievements was the creation of the welfare state? Have any discussions taken place about the implications of separation for welfare spend in Scotland, particularly as recent figures reveal that it was three times greater than oil revenues in 2010?

[Michael Moore]

The hon. Lady makes an important point about the contrast between the level of spending to support some of the most vulnerable in our society in Scotland and, indeed, the rest of the country and the volatility of oil revenues. I believe that we can have a more secure and generous welfare system by sharing the risks and resources across the whole of the United Kingdom, which has helped Scotland through difficult times in the past and at present.

[Gordon Henderson (Sittingbourne and Sheppey) (Con)]

Does my right hon. Friend agree that all Scots should be entitled to vote in any referendum on independence, whether or not they live in Scotland, including my dad, who is a proud Scotsman who happens to live in England and thinks of himself first and foremost as British?

[Michael Moore]

I pay tribute to my hon. Friend’s dad’s sense of patriotism and I am sure that he, like many other Scots around the country and around the world, will wish to contribute to our consultation. Like me, they will want to see this referendum on the most historic decision we will ever take in Scotland carried out legally and fairly, on a straightforward and decisive basis. Let us get that sorted and let us get on with the debate.

[Katy Clark (North Ayrshire and Arran) (Lab)]

9. What steps he has taken to address youth unemployment in Scotland.

[The Secretary of State for Scotland (Michael Moore)]

rose— [Interruption.]

[Mr Speaker]

Order. I apologise for interrupting the Secretary of State, but we are discussing youth unemployment in Scotland, a very important matter, and I want to hear his answer.

[Michael Moore]

The Government have committed £1 billion over the next three years to implement the youth contract. Our package of support includes wage incentives for employers to recruit 18 to 24-year-olds from the Work programme and increased work experience opportunities for that age group. Other support is also available.

[Katy Clark]

I thank the Secretary of State for that answer. He is well aware of the rising levels of youth unemployment in North Ayrshire and I know that he has received strong representations about it from all the Ayrshire MPs. What more does he think that this Government can do at Westminster to increase public and private investment in North Ayrshire?

[Michael Moore]

I acknowledge the work that the hon. Lady has done and the fact that we recently met to discuss this very serious issue. It is important that the youth contract, which my right hon. Friend the Deputy Prime Minister visited Scotland to discuss on Friday, is taken advantage of by people across the country. I look forward to coming to the hon. Lady’s constituency in the near future to meet those very people so that we can discuss how to implement it most effectively.

[John Mann (Bassetlaw) (Lab)]

12. What comparative assessment he has made of the level of subsidy from the public purse for postal, transport and health services in Scotland and the north of England.

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

Health and large aspects of transport are devolved areas, and it is for the Parliament in Scotland to decide how to allocate its budget. The Government have provided an annual subsidy to Post Office Ltd of £150 million for the last financial year and £180 million for this financial year. The subsidy is not distributed by country or region.

[John Mann]

Does the Minister think it would help the forthcoming debate if all the figures were made public so that my constituents and others can fully participate?

[David Mundell]

I absolutely agree that the debate on the independence of Scotland should be based on facts and on the issues. That is why we need to move on from the process and get on with the referendum.

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

The question of the referendum on Scotland is not a matter just for the Scottish Government or for the Scottish people. How and when will my constituents in England be consulted on this important matter?

[Mr Speaker]

I remind the Minister that the question is with reference to postal, transport and health services.

[David Mundell]

My hon. Friend’s constituents have the opportunity to be represented on these issues through him in this House.

The Prime Minister was asked—

[Mr Graham Stuart (Beverley and Holderness) (Con)]

Q1. If he will list his official engagements for Wednesday 11 January.

[The Prime Minister (Mr David Cameron)]

I am sure that the whole House will wish to join me in paying tribute to the servicemen who have fallen in the service of our country since we last met for Prime Minister’s Question Time—Captain Tom Jennings from the Royal Marines, Squadron Leader Anthony Downing from the Royal Air Force, Private John King from 1st Battalion the Yorkshire Regiment, and Rifleman Sachin Limbu from 1st Battalion the Royal Gurkha Rifles, who died after a long period in hospital where he was much loved by the staff who looked after him in Birmingham. Their outstanding courage and selflessness will never be forgotten. They have given their lives serving our country and making our world more secure, and our thoughts should be with their families and friends.

This morning I had meetings with ministerial colleagues and others, and in addition to my duties in this House I shall have further such meetings later today.

[Mr Stuart]

The whole House will wish to associate itself with the Prime Minister’s tribute to the fallen.

May I ask the Prime Minister to join me in congratulating Cranswick Country Foods on its £15 million investment creating a state-of-the-art facility in my constituency, which is licensed for exporting to the US Department of Agriculture, exports throughout the EU and employs more than 1,200 people? Unfortunately, the Food Standards Agency is blocking exports from that excellent plant to the far east. Can my right hon. Friend assure me that job-destroying and unnecessary regulation will not be tolerated by his Government?

[The Prime Minister]

I certainly join my hon. Friend in congratulating the company in his constituency on its expansion and on the welcome new jobs it is bringing. It is vital that we rebalance our economy, with greater emphasis on business investment and on exports. Exports to China went up by 20% last year. I shall certainly do everything I can to help to resolve the situation, and I shall be happy to ask a Minister from the Department for Environment, Food and Rural Affairs to meet my hon. Friend to discuss this issue.

[Edward Miliband (Doncaster North) (Lab)]

May I join the Prime Minister in paying tribute to Captain Tom Jennings from the Royal Marines, Squadron Leader Anthony Downing from the Royal Air Force, Private John King from 1st Battalion the Yorkshire Regiment, and Rifleman Sachin Limbu from 1st Battalion the Royal Gurkha Rifles? All of them showed enormous courage and bravery. They have made sacrifices on our behalf, and our deepest condolences go to their families and friends.

In the autumn statement the Chancellor said that train fares would rise by only 1% above inflation. Can the Prime Minister therefore explain why rail companies this month on some of the busiest commuter routes have increased their fares by up to 11%?

[The Prime Minister]

The power to do that was given to them by the last Labour Government.

[Edward Miliband]

No, Mr Speaker, the Prime Minister is wrong. The last Labour Government stopped them doing that, and this Prime Minister, when he came to office, reversed that policy, which we introduced. That is why the companies are able to rig the fares. That is why someone travelling from Northampton to London will see a rise on the season ticket of more than £300. Will he now stand up to the train companies, get a better deal for commuters and change his policy?

[The Prime Minister]

I know that the right hon. Gentleman has had a difficult start to the year, but I am afraid he has made it worse by getting the facts wrong. Labour, in 2009, allowed fare increases of up to 11%, because they introduced the idea of flexibility of 5% over and above the RPI plus 1% that was the case. What was the case in 2009 is the case today, but the key issue is this: there are only two places that money for railways can come from. It can come from the taxpayer or it can come from the traveller. What really matters is whether we are going to put money into rail investment, and this Government are putting that money in. We are building Crossrail, we are electrifying the Great Western main line, we are electrifying the line between Manchester and Liverpool, we are putting £308 billion into Crossrail, and of course, as my right hon. Friend the Secretary of State for Transport announced yesterday, we are building High Speed 2 as well.

[Edward Miliband]

I am afraid the Prime Minister is just wrong about the facts. The Labour Government saw that train companies were taking advantage of consumers, ripping them off by increasing fares more on the busiest routes, and we stopped it. We took that power away from them. He came to office and brought the power back. He made the wrong decision. And as for his idea that this is all to help the passenger, only last month the National Audit Office warned that the problem was that the money would probably result in increased train operating company profits. I ask the Prime Minister again: will he now go back and reverse his policy?

[The Prime Minister]

We originally set out an RPI plus 3% policy for train fares. We found money in the autumn statement to reduce that to RPI plus 1%, but if the right hon. Gentleman wants to see more money go into our railways—presumably he supports the electrification of the Great Western main line and the railway lines in the north-west—he will be touring the country telling us that he supports these things, but he is never prepared to take difficult decisions in order to support them. It is time—[Interruption.]

[Mr Speaker]

Order. The answers from the Prime Minister will be heard.

[The Prime Minister]

It is time for the Leader of the Opposition to listen to his shadow Defence Secretary, who wrote very candidly over Christmas:

“There is a difference between populism and popularity”—

and that difference is called credibility. Time to have some, I think.

[Edward Miliband]

Instead of his pre-prepared lines, the right hon. Gentleman should get his facts right about his own policy. He is just wrong. He says that he is continuing the policy of the Labour Government, and he is simply wrong on the facts. The Labour Government saw what the train companies were doing and said that we would put an end to it. The Prime Minister said at the weekend that he wanted to take action against crony capitalism. He has failed at the first hurdle. I ask him for the last time: will he now reverse the policy?

[The Prime Minister]

We are now on to the issue of higher pay. On the issue of the rail fares, let me be absolutely clear. Labour introduced the policy of 5% flexibility. They changed it for one year only—for an election year—but with no intention of making that permanent. If the right hon. Gentleman does not know that, he should. [Interruption.] If he wants to get on to the issue of executive pay, he is entirely right to raise it. Unlike a Government who did nothing—[Interruption.]

[Mr Speaker]

Order. I want to hear the answer, and however long it takes—[Interruption.] Order. However long it takes, I will.

[The Prime Minister]

Thank you, Mr Speaker. The Leader of the Opposition is right to raise the issue of executive pay—and unlike the previous Government, who did nothing for 13 years, this Government will act.

[Sir Roger Gale (North Thanet) (Con)]

I understand that my right hon. Friend recommended me for one new present, and I am about to ask him for another. The Leader of the Opposition is talking drivel, I am afraid. My constituents on the Kent coast line had been paying up to 10% increases under the previous Government for the last four years, until they lost office. I congratulate this Government on their courageous decision to pursue High Speed 2. May I ask my right hon. Friend to turn his attention now to a piece of unfinished business left by the previous Government? High Speed 1 at present runs, in effect, only from St. Pancras to Ashford. Could he see it driven through to Thanet, so that we can enjoy the sort of benefits that in the future will be enjoyed by Birmingham?

[The Prime Minister]

First, I congratulate my hon. Friend on his well-deserved honour for his many years of service to his constituents. He is entirely right about what happened under the previous Government, when regulated fares went up by over 18% and unregulated fares went up by over 23%. I will certainly look into what he says about High Speed 1, but I think that it is an advertisement for what we can get by linking up our country with high-speed rail, shortening commuter distances and helping to change the economic geography of our country so that we can build a stronger economy.

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

Q2. Over 80,000 pensioners in Liverpool will lose up to £100 this winter following the Government’s cut in winter fuel allowance. Will the Prime Minister adopt Labour’s policy of ensuring that energy companies automatically put elderly customers on the cheapest tariff for gas and electricity?

[The Prime Minister]

I am afraid that, as with the hon. Lady’s party leader, there seems to have been an outbreak of collective amnesia on the Labour Benches, because we have kept the previous Government’s policy on the winter fuel allowance and are meeting in full all the promises that she and her party made on the winter fuel allowance. We have gone one further, because they introduced higher cold weather payments only for election year, but we have made them permanent.

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

The Prime Minister will have experienced at first hand the quality of nursing at Treliske. What steps are the Government taking to ensure that patients across the country receive the highest possible standards of nursing care from the NHS?

[The Prime Minister]

My hon. Friend is entirely right. I well remember—indeed, I will never forget—the time I spent at the Royal Cornwall hospital and the happy days I had there, and it was a great privilege to go back again last year. We have very high standards of nursing care in our country and the overwhelming majority of nurses do a fantastic job, but I do not think that we would be serving our constituents properly if we did not highlight those few cases where it goes wrong, and we have seen in the Care Quality Commission reports that there are areas where it has gone wrong. I think that it is incumbent on the Government to try to remove the bureaucracy that can get in nurses’ way, but it is also important for us to highlight best practice in the best hospitals in our country—I visited an excellent hospital in Salford last week—and say, “Let’s copy that right across the country,” so that we have high standards of care and look after the nutritional needs, indeed all the needs, of vulnerable people in our hospitals.

[Edward Miliband]

I want to ask the Prime Minister about Scotland. We on this side of the House believe that the United Kingdom benefits the people of Scotland and the people of the rest of the United Kingdom in equal measure. We are stronger together and weaker apart. Does he agree that we must make the case for the Union—not simply a case against separatism, but the positive case about the shared benefits to us all of Scotland’s part in the United Kingdom: the shared economic interests, the shared institutions such as the NHS, the defence forces and the BBC, and above all the shared values we hold together?

[The Prime Minister]

I am happy to say that this is an area where the right hon. Gentleman and I will be in 100% agreement. I passionately believe in the future of our United Kingdom, and passionately believe that we are stronger together than we would be by breaking apart. Frankly, I am sad that we are even having this debate, because I support the United Kingdom so strongly, but we have to respect the fact that Scotland voted for a separatist party in the Scottish parliamentary elections, so the first thing that it is right to do is make clear the legal position about a referendum, which is what my right hon. Friend the Scottish Secretary has been doing. We have made the offer to devolve the power to hold that referendum so that it can be made in Scotland and held in Scotland. Frankly, I look forward to having the debate, because I think that too many in the Scottish National party have been happy to talk about the process but do not want to talk about the substance. I sometimes feel when I listen to them that it is not a referendum they want, but a “neverendum”. Let us have the debate, and let us keep our country together.

[Edward Miliband]

May I agree with the Prime Minister? This is not a fight about process between the Westminster Government and the Scottish Government, or between the British Prime Minister and the Scottish First Minister. The way to tackle this issue is to have immediate cross-party talks in Scotland about the timing of the referendum, the nature of the single-question referendum and the vital involvement of the Electoral Commission. Does the Prime Minister also agree with me that we need as soon as possible, as he said, to get beyond process and have that discussion about the substantive issues? This is a momentous decision that our children and grandchildren will have to live with if we get it wrong, so we need a serious, thoughtful and inclusive debate about the choices and the benefits to Scotland of staying in the United Kingdom. On this important issue, the people of our country deserve nothing less than that serious debate about the benefits of the United Kingdom.

[The Prime Minister]

The right hon. Gentleman is right on those three points. On the process of negotiation, which is very important now, particularly given that the SNP has come out and made more clear what it wants to do, I am very happy for the UK Government and the Westminster Parliament to speak directly to the Scottish Government and the Scottish Parliament, and let us come to a conclusion about the best time and the best way to hold the referendum. But it must be clear, it must be legal, it must be decisive and it must be fair. Those are the absolute keys. I absolutely agree with the right hon. Gentleman: as soon as those process questions are settled, we need to get on to the substance. [Interruption.] The only point I would make about the timing—[Interruption.] As SNP Members, who cannot seem to keep quiet, are so keen to leave the United Kingdom, I do not quite understand why they want to put off putting the question for so long.

[Mrs Helen Grant (Maidstone and The Weald) (Con)]

What action will the Prime Minister take to tackle the appalling issue of forced marriage both in the UK and globally?

[The Prime Minister]

My hon. Friend is absolutely right to raise that issue. We have taken some steps, as the previous Government did, to try to crack down on the practice of forced marriage, which, tragically, does take place in too many communities and too many places in our country. We are looking specifically at whether we should take further legal powers and make it a criminal offence, and I am taking a personal interest in the issue, as I think we should be taking every available step to say that it is simply unacceptable, in 2012 in a civilised country such as ours, to have such a barbaric practice.

[Lilian Greenwood (Nottingham South) (Lab)]

Q3. Nottinghamshire police serve areas of deep deprivation, face some of the highest crime levels in the country and, rightly, have ambitious crime reduction targets, but Her Majesty’s inspectorate of constabulary says that Nottinghamshire is one of five forces facing the most significant challenge to protect their front lines, and senior officers tell me that Government cuts will impact on front-line policing. Is it not time to implement the police funding formula in order to give my local police the resources that they need?

[The Prime Minister]

I shall look carefully at what the hon. Lady says, but all police forces are having to make efficiencies, and I praise chief constables for the steps that they have taken to deliver those efficiencies without affecting front-line policing, while at the same time still delivering a reduction in crime levels.

In Nottinghamshire police there are still 47 officers working in back-office jobs, there are still trained police officers working in human resources, finance and corporate development, and there is still further work to be done to civilianise those parts of the police force and make sure we get all our police officers out on the front line.

[Andrew Stephenson (Pendle) (Con)]

Q4. Following the murder of my constituent Jane Clough by her former partner, a rapist, Jonathan Vass, I presented the Bail (Amendment) Bill to the House, and in October the Ministry of Justice team agreed to change the law. Can the Prime Minister confirm to the House, and to Jane’s parents, who are in the Public Gallery today, when that will happen?

[The Prime Minister]

First, on behalf of the House, may I pay tribute to my hon. Friend for his work on the issue and, indeed, on that case? Our sympathies go out to the family, who have suffered so appallingly. I accept, and the Government accept in principle, that there should be a right of appeal against Crown court decisions allowing bail. There is of course that right in magistrates court cases, so there is a strong case for changing the law, and we will table an amendment in the Lords to the Legal Aid, Sentencing and Punishment of Offenders Bill, creating a right of appeal to a High Court judge against the granting of bail by a Crown court. I hope that that will improve the law, be more helpful to victims and give some satisfaction to the family whom my hon. Friend is representing so well.

[Angus Robertson (Moray) (SNP)]

The Scottish Government were elected with an overwhelming mandate to deliver an independence referendum in the second half of this parliamentary term—[Interruption.] They were. It is a fact. In contrast, the Conservative party has fewer Members of Parliament in Scotland than there are giant pandas in Edinburgh zoo. Why is the Prime Minister trying to emulate Margaret Thatcher by dictating to Scotland?

[The Prime Minister]

Quite the opposite: we want to give Scotland the power to hold a legal referendum. Right across this House there is a uniform belief that that needs to happen. Discussions can now be entered into about the timing of the referendum and its precise nature, so that we can ensure that it is fair and decisive. The people of Scotland deserve nothing less.

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

Q5. Care of our older people is one of the most pressing issues facing this country today. Will the Prime Minister join me in welcoming Age UK’s Care in Crisis campaign, which was launched on Monday? Will he commit to ensuring that the White Paper due in the spring will present a way forward on this vital issue?

[The Prime Minister]

I pay tribute to my hon. Friend for his work on this issue, and to the Age Concern campaign. We have a huge challenge to rise to this agenda and we want to do so through the White Paper. There are three elements: we must do something about the rising costs of domiciliary care, improve the quality of the care that people receive, and address the issue of people having to sell their homes and all their assets to pay for care. We are looking hard at all those issues to work out a way forward that is right for our system, and that the country can afford.

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

Q6. The Sunday Times showed that in the past two years the 1,000 richest persons in Britain got richer by £137 billion—enough to pay off the entire deficit. Will the Prime Minister therefore tax them to fund the creation of 1 million jobs, which would be a far better way of cutting the deficit than prolonged austerity?

[The Prime Minister]

For a minute, I thought that the right hon. Gentleman was talking about the Prime Minister he served under. It is essential that as we reduce the deficit and take difficult decisions we are fair, and are seen to be fair. What we have done so far has seen the top 10% of the country paying 10 times more than the bottom 10%. Crucially, the top 10% in terms of earnings are paying more not only in cash terms, but as a percentage of their income. As we go ahead with this agenda, I want to ensure that people behave responsibly, and that the Government do too.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

Q7. I am sure that you, Mr Speaker, and the Prime Minister will want to congratulate Mr Tony Whatling, who has served as postmaster in Westhall for more than 60 years and has still not retired. However, residents in Wangford and Walberswick are being let down because there is no post office outreach provision. Will the Prime Minister encourage the Post Office to use its generous subsidy to ensure that rural villages are served, not left stranded?

[The Prime Minister]

I certainly join my hon. Friend in paying tribute to Mr Whatling. To run a village store and post office for 60 years is a huge achievement. It is people like him who keep our country going. The Government have committed £1.3 billion to improve the network. As a condition of that funding, the Post Office must maintain at least 11,500 branches, but the point that my hon. Friend makes about mobile post offices is a good one. That is a way to serve many communities and to ensure that elderly and vulnerable people in particular get the services that they need.

[David Simpson (Upper Bann) (DUP)]

Q8. The Deputy Prime Minister is reported to have said in the past few days that in due course the UK will sign up to the EU treaty that the Prime Minister rejected a short time ago. Was the Deputy Prime Minister correct?

[The Prime Minister]

The position is very straightforward. We did not sign the treaty because we did not get the safeguards that we wanted to receive. That situation is not going to change. What coalition partners want to put in their manifestos at the next election is entirely up to them.

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

Q9. Does the Prime Minister agree that people should pay their taxes, keep their businesses onshore and not live as tax exiles in Switzerland, leaving pensioners high and dry? What is he doing to stamp out such predatory business practices?

[The Prime Minister]

My hon. Friend makes an interesting point. For all the lectures about predatory capitalism and taxing different businesses in different ways, the one person the Leader of the Opposition has chosen to advise him on this issue has based all his companies in the British Virgin Islands.

[Valerie Vaz (Walsall South) (Lab)]

Q10. The funding for the United Kingdom Resource Centre for women in science, engineering and technology has been cut. Given that 1 million women are unemployed and that women make up only 12.3% of people in science, engineering and technology, will the Prime Minister look again at funding for the UKRC, and at thereby restoring Britain’s leading role in science, which nurtured the talents of Dorothy Hodgkin and Rosalind Franklin?

[The Prime Minister]

I will certainly look at the case that the hon. Lady sets out. As she knows, despite having to make difficult decisions across a range of public spending areas we did not cut the science budget. Indeed, in the autumn statement the Chancellor provided a series of enhancements for specific science-based projects. I will look at the specific one that the hon. Lady mentions and get back to her.

[Mike Crockart (Edinburgh West) (LD)]

Today, unfortunately, is the 10th anniversary of the opening of Guantanamo Bay, a despicable institution that to this day still holds one UK national. Will the Prime Minister commit to doing all he can to see that 2012 is the last year in which that institution operates?

[The Prime Minister]

My right hon. Friend the Foreign Secretary is working very hard with the United States to try to secure the issue and bring this chapter to a close. As the hon. Gentleman will know, we have also taken steps as a Government and as a country to try to achieve some closure to what happened in the past, through a settlement with the people who were in Guantanamo Bay and through setting up a proper inquiry to ensure that the British Government were not complicit in any way in the torture of people in Guantanamo Bay or elsewhere.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

Q11. A moment ago, the Prime Minister was clear that it is crucial that Government economic policy be fair and be seen to be fair. Can he therefore confirm that the 50% tax rate on incomes above £150,000 will remain in place for the duration of this Parliament?

[The Prime Minister]

We take pretty much the same point of view as the former shadow Chancellor who, when he introduced that rate, said that it should be a temporary measure. I think we should also make a judgment about how much money the tax is actually raising. The purpose of the tax system is to raise money for the funds that we need to put into our public services, and it is very important that we look at how it works in practice.

[Heather Wheeler (South Derbyshire) (Con)]

Will the Prime Minister congratulate the Secretary of State for Transport and the good workers of Bombardier on securing a £188 million contract on 28 December, and on the announcement on the Toronto stock exchange, which was so important to the workers in Derbyshire?

[The Prime Minister]

I congratulate everyone at Bombardier on winning that contract. As I have said before from the Dispatch Box, I want the Government to be a good customer of British firms and work with their supply chain, and not to make the mistakes that the last Government made. They drew up the contract for the railway service that Bombardier did not win.

[Tony Lloyd (Manchester Central) (Lab)]

Q12. The Prime Minister will probably be aware that a chief executive of a stock exchange top 100 company is paid 35 times as much as a hospital consultant who keeps people healthy and saves lives. If the Prime Minister is going to act tough on high pay, and if he really does get it, will he give a date—a year from now, or within the lifetime of this Parliament—when we will see that obscene 35 times multiple come tumbling down?

[The Prime Minister]

I do think that we should make progress on the issue of pay ratios, and we can start with the Government setting out their own pay ratios as an act of leadership. I think this Government have shown some leadership, not least by cutting and freezing Ministers’ pay and having total transparency on pay across Government. On the specific case that the hon. Gentleman raises, this year we have seen a 49% increase in pay yet only a 4% increase in the FTSE. I am not against people running great companies being paid lots of money if they are growing and expanding them and succeeding, but we should not have rewards for failure. Frankly, the last Government had 13 years to deal with this, and did sweet nothing.

[Nick Boles (Grantham and Stamford) (Con)]

Does the Prime Minister think that it can ever be fair for a single family to receive £100,000 a year in housing benefit alone?

[The Prime Minister]

My hon. Friend makes an important point. The issue of top people’s pay and this issue are, in many ways, linked. We need to get rid of a something-for-nothing culture in this country. We inherited an out-of-control benefit system in which there were families on many tens of thousands of pounds of housing benefit. We had an out-of-control immigration system in which it paid to cheat, and we also had an out-of-control banking system in which reward was not linked to success. Unlike the last Government, we are going to deal with all those things.

[Tony Cunningham (Workington) (Lab)]

Q13. The Cumbrian health economy is in crisis—real crisis. How does the Prime Minister propose to deal with it?

[The Prime Minister]

The first and most important thing is that we are committed to year on year increases in NHS spending. I am afraid that that position is not backed by the hon. Gentleman’s party. Alongside the extra money, we also need to make sure that there is reform so that we give clinicians a leading role in the health service. We also have to do more on the public health and health promotion agenda, because that is the best way to reduce demands on our NHS. There is also one extra thing that we need to try to achieve: looking at the links between alcohol and crime, and alcohol and hospital admissions, which put massive pressure on our NHS. That is an issue that I want this Government to deal with.

[Sir Bob Russell (Colchester) (LD)]

Ethnic cleansing and apartheid are evil. Sadly, successive Governments have supported a country where those vile actions are inflicted on indigenous people. We welcomed the Arab spring, but the long Arab winter continues for Palestinians. Last Tuesday the Israeli Government said that they would proceed with the forced eviction of 30,000 Bedouin Arabs from their historic lands. Is it not time we treated Israel as we did apartheid South Africa?

[The Prime Minister]

What I would say to my hon. Friend is that first, we should respect the fact that Israel is a democracy. It is a country that has a right to exist and that has frequently been threatened by its neighbours—but also, we are a country that should stand up for clear human rights and clear rights and wrongs in international relations. This Government have been very clear that we do not agree with the Israeli Government’s practice on settlements. I raised the issue myself with the Israeli Prime Minister in a new year telephone call, and this Government will continue to act and vote on illegal settlements.

[Liz Kendall (Leicester West) (Lab)]

Q14. Bethany Mickleburgh, a 14-year-old girl in my constituency, has leukaemia and desperately needs a bone marrow transplant. Despite an incredible campaign by her family to get more people to join the blood stem cell register, Bethany still does not have a match and is having to look overseas. What plans do the Government have to improve public awareness of that vital issue and increase the number of potential bone marrow donors in the UK?

[The Prime Minister]

The hon. Lady is right to speak up for Bethany specifically, but also for all bone marrow cancer sufferers. The need to get more people on to the register, because of the importance of trying to get a match, is not widely enough understood. The Government will spend about £4 million this year to help promote that and make it happen. However, all of us, in our constituencies and in our own ways, can promote the idea and encourage people to do as the hon. Lady says.

[Mr Julian Brazier (Canterbury) (Con)]

May I draw my right hon. Friend’s attention to the excellent paper that ResPublica published this morning, which seeks to build on the Government’s initiatives both to build up cadet forces and to get more former military personnel into schools as teachers? It proposes that we set up in some of most deprived communities military academies and free schools administered by the reserve forces and cadets associations.

[The Prime Minister]

I pay tribute to my hon. Friend, who does so much to speak up for our reserve forces and our cadet forces, which are incredibly valuable assets to our country. It is worth noting that this year the cadet forces will do a huge amount to try to save and preserve our war memorials from the appalling crime of metal theft that they have been suffering. I will look very carefully at the ResPublica report that my hon. Friend mentions. We should empower our cadet forces to expand and perhaps to go into parts of the country where they have not always been present. The link that my hon. Friend makes between them and schools is a very good idea, which we should promote and support.

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

My constituent Miss S, who is 32, has lived alone for eight years and was forced on to housing benefit because of redundancy. That benefit has just been cut by nearly 50%, to the shared accommodation rate. Which does the Prime Minister think is most likely: that her landlord will reduce the rent by 50% or that she will be made homeless?

[The Prime Minister]

I congratulate the right hon. Lady on her preferment in the new year’s honours list. Although I profoundly disagree with many of the things that she has tried to do over her political career—mostly to disarm Britain one-sidedly—I praise her for her persistent efforts. No one can accuse—[Interruption.] I am sorry; let me answer the question very directly. As I understand it, all parties are committed to reform housing benefit. That was Labour’s commitment before the election. The housing benefit bill is completely out of control. Labour’s own welfare spokesman said last week that, at £20 billion, it was unacceptable and had to change. What we have seen so far, as housing benefit has been reformed and reduced, is that rent levels have come down, so we have stopped ripping off the taxpayer.

[Mr Speaker]

We now come to a statement by the Secretary of State for Health. Will Members who are leaving the Chamber do so quickly and quietly so that we may hear this very important statement?

Breast Implants

Wednesday 11th January 2012 Commons Chamber

12:35

[The Secretary of State for Health (Mr Andrew Lansley)]

With permission, Mr Speaker, I would like to make a statement about PIP breast implants. The House will be aware that approximately 40,000 women in this country have had implants manufactured by the French company Poly Implant Prothese, and that these implants could have been made of a non-medical grade silicone gel. My concern throughout has been for the safety and well-being of all these women. I wish now to update the House on what happened; how we are looking after the women concerned; and the further actions required.

In 1997, PIP received a European CE mark for its silicone breast implants. The CE mark was overseen by the German notified body, TUV Rheinland. The Medicines and Healthcare products Regulatory Agency adverse incident centre received a number of reports annually about PIP implants. Based on such reports, in 2008, the MHRA raised its concerns with the German regulatory authorities and the manufacturer. The MHRA was reassured by the notified body that the number of adverse reports was adequately explained by changes in the company’s reporting practices and by the increasing number of implants sold.

However, in March 2010, the French regulator discovered that rather than using medical grade silicone gel in the implants, PIP had in fact been using unauthorised silicone gel. This is in clear violation of the CE mark. The mark was promptly withdrawn and all EU member states immediately alerted. The MHRA immediately issued advice to stop using PIP breast implants in the UK. The French authorities are currently investigating this as a criminal matter, and the UK Government will help in any way we can with their investigation.

Initial toxicology tests in both France and the UK found no significant health risk to women with the implants. Also the MHRA could find no evidence of an increased risk of cancer. However, on 23 December 2011, following an increase in the number of reported ruptures, the French Ministry of Health announced that it was advising women, as a non-urgent precautionary measure, to consider having their PIP implants removed. The MHRA’s advice was that there was no scientific basis for recommending routine removal of implants in the absence of symptoms.

The available data, however, were incomplete. For this reason, I asked Sir Bruce Keogh, the NHS medical director, to form an expert group and to review the available data, including information from the French authorities, and to offer more definitive advice. I received the group’s interim report on Friday 6 January and a copy has been placed in the Library. I would like to thank the experts and members of the profession for their hard work and commitment in producing this rapid report.

The main findings of the expert group were, first, that there is no causal link between these implants and breast cancer. Secondly, the evidence on the rate of ruptures for PIP implants compared with other implants is incomplete and so this risk cannot be assessed definitively. Thirdly, although the rupture of implants or leakage of material can result in inflammation, there is no clear evidence that these problems are more serious in relation to PIP implants than other implants, or that they result in increased long-term health risks. Therefore, they have not recommended routine removal of the implants. Fourthly, there are risks inherent in the removal of breast implants, just as with any surgery, and these risks should be taken into account when taking any clinical decisions. However, for this particular group of women the risk is very low. Fifthly, the expert group recognises, as we have throughout, that women with PIP implants will be understandably concerned that they did not have the character of implant that they thought they did. The expert group advises, as we have, that we should give every woman an opportunity to secure advice, investigation and remedy.

The women who received the implants did so on the understanding that the implants met the requirements of the CE mark and were safe. That was not the case, and every provider has a responsibility to put things right. Although the majority of women will have received their implants privately, some—such as those who have had reconstructive surgery following mastectomy—will have received PIP implants through the NHS. All those patients will receive the highest possible standard of care. First, they will be contacted to inform them and give them all the relevant information and advice. Women who wish to will be able to speak to their GP or the surgical team that carried out the original implant to get advice on the best way forward for them. If the woman chooses, that could include an examination by imaging. If, when informed by an assessment of clinical need of the risks involved and the impact of any unresolved concerns, a woman decides with her doctor that it is right to do so, the NHS will remove and replace the implants, if the original operation was done by the NHS. Last week the NHS chief executive wrote to the service, and Dame Sally Davies, the chief medical officer, wrote to GPs and relevant health professionals. Copies of those letters are available in the Library.

It is right that those who received their care privately should also receive a similar level of service and reassurance from their care provider. However, I do not think it fair to the taxpayer for the NHS to foot the bill for patients who had their operation privately. Eight private health care companies, including Nuffield Health, Spire Healthcare and BMI, have confirmed that they will follow the same guidelines as those that I have set out for NHS patients. However, I want to be absolutely clear that the NHS will continue to be there to support any woman. If a clinic that implanted PIP implants no longer exists or refuses to remove the breast implants, where that patient is entitled to NHS services, the NHS will, in consultation with their doctor, support the removal of PIP implants in line with the guidance that I have just outlined. Any NHS service in that instance would cover only the removal of the implant, which would not include the replacement of private cosmetic implants. In such cases the Government would pursue private clinics to seek recovery of our costs.

These events highlight the need to ensure the safety of people having cosmetic interventions. It is clear from the information that we have received from the industry that the safety information that it collects and provides to the regulator is of variable quality. Without good data, we have no way of knowing when problems arise. I believe that there are a number of things that we now need to do. First, lessons need to be learned from this case and incorporated into the ongoing review of the EU medical devices directive. I spoke to Commissioner Dalli yesterday, and can confirm that this European work is under way. We also need to understand what happened in this instance in the United Kingdom. A review for that purpose will be led by the Minister for Quality, Earl Howe, with expert advice, and will shortly put its terms of reference in the Library. That review will investigate and report rapidly. The blame for what happened lies with PIP, but the review will enable us to learn lessons to improve future regulatory effectiveness and will feed into the Commission’s review.

In addition, the Care Quality Commission will conduct a swift review of private clinics. That review will look at evidence of compliance, patient safety and clinical quality, and the information and support given to their patients. Where a provider does not meet those requirements, the CQC has a wide range of enforcement powers that it can use to protect the safety of patients. The findings of that review will be published before the end of March.

Looking to wider issues of clinical safety and regulation, I have also asked Sir Bruce Keogh to reconstitute his expert group to look at how the safety of patients considering cosmetic interventions can be better ensured in the future. That will include treatments such as cosmetic surgery and dermal fillers. I expect his review to consider whether cosmetic products and interventions are appropriately regulated and have strong clinical governance; whether patients and consumers can be confident that the people who carry out procedures have the skills to do so; and whether the settings in which such procedures take place are able to ensure the care and welfare of people who use their services. That review will consider issues of governance, data quality, record keeping and surveillance, as well as ensuring that proper information is provided to secure patients’ informed consent.

I expect the review also to include consideration of an outcomes-based register of frequently implanted devices, covering everything from breast implants to heart valves and replacement joints, in order to provide the United Kingdom with a valuable asset for further innovation and safety improvement. There is already considerable clinical support for such a comprehensive register. The Government’s commitment is to provide effective reassurance and remedy for women with these implants, and also to learn the lessons to deliver safety and quality for the future. I commend this statement to the House.

[Andy Burnham (Leigh) (Lab)]

I thank the Health Secretary for his statement, and for the steps that he is taking to help the thousands of women who have found themselves in this worrying situation. We welcome much of what he has just announced, including the further reviews that he has commissioned. I assure him that we will support him in his efforts to reach a resolution as quickly as possible for all those people who are affected, but I have to tell him that he has a lot of work to do, and a lot of ground to recover, as his response to date has not helped to build those people’s confidence.

Over the Christmas break, the mixed messages coming from the Government did not go unnoticed. They only added uncertainty in what has been an anxious time for many people. The Health Secretary has gone from downplaying the dangers on 23 December to announcing an urgent review on new year’s eve, then giving an inconclusive statement late last Friday evening. This has left the people affected struggling to make sense of what it means. For the vast majority whose implants were fitted privately, there was precious little practical advice or help from the Department of Health as they began approaching their private providers. Many women were unable to access their records or told that long delays would be involved. Others have been asked to pay large fees to access their records. Many have simply hit a brick wall when they have sought medical advice or removal, even where there is evidence of rupture.

What people needed at the earliest stages was a strong statement from the Government of what was expected of all private providers—namely, that records should be provided without delay and without charge; that consultations should be arranged when people were worried; and that removal should be arranged urgently when there was evidence of rupture. The reality is that the Government’s failure to provide that leadership from the outset has left people fending for themselves in the face of a self-serving and unaccountable industry.

The Health Secretary was right, however, to establish an urgent review of the evidence by the NHS medical director, Professor Sir Bruce Keogh. We welcome the speed with which that review was conducted, and we echo the Health Secretary’s thanks to the members of the review panel. We accept the Government’s judgment on the advice to women regarding the removal of implants on the basis of the data that they have seen, but what confidence can we have in the evidence and data on which those decisions were reached?

We note the Secretary of State’s public comments about the industry’s failure to provide quality information in a timely fashion, and the interim report’s finding that the evidence is subject to “considerable uncertainty”. The review concludes that it should reconvene in “about four weeks time” to examine any new evidence, and to consider whether to update its recommendation on removal. I have to tell the Health Secretary, however, that that feels way too vague and ad hoc. May I press him to give a clearer timetable for this further process of review on whether to change the recommendation on removal? People need absolute clarity on when further statements will be made, so that they can make informed decisions. This is of course a separate matter from the long-term reviews that he has announced today.

This is particularly important in the light of the different decisions that other Governments are beginning to make in response to the situation. Yesterday, the Welsh Government announced that all women who received PIP implants, including those treated privately, will be offered replacement implants on the NHS. That is of course different from what the Health Secretary has announced today. What discussions did he have with his counterpart Minister in the Welsh Assembly Government before their announcement was made? Will he assure the House today that all the data that were available to Welsh Ministers and officials were also available to, and considered by, the Keogh review? Governments around Europe have responded sooner, more decisively and with greater clarity than the coalition has done. By contrast, people here have found the Government’s statements in response to be both inconclusive and ambiguous.

We support the decision to help NHS patients to have PIP implants removed and replaced, but does the Secretary of State appreciate how that decision has added to the confusion that many people feel and was interpreted as contradictory to the review’s overall finding? The clear implication of the Keogh review is that the best course of action is, in fact, to have the implants removed, but again no practical help was offered beyond the statements of expectation for private providers to match the support on offer from the NHS and the reference made to “moral duty”.

I, too, commend the private providers, such as Nuffield, Spire and BMI, that have done the right thing by their patients, but in recent days we have heard how some of the leading cosmetic surgery clinics have simply ignored the Health Secretary’s appeal. Transform, which used PIP implants on over 4,000 patients, has said that all women affected will have to pay £2,800 for removal, while the Harley Medical Group, which has 13,900 patients with PIP implants, has offered to pay for the cost of the new implant, but only if the NHS pays the far greater bill for the surgery. I am sure the whole House will agree that this is an appalling response to this situation, and that the failure of these companies to face up to their duty of care for their patients leaves everybody, including the Government, in a difficult position. It is simply unacceptable for any woman in England to be left in a position where she is worrying about her health and thus has no peace of mind, but is unable to afford to do anything about it.

I appreciate what the Health Secretary has said today about helping people out of this predicament. I agree with his decision where private clinics no longer exist, but in accepting that the NHS will provide private treatment where private providers refuse to, is he not in danger of letting those providers off the hook? May I remind him that most people will not accept that the NHS should subsidise the failures of private companies, and will look to him to pursue them to the nth degree to get any costs back? For instance, has he fully explored the insurance position of these private providers as a means of recovering costs? He says he will pursue them, but what assumptions has the Department of Health made about the likelihood of his success, and how much money is expected to be recovered? Has he fully explored the position of the French Government and considered whether there is any residual liability on the device manufacturer in that company?

Let me turn briefly to questions of regulation. Can we support what the Secretary of State said today about the wider review of regulation of the cosmetic surgery industry? If there are any loopholes, we will support him in closing them down.

Finally, the right hon. Gentleman’s Health and Social Care Bill envisages a much expanded role for the private sector in the delivery of health care. I make no comment about that, but has he reflected on the Bill and revisited the assumptions behind it? Will he assure us that issues of quality and safety will be safeguarded in the NHS that he seeks to create? We want to be assured that he is giving careful consideration to all these issues, as he considers his response to this worrying situation.

[Mr Lansley]

I am grateful to the shadow Health Secretary for his welcome of my statement and the principles behind what we are setting out to do to look after the women affected by these implants.

I do not share the right hon. Gentleman’s view that there were any mixed messages. I am sure he would have been the first to complain if I had not identified the lack of available and consistent data and not asked an expert group to look into this. As we look at countries across the world, we can be confident that we have set an exemplary standard in looking after women through the NHS and in bringing together an expert panel fully to understand what would be the best advice for women. The advice that no identified specific safety concern justified the “routine removal” of these implants was true on 23 December and it remains true today. As we have recognised from the outset and as I said on 23 December, if women are worried or concerned about the possibility of not having the implant they thought they had, that provides a perfectly reasonable basis on which to seek advice and investigation. It would be right for some women to ask for removal, but we should not assume that women are choosing to have these implants removed on the basis of clinical advice—even in France.

The chief medical officer spoke to a clinical counterpart in the Welsh Assembly Government before the publication of the expert group’s work. I have made sure that they are informed, but I have to say that the Welsh Government made an announcement yesterday without previously informing us.

[Paul Flynn (Newport West) (Lab)]

It’s called devolution.

[Mr Lansley]

It may be called devolution. I respect the devolved Administrations and always inform them of what I am doing, where it is relevant to them. We do not recognise the advice that Wales received. Sir Bruce Keogh’s expert group, which included some of the foremost experts in plastic surgery, made clear recommendations last week for patients in England and concluded that there was no significant increased clinical risk in cases where implants are not replaced.

If the shadow Secretary of State commends what the Welsh Government have done—[Interruption.] Perhaps he did not, but if he or anyone were to commend it, they would need to recognise that it runs the risk of letting the private providers off the hook. I am very clear that they should provide an equivalent standard of care. As the right hon. Gentleman made clear, there are limitations on what can be done. I do not have powers and I did not inherit powers to control what the private providers do in the private sector. I have to tell the right hon. Gentleman, however, that I have reflected on the Health and Social Care Bill, which is a positive legislative step forward. Just as it allows Monitor as a health and social care sector regulator, on which we are consulting, to look at the prudential regulation of private providers in social care, so it would allow us to consider the role of Monitor as a health sector regulator in licensing private providers of private health care. It is thus a positive not a negative step forward. There is no comparison, as the right hon. Gentleman will recognise, between the role of the private sector providing private care and the private sector in the NHS, which is subject to the same duties and obligations as an NHS provider. The Bill does not lead to an increase in private sector provision, but in so far as there are private sector providers, they will be properly regulated in the NHS.

On the role of private providers, they may be insured and there may be warranties relating to these implants. We do not have data on this aspect, but I am clear that these providers have legal and, indeed, moral obligations. I particularly commend a letter issued this morning by the leaders of the profession—the two principal professional associations—to their surgical colleagues. Having talked about the standard of care in the NHS, the letter went on to say:

“Those working in the private sector are urged to support in similar fashion. We would hope that implanting surgeons would honour requests for replacement surgery free of surgical charge”.

The private providers that have not made this offer to the women for whom they are responsible can see that their surgical associates are willing to carry this out free of surgical charge, so I see no reason why they should not now step up and deliver the standard of care that women have a right to expect.

[Mr Stephen Dorrell (Charnwood) (Con)]

May I welcome my right hon. Friend’s statement and the prompt action he has taken over the last few weeks to address this issue? Does he agree that the first priority when these concerns came to light was to ensure that the women who have had these implants had clear, authoritative advice based on the evidence of the right way to treat them, and that the process he established under Sir Bruce Keogh has provided and will continue to provide exactly that authoritative evidence-based advice? Does he further agree that there are some longer-term policy issues around the regulation of this industry that need to be addressed, but in a more considered way and not tied up in the emotions of this immediate concern?

[Mr Lansley]

I am grateful to my right hon. Friend and agree with all his points. I would add that when the French Government informed us of their prospective announcement—I spoke to the French Health Minister the day before it—we gave the best advice to date, based on the MHRA’s knowledge of the toxicology tests and its discussions with the French regulator. What we have to do is to establish the extent to which surveillance of these implants over a number of years should have led to any different conclusion. It remains true, however, that there is no evidence of long-term health effects that would give rise—and would have given rise at that time—to a different recommendation from the one that we made.

[Ann Clwyd (Cynon Valley) (Lab)]

This is not a new issue, as the Secretary of State must know. Twenty years ago I raised the case of a constituent who had to have a double mastectomy because silicon implants had leaked in her body. As a result, we set up an organisation called SOS—Survivors of Silicon. We worked with Which? magazine and the Department of Health, and we helped to set up the register of implants, which was unfortunately not made compulsory. That is why the data are missing.

This is part of a wider issue, of the proper regulation of the cosmetic surgery industry, 70% of which is virtually unregulated. I hope that the Secretary of State will insert an amendment into the Health and Social Care Bill to ensure that there is proper regulation of the whole industry.

[Mr Lansley]

I completely understand the right hon. Lady’s point, but this activity is not unregulated. For example, the Care Quality Commission is responsible for the registration of providers, and for ensuring that they meet essential standards of safety and quality. However, for precisely the reasons cited by the right hon. Lady, I am asking Sir Bruce Keogh’s group to consider wider issues relating to the regulation of cosmetic surgery and cosmetic interventions.

The registry to which the right hon. Lady referred was discontinued in 2004 because a substantial number of women were not consenting to the addition of their names to the register. I believe that, given the positive experience that has followed the establishment of the National Joint Registry, we can reassure women that their data can be entered without prejudicing their patient confidentiality.

I should make it clear that as yet we have no evidence demonstrating any significant difference between the rupture and leakage rates of PIP breast implants and those of other implants. Last June the American Food and Drug Administration published the findings of a study of normal implants, two of which had a 10% to 13% rupture rate over a 10-year period. It is important to appreciate that implants in themselves pose a distinct risk of rupture and leakage.

[Dr Sarah Wollaston (Totnes) (Con)]

I welcome the clear commitment to putting women’s health needs first in this context, but is not the heart of the problem the obvious conflict of interests for private clinics when it comes to the provision of long-term safety statistics? Will my right hon. Friend ensure that any future system allows women to self-report to the registry—albeit with a follow-up from specialists for confirmation purposes—so that we can have a complete picture of the long-term complications caused by devices of this kind?

[Mr Lansley]

My hon. Friend is right. When Sir Bruce and his colleagues are considering the establishment of a wider registry, they will consider not only the possibility of self-registration but the possibility of making clinical professionals responsible for the publication of such data. The responsibility should not rest solely on providers or manufacturers.

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

I understand that a number of private clinics will not even scan a patient with PIP implants without charging. However, these goods were counterfeit. They were not of a medical standard, and they could be injurious to health. Should not the NHS be prepared to help women who must be worried sick, and perhaps cannot even afford to have a scan to reassure them? I cannot believe that the NHS would turn its back on a patient who was suffering after drinking counterfeit vodka, so why should it turn its back on these patients?

[Mr Lansley]

I am sorry that the hon. Lady framed her question in that way, because I thought I had made it clear that the NHS would always be there to support women. We will seek to recover the cost to the NHS if the original provider was a private provider: that approach has been adopted for years, and I am sure that it would have been adopted by my predecessors. No woman should have to feel that she will not be looked after, but I am making a different point—namely that, in the first instance, women should be looked after by the original providers, who have a continuing duty of care. They also have legal obligations—as well as the moral obligations to which I have referred—but it is not for me to advise on those.

[John Pugh (Southport) (LD)]

If the Government are paying for something that is needed, it is logical to assume that some private firms must be dodging their responsibilities. If those firms are not indemnified against the risks of surgery or willing to accept responsibility for its consequences, why on earth do we allow them to practise? Does the remedy not lie in our hands?

[Mr Lansley]

I entirely understand my hon. Friend’s point. The position we have inherited is that I have no powers in relation to the provision of private health care by private companies. As I said to the right hon. Member for Leigh (Andy Burnham), the Health and Social Care Bill provides for the establishment of Monitor as a health sector regulator that will license such providers. I am not making any judgment at this point on whether it would be appropriate for conditions to be attached to such licences in relation to the continuity of service to patients, but it is one option that we can consider.

[Chris Bryant (Rhondda) (Lab)]

May I suggest to the Secretary of State that the problems in the cosmetic intervention industry may be far more extensive than we have known thus far? A few years ago, I had my eyes lasered. I visited five clinics, four of which seemed to be trying to sell me an intervention rather than trying to do anything that would be in my general health interest. Will the Secretary of State add laser surgery clinics to his list, and also private dentists, many of which are encouraging patients to undergo operations that they certainly do not need?

[Mr Lansley]

I will reserve my position on dentistry, because there is a very wide range and cosmetic intervention constitutes a substantial proportion of overall dentistry activity, but I will happily consider whether there is an issue to be dealt with. As for laser eye surgery, I will ask Sir Bruce’s group to consider not only the establishment of a registry in relation to implants and devices, but cosmetic interventions more generally. I hope that we shall be able to reassure the hon. Gentleman when we publish the terms of reference.

[Several hon. Members]

rose—

[Mr Speaker]

Order. Before I call Margot James, let me wish the hon. Member for Rhondda (Chris Bryant) a very happy birthday.

[Margot James (Stourbridge) (Con)]

I commend the Black Country Partnership NHS Foundation Trust on conducting 517 breast implant operations in the decade before 2008 without the use of a single PIP implant.

What this furore has revealed to me is the existence of a growing private sector offering a vast array of cosmetic surgery that extends well beyond breast implants. I fear that the need for tighter regulation of the industry will prove widespread, and I therefore welcome the Government’s commitment to a review. Does my right hon. Friend expect to be able to charge the private sector for the costs of any additional regulation that the review group may deem necessary?

[Mr Lansley]

I am grateful to my hon. Friend for what she said about the NHS. I think that before considering whether there is a cost associated with regulation and how it might appropriately be met, we should consider what is necessary to assure patients of safety and quality.

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

I welcome the statement, but may I caution the Secretary of State against placing additional burdens on the Care Quality Commission without providing it with additional resources? May I also urge him to heed the advice of my right hon. Friend the Member for Leigh (Andy Burnham), and pause to listen and reflect on what lessons can be learned and what safeguards can be provided for the future? I am thinking both of the protection of patients’ safety and of future NHS liabilities when surgical procedures or treatments are carried out by the private sector, which is likely to become more frequent as the privatisation provisions of the Health and Social Care Bill are implemented.

[Mr Lansley]

For reasons that I have already explained, the hon. Gentleman is simply wrong about that. It is nonsensical to attempt—as the editor of The Lancet did this morning—to compare the regulation of private providers of private care with that of private providers of NHS care. There is no comparison at all.

The CQC will inspect a sample of providers of cosmetic surgery to check that they are meeting registration requirements, and will undertake a number of unannounced inspections as part of that. We expect the inspections to be completed by the end of the month, and expect the CQC to have published its report by the end of March. It has confirmed that it has enough resources to undertake the inspections within its existing budget.

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

I add my support and thanks to the Secretary of State for what he is doing on this very important issue which has caused so much distress to so many women. Does he agree that this episode flags up a wider issue in the cosmetic surgery industry, in that some practitioners performing medical procedures do not have any medical qualifications or knowledge of anatomy? Does he also agree that it is a problem that there is no psychological counselling and that a holistic look at patients is not taken, as this is an on-demand industry? Finally, does he agree that there must be a proper paper trail and record system in the industry, so that we can consider what is in the best interests of patients and so that there is proper accountability for all providers?

[Mr Lansley]

My hon. Friend makes a number of important and perceptive points. It is, and will continue to be, one aspect of NHS advice that psychological assessment can form an important part in the management of patients referred for low-priority procedures, including cosmetic surgery. However, although we will look at cosmetic interventions and their regulation more widely, we must recognise that the issue in this instance related to what was a criminal act—seeking to adulterate the material in the implants. Many private providers were using what they regarded as properly certified implants for a perfectly proper procedure. To that extent, they were not engaging in any improper behaviour. However, they have legal and moral obligations to their patients, and I am asking them to discharge those obligations.

[Fiona Mactaggart (Slough) (Lab)]

It saddens me that, despite previous reports recommending more effective regulation of the cosmetic surgery industry, it has taken this crisis, causing so much distress to so many women, for the issue to be taken seriously. I am nevertheless glad that it is being taken seriously. Will the Secretary of State consider ensuring that people seeking cosmetic procedures must have independent counselling and advice from a body that will not make a profit from that procedure, and whose whole concern is the health of the patient?

[Mr Lansley]

I am grateful to the hon. Lady for that suggestion, and I will ask Sir Bruce’s group to consider it.

[Penny Mordaunt (Portsmouth North) (Con)]

I welcome the statement. What has the Secretary of State learned from this episode about the quality and take-up of routine insurance products offered by private companies to protect both patients and providers when cosmetic surgery goes wrong?

[Mr Lansley]

I am grateful to my hon. Friend for her welcome for the statement. Those seeking cosmetic interventions must ask serious questions about not only the nature of the procedure but the quality and reputation of the provider organisation, and ask it how it would protect their interests if things went wrong.

[Sheila Gilmore (Edinburgh East) (Lab)]

The Secretary of State referred in his statement to the possibility that an organisation that had carried out operations had gone out of business. As there are long-term implications from such surgical interventions, has the Secretary of State considered instituting some form of levy or fund that would have to be paid into—nor do I want to let the private sector off the hook—so that if organisations go out business there would be a sum of money from which people could claim?

[Mr Lansley]

As I hope the hon. Lady will appreciate from what I said to the right hon. Member for Leigh (Andy Burnham), the Health and Social Care Bill introduces for the first time a comprehensive continuity of service regime for the NHS, and it also creates, through the health sector regulator, the potential for us to consider whether such continuity of service needs to be extended beyond the NHS.

[Ian Swales (Redcar) (LD)]

If the NHS stands behind private providers in such cases, it is effectively providing free indemnity insurance. Will the Secretary of State look at the insurance position of providers of such services and ensure that the taxpayer does not face open-ended liabilities?

[Mr Lansley]

As my hon. Friend points out, to that extent the NHS has always stood behind the private sector provision of health care. If things go wrong, people have the right to access NHS treatment as they must be looked after on the basis of clinical need. Referring back to points I made earlier, the Health and Social Care Bill gives us an opportunity to look more systematically at continuity of care for patients both in the NHS and the private sector and at the responsibilities of providers under their licence.

[Valerie Vaz (Walsall South) (Lab)]

I thank the Secretary of State for coming to the House and making this statement. How many clinics will the CQC be reviewing, and what will happens in respect of any clinics that are no longer practising? Presumably the CQC will not have access to their records.

[Mr Lansley]

I cannot tell the hon. Lady how many clinics the CQC will visit, but it will be a sample of providers, not all of them. As she may know from the material we published last Friday, there were 93 private providers. The operations were heavily concentrated in that a lot of them were carried out by a small proportion of providers, but about 87 other small providers, or even single-handed providers, are involved and accessing data from all of them will be difficult. I also recognise that, as the hon. Member for Edinburgh East (Sheila Gilmore) said, some may not be in business any longer, or there may be surgeons who have retired.

[Paul Uppal (Wolverhampton South West) (Con)]

I also thank the Secretary of State for making the statement. Following on from a vein of questioning that has already been explored, will he elaborate on the point about the Government pursuing firms to recover costs and explain what mechanisms are available to the Secretary of State to recover costs?

[Mr Lansley]

I will do so to an extent. It depends on the nature of the legal contract between a woman and her private provider. I hope that in many cases the legal obligations derived under that contract or under sale of goods and services legislation will clearly mean that the woman will get redress from her private providers or her insurers. If the NHS becomes involved, there may be compensation through the injury costs recovery scheme, so if the NHS incurs costs, we can go on to seek to recover them.

[Yasmin Qureshi (Bolton South East) (Lab)]

I thank the Secretary of State for his statement. As has been said, most of the cosmetic surgery industry is not regulated. What time frame are he and his staff working towards?

[Mr Lansley]

Given the nature of the work I am asking Sir Bruce Keogh and his group to undertake, it will take them some time to look at the range of cosmetic interventions and make any recommendations. They are coming together as rapidly as they can. Many of them have given up a great deal of time over the past two weeks to help us in this work. We must recognise that there are things we need to do rapidly to ensure that there is support and reassurance for any woman affected by PIP implants, and we are acting rapidly. There are lessons and wider implications to be learned. This particular area of cosmetic surgery was not without regulation. The question is to what extent things were properly regulated with surveillance and enforcement over a number of years.

[Steve Brine (Winchester) (Con)]

I welcome the Secretary of State’s statement. As he knows, I co-chair the all-party group on breast cancer and we will want to monitor how women are treated by the NHS and private providers, and we will certainly feed that into the Department. For women who have fought breast cancer and been through the trauma of reconstructive surgery, this will bring it all back and be tremendously upsetting. Does the Secretary of State therefore agree that speed is of the essence in respect of replacement surgery where it is wanted, so that those women can again put this nightmare behind them?

[Mr Lansley]

I am grateful to my hon. Friend and I completely recognise the points he makes. As he will know, the overwhelming majority of the approximately 3,000 women who had PIP implants through the NHS will have had them as breast reconstruction surgery following mastectomy. From day one, we were clear that we wanted all those women to be able to get advice, investigation and remedy, and removal and replacement, should they wish. If the NHS was responsible for the original operation, we will be responsible for the replacement with new implants, if that is what is wanted.

The NHS is very clear about this issue in the advice that was presented. I welcome the fact that my professional colleagues in the associations are making it clear that, through the NHS, replacement procedures for these women should be possible rapidly, but it should not prejudice the availability of urgent referral for cancer, which will continue to be an operational requirement in the NHS.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

The question arises of access to records in both the private and NHS sectors. Is it not time to look again at who is the keeper of medical records? Should it not be the patient—therefore bringing together the NHS and private provision, where applicable—rather than the institutions?

[Mr Lansley]

Of course, as the hon. Lady knows, we have been thinking hard about precisely this issue. The NHS Future Forum made further recommendations to us only yesterday about achieving access for patients to their own records by 2015 across the NHS. The NHS should keep records, but the patients themselves should have access to them. We will pursue that issue in the NHS, although frankly, I am not in a position to mandate that in the private sector. However, any patient would be well advised to say, “Why can’t I hold my own record from a private provider?”

[Bob Blackman (Harrow East) (Con)]

I welcome the Secretary of State’s statement, but PIP is not the sole supplier of breast implants across the industry. What assurances has he received from the industry that no other company has embarked on the practice of using non-medical grade silicon in its breast implants, so that women who have had such implants can feel safe?

[Mr Lansley]

I have no evidence of such behaviour on the part of other companies. My hon. Friend is right: PIP is only one of a number of suppliers, and in this country probably only one in seven breast implants were PIP implants. Other countries have looked at this, and across Europe the regulatory process should ensure the scrutiny of these implants, including proper testing. The European review must look at whether that surveillance, including unannounced inspections and appropriate testing, gives us the assurance we are looking for.

[Heidi Alexander (Lewisham East) (Lab)]

Yesterday, I was contacted by a constituent who had PIP implants inserted by the Harley Medical Group in 2006. She said:

“There is so much conflicting information at the moment, I feel as though I’m being pushed from pillar to post. To add absolute insult to injury nobody is keen on helping us, they are saying the NHS should help…or they say they will perform the procedures on us for an extra fee.”

Can the Secretary of State tell me precisely what further representations he will be making to private providers to ensure that all women get access to the advice and treatment they need?

[Mr Lansley]

We have been very clear about the advice we have given to women, and I hope that, through the NHS, any woman in those circumstances would go and see their general practitioner, who will have full access, from the chief medical officer, to the expert advice we have disseminated. I know that the Harley Medical Group has not shared with others the view that it can match the NHS’s standard of care; but given that, the professions are suggesting to surgeons that they should honour requests for replacement surgery free of surgical charge. I hope that gives a basis on which more of the private providers will now meet their full obligation of a duty of care.

[Mr Philip Hollobone (Kettering) (Con)]

What is the Department of Health’s central estimate of the number of women who have had breast implants through private clinics who will seek their removal through the NHS?

[Mr Lansley]

I am sorry to disappoint my hon. Friend but I cannot offer him such an estimate. We know that some 37,000 women had PIP breast implants. Clearly, not all those will necessarily want removal, and on advice, it might be any proportion of those; I cannot tell him what that figure would be. As we see in France, recommending the removal of implants does not mean that all women will have them removed.

[Mark Durkan (Foyle) (SDLP)]

I acknowledge the Secretary of State’s commitment to engaging proactively with the devolved Administrations on this issue. However, in his statement he used somewhat clumsy language regarding the third main finding of the expert group, saying that “there is no clear evidence that these problems are more serious in relation to PIP implants than other implants, or that they result in increased long-term health risks.” Is he not concerned that, put so clumsily, that will not only fail to reassure those with PIP implants but extend concern and alarm to those who have received other implants?

[Mr Lansley]

I am afraid that absence of evidence does not mean evidence of absence. We can be very clear, on expert advice, that there are no specific safety concerns that routinely require the removal of these implants, nor identification of any increased long-term health risks, in precisely the way I have described. I cannot go further and provide, on advice, absolute assurance, and the expert group was clear about that. That is why the French Health Minister, whom I was talking to last week, and I were clear that we should undertake additional toxicology tests on implants when they are explanted, in cases where they were implanted over a period of time, to begin to understand the extent to which they had adulterated filler material and what was in it.

[Andrew George (St Ives) (LD)]

I commend my right hon. Friend’s initiative. However, he said the following, which may have been sloppy wording: “those who have had reconstructive surgery following a mastectomy, will have received PIP implants through the NHS.” Of course, the majority will not have done so, and I have confirmed with surgeons in Cornwall that PIP implants have never been used in the NHS in Cornwall. Given that the Medicines and Healthcare products Regulatory Agency issued advice to stop using PIP implants in the UK in March 2010, can the Secretary of State confirm that this advice was acted on, no doubt within the NHS but across private clinics as well?

[Mr Lansley]

I hope I did not say what the hon. Gentleman ascribes to me. Some 3,000 women, we think, had PIP implants, and of course, that is only a fraction of the number having breast reconstruction surgery. I think I can offer him reassurance. The MHRA withdrew authorisation in March 2010, and given that there was only one distributor of these implants in this country—Cloverleaf—they will not have been distributed for use after that date.

[Toby Perkins (Chesterfield) (Lab)]

A constituent in Chesterfield contacted me who is at her wits’ end. She has been in considerable pain since having a PIP implant fitted, and has been told by the private provider that she will have to pay £3,600 to have it replaced. What more can the Secretary of State do to ensure that her private provider follows the example of the other eight providers that are doing this free of charge? Let us put some pressure on these companies to make sure that all of them do the same as the NHS and replace the products they have fitted.

[Mr Lansley]

I think I have made it clear that not only the Government but, helpfully, the professional associations are looking to give no reason why private providers should not match that standard of care, especially if the implanting surgeons are willing to offer replacement surgery free of surgical charge themselves. It would be very helpful if the hon. Gentleman and other Members gave us details of such cases on behalf of their constituents. Clearly, his constituent will have had that implant before March 2010. The adverse incident centre has had 478 reports of ruptures over the whole period, which extends back many years. One of the things we want to understand as part of our review is why, if there were ruptures and, more to the point, adverse health effects associated with these implants, they were not disclosed to the adverse incident centre. As yet, we have not seen a range of health effects over a period of time that, in themselves, distinguish these implants from other, normal implants.

[Mr Marcus Jones (Nuneaton) (Con)]

I contacted the Harley Medical Group on behalf of a concerned constituent this morning and was told that it would be making a decision on its response to this issue by Friday, although that is somewhat contradicted by the comments made by the shadow Secretary of State. Regardless of that, does my right hon. Friend not agree that the Harley Medical Group, or any other company, should step up to the plate, take full responsibility and work to make sure that it gives the people involved complete satisfaction, without any cost to the individual concerned?

[Mr Lansley]

My hon. Friend will understand that I cannot speak about the precise details of the situation with the Harley Medical Group. All I can say is that the group has told the media that it does not feel it can offer that standard of care completely, but that will have been before the professional associations wrote to their members asking them to support replacement surgery free of surgical charge. I know that the group has told members of the media that it is willing to offer to the Government that if we are responsible for the removal of implants, it will pay for implants to be available for replacement purposes. Frankly, if surgeons are willing to waive the surgical charge and the group is willing to pay for the implants, it is not too much to ask for it to be responsible for removal and replacement, where it is in the woman’s best interests to do that.

[Paul Flynn (Newport West) (Lab)]

Does the Secretary of State not regret failing to react to the call made last May for British patients to have the same protection against failures of all medical devices as that enjoyed in the United States? Is not the real scandal here, again, the chronic under-reporting by the industry and the MHRA of failures of devices and drugs? Is not the answer for this probe to look into the possibility of having a genuinely independent regulatory authority, instead of one that is entirely funded by the industry, because self-regulation is often no regulation?

[Mr Lansley]

The hon. Gentleman says that this body is entirely funded by the industry. It is true that in relation to pharmaceuticals the MHRA is funded by levies on the pharmaceutical industry, but much of the cost of the regulation of medical devices is actually met by the taxpayer. I regard the MHRA as operating in an independent fashion and its expert and scientific advice as independent from Ministers. None the less, as he says, the review that Earl Howe will lead will examine the lessons to be learned, including those about the effectiveness of regulatory surveillance and enforcement in this country, albeit that the regulatory failure occurred, in essence, in Germany, in the first instance, and in France.

[Richard Burden (Birmingham, Northfield) (Lab)]

The uncertainty that many women face relates to not only the level of risk associated with PIP implants, but whether the implants they had fitted were PIP implants. I accept what other hon. Members have said about problems with record keeping in the private sector, and that needs to be taken up. The Secretary of State said that the estimated 3,000 NHS patients will be written to. If they are to receive such a letter, will he reassure them about when that will be?

[Mr Lansley]

The chief executive of the NHS wrote to the NHS bodies last week. As the hon. Gentleman will realise, the numbers concerned in each organisation will not be very large, so I am looking for what he describes to happen rapidly.

[Mr Denis MacShane (Rotherham) (Lab)]

Will the Secretary of State send officials to investigate the Birkdale clinic in Rotherham and its executive, Mr Promod Bhatnagar? Scores of women have had PIP implants at the clinic and are now being told that they have to pay £2,900, in cash, to be screened and looked at again. Mr Bhatnagar has threatened groups in south Yorkshire with “unimaginable consequences” if they raise this issue. After his very unclear statement, will the Secretary of State finish by saying that as in every other European country, and standing with the women of Britain, taxpayers do not mind paying for a few hundred women to be properly investigated? My constituents have contacted me saying that the women of south Yorkshire should be able to go to their general practitioner, go straight into hospital and be seen to, and we should clear up all the fuss about bills afterwards.

[Mr Lansley]

I think I have been absolutely clear about what I expect to happen, in relation both to women treated through the NHS and what I expect of private providers. I have also made it clear that if private providers will not or are unable to meet that standard of care, the NHS is available to support women. It is absolutely wrong to say that we are somehow responding to women differently from other European countries, because across Europe countries affected by this are taking exactly the same view that we take.

[Jim Shannon (Strangford) (DUP)]

I thank the Secretary of State for his statement and I again highlight the concerns that a great many ladies have. Just today, I have been made aware that constituents of mine, as well as those from other regions of the United Kingdom, have had PIP breast implants carried out privately in the Republic of Ireland. When they contacted the firm, they found that it had gone bust, so what help can he give ladies, both financially and physically, who were NHS patients in the United Kingdom but had operations carried out outside the United Kingdom, specifically in the Republic of Ireland?

[Mr Lansley]

I refer the hon. Gentleman to what I said in my statement: if women are entitled to NHS treatment in those sorts of circumstances, they should come to the NHS and we will provide the standard of care that I outlined.

[Ian Mearns (Gateshead) (Lab)]

The Secretary of State has demonstrated his obvious concern for the women affected by this situation. Does he accept that they are gravely concerned about the difference of opinion that is emerging between Governments in the countries where these implants have been used, in particular, the difference between our Government’s advice and that of the country where the implants were manufactured, France? Will he also reflect on whether companies in the private sector that are giving either cosmetic or other treatments of this nature to women are properly insured, so that even if they go out of business the insurer will cover women for future treatments should something go wrong?

[Mr Lansley]

On the hon. Gentleman’s final point, I refer him to what I said earlier about how we might deal with that in the future. On the point about other countries, I have spoken to Commissioner Dalli and I have spoken to my French counterpart twice. What I want to be clear about is that the French authorities did recommend routine removal of implants, but from any individual woman’s point of view we are, in effect, recommending that the same thing should happen: any individual woman should see the clinician responsible, should be examined—by imaging, if necessary—and should consider, in the light of that and in a clinical decision with her adviser, what is right for her. That will be true in France and in Britain. I wish to emphasise that we have not seen, on advice, scientific evidence that justifies the recommendation of the routine removal of these implants. We are not saying to women that we think they should have them removed; we are saying that women should have access to imaging. Clearly, women with symptoms, or women for whom evidence of rupture or leakage has been provided through imaging, may well choose to have the implants removed, and we would support that.

Trade Union Officials (Refund of Pay to Employers)

Wednesday 11th January 2012 Commons Chamber

Motion for leave to bring in a Bill (Standing Order No. 23)

13:38

[Jesse Norman (Hereford and South Herefordshire) (Con)]

I beg to move,

That leave be given to bring in a Bill to provide that pay for hours worked on behalf of trade unions by trade union officials during hours when they are paid by an employer should be refunded to the employer by the trade union; and for connected purposes.

The Bill addresses an issue that has recently attracted great public attention: the funding by the taxpayer of public sector employees who in fact work not as nurses, teachers, social workers, local government officers or civil servants but as trade union representatives. It was raised in an Adjournment debate last year by my hon. Friend the Member for Cannock Chase (Mr Burley) and I pay tribute to him for that, to my hon. Friend the Member for Witham (Priti Patel) for her work in the area and to other colleagues for their support today. The number of my colleagues in the Chamber attests to the importance of this issue.

This is not an area where definitive information is available, because adequate records have not been kept. The facts so far, taken from freedom of information requests to some 1,300 public sector organisations, are as follows. In 2010-11, trade unions received £113 million from public sector organisations. If extended over the lifetime of a Parliament, that would amount to the extraordinary sum of more than half a billion pounds in payments. An estimated 2,840 full-time equivalent public sector employees worked for the trade unions in 2010-11, paid for by taxpayers. That is equivalent to 2,840 public servants whose work has to be done by others: teachers who are not teaching, nurses who are not nursing and social workers who are not assisting their clients. The Department for Work and Pensions alone has 308 full-time equivalent staff working on trade union activities paid for by taxpayers, while Her Majesty’s Revenue and Customs has 181, to give just two examples. These facts are quite unknown to most people in this country and they deserve much wider publicity. It will be a source of huge anger to my constituents in Herefordshire, who must fill in their tax forms this month in very difficult economic times, to learn that they are subsidising nearly 200 tax officials who do no tax work at all—all the more so as under the previous Government the Revenue drastically cut back its office in Hereford.

It is important to be clear about one thing, however. The Bill is not about attacking the unions. The trade union movement in this country has an often distinguished history of supporting and protecting working men and women and their families. Many unions do very good work for their members today. I recognise these things and I welcome them. In a similar spirit, the House will know that I am a great supporter of co-ops, mutuals, credit unions and other organisations whose purpose is to empower and support people who are often on very modest incomes. The issue here is one of basic principle: is it appropriate for the taxpayer to subsidise any such large-scale activity by private organisations? If it is, should it be allowed without proper processes of competitive tender and public accountability? My own answer to these questions would be, in general, a resounding no.

Taxpayers’ money should be spent, as far as possible, on the front line of public services. In general, private organisations should not be subsidised by the state. Moreover, the fundamental principle of no payment without accountability is already observed throughout the public sector in other areas. Public procurement is supposed to be competitive and transparent, and so is commissioning of services in the NHS and across local government. In exactly the same way, there should be proper transparency and accountability in public funding for trade unions.

I myself have just waged a long campaign to recover some £1.5 billion for the taxpayer on the private finance initiative—only a small portion, so far, of the money overspent by the previous government on PFI. In effect, PFI included a massive subsidy to the financial and construction sectors. The principle is exactly the same here: taxpayers’ money should not be used to subsidise private organisations without proper transparency and accountability. Why should the unions be any different?

There is an important further argument. Subsidising the unions with taxpayers’ money is not ultimately in the interests even of their own members. Indeed, it will tend to undermine the services those unions provide. All subsidies distort incentives. This subsidy encourages union leaders to lobby politicians for hand-outs, rather than focus on doing the jobs their members pay them to do.

Finally, taxpayer funding creates huge conflicts of interest. Inevitably, some union reps will be tempted to engage in political activity during time funded by the taxpayer. That was the problem with Ms Jane Pilgrim, the former nurse turned union rep at St George’s hospital, Tooting, who denounced the Secretary of State for Health on the basis of a meeting she had never attended. That was politicking pure and simple, but the conflict between political activity and taxpayer funding would be removed if unions were required to refund public money received, as this Bill would demand.

Various defences have been made of such payments. It has been suggested that they actually save money, that union reps are needed for pay negotiations and that union reps must be employees, but those arguments entirely miss the point. The issue is not whether the unions provide valuable services, whether they should be paid for doing so or whether public servants may not also be union reps; the issue is why they should be paid in that role by the taxpayer.

There is a wider point as well, which is that of transparency itself. Last week, my office called seven of the biggest unions, asking for their latest financial reports and accounts as background research. The response was extraordinary. Some unions, such as the National Union of Rail, Maritime and Transport Workers and the Union of Shop, Distributive and Allied Workers, do not put this information online at all—USDAW kindly invited me to write to its treasurer with a request. Others, such as the NASUWT, make it available only to members. Unison had its 2009 statements online, and the National Union of Teachers had a summary. Only the Public and Commercial Services Union had a full recent report and accounts online.

Matters only become murkier on further investigation. The unions are regulated by the relatively little-known certification officer, who requires them to file an annual return. In the case of Unite, that reveals that the union had income in 2010 of £141 million and made a pay-off of more than half a million pounds to its outgoing joint general secretary, Derek Simpson—

[Mr Denis MacShane (Rotherham) (Lab)]

Is this in order?

[Mr Speaker]

Order. Stop the clock. The right hon. Member for Rotherham (Mr MacShane) should behave not like a trainee rabble-rouser but rather like the elder statesman that at his best he can be.

[Jesse Norman]

Astonishingly, there is no management report in Unite’s annual return, no historical comparison of income and expenditure, no discussion of the year’s activities, no analysis of the current environment or future prospects, no biographies of senior officials and not even any photographs. The impression given by that annual return is one of contempt for the union’s membership. Members should ask themselves what would be required if Unite were a charity like, to choose an example at random, the Sheffield Hospitals Charity. Its annual report and accounts is a model of detailed and clear presentation, full of information about the organisation, its people and its work. There is a very clear sense of public commitment and purpose. Its page on the Charity Commission’s website is packed with accessible information and graphics, but there is nothing especially unusual about that report and accounts or that disclosure. It is simply that the standards for public disclosure and the standards of treatment for donors are much higher for charities than for unions.

The Sheffield Hospitals Charity had income last year of just £2 million; Unite is 70 times larger. It is Britain’s biggest union, with more than 1.5 million members, and wields enormous political power. If this is how it treats its membership and the taxpayer, the case for greater union accountability and for more transparent regulation could hardly be clearer. I commend the Bill to the House.

13:48

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

This Bill attacks the most basic and most benign feature of trade union work—the day-to-day support for staff at work by their colleagues who are prepared to volunteer as trade union representatives.

Last time, the attack was led by the hon. Member for Cannock Chase (Mr Burley) in this Chamber. I had thought he might be detained elsewhere. I have to say to the hon. Member for Hereford and South Herefordshire (Jesse Norman) that I am surprised to hear him attempt to bring in this Bill. He is gaining a growing reputation for hard work and intelligent comment, but his speech was a cheap-shot speech based on ignorance, ideology and inaccurate briefings from the TaxPayers Alliance. He talks about trade union accounts and public service, but the Bill is a broadside against trade union organising in both the public and the private sectors. It is a personal attack on around 200,000 people who are ready to help their colleagues by giving advice, by supporting them at grievances and discplinaries and by negotiating with managers. That is difficult and demanding work, but many of those representatives are also ready to take on extra, special responsibilities for improving health and safety, equality, training and environmental standards.

The Bill is a personal attack on people such as Kevin Maggs, a GMB learning representative at A & P ship repairers in Cornwall. He organised open learning days for his colleagues at work and encouraged them on to courses. He says that some of them have been able to gain qualifications for a job they have done for years, whereas others have been able to understand their pay slip for the first time because of their improved literacy and numeracy. The hon. Member for Hereford and South Herefordshire might not be able to understand that, but Ministers do. Let me quote the Minister for Further Education, Skills and Lifelong Learning, who said last year:

“I want to pay tribute to union learning reps, who have made so much difference to so many lives, and to such effect. Trade unions can play an invaluable and immeasurable role in improving skills in the workplace.”

That is why the Government are rightly investing £33 million to support union learning. It is part of the £110 million condemned by the TaxPayers Alliance.

Many trade union reps rightly receive paid time off from their other work to carry out those duties. Many also devote much of their own time to that work. A recent Government survey showed that reps in the public sector contribute up to 100,000 unpaid hours each week to carry out their duties. Our union reps are the unsung heroes of the long, proud British tradition of volunteering. They are the workplace wing of the Prime Minister’s big society. There should be receptions in Downing street to pay tribute to their work. They support their colleagues and they save employers and the Exchequer millions of pounds each year by reducing the number of employment tribunals and days lost through illness and injury. By improving productivity and training, they help organisations to get through periods of great pressure and great change. I looked at the new year’s honours list this year and saw there were hundreds of civil servants, charity workers and business people on it—especially civil servants—but I found only one person, Mr Charles James from Leeds, who was honoured for the service he has given to his union and to his community. We should see many more ordinary workplace reps being honoured in future like Mr James.

I think that the House will have recognised that the hon. Gentleman did not quote one single employer. Employers are not calling for this attack; it does not even feature on the CBI’s 11-point checklist of curbs it wants to see on trade unions. Many of our biggest and best British companies work with trade unions and recognise them—Rolls-Royce, Tesco, Virgin Media, Odeon cinemas, the HSBC bank and Jaguar Land Rover. Those names are known worldwide and those companies know the benefit of working with trade unions and know the benefit of trade union representation.

If we accept that employers as well as employees benefit from union representation, it is entirely right to expect employers to make a contribution towards the cost. That is why the hon. Gentleman’s Bill is wrong. Let me say one final thing to him and his colleagues. Many trade unionists voted Conservative at the last general election—too many—and some even voted Lib Dem. They do not deserve this and the Bill does not deserve support from any part of this House.

Question put (Standing Order No. 23).

13:55

Division 419

Ayes: 132

---

Conservative: 121
Democratic Unionist Party: 7
Liberal Democrat: 3

Noes: 211

---

Labour: 186
Liberal Democrat: 13
Scottish National Party: 4
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Conservative: 1
Alliance: 1
Green Party: 1
Independent: 1

Opposition Day

Wednesday 11th January 2012 Commons Chamber

[Un-allotted Day]

Rail Fares

Wednesday 11th January 2012 Commons Chamber

14:07

[Maria Eagle (Garston and Halewood) (Lab)]

I beg to move,

That this House believes that the scale of increases to rail and bus fares and the high cost of fuel are significantly increasing the transport sector’s contribution to the cost of living crisis facing households up and down the UK; notes that, despite the Chancellor’s announcement in his Autumn Statement that rail fares would rise this month by 1 per cent. above inflation, many commuters have found their tickets have gone up by as much as 11 per cent.; recognises that this is a direct result of the decision to give back to train companies the right to add a further increase of up to 5 per cent., resulting in the cost of getting to work rising to more than the cost of monthly mortgage or rent payments for many families; notes with concern the National Audit Office’s warning to the Department for Transport that higher rail fares are likely to lead to higher profits for train operating companies; deplores the Government’s decision to levy even higher increases of 3 per cent. above inflation for 2013 and 2014; and calls on the Government to end the right of train companies to increase regulated tickets by more than the cap set by Ministers, so as to prevent fare increases of up to 13 per cent. that could otherwise hit passengers in each of the next two years.

This has not been a happy new year for many commuters. Having been promised by the Chancellor in his autumn statement that he was keeping increases in rail fares at just 1% above inflation, many had a nasty shock as they returned to work last week—not fare rises of 1% above inflation, but increases of up to almost 11%. Season tickets between Chester and Crewe are up by 10.6% on a year ago, and tickets between Llandudno and Bangor hiked by the same double-digit increase, 10.6%. Return tickets are also up—Exeter to London, for example, up by 9.6%, Cardiff to London by 9.7% and Plymouth to London by 9.7%.

But what did the Chancellor tell the House in November? He said:

“RPI plus 3% is too much. The Government will fund a reduction in the increase to RPI plus 1%. This will apply across national rail regulated fares, across the London tube and on London buses. It will help the millions of people who use our trains.”—[Official Report, 29 November 2011; Vol. 536, c. 810.]

He was right—it would have done, except that the Chancellor forgot to say that his Government had quietly given back to train companies the right to add up to another 5% on fares, provided the increases averaged out at the cap that he had set, giving the train companies back the right to fiddle the fares.

[Mr John Redwood (Wokingham) (Con)]

Given that we all would like lower rail fares, does the hon. Lady think that there should be a bigger Treasury subsidy out of taxpayers’ pockets in order to achieve that?

[Maria Eagle]

Our position is that we would have continued in this Parliament, as we did in 2009, to put a stop to the power train operating companies have to fiddle the fares—

[Stephen Hammond (Wimbledon) (Con)]

Will the hon. Lady give way?

[Maria Eagle]

If the hon. Gentleman will allow me to finish answering the last intervention, I might get around to giving way to him. As the previous Labour Transport Secretary made clear, we would not have given back to train operating companies the power to fiddle the fares by hiking them by more than the cap on the most profitable routes and getting away with it by introducing much lower increases on the routes that do not rake in the cash. That is something we put a stop to in government once times got tough.

[The Minister of State, Department for Transport (Mrs Theresa Villiers)]

Will the hon. Lady give way?

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

Will my hon. Friend give way?

[Maria Eagle]

I will give way to the Minister, who I expect will be winding up the debate, and then to my hon. Friend.

[Mrs Villiers]

The hon. Lady claims that Lord Adonis, a previous Transport Minister, would have continued the suspension of the fares basket, but the reality is that he did not renegotiate that with the train operators; he negotiated for a one-year contractual suspension. If he had intended to carry on with that, he would have negotiated the period into the franchises, but he chose not to.

[Maria Eagle]

The right hon. Lady is wrong to say that there was no intention to continue with that. She can try to rewrite our policy as much as she wishes, but my noble Friend Lord Adonis made it perfectly clear in oral and written evidence to the Transport Committee that the ban on flex would continue into subsequent years, and that remains our policy.

[Andrew Gwynne]

My hon. Friend is right to point out that it was the previous Labour Government who got rid of train operating companies’ ability to fiddle the fares. Was she as astounded as I was at the lack of knowledge displayed earlier by the Prime Minister, who did not even know that it was his Government who had reinstated the right for those companies to clobber hard-working commuters?

[Maria Eagle]

I must say that I was quite surprised that the Prime Minister did not seem to have that information. It was only after my right hon. Friend the Leader of the Opposition had asked him three times that the Prime Minister managed to claw his way towards an accurate answer, but that is what we have come to expect from him.

[Dr Julian Huppert (Cambridge) (LD)]

While we are discussing the rewriting of policies, what message would the hon. Lady give to a previous Transport Secretary who in 2007 allowed Stagecoach South West to raise fares by 20%, or indeed to the Transport Secretaries who allowed that to happen in the 10 years before that? Does she agree that that was a huge mistake and that fares went too high?

[Maria Eagle]

If the hon. Gentleman will wait, I will move on to say a little more about our current policy thinking later in my speech.

[Mr David Evennett (Bexleyheath and Crayford) (Con)]

Will the hon. Lady give way?

[Maria Eagle]

I will give way, but then I must make some progress, because the debate already has to be shorter than we had hoped.

[Mr Evennett]

I am extremely grateful to the hon. Lady and am listening to her with great interest, but she is attempting to rewrite history. Does she feel any guilt about the huge fare increases that took place under the Labour Government, because commuters in my constituency had a really rough time?

[Maria Eagle]

The reality is that when the previous Government saw what train operating companies were doing with the power that flex gave them to game the system and clobber some commuters far more than others, we banned it. This Government have reintroduced it. Times are still tough and the Government should not have caved in to pressure from train companies, but they seem to be unwilling, or perhaps incapable, of standing up to vested interests on behalf of commuters, who are now paying the price. I have made it clear that we would have strictly enforced the 1% above inflation cap and not allowed the increases of up to 11% that commuters have faced at ticket offices since the new year.

[The Secretary of State for Transport (Justine Greening)]

Perhaps the hon. Lady would like to finish the other part of her phrase, which is that she would not have allowed rises of above RPI plus 1%, just as she would not have allowed below RPI plus 1% flexibility. Will she confirm that that is the position and that many commuters would face fare increases under her proposals?

[Maria Eagle]

What we are not seeing from train operating companies or the Government are proposals to reduce fares. The technical position is of course that if an average cap is applied to each fare, the fare rise will apply to each fare. The Secretary of State is right about that, technically speaking.

[Ms Karen Buck (Westminster North) (Lab)]

On the commitment to reduce fares, is my hon. Friend aware that the Labour candidate to be Mayor of London intends to bring forward a package to reduce fares, given that Boris Johnson’s increase in the cost of a zones 1 to 4 travelcard equals a 21% rise, despite the fact that Transport for London has a £729 million operating surplus? The Labour party has a commitment to cut fares.

[Maria Eagle]

I am aware of that and thank my hon. Friend for making that point. At least Labour’s candidate understands how hard it is for ordinary, hard-pressed commuters to afford the kind of fare rises that the Government are not only allowing, but promoting. It is no good Ministers hiding behind the deficit, because this is not a simple case of bringing additional money into the Treasury; it is also about bringing additional money into the profits of private train companies. The National Audit Office report on the Department for Transport’s spending settlement warned:

“There is a risk that the benefit of the resulting increase in passenger revenues will not be passed on to taxpayers fully, but will also result in increased train operating company profits.”

High fares equal increased profits in an industry that relies on subsidies of more than £4 billion of taxpayers’ money every year. It is no wonder passengers in Britain are paying three and a half times more for their rail tickets than those in France, Germany and Holland, all countries that do not have the costly and fragmented rail industry structure that is the legacy of the Tories’ botched privatisation of our railway industry. The French, German and Dutch state railways are so successful that they are now bidding for and winning franchises to run rail services in Britain. The Government are step by step nationalising our rail services—it is just that it is not our nation. The profits will be helping to keep down fares in France, Germany and Holland for their own domestic passengers. It is no wonder that fares are so high under our broken system.

Therefore, we would enforce a strict cap on fare rises, but I believe that we need to go further and make fares fairer. Because the system has lost all credibility, passengers feel ripped off and know that they are being ripped off. They feel that the system does not work in their interests and that it is designed to catch them out. That is what I have been told by passengers as I have travelled across the country over the past year. In addition to getting spiralling rail fares under control, here are five other ideas that passengers have said would make a real difference. First, why is there no single national definition of peak time? Why are train companies allowed to set different rules so that passengers have to know precisely which company they are travelling with or risk facing a fine for travelling on the right ticket at the wrong time? Why are the companies allowed to chop and change peak time, stretching it out simply to hike their profits?

[Mrs Villiers]

rose—

[Dr Huppert]

rose—

[Maria Eagle]

I have already given way to the right hon. Lady and to the hon. Gentleman, so I will make some progress in my speech. At the very least, rail passengers would like tickets to state clearly the precise time restrictions that apply instead of simply being referred to some obscure part of a website that they do not have access to when purchasing a ticket.

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

Will the hon. Lady give way?

[Maria Eagle]

I want to make a few points about what I have heard from passengers and will try to give way to the hon. Gentleman later.

Secondly, passengers want a legal right to be offered the cheapest ticket for the journey they wish to make, and they do not think that it is too much to ask that the cheapest fare must be clearly advertised. Should passengers not be entitled to a refund if they have not been sold the cheapest ticket?

Under this Government, it is to become harder to buy the cheapest ticket if plans to replace staff with machines and close all 675 category E station ticket offices are implemented, yet that is what Ministers are considering, along with cutting the opening hours of 302 category D station ticket offices. All the evidence suggests that many people are not sold the cheapest ticket when they buy a ticket online or from a machine.

Thirdly, passengers have told us that they want the cheapest fares to be available wherever tickets are sold, yet the cheapest fares often appear to be available only online. Should not the same fare structure apply to tickets purchased at train stations and other outlets as applies to those bought online, ending the digital divide that is arising and increasing costs for older passengers, in particular?

Fourthly, what really annoys rail users is when they make a genuine mistake or are forced to change their travel plans but find themselves treated as a common criminal in front of other passengers and required to get out their cheque book and cough up. Of course we have to protect revenue, but we also have to have some common sense. Within the same period of the day, there has to be greater flexibility to vary plans, even on pre-booked tickets. Trains are not airlines, and we do not wish to go down the road of airline-style ticketing, with no cheap walk-on option.

Finally, passengers told us—

[Alok Sharma (Reading West) (Con)]

Will the hon. Lady give way?

[Maria Eagle]

If the hon. Gentleman will just let me get to the end of my points, I may give way to him.

Finally, passengers told us that they understand that sometimes a track has to close, such as for essential work, to keep our railways safe, but when a rail replacement service makes their journey longer, often adding considerable inconvenience, they want to know why their ticket costs the same. They can apply for a discount if their train is delayed, but not if it turns out not even to be a train and ends up being a bus.

Those are all ideas that we are looking at seriously, because for too long Governments have let the train companies get away with treating passengers in a way that would not be permitted in other industries.

[Paul Maynard]

Is the hon. Lady seriously arguing that peak hours on the west coast main line should be the same as those on Merseytravel lines?

[Maria Eagle]

I am arguing that it is important to have a national understanding of peak hours, so that passengers are not clobbered and do not have to wait until what seems like a long time after normal peak hours in order to get on a train home. That would be an improvement, and it would clarify the system. People would not be caught out as they frequently are, and they would not be inconvenienced by having to wait for hours after their meeting has finished in order to get on a train home.

If this Government are not going to stand up to the train companies and take on vested interests, we will. Those are all ideas that we are looking at seriously.

[Charlie Elphicke (Dover) (Con)]

Will the hon. Lady give way?

[Maria Eagle]

No, I am going to make some progress.

[Alok Sharma]

On that point?

[Maria Eagle]

I said that I am going to make some progress.

For too long, Governments have let the train companies get away with treating passengers in a way that would not be permitted in other industries. The previous Transport Secretary described rail fares as eye-watering and rail services in Britain as a “rich man’s toy”, yet he failed to understand that the policies of his own Government are making the situation worse.

[Alok Sharma]

Will the hon. Lady give way?

[Maria Eagle]

No.

Next year’s fare increases are set to be even higher—not 1% but 3% above inflation, with the same again in 2014. Unless the Government are willing to stand up to the train companies, and unless they are willing to take on the vested interests and remove the right to add another increase of up to another 5% on top of this year’s so-called cap, commuters next year will face fare rises of up to 13%, with another 13% the year after. That is happening at a time when average incomes are plummeting. Over three years, some tickets will rise by almost one third as people’s real incomes fall by 7.5%, yet the Government seem completely out of touch with the impact of that on households.

Season tickets are heading rapidly towards £10,000 a year on some routes into London once underground travel is included; families are now paying more on commuting costs than on the mortgage or rent; and ticket price rises are outstripping wage increases several times over, if people are fortunate to see a wage increase at all. That is the cost-of-living-crisis facing households throughout the country. Rent levels are going up; energy and water bills are rising relentlessly; bank charges are extortionate, as the cost of living means overdraft limits are breached; and the cost of transport is rising.

[Justine Greening]

I am listening very carefully to the hon. Lady, who is raising what we all recognise as important issues, but I want to double check something, because earlier in her speech she talked about getting more money into Government coffers through the RPI plus 5% flexible policy. Does she recognise that the policy she is announcing today is a spending commitment? If so, how does she set it against what her shadow Chancellor said yesterday, when he stated:

“I can say to you unequivocally we can make no commitments to reverse any of the Government’s tax rises or spending cuts”?

[Maria Eagle]

I do not know the spending commitment to which the Secretary of State says I have referred, because there is no spending commitment, and it is complete nonsense for her to say that there is —[Interruption.] I understand her point, but if she wishes to try again I will give way.

[Justine Greening]

Clearly, the money for that policy has to come from somewhere, and it is from the taxpayer. The hon. Lady obviously accepts that point, so the policy is a spending commitment. Will she simply confirm the reality of that?

[Maria Eagle]

What I have said is that we would stop the operation of the flex system, as the Secretary of State’s Labour predecessor did. We said before the election that we would do so, but the Government have reversed that policy, and commuters are being clobbered as a result. That is quite clear.

[Charlie Elphicke]

Will the hon. Lady give way?

[Maria Eagle]

No. This is a shortened debate, and I want to give people time to make their speeches, so I hope that the hon. Gentleman will forgive me if I make some progress. I have already spoken for a little longer than I would have hoped, and that is partly because I have taken interventions.

The Government need to be tougher not just on train companies, but on private bus operators. While train fares grab the headlines, most people’s experience of transport is in fact the local bus. For many, the bus is a lifeline: for those without a car; for older people who no longer drive or may never have done so; and for our young people, for whom the bus is their only way to get around, especially if mum or dad do not have a car or work all hours. Yet quietly, and without much fanfare, throughout the country there is a catastrophe facing bus services, with services being cut and fares rising. Again, that is thanks to decisions made by the Government. Their unwillingness to take on the vested interests in our transport industry is holding back the reform that is required.

In the spending review, the Government have made three decisions that have hit bus services. First, they have cut councils’ local transport funding by 28%—and front-loaded it. that has meant the end of support for many subsidised routes, and the end of ring-fencing has placed further pressure on councils—[Interruption.]

[Madam Deputy Speaker (Dawn Primarolo)]

Order. It really is not necessary for the Secretary of State to keep shouting across the Dispatch Box. She is about to address the House, and I am sure that she expects everybody to listen to her as well.

While I am on my feet, I must say that increasingly in the Chamber there is the behaviour whereby Members shout and heckle constantly when somebody else is speaking, and it is not really acceptable, so I hope that Members will stop it.

[Maria Eagle]

The end of ring-fencing has placed further pressure on councils to divert funds from bus services in order to protect other front-line services such as Sure Start or social care budgets.

The Government’s second decision has been to cut the funding available to bus companies in order to reclaim some of their fuel costs, particularly in rural areas where otherwise they would simply not run the service. Thirdly, the Government have changed the formula by which local authorities are reimbursed for the cost of delivering the concessionary fares scheme for older people, leaving councils with a funding shortfall that has led to new restrictions on when passes can be used, and to cuts in services.

On the impact, the Campaign for Better Transport calculates that one fifth of supported bus services throughout England now face the axe; more than 1,000 bus services have already been lost; and many surviving routes have seen fares hiked significantly.

The Public Transport Executive Group, which represents all the passenger transport executives, serving 11 million people throughout the metropolitan areas of England, calculates that as a result of the Government’s policies bus usage and patronage will decline by 20%, fares will increase by 24% above the rate of inflation and the added congestion alone will cost £68 million.

Ministers fail to understand that, when they cut a bus route, they cut an opportunity for young people to stay on in education, for people to travel further afield to take up employment, and for older people to remain connected to family and friends, with all the quality of life and, even, mental health benefits that that can bring. That impacts not only on those who rely on their local bus services, but on our ability to reduce the deficit. When those who want to travel further to take up work find that they cannot afford to do so or that the bus service is no longer there, those opportunities simply cannot be taken up. Young people who get the grades that they need to give them a chance in life and to find a good job will find that they simply cannot get to where they want to go for work or to continue their education.

The Government have said that those who are out of work should be willing to travel for up to 90 minutes to take up a reasonable job offer or else lose their jobseeker’s allowance. However, they are also taking away the only affordable means for people to do so. That is a total failure of joined-up government.

The Government are telling young people to stay on in education post-16, yet they have not only axed the education maintenance allowance, but failed to protect the local bus services that enable young people to get to college. The scale of the cuts faced by councils is leading to restrictions on concessionary fare schemes for young people. Some councils are telling us that they may have to axe schemes altogether. It is no wonder that the UK Youth Parliament chose to debate the need for cheaper fares and more accessible public transport for all young people during its annual sitting in this Chamber, following a vote by 65,000 people across the country.

The Association of Colleges has warned of a drop in further education enrolment and 60% of colleges have reported a drop in transport spending by their local authority. On average, students travel between 9 and 35 miles to get to college, with 72% of them relying on the bus to get there. That is another total failure of joined-up government. The consequence will be added pressures on family budgets or young people simply being unable to take up the opportunities that they need to reach their potential. That is a tragic waste for those young people. It is an idiotic policy because it will lead to higher welfare costs and less tax take in the future. It is a knee-jerk cut that will make it harder to reduce the deficit.

Cuts to school transport support for younger pupils are adding to the burden on families, with parents struggling to afford the fuel costs of the school run or having to juggle getting children to school with getting to work. Figures obtained by the Campaign for Better Transport show that council spending cuts have led to almost three quarters of local education authorities making cuts to school transport.

The loss of bus services has also had a devastating impact on older people. Despite the Prime Minister’s election pledge on the free bus pass that we introduced in government, he has axed £223 million from the scheme in this year alone. That has an impact on the viability of many bus services. Do not take my word for it; Tory-controlled Norfolk county council is leading the campaign for fair funding from the Government for concessionary fares. It has support from councils in Cumbria, Somerset and Devon, all of which have Tory leaders. Norfolk alone has calculated a £4.5 million shortfall in funding for the concessionary bus scheme. Up and down the country, pensioners are asking what is the point of a free bus pass if there is no bus. The Prime Minister has failed to honour the spirit of his election pledge and has left many older people isolated.

[Dr Huppert]

Will the hon. Lady give way?

[Maria Eagle]

I hope that the hon. Gentleman will forgive me, but I have given way to him once and I need to conclude.

The issue is not only about the level of spending; we need the proper regulation of bus services, not least when they rely on public subsidy. Having made these cuts, the Government are powerless to influence bus fares or to protect bus services because they are unwilling to stand up to the private bus operators and to take on the failure of bus deregulation outside London. In London, we have control over fare levels and we can regulate bus routes, or we could if we had a Mayor of London who was not choosing to let bus fares spiral out of control. It is time to consider the right way to reverse bus deregulation across England. We should give new powers to local communities to deliver bus services in the way that best suits them.

[Charlie Elphicke]

Will the hon. Lady give way?

[Maria Eagle]

I am coming to a conclusion so I will not.

Whether it is the increase in rail and bus fares or the rise in the cost of fuel, this Government are allowing the costs of transport to spiral, adding to the cost-of-living pressures faced by families. The Government have failed to tackle those increases not because of the deficit, but because they are unwilling to stand up to vested interests. They are failing to stand up to the train companies, letting train fares rocket by up to 11%. They are failing to stand up to the bus companies and to look at the best way to re-regulate the industry outside London. They are failing to stand up to the banks and impose a bonus tax, adding to the high cost of fuel. As a result there are rising transport costs, which are adding to the pressure on households up and down the country. This Government are too out of touch to do anything about it.

14:34

[The Secretary of State for Transport (Justine Greening)]

I am delighted to be back at the Dispatch Box for the second day in a row. I am also delighted to be debating this important issue with the Opposition who have left the country with such debts, that the Government have little leeway to do what the hon. Member for Garston and Halewood (Maria Eagle) is proposing, which is to add more debt on to a debt crisis.

The Opposition talk about how they feel about train services and rail fares and I will respond to the particular points that the hon. Lady has made. However, many people who are listening will find it galling that the day after the Leader of the Opposition made his relaunch speech which talked about responsibility, his party is instantly engaging in an Opposition debate that shows no responsibility whatever and is making more unfunded commitments that would only add to the debt levels with which it has already burdened our country. The Labour party left this country with the highest structural budget deficit of any major economy in the world and with the highest deficit in our peacetime history. Those debt levels are costing us £120 million a day. We would much rather invest that money in our transport system and other public services. The debt levels that the Labour party left us are crippling the country and we have to tackle them first. As we regain control of our country’s finances, we are aware of how difficult the economic situation is for many people. That is why the Government have taken tough decisions to restore credibility to this country’s economic policy.

[Mrs Anne Main (St Albans) (Con)]

I am pleased that the Secretary of State is drawing attention to the history behind this matter. My constituents experience the highest rail fares in the country at nearly 30p a mile. Those fares did not get to that level overnight. In his speech on Monday, the Leader of the Opposition described Hertfordshire as one of the cheaper places to live. That shows that the Opposition are completely out of touch with my constituents.

[Justine Greening]

The Opposition are out of touch. The speech largely failed to talk about how we can tackle the underlying problem in the rail industry, which is the cost. The hon. Member for Garston and Halewood touched on that point and I will come to it later. The industry was passed over to this Government with a high cost. I want to tackle that cost, but the previous Government did nothing to tackle it in 13 years. One of the most important things that the Government and I have to do is to get to grips with the high cost of the railway industry. That must be part and parcel of the Government’s overall approach to getting a grip on our public finances.

At the heart of the Government’s clear determination to do that is giving ourselves the best possible chance of keeping interest rates as low as possible for as long as possible to help families and businesses with loans and mortgages. It is not just the taxpayer who is paying through the nose for debt. We must keep interest rates as low as possible for people across this country who rely on that for their household finances to make sense. Let us be clear: if we had taken the advice of the Opposition to spend more and borrow more, which is what they have been talking about in this debate, we would be talking not about the cost of rail and bus fares, but about an International Monetary Fund bail-out to keep our country afloat, and we would be living in a country facing bond yields and interest rates like those of European countries such as Greece. That is the situation that the Opposition want to swap for.

[Kwasi Kwarteng (Spelthorne) (Con)]

Does my right hon. Friend have any idea why the perennial problem of rail costs was not tackled in 13 years under Labour and why she and her Department have had to deal with it?

[Justine Greening]

My personal view is that there were two key reasons—a lack of ability to tackle the problem, because Labour simply did not understand how to do so, and a lack of willingness. Tackling the problems means that we need to have some difficult discussions about the work force, and as we saw in the vote that has just taken place in the House, the Labour party shows no willingness ever to stand up to its party pay leaders, the unions.

[Maria Eagle]

Given that the Secretary of State has said that she is interested in reducing the costs of the railway industry, does she accept that she needs to examine its structure? One of the big causes of excess cost in the industry is the fragmentation that was left to us after the botched privatisation that the previous Tory Government carried out.

[Justine Greening]

I think many people watching the debate will wonder why the hon. Lady’s party did nothing in 13 years. I will shortly publish a Command Paper setting out our approach to tackling a number of the broad challenges that exist.

[Mr Tom Harris (Glasgow South) (Lab)]

I am disappointed that the Secretary of State is being so churlish and saying that the last Government did nothing to reduce costs. Is she even aware that in the five-year control period ending in 2009, they forced Network Rail to improve its efficiency by 33%? Why has she not admitted that that was a major achievement, or that further efficiency savings were included in the next control period ending in 2014?

[Justine Greening]

I do not think there is any way in which the hon. Gentleman can dress up the outcome of the McNulty report, which set out very clearly just how expensive our railway industry is compared with those in mainland Europe.

I understand that rail fares are a large part of household expenditure for many people, particularly commuters, who often travel significant distances to go to work and earn a living. Of course, the taxpayer subsidises the rail industry alongside rail fares, and thanks to difficult decisions that the Government took in the emergency Budget and the spending review, the Chancellor was able to announce in the autumn statement that we would fund a reduction in the planned increases in fares so that regulated fares would increase by RPI plus 1%. That reduction is helping millions of people who use our trains.

[Mr Edward Leigh (Gainsborough) (Con)]

Will my right hon. Friend say something about rural fares? The anytime weekly return to London from Market Rasen, which is not in the frozen north, is £150, and the average weekly wage in Market Rasen is £561. That means that people are paying 26% of their weekly salary just to get to London and back. That is not acceptable, and something must be done. We must have less emphasis on the high-speed rail link and all those wonderful projects and more emphasis on helping ordinary people in rural areas.

[Justine Greening]

My hon. Friend is right to set out the very difficult balance that we have to strike. On one hand we have to ensure that we keep rail fares affordable, and I am determined to do what I can to do that in spite of the fiscal straitjacket within which the Government are having to operate. On the other hand, we have to ensure that we can balance investment in the short term. I am sure that many Members were delighted to see Bombardier agree the contract with Southern for more carriages, and we are putting unprecedented investment into the existing railway lines. We have to strike a balance between working out who pays for the hard work that is going on today and ensuring that we have a railway network that is fit for service in the future.

I know that some passengers on particular routes have faced higher increases than others, and I listened to what the hon. Member for Garston and Halewood said about the 5% flex in rail fares. I am bound to point out, however, that it was the last Labour Government who introduced that flex in 2004.

[Maria Eagle]

I accept that it was introduced by the Labour Government, but it was then stopped by the Labour Government and reintroduced by the current Government.

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

It was stopped for one year.

[Maria Eagle]

No, permanently.

[Justine Greening]

I am pleased that the hon. Lady has made that intervention, because I have with me an exact extract from the franchise agreement that the last Labour Transport Secretary put in place. I shall quote from it, to remove any uncertainty, and then maybe the hon. Lady would like to intervene on me again. It states:

“With effect from 1 January 2010, Schedule 5 of the Franchise Agreement will be amended as set out in the Appendix to this notice.”

That is the change that she has talked about. However, it continues:

“On and from 1 January 2011, the amendment to the Franchise Agreement set out in this notice of amendment shall be reversed.”

Does she want to intervene to correct the record?

[Maria Eagle]

I am very happy to intervene. Of course I will not contradict what the legal agreement states, but the last Labour Transport Secretary made it perfectly clear to the Transport Select Committee in 2009, in oral and written evidence, that the policy was to continue. It had not been negotiated, but that is different from the policy having been changed. Negotiations go on all the time in government, as the Secretary of State will be finding out. I do not think that quotation makes the point that she thinks it does.

[Justine Greening]

I really suggest that the hon. Lady stops digging the last Labour Transport Secretary into a deeper hole than he is already in. The contract is absolutely clear-cut, stating categorically in black and white that the flexibility levels introduced by her party’s Government would be reintroduced the year after their abolition.

[Mr Tom Harris]

Irrespective of what the legal agreement was, does the Transport Secretary personally believe that it would have been a good idea to renegotiate a further period for which the flex would not have been in force?

[Justine Greening]

I do not, because I believe that the train operating companies need flexibility, so I support my predecessor’s decision. If I did agree with negotiating a further period, it would represent a spending commitment. I agree with the shadow Chancellor that now is not the time to make any further spending commitments, even if the hon. Member for Garston and Halewood does not. We can see the absolute disarray that the Labour party is now in.

I find it incredibly frustrating and galling, as I think many other people do, to hear on one day the leader of the Labour party—the party that left this country in a worse financial state than any other Government ever have—profess that we must be responsible, even though Labour was irresponsible and did not have the custodian values that it needed in looking after our public finances, then the day after, to hear Labour talk about more spending and more debt in the middle of a debt crisis. The very people who let this country down the most and left our public finances in their worst state ever are now the ones talking about responsibility. Most people outside will see that for exactly what it is—absolute political gibberish.

[Ms Buck]

Will the Secretary of State give way?

[Justine Greening]

No, I am going to make some more progress now.

I ask the hon. Member for Garston and Halewood, or perhaps the shadow Minister who winds up the debate, to come clean and talk about how their spending commitment would be funded. If the hon. Lady wants to go against what the shadow Chancellor is saying about there being no more spending, she must accept that her suggestion represents a spending commitment. It is time to talk about how she would fund it, otherwise she has to accept that it would lead to more debt at a time when we are right in the middle of a debt crisis. There is no point in the Leader of the Opposition promoting responsibility when his own party continues to show absolutely none.

The hon. Lady also has to admit that the flexibility that she wants to take away from train operating companies has meant some passengers benefiting from lower increases or decreases. For instance, passengers on the Birmingham to London route via High Wycombe have seen their annual season ticket price reduced by 7%, and the Gatwick to Bournemouth saver return has been reduced by 28%. She is proposing to raise the cost of those passengers’ travel. Presumably she is quite happy to confirm that—she can intervene if she wants.

The bottom line is that for all the bluster that we heard from the hon. Lady, she would abandon the long-term investment in capacity improvements that depends on continued funding from both the taxpayer and the fare payer. She talks about 11% fare increases, but the last Government also allowed such increases. It is worth reminding ourselves of their record on rail fares and value for money. The Labour-led Transport Committee in the last Parliament stated:

“Neither passengers nor tax payers are getting value for their money…The value for money of rail travel has deteriorated by most yardsticks over the past decade.”

I have listened carefully to the comments of the hon. Member for Garston and Halewood, and I hope that we both accept that the real driver of rising costs for fare payers and taxpayers is the inefficiency of the rail system that we inherited from the Opposition. She mentioned other European railways, and Sir Roy McNulty’s independent review of our railway network found that the system that we inherited from the previous Government is 40% less efficient than those of our best European comparators. Taxpayers and fare payers must shoulder that huge cost burden because of the previous Government’s failure to reform our railways.

Unless we are prepared to get to grips with the underlying causes of the inefficiencies, we will never make the progress that I am so passionate about achieving. That means getting different parts of the industry to work more effectively together, as we are doing through the rail delivery group, which has been set up, as Roy McNulty proposed. It means aligning incentives better and increasing transparency—I absolutely agree with that. However, it also means tackling some of the work-force issues, which, we must all accept, have driven up costs. When we reach those difficult discussions in the coming weeks, months and years to tackle rail industry costs that are too high, I hope that the Labour party will step up to the plate and join us in making the necessary decisions to bring rail costs down for the longer term and relieve the fare rise pressures that we have experienced year after year.

[Kelvin Hopkins (Luton North) (Lab)]

The Secretary of State rightly draws attention to the difference in cost between continental railways and ours. The only major difference between them and us is that theirs are publicly owned and integrated and ours are privately owned and fragmented.

[Justine Greening]

That is an over-simplification. However, the hon. Gentleman is right to point out that Sir Roy McNulty identified in his report a need for the different parts of the rail industry to work together much better. Network Rail is already doing that with many of the train operating companies. That was to be a key way of driving costs down—not through worsening services but by running the system better in the first place.

[Stephen Hammond]

If we are comparing privatised or denationalised and nationalised railways, perhaps the Secretary of State would like to reflect on the point of history that, in the last 15 years of British Rail, fares rose faster than in 15 years of denationalised railways.

[Justine Greening]

As ever, my hon. Friend, for whom I have huge respect and who is obviously an expert in the House on the subject, makes an incredibly powerful point. It is worth complementing that with the point that we also experienced unprecedented increases in passenger demand since privatisation.

[Julie Hilling (Bolton West) (Lab)]

When the Secretary of States talks about reducing costs in the industry and staff numbers, does she mean cutting the salaries of people who work in ticket offices on basic wages of £16,000 or £17,000, or of train dispatchers, who are on basic wages of £14,000—not big, but low salaries? Is she saying that those people should have their salaries reduced?

[Justine Greening]

I do not think that I have talked about reducing salaries. Many people might say that a train driver on a salary of £40,000 or more had a well-paid job compared with them.

Clearly, we need to address important issues that relate to the costs of the railway industry. That is why we will publish the rail Command Paper early this year to set out how to meet the challenge. That is the real prize. The long-term way of reducing pressure for relentless fare rises is by tackling the underlying driver: the industry’s cost base. As I said, that will also give the Opposition an opportunity to demonstrate whether they are serious about reducing costs to passengers or whether their policy review is limited to tinkering at the edges with uncosted commitments drawn up on the back of an envelope.

[Mrs Main]

I have written to the Secretary of State about Network Rail, which has fundamentally failed many of the train operators—67% of all delays and stoppages are to do with Network Rail. It is time to have a debate about it. Network Rail, which is with the Office of Rail Regulation now, has been deeply inefficient in the amount of money that it costs the taxpayer.

[Justine Greening]

That is what I mean when I talk about the need to align financial incentives better so that people are pulling in the right direction and so that, when performance is not good enough, it costs the people who cause the inefficiency in the first place.

I want to move on to the second aspect of the comments of the hon. Member for Garston and Halewood —bus fares. Although every sector and Department have had to play their part in deficit reduction, the Labour party still does not accept that, even after yesterday’s speech by the Leader of the Opposition. Nevertheless, we are determined that, even in the difficult economic conditions that we face, buses will continue to receive their fair share of funding. Yes, it is constrained by the terrible legacy that the Labour party left us, but we are determined to encourage more people on to buses and to make bus travel more attractive. That is why we set out in a spending review our commitment to continuing our financial subsidy of bus operators. The bus service operators grant remains untouched for this financial year, with savings to be introduced only from April, alongside others that we have had to make across Government as part of tackling the deficit that the Labour party left us.

[Ms Buck]

Does the Secretary of State therefore think that the Mayor of London was wrong to raise a single bus fare by 50% since 2009?

[Justine Greening]

Many Londoners will not forget that the current Labour candidate for Mayor increased bus fares in 2004 by a huge amount. I simply do not accept that his proposals for London will mean anything other than catastrophically undermining the essential investment, on which so many Londoners count, in the transport system. It is financial jiggery-pokery, and it does not add up. I believe that Londoners will see right through it in May.

We must tackle the deficit, but we continue to ensure that funding goes into our bus services. Indeed, we spoke to the industry as part of the spending review about how we could get more out of the bus service operators grant. After difficult spending decisions, the industry said that it felt able to absorb the reduction without raising fares or cutting services. Nevertheless, we are protecting the concessionary bus travel scheme.

[Lilian Greenwood (Nottingham South) (Lab)]

I can assume only that the Secretary of State is out of date, because the Confederation of Passenger Transport UK told me that, although it initially felt that it could absorb the 20% cut in the bus service operators grant, the combination of that and the cuts to concessionary travel repayment and local transport was a perfect storm.

[Justine Greening]

The hon. Lady should apologise to that organisation more than anyone else because her Government left the country’s finances in a state that means that we have to make very difficult decisions. There is not a day when I do not come into the office wishing that the state of the public finances that the Labour party handed us was better. The reality that we must all, apparently apart from Labour Members, face is that we have got to tackle that problem. That means making some difficult decisions. The Labour party is in complete disarray.

[Several hon. Members]

rose—

[Justine Greening]

Until the Opposition speak with any sort of single voice, it is pointless taking further interventions. Most hon. Members would accept that I have taken an awful lot and it is time for constituency Members of Parliament to have their say on behalf of their communities.

We are committed to investing in bus travel. In the past two months, we have also announced nearly £100 million of additional investment in buses as part of the growth review.

We are committed to investing in the transport infrastructure—not only HS2, as we announced yesterday. We are putting unprecedented investment into rail infrastructure. Even in these tough times, the Government are taking action to help people with the rising cost of living at the same time as dealing with the massive budget deficit that the Labour Government left us. That is why we are helping keep interest rates low for families and businesses, freezing council tax for the second year running, cancelling this month’s fuel duty increase on top of last year’s fuel duty cut. It is why we are funding a reduction in the planned increase in regulated rail fares and continuing our financial subsidy of bus operators while implementing a massive programme of investment in our transport infrastructure, not just for passengers today and in the next 10 years, but for those in the decades to come. Our determination to reduce the cost of railways in the long term to fare payers and taxpayers means that we will introduce proposals for substantial reform in the rail Command Paper early this year.

That is the significant action that we are taking. The Labour party talks about responsibility at the top, but in reality that means difficult decisions. We are making them, and that stands in stark contrast to the Labour party’s tinkering, unfunded and, in so many cases, unworkable proposals.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I have to inform hon. Members that a time limit of six minutes has been placed on Back-Bench contributions.

15:00

[Mr Tom Harris (Glasgow South) (Lab)]

Since the Secretary of State spent some time talking not about rail fares but about the economic legacy of the last Labour Government, I wish to make one brief point first. As an Opposition Member, she was a member of the shadow Treasury team and, up until November 2007, the Conservative party’s policy was to support every penny of spending made by the Labour Government. If she is claiming that the deficit that the Government inherited was created in the last 18 months of the Labour Government, that is something that the House would like to debate. She cannot pour scorn on the spending of that Government when she sat on the Opposition Front Bench and supported every penny. That is double standards. The Secretary of State shakes her head, and I am more than happy to give way if she wants to explain why she did not tell the then shadow Chancellor that he should not support Labour’s spending plans.

[Justine Greening]

Everybody in Britain knows exactly which party got the country into the financial mess. It is precisely why Labour Members are on the Opposition Benches now: it was them.

[Mr Harris]

That says quite a lot about the Secretary of State’s reluctance to accept her own culpability for supporting the spending plans of the previous Labour Government.

I do not believe that the railway industry is broken, or a basket case. I was proud to serve as a railway Minister in the last Labour Government, and I understand the successes that have grown from 13 years of Labour governance of the railway industry. We have more people travelling on the railways than at any time in their history outside of wartime. We have more services every working day than ever before, and punctuality is at an all-time high. Those were achievements that this Government have managed to continue—and I hope that that continues—but fares are a fundamental weakness. They are the crucial interface between the travelling public and the railways and—irrespective of the public subsidy to the railways—if we do not make rail travel affordable for ordinary people, it will not be surprising if they feel that the railways are letting them down.

The previous Secretary of State for Transport, the right hon. Member for Runnymede and Weybridge (Mr Hammond), famously described the railways as a “rich man’s toy”. A few weeks ago, I challenged the Secretary of State in the Transport Committee about whether she agreed with that assessment and, understandably, she did not want to commit herself. She told the Transport Committee that she wanted to see the balance between the taxpayer and the fare payer move towards the latter. She also said that in the long term she wanted the fare payer to pay less. Well, she can have one or she can have the other, but she cannot have both. It is clear that unless the taxpayers’ contribution is increased, fares will not come down. The Secretary of State refused to answer that point at the time.

[Paul Maynard]

The hon. Gentleman raises the interesting question of whether the burden can be switched to the fare-paying passenger at the same time as reducing fares. Does he agree that if we do what McNulty recommends and try to reduce the overall cost base of the railways, that conundrum could be solved?

[Mr Harris]

I am sure that the hon. Gentleman, who also sits on the Transport Committee, is as much of an expert as any other Member, and I will agree to consider his comments.

The Prime Minister was wrong today and failed to give the facts about the policy of the last Labour Government and the policy of this Government. Even if it was for only one year, Lord Adonis managed to challenge the rail industry on the so-called basket of fares and whether the RPI plus 1% policy should apply to individual fares or to a basket of fares. He got a lot of support on both sides of the House for insisting—against the arguments of his own officials and the resistance of the industry—that that policy should apply only to individual fares. As we know, if it is applied to a basket of fares, some can go up by 6%, instead of 1%. Whether or not that was a temporary agreement for one year, surely when a new franchise is let the Minister has a responsibility to challenge the industry and set such an arrangement in stone at the very start.

When the railways were first privatised, the policy—it was then RPI minus 1%—was applied to a basket of fares, as agreed with Ministers. That was what Lord Adonis succeeded in challenging, but sadly only for one year. Will the Secretary of State give a commitment that, in future new franchises, the Adonis approach will be applied to fares to protect fare payers and to ensure that train operating companies take money out of their own pockets, rather than the pockets of fare-paying passengers?

[Mrs Villiers]

Will the hon. Gentleman give way?

[Mr Harris]

I only have six minutes and the Minister will have plenty of time to wind up at the end of the debate.

I hope that the Secretary of State will not take the same path as has been followed in Scotland, where the SNP Government—for the first time since the 1960s and Beeching—are threatening to close stations, including Kennishead in my constituency, even as passenger numbers are increasing there and throughout the network. That is a disgraceful approach for any so-called progressive Government to take, and I hope that the Secretary of State will make a commitment that she will not close stations or lines in the rest of the country.

It is too easy to criticise rail services and forget some of the major advances that have been made since privatisation, but at the crucial interface between train and customer, there is a growing crisis of affordability—on the personal level, rather than the national taxpayer level.

[Charlie Elphicke]

The hon. Gentleman says that the Adonis policy was for one year only. Was that not an election year? I am sure that most people would agree that that is the kind of cynicism that used to characterise the previous Government and it is a good thing that we have got rid of that.

[Mr Harris]

Most fare-paying passengers would not agree that it is a good thing that that policy was got rid of, because they are paying more as a result. Perhaps the hon. Gentleman represents constituents who are very wealthy and can afford to pay unlimited increases in fares. If he is claiming that it was a cynical manoeuvre by Lord Adonis, he has clearly never met him. It was officials who recommended that the agreement should be for one year. Is the hon. Gentleman really saying that a Secretary of State should ignore legal advice? That is disgraceful and completely misrepresents what the then Secretary of State and Labour Government were doing for rail passengers.

15:08

[Stephen Hammond (Wimbledon) (Con)]

I direct the House to my entry in the register. It is a great pleasure to follow the hon. Member for Glasgow South (Mr Harris), who is the joint chair of the rail group and was of course a distinguished rail Minister.

The motion makes four contentions. First, it is critical of the scale of fare increases overall. Secondly, it contends that the scale of rail fare increases has added disproportionally to the increase in the cost of living for us all. Thirdly, it says that the flex mechanism should be stopped, and fourthly that the profits of the rail companies are too high. I wonder whether, in my short contribution, we might look at some of the facts rather than the hyperbole.

First, as the hon. Gentleman pointed out, there can be no discussion of rail fares without accepting that there is always a balance between what is funded by the taxpayer and what is funded by the fare payer. Successive Governments since 1945 have chosen to subsidise both the operating and the capital costs of rail expenditure, so there has been an implicit subsidy of fares from the taxpayer. That equation has been long recognised. It was Lord Adonis who, in the later years of the Labour Government, decided that the balance had swung too far from taxpayer support and needed to swing back to the fare payer. Therefore, if we want to start talking about why rail fares are increasing and taxpayer subsidies are decreasing, let us all be absolutely clear. History shows that the change in the slant of that equation happened post 2004, and certainly accelerated from 2006, so that the £10.5 billion overall operating costs of the industry are now split, with 62% coming from the fare payer and 38% from the taxpayer. The bulk of that change happened between 2005 and 2010.

Secondly, when it comes to the system of regulated and non-regulated fares, it was the last Government who introduced the policy of RPI plus 1, which is why regulated fares are increasing this year by RPI plus 1. Are Opposition Front Benchers saying that they have changed their attitude towards regulated and non-regulated fares? Are they saying that they will not operate RPI plus 1 in future? The motion is of course stoically silent about that. Let us look at the relative contribution of different sectors to the increase in our cost of living. The motion’s claim does not bear too much examination, for it is not rail or bus fare increases that are contributing most to our increased cost of living. The World Bank global food index has gone up 19% over the last year, while Green Flag says that the costs of motoring and car insurance are up 21%. The average fare increase this year—I accept that it is an average; we will come to that point in a moment—is 5.9%, so the motion fails when it says that there is a disproportionate increase from transport.

As my right hon. Friend the Secretary of State has already pointed out, no one wants to see excessive price increases. Also, I accept that we are talking about an average and that some people have seen rather larger fare increases, but that is also the point about flex, is it not? Flex is a weighted average increase—a device, introduced by the last Labour Government and suspended for one year only, to manage demand. If the Labour Opposition are going to get rid of flex, they have to say whether the shadow Secretary of State will write to every commuter whose rail fare increase was less than the average and tell them why she is doing it. Is she going to put in place another tool or mechanism to manage demand? Let us not forget that although she talked about demand in peak hours, rail markets, like many other markets, are localised markets around cities or in rural areas. That is why the last, Labour Government agreed and negotiated differing peak hours with the rail companies, to ensure that localised demand could be managed over peak and “shoulder” hours. If she is going to get rid of flex, she has to stand up and say how she will accept that challenge and demand.

Finally, there is a lot of talk about the huge profits earned by the rail companies, but their operating profit margin has been absolutely constant over the last 10 years, at approximately 3%. Let us look at some of the other companies around—say, that mouthpiece of the Labour party, the Daily Mirror, whose operating profit margin is 16%. It is absolutely clear—it is also implicit in RPI plus 3—that any extra contribution will go back into the rail industry, not the profits of the rail companies. Today’s motion is interesting, but it fails the test of fact. That is why I hope the House will reject it.

15:14

[Owen Smith (Pontypridd) (Lab)]

Transport infrastructure is one of the most important and pressing aspects of economic renewal. It is one of the keys to seeing the real improvements in our economy, the growth in jobs and the economic development that we all need. That is perhaps particularly true in some of the, as it were, post-industrial parts of Britain, such as my constituency in the south Wales valleys. Rail there has always enormously important. Indeed, it is perhaps more important right now than during any period in the last century, and arguably since the 19th century.

That is why I welcome the Government’s infrastructure investment decisions. I welcome the announcement about electrification of the Great Western line between London and Cardiff, although I deplore the fact that the Government have not recognised the excellent business case for going as far as Swansea. I also welcome the decision to take forward, in conjunction with the National Assembly Government, a business case to consider electrification of the valleys and the creation there of a so-called metro system. The reason that is so important is that travel to work in urban metropolitan centres such as Cardiff from their hinterlands is the key to the economic regeneration of places such as Pontypridd, the seat I represent. I urge the Minister to consider that business case carefully when it comes forward and to look on it favourably, because doing so would be a genuinely bold and imaginative step, and a key to change.

Secondly, I agree with my hon. Friend the Member for Glasgow South (Mr Harris), the former Transport Minister, that we cannot say that all is ill with our railways right now. They are, without a doubt, more efficient, cleaner and less dangerous than they were before the Labour Government. It is Labour investment and Labour management of the rail system that led to those changes, in particular the way we effectively negotiated franchises, which—not always, but in the main—led to investment and improvement. Indeed, I commend the current Government for taking forward that infrastructure legacy.

[Mr Robert Buckland (South Swindon) (Con)]

Does the hon. Gentleman not agree, however, that the terms of reference for the previous Great Western franchise put the service at the wrong stage, in effect applying a lower common denominator and thereby regressing the service? The new franchise needs to start from the current level and quality of service, so that we can encourage value for money and progress, instead of the rather problematic issues that we have encountered with First Great Western in recent years.

[Owen Smith]

I am grateful for that intervention, which gives me the opportunity to say that it was, of course, the Labour Government who managed that franchise, such that we called in Great Western and demanded the changes that it made and that it adopt special measures.

[Mrs Villiers]

The Labour Government did make some attempt to fix the problems, but they created them, because they let the franchise in the first place.

[Owen Smith]

In truth, the problems we have with the railways are in large measure precisely due to the fragmentation that resulted from the botched privatisation of our rail industry. That is the reality.

The way we have debated this issue today—in particular, the way the Secretary of State took the opportunity, uncharacteristically perhaps, to make a lot of heavy-handed party political points—does not serve our constituents and rail travellers well. This is too important an economic issue, as she will know from her time on the Treasury Bench, for us to play knockabout politics with it. The key issue that the Opposition are raising today is affordability. Very simply, given that it is so important for many of our constituents that they are able to take advantage of the improved, more efficient and cleaner train services that are now available, those services must be affordable. That is why we are concerned about the large fare increases in the recent round, although Arriva Trains Wales has commendably kept down a lot of its fares across parts of my patch to RPI plus 1. On the Great Western line, however, there has been a worrying increase of 10% in the cost of travelling between Cardiff and London, as my hon. Friend the Member for Garston and Halewood (Maria Eagle) said. That will make businesses and commuters think hard about whether they can continue to travel on that vital line for commerce and commuting.

It is important that the public understand that this Government took a decision to repeal the ban on flexing fares that the Labour Government put in place. That measure was introduced as a result of the economically straitened times in which we found ourselves in 2009. Lord Adonis made that decision to try to address the issue of affordability, and it is party political point scoring to suggest that the fact it was negotiated as a legal contract for one year was indicative of a longer-term intention. There is no read-across in that respect, and the Secretary of State would do well to take Lord Adonis at his word when he put it in writing to the Select Committee that he intended to continue the practice while we remained in economic difficulty.

What has changed since 2009? People are harder up than they were. Things have not got easier for my constituents or for those of the Secretary of State; they have got harder. That is why the Government should have thought long and hard about how they could justify taking a decision that might be in the interests of the train operators but is not in the interests of the travelling public. That was fundamentally the wrong decision for them to take.

I welcome the common sense that we have heard from my hon. Friend the Member for Garston and Halewood today about the need for a cross-party review of our rail services. The fares are too complicated, and the system is too complicated. The flexing at peak times across different parts of the country is also too complicated. Many people end up paying higher fares than they ought to, because the system is engineered in such a way that they cannot access the cheapest fares. We have seen this with the energy companies as well. They rig the market in their favour by making it utterly impenetrable to ordinary people, and it is the same on the railways. My hon. Friend is absolutely right to say that we must look into those issues, and at the underpinning question of the nature of the structure—the ownership principles—of the railway industry. We cannot simply say that there is no alternative, and we cannot get into a tawdry, tedious knockabout over whether this or that issue represents a spending commitment. That is just point scoring, and we need a much more fundamental discussion about the nature of our rail services. We need a Government who are going to act in the interests of the people, not just those of their people.

15:23

[Mark Menzies (Fylde) (Con)]

May I start by welcoming the biggest rail investment programme that the country has seen? It was clear to all of us who were in the Chamber yesterday that the Secretary of State has shown great leadership and vision in taking difficult decisions on the future of the railway network. There is cross-party consensus on High Speed 2, but that was the kind of difficult decision that Governments can sometimes be tempted to kick into the long grass. I therefore welcome the fact that this Government have decided to press ahead with the project with such vigour. Such capital projects have to be paid for, however, and they cannot always be paid for solely from the public purse. Unfortunately, we also have to be prepared to ask the travelling public to make a contribution.

The electrification of the triangle of routes between Manchester, Preston and Liverpool represents a great step forward for the north of England, Mr Deputy Speaker. I know that you, too, care passionately about the railways, because you are a north-west MP. That investment will no doubt have substantial benefits for businesses in the north-west, and I am sure that the whole House will welcome it.

For the foreseeable future, the west coast main line will be the main artery connecting the north-west to London, and, as I know the Secretary of State is aware, the franchise is now up for renewal. May I take this opportunity to urge her, when she is looking into the franchise, to take into account not only the quality of the bids but the proposed fare structures? Will she ensure that low-cost, flexible fares remain available for the people who do not always have the luxury of being able to book many days in advance? We must ensure that people on low incomes who have to travel at short notice are not priced off the railways.

Moving on, may I point out that some of the key stations on the west coast main line, such as Preston and Wigan, are in desperate need of serious capital investment? For many years, they have been given a lick of paint and nothing more. I urge the Secretary of State to ensure that whoever operates that line focuses on such investment. We also need to be clear about how that investment will be paid for. We cannot keep asking the taxpayer to put their hand in their pocket; we must accept that if we want stations in the north-west and elsewhere in the UK that we can be proud of, some of the cost must fall on the travelling public.

Many of us will have received letters and postcards about the increase in rail fares, and in the current climate we must do everything possible to ease the stresses on people’s living expenses. They face not only higher rail fares but higher household fuel bills, for example. The Government are not insensitive to that, and we need to recognise that they are doing everything in their power to keep those costs to a minimum. In launching such large-scale, ambitious projects, my right hon. Friend the Secretary of State is to be congratulated on doing everything that she can to keep price increases down to RPI plus 1%. That is significantly less than the increase of RPI plus 3% that was expected before the autumn statement, which should be welcomed. We are a railway nation, but if we want railways that we can be proud of, we need to be prepared to pay for them. The taxpayer does not have a limitless cheque book.

15:27

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

I want first to talk about how the Government have increased fares with no added visible benefit to Teesside and the rail users of the north-east. The Secretary of State has mentioned unprecedented funds being put into rail lines, but sadly, that has not happened on Teesside. As the hon. Member for Fylde (Mark Menzies) said, the announcement in the Chancellor’s autumn statement that the trans-Pennine route from Manchester to Leeds and York would be electrified has been greeted with enthusiasm in the north. However, that enthusiasm has been tempered with concern that the move could risk fragmenting the highly successful trans-Pennine network. The plans for partial electrification have opened a can of worms, as they could leave many major towns and cities of the north worse off than they were before.

The TransPennine Express franchise covers a network of routes across the north and into Scotland, and currently uses an all-diesel fleet. With Manchester as its hub, the TPE network serves Manchester airport, Liverpool, Blackpool, Barrow, Windermere, Glasgow and Edinburgh on the west side. Liverpool and Blackpool are to be electrified under previously announced plans, leaving Carnforth, Barrow, Oxenholme and Windermere unwired. To the east from Manchester, the TPE operates to Leeds, Hull, York, Scarborough, Middlesbrough and Newcastle. The core route between Manchester and Leeds is used by all the TPE’s eastbound services, with a pattern of four trains an hour. The Hull route diverges east of Leeds, while the Scarborough line branches off at York, and the Middlesbrough trains leave the electrified east coast main line at Northallerton. The busy section between Manchester and Leeds is ideal for electrification with lots of trains operating over a steeply graded route. The northern hub strategy would see the core route’s frequency increased from four to six trains an hour, with many services running west from Stalybridge into Manchester Victoria.

The new Ordsall curve will, when completed, allow trains to continue to Piccadilly and the airport, while Liverpool services would head west over Chat Moss, but what happens to the routes such as those to Hull, Scarborough and Middlesbrough to the east and Barrow and Windermere to the west, which are not currently down to be electrified? I have already asked parliamentary questions about the future prospects of the service to Manchester airport, expressing the concern that Teesside could be left to languish on a “non-electrified branch line”. Rail campaigners I know in Cumbria have expressed worries about Barrow trains terminating at Lancaster and about Windermere becoming a self-contained branch.

The route in my area has massively increased in popularity, largely due to the huge benefits brought by the previous Cleveland Labour authority, which invested heavily in the local rail line in 1993 and formed new train stations such as Yarm.

It is ironic, given the recent Government announcement after fantastic campaigning by my hon. Friend the Member for Sedgefield (Phil Wilson) for the delivery of the Hitachi plant at Sedgefied, that dual-use—both diesel and electrified—trains made by Hitachi will be built in an area that would not benefit from those self-same carriages. Network Rail has been asked by the Department for Transport to look at the business case for electrifying the line to Middlesbrough, Scarborough and Hull, and I believe an announcement is expected in July.

All this comes down to basic economic arguments when we have a Government who are evacuating the public sector and public sector spending and trying to implement regionalised pay and to change local business rates supposedly to attract private investment. Industry, however, particularly that using freight in my area, has no market certainty about how this Government are developing their transport plans. What makes me and people in my area angry is that at a time when manufacturing is in the doldrums, with statistics showing a potential recession, and despite the fact that the north-east is bucking the trend through its chemical industry, local steel industry and the agricultural industries in the region, we are nevertheless not getting any of the infrastructure benefits of the positive measures coming from industry and local workers in my region.

The Secretary of State said that the previous Government had left a terrible legacy and that this Government’s fiscal measures were amending that position. I beg to differ. The reason why we are able to lend at better rates at the moment has absolutely nothing to do with the fiscal measures of this Chancellor—the Secretary of State knows this—as it is really due to quantitative easing and Bank of England policy since 2008. That can be measured by the fact that foreign market purchasing of our bond yields has not increased since 2008. The Secretary of State can talk as she wishes about the economic changes being made by this Government’s policies, but the truth is that this Government have no plan for growth. As I have said, manufacturing is delivering for this nation in my region, yet the Government are providing no infrastructure support. That has been backed up by the civil engineering association in my region, which recently met me and reiterated that argument.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I now have to announce the result of the deferred Division on the question of the carry-over for the Local Government Finance Bill. The Ayes were 329, the Noes were 207, so the Ayes have it.

[The Division list is published at the end of today’s debates.]

15:32

[Dr Julian Huppert (Cambridge) (LD)]

Rail fares in this country are far too high. Under the last Labour Government we saw year after year of fare rises, and we now have one of the most expensive railways in the world. From 1997, 13 years of Labour government saw rail fares going up by 66% in cash terms. I welcome, however, some of the shadow Secretary of State’s comments about people wanting simple ticketing, as they want to understand what is going on. I welcome that, although it is somewhat belated. I and many others have been arguing for that for many years. I hope we can go further; it is a shame that it did not happen during those 13 years.

Most recently, thanks to pressure from the Liberal Democrats—both inside government, from those such as the Under-Secretary of State for Transport, my hon. Friend the Member for Lewes (Norman Baker) and outside it—and arguments won by a new Secretary of State and Minister for the railways, fares have risen by 1% above inflation this year rather than the planned 3%. I welcome that, and I hope it will not revert to 3% in future years.

We in the Liberal Democrats believe that fares should fall in real terms rather than rise even further above inflation, as happened year on year under Labour. As the shadow Secretary of State confirmed today, Labour policy is for fares to go up by more than inflation every year. That is something that the British public should be concerned about; they have heard it from the shadow Secretary of State today. The Conservatives have also argued for similar increases. We need to reduce the fares and to understand how we can reduce them, we first need to look at how fares have become so high.

[Justin Tomlinson (North Swindon) (Con)]

With pressure to raise revenue to offset fare rises and reduce overcrowding, why not give greater freedoms to train conductors to sell spare capacity in first-class carriages during peak times?

[Dr Huppert]

I would have to look at the details, but it is an interesting idea that is worth looking at. There is also the question of how much spare first-class capacity there should be so that potentially everybody could afford to use it. I am sure that the responsible Minister will look at that.

Why are rail fares so high? Why do commuters suffer from some of the most expensive tickets in Europe and some of the most crowded services? The main reason is chronic underinvestment and mismanagement of the railways. Over the last 50 years, for example, the length of our rail network has roughly halved, but even just since 1980, the number of passenger journeys has doubled. That is good, but it puts pressure on those railways. Government after Government have invested far too little in our most important transport network. Infrastructure spending simply has not kept up with demand, and that pressure on the railways has caused a downward spiral. An overcrowded, inefficient and unreliable service is far more expensive to run. The Office of Rail Regulation estimates that UK railways are up to 40% less efficient than their European counterparts, despite the cost of tickets. That puts fares up, and reduces the amount of investment that is available from them.

The network has become increasingly expensive to run as it has deteriorated, and Government after Government have shifted the spending burden on to passengers. I believe that a large chunk of the 30% savings identified by the McNulty review should be passed on to passengers in the form of lower fares as soon as possible, with the rest being spent on infrastructure. I hope that the Secretary of State and the Minister will accept that those are the priorities.

What is key is significant and well-targeted investment in the railways. That is why the Liberal Democrats were so thrilled by the announcements made by the coalition Government towards the end of last year. Despite the eye-watering public deficit that we face and the ongoing eurozone disaster, we managed to find the £1.4 billion of investment in our railways that was announced in the autumn statement—£400 million more than was announced for the roads, which represents a very good rebalancing towards sustainability—and yesterday we heard the excellent news about High Speed 2.

If we have managed to find those funds now, in such difficult times, just think what could have been done in the boom years. That opportunity was missed. It is deeply regrettable that the necessary investment was not made sooner. Funding would have been easier, decisions would have been much easier to make, and the fares that we face now would be lower. It is a great shame that that did not happen when the money was available.

As well as what can be done in the longer term, there is more that we can do now. For years the Liberal Democrats have called for rail fares to be more open, transparent and rational—so that people can understand what they are buying, why they are buying it and when they can use it—and for franchise agreements to be more flexible. On both those fronts, the Government are making significant progress by reforming franchise agreements and opening up Government data. Nevertheless, there is more to do, and I am sure that the Minister will say more about it later.

Without accountability and openness, there can be no reform and no incentive for fare reductions. It is because of the lack of transparency that successive Governments have employed in rail policy that the debate has become so fractious and fares are so stubbornly high. We see politicking and individual fares being picked on in various quarters. We can all do that. Today we heard the Labour party present the fare rises as though they were a new phenomenon, but fares have risen above inflation since 2003. Some fares have always been allowed to rise more than others as long as they fit the average cap. That was the system established by Labour in 2004.

I could give a number of examples. In 2007, fares on Stagecoach South West Trains rose by 20%. In January 2009, when the retail prices index was 0.1%, fares rose by 6%: 60 times as much as inflation, which was a huge amount. Some comments were made about Ken Livingstone earlier. Londoners will not forget that, having promised in his manifesto

“I will freeze bus and tube fares in real terms for four years”,

Ken Livingstone raised bus fares by 43% in January 2004. They will know what to believe when he makes similar promises again.

The real casualties of all that are the rail system and the passengers whom it is there to serve. The masking of the cause of the fare rises, the predicted income and the pricing structures have meant that the real issues have not been dealt with for too long. We are letting the public down by continuing down that route and not taking the steps that I have outlined. We should pay attention to what is happening throughout the country at present, not just to the extremes—the highest and lowest figures. Overall, fares are rising by 5.9%, which is below the “1% above inflation” cap. That is good, but the fares are still too high and they need to come down.

We should focus today on the overall burden on passengers, on the causes of that, and on how we can reduce those causes. Unless we invest and deal with the problem now, we shall never be able to achieve our goal of a cheap, efficient and sustainable transport network. I hope that Liberal Democrats in Government will be able to make those tough decisions in order to give Britain the efficient and sustainable network that we deserve, and I hope that we will be successful in our pressure for fares to go down in real terms and not up, up, up. The public deserve a good, reliable and affordable rail system.

15:39

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

Rail travel is vital to the far south-west. It takes nearly three and a half hours to travel from London to Plymouth, and five hours to travel further down the Penzance main line. We have ever-diminishing air travel options—Plymouth airport has just shut—and only two strategic road routes, and there is no motorway leading down to Cornwall. Rail and its affordability are therefore incredibly important.

Over the 15 years since privatisation, rail travel in the south-west has boomed. There have been 85% more journeys, 40% of them to London and the south-east. The number of journeys in Plymouth has increased over the past 10 years, despite the recession, and we have seen the fastest rate of travel-to-work growth—about 4.6% each year.

A major capacity gap is looming, however. The decisions taken on High Speed 2 will not help the south-west as much as we would like. It is especially expensive for people in the south-west to travel around the country, as we pay more per mile than those in other areas. That is part of the legacy of botched privatisation. There is a deep sense of unfairness. I fully accept that rail passengers have to pay towards the service they use, but there should be fairness in the system and that does not exist.

Local authority figures and development plans suggest that the number of rail passenger journeys will increase further, and in excess of Network Rail’s figures—I urge the Government to compare the figures of Network Rail with those of the local authorities—but passengers will still face historically high fares, and in particular those travelling from the south-west. Why are standard anytime single fares that are priced per mile so much higher for our region than for any other region? A standard open ticket down to Plymouth will now cost £252, up by 9.7%.

The Government put forward the idea that people can commute for 90 minutes into work. The 90-minute journey out of Plymouth to Taunton is a fair stretch, and a young person doing their first job will have to pay £170 a week if they cannot afford to buy a season ticket. That simply is not realistic, and it is certainly not affordable.

A number of Members touched on the economic significance of the rail network for regional and city growth. Its importance to the south-west cannot be overestimated. So much potential could be unlocked if our rail services were efficient, on time and, importantly, affordable. In yesterday’s local government finance debate, we talked about how local authority budgets might grow, such as through increasing business rate revenues. Those revenues will not grow if a decent infrastructure is not in place and if fares are not affordable, as under those circumstances businesses will not want to invest in cities that are distant from the central hub of London.

As always, we in the south-west and Plymouth are concerned about our peripherality. Following the HS2 announcement, we are increasingly concerned that the south-west’s links to London are not being looked at and that we are not getting a strategic overview of exactly how the benefits of HS2 will pan out in terms of access to and from the south-west. We have also received no reassurances about affordability, and we see no fairness in the fares structure. We need a fares structure that is simpler, too. We have a new franchise coming up, and fares structuring and pricing must be taken into account at that time. I also urge the Minister to take on board the concerns of the people of the south-west.

My hon. Friend the Member for Garston and Halewood (Maria Eagle) was right to call this debate, as we should highlight the policies of the Government, which do not tackle the rail companies and therefore, in effect, acquiesce in the unacceptably high rail fares. I urge Members to vote for our motion.

15:44

[Iain Stewart (Milton Keynes South) (Con)]

I am disappointed by the text of the motion. We could have had a sensible and mature debate on the future of the rail industry, its costs and the appropriate balance between revenue from the fare box and from the taxpayer, but instead we have merely had cheap political point making, which does no one any service. From listening to some contributions, one would have thought that train fare increases occurred for the very first time in January of this year, whereas there have, of course, been increases for many years.

For many years before I was elected, I commuted daily up and down the west coast main line between Milton Keynes and Euston. Every year, the season ticket went up a couple of hundred pounds. Now, it is about £5,000, and if one adds on parking charges, that is a huge sum of money to come out of people’s pockets after tax. I acknowledge that that is a huge cost, but we need to have a sensible debate about how we move forward from here, rather than just engaging in cheap point scoring across the board. I hope that the Select Committee on Transport, on which I serve, will turn its attention to this issue at some point this year, once the Government have published their fares review and response to McNulty.

In the short term, it is important that we do what we can to cap fares, and I welcome the announcement in the autumn statement that we are scaling back from RPI plus 3 to RPI plus 1. However, it is also important that passengers see something for what they are paying. I applaud what the Government have done to prioritise investment in the rail industry, and we have seen some examples of that on the line I use. It is far from perfect, but there are measures to tackle overcrowding. We have a new fleet of trains, and just this week, Virgin Trains announced that an extra three of its fast trains will stop at Milton Keynes during the evening peak. That will go some way towards relieving overcrowding, and many of the Pendolino trains are being lengthened. Some tangible improvements are therefore happening, although not as fast as I would like—I would like more trains to stop during the peak morning period—but, this is a welcome first step.

Also welcome is the announcement in the autumn statement about the East West Rail line, which will connect my constituency westwards to Oxford, and southwards to Aylesbury and on to London. I hope that, in the fullness of time, we will extend eastwards towards Cambridge, so that I can go and see my hon. Friend the Member for Cambridge (Dr Huppert) in record speed. However, I suspect that that is a little while off. The key point is that these are tangible improvements in the short term that passengers can see for the extra money they have to pay.

However, there are long-term structural issues within the rail industry, and we need to have a frank and honest debate about how we move forward. We should look not just at this country, but overseas to what other countries do. During the summer recess, I had the great privilege of travelling to Switzerland as the guest of the Swiss railway to examine its system. It has increased cost pressures, as well. We hold up the Swiss railway example as nirvana—the goal that we want to achieve—and in many respects it is, but it is having a big argument at the minute about putting up rail fares to pay for increased infrastructure investment in order to increase capacity. So, this problem is not unique to this country.

However, there are certain parts of the Swiss system that we should look at. In the one minute and 50 seconds remaining to me, I do not have quite enough time to go into that issue in depth, but the Swiss have what they call the general access card, which covers public transport costs across all modes, be they rail, tram, ferry or bus. We should encourage measures in this country to improve transport integration, which has long been talked about. The former Deputy Prime Minister, now Lord Prescott, proclaimed that we would have a committee for integrated transport; however, 13 years on, little has been achieved. We need to address such issues and to look at the long-term costs within the rail industry. Our rail costs are among the highest in the world, and we should not just accept that the existing situation must be preserved in aspic for ever.

Some tough issues have to be addressed and it is not going to be easy, but I am looking forward to having a sensible debate. I hope the Transport Committee will tackle these key issues when we conduct our inquiry, hopefully later this year, and that we can have a sensible debate, rather than the petty and pointless political point scoring that has happened today. There are many sensible Opposition Members with whom I serve on the Transport Committee, and I hope we can have a decent discussion and explore all the issues.

15:49

[Julie Hilling (Bolton West) (Lab)]

I start with the point that I wanted to make to the Secretary of State during her speech. There was a global financial crash; although the previous Prime Minister may have been a very powerful man, he did not cause a financial crash in America, Japan, Germany, Europe and the rest of the world.

In my postbag and in my surgeries I increasingly encounter stories from ever more desperate constituents. I hear from those who are losing their homes and their jobs, from those who are terrified about losing their disability benefits and about the changes to housing benefit, and from those who are having to give up their college courses because they can no longer afford to get to them. I hear from ordinary people who are paying the price of the failure of the banks and of this coalition Government’s economic policy.

The rise in gas and electricity prices means that many people are choosing between heating and eating, and some people cannot even afford food. Last year, the Trussell Trust fed more than 60,000 people who were experiencing food poverty, and the number of people seeking help because they simply do not have enough money to feed their family is growing. These people have lost their jobs or faced an unexpected bill, have had their benefits cut or fallen ill, their relationship has ended or they have simply not received a pay increase for a number of years. These are ordinary people facing devastating circumstances simply because they are poor.

Transport costs are yet another problem. Even in this age of the car, many people are totally dependent on public transport. That could be because they are too young or too old to drive, because they have disabilities, because they are young and cannot afford thousands of pounds for car insurance or because they are on low pay and cannot afford to own and drive a car. The bus is an essential part of most people’s travel on public transport. Twice as many people use buses as use trains, with bus use particularly common in the lower income bracket, and 25% of households do not have access to a car. There has been a perfect storm in the bus industry: a 20% cut in the bus service operator grant; a 28% cut to local government funding for transport; and changes to the way funding is provided for concessionary fares for older people, which cost local authorities £223 million in 2011-2012.

What has been the result of that? It has been as follows: children’s fares rising in my area to half the adult fare, rather than being the flat rate of 80p that they were before; bus services disappearing because local authorities can no longer support them; young people dropping out of college or not applying to go because they no longer get education maintenance allowance to pay for the fares; people no longer able to get to their place of work or to afford the fares to get there; the unemployed unable to afford fares to seek work; young people unable to get to youth projects and left with nothing to do; and the elderly and other vulnerable groups left isolated on their homes. It is no wonder that the UK Youth Parliament chose public transport as its No. 1 issue for 2012.

One of my constituents, Sandra, wrote to me about the increase in cost for children on the bus last April, saying that the cost of getting her two children to school had gone up by 50%. The weekly fare for both girls was £16 and it has risen to £24, or £96 per month, so she will have to find an extra £32 a month just for their transport. She said:

“What option do I have but to pay these amounts, this is the nearest school my girls can attend however it is too far for them to walk especially as it would involve crossing the busy A6 junction which has seen so many fatalities.

The other option is for me to drive them there and pick them up which in this day and age of trying to do our bit for the environment is very negative, plus it would mean taking away their independence which they gained since attending high school.

Surely the knock on effect will be that more parents will drive their children, congestion will increase and the bus company will see a reduction in people using their services which will ultimately see the service itself being cut due to lack of use….Working parents are feeling very stretched at the moment and all these extra costs seem very harsh.

I know many parents I have spoken to feel the same”.

Michelle contacted me in a similar vein, saying:

“As hard working parents who are really struggling to make ends meet in the current economic climate we don't qualify for any financial help from anyone, and there is a limit to how much we can afford to pay. I am aware that there such a thing as a Junior Saver Pass which can be bought weekly—but it would cost me even more to buy this pass than it will be to pay the increased bus fare! So, to put it bluntly, I am stuffed!!!

I wonder, are we going back to the dark times that Orwell wrote about not many miles away when many working families were living and working well below the breadline?”

Of course, it is not just children who face unaffordable increases in bus fares. First Bus will put up its fares this month by more than 7% and some providers are increasing fares by even more.

Let me turn finally to rail. UK rail fares are already the highest in Europe, with some season tickets costing a fifth of the average UK salary. We are forcing those who have cars to go back to driving, increasing congestion and carbon emissions, and forcing those who do not have cars into unemployment and isolation. The Secretary of State talks about the cost of our rail services but does not address the fundamental problems of botched privatisation in the first place. We clearly need to look at how we can reduce costs, but we should not do that at the expense of rail users.

I want to ask a final question: is public transport a public service? No public transport network in the world is not subsidised, but if the Government continue along the path of expecting the user to pay the full cost of any public transport service, people of ordinary means and the poor will be driven off public transport. Indeed, trains will become simply rich men’s toys.

15:55

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

It is a pleasure to speak in this debate. Paragraph 13 of the final McNulty report states quite clearly:

“Fares structures do not send efficient pricing signals, particularly in terms of managing peak demand, and are extremely complex.”

As a frequent user of the west coast main line I can only concur with that diagnosis, but what has struck me about today’s debate has been the lack of any praise for what the Government are doing to tackle it. I am not just talking about RPI plus 1 rather than RPI plus 3, or about the fact that we have more passengers on our railways than we did in the 1920s, but I find it strange that the Opposition find it difficult to recognise our investment, particularly in the north-west with the Ordsall chord, which is the first stage of the northern hub, and the electrification of the line to Blackpool—and that is before we get on to High Speed 2; I am told than those on both Front Benches are suffering a degree of HS2 fatigue.

I listened to the speech from the hon. Member for Garston and Halewood (Maria Eagle), the shadow Secretary of State, and I began to ask myself whether that was the new reality and the new approach for tough times or whether it was just about borrowing a bit more—the same old story and the same old solution—without saying where it would come from. That is not just a knockabout point, as it goes to the heart of transport policy. The previous Labour Government, rightly in my view, wanted to shift the burden of paying for our railways from the taxpayer to the fare-paying passenger, a policy that this Government are continuing. I am not quite sure I understand why the Labour Opposition do not want to continue with that approach. I began to get a bit confused. As I listened to the hon. Lady, I felt like I was watching a game of what I call policy Twister, where a Front-Bench team try to contort themselves into new poses to fit the leader’s latest re-launch. As someone who spent many years in an opposition front-bench team, I know what it feels like. I have been there, done that and bought the T-shirt.

I do not want to denigrate the hon. Lady’s proposals, as I thought that some of them made a lot of sense. For example, I have concerns about the digital divide and the availability of fares only online, and she was right to raise that. I feel, however, that in the wider debate we need a slightly more coherent understanding of what the McNulty review recommends. I am concerned that the debate seems to focus on what is said in the latest RMT or Transport Salaried Staffs Association press release. This is not just about ticket offices—and, by the by, I share many people’s concerns about the loss of ticket offices. We need to understand that McNulty goes much further than that.

Somewhere within rail policy, we must discuss where the burden lies and where the balance falls between the fare-paying passenger and the taxpayer. Given that McNulty called for a fare review and we are delivering a fare review at the end of the year, I am a little perplexed as to why the Opposition could not wait to see what is in the fare review. I am proud to serve on the Select Committee on Transport and I am looking forward to our cross-examination regarding the documents when they come forward. I have no doubt that we will find some flaws and will communicate those flaws to the Government in our usual courteous way, and that will be a good thing. Hon. Members have to recognise that there is a Command Paper coming out that will look at the structure of our railways and that there is a fare review coming out that will also address the issues.

The hon. Member for Garston and Halewood illustrated a useful point when she confirmed to me that one of her core beliefs is that the peak period should be the same in Euston as in Merseyside. I should think that would raise some very interesting problems. Anyone who uses the west coast main line, as I am sure she does to get back to Liverpool, must realise that at peak hours on a Friday the place is a hell hole. Passengers have to be put in cattle pens; it is not acceptable. Is she suggesting that we should reduce the standard national peak time? That would just cause that problem at Euston every day of the week and make it worse. Is she suggesting that we should have a much longer national peak hour? That would make it quite hard for many of our parents and neighbours who travel from Runcorn into Lime Street to do their shopping in Liverpool One to get there and back in a day on an off-peak ticket. That is an example of how the policies that the hon. Lady has suggested today have not really been thought through.

I would far rather that the hon. Lady recognised that the Government are taking relevant steps and are making a difference. They are bringing forward the fares review and the Command Paper on the structure of the rail industry that we need to see. I have a feeling that this debate might have been plonked on Opposition Members from above. I know that that happens sometimes—Members do not always choose to have a debate but might be told, “You’re having one.” They have done their best to cobble together a press release but I am afraid that although they get A-plus for effort, they get D-minus for homework. There is a debate to be had, but I am not sure that today’s debate was the one we wanted to be having.

16:01

[Heidi Alexander (Lewisham East) (Lab)]

Let me start by picking up on the last point that the hon. Member for Blackpool North and Cleveleys (Paul Maynard) made. He suggests that this debate was thrust on our Front Bench. Far from it; I believe that a number of Members desperately want to discuss this issue—[Hon. Members: “Where are they?”] Well, I am here and if hon. Members will grant me the courtesy of listening, I will tell them that my constituents e-mail and write to me on a weekly basis about this issue, and when I knock on their door they talk to me about the affordability of the railway. My constituents depend on the railway far more than most Members’ constituents, partly because there are not a huge number of locally based jobs in the area of Lewisham that I represent. Most of my constituents who work—70%—travel into central London, down to Croydon and out to Bromley using the railway, not the tube, and sometimes the bus to go about their daily life. The railway and the affordability of train fares are critical to my constituents. That is why we are having this debate today.

I was struck by the comments of the hon. Member for Milton Keynes South (Iain Stewart), who said that train fares have been increasing for a number of years. That certainly has been my experience as a London Member of Parliament, but the real difficulty this year is that the train fare increases are particularly hard to stomach given that they come on top of so many other increases in the cost of living, such as in utility bills and food. Constituents are coming to us and saying that their housing benefit is being reduced, and it is a real kick in the teeth when train and bus fares are being hiked by such considerable amounts this year.

[Iain Stewart]

The two issues that the hon. Lady has just mentioned are not separate points, because trains require energy to run on and if energy costs go up the operating costs of the railways also go up. One cannot simply differentiate those two issues.

[Heidi Alexander]

Energy was just one of the things that I mentioned. Most people would recognise that the cost of living is going up considerably. However, I agree with the hon. Gentleman when he says that, with fares going up, our constituents—the public—expect to see an improvement in service, getting some bang for their buck. When the trains roll into stations in my constituency, they are rammed full of people. This morning I tried to get on the 8.32 train from Lewisham and had to wait for the next one to come along. The previous Government put in place a number of measures to increase capacity on some of the suburban lines coming into London.

[Henry Smith (Crawley) (Con)]

Will the hon. Lady give way?

[Heidi Alexander]

I am afraid I will not give way; I have limited time. With the railways Minister present, I would like to make the point that that increase in capacity, lengthening trains to 12 cars, is incredibly important. Also, the new rolling stock on the suburban lines is critical. The new rolling stock has much more standing room, which my constituents are calling out for.

My problem with the increase in train fares is that it is making it much more difficult for my constituents to find work. A single man on low pay working in central London came to my surgery recently. He said that he was gravely worried about whether he could afford to get to work. If people are not able to stay in work or have to look for other jobs, that will add to the bill that the Government are paying out in jobseeker’s allowance. I have fundamental concerns about the impact of rising fares on people’s ability to stay in work. The Campaign for Better Transport has estimated that in London, if two parents are working and have two children in child care, that can swallow up 40% of the household’s income. Hundreds of pounds added each year to the cost of getting about in London will make a significant difference to household budgets.

Not only is it important that train fares are affordable so that people can go about their daily lives, get to work and stay in jobs, but everyone in the Chamber would recognise that ultimately we need to do more to get people on to public transport. The environmental benefits of getting people out of their cars, reducing congestion and pollution by getting them on to the trains and buses, are key. If people do not believe that public transport is affordable to them, we will not see the change in behaviour that all of us in the Chamber want.

In the few minutes remaining to me, I shall pick up on some of the remarks made earlier by the Secretary of State about the proposals put forward by Labour’s candidate for Mayor, Ken Livingstone, on fares policy. She suggested that in some way the 7% cut in fares that Ken Livingstone is promising for October this year would fundamentally destabilise Transport for London budgets. TfL has costed the proposal at £215 million. At present TfL works with an operating surplus of £727 million. It is possible and it can be done. That is why it is the right policy for Ken Livingstone to pursue.

I conclude by saying that it has always interested me that we view public money spent on roads as an investment, yet public money spent on railways as a subsidy. For me, the sooner that changes, the better.

16:08

[Lilian Greenwood (Nottingham South) (Lab)]

We have heard this afternoon exactly how the cost-of-living crisis is hitting households up and down the country. My hon. Friend the Member for Bolton West (Julie Hilling) described the devastating circumstances faced by some of her constituents. This debate is not about point scoring. It is about the lives of the people whom we represent—the people who went back to work after the Christmas holidays and suddenly found that they had to pay almost 11% more to catch the train. As my hon. Friend the Member for Pontypridd (Owen Smith) noted, passengers travelling from Cardiff to London face increases of 9.7%. My hon. Friend the Member for Plymouth, Moor View (Alison Seabeck) highlighted the frightening cost of fares to and from the south-west.

As usual, there were plenty of warm words from the hon. Member for Cambridge (Dr Huppert), but I remind him that his party is part of this Government and their policy is to increase fares in this Parliament by RPI plus 3%.

[Dr Huppert]

Will the hon. Lady give way?

[Lilian Greenwood]

I will not give way at the moment.

We have heard about shoppers finding that they have less to spend when they get to the shops or the market because bus fares have gone up, about small businesses struggling with the high cost of petrol, and about mums and dads having to find more money from the family budget to help teenage sons and daughters pay to travel to college because they have lost their education maintenance allowance and the fare concessions they used to get have been cut. Parents are having to get the car out to take their children to school, even if they cannot really afford to, because school transport has been cut. As has been said, that does nothing to contribute to the green agenda.

The cost of living crisis is hitting hardest those who are least able to withstand it and is made worse by the decisions that the Government have made, which show that they are out of touch with the concerns of ordinary families. When so many people are struggling to pay their bills and make ends meet, only a Government who are completely out of touch with these concerns would allow inflation-busting increases in rail fares, yet that is exactly what this Government have done. They were forced to back down on their original plan to increase rail fares by inflation plus 3% this year, but passengers will still face those rises in January 2013 and January 2014.

When passengers heard the Chancellor’s autumn statement, they understandably expected that the most they would have to pay this year was an extra 1% above inflation, but they soon found that they were wrong, because the Government gave private train companies the right to increase some tickets by an additional 5%, something that Labour banned in government precisely because we understood the pressures commuters face in tough economic times.

[Alok Sharma]

At the start of the debate the hon. Member for Garston and Halewood (Maria Eagle) made a spending commitment to keep fares down. Will the hon. Lady tell us where the money for that would come from and, assuming she does not wish to increase the national debt, what she would cut to fund that commitment?

[Lilian Greenwood]

I am not making any spending commitments this afternoon. The real question needs to be addressed by the Minister, which she might do when summing up. She needs to address the point, made by the National Audit Office, that rather than protecting taxpayers or paying for the investment described by the hon. Member for Milton Keynes South (Iain Stewart), the flexibility will boost the profits of train operating companies. How will she tackle that?

As my hon. Friend the Member for Glasgow South (Mr Harris) rightly said, rail services flourished under Labour, with more services, more passengers and better punctuality than ever before. He also noted that Lord Adonis stood up to train operators and removed this flex. Lord Adonis stated in evidence to the Transport Committee:

“In a time of economic stringency I do not think it acceptable for individual commuters to face significantly above-average fare increases. The Government’s intention is, therefore, that in future the cap should apply to individual regulated fares, not just to the average of each fares basket.”

He said “in future” and nothing about it being for one year.

The Prime Minister might say that he wants to tackle crony capitalism, but actions speak louder than words. His Government have shown that they are on the side of private train operators, rather than passengers, letting them increase some fares by as much as 11% with no guarantee that the money will lead to a better deal for taxpayers. As I have said, the NAO has warned that that could simply result in higher profits for train companies. The Government also know how difficult it is for passengers to navigate their way around complex fare structures to find the cheapest tickets, but they will not rule out getting rid of the very ticket office staff who can help and advise people, particularly those who are unable to find the best offers online or by using a ticket machine.

If things are bad for rail users this January, bus users might say, “Look at the year we’ve already had.” The Transport Committee called the 2010 comprehensive spending review

“the greatest financial challenge for the English bus industry for a generation”.

Alongside rising fuel prices and a depressed economy, many bus operators have had no option but to raise fares, cut services or both. What have the Government done to help bus users, many of whom are among the least well-off in society? They have cut transport funding to local councils by 28%, a loss of £95 million in 2011-12 alone. They have changed the way in which the concessionary fares scheme is funded, taking a further £223 million away from local authorities in the past year, and they have decided to cut the bus service operators grant, the fuel rebate to bus companies, by 20% from April.

If we add those changes together, we find that the result is devastating. Fares are going up, one in five supported bus services has been scrapped and the Campaign for Better Transport has collected examples of more than 1,100 bus services that have already been lost in the English regions. Whole communities have been left isolated without access to public transport, and almost three quarters of local authorities have been forced to cut or to review school transport provision.

Older people, who are protected from fare rises, having benefited enormously from the free bus pass introduced by the previous Labour Government, are finding additional restrictions on when they can travel and, particularly in rural areas, that the service they relied on has disappeared. The Prime Minister may have promised to keep the free bus pass, but it is of little use if people have no local bus to travel on.

Time and again we see this Government choosing to implement policies that have a disproportionate impact on the very people who most need to be protected in harsh economic times: older people and disabled people, who often do not have the choice to use a car; and the unemployed, who are already paying the price of this Government's economic failure. Some 64% of those seeking work do not have a access to a car, so they rely on buses to get to interviews and jobs. As my hon. Friend the Member for Lewisham East (Heidi Alexander) said, how will they access job opportunities or stay in work without public transport and how can work pay if travel to work is not affordable?

We heard about young people, 72% of whom rely on buses to get to college and to give them independence. They are already struggling without their education maintenance allowance, or are facing a threefold increase in tuition fees, so it is little wonder that colleges report a fall in admissions, and that the UK Youth Parliament made cheaper, fairer and more accessible public transport its No. 1 issue for 2012.

For the one in 10 people in rural areas who do not have access to a private car, a bus is essential to get to the nearest shop, doctor or post office—not that car users have done much better. For all the Government’s talk of fuel stabilisers in opposition, one of their first acts was to increase VAT to 20%—immediately putting petrol prices up by 3p a litre and adding an extra £1.35 to the cost of filling up the average car.

The Government claim that those changes are all in the name of deficit reduction and that there is no alternative. That is not so. What is required is the determination to stand up to vested interests and to powerful lobby groups. We have already set out how we would ease the pressure on households from the rising costs of transport—not by increasing spending, but by banning private train companies from averaging out the cap on fare rises. That would mean a maximum increase of inflation plus 1% this year, not increases of up to 11%.

My hon. Friend the Member for Garston and Halewood (Maria Eagle) also set out how we are considering other options to ensure that passengers are protected from unfair pricing, including a single definition of peak and off-peak; a right to the cheapest ticket; a right to a single price for the same ticket; a more flexible way of changing one’s travel plans; and a right to a discount when a rail replacement bus service is put on.

Labour’s policy review is looking at all options for reforming the structure of Britain’s rail industry. We need root-and-branch reform of its costly fragmented structure, and we need a better deal for taxpayers and passengers. We also want to devolve more transport responsibilities, so that more decisions are made locally by integrated transport authorities with powers to deliver local bus services in a way that best suits each community, ensuring that the needs of local people are met and that fares are affordable. For young people who are aged 16 to 18 and in education, we want to see a concessionary fares scheme delivered by the major bus companies in return for the subsidies that they have received.

In the transport spending review, the Government recognised:

“Transport provides the crucial links that allow people and businesses to prosper”.

Well, people and businesses are suffering as a result of their poor decisions. Yesterday, we, like the hon. Member for Fylde (Mark Menzies), welcomed the good news about High Speed 2 and the Government’s commitment to long-term investment in our infrastructure, but they must face up to the here and now. They need to listen to passengers and start taking action to tackle the quiet crisis facing people the length and breadth of this country.

16:19

[The Minister of State, Department for Transport (Mrs Theresa Villiers)]

Time is too short to refer to every contribution to today’s debate, but I welcome all those that have been made.

The hon. Member for Glasgow South (Mr Harris) criticised a fares system that he presided over as rail Minister. My hon. Friend the Member for Wimbledon (Stephen Hammond), along with many others, pointed out that RPI plus 1 and above-inflation fare increases were introduced under the Labour Government and did not start under the coalition.

The hon. Member for Pontypridd (Owen Smith) commented on the Government’s continuation of a major investment programme and called for a simpler ticketing system. My hon. Friend the Member for Cambridge (Dr Huppert) also welcomed our commitment to a programme of rail improvements that is probably the biggest since the Victorian era. He welcomed the fact that we had been able to prioritise it despite the deficit because of the difficult decisions that we have made in other areas. My hon. Friend the Member for Milton Keynes South (Iain Stewart) welcomed the progress on East West Rail and made some important points about how fares operate.

The hon. Member for Bolton West (Julie Hilling) made a moving speech about the hardship that her constituents are feeling. As for buses, we are of course doing all that we can within the constraints of the fiscal straitjacket created by the deficit that we were left by Labour. Within those constraints we are of course striving to help those who are facing hardship with the cost of living.

My hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) pointed out the impracticalities of having a single uniform peak throughout the country and that the Opposition transport team appear not to have read the speeches made by their leader or the shadow Chancellor. I particularly liked my hon. Friend’s reference to the game of policy Twister that they have unfortunately had to play today.

The hon. Member for Lewisham East (Heidi Alexander) commented on the concern about the effect of inflation and fare rises. That is exactly the concern that the Chancellor responded to in his autumn statement in putting the limit on the average rise in national rail, tube and bus fares at RPI plus 1. That help for people struggling with the cost of living was welcomed by my hon. Friends the Members for Fylde (Mark Menzies), for Cambridge and for Milton Keynes South. We ought to pay tribute to the Secretary of State for her role in that. We were able to do that at the same time as delivering a major investment programme only because of savings made elsewhere in government to tackle the deficit—the kind of spending reductions that Labour has consistently opposed.

[Mr Tom Harris]

“Many families are feeling the pinch because of stratospheric fare increases—racing ahead of inflation—inflicted by the Department.”—[Official Report, 24 July 2007; Vol. 463, c. 691.] Those are not my words, but those of the Minister in this House. Can she point out any improvements that have been made since then?

[Mrs Villiers]

The former rail Minister has made my point for me. The Opposition must be suffering from collective amnesia if they think that this problem suddenly appeared in May 2010 when the coalition took over. In 2006, a Labour-dominated Select Committee described the Labour Government as “breathtakingly complacent” on value for money in fares. The truth is that concern about rail fares has been growing for years, as my hon. Friends the Members for Bexleyheath and Crayford (Mr Evennett), for St Albans (Mrs Main) and for Milton Keynes South have said.

A major reason for the increases is that under Labour the cost of running the railways spiralled and hard-pressed passengers and taxpayers were left to foot the bill. It is fair that passengers contribute to the cost of running the railways and to the massive programme of upgrades that we are taking forward, but neither fare payers nor taxpayers should have to pay for industry inefficiency. This Government understand how vital it is to get the cost of running the railways down and to tackle the legacy of inefficiency that we inherited from Labour. That is the long-term, sustainable solution to delivering better value for money for taxpayers and fare payers.

[Lilian Greenwood]

The point that we are seeking to make is that when the Government say that fares will go up by inflation plus 1%, that is what they should go up by, not by up to 11%, which is what many people face this year as a result of the Government’s decisions.

[Mrs Villiers]

The hon. Lady need not worry as I will come on to the fares basket in a moment. Before I do, it is crucial to say that we are determined to deliver our goal of ending the era of above-inflation fare rises. The only long-term, sustainable solution to delivering better value for money for taxpayers and fare payers is to get the cost of running the railways down, not the short-term, uncosted, poorly thought-through proposals that we have heard from the hon. Member for Garston and Halewood (Maria Eagle) this afternoon.

We have started reform already, with the reform of the franchising system and our commitment to further electrification to reduce costs. We are also determined to see the rail industry working together better, with a strong shared incentive to reduce costs and deliver better outcomes for passengers.

Another key plank of getting the cost of the railways down is making working practices on the railways more efficient. When Labour was in charge, pay in the rail sector rose more than twice as fast as it did in the economy more widely. Difficult decisions may lie ahead, and I do not believe Labour is capable of taking those decisions where the interests of the unions conflict with the goal of getting better value for money for passengers.

[Mr Tom Harris]

Will the Minister give way?

[Mrs Villiers]

No.

Labour failed to deal with the problem in government, and its heavy dependence on union funding would make it utterly incapable of dealing with it if the country were unwise enough to return a Labour Government. If the Opposition were really serious about getting better value for money for passengers, they would not be making glib announcements in the House; they would be remonstrating with their friends in the rail unions about a responsible approach to pay, from the boardroom to the platform.

I turn now to the fares basket and the flat cap on prices. Frankly, the shadow Secretary of State was in all sorts of trouble on the matter. The claim made by her and the Leader of the Opposition that the suspension of the cap was an ongoing policy, representing a dramatic change of heart by Lord Adonis, is simply not borne out by the facts of what Lord Adonis did in government.

[Mr Harris]

Will the Minister give way?

[Mrs Villiers]

No. The hon. Gentleman did not do anything about the flat cap in his entire time as a rail Minister, so I will not take his intervention on the matter.

Lord Adonis inserted in the franchise contracts a one-year suspension of the flat cap. That conflicts with what the shadow Secretary of State said today.

[Mr Harris]

I promise it is the last time, but will the Minister give way?

[Mrs Villiers]

No.

More important, the shadow Secretary of State has given us no indication of just how much it would cost to repeal the fares basket provision. Amazingly, she did not even seem to understand that it would have a cost. I can assure her that it would. She has given no credible explanation of how Labour would pay for the change, and whether it would come from higher fares, higher taxes, cuts in services, the cancelling of extra carriages or upgrades or more borrowing.

Just one day after the Leader of the Opposition finally acknowledged that dealing with Labour’s deficit means that there is no more money left to spend and said that the Opposition would take a more responsible approach, the shadow Secretary of State stood at the Dispatch Box making spending commitment after spending commitment on rail fares, concessionary bus travel, local government funding, school transport, VAT—the list goes on and on. She and the shadow Minister, the hon. Member for Nottingham South (Lilian Greenwood), made several billion pounds of commitments today.

The truth is that when it comes to the cost of living and the economy, Labour just does not get it. It must be just about the only political party in the world arguing that the way to get out of a debt crisis is by borrowing more money. Whether it is a credit card bill or the international gilts market, that simply does not work. There is no way that interest rates could have stayed at today’s low levels without the action that we have taken to deal with the deficit and avert the crisis enveloping other European countries with public finance positions almost as bad as ours.

In government, Labour brought this country to the brink of bankruptcy, leaving Britain with one of the biggest structural deficits in the developed world. Today’s debate demonstrates that, contrary to what the Leader of the Opposition said, Labour has learned nothing in opposition. The biggest threat to the cost of living in this country is the spiralling interest rates that we would get if we gave way to the demands that Labour makes every single day in the House for more and more spending.

It is clear that if Labour had won the last election—thankfully it did not—it would have utterly failed to take the tough decisions needed to get the deficit under control. That would have had disastrous consequences for the cost of living for millions of families right across the nation. I urge the House to reject the motion.

Question put.

16:29

Division 420

Ayes: 251

---

Labour: 234
Democratic Unionist Party: 5
Scottish National Party: 5
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Alliance: 1
Green Party: 1
Independent: 1

Noes: 319

---

Conservative: 271
Liberal Democrat: 46

Energy Prices

Wednesday 11th January 2012 Commons Chamber

[Relevant documents: The Fourth Report from the Energy and Climate Change Committee on Electricity Market Reform, HC 742, and the Government’s response thereto (Sixth Special Report, HC 1448), and the Sixth Report from the Committee on Ofgem’s Retail Market Review, HC 1046, and the Government’s response thereto (Eighth Special Report, HC 1544.]

16:44

[Caroline Flint (Don Valley) (Lab)]

I beg to move,

That this House believes that soaring energy bills are driving up inflation, contributing to a cost of living crisis afflicting millions of families, and that the energy market is not serving the public interest; notes the motion passed by this House on 19 October 2011 calling on the Government to investigate mis-selling, simplify tariffs, increase transparency of trading data, require energy companies to use their profits to help with bills this winter and reform the energy market to increase competition and drive down energy bills; regrets that since then the Government has failed to deliver on any of these measures; further notes that consumer efforts to control their energy bills have been undermined by cuts to the Feed-in Tariff and Warm Front scheme, and that there are serious concerns about whether the Green Deal will be taken up by, and work for, consumers; notes that over 90 per cent. of eligible families will not receive the Warm Homes Discount in 2012; calls on the Government to require energy companies to provide the lowest tariff to over 75s and use their profits to ensure that all families eligible for Cold Weather Payments receive the Warm Homes Discount; and further calls on the Government to reform the energy market to make it competitive and responsible, to cut VAT on home improvements to 5 per cent. for 12 months and to ensure that the Green Deal is offered on fair terms to consumers which will deliver real savings in energy bills.

May I wish you a happy new year, Mr Deputy Speaker?

Less than three months ago, the Opposition warned that soaring energy bills were driving up inflation, squeezing household budgets and contributing to the cost of living crisis afflicting millions of families. We warned, too, that trust in the energy sector had fallen to dangerously low levels as people grew sick and tired of the energy companies’ sharp practices. We set out a clear plan to provide real help now, as well as to reform the way in which our energy market works. We called on the Government to investigate the scandal of mis-selling, and to ensure that people were properly compensated. We also urged them to simplify tariffs, in order to put an end to the disgrace of four out of five families paying more for their energy than they needed to. We asked for more transparency on energy companies’ trading data, so that the public could see for themselves how much the companies were paying for their energy, as well as how much they were charging for it. We argued for a radical overhaul of the way in which our energy market was structured, to break the dominance of the big six and increase competition in order to drive down bills for families and businesses. We also called on the Government to make the energy companies use their record profits to help people with their bills this winter.

The Government did something unusual—so unusual that the Government Whip on the Front Bench at the time seemed surprised by it. They backed our motion. They agreed to support our plans. Indeed, commenting on the Labour motion, the Secretary of State said that

“there is nothing we disagree with”.

He went on to say that

“sympathy from the sidelines is not enough. It is our responsibility to do everything we can to help.”—[Official Report, 19 October 2011; Vol. 533, c. 944.]

Today, however, the scale of the Government’s failure is clear. More families are in fuel poverty and struggling to heat their homes. Consumer Focus says that a quarter of all households in England and Wales—5.7 million in all—are now in fuel poverty. National Energy Action fears that the figure could be as high as 6.6 million. These are levels not seen since the dog days of the last Conservative Government. The number of households in debt to their electricity and gas suppliers is up, too, but energy companies’ profit margins are still in excess of £100 per customer per year.

[Alok Sharma (Reading West) (Con)]

It is all very well for the right hon. Lady to lecture the Government, but in the last six years of the Labour Government, the number of households in fuel poverty rose by 2.8 million. Is she proud of that record?

[Caroline Flint]

I am proud of the fact that, by the time we left government, there were 1 million fewer people in fuel poverty. That included 500,000 in the most vulnerable households. The fact is that we took measures to tackle fuel poverty. Is there more to do? Yes. But what is happening now is that the figures are going up and, as I will demonstrate, this Government are not helping; they are hurting.

Confidence in the energy companies is at a near record low. Less than half of the public are satisfied with their energy supplier, yet energy company bosses have awarded themselves huge pay rises and bumper bonuses totalling millions of pounds. Complaints to the energy companies have soared, often over dodgy tariffs or incorrect billing or meter readings. There have been 4 million complaints in the past year alone, and the figure has gone up by 26% in the last three months. Today’s Which? report shows that one in five customers who have had problems with their energy supplier did not even make a complaint, and that nine out of 10 complaints are unresolved and never make it to the energy ombudsman. As much as £4 million in compensation is going unclaimed. There are real concerns about whether the watchdogs, the consumer groups, and organisations such as the energy ombudsman and Ofgem have the powers that they need to protect the public. We need to think clearly about the kind of infrastructure that is needed to ensure that those organisations do their job.

Time and again, we see a Government who are not just out of touch but completely unable to stand up to vested interests in the energy industry. Far from doing everything they can to help, this Government are making things worse, not better, for millions of hard-working families. Their failing economic policies mean that the average family faces the worst squeeze on income since records began in the 1950s, with families and children hardest hit.

What, then, are the Government doing to help people? What have they done for pensioners forced to choose this winter between heating their homes and having a hot meal? They have cut the winter fuel allowance, despite promising not to. We have been honest that under a future Labour Government that might be something that we cannot reverse, but let us be clear about the facts. Before the election, we warned that the Conservatives wanted to cut the winter fuel allowance. In response, the Prime Minister said:

“We would keep the winter fuel allowance. Let me take this opportunity to say very clearly, to any pensioner who is watching this or reading any of these reports, I know that you are getting letters from the Labour party saying the Conservatives would cut the winter fuel allowance…Those statements from Labour are quite simply lies.”

Our 12.7 million pensioners now know that we were not lying.

The Government, however, have tried to change the story. Now they like to say that the decision had already been taken by the last Government. Even today, the Prime Minister repeated that allegation. It is simply not true. When Labour left office, the decision had not yet been taken. It was perfectly within the Government’s power to continue with the extra payment, as Labour Chancellors had in previous years, but they chose not to. This Government took the decision in last year’s Budget—and they should take responsibility for it.

[Several hon. Members]

rose—

[Caroline Flint]

The difference between Labour Members and Government Members is that we do not just give up; we look to find other ways to help pensioners with their fuel bills. Nobody should have to pay more for their energy bills than they need to. This is especially important for pensioners over 75 who are more susceptible to the cold and least able to take advantage of online deals. That is why my right hon. Friend the Leader of the Opposition announced yesterday that, to start with, we would ensure that all pensioners over 75 got the lowest tariff on offer, saving them up to £200 a year—on the Government’s figures, not ours. There might be less money around, but for those 4 million pensioners, Labour can still deliver fairness in these tough times—not by spending more money, but by saying to the big six energy companies that, at a time when people are struggling yet they are enjoying strong profits, they must act in a way that is responsible and fair to the public.

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

Does the shadow Secretary of State agree that whatever the situation with the winter fuel allowance, one thing that would have put a lot more money into pensioners’ pockets is the restoration of the link between pensions and earnings—something Labour promised in 1997. They failed to deliver that yet we delivered in our first Budget, which will bring about a record rise in pensions this year?

[Caroline Flint]

One of the first actions taken by the Labour Government after winning in 1997 was to look at the situation of the poorest pensioners in our country, many of whom were women who had never been able to earn enough to have a second pension. We had priorities in respect of what we were going to achieve—pension credit, the winter fuel payment, other support through the Warm Front scheme: we did more for pensioners than any Government for generations. What is happening is that we are now going backwards, not forwards.

[Mr Dave Watts (St Helens North) (Lab)]

Does my right hon. Friend agree that it is not what people say, but what they do? The last Labour Government took pensioners and families out of poverty, while introducing help and assistance for fuel costs. This Government have cut fuel cost assistance and are putting more people into poverty. Is that not the difference—not what we say, but what we do?

[Caroline Flint]

My hon. Friend is absolutely right: actions speak louder than words. The actions going on at the moment mean that the number of people in fuel poverty is going up and there is less support coming forward to help the most vulnerable. We are heading for a car crash when the Warm Front scheme ends and we wait to see whether the green deal will happen in a way that will help people. I shall say a little more about that later, and I am sure my hon. Friends will want to make some points about it in their contributions.

Let us talk about helping low-income families with their energy bills. The Secretary of State likes to boast about the warm home discount scheme. He says it is a statutory scheme and that Labour had only voluntary agreements—never mind that those voluntary agreements secured £375 million to help almost 1.6 million households with their energy bills over three years. What the Secretary of State forgets to say is that the present scheme exists only because Labour legislated for it when we were in office. When the present Government decided to take it on, we warned that, on the basis of their plans, they could exclude hundreds of thousands of people from the help that they needed.

In Committee, my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) said

“there are concerns about the make-up of the broader group and the discretion given to energy companies to fund it.”

She asked for assurances

“that the Government will evaluate how effective the discretionary nature of the broader group will be and, if necessary, take steps to expand the core group if households are falling through the gap”.—[Official Report, Third Delegated Legislation Committee, 28 March 2011; c. 6.]

The Government did not heed those warnings, and, as research by Save the Children revealed last week, only 3% of families who are eligible for help from the warm home discount scheme will receive the support to which they are entitled this year.

The Secretary of State may try to tell us that more people will be helped as the scheme develops, but those families need help now, not in three or four years’ time. This is not about spending more money or adding to customers’ bills; it is about standing up to vested interests in the sector, and telling them that they have a responsibility to their customers and to the public.

The Government are not only cutting help for people in need, however. They are also hitting families who want to do their bit—who want to do the right thing, to have more control over their energy bills, and to make their homes more energy-efficient. The Government’s disastrous and chaotic cuts in the feed-in tariff for solar power will be back in court on Friday. In defence of their plans, Ministers have been forced to resort to ever more outlandish claims about how much it is costing the public. First it was £26 a year, then it was £40, then it was £80. The actual figure—what it is really costing consumers—is just 21p per household per year, compared with average bills in excess of £1,300. What the Government do not seem to understand is that one of the reasons why so many people, especially pensioners, chose to install solar was the fact that it enabled them to control their energy use and cut their bills.

[Guy Opperman (Hexham) (Con)]

Today the Select Committee on Energy and Climate Change heard some of my constituents give evidence on the issue of off-grid energy. May I ask a simple question? Is the Opposition’s policy to regulate it—yes or no?

[Caroline Flint]

We have had a number of debates on the subject. One of the problems with off-grid energy is that some of the schemes that the Government are coming up with do not help the people who are affected by it. I shall say more about that later in the context of the green deal. There are real questions about who will be excluded, but we are talking today about energy prices, and about what we can do to make the market more competitive and responsible.

I look forward greatly to learning what the Select Committee has discussed in relation to off-grid energy, and will think about some of its recommendations. We will make up our own minds about what we should do, but I acknowledge that there is a problem. During the three months for which I have had my present job, it has arisen many times in debates. I also acknowledge that there are insulation problems for many people in rural communities whose homes have solid walls. I am afraid that I cannot give the hon. Gentleman chapter and verse today, but he can be reassured that the issue is on my radar.

[Barry Gardiner (Brent North) (Lab)]

The witnesses who gave evidence to the Select Committee made it clear that the statutory protections that exist under the licences for mains gas or electricity supply do not exist for off-grid gas customers, who are the vulnerable customers. Will my right hon. Friend at least consider committing the Opposition to regulation if the code of practice that the industry is seeking to introduce on a voluntary basis is inadequate to secure such protections for those customers?

[Caroline Flint]

I feel that the time has come for us to take stock of our position. The first line of the motion refers to an energy sector that works in the public interest. That does mean that we can still support competition, and I think there should be more competition in the sector. For all types of energy—on-grid and off-grid—it is time that we had another look at what is happening in the market. For me, energy is not like buying a phone or a car; rather, it is essential to life, and therefore a higher order of accountability is required. I will be very happy to look at the issues raised by the Committee. Select Committees are useful for the Opposition as well as the Government. I will be very happy to talk to my hon. Friend and to the hon. Member for Hexham (Guy Opperman) and to see what the Select Committee comes up with, but I think the time for standing by has passed.

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

In Blurton in my constituency, there was the fantastic sight of houses having photovoltaic panels erected on their roofs, but the project that E.ON had with Stoke-on-Trent city council covering thousands of houses across the city has now been cut short. E.ON said to me that it understands why the Government were looking at the issues of feed-in tariffs and the cost, but it cannot understand why it was given six weeks to complete projects that were going to take five weeks to bring in.

[Caroline Flint]

It is always very helpful to hear of real examples. We have listened to many smaller businesses in this sector of course, but even the big six energy companies have concerns about the way the Government have gone about changing the rules on solar. Sadly, about 100,000 social homes may not get solar in the future because of these changes. We all agree that the tariff should come down, but, aside from that point, if the Government’s plans go ahead, people will only be able to have solar if their home is a category C residence in terms of efficiency, and therefore about nine out of 10 homes in England will no longer have the option of having solar even under the changed rules and tariff. This is another example of bad management of a project that was clearly popular among the public and that has created jobs—the sector is one of the few that has experienced growth.

In the long run, we know that the most sustainable way for people to cut their bills is for them to use less energy.

“Energy efficiency is a no-brainer because it makes homes warmer and cheaper to run.”

Those are not my words; they are the words of the Secretary of State from back in September, but what has actually happened on his watch? The number of families getting help to insulate their homes or make them more energy efficient has plummeted.

Let us take the month of April as a point of comparison. In April 2010, the month before the general election, more than 15,000 households got insulation measures through Warm Front. In April 2011, just six households got insulation through Warm Front—not 6,000, 600 or even 60, but just six. The Minister of State, the hon. Member for Bexhill and Battle (Gregory Barker), has said that this year he expects 50,000 households to get help with insulation through Warm Front, but so far fewer than 15,000 properties have been helped—not even a third of what the Minister promised. On the current trend, fewer than 20,000 households will get help with insulation this year, a fall of more than 90% on what we delivered in our last year in office.

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

Unfortunately, the right hon. Lady is making completely the wrong point. Warm Front does not deliver insulation; it introduces heating systems for people who do not have heating systems. Insulation is primarily the responsibility of CERT, the carbon emissions reduction target, and CESP, the community energy saving programme. Warm Front is not primarily an insulation programme. Perhaps she would like to try again.

[Caroline Flint]

Well, I have to say that some of my constituents have had help with things such as boilers, heating and also insulation.

[Robert Flello]

I am deeply troubled by the Minister’s intervention. If he visits my constituency, I will take him to houses that have had loft insulation put in through the Warm Front scheme, and to properties that have had replacement boiler systems fitted, not systems fitted for the first time. That is not the point he made a moment ago, as he will see if he checks Hansard.

[Caroline Flint]

The truth is that the Government are not on the same planet as most of the rest of us.

What the Minister did not answer is why the number of homes being fitted with insulation went down from 15,000 to six within a year. That is the question the Government should answer today. Let us be clear: when Warm Front is finally abolished next year, this will be the first Administration since the 1970s not to have a Government-funded energy efficiency programme in place. That is disgraceful. But, it is okay, because they say, “Don’t worry, we’ve got the green deal.” However, real questions have to be addressed about whether the green deal will be offered on fair terms and will actually deliver real energy bill savings, and whether it will really work for the public.

Let us start with the interest rates. Time and again, Ministers have been asked what sort of finance will be available to households interested in taking up the green deal. Time and again, they have failed to provide a straight answer. The reality is that if the level of interest is too high, given all the other pressures that families face at the moment, they will just not be interested in taking it up. Polling conducted by the Great British Refurb Campaign found that only 7% of home owners would be interested in taking up the green deal if the interest rate was 6% or more. However, we are hearing that the rate could be as high as 8% or 10%, so I ask the Secretary of State again today whether he can assure us that the green deal will be offered on fair terms and at a fair rate to the public.

In the autumn statement, the Chancellor also announced £200 million to provide incentives for the green deal. We still do not know what that money will be spent on or how it will encourage take-up. Most important of all, the fundamental idea behind the green deal—the “golden rule”, as the Government like to call it—is that the savings from better energy efficiency should cover the costs of the green deal. That is the promise being made to the public, but on looking at the small print, it is clear that the golden rule is not so golden after all. There is no guarantee that bills will not be higher after the green deal. If there is no guarantee, there is a real concern about the potential for mis-selling. The danger of what might happen out there is obvious: people will say, “We’re a Government-backed scheme—we promise you this”, but down the road they will not deliver. This measure will not balance out the costs that people are having to pay. In the light of stories about people not saving money or unwittingly inheriting higher energy bills after buying a green deal property, any credibility the scheme had will be shot to pieces.

[Tessa Munt (Wells) (LD)]

Will the right hon. Lady consider the fact that after a green deal installation, people might find themselves in a home that is at least warm, even if their bill is the same? They might not have saved any money, but they will for the first time be warm in their homes.

[Caroline Flint]

The warmth issue is not really part of the equation. The question of what this measure should mean has been discussed in Committee. The “golden rule” is about people saving money. With all due respect to the hon. Lady, the problem is that the scheme should be far further forward than it is. We already know from what has happened with solar that a number of businesses doubt whether they are going to enter the field to work within the green deal. For example, those involved in insulation are worried about the measure’s impact on the work they do, an issue I will say a little more about later.

So many questions have been left unanswered, and any Government scheme that allows anyone to go out and say that they are Government-backed has to stand up to scrutiny. We have to make sure, first, that the public are not priced out of taking part, but we must also ensure that they do not become the victims of cowboys involved in the scheme.

[Several hon. Members]

rose—

[Caroline Flint]

I am going to make a bit of progress. The Department of Energy and Climate Change website actually states:

“The Warm Front scheme provides heating and insulation improvements to households on certain income-related benefits”,

and it goes on to refer to grants for loft insulation and draught-proofing—I rest my case.

Perhaps the Government will also respond to firms, such as those I have met, undertaking cavity wall insulation, which provide a sensible, professional product under the carbon emissions reduction target—CERT—scheme. Some 6 million homes have cavity walls without insulation, and 10 million lofts do not have insulation. That provides enough work for a whole industry to do—work that is good both for the public and for the environment. However, I understand that, under Government proposals, if this work is to be undertaken under the green deal, a full assessment of the property will have to be made—the householder’s lifestyle and behaviour will be included in this. The assessment sounds as if it will have to be paid for by the consumer, yet the work that they wish to have done may be blindingly obvious. I hope that the Government will ensure that the public and businesses are still able to improve the energy-efficiency of homes without being forced through a bureaucratic and unnecessarily costly process.

With the end of the Warm Front scheme, and of the community energy saving programme and CERT, what will happen to families in fuel poverty, or in hard-to-treat homes, for whom the green deal might not be suitable? The Government’s solution is the energy company obligation—ECO—but only a quarter of the money from ECO will help households in fuel poverty; the rest will go to able-to-pay households. So the Government’s promise that ECO will do more to tackle fuel poverty than either CERT or the Warm Front scheme just does not stack up. In what way is ECO’s £325 million a year for fuel-poor homes greater than last year’s Warm Front budget of £370 million or the CERT spending of nearly £600 million on priority groups?

We know that as well as coming up with policies, even in these tough times, to help families with spiralling energy bills now, we must also reform the energy industry to secure a new bargain in the future. I have said it before and I am going to say it again: to start with we have to deal with the sheer number and complexity of tariffs on offer. We have 400 tariffs, with about 70 new ones in the past year. They are confusing and unfair, and they must be reformed. At his infamous energy summit in the autumn, the Secretary of State implored people to switch. Perhaps he could tell us today exactly how many people took his advice and switched, and how much they have saved. The problem is not that people are not shopping around enough; the real problem is that there are too many tariffs on offer, that they are too complicated to understand and that even when people do switch, they do not always get a better deal.

[Mr Watts]

Does my right hon. Friend agree that it is clear that the energy companies have made the tariff system as complicated as they can? Is it not a fact that even when people do switch and take the Prime Minister’s advice, they often find that they get a worse deal than the one they started with?

[Caroline Flint]

I am afraid that that is the case. I have met a number of the energy companies over the past few months and they are obviously hurting as a result of the public criticism being directed their way. However, when we examine today’s Which? report, we find that 4 million people complained in the past year and that the number of complaints rose by 26% in the past three months, so something is seriously not right. The real problem is that there are too many tariffs on offer. Having more than 400 tariffs is not about competition or choice, and it does not serve the public interest; it serves only the interests of the energy companies. So we need, as we have said before, a simple new tariff structure that is clearer and fairer, and that will help all customers to get a better deal. I know that consultations are going on at the moment, but the Government really need to step up the pressure. We should not be unable to knock a few heads together, and we need to do that sooner rather than later. We must keep the pressure on as that is the only way to make the companies change. The Which? report has highlighted the terrible situation with bills that were overestimated or incorrect as well as the mis-selling that went on in the past. We need a proper investigation and proper compensation for people who have been ripped off. Only then will we start to rebuild trust in our energy companies.

As well as a more responsive energy industry, we need a more competitive energy market. The energy market is dominated by just six firms that supply more than 99% of electricity and gas. Today we heard that EDF will cut its gas prices by 5%, but the public will ask why energy companies are still so quick to put up people’s bills when wholesale prices go up but slow to bring them down when they fall as well as when the other big energy companies will follow suit.

[David Mowat (Warrington South) (Con)]

I have in front of me a copy from the EU website of the gas prices for every country in Europe and it would appear that the UK has the fourth lowest gas price of the 27. What is the right hon. Lady’s analysis of why that has happened?

[Caroline Flint]

First, that is not about the point I was making, but is the hon. Gentleman defending the way in which prices have soared in the past year? Is he defending the companies’ atrocious record in dealing with people’s complaints? I would not stand in his shoes and make that case. The truth is that prices need to be transparent and we need to know how they are arrived at. It is quite clear—it has been proved by an Ofgem report and the Secretary of State might back me up on this point—that there is evidence that when prices go up the bills go up far quicker than they come down when prices fall.

[David Mowat]

Will the right hon. Lady give way on that point?

[Caroline Flint]

No, I will not give way to the hon. Gentleman again.

The bigger issue is how we carry out a root-and-branch reform of the energy market for the future.

[Mr Mike Weir (Angus) (SNP)]

I thank the shadow Secretary of State for giving way, and she is making a very good point. Rather than asking EDF why it is reducing the price by 5%, should we not be asking why it is doing so two months after putting it up by 15%?

[Caroline Flint]

It was actually 15.4%, but I do not want to be churlish. I am pleased that the prices have come down, but part of what we are seeing from the energy companies is due to the fact that they are starting to smart from the criticism levelled at them. The problem is getting worse and, as I have said, complaints have gone up and prices, which went up steadily over the past few years, have soared in the past year. We are not the establishment—the Government are, they are in the driving seat and they have the tools to do something about it. I only wish they would.

We must ask the fundamental questions, and the fundamental problem in defining whether prices are reasonable and fair and considering the other pressures on those prices is the fact that we are hampered by the lack of transparency in the market. The energy companies that generate energy sell it on to themselves and then on to customers. If the few big dominant firms were forced to sell the power they generate to any retailer, companies such as supermarkets and other independent retailers—like Good Energy, which came top of the poll for customer service in the Which? report—could play more of a role in the market. There would then be more competition and the upward pressure on prices would be eased.

Times are tough, we all know that, and we know that it means difficult decisions must be made. When times are tough, fairness is our first priority but, unfortunately, for the Government fairness is the first casualty. Millions of families and pensioners across the country are struggling with their energy bills and a cost of living crisis, but the Government are so out of touch that they are making things worse rather than better. They are cutting the help people get with their energy bills and scaling back on energy efficiency. By failing to stand up to the energy companies, they are letting down the public. We know that people need real help now and a more responsible and competitive energy market for the future. For those reasons, I commend the motion to the House.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. The wind-ups will start at about 6.40 pm. As hon. Members can see from the clock, we do not have a lot of time for the debate so if people could have in their mind a five-minute limit and aim to make a four-minute speech we will be able to accommodate more Members. Brevity has to be the order of the day.

17:20

[The Secretary of State for Energy and Climate Change (Chris Huhne)]

Thank you, Mr Deputy Speaker. I shall try to take on board your injunction for brevity.

Last year, we saw a big energy price rise, which came on top of increasing petrol and food costs. With the cost of gas imports now falling, I welcome today’s announcement from EDF, which has responded to the smaller companies leading the way such as Co-op and Ovo by joining them in cutting domestic gas prices. Some of the big energy suppliers were quick to pass on rising costs last year and it is only right that they should now pass on cost reductions to hard-pressed householders as quickly as possible. I urge the remaining five large energy suppliers to follow suit and give consumers some respite this winter. If suppliers do not reduce prices, consumers can send them a clear message by voting with their feet and taking their business elsewhere.

[Mr Watts]

On that point, has the Secretary of State contacted those energy companies and made it absolutely clear that if they do not drop their prices, he will take action to force them to do so?

[Chris Huhne]

I have been very rapid in my reaction to the EDF announcement and I have been pressing the energy companies and saying that they need to act to inform their customers about the cheapest tariffs.

The House last debated this topic in October, when I said that simply expressing concern and sympathy for those who are struggling to pay their bills is not enough. It is our responsibility to do everything we can to help. The clear steps we have taken to increase competition are working and it is right that energy companies should feel the pressure to keep bills down. We are not complacent and I can report that the action I promised then to help people with their bills is taking place now.

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

In the objectives that the right hon. Gentleman has set for himself and no doubt for the Government he makes the point about keeping energy prices down. Is he satisfied that Ofgem, the regulator, is exercising the powers that it has? Are those powers insufficient?

[Chris Huhne]

I am grateful to the right hon. Gentleman for raising that issue, which I shall address in greater detail. Ofgem is working closely with us on this and I think it is tackling many of these issues. I will give further detail on that.

Following the consumer energy summit, at which my right hon. Friend the Prime Minister and I brought energy suppliers, consumer groups and Ofgem together, we have been working together to make sure that consumers know about the help that is available and about how they can cut their energy bills this winter. In October the Government launched the “Check, switch, insulate to save” campaign on the Directgov website, and next week Citizens Advice is co-ordinating a big energy week campaign. Big energy week is designed to connect consumers who are struggling to cope with energy bills with the support available to help them to reduce their energy costs and maximise their income. More than 100 events will take place across the country, reaching out to people who might not know about those schemes.

In December, Ofgem published for consultation radical proposals to require suppliers to simplify their tariffs and billing information so that consumers can compare suppliers’ deals much more easily. Currently, as the right hon. Member for Don Valley (Caroline Flint) has pointed out, more than 400 different tariffs are available. Frankly, this leads to confusion rather than to greater choice. I suggest that is part of the reason why the switching of rates in the UK has declined over time. Ofgem’s proposals should help consumers to identify more easily the best deal for them. I support Ofgem’s work in this area and will continue to work with it to boost the transparency of bills and competition in the energy market.

It should be quick and easy to switch supplier. As part of our implementation of the EU third energy package in November, we have cut to just three weeks the time it takes to switch. Citizens Advice and Ofgem have received the highest level of funding yet from suppliers for the energy best deal campaign, which helps vulnerable consumers to shop around for the best available deal. Even without changing supplier, millions of households could save just by switching tariffs or payment method.

As agreed at our consumer energy summit, suppliers are placing messages on the front page of all bills to encourage consumers to phone them or visit a website to find out if they could be saving money. They are also writing to about 8 million customers who pay on receipt of their bill to tell them that they could save up to £100 a year if they move to direct debit payment. Nearly all these letters have now been delivered.

[Tessa Munt]

Has my right hon. Friend made any progress in sorting out the situation faced by people who have prepayment meters and therefore do not receive a bill? It is difficult for them to establish what they are paying over any period, and the most vulnerable customers are often in that situation.

[Chris Huhne]

I am grateful to my hon. Friend for the concern about prepayment meters. It is one thing that we have been looking at closely. Thankfully, people on prepayment meters are not paying more than was previously the case, and that is a step forward. I am sure there is more work to be done and we are looking at it closely.

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

The hon. Member for Wells (Tessa Munt) raised the issue of people on prepayment meters. There are two other key issues concerning people. One million households across the UK do not have access to a bank account so they cannot have direct debits; likewise, there are those who do not have access to the internet—the digital divide.

Further to the point that the Secretary of State made about the energy companies that are writing to their customers, I received one of those letters asking me to go on to direct debit. I called my energy company, E.on. It wanted to put me on to a monthly payment, which would have cost me at least a third more and I would have had to wait until May before I could reassess the situation. So even when energy companies are writing to their customers, myself included, they are not offering consumers the best deal. I cannot move on to direct debit because the company wants to charge me more than I pay already.

[Chris Huhne]

I can only recommend that the hon. Lady look at switching energy supplier to see whether she can find a better deal. We know from Ofgem that people can save substantial sums of money by doing that—£200 a year. Her particular case is obviously regrettable.

[Barry Gardiner]

The Secretary of State rightly talked about the simplification of tariff structures. Will he give a commitment to the House to look carefully at the possibility of enforcing a rising block structure? In an era of rising energy costs, it seems inequitable that the highest per unit cost should be paid for the first tranche, which of course the poorest families have to use. We should be applying the “polluter pays” principle, which means that as we use more energy, we pay more per unit for it. Please will the right hon. Gentleman look at that?

[Chris Huhne]

The hon. Gentleman makes a good point. One of the first things I did on becoming Secretary of State was to ask for a serious look at the issue. It is unfortunately much more complicated than one might suppose at first glance, not least because there is such an enormous variation in energy use in different income groups. For example, among the poorest people measured by income, the variation in energy use, off the top of my head, was as much as a multiple of six. There could be dramatically different effects from a rising block tariff, which do not correspond neatly to what the hon. Gentleman and I would want.

We want the companies to take more account of the wholesale market. Up like a rocket and down like a feather—that was the old days, and it must end. I agree with the right hon. Member for Don Valley in her points on that, although I note that Ofgem did not find evidence that that was the case. We are helping, through greater competition, to get the consumer the best deal and we have done a great deal to defend the consumer interest over the past 20 months—rather more, I would say, than the right hon. Lady’s Government did in 13 years.

[Caroline Flint]

Will the right hon. Gentleman answer my question? How many consumers have switched since the energy summit?

[Chris Huhne]

I will let the right hon. Lady know the information as soon as we have it. When it is available, I will write to her.

It is important to get the message across that households can save money not only by switching supplier, but by using less energy. Insulating lofts and walls can cut energy bills. The six largest energy suppliers all offer free or cut-price insulation, yet many households still have not taken up the offer. That is why the Government are writing to 4 million of the most vulnerable energy customers to tell them that they are eligible for free or heavily discounted loft or cavity wall insulation, and I am pleased to say that the initiative has been funded by suppliers.

[Mr Weir]

Following up on the Secretary of State’s answer to the hon. Member for Wells (Tessa Munt), I note that Ofgem stated in its briefing for the debate:

“The number of gas and electricity customers paying by prepayment meters has increased compared to the same quarter in 2010, by 6% and 4% respectively”.

Those are worrying statistics indicating that people are moving to prepayment meters and falling through the gaps despite the Government’s attempt to contact them and get them on to cheaper tariffs.

[Chris Huhne]

I agree with the hon. Gentleman. Sadly, during tough times people tend to fall behind with energy bills and so can be moved on to prepayment meters. One of the things that it is very important the Department does is try to ensure that those who no longer need to be on prepayment meters, from a credit point of view, are moved back so that they pay more directly and can take advantage of those schemes.

[Bob Stewart (Beckenham) (Con)]

If the Government are writing to so many vulnerable people, can we not make it as simple as possible? When we start talking about the elderly shopping around, why can we not just say, “Here are two or three very good deals that will work for you”, and then use that to ensure that energy providers bring their prices down? We should say to energy providers, “We are going to recommend this, so you had better bring your prices down.” That is what we need. We want to keep it as simple as possible.

[Chris Huhne]

I entirely agree with my hon. Friend on the need to continue the whole process of clarifying energy bills and making them simpler so that they are absolutely transparent and people find it easier to switch. That applies to all age groups. Compared with those of us in our 50s, those in their 60s and 70s—the silver surfers—actually do more on the internet, so we should not underestimate the ability for that to happen.

My hon. Friend might be interested to know that the letters the Government are sending out direct customers to a dedicated independent helpline as part of our programme to ensure that an extra 3.5 million homes are properly insulated by the end of 2012, and later this year we will be rolling out the green deal to help even more households save money through energy efficiency. We are ensuring that extra support is available this winter for the most vulnerable households. We are requiring energy companies to provide help to around 2 million low-income households through the warm homes discount, at a cost of £250 million for 2011-12, which is 40% more in cash terms than last year under the voluntary arrangements operated by the previous Government.

The right hon. Member for Don Valley made much of our apparent meanness on this exercise, but I do not see how the Government can be accused of being mean to those in the most vulnerable groups when it comes to energy bills when we are increasing the warm home discount by 40%. The scheme will help around 600,000 of the poorest pensioners with a core group discount of £120 this winter. We are spending £110 million on heating and insulation for low-income and vulnerable households living in energy-inefficient housing through the Warm Front scheme. We will also provide winter fuel payments to pensioners and cold weather payments to some households in areas that have extended periods of very cold weather.

[Robert Flello]

Many of the houses in my constituency and others were built without cavities. Often people take the opportunity to insulate their roofs and loft spaces but cannot do more because there are no more cavities to fill. What will the Secretary of State do about that?

[Chris Huhne]

The hon. Gentleman’s constituency is clearly a perfect place for the green deal, because the ECO subsidy will in part subsidise solid-wall homes with solid-wall insulation. That will be a very substantial step forward for many people who have not been in a position to benefit from energy efficiency because they have not had cavities to fill. A very large number of people in housing built before the first world war, and in more recent housing built quickly after the second world war, are in that position, and this measure will help.

[Chris Heaton-Harris (Daventry) (Con)]

There was a ten-minute rule Bill yesterday on park homes. Will they benefit from the green deal?

[Chris Huhne]

Park homes will be eligible for the green deal. We in the ministerial team are very keen to ensure that park homes, which are often the Cinderella of the housing stock, are looked after, and we are trying our best to ensure that they are eligible for the full array of measures that are available elsewhere.

The new energy company obligation, alongside the green deal, will include support not just for solid-wall insulation, which I mentioned to the hon. Member for Stoke-on-Trent South (Robert Flello), but provide “affordable warmth” to low-income and vulnerable households, through heating and insulation measures. That is the direct replacement for the Warm Front scheme, so the right hon. Lady’s charge that we are the first Government not to pay for help through public expenditure is disingenuous, because there will be help, but it will be delivered in a different way through the ECO subsidy, and with greater targeting and, I believe, greater help.

Those policies will make a difference this winter and next, but, as I said in October when I addressed the House on this topic, we also need to take the right long-term decisions so that energy does not become unaffordable. We must keep the lights on in the cheapest, cleanest way to ensure that households get the best deal in the long term. Over the next 10 years, we need £110 billion of investment in power plants and another £90 billion of investment in energy infrastructure to avoid the risk of blackouts. We must invest now not only to improve our energy efficiency, so that we do not need to produce as much energy to keep warm, but to reduce our dependence on fossil fuels in the long term, so that we do not have to rely on ever-more expensive imports.

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

I wonder whether we are in the position we are in today because of the previous Administration’s inability to take the decisions needed to ensure that we had a firm energy future.

[Chris Huhne]

My hon. Friend is absolutely right. The story of energy policy under the previous Government is one of stopping and starting, and of failing for many years to face up to the need to deal with the problem of renewing our energy infrastructure. But we are not dithering or delaying any longer: we in this Government are biting the bullet. We are determined to proceed with what is necessary to ensure that we have clean, green and secure energy for our nation.

Our proposals to reform the electricity market will deliver the best deal for Britain and for consumers, ensuring secure, low-carbon electricity supplies, and providing green jobs.

[Malcolm Wicks (Croydon North) (Lab)]

This is not the point that I was going to make, but I recall the Labour Government making the difficult decision on nuclear so convincingly that even the Liberal Democrats are now in support.

On the long-term issue, however, what is missing from this debate is the global dimension, although the Secretary of State has touched on it. Given that world energy demand is going to increase by 30-odd% in the coming years, with consequences for pricing, has the Department made any forecast of the implications for British energy prices and costs over the next 10 or 15 years?

[Chris Huhne]

I very happily exempt the right hon. Gentleman from my strictures about the previous Government’s policy, because when he was in the post of Energy Minister he certainly took some tough decisions, but sadly the record over the 13 years is not one of which Labour Members can be proud.

On energy prices, the right hon. Gentleman is absolutely right, and we have of course produced a forecast in the annual energy statement. Like all forecasts, it gets more uncertain the further out it goes, but it does point to a rise over time in oil and gas prices worldwide because of increased demand from, in particular, the far east. One of the current environment’s most striking features, about which there ought to be much greater public awareness and debate, is the sharp recovery in oil, gas and other commodity prices, despite continued relatively slow growth in Europe, the United States and Japan. This is the first time that that has happened in the post-war period. That shows the influence that the rapid growth and catch-up in the far east will have on world commodity prices.

[Guy Opperman]

I merely reiterate the point that with 24% of the north-east in fuel poverty, the situation in relation to heating oil and liquefied petroleum gas for off-grid customers is clearly unsatisfactory. Does the Secretary of State accept that and what specifically does he intend to do about it?

[Chris Huhne]

My hon. Friend makes a good and important point. People who are off-grid have traditionally had to deal with substantially higher costs than those who are on grid, and that continues to be the case. The case for regulating off-grid is weak, because as long as the market is competitive, it ought to deliver a reasonable result for consumers. I was surprised, as were other members of the ministerial team, that when we asked the Office of Fair Trading to look at the market, it was given a clean bill of health on competition grounds. We need to continue to watch this situation and we are very much on the case. With the renewable heat incentive and the green deal, it will be important that people who are off-grid think about other options rather than being reliant on heating oil, such as ground source heat pumps and biomass, which can already be cheaper than on-grid options.

[Graham Stringer (Blackley and Broughton) (Lab)]

The Secretary of State correctly points out that all projections on future energy prices show an upward trend. There is a debate about how much of that is down to renewables. One interesting difference between the UK and European market and the United States market is that there has been a decoupling of the gas price from the oil price in the north American market because of the intense use of shale gas that has been developed. What will the right hon. Gentleman do to develop shale gas in Lancashire and elsewhere in this country to change the projections so that the price of gas goes down?

[Chris Huhne]

I am grateful to the hon. Gentleman for his question. Shale gas is potentially an exciting development that could bring enormous prosperity to the parts of the country where it has been found, such as Lancashire. Provided that all the environmental safeguards are properly in place, it presents the opportunity to reduce the cost of gas. Of course, for the same calorific value, gas is about half as polluting in carbon terms as coal. Used with carbon capture and storage, it may be a long-term source of electricity generation. We are looking closely at this issue. We have been in contact with Cuadrilla, the energy company that has been involved in exploration in Lancashire. I hope that we will be able to make progress. Crucially, we must learn the lessons from the mistakes that were made in the United States. I do not want to see water tables contaminated; nor do I want the industry to be exempted from the provisions for clean water, which is what happened in the United States. There will be a different regulatory environment. In that context, I am sure that we can see success.

As so many people want to speak, I will curtail the remarks that I was going to make about our work with Ofgem. I will simply say again that we are considering giving Ofgem powers to order companies to provide redress to consumers who lose out as a result of a company’s regulatory breach. As a result of our implementation of the EU’s third energy package, companies are no longer able to block action by the energy regulator, Ofgem, by forcing it to seek a second opinion from the Competition Commission. We are determined to be on the side of the consumer in ensuring that the market is as competitive as we can make it.

We are doing everything that we can to help households with their energy bills this winter. On tariffs, bills and insulation, we are making it easier for people to save money and energy. We are taking action to help the most vulnerable households cope with rising bills and inefficient properties, and from the green deal to the reform of the electricity market we are making the right long-term decisions to ensure warm homes and affordable, secure energy for the future.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Please keep in mind the need for brevity, as we have less than an hour before the wind-ups.

17:44

[Albert Owen (Ynys Môn) (Lab)]

It is always a pleasure to follow the Secretary of State. I, too, welcome the debate, and I congratulate my right hon. Friend the Member for Don Valley (Caroline Flint) on calling it and on keeping up the pressure on the energy companies, which is very important. As she said, the Government agreed to a motion in October calling for investigation of mis-selling, the simplification of tariffs and improved transparency, and for energy companies to use their profits to help with bills. We have not seen a lot of action yet on the points in that motion, but I acknowledge that there has been some progress, which can be laid at the door of the regulator, which has been more proactive, and of the consumer groups. I pay tribute to Consumer Focus, Citizens Advice and Which?, which have highlighted many of the issues involved. The House and politicians from all parties can also take credit, because we have embarrassed many of the energy companies into taking action. I welcome today’s 5% price reduction, but I agree with other Members that it does not in any way make up for the previous double-digit rises.

Although we have had a mild winter—[Interruption.] I know that there are exceptions, such as the wind in Scotland, but compared with last year we have had a mild winter. However, that does not disguise the fact that there will be huge rises in the bills that people receive in January.

I wish to concentrate my remarks on those who are not on the gas grid. I make no apologies for doing so again and again. They are not a fringe group but some 2 million households in Britain alone, which does not include Northern Ireland, where 80% are off-grid. Those families do not get the same protection as those who are on-grid when it comes to simple matters such as help with prices. I make a direct plea to the Government to help those people. I cannot overstate that case. They ruled out social tariffs for those off the grid, I believe in June 2010, and I ask them to reconsider that.

The Energy and Climate Change Committee is undertaking a mini-inquiry into fuel poverty and off-grid gas, and we heard evidence today from the Office of Fair Trading. Unlike the Secretary of State, I was not surprised that the OFT came to the conclusions that it did, because it has a very narrow remit. The people who undertook the inquiry did not look at the matter in enough detail to conclude what we all know—that people off the grid have been ripped off in many ways.

It is not enough to refer the matter to the Competition Commission. The problem of higher prices is real, but anecdotal evidence that we have received from consumer action groups such as the one from the constituency of the hon. Member for Hexham (Guy Opperman) that gave evidence today, and from the constituents who write to us, suggests that people off the grid are being treated unfairly. There might be four companies in an area providing fuel, but they are all selling at very high prices.

Fuel poverty in off-grid areas is going up. I have some figures from Consumer Focus that I will share with the House. Some 28% of fuel-poor customers in England, 34% in Scotland and 37% in Wales are not connected to the grid. To be fair to the Minister of State, the hon. Member for Wealden (Charles Hendry), he has met Members representing off-grid customers since the last debate. I urge him to give Ofgem the responsibility to treat customers who are off the grid equally. As I said, there are 2 million such households, and they deserve the same treatment and the same protection as those who are on the grid.

I urge the Secretary of State to consider radically extending the gas mains. The renewable heat incentive may be a good thing, but it is a long way in the future. We could create jobs in construction and help to alleviate fuel poverty if we extended the gas mains to off-grid areas. They include not just isolated areas but those very close to the original gas mains that supply towns and cities. Such an extension could be done relatively quickly and would be real action, which is what our constituents demand.

17:49

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

The motion’s opening line states:

“That this House believes that soaring energy bills are driving up inflation”.

No one can argue with that. There has been a massive increase in energy bills, and before we continue with the debate, we should assess the reasons for that. All the independent financial analysts recognise that there has been a double-digit inflationary rise in energy bills, and that has spread to the economy. We live in a dangerous world, where there is much instability. The European Union recently approved sanctions on oil exports from Iran. All that has a knock-on effect on energy prices in this country. It is important, when setting the scene for the debate, to understand why energy prices have increased and that the Government can do something, but not everything.

In the summer I was in the United States when Michele Bachmann amusingly commented that she would reduce the price of fuel back to $2 a gallon. Perhaps that is why she has polled only 5% in the primaries—one simply cannot say, “We’ll reduce it back”: that flies in the face of dealing with the world crisis. There has been discussion for many years—certainly when I was at school, but it is now coming to the fore—about whether we have reached peak oil. Whether we have or not does not matter because the markets believe that we have reached that position.

There has been a 30% increase in energy demand in the recent past. As the Secretary of State pointed out, there are forecasts, but the further into the future they go, the more unreliable they are.

[Mr Mark Spencer (Sherwood) (Con)]

Yesterday, the Leader of the Opposition said that the previous Administration had not made enough progress, and he was Energy Secretary at the time. Is my hon. Friend as relieved as I am that we now have a ministerial team that is taking action to deliver real change, not only on lowering prices but on securing our energy future?

[Alec Shelbrooke]

I am most grateful for that intervention. Half the problem with such motions is that they ignore the facts that I outlined in my opening remarks and simply state that everything is the fault of the existing Government. Many people feel that the Labour party likes to be in perpetual opposition—my constituents certainly feel that, and I see nothing to disprove the theory. The right hon. Member for Don Valley (Caroline Flint) was very clear about the reforms that she wants to make, so why was she not clear when she was in government only two years ago? Perhaps the comment about window dressing goes a lot further than we thought.

Of course, we are trying to move forward in our proposals for energy consumption in this country, and the Secretary of State is right to say that we have bitten the bullet on how to generate energy. Let us be honest: we are in a coalition and we know that the Liberal Democrats had views on nuclear power. They held a perfectly acceptable view in their manifesto, and I greatly respect the work that the hon. Member for Wells (Tessa Munt) has done throughout her life as a member of CND—they were her beliefs, but we had to move forward.

[Tessa Munt]

They still are my beliefs.

[Alec Shelbrooke]

Quite right—the hon. Lady corrects me from a sedentary position. However, we had to bite the bullet and make decisions to secure this country’s energy future. All those things have a knock-on effect. The Labour Government’s dithering, delay and unwillingness to make those decisions because of the fright their Back Benchers gave them have been shown up massively by the two parties that came together to run the country after the mess left by the last lot, with one coalition partner making a decision that it did not want to take, but realising that it was right for the country. That is what is important: what is right for the country.

The right hon. Member for Don Valley said much about the Government cutting the winter fuel allowance for 2 million pensioners; there was a lot of “We told you so.” Later in her speech, however, the right hon. Lady said that the proposed legislation was initiated by the Labour Government and we have picked up on it. She cannot have it both ways. Labour was quite clear in its manifesto and previous decisions that it would do exactly the same thing on the winter fuel allowance. In these austere times, it is the Government who are resisting the populist pressure, coming perhaps from some of the more right-wing media, to means-test the winter fuel allowance, and we are ensuring that it is all there. The tax bribes that Labour was giving out at the last election were seen through, which is why it suffered the worst defeat since 1918.

I have already outlined the need for a coherent policy on energy futures, which will help to bring prices down. The situation with the feed-in tariffs is difficult, but we need to ensure that progress is made. We have done many other things to help people with their pensions, including introducing the triple lock, and ensuring that pensioners this year will receive the highest cash settlement that they have received in the last 100 years—it is huge.

There is every chance that the Opposition motion would lead to more borrowing, less tax, and disaster. When people cannot pay their bills, it is because of the economic incompetence of the Labour party.

17:56

[John Robertson (Glasgow North West) (Lab)]

I shall try to talk to the subject that we are here to discuss, unlike the hon. Member for Elmet and Rothwell (Alec Shelbrooke).

Last year, the average household saw energy costs rise by about £300 and Ofgem announced last October that the profit for energy companies had risen to £125 per customer per year, from £15 in June. My contention is not that the cost of energy is rising, but that the big six do not have a great track record of passing on wholesale decreases as quickly as increases.

Today’s wholesale energy prices are lower than they were a few years ago—and lower than they were only a few months ago. According to Bloomberg, the wholesale price for gas in autumn 2008 hit over 70p a therm. If we compare that with 59p per therm last October, we see that wholesale gas prices have actually dropped 15% since then. Similarly, prices in the wholesale electricity market reached £120 per megawatt-hour in autumn 2008. Today, they are just over £50 per megawatt-hour—less than half the price back then. But gas prices have dropped by only 15% and electricity prices by only 11% since last May’s peak. According to Bloomberg, in December natural gas futures declined by 30% compared with 2011. Today, energy companies can buy their gas for 53p per therm, some 9% cheaper than even last October.

The reason for this is sadly apparent. European demand is going down as the continent is moving towards a downturn and productivity is declining. This may be why EDF announced today a 5% cut, but—as my right hon. Friend the Member for Don Valley (Caroline Flint) pointed out—the company raised its gas prices last year by 15.4% while future gas derivative prices were falling, and while current market prices are down on previous years.

As a result, there is great suspicion among many, including Ofgem, that the big six have not been passing on wholesale market price reductions, not only last year but this year. These are clear acts of anti-competiveness in themselves, especially towards smaller energy companies, let alone customers and small businesses. For example, section 2 of the Competition Act 1998 prohibits the abuse of a dominant position in a market by one or more undertakings which may affect trade within the UK. I will quote competition law guidelines again as it seems that the Secretary of State did not hear me the last time I did so. They state:

“Conduct may be abusive when, through the effects of conduct on the competitive process, it adversely affects consumers directly (for example, through the prices charged) or indirectly (for example, conduct which reduces the intensity of existing competition or potential competition). A dominant undertaking is under a special responsibility not to allow its conduct to impair undistorted competition.”

I strongly suspect that one reason behind the price rises is probably that the companies have grossly failed to stockpile their energy reserves to hedge adequately against future prices. That could explain why, when future prices have fallen by almost a third, the companies are not passing on the reduction. There may be numerous reasons for that—one reason is probably ineptitude—but I feel that the main answer lies more in the lack of any incentive to pass on substantial price falls.

[David Mowat]

Will the hon. Gentleman give way?

[John Robertson]

I will not give way. There are a lot of people wanting to speak.

My constituents are grossly disadvantaged. The Secretary of State talked about going on the internet, but the low internet uptake in Glasgow—we have one of the lowest uptakes—will not allow that to happen for my constituents. However, I was pleased to hear that he has taken on board the point about severe housing, which is what we have. Efficiency savings cannot be made in concrete housing blocks. In fact, all my constituents seem to do is pay to heat up the concrete blocks in the winter and cool them down in the summer. I therefore look forward to hearing more from the Minister. I hope he will look at the prices, go back to the companies, give Ofgem the teeth that it needs and ensure that the fines that should be imposed on the companies in question are indeed imposed.

18:01

[Simon Wright (Norwich South) (LD)]

In October we saw the launch of the “Check, switch, insulate to save” campaign. There is a clear need to raise awareness of what people can do today to reduce their bills. Many people can go online, check around for better deals and switch suppliers or change to a cheaper tariff, but three in every five consumers say that, in fact, they have never switched supplier. There are perhaps a number of reasons why not, one of which is that there remains a digital divide, which means that the information is not as easily or quickly available to all. What is more, many of the best deals are for online-only web accounts. Many households could save around £100 immediately by simply moving to an online account, but this is little help to those who have not embraced the internet, which in many cases also includes poorer households. Those who are not online include more than half the UK’s over-65 population.

Other households tend to avoid doing too much of their business online, because they have poor quality internet access where they live. I strongly welcome the Government’s investment in better broadband for Norfolk. Better communication links will allow more people to search online for the cheapest services and, as a result, become more powerful consumers. However, even with 100% broadband coverage, many households will still not connect to the internet. It is therefore vital that every effort be made to ensure that support is available for offline consumers to ensure that everyone can access the cheapest tariffs, not just the internet-savvy. I welcome the work that citizens advice bureaux and Ofgem are doing to help.

[Bob Stewart]

Is that not the very point that we were making earlier? Citizens advice bureaux and the Department, in sending out these letters, should advise vulnerable people exactly what they think is best for them. That should make it as simple as possible for very vulnerable people, and that is our duty.

[Simon Wright]

That is a very good point, and I thank the hon. Gentleman for making it, but given the sometimes huge price differential between online and offline accounts, I hope that Ministers can work with Ofgem and the suppliers to seek to narrow the gap.

In recent years, competition for new customers seems to have been increasingly focused on price comparison websites. That has meant that those who use such tools can find massive discounts for web-only accounts, while the majority, who do not, end up paying more. To improve competition, we need simpler tariffs. Over 70% of consumers tested in Ofgem’s market research said that they would be more likely to switch if tariffs were made clearer. With a bewildering 400 or so tariffs available, only 44% of people in Ofgem’s research were able to select the cheapest tariff, even under a simplified form of the current arrangements.

We also need tariffs to be structured in a way that encourages energy conservation. A system of rising block tariffs—which was mentioned earlier—where customers pay less for the initial blocks of consumption and a rising amount for subsequent blocks, would provide an additional financial motivation for households to consider energy conservation. Low energy users would be rewarded for their efforts. At present, intensive energy users pay proportionately less.

I recognise that there are concerns about the unintended impacts that such a system could have on households that necessarily consume high amounts of energy, such as those of people with long-term health conditions who need to keep their house at a higher temperature. Perhaps we could consider other forms of social tariffs for such households, and examine whether extra support could be made available for housing insulation improvements, possibly through the green deal and through energy company observation. I know that Professor Hills’s fuel poverty review will consider tariff structures in its final report, and I hope that energy conservation will be seen as an important part of that work.

I also want to mention smart meters, which could play a massively important role for consumers. Every household should have one by the end of this decade. As well as encouraging more efficient energy use and allowing for more precise billing, these meters will provide consumers with billing information on what they are paying for, at the touch of a button. There is great potential for people to use that information to ensure that they are getting a good deal. For households to get the maximum benefit, consideration must be given to how best to inform, engage, and motivate consumers to use their meters to the best effect. The consumer engagement strategy, which I hope to see being developed and implemented during this year, will have a vital role to play in that regard.

Simplifying and reforming tariffs and improving transparency are all necessary short-term steps required to increase competition. There are a few encouraging signs of competition in what is, overall, a difficult market for consumers. Today’s announcement by EDF of a reduction in its customers’ gas bills in response to the falling cost of imported gas, following similar moves by smaller suppliers such as Ovo and the Co-op, will be welcomed by many of my constituents. Last year, however, rising costs were passed on to customers very quickly, and I now want to see—on behalf of all my constituents—action being taken by the other big five energy suppliers to reduce their prices. Whether or not they do so will be an indicator of how competitive the market is for consumers. If suppliers do not reduce prices, how many of their customers will go elsewhere? Promoting competition now is vital, and I welcome the emphasis that Ministers, working with Ofgem, have given to this issue.

Today’s debate is important. The issues are not simple, but the public rightly expect Ministers to intervene, and I welcome the progress that has been made in recent months. We are heading in the right direction, and I urge Ministers to continue.

18:07

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

My objective today is, as it has been in similar debates under the previous Government and this one, to speak up for my constituents who are getting a very raw deal from the energy suppliers. Energy companies are renowned for using fluctuations in wholesale prices as an excuse for unacceptably high domestic energy bills. The issue affects every household in my constituency, particularly those of pensioners and families on low incomes with young children, and it causes financial misery to consumers.

I have written to Ofgem, and met representatives of the organisation. I have sought to remind it of its duty to consumers. Likewise, I have been in touch with the Office of Fair Trading, which has a duty to ensure that a cartel is not operating against the public interest. I remain to be convinced about that. The problem that we are discussing today will not simply go away, and my activity will continue until pressure is brought to bear on energy suppliers to reduce the inflated prices that are being unfairly charged to all households.

As I travel round my constituency, I find that the issue uppermost in the minds of my constituents is the rocketing price of gas and electricity. The price of both has gone up substantially, leaving those consumers helpless or in debt from dealing with the problem. Food inflation is up by 6.2%. Electricity prices have risen by 10%, and gas prices are up by as much as 17.4%.

I was hoping that during this debate we might be spared the fool’s bargain solution of asking the public to switch providers. By heavens, we have heard that so often. This has not, is not and never will be the solution. I have a sense that the Government know, deep down, that what I am saying is perfectly true.

There is no need for extensive research into the domestic energy supply industry. The man and woman in the street are absolutely convinced that energy companies are simply leapfrogging one after another when it comes to increases. An unregulated energy market that allows consumer prices to soar while wholesale prices are decreasing is unjust, irresponsible and is hitting the poorest households hardest. The rip-off continues unabated, and I think we are right to challenge it today.

Let me issue this challenge to the Minister: can he name any other product or commodity that has risen in price so steeply not just during the last year, but during the last decade? This explains why energy prices have, frankly, become a national scandal. I am in constant touch with ordinary decent people in my constituency who are struggling against extraordinary energy price increases. Consumers need energy to keep themselves warm and to cook meals, and they need hot water. Wholesale price fluctuations have largely been blamed on the energy supply from the continent, but there is a healthy scepticism about this rationale. I am not against companies making a profit. What I am against are the profits of energy companies rocketing while consumers are facing human misery.

Clearly, we need to ask whether competition is working as it should. Are companies becoming too comfortable in this small sector in which the price-setter, British Gas seems more keen to keep its prices up than to keep its customers? I am not especially concerned with the profits that those companies are making—obscene though I believe them to be. Nor am I concerned about whether they should face competition inquiries or fines, because fines will be of no use whatever to low-income families in my constituency. My concern is that those people should get a fairer deal—no less and no more than that.

The previous Government made huge strides to combat fuel poverty through the winter fuel payment and other measures such as pension credit. The tragedy is that those efforts are being completely undermined and devalued by the scandalous energy prices that consumers are being—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order.

18:12

[Ben Gummer (Ipswich) (Con)]

It is always a great pleasure and honour to follow the right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke), whose defence of his constituents is always reasonable and valiant. I think he is right to this extent—that appealing to people to switch supplier will not be the entire cure for problems in the energy market. The reason for that is that the energy market is broken, so competition will not work entirely. It can work to a certain extent, but not entirely, if the market cannot deliver what the consumer wants.

To understand how to fix the market, we have to look at the history of the market and why it went wrong. If we look at energy prices, we find that they have moved since the privatisation of the late ’80s. They fell consistently beneath the retail prices index every year from the late ’80s and the early 2000s. They did so over a longer period than at any time since records of energy prices began. Then, from the mid-2000s they levelled out, and from 2005 to 2007 they increased further than RPI until 2010 when the last Government left office.

I am fully aware that this is often not a moment to talk about the previous Government’s record, but they had a fundamental hand to play in the reasons why we are in the position we are in now. It is also incumbent on us to point out that much of the responsibility lies with the man whose name stands at the head of the motion who seeks to lead the British public as Prime Minister after the next election. He is responsible for the complete lack of action taken to do anything about the broken energy market, which has caused the problems from which our constituents, including those of the right hon. Member for Coatbridge, Chryston and Bellshill, suffer today.

In a debate earlier in the Session, the right hon. Member for Don Valley (Caroline Flint)—who is now shouting from a sedentary position—said that reform of the electricity market was

“what my right hon. Friend the Member for Doncaster North (Edward Miliband) has been calling for ever since he was Energy Secretary, including now, as leader of the Labour party.”—[Official Report, 19 October 2011; Vol. 533, c. 931.]

A Secretary of State does not call for a reform of the energy market, or of the electricity market. The right hon. Gentleman’s purpose should have been to do something about the situation, but far from doing something about it—or even calling for something to be done about it—he issued the following warning to the then Opposition Front-Bench team during a 2009 debate on the Energy Bill:

“I have to say that the alarmism... is of no help at all.”—[Official Report, 7 December 2009; Vol. 502, c. 43.]

It was not alarmism, however. We understood that the market was broken, and we understood that fundamental changes were needed. That is why we are introducing the changes that need to be made now that we are in power.

My first problem with the proposals in the motion is that they do not have the agreement of even small energy providers, who say that the right hon. Lady’s pooling mechanism would not work.

[Caroline Flint]

How do you know?

[Ben Gummer]

I can tell the right hon. Lady, in answer to her sedentary question, that even the small providers have put that on record.

Secondly, the right hon. Lady alluded to a series of reforms that she believes would combat fuel poverty. That suggested that the last Government’s attempts had somehow been successful, or would be successful were they to be continued. In that earlier debate, the right hon. Lady also said:

“we had the most ambitious programme to help people in fuel poverty deal with their bills”. —[Official Report, 19 October 2011; Vol. 533, c. 932.]

Let me remind her of that policy. Between 2000 and 2008 the last Government spent £20 billion on abatement of fuel costs, and what happened to fuel poverty during that period? It increased by 333%. That was indeed ambitious. It was ambitious to the extent that for every household the Labour party put into fuel poverty, the taxpayer paid £5,700. The taxpayer paid £5,700 to reduce a household to fuel poverty, yet Labour Members have had the cynicism to come to the House and claim that their policies would work again, and that the brave and principled position of Her Majesty’s Government is somehow misguided. It is a hypocrisy which lays bare a party that has no ideas of its own, and is reduced to attacking its own record.

18:17

[Pat Glass (North West Durham) (Lab)]

I have spoken in every energy debate in the House since my election. That is because my constituency is largely rural and is in the north-east, and because 25% of my constituents are living in fuel poverty. Many of them are on low incomes, there is high unemployment in the constituency—it has doubled in the last 12 months—and we have an ageing population. Any suggestion of an increase in fuel costs always causes real fear and anxiety in constituencies such as mine.

I listened carefully to what the Secretary of State had to say. While apparently guiding us carefully through the complexities of the energy industry, he seemed to me to be doing so from the point of view of the chief executive of an energy company, and I found that incredibly disappointing. I thought it was complacent in the extreme, and I believe that my constituents would be rightly angered by it. The Secretary of State spoke of dithering and delay in the last Government, but in the two years in which I have been in the House, I have witnessed a master class in dithering and delay. We need to get on with doing something about the present situation.

In my brief speech, I want to raise two issues. As a past student of economics, I want to discuss the artificial economy created by successive Governments in the energy industry, and I also want to return to the issue of off-grid and heating oil prices.

Successive Governments have created and modified the artificial market in the industry, but that artificial market has failed to establish safeguards that would prevent companies from manipulating the market in order to achieve massive profits at the expense of the consumer and at virtually no risk to themselves. It has failed to prevent an oligopoly in which these companies can operate with impunity. We now have few suppliers in the market and entry into the market is almost impossible, and the actions of those few suppliers have a disproportionate and negative impact on consumer prices.

Most of our strategic energy companies are also now foreign-owned. I sat through the previous debate on transport, and I heard the shadow Secretary of State tell us how the rail industry is being gradually renationalised and returned to Government ownership, but, unfortunately, not British-Government ownership; foreign companies and Governments now own our rail industry, and the same is happening in our energy industry.

On off-grid and off-gas, I was stunned by the Secretary of State’s remark that the Office of Fair Trading report gave a clean bill of health to the industry. It is clear to me that he has not read that report. I accept that the report said there was no monopoly in heating oil, but I think that is because its remit was far too narrow so the investigation was too limited.

[Guy Opperman]

I am the hon. Lady’s constituency neighbour and we share a great deal of common ground on the issue of off-grid problems. So far as my constituents are concerned, there is no genuine competition and fairness of pricing in respect of off-grid, so from their point of view the report by the OFT, which was only a market study, is manifestly insufficient and not right. Do her constituents convey the same concerns?

[Pat Glass]

Yes, exactly the same issues are raised in my constituency surgeries. The OFT accepted that in some parts of the country there are fewer than three suppliers, but in practice even though there may be three advertised suppliers, sometimes only one company is prepared to deliver. That is certainly the case in parts of my constituency, and I am sure that is also the case elsewhere. That may not be a monopoly in the view of the OFT, but for my constituents it is definitely a monopoly. Some of my constituents were faced with increases of almost 100% in heating oil prices in the run-up to Christmas last year, and only one company was prepared to deliver. I call that a monopoly. I urge the Government, and my party’s Front-Bench team, to look again at the regulation of this sector.

I am pleased that the Prime Minister seems recently to have woken up to the public’s anger about irresponsible capitalism. We have a culture in which obscene profits are made and consumers are suffering as a result. However, I do not believe that the Prime Minister is serious about this; rather, I think it is just focus-group rhetoric. If he is really serious about doing something about irresponsible capitalism, the energy industry in this country is a good place to start.

18:23

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

I simply do not accept the criticism we have heard this afternoon from the Opposition that the Government are sitting on their hands and letting people die in their homes this winter. In the few minutes available to me, I shall demonstrate that, as Opposition Members have said, actions do, indeed, speak louder than words, and I shall describe a fraction of the things that are being done in my constituency to tackle fuel poverty now, as we speak.

Cornwall council and the council of the Isles of Scilly have led a successful bid to the Department of Health for more than £140,000 for a campaign called “Warm homes, healthy people”. It is estimated that each year about 300 people in Cornwall die as a result of living in cold homes, which is, of course, 300 too many. Partners in this campaign include the NHS in Cornwall and the Isles of Scilly, Age UK, Community Energy Plus, the citizens advice bureaux, Cornwall Voluntary Sector Forum, Truro Homeless Action Group, the home improvements agencies, St Petroc’s, the Cornwall drug and alcohol team, New Connection and the councils’ own housing and adult social care teams. All of them are combining their efforts to tackle this problem. They will identify those most at risk of fuel poverty. They are going to make sure that people access all the advice and support that is already available for them. As the right hon. Member for Don Valley (Caroline Flint) said, millions of pounds go unclaimed in benefits and compensation from energy companies. This practical programme will make sure that the people who need support actually access it.

[Mr Watts]

Will the hon. Lady give way?

[Sarah Newton]

I will not, because I want to allow more colleagues to join in.

The programme is going to give people really good advice on how to protect themselves from the risks of high humidity and on insulating their homes, and it will make sure that they are taking up the available grants. It is also going to make sure that people really take advantage of the many existing free programmes.

This programme has had widespread support from people in Cornwall. The council cabinet member responsible for health and well-being has said:

“This is a great example of community and voluntary organisations coming together with the public sector to offer a joined up approach to a big issue. The funding is very welcome indeed as it will help all the agencies involved target support to those in most need and at most risk. By working together, frontline workers and volunteers will have systems in place to make sure that vulnerable people are directed to the service most able to help them.”

Our director of public health for Cornwall and the Isles of Scilly has also warmly welcomed this investment, saying that it will be used alongside money that Cornwall council and the NHS already spend in subsidising the Warm Front scheme to ensure that all the costs of insulating people’s homes are met.

In addition, the council cabinet member responsible for housing has said that this funding is “great news” and is going to back up the money already being received from the Government to tackle homelessness. People who are homeless or living in very poor quality accommodation—in the mobile homes and park homes that we have heard about; in poor quality, poorly insulated private rented sector accommodation—will be able to top up the money the Government are already giving to people at risk of homelessness, which will actually make a difference this winter.

In addition, I have been working with all these different voluntary sector organisations, and, together with Church groups and poverty forums, we have come up with a practical guide that will be widely distributed to people. Anyone and everyone who is worried about heating their homes this winter will have the full range of advice about all the benefits and services available to them.

I challenge my colleagues on the Opposition Benches. Yes, actions do speak louder than words, and rather than spending hours in these sterile and futile debates, why do they not roll up their sleeves, go back to their constituencies and work with those who really want to make a difference to people this winter?

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I want to allow some people who have been here throughout the debate to get at least something on the record. I do not like dropping the time limit to three minutes, but I am afraid I have to. I call Mike Weir.

18:28

[Mr Mike Weir (Angus) (SNP)]

In the brief time available I just want to make a few comments. Rising energy prices are obviously causing huge problems for many families. Every 5% rise puts a further 46,000 households into fuel poverty. It is not a completely grim picture. For once, there is some good news in Scotland. The Scottish house condition survey, which measures fuel poverty, published in November, shows a reduction in the number of homes in fuel poverty in 2010, although, like the rest of the UK, the figure remains far too high. The current average dual fuel bill is now £1,345 a year, an increase of almost 50% over the past four years. Today, EDF trumpeted the decision to reduce gas prices by 5%, but that comes on top of an increase only a couple a months ago of 15.4%.

There are other related issues. I raised with the Secretary of State in an intervention the issue of prepayment meters. There is great concern about the huge increase in the number of people moving over to prepayment meters—presumably, people who are unable to meet their energy bills—and there is a real danger of self-disconnection when that happens. We do not always know when some of these people are doing this. That is a real worry and we need to do something about it.

The mantra of switching simply does not work. The energy companies appear to be doing a “follow my lead” on rising prices; I very much doubt whether that will necessarily occur when prices start to go down.

I note that Labour’s motion suggests that we should

“require energy companies to provide the lowest tariff to over 75s”.

That, in itself, is a good idea, but the problem is that it will work only if the tariffs are lower; there is no point putting people on the lowest tariff if all the tariffs are high, which tends to be the position at the moment. At the Scottish Government’s energy summit last November, Scotland’s six largest energy providers pledged to help vulnerable customers transfer to their most efficient tariff, so there has been some movement on this issue and it should be encouraged. However, the previous system of higher winter fuel allowances for elderly people is a much better option, because it reduces the amount they have to pay out, irrespective of what bill they are on, and I am slightly disappointed that Labour seems to be moving away from that approach.

I wish to make the point about off-grid customers, of whom my constituency has many and about which other hon. Members have spoken. I have previously raised this prospect, but the Government should consider, at the very least, making the winter fuel payment earlier to vulnerable people who are off-grid, as that would allow them to fill up their tanks in the summer or early autumn, when the price tends to be lower, although it is not always. That is a no-cost and positive option, so I urge the Minister at least to consider it again.

18:30

[David Mowat (Warrington South) (Con)]

I have been sitting here for a few moments trying to work out whether to talk quickly in the next few minutes or to curtail my remarks. I wish briefly to say something about the structure of the UK gas and electricity industries.

First, I shall discuss the gas industry. I heard the comments made by hon. Members from both sides of the House, but particularly by Labour Members, about the predatory nature of the industry, cartels, price fixing and so on. I return to my earlier intervention by saying that this country has the lowest gas prices in Europe, leaving aside three small countries. I am not defending these organisations and if the prices could be lower, they should be lower. However, if that situation is the result of predatory pricing and the operation of a cartel, the companies are not very good at it.

[Ben Gummer]

Is my hon. Friend aware that the probe initiated by the previous Secretary of State found that the energy companies were not acting as a cartel and that there was indeed price transparency between them?

[David Mowat]

I was aware of that, and I shall finish on this point by saying that if Labour Members have evidence of directors operating a cartel, which is a criminal offence, they should come forward with it. Alternatively, they should just stop making the accusation, which is becoming increasingly silly.

I was somewhat disappointed by the Secretary of State’s answer to the question about shale gas, because it has the potential to be a game-changer. In the United States gas prices have reduced by a factor of three and, in 2015, the US is going to start exporting shale gas, and if we do not have it here, that could well have a major impact on the structure of the industry and how it will work in the future. For the first time, we are seeing the decoupling of gas and oil prices, and once that has happened, all bets are off. The price of gas in Europe—in the European balancing hub—is three times what it is in the US. If a fraction of what happened in the US happens here, the results could be very radical and could create some issues to address in terms of the debt strategy.

Whereas we have nearly the lowest gas prices in Europe, the same cannot be said for electricity prices. We have structural issues to address in our electricity market. We do not have cheap nuclear power, as France does. We have missed the opportunity on that, although we are doing our best to catch up.

In the minute remaining, I want to suggest to the Minister one area that I believe we have got wrong in policy terms. The Climate Change Act 2008 sets a very ambitious target of 80% decarbonisation, and I accept that, but I believe we have confused the need to decarbonise with the need to go for renewables. The 20-20-20 directive from 2009, which imposes a renewables target over and above what we could have done to reduce carbon, has confused the issue. As a result, we have gone into nuclear more slowly than we should have done and, frankly, we have gone more slowly into carbon capture and storage, which is an alternative. Will the Minister assure us that the Green investment bank will be concerned with decarbonisation, not just renewables, and that the money available from it will therefore be available to the nuclear industry, which is in as much need of it as other parts of the decarbonisation chain, and the CCS industry?

18:35

[Barry Gardiner (Brent North) (Lab)]

Since 2004, gas and electricity bills have increased more than six times faster than household incomes, meaning that a quarter of all households in England and Wales are now in fuel poverty. Increasing energy bills and stagnating incomes also mean that an additional 25% of people now face energy debts and more than 850,000 electricity consumers and more than 700,000 gas customers are now in debt to their energy supplier.

I would dearly love to give the hon. Member for Ipswich (Ben Gummer) a lesson in the history he so eloquently went into earlier, but I shall defer that to another occasion. I would point out, however, that although he accused the previous Government of not having tackled structural reform in the energy market, they did so on two occasions with the new electricity trading arrangements, or NETA, and the British electricity trading and transmission arrangements, or BETTA. We will save the rest of that debate for another day.

The point that I most wish to make is that the costs of environmental and social measures, such as CERT and the renewables obligation, now account for about 4% and 10% of gas and electricity bills respectively. This is an unpopular thing to say—and certainly unfashionable, coming from me—but it is the truth and we have to face up to it: developing a low-carbon energy infrastructure will require long-term planning and significant investment. Whereas 84% of recent energy price rises were unrelated to low-carbon measures, the remaining 16% were and the Committee on Climate Change estimates that policies to achieve a low-carbon economy will add about £110 to bills over the next decade. That is because it expects electricity consumption to drop by 50%, meaning that per unit costs of electricity will skyrocket. The most important thing we can do, therefore, is achieve energy efficiency.

On that point, I want to challenge the Secretary of State on ECO. He will know that the Fuel Poverty Advisory Group and National Energy Action have said that ECO spends only 25% of its funds on the fuel poor and 75% of its funds on trying to reduce carbon emissions, which could be better directed at targeting solid-wall insulation for the fuel poor in the private rented sector. I ask him please to consider that, as it can achieve his energy emissions objectives and increase the benefits to the fuel poor.

18:38

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

As many other Members have said, this is an issue of huge concern to constituents across the country, and my constituents have some particular concerns that make the impact of rising energy prices much greater. We have a lot of properties that are off-grid, which is a huge issue particularly in the marshland villages, and I also represent in the Scunthorpe part of my constituency a large number of park homes, which other Members have mentioned. A lot of people in my constituency live in single-skin properties, many privately rented, where landlords, despite their legal right, require them to be on energy meters. That was an experience I had for about three and a half years before I was able to buy my house. I lived in a rented property with one of those meters and I know the added costs. Like other Members, I am getting increasing amounts of casework about this matter. I hope the Secretary of State will act on the concerns about private rented landlords, park homes and single-skin properties.

There is not a great deal of time to go into casework issues, but another issue I want to discuss is switching. I was saddened by the comments of the right hon. Member for Don Valley (Caroline Flint) and I remind her that, under her Government, in the region we represent, Yorkshire and the Humber, fuel poverty went from 7.7% of households in 2004 to 19.9% in 2009, so this issue has not appeared overnight. It is wrong to pooh-pooh the idea of switching. One thing that I have done—my hon. Friend the Member for Truro and Falmouth (Sarah Newton) said that she had done something similar in her constituency—is to produce a book and guide for my constituents to assist them as best I can by informing them about how they can switch and how they can make use of the social tariffs and their replacements. There are practical things that we can do, but I do not deny that it is sometimes incredibly confusing. I had a lady in her 80s at my constituency surgery the other week. She explained that she was unable to switch because she did not have access to the internet and her children lived a long way away. We need to do more for such individuals.

I want briefly to address a point made by the right hon. Member for Don Valley. I intervened on her about it but it is worth saying again. If a point is worth making once it is worth making twice. Never mind the nonsense about the winter fuel allowance and the fact that Labour would probably have raised it—even though she committed today to not raising it, which tells us all we need to know—the one thing that would have helped pensioners in my constituency previously, instead of giving them that disgusting 75p rise, would have been Labour making good on its 1997 election pledge to link pensions to earnings. I am proud that we have done that, and it should put £5 or more into the pockets of pensioners.

18:41

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

I am pleased to respond to this very important debate. At the start of the debate, my right hon. Friend the Member for Don Valley (Caroline Flint) reminded the House of the last time we debated rising energy prices—in October, just three months ago. In that debate, the Government supported our motion calling on them to investigate mis-selling, simplify tariffs, improve the transparency of trading data, reform the energy market to increase competition and drive down bills, and to demand that energy companies use their profits to help with bills this winter.

Since then, the Government have failed to deliver on every one of those promises. No action has been taken to address the chronic lack of trust between energy companies and their customers. There has been no action to increase transparency and competition and no action to help with the soaring cost of bills. Today, we have heard in speeches of Members from across the House about the consequences of the Government’s failure. They have told us about constituents who have been let down and who are struggling to keep warm this winter. Families and pensioners are facing a cost-of-living crisis. They are being squeezed by huge increases in prices at a time when their incomes are decreasing in real terms. In the latest round of price increases, electricity has gone up by 10% and gas has gone up by more than 17%, and that has come on top of high fuel prices and food inflation at 6.2% as well as the Government’s VAT rise, which is costing the typical pensioner around £275 a year.

Several hon. Members have talked about unfairness. My hon. Friends the Members for Ynys Môn (Albert Owen) and for North West Durham (Pat Glass) raised the issue of the 2 million customers who are off-grid, which is a specific issue in their constituencies. Those households suffer specifically from the monopolistic situations in their area and do not have choices about electricity and gas when such services are not available to them.

The hon. Member for Norwich South (Simon Wright) rightly talked about people who do not have access to the internet as a means of identifying the cheapest deals. A number of Members talked about the scandal of prepayment meters and the high costs incurred for those customers.

My hon. Friend the Member for Brent North (Barry Gardiner), my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr Clarke) and my hon. Friend the Member for Glasgow North West (John Robertson) all highlighted that at a time when their constituents are being squeezed by record rises in their bills, energy companies are seeing record rises in their profits. It cannot be right that while the cost of a typical dual fuel bill now stands at more than £1,300, thereby making energy bills one of the biggest costs that households face, the profits of the big six, which supply 99% of our households, have risen to more than £100 per customer.

The Government are exacerbating the situation by making the wrong choices for Britain’s bill payers. They are wrong to withdraw support from the most vulnerable consumers when they need it most. They are cutting winter fuel payments by £50 for the over-60s and by £100 for the over-80s despite having promised before the general election not to do so. They are also running down the successful Warm Front scheme before they scrap it completely next year. That scheme was introduced by Labour and has helped more than 2 million households to save money by improving their homes’ heating systems and energy efficiency.

Ministers are quick to lecture consumers about the importance of energy efficiency, yet at a time of soaring energy costs they are cutting help for those who are trying to install those vital measures, be it insulation or more affordable and energy-efficient heating systems. In 2009-10, during the last year of the Labour Government, over 200,000 homes received new heating and insulation under the Warm Front scheme. By November last year, fewer than 15,000 households received such help—a staggering reduction of 85%. The hon. Member for Truro and Falmouth (Sarah Newton) must be receiving the majority of the Warm Front support in her constituency.

It shows just how out of touch this Government are that, when they should be supporting those who are trying to do the right thing, they are instead making it more difficult. They are wrong, too, because as well as scrapping existing successful schemes, they have introduced new programmes which are not delivering. I am pleased to see the hon. Member for Elmet and Rothwell (Alec Shelbrooke) back in his place. He did not know the difference between the warm home discount and winter fuel allowance. It is a shame that he was not able to stay for the debate, because he might have learned about it.

The new warm home discount is failing to help those in fuel poverty. We warned the Government that the scheme was too narrowly focused and would not deliver the support needed. It seems that those warnings went unheeded. Research by Save the Children, which came out last week, highlighted the huge shortfall in funding provided by energy companies for the schemes, which means that only 25,000 of the 800,000 households eligible for the warm home discount will get help this winter. That is just 3% and it is not good enough.

When pensioners and low-income families are struggling to make ends meet, it is time the Government got tough with the energy companies. We would provide real help now by making the energy companies ensure that all vulnerable pensioners and low-income families with children at risk of fuel poverty who receive cold-weather payments automatically receive the warm home discount. When in government we took action to help consumers, thanks to measures such as Warm Front and the winter fuel allowance, which the Government are now cutting. The number of households in fuel poverty fell by 1 million. Of course we would have liked to have reduced that even further, but now fuel poverty is rising and things are getting worse, not better, as a direct result of the decisions being made by this Government.

At the same time as cutting support, the Government’s plans for the new schemes, the green deal and the energy company obligation, will not deliver either. We have just heard that at a meeting in the other place, the Energy Minister there said that the regulations for the green deal would be delayed. We wait to hear how long that delay will be.

The Minister of State, the hon. Member for Bexhill and Battle (Gregory Barker), told the House in 2010 that the green deal would be the game-changer for fuel poverty, but his figures revealed that only 350,000 to 550,000 households would be lifted out of fuel poverty by 2020. These are derisory ambitions. His plans mean that the Government will be gifting three times as much subsidy to households that can already afford to improve their homes, compared with those in fuel poverty who cannot even afford to keep theirs warm. To echo my hon. Friend the Member for Brent North, why, when money is tight, is the Minister not prioritising support for those who need help most?

We have seen a clear choice emerge in this afternoon’s debate. On the one hand, there is an out of touch, out of date Government unable to stand up for hard-working consumers—out of touch because when energy bills are rising, millions are struggling to keep warm and fuel poverty is rising, their only answer is to cut support and tell consumers to shop around. Although it is refreshing to hear from the hon. Member for Ipswich (Ben Gummer) that he believes that the energy market is broken, the Government are out of date because they are wedded to an orthodoxy which for too long has allowed utility companies to do what they please at the expense of their customers. On the other hand, the Labour Opposition have plans to deliver fairness in tough times, to provide real support for struggling households this winter, even when Government have less to spend, and to take on the vested interests, reforming the energy market so that it benefits the many and not just the few.

We heard throughout the debate how the huge rises in gas and electricity prices mean that bills are one of the biggest costs that households face. The Government lecture consumers, telling them that it is possible to save up to £200 on an annual bill by shopping around. In some cases that might be true, but Ministers are out of touch if they think that it is easy for consumers. We have heard from many about the 400 different tariffs. It is those who need help most, Britain’s pensioners, who are losing out from the Government’s failure to force companies to introduce simpler tariffs. Research by Ofgem has shown that elderly customers are much less likely to investigate cheaper tariffs or switch suppliers, compared with the average consumer. It is crucial that at times like these, when money is tight and people right across the country are struggling to get by, the Government do everything they can to help them.

Yesterday my right hon. Friend the Leader of the Opposition showed that Labour will deliver fairness for elderly people struggling with soaring fuel bills as well as taking action to cut the deficit. The plan he set out in today’s motion would cut gas and electricity bills for up to 4 million elderly pensioners, not by spending more money, but by getting energy firms to show greater responsibility towards their most vulnerable customers. We want energy companies to move their customers who are over 75 automatically to the cheapest tariff they offer for gas and electricity.

As well as taking action to protect the most vulnerable in our society, we must ensure that everyone benefits from fairness and responsibility in our energy market, so we would go further by introducing real reform to increase competition and drive down prices. For too long the market has been dominated by a handful of companies. Today’s debate has shown once again that the market is broken and that we need to fix it. I hope that the House will vote for action today and I urge Members to support the motion.

18:50

[The Minister of State, Department of Energy and Climate Change (Charles Hendry)]

I am delighted to have the opportunity to respond to the debate, which I think we all would agree has dealt with some extremely important issues that concern us all. I think we should start with the recognition that there is no monopoly of care when it comes to fuel poverty. Every Member of the House, regardless of party allegiance, cares about their constituents being able to pay their bills and worries about how they can do more to assist them. This is a long-term concern. Fuel poverty started to come down in the 1990s under the Conservative Government and continued to decline until 2002. It then increased from 2 million households living in fuel poverty to almost 6 million over the course of the Labour Government. As prices have continued to rise, fuel poverty has continued to go up. It is an issue that no party can claim to have addressed, but one that every Member cares about finding the right solutions to.

Important issues were raised in the course of the debate. The hon. Member for Glasgow North West (John Robertson) talked about the difficulty of insulating the types of housing found in his constituency and the hon. Member for Angus (Mr Weir) referred to the problems faced by people on prepayment meters. We heard the continuing debate about off-gas grid customers. We welcome the progress and the interaction we have had with the hon. Members for Ynys Môn (Albert Owen) and for North West Durham (Pat Glass) and my hon. Friend the Member for Hexham (Guy Opperman) to try to ensure that constituents who are off-gas grid get a better deal than they have had so far. We have ensured that the warm home discount will be payable to those who are off-gas grid and have seen good engagement with the Office of Fair Trading, which said following its market study that if there was evidence of market abuse it would carry out a full investigation in that area.

I have asked Members on both sides of the House to provide evidence of how the market is working in their constituencies and, if they find that there is not the range of market providers that the OFT suggests, ensure that that is brought to my attention. If there are problems with delivery in some areas or with advance payments being required, I want cast-iron evidence so that we can decide on the most appropriate way to go forward on those issues.

We have heard discussions about the green deal, which the right hon. Member for Don Valley (Caroline Flint) raised. I well remember a discussion with the right hon. Member for Lewisham, Deptford (Dame Joan Ruddock) in 2010, when she was Energy Minister, after we had put forward an amendment to the Energy Bill. She said that the green deal was not possible and the Labour Government voted it down. We could have had the green deal in place 18 months ahead of where we are now and delivering the sort of help we want to see. It is the most ambitious programme this country has ever seen for insulating our homes, with the ambition of 14 million homes having good energy insulation over the course of the next decade, which knocks into oblivion any other scheme that has been tried by previous Governments. I well remember the current leader of the Labour party, when he was Secretary of State for Energy and Climate Change, telling the House in December 2009 that their ambition was to have five pilots in different parts of the country. We have taken it from five pilots to a nationwide scheme delivering on a level that has never before been possible.

My hon. Friend the Member for Elmet and Rothwell (Alec Shelbrooke) was absolutely right to draw our attention to the upward pressure on prices. Indeed, the Leader of the Opposition, in his Labour party conference speech last year, said that

“over time there is going to be upward pressure on energy prices.”

Yet from the right hon. Lady there was not a word about the global picture—the fact that towards the end of last year gas prices were 40% up on the year before, after the world’s worst oil incident in the gulf of Mexico, the world’s worst nuclear incident in Japan and a war in the middle east. She wrote that out and acted as if the only reason for prices going up is the greed of the energy companies, saying that we in this debate have to get a sense of reality.

What the Government have been doing, however, is working to remove some of the levies that Labour put in place. Indeed, over the course of this decade we will have reduced people’s energy bills by £100 compared with what they would have been if Labour’s levies had stayed in place. The renewable heat incentive is now to be paid from general taxation, rather than from a levy; and the carbon capture and storage levy, which, in the words of the leader of the Labour party, was going to cost £9.5 billion over the coming years and be paid for by consumers, is no longer on consumers’ bills.

Introducing the green deal, the warm home discount and electricity market reform, rebanding the renewables obligation and changing the feed-in tariffs will all help to bring down consumers’ bills by £100 when compared with what they would have been under Labour’s levies. So where Labour put in place stealth taxes on bills, this Government have now removed them.

As my hon. Friend the Member for Warrington South (David Mowat) said, the issue is not just one of global energy prices, but whether there is enough electricity generation to meet demand. There was not a word from the Opposition about the need to rebuild our energy infrastructure—the £200 billion that is necessary, or the fact that during this decade we have to secure twice as much investment as Labour achieved during the previous decade. In reality, if we do not secure that investment, the lights in this country will go out. The leader of the Labour party, when in government, referred to that as “energy demand unserved”, whereas all of us know that in ordinary people’s language it means power cuts. That is why we have started the most ambitious programme of market reform—things that Labour in government told us were not necessary. The carbon floor price, the capacity mechanism and market reform more generally have all been put in place in less than two years by this new Government.

We are also clearing Labour’s backlogs. Last year, the highest number of planning consents since the Electricity Act was passed in 1989 were granted to get those new projects under construction, and the highest number of oil and gas licences for more than a decade were approved, as we try to get the most out of our indigenous resources. We have already brought forward by 12 months the roll-out of the smart meter programme, because of its importance in giving consumers control over their bills, so it was no wonder that Steve Holliday, the chief executive of National Grid, when interviewed on television a week ago said that we were closer to having an energy policy now than at any time in his lifetime.

My hon. Friend the Member for Ipswich (Ben Gummer) also highlighted the role of the Leader of the Opposition in the issue. It is worth looking at what he has said and where his policy has gone. It has not been a good week for the right hon. Gentleman, and it may not get any better now. In government, he said that there should not be a Competition Commission inquiry, yet the Labour party in August said that there should be, and now it is silent. We do not know its view on that issue now. In government, he said also that the energy companies should not be broken up, but in his conference speech he talked about breaking the dominance of a market that has clearly failed. Now, a few months later, he is silent on that as well.

The right hon. Gentleman talked about pooling electricity generation, yet he did not agree with that in government, and now the Labour party is silent. Ahead of his conference speech, he talked about cutting energy bills for four out of five families, but that has been lost. All we hear today is that people who are over 75 years old should be given extra support: bizarrely, a Labour party giving more support to wealthy 75-year-olds than to 74-year-olds who are struggling to pay their bills.

As my hon. Friend the Member for Truro and Falmouth (Sarah Newton) said, we have in place measures that are working. We have simplified tariffs, and we have helped with switching, although there is more to be done, as my hon. Friend the Member for Norwich South (Simon Wright) said. We have introduced the biggest energy efficiency initiative ever, and there is more help to encourage new entrants—

[Ms Rosie Winterton (Doncaster Central) (Lab)]

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Main Question accordingly put.

18:59

Division 421

Ayes: 248

---

Labour: 232
Scottish National Party: 6
Democratic Unionist Party: 3
Plaid Cymru: 3
Social Democratic & Labour Party: 1
Alliance: 1
Green Party: 1
Independent: 1

Noes: 323

---

Conservative: 275
Liberal Democrat: 46

Business without Debate

Wednesday 11th January 2012 Commons Chamber

Delegated Legislation (Committees)

Ordered,

That the Motion in the name of Sir George Young relating to the Electoral Commission shall be treated as if it related to an instrument subject to the provisions of Standing Order No. 118 (Delegated Legislation Committees) in respect of which notice of a motion has been given that the instrument be approved.—(James Duddridge.)

Khat

Wednesday 11th January 2012 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(James Duddridge.)

19:15

[Mark Lancaster (Milton Keynes North) (Con)]

I am delighted to have secured this debate, and I would like to start by paying tribute to the attempts by successive Governments to deal head on with specific issues encountered by minority communities—as we heard only today with the Prime Minister’s commitment to address forced marriage. I must admit, however, to being slightly disappointed that, as a Member of a party that raised the expectations of my constituents by pledging to ban the drug khat while in opposition—a commitment made by no fewer than three members of the shadow Cabinet on three separate occasions—I stand here yet again calling on the Government finally to fulfil their very clear commitment. This is not a partisan issue. Indeed, as I sense we shall see tonight, it unites the House, and it is time that the Government acted.

I have three main points to make but I shall give first a little background, which I hope will mean that the Minister in his response will not need to dwell on the past, but can focus on the future actions his Department intends to take. The distinctive customs and traits of other cultures constitute the vibrant country that we live in today. East African culture has had a particularly far-reaching effect on our society. The religious dedication and hard-working ethos that colour the characters of east Africans have been something to admire over recent years, with independent businesses and community leaders flourishing across towns and cities in the UK. However, with the highs come the lows. One element of east African culture which has long been disputed is the legality of the native east African drug khat. Given the frequency with which khat has been discussed over the past year, I know that most hon. Members are now familiar with the drug, but for the benefit of those who are not, I shall explain in more detail.

Khat plants are grown in Africa and the middle east, and are chewed primarily among Somali, Ethiopian and Yemeni communities. The effects of khat are varied but as a stimulant it creates euphoria and increased sociability—hence its popularity at social gatherings such as weddings. However, the paranoia, aggression and hallucinogenic effects make it extremely disruptive not just to the individual and their health, but to their family and wider society.

Khat is a barrier to inclusion and integration, and it was my sincere impression—and more importantly that of my constituents—that this Government intended to act. This is the second time I have raised the subject of khat in this Chamber and I was deeply encouraged when the Lord Commissioner of Her Majesty’s Treasury, my hon. Friend the Member for Kenilworth and Southam (Jeremy Wright). confirmed in response to the first debate that in February last year the Advisory Council on the Misuse of Drugs was ordered to carry out a full review of the available evidence on khat, and to reconsider the question of controlling it. One year on, and with no report to speak of and none expected anytime soon—indeed, this week the Department confirmed that it will be at least another year—the same amount of limited research is available to us.

From the first mention of khat in Parliament 16 years ago to this very day, Members on both sides of the House have shared their evidence. From Portsmouth to Glasgow, councils and local authorities are standing in isolation, but what we need is a joined-up, united front. My debate today has been sparked by the frustration of my constituents that after 19 months of the coalition Government we appear to be no further forward.

In seeking to progress the matter, I wish to highlight three distinct points. First, I wish to remind my hon. Friend the Minister, for whom I have enormous respect, of the detrimental impact that khat has on issues ranging from health to crime. This will demonstrate how simply kicking this issue into the long grass with further “monitoring” is simply unacceptable. Secondly, I want to revisit the pledge that we made in opposition to act on khat, and to ask why we now seem to be shying away from this pledge. Lastly, I will suggest that tackling khat fits in with this Government’s recent accomplishments in determinedly facing up to the problems that divide our minority communities.

[Jim Shannon (Strangford) (DUP)]

The hon. Gentleman has outlined some of the side effects of the drug, which also include insomnia and depression. Does he feel that those two health effects are sufficient reason to ask that the legislation be changed urgently? Does he agree that it is important that any legislative change should affect all the regions, in conjunction with the devolved Administrations, so that it applies UK-wide?

[Mark Lancaster]

The hon. Gentleman makes an important point; indeed, I will come to the health effects in greater detail shortly. However, let me be absolutely clear that I am pressing for this Government to act in the manner that he suggests.

In my constituency, there are more than 6,000 Somali residents. One of the leaders of the Milton Keynes Somali community, Adan Kahin, has shared many alarming stories with me. His biggest concern is that khat is at the root of family breakdown, owing to issues such as unemployment, economic hardship or aggression arising from heavy usage. Adan has expressed explicit concern about the number of teenage boys whose fathers are absent from the home, instead spending all day chewing in a mafrishi, or khat house. If the Government are truly concerned about the antisocial behaviour witnessed last summer, it is vital that we shine a light into those corners of society. Adan has warned of usage spreading to female members of the community—women who are left alone all day with large numbers of children and little escape. What links all users, however, is the common belief that turning to khat will alleviate the destitution and stress that permeate their lives. I am even aware of instances in well-regarded British institutions where khat has been chewed inappropriately during working hours. There have also been complaints about disturbances caused by delivery of the plant and violence outside mafrishis, with one incident even leading to the death of a seller in my constituency.

Our hands-off policy means that there is absolutely zero quality control. One box of khat checked by port health at Heathrow contained such high levels of pesticides that it was unfit for human use, and that is just one box out of the 10 tonnes arriving each week. Because of the lack of information held on hospital admissions, we are still uncertain about the overall long-term health effects. Problems range from the need for substantial dental treatment, owing to the quantity of sugar and cigarettes consumed, to more serious conditions, such as liver failure and psychosis. It is clear that health practitioners are clueless about how to advise users. Those wishing for a fresh start are stranded, with little or no support—no addiction services or pharmacological agents who can treat khat dependence. Essentially, there are few ways out.

The last review of khat surmised that usage is not prevalent. That may be true for the mainstream population, but not for the demographic concerned. It has been put to me that the Government are not interested because this is perceived as a minority issue. I know that this is not the case, but it is in the Minister’s hands to demonstrate to my community that he does care, as actions, as we all know, speak louder than words.

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

I congratulate my hon. Friend on securing this important debate. On that very point, when the Advisory Council on the Misuse of Drugs reported in 2005, it said:

“On the basis of the evidence, the Council recommends that Khat is not controlled”.

However, the following sentence, to which I think he is referring—this is the pertinent one—says:

“Use of the substance is very limited to specific communities within the UK, and has not, nor does it appear likely to, spread to the wider community.”

Does it not appear to him that there is no equality under the law in this case? The last time the issue of khat was analysed, it seems that the ACMD advised that we not ban it, simply because it applied only to that minority community.

[Mark Lancaster]

My hon. Friend makes a powerful point, which simply underlines what I said earlier. I know that the Minister is committed to equality, which is why I am sure he will address the issue when he responds to this debate. Khat does easily not fit a pre-existing drugs profile, given that its use is limited to certain ethnic communities. That is precisely why we must give it special attention.

Let me move on to my second point. The Government’s silence on this issue prompted me to re-read our manifesto, to make sense of the khat conundrum, but it holds no evidence of a U-turn, with other evidence actually pointing to the contrary. In a 2008 article in The Guardian, the co-chair of the Conservative party, the noble Baroness Warsi, claimed that khat was

“far from harmless and should be banned”.

Indeed, the title of that article was “Conservatives will ban khat”—not “Conservatives might ban khat”, not “Conservatives will consider banning khat”, not “Conservatives will seek advice from the ACMD and then ban khat”, but “Conservatives will ban khat”. In a 2006 report entitled “The Khat Nexus”, the then shadow Home Secretary, my right hon. Friend the Member for Haltemprice and Howden (Mr Davis), claimed that a Tory Government would

“schedule khat as a class B drug.”

Those were watertight pledges, made regardless of an ACMD review. So if nothing else, can the Minister explain to my constituents why we now appear to have had a change of heart?

This Government have, however, made a beeline for new legal highs. It is right that we award legal highs that attention, but we cannot ignore the fact that khat, by its very nature, also fits the description of a legal high. I was shocked to learn that cathine and cathinone, two components of khat, are members of the same group of drugs as mephedrone. As components, cathinone and cathine are illegal, as is mephedrone, yet contradicting all common sense, khat, which contains those same substances, is legal. I would like to know how we can continue to promote the hypocritical message that cathinone is okay in one substance but not in another? Just because a drug is legal does not mean it is safe. Tackling new legal highs cannot be a flag-waving policy; we must not forget the question of khat, which has languished in this Chamber year after year. As we take action on those powerful synthetic drugs, khat users and their families watch from the sidelines as their plea goes unheard yet again.

Another reason for my keen interest in this topic is that it is a cross-party point of concern. Wherever large immigrant groups of Somalis settle, the problem of khat is never far behind. This is an issue that the whole House can support, and we should therefore be working towards an integrated solution. It does not help that councils and local authorities are standing alone on the issue. I commend Hillingdon council’s recent report, produced in 2011, which was forthright enough to make recommendations to the Government on matters ranging from classification to temporary bans.

Unlike the UK, some countries are acting. As of yesterday, even the Netherlands—a country renowned for its liberal drugs policy—has banned khat. The UK is now the only legal point of entry for khat into Europe, and that is an embarrassing position to find ourselves in. The Dutch Government have clearly stated that 10% of users, who are predominantly Somali, develop problems with khat. I want to ask the Minister what is preventing us from safeguarding our citizens in the same fashion. The most disturbing comparison comes from Somalia itself: even that war-torn country has made moves to control khat. Islamist courts there are working to put a stop to the khat scourge, and to promote a more stable and cohesive society. What we need is joined-up thinking, and top-down leadership to reassure councils and communities that they are not alone. This is an ideal opportunity for the Government to prove to our communities that we recognise—and, indeed, will tackle—the problems on their doorstep.

That leads me nicely on to my third and final point, which is the commendable way in which this Government have faced up to issues that traditionally effect ethnic minority communities. We have not shied away from those problems, which are so often left to rot at the core of our society. We have rightly begun to take steps to address forced marriage in this country—an issue that has shocked the nation and that works directly against the values and self-worth that we teach our young women, of every background, in British schools. The work that we are promoting on the subject of domestic violence will have a direct effect on majority and minority ethnic communities.

That is not all. I was encouraged to read in the Conservative manifesto that we would be promoting improved community relations for minority ethnic communities, which action on khat will help to deliver. In my own constituency, good work is being done to address those marginalised, sometimes controversial, issues; acting on khat will not be out of step with the current momentum. We can prove to those who doubt our intentions that when we make promises, we stick to them, which is why I am sure the Minister will agree that it is important, given our previous promises, that we are seen to act on khat.

Finally, I want to bring the debate right up to date. We are standing here today, almost one year on from the report being ordered, with no new evidence from the Advisory Council on Misuse of Drugs. Since its appearance on the British crime survey of drug misuse, the usage of khat has increased. We are unaware of the percentage of khat imports that are being used to extract cathinone and cathine, and in turn, being illegally re-exported. Also, we have only anecdotal evidence that usage is spreading to the indigenous population. Why have we not commissioned a report to explore that threat?

Today, I want to know why my Government’s previous enthusiasm for acting on khat has waned so suddenly. May I ask the Minister to consider how I should respond when my constituents ask again what the Government are doing to protect future generations from the dangers of khat? And—if I may have the audacity to predict his response—may I ask whether he realises that, in order to get the evidence that his Department repeatedly demands, procedures have to be put in place first, in order to reap that information? Banning khat is unfailingly the end-state that I and the community want from this Government, as previously promised, but I wish to outline other possible interim measures.

[Jim Shannon]

The drug khat is controlled in America, Canada, Norway and Sweden, to mention but four examples. Does the hon. Gentleman feel that the Government could make contact with those countries to ascertain how they went about criminalising the drug? Might this not provide a way forward on the basis of information that might be helpful for the Government?

[Mark Lancaster]

I thank the hon. Gentleman for that suggestion, which underlines the ridiculous point that, following the Dutch move only this week, khat is controlled everywhere in the western world apart from in the United Kingdom.

These are the interim suggestions I would make to the Minister—hopefully to be implemented before we get around to banning khat. Better provisions must be made for addict support. The most effective way of delivering this would be to provide targeted training to those already working within areas affected by khat, to deal with it in a culturally acceptable way. Community mobilisers who already assist with housing, health and education are incredibly well placed to co-ordinate this. Evidence suggests that heavy users are unlikely to seek help, which means that we must do more to reach them.

Secondly, a full health practitioners’ guide to khat and its health effects should be prepared and delivered to GPs and pharmacists nationwide. Thirdly, greater attention must be given to the importation of khat at ports. Finally, the disruption caused by khat houses and mafrishi congregations can be controlled through licensing. A minimum age should be introduced to protect young British citizens from the harm caused by the drug. Checks must be carried out on premises to ensure that they comply with health and safety standards.

After years of talk on khat, if my Government wish to retain the trust of the east African community, the time has come to follow the rest of the western world and act on khat.

19:31

[The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)]

This has been an interesting and impassioned debate, and I would like to take this opportunity to thank my hon. Friend the Member for Milton Keynes North (Mark Lancaster) for continuing to raise this issue. I am mindful that this is the second debate he has secured, having previously spoken on the same topic in a pre-summer recess debate last year. He represents well and effectively his constituency and these particular parts of the community in it by seeking to draw attention to this issue this evening.

My hon. Friend said that there was some kind of formal commitment and he drew attention to statements of shadow Ministers in the Opposition prior to the last general election. I would say to him, however, that there was no specific manifesto commitment and no provision was made in the coalition programme for government for the classification of khat. I would like to assure my hon. Friend, the community he represents and other communities and interested parties that the Government are concerned about this serious issue. It is a matter we want to investigate properly and effectively by closely examining the problems highlighted this evening; we do not want to kick this into the long grass.

We have heard today about real public concerns over health issues—sleep deprivation, loss of appetite, oral hygiene and mental health—and particularly about the social harms associated with the use of khat. Although its use has a cultural context and can be socially accepted among Somali, Yemeni, Ethiopian and Kenyan communities in the UK, many concerns have been raised within these communities. Higher prevalence of khat use among them and its potential for misuse might well disproportionately affect the social cohesion around khat users and their families, as well as their quality of life within wider UK society. We need fully and properly to understand this dimension.

Under the Misuse of Drugs Act 1971, the Government are required to look to the Advisory Council on the Misuse of Drugs to provide advice on drug-related issues, including on the case for control based on available evidence at the time of its consideration.

As my hon. Friend knows, the ACMD last formally considered the misuse of khat in 2005, when it advised against bringing the plant under the control of the 1971 Act and made recommendations for health and prevention approaches responding to local community needs, which the last Government accepted. In the light of those 2005 recommendations, the handling of khat-related issues has focused on the tailoring of health and education responses to local community needs, such as the availability of appropriate drug prevention materials and information to raise awareness among practitioners and khat-using communities.

[Mark Lancaster]

Will my hon. Friend confirm that the Government are under no obligation to follow the ACMD’s advice? The last Government did not do so when it came to the reclassification of cannabis.

[James Brokenshire]

The Government will consider the evidence and recommendations supplied to it by the ACMD. The ACMD has an advisory role in that context and Ministers make the ultimate decision, but we have stated in our working protocol with the ACMD that we should properly consider the advice that we are given, and I think that that is the appropriate course.

The FRANK service provides information and advice on khat and harms associated with its use and misuse, directed at young people, their parents, and those working with them. Treatment for khat misuse typically consists of psycho-social interventions and talking therapies to help change behaviour, and drug action teams are expected to review commissioning of local services in order to respond in the best way to the diverse needs of their local communities. My hon. Friend has specifically sought to draw attention to that diversity this evening.

[Mark Lancaster]

Will the Minister give way?

[James Brokenshire]

I will give way once more.

[Mark Lancaster]

Can the Minister confirm that FRANK offers that information and advice in the native languages of the east African communities?

[James Brokenshire]

I am told that a leaflet has been published in English and Somali, that a range of other drug information leaflets have also been published in Somali, and that the helpline is equipped to take calls in Somali via a translator. However, I understand my hon. Friend’s wish to ensure that the service is provided in a way that makes it accessible to those who may be in the greatest need of its support, and I agree with him that more needs to be done.

The Government are concerned about khat use—particularly among young people—and about the societal impact on the most affected communities, and they adopt a serious approach to their role by taking appropriate action to protect all sections of the community from harms caused by drugs. Since the ACMD’s last review in 2005 there has been an advance in the evidence base, which is why I requested the ACMD to undertake a comprehensive review to update its 2005 assessment. The chair of its khat working group has told me that the planned process of evidence-gathering for the review will be rigorous, and will include engagement with communities and stakeholder organisations and a public evidence-gathering meeting.

The ACMD review will cover issues including classification of khat under the 1971 Act, reporting the prevalence of khat use, identifying key khat-using populations, identifying and quantifying harms associated with khat use—specifically social harms—developing an understanding of responses to khat use through services and public information campaigns, and considering the nature of the khat trade, including international trafficking. The chair of the working group has indicated that he would be pleased if my hon. Friend put him in contact with constituents who have evidence to contribute to the review. Furthermore, the ACMD would welcome sharing its terms of reference for the review and its planned process for evidence collation. I would certainly encourage my hon. Friend and other Members present to get involved and support that. My right hon. Friend the Home Secretary will emphasise in her annual commissioning letter to the ACMD, which will be issued shortly, the priority that this work should now continue to have as part of the ACMD’s work programme in order to ensure its advice is delivered on time.

We have published two studies on khat, one in October 2010 and the other in July 2011. They reviewed perceptions and international evidence on the link between khat use and social harms, and included an overview of the evidence in respect of legislative approaches adopted abroad. These studies have been shared with the ACMD to inform its review. We identified research gaps, which was why those two studies were commissioned. We anticipate that they will help inform the ACMD’s review. We will ensure that there is appropriate information and we encourage others to participate in the review.

The October 2010 study of perceptions of social harms found that khat use was widely socially accepted within Somali, Ethiopian and Yemeni communities, and that there was an increased prevalence of use including among women and young people. There was widespread support for some level of Government intervention, but there was no consensus, although there was a range of suggestions, including regulation of trade, local investment in tailored services and more research and better statistics, and some called for control.

The July 2011 review of literature on social harms found no robust evidence either for or against in respect of the link between khat and social harms, but there were perceptions of social harms among the UK’s immigrant Somali, Yemeni and Ethiopian communities although there was little evidence of a clear causal relationship to support this view. Reference was made to stronger evidence on the health harms of khat consumption.

The Government have made clear in our drug strategy a commitment to a drug policy that is based on evidence and outcome. We have placed proper consideration of the advice provided by our independent experts, the ACMD, at the heart of enabling the delivery of the strategy. The Government and the ACMD have also agreed a new working protocol, which has been placed in the House Library, setting out a framework for mutual engagement in line with statutory duties. I am sure that my hon. Friend shares my anticipation at the publication of the ACMD’s findings and appreciates the importance of considering the advice of our experts before deciding on next steps, in particular any legislative intervention. My hon. Friend will not expect the Home Secretary to prejudge the outcome of this advice and preclude the consideration of evidence that will be available then. I take this opportunity to invite Members to direct any representations and evidence in respect of khat to the secretariat of the ACMD, based at the Home Office.

We take this issue very seriously. I commend my hon. Friend on the way in which he has approached it and his continued focus on it. We will not kick it into the long grass. We remain focused on this matter and will take action if that is judged appropriate.

Question put and agreed to.

19:44

House adjourned.

Division 418

Ayes: 329

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Conservative: 265
Liberal Democrat: 52
Democratic Unionist Party: 7
Labour: 1
Plaid Cymru: 1
Independent: 1

Noes: 207

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Labour: 202
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Alliance: 1
Green Party: 1