House of Commons

Tuesday 7th February 2012 Commons Chamber

Tuesday 7 February 2012

The House met at half-past Two o’clock

Prayers

Tuesday 7th February 2012 Commons Chamber

[Mr Speaker in the Chair]

Business Before Questions

London Local Authorities Bill [Lords] (By Order)

Further consideration of Bill, as amended, opposed and deferred until Tuesday 21 February at Seven o’clock. (Standing Order No. 20).

London Local Authorities and Transport for London (No.2) Bill [Lords] (By Order)

Transport for London (Supplemental Toll Provisions) Bill [Lords] (By Order)

Second Readings opposed and deferred until Tuesday 21 February (Standing Order No. 20).

Oral Answers to Questions

Tuesday 7th February 2012 Commons Chamber

The Deputy Prime Minister was asked—

[Simon Kirby (Brighton, Kemptown) (Con)]

1. What recent representations he has received on House of Lords reform.

[Nick de Bois (Enfield North) (Con)]

2. What recent representations he has received on House of Lords reform.

[The Deputy Prime Minister (Mr Nick Clegg)]

The Government have received more than 200 representations since the publication of their White Paper and the draft House of Lords Reform Bill was published in May last year.

[Simon Kirby]

I thank the Deputy Prime Minister for that answer. Can it be right that those who break the law should be permitted to continue making the law? Does he plan in the legislation to introduce parity between the two Houses?

[The Deputy Prime Minister]

One of the many things that would be included in a package of reform of the other place would be precisely an ironing out of some of those anomalies, so that those who had broken the law, who would not normally be entitled to continue to serve in this House, would not be able to do so in the other, reformed House either.

[Nick de Bois]

The Deputy Prime Minister rightly said in his new year message that Britain faced great challenges in 2012 if it was to avoid some of the economic problems of our European neighbours. How, then, can the Government justify consuming so much parliamentary time to push forward House of Lords reform at the expense of more pressing legislation?

[The Deputy Prime Minister]

I would caution my hon. Friend a little on this point. After all, we are going to invest a considerable amount of time on individual electoral registration, as we have in this Session on the plans for boundary changes—things about which he and his colleagues on the Government Benches feel equally strongly. I think it is perfectly possible to do more than one thing at once in government.

[Mr Ben Bradshaw (Exeter) (Lab)]

When the Deputy Prime Minister talks to the bishops and the archbishops about their futures, will he gently remind them that the overwhelming majority in Parliament, in the country and in the Church of England want women to be able to become bishops, and that it might not be in the interests of the House of bishops to try to amend or water down the current measure before Synod this week?

[Mr Speaker]

I am sure that that question refers to membership of the upper House by women bishops. I am sure that that is what the right hon. Member meant.

[The Deputy Prime Minister]

I was struggling to see what I could usefully contribute to this issue, as I do not think it is a matter for Government, but I admire the strength of feeling with which the right hon. Gentleman has expressed himself on this important issue.

[Sadiq Khan (Tooting) (Lab)]

I welcome the hon. Member for Kingston and Surbiton (Mr Davey) to his place as the new Secretary of State for Energy and Climate Change. As a fellow south Londoner, I wish him well in his new job.

Since May 2010, 117 unelected peers have been appointed to the House of Lords, at an additional cost to the taxpayer of £63 million during the course of this Parliament. We know that a new House of Lords reform Bill will be the centrepiece of the Queen’s Speech. The Deputy Prime Minister believes that all parliamentarians should be democratically elected and he also believes in cutting public expenditure. Will he therefore confirm that as long as his proposals on Lords reform are in train, there will be no more peers appointed to the House of Lords?

[The Deputy Prime Minister]

No, clearly—[Interruption.] We have been open in the coalition agreement that, pending wholesale reform of the other place, we will continue to make appointments to the House of Lords in the time-honoured fashion in proportion to the share of the vote won by the parties at the last general election. As with so many issues where the Labour party has become terrifically pious in opposition, this is not something to which the right hon. Gentleman’s party adhered when in government.

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

3. What plans he has to cap the size of donations to political parties by individuals and organisations.

[The Deputy Prime Minister]

The Government are committed to limiting donations and reforming party funding. This is best achieved, as far as possible, by consensus. To this end, I will write to the Prime Minister and the Leader of the Opposition later this week, asking them to nominate representatives to take part in preliminary cross-party discussions.

[Mr Turner]

We know that the Government’s policy is against state funding. The Conservatives are and will remain that way. What is the Liberal Democrats’ view of the Liberal Democrats’ stance during the period of the next Government?

[The Deputy Prime Minister]

Last year, when Christopher Kelly’s committee published a report containing its ideas for a package of reforms of party funding, all parties made clear that it was inconceivable that any of us would advocate an increase in overall state funding at this time. I will therefore stipulate in my letter to the leaders of the other main parties that such an increase is not on the agenda for now. However, that does not mean we could not make progress on many other areas of party funding reform on what I hope would be a cross-party basis.

[Mr John Spellar (Warley) (Lab)]

11. As Members know, if one of our constituents buys a car in all good faith and it subsequently turns out to have been stolen, he or she must hand it back. Will the Deputy Prime Minister’s examination of political funding explain why his party is insisting on holding on to the £2.5 million that it was given by the convicted criminal Michael Brown? Will the right hon. Gentleman give it back, or, at the very least, spare us the usual sanctimonious holier-than-thou sermon? [Hon. Members: “Hear, hear.”]

[The Deputy Prime Minister]

They liked that one.

As we have explained before, the Electoral Commission has made crystal clear that, given the knowledge and information available to the Liberal Democrat party at the time—well before my time as leader—the money was received in entirely good faith.

[Tom Brake (Carshalton and Wallington) (LD)]

What risks does the Deputy Prime Minister think are associated with any political party receiving 90% of its donations from one source, notably the trade unions?

[The Deputy Prime Minister]

I certainly think that there would be a significant reputational risk if that party were to table amendments and ask parliamentary questions written for it by that donor, as we learnt had been done last year. If that were the practice in any other party, members of the party concerned would be crying foul.

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

4. If he will publish an implementation plan alongside the introduction of legislative proposals for individual electoral registration.

[The Parliamentary Secretary, Cabinet Office (Mr Mark Harper)]

We will indeed be publishing an implementation timeline with our response to the Select Committee’s report. In it, we will consider implementing individual registration from the point of view of the elector, the administrators and the Government.

[Tristram Hunt]

The truth is that this is one of the most anti-democratic Governments of modern Britain. They are having the longest parliamentary term in the world outside Rwanda, and their rushed plans for voter registration now threaten to disfranchise Britain. As well as committing himself to publishing an implementation plan, will the Deputy Prime Minister commit himself to a phased introduction of voter registration, an end to the opt-out clause, and a full household canvass in 2014?

[Mr Harper]

I do not think that the hon. Gentleman received the memo from his Front Benchers, who took a much more sensible position during the debate the other day. The right hon. Member for Tooting (Sadiq Khan) said:

“I welcome the process that the Government have adopted and how they are acting on this matter. We have had a draft Bill and a White Paper with pre-legislative scrutiny, and the Deputy Prime Minister has said twice on the Floor of the House that the Government are willing to listen to concerns”.—[Official Report, 16 January 2012; Vol. 538, c. 475.]

I think that the hon. Gentleman ought to check what his party’s position is.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I have been in touch with my hon. Friend and neighbour about the case of my constituent Mr Brian Hudson following his removal from the electoral register in Weymouth and Portland borough council simply because he had a second home. He had been on the list for three years. Does my hon. Friend think it right that anyone can be arbitrarily removed from an electoral register on the grounds that he does not have a “proper” second home?

[Mr Harper]

The law makes clear that it is a question of where people reside, not necessarily a question of where they simply own property. It is up to the electoral registration officer to make a judgment about whether people actually reside in an area. If my hon. Friend’s constituent thinks that he has been hard done by, he should go back to the ERO with some evidence about his residence, and take the matter from there. There is an established independent appeals mechanism.

[Mr Wayne David (Caerphilly) (Lab)]

The Government have said that they accept that registering to vote is a civic duty. They have also indicated that they do not believe that the threat of a criminal conviction is appropriate when an individual fails to complete a registration form. In line with those positions, will they now commit themselves to a system of civil penalties in cases in which a person has been wilfully unco-operative with an electoral registration officer?

[Mr Harper]

We are going to consider that, as the hon. Gentleman will know from the debates that we have had. We have made clear that we do not think criminalising millions of people is very sensible, and I am glad that he welcomes that view. We will think about civil penalties, which have been recommended by the administrators in the Electoral Commission, and will say more when we respond to the Select Committee shortly.

[Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)]

5. Whether the commission to consider the West Lothian question will take evidence from Members of the (a) Scottish Parliament and (b) National Assembly for Wales.

[The Parliamentary Secretary, Cabinet Office (Mr Mark Harper)]

The independent commission that we have set up will be able to take evidence from anybody who wants to give it, within its terms of reference. I am therefore sure it will be willing to take evidence from Members of the Scottish Parliament and the National Assembly for Wales, but that is a matter for the commission.

[Sandra Osborne]

I thank the Minister for that answer. I am sure he will be aware that constitutional change in one area can affect other areas. How might any changes suggested by his West Lothian commission affect reform of the House of Lords?

[Mr Harper]

I am not sure that those two matters are connected at all. The commission’s terms of reference are specifically to consider the effects and consequences for the House of Commons of the devolution arrangements in Scotland, Wales and Northern Ireland. The hon. Lady will know that we have appointed experts to the commission. They will come back to the Government with their recommendations, and I have committed then to talk to all parties in this House about how we might proceed further.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

Will the commission be able to consider what is really the Berwick-upon-Tweed question: how has it come about over so many years that Scotland seems to have had more money for schools and roads, and a great deal of say in the affairs of England?

[Mr Harper]

Specifically, we have made it clear that the commission will not be able to look at the financial questions. The Government have committed to resolving them, but we have made it clear that the deficit must be dealt with first, and then those other matters will be taken forward by my right hon. Friend the Chancellor.

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

6. What plans he has to improve the completeness and accuracy of the electoral register.

[The Parliamentary Secretary, Cabinet Office (Mr Mark Harper)]

In order to deliver a more complete and accurate electoral register, we will introduce our proposals for individual registration, the principle of which is supported on both sides of the House. We have published our proposals for pre-legislative scrutiny and we will respond to the Select Committee shortly. I hope my hon. Friend will welcome these changes.

[Paul Uppal]

I welcome the Government’s initiative on individual voter registration, especially the provision to deny the postal vote to people who are unable to provide national insurance details. Does my hon. Friend agree that we might expand that principle by considering the option of requiring individual voter ID from people voting at polling stations?

[Mr Harper]

The Government do not have any plans to introduce a requirement for voters to present ID when they vote. We think the current arrangements get the balance right between accessibility and security. We keep these matters under review, however. My hon. Friend will know that there is such a requirement in Northern Ireland, which has a different history in this regard, but it is not in the Government’s plans at present.

[Chris Ruane (Vale of Clwyd) (Lab)]

The number of unregistered voters increased from 6 million in December 2010 to 8.5 million in April 2011, so there has been a huge 2.5 million extra unregistered voters in the space of four months. Will that devastatingly high figure increase still further as a consequence of the rapid introduction of individual electoral registration?

[Mr Harper]

The hon. Gentleman should acknowledge that the research that the Electoral Commission carried out—and which was funded and conducted at the initiative of the Government so that we could see the state of the existing registers—should shake any Members who had a sense of complacency, and who thought the existing system was perfect, out of that complacency. These findings show that there is an urgent need to move to a more accurate and complete system. If the hon. Gentleman waits for the response that we will give to the Select Committee report, he will learn that we have acknowledged some of those concerns, and I think he will be pleasantly surprised by our response.

[Caroline Nokes (Romsey and Southampton North) (Con)]

13. Following the data-matching pilots, what assurances can the Minister give that information and data held by the Department for Work and Pensions will be compatible with the current systems used by electoral registration officers throughout the country?

[Mr Harper]

I thank my hon. Friend for her question. The initial response to the data-matching pilots has been very positive. The Electoral Commission will publish its own independent assessment in March, and we will be saying a little more about that in our response to the Select Committee. Data matching opens up ways of ensuring that the register is more complete and accurate and requires voters to do less work.

[Dr William McCrea (South Antrim) (DUP)]

Will the Minister assure me that he and his colleagues will carefully examine the implementation of the individual electoral registration which has already taken place in Northern Ireland, that any lessons will be learned and that any necessary changes will be made to enhance the situation?

[Mr Harper]

I can absolutely give the hon. Gentleman that assurance. We have already set out some of the lessons we have learned, such as on implementing a carry-forward from the beginning. I have visited Northern Ireland, talked to the chief electoral officer there, looked at some of the very exciting outreach work that people there are doing to get younger voters registered and talked to people about how data matching works. We have learned lessons already and we will continue to work with people in Northern Ireland.

[Robert Halfon (Harlow) (Con)]

7. What recent progress he has made on establishing the commission to consider the West Lothian question.

[Sajid Javid (Bromsgrove) (Con)]

8. What recent progress he has made on establishing the commission to consider the West Lothian question.

[The Deputy Prime Minister (Mr Nick Clegg)]

The establishment of the commission was announced by written ministerial statement on 17 January and the commission is due to report during the next parliamentary Session.

[Robert Halfon]

Treasury figures show that every English household pays £420 in tax to subsidise Scottish services, which means that Harlow families from my constituency are sending £16 million a year to Scotland. Is it not time to redress the balance and have English votes for English laws?

[The Deputy Prime Minister]

I am sure that my hon. Friend will want to take the opportunity to make his views known to the commission. As my hon. Friend the Parliamentary Secretary has just explained, the commission is of course focused on procedures in this House, as they are affected by the process of devolution. I am not sure whether the concerns of my hon. Friend the Member for Harlow (Robert Halfon) will be directly relevant to the commission’s central terms of reference.

[Sajid Javid]

The recent debate on Scottish independence has shown that, unfortunately, a significant proportion of English people believe that Britain would be better off without Scotland, so may I press the Deputy Prime Minister a little further on English votes for English laws? Does he think that such a change will help to restore English faith in the Union?

[The Deputy Prime Minister]

That is why I believe that the commission is important; if we can get the balance right in this House, such that the changes brought about by devolution are properly reflected in our procedures here—in how matters are dealt with and votes are cast—that will, I hope, address some of the concerns raised by my hon. Friend’s constituents. It will also allow us all to make the argument that the vast majority of us in the House believe that Scotland is stronger as a strong part of a strong United Kingdom.

[Ann McKechin (Glasgow North) (Lab)]

Given that all successful constitutional change in this country post war has taken place on the basis of cross-party consensus, does the Deputy Prime Minister not consider it a serious error not to have sought cross-party meetings or discussions in order to obtain agreement on the terms of reference for the inquiry?

[The Deputy Prime Minister]

Needless to say, once the commission, which is entirely independent of any party and of the Government, produces its report, we will be keen to enter into cross-party discussions. But at the moment we do not know what the commission is recommending, and it is very difficult to have a proper cross-party discussion without knowing what the recommendations will be.

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

If the English regions can give evidence to the commission, what will be the appropriate body to do so from Yorkshire and Humber, which has a larger population than Scotland, as we no longer have a regional development agency and we have nothing that represents or gives focus to any strategic thinking for our region?

[The Deputy Prime Minister]

For a start, it would be a good thing if Members of Parliament from Yorkshire and Humber—I am a Yorkshire MP—were to give evidence where we have strong views on how the procedures of this House should be changed to reflect devolution. The commission has been established and its membership has been selected precisely to reflect the expertise we need on how this House works and how its procedures might need to be reformed.

[Meg Munn (Sheffield, Heeley) (Lab/Co-op)]

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

[The Deputy Prime Minister (Mr Nick Clegg)]

As Deputy Prime Minister, I support the Prime Minister on a full range of Government policy and initiatives, and within government I take special responsibility for this Government’s programme of political and constitutional reform.

[Meg Munn]

The Deputy Prime Minister will be aware of increasing calls to change the law on the close of polls and that in Scotland it has indeed been changed. Although I welcome operational changes, does he accept that it is important that there can be circumstances where a lot of people turn up to vote towards the end of the poll and that to guarantee their right to cast their vote the law should now be changed?

[The Deputy Prime Minister]

The hon. Lady has raised this issue before and I understand that she feels strongly about it, but much of the evidence suggests that with proper organisation and administration the problems should not have arisen in the first place. She knows as well as I do the areas in Sheffield where a number of people, particularly young people, were disfranchised and were not able to vote, which was an absolute scandal. However, I think we need to be a little cautious about immediately resorting to the statute book to fix a problem that could be fixed by improved organisation and better performance from electoral officers.

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

T3. May I congratulate the Deputy Prime Minister on the excellent and distinguished wise men and one wise woman he has appointed to the West Lothian commission? Will he extend the terms of reference so that they will look at the potential consequences of devo-max on this Parliament?

[The Deputy Prime Minister]

The commission is to focus on the procedures and practices of this House as they are affected by devolution as we know it right now. The case for further devolution to Scotland, which I happen to believe in as the leader of a party that believes in home rule, can be made but not until we know whether Scotland is going to be part of the United Kingdom in the first place. That can and should be resolved only by a decisive, clear, fair and legally binding vote in a referendum.

[Ms Harriet Harman (Camberwell and Peckham) (Lab)]

There is widespread concern that the NHS Bill lifts the cap for private patients from what is now typically 2% to up to 50%. That means half of all NHS beds and services being given over to private patients and half of all NHS doctors and nurses caring for private patients, which means that NHS patients will be put to the back of the queue. Will the right hon. Gentleman oppose raising the cap?

[The Deputy Prime Minister]

It is important that the right hon. and learned Lady does not provide a misrepresentation of the current situation. She will know that some London hospitals, such as the Royal Marsden, have a cap of around 30%, which is not nearly as low as she implies. We are saying that no NHS hospital should be able to earn 50% or more of its income through private practice—it should be less than half—and that every penny and every pound raised should be ploughed back into improving services for NHS patients. The alternative is to condemn a number of hospitals into outright financial crisis. How would that benefit families or the thousands of NHS patients who would otherwise have benefited from the extra income coming into the NHS?

[Ms Harman]

It is clear that yet again the Deputy Prime Minister is simply going along with the Tories. Giving half the NHS to private patients is not reforming the NHS—it is destroying it. Is not this an abject betrayal of everything the Lib Dems claim they ever stood for? Will he now drop the Bill?

[The Deputy Prime Minister]

What would be an abject betrayal of the NHS would be our condemning hospitals to possible closure because we were preventing them from raising money for the benefit of NHS patients. We are not—I repeat, not—suggesting that any NHS hospital should be able to earn private income as half or more of its total income. What is wrong with allowing hospitals that already do private work doing so in a manner that can only benefit NHS patients?

[Mr Edward Timpson (Crewe and Nantwich) (Con)]

T4. Will my right hon. Friend give heart to the Protect Stapeley campaign in my constituency, which is rightly campaigning against a plan for 1,500 homes, largely on green-belt land, without any obvious concern for the unacceptable pressure it will put on local services and infrastructure?

[The Deputy Prime Minister]

I am sure that my hon. Friend is working tirelessly as he always does for his constituents on what sounds like quite a controversial planning application in his area. I cannot comment on the specific application but, as he will know, the draft national planning guidance is very clear that we will always continue to cherish and protect the green belt and that any incursions on it can take place only for very exceptional and special reasons.

[Kevin Brennan (Cardiff West) (Lab)]

T2. I understand that at this morning’s Cabinet meeting the Culture Secretary gave the Deputy Prime Minister for Dickens day a copy of “Oliver Twist”. Did his Tory Cabinet colleagues then burst into a chorus of, “Consider yourself one of us”?

[The Deputy Prime Minister]

That was a well-rehearsed and well-delivered joke. No, they did not.

[Sajid Javid (Bromsgrove) (Con)]

T7. This May, 11 English cities, including Sheffield, will be holding mayoral referendums. There is considerable evidence that elected city mayors lead to better local leadership and wider political participation, so will the Deputy Prime Minister join me in urging people to vote yes?

[The Deputy Prime Minister]

It would be wrong to start taking sides on referendums that are taking place across the country in different cities. The key thing is to make sure that the referendums are held in a way that allows the debate to be played out. I suspect some areas will opt for mayors and others will not; that is the great virtue of all this—it will be entirely dependent on people’s decisions in each local area.

[Hazel Blears (Salford and Eccles) (Lab)]

T8. The right hon. Gentleman has said:“For too long, internships have been the almost exclusive preserve of the sharp-elbowed and the well-connected.” Twenty-five per cent. of the internships currently advertised on the Government’s graduate talent pool website are for unpaid vacancies. What practical steps are the Government taking to provide more paid internships so that people from poorer backgrounds can get those opportunities?

[The Deputy Prime Minister]

As the right hon. Lady knows, we have made considerable progress on the internships that operate in Whitehall. When we entered government just over 18 months ago, I was astonished by quite how informal and laid-back the procedures were. We have now put them on a much more open and meritocratic basis, but of course I will look into the cases the right hon. Lady has drawn to my attention.

[Dr Julian Huppert (Cambridge) (LD)]

T5. My right hon. Friend and I stood for election on a key manifesto commitment to lift the income tax thresholds —[Interruption.]

[Mr Speaker]

Order. Let us hear about which commitment the hon. Member for Cambridge wishes to speak.

[Dr Huppert]

I am sorry the party that introduced fees feels the need to shout about it.

We stood on a commitment to lift the income tax threshold to £10,000 and that has started to happen, but we need to go further and faster so that we can help more people across the country. What discussions has my right hon. Friend had with the Conservatives in the Government to try to take that forward?

[The Deputy Prime Minister]

We included in the coalition agreement our commitment to raising the income tax allowance as the No. 1 priority in our tax reforms for a very good reason: it is an extremely effective way of making the tax system more progressive. Let us remember that we inherited a tax system from Labour that scandalously imposed heavier tax on the wages of a cleaner than on the earnings of a banker. That is why we have increased capital gains tax by a full 10% and why this April, for the first time, we shall be taking more than 1 million people on low incomes out of paying any income tax altogether. I want to go further and faster and that is exactly the kind of thing we shall be debating in the weeks and months ahead.

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

T9. The Royal College of General Practitioners has condemned the health Bill and the Prime Minister is widely reported as suggesting an unpleasant end for the Health Secretary. Does the Deputy Prime Minister agree with his Cabinet colleagues about that unpleasant end?

[The Deputy Prime Minister]

As the Health Secretary has explained many times, the central purpose of the Bill is to ensure that those who know patients best, the GPs, surgeons, nurses and clinicians, have a greater say—[Interruption.]

[Mr Speaker]

Order. First of all, Members should not shout their heads off at the Deputy Prime Minister; it is deeply discourteous. Secondly, I say to the hon. Member for Kingston upon Hull East (Karl Turner) that if he had yelled like that when practising in the law courts, the judge would have kicked him out. We cannot have it.

[The Deputy Prime Minister]

It would be so much easier to take the Labour party members seriously on the NHS if they committed to actually spending more money on it. They will not. In their manifesto at the last election, they said they believed in “bold reform” of the NHS, yet they will not tell us what that is. It was under the Labour Government that £250 million of taxpayers’ money was wasted on rigged private sector contracts which never ever delivered a single thing for a single NHS patient. It is this Government who are making it illegal to provide the sweetheart deals for the private sector that occurred under Labour.

[Several hon. Members]

rose—

[Mr Speaker]

Order. We have much to do and very little time in which to do it. We must progress.

[Stephen Barclay (North East Cambridgeshire) (Con)]

T12. How will the Deputy Prime Minister assess the value for money of the constitutional changes he is putting forward? Will he put a more detailed note in the Library setting out how that will be assessed?

[The Deputy Prime Minister]

Clearly, we strive at all times to deliver value for money for the taxpayer. For instance, the proposals to reform the House of Lords are based on a radical reduction in the size of the House of Lords, which over a period of time will of course represent significant savings.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

T10. I am sure that the Deputy Prime Minister was rather disappointed to be described yesterday as the Government’s whipping boy by one of his high-profile celebrity backers. One way in which he could cast off that awful image is by demanding that his Tory masters drop this disastrous and unwanted Health and Social Care Bill. Will he do so, and does he actually think that the Health Secretary is doing a good job?

[The Deputy Prime Minister]

The hon. Lady is following her instructions dutifully, and I congratulate her on doing so. I think that she is referring to—[Interruption.]

[Mr Speaker]

Order. The House must calm itself. I am worried about the shadow Justice Secretary. I have a concern about his long-term health and well-being, and I am not sure that he is safeguarding it.

[The Deputy Prime Minister]

I think that the hon. Lady was referring to Harry Potter. I suppose that the Labour party and Harry Potter have something in common—they both believe in magic. How else can we explain the Labour party’s economic policies and its complete, collective amnesia about its responsibility for failing to run the national health service effectively so that, as in so many other areas, we have to clear up the mess that it left behind?

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

T13. What action will the Deputy Prime Minister take to boost social mobility in Britain?

[The Deputy Prime Minister]

One of the most important things is to intervene as early as possible. I pay tribute to some distinguished members of the Opposition who have provided important thinking on early intervention. That is one reason why, under this Government, hundreds and thousands of two-year-olds from deprived families will receive, for the first time ever, free pre-school support. Every single three and four-year-old from every family in this country will receive 15 hours of free pre-school support, and then they will benefit from the pupil premium: £2.5 billion of extra money targeted specifically on helping children at school. The evidence is clear: if we want youngsters to do well as they grow up, we have to help them in those crucial, early, formative years.

[Nic Dakin (Scunthorpe) (Lab)]

T11. About 300 job losses have been announced today at Lloyds TSB in Scunthorpe. What can the Deputy Prime Minister do to ensure that the high pay of bank bosses is not paid for by the jobs of hard-working bank staff?

[The Deputy Prime Minister]

The announcement from Lloyds will be of immense concern to the employees involved, and it is important that Jobcentre Plus and other resources are made available to react in those areas that are affected. Of course there is huge concern in all parts of the House and across the country about bonuses, particularly in our state-owned banks. Again, it would be much easier to take the hon. Gentleman’s party seriously if it had taken action on bank bonuses and not let them rip in the first place over the past 13 years.

[Tessa Munt (Wells) (LD)]

T14. Does the Deputy Prime Minister agree that there is a moral and ethical case for going faster and further in raising the income tax threshold to £10,000 in the next Budget, mainly because that will help the least well-off who, unlike the wealthy who can save, have to spend every single penny that they earn on their keep because they must?

[The Deputy Prime Minister]

The simple principle of saying that millions of people, particularly those on average incomes and on low and middle incomes, should be able to retain more of the money that they earn is a very good one. It has not only a moral dimension but an economic logic, too, because with more money kept in their own pockets, hopefully that in turn will encourage many, many consumers to go out and shop and help move the wheels of the British economy.

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

Further to the question from my right hon. Friend the Member for Salford and Eccles (Hazel Blears), will the Deputy Prime Minister explain why, despite his pledge to widen access to internships, publicly funded museums and galleries took on close to 800 unpaid interns in the past two years?

[The Deputy Prime Minister]

As the hon. Lady knows, the role of internships, which used to be informal—people did not really think that it mattered very much—has become much more important over the past five to 10 years. It has become a stepping stone for people’s subsequent success in finding real work, so it is right that she and others devote more attention to it. I was not aware of the figures that she has cited for unpaid internships in the museum sector which, as much as any other walk of life, must reflect hard on whether internships are being made fairly available to as many young people as possible.

[Philip Davies (Shipley) (Con)]

With regard to House of Lords reform, the Deputy Prime Minister said that it was a matter of principle that people who are unelected should not be able to set the laws of this country. Does that mean that he now believes that unelected and unaccountable European Commissioners should not have any role in initiating legislation that impacts on this country?

[The Deputy Prime Minister]

The hon. Gentleman is nothing if not skilled in crowbarring the European Commission into almost any topic, and I congratulate him on doing so again. I do not think that the parallel is an exact one, because the European Commission can only propose legislation; adopting it, thankfully, is the role of elected Members of the European Parliament and elected Ministers in the Council of Ministers.

[Mr Dennis Skinner (Bolsover) (Lab)]

The Deputy Prime Minister is on television almost every week talking about the influence of the Liberal Democrats within this coalition. I have an idea for him: why does he not do something useful for a change by having the guts to tell the Prime Minister to drop the dastardly Bill to privatise the health service and get in line with all those royal colleges and the British people who are calling for the same thing?

[The Deputy Prime Minister]

It is truly ironic that the hon. Gentleman gets on his high horse once again to talk about the private sector in the NHS when it was his Labour Government—I am not sure whether he had disowned them—who crowbarred into the NHS sweetheart deals with the private sector that were deliberately designed to undermine the publicly owned parts. Some £250 million of taxpayers’ money was wasted by his colleagues in government on private sector contracts that delivered nothing. It is this coalition Government—two parties coming together—who are making privatisation by the back door illegal.

[Mr Speaker]

I call Zac Goldsmith—[Interruption.] Order. The House must calm down. Let us hear Mr Goldsmith.

[Zac Goldsmith (Richmond Park) (Con)]

The proposals for a register of lobbyists will require lobby groups to list their members, but when those groups meet Ministers, will they be required to list on whose behalf they are meeting them?

[The Deputy Prime Minister]

As my hon. Friend will know, we are running a consultation on exactly those kinds of questions—[Interruption.] The hon. Member for Rhondda (Chris Bryant) says that it does not do that, but those are exactly the kinds of questions on which people can provide their views, and we will of course listen to all the views expressed.

[Sheila Gilmore (Edinburgh East) (Lab)]

Given that satisfaction with the health service rose from 34% in 1997 to 70% in 2010, will the Deputy Prime Minister withdraw his comment that there was a mess to be cleared up and change his advice to the Prime Minister by encouraging him to drop the Health and Social Care Bill?

[The Deputy Prime Minister]

I was pointing out that the Labour party’s position now, if I understand it correctly, is to remove the freedom of hospitals to be financially viable, thus condemning them to having to make £20 billion of savings. Guess who announced those huge savings that need to be made in the NHS? The Labour Government. The Labour party has no plans for how hospitals should make those savings and still will make no commitment to providing real-terms increases for the NHS of the sort we are making. I do not think we need to take any lessons on the NHS from the Labour party.

[Ian Swales (Redcar) (LD)]

I welcome the idea of a statutory register of lobbyists, but will the Deputy Prime Minister ensure that the definition of lobbyist will not deter charities or businesses wishing to invest in an area from being able to approach their MP frankly and openly?

[The Deputy Prime Minister]

My hon. Friend makes a good point. It is very important that we get the balance right so that we can ensure that there is more transparency in the way lobbying is conducted, but in such a way that does not discourage people, organisations or charities from doing what they naturally want to do, which is to approach their MP and make their case. That is why we have crafted the consultation in exactly the terms we have.

The Attorney-General was asked—

[Fiona Mactaggart (Slough) (Lab)]

1. What recent discussions he has had with the Crown Prosecution Service on improving the effectiveness of rape prosecutions.

[The Solicitor-General (Mr Edward Garnier)]

I have regular discussions with the Director of Public Prosecutions on a range of criminal matters, including rape. The DPP, the Attorney-General and I take our duties in regard to rape prosecutions extremely seriously. The hon. Lady met the DPP in April last year to discuss rape prosecutions, and he wrote to her on 6 May setting out what the CPS is doing to improve the effectiveness of rape prosecutions.

[Fiona Mactaggart]

Last week the chief prosecutor for London, Alison Saunders, called on the Government to start a public debate to bust some of the myths about rape victims which prevent successful prosecutions. Will the Attorney-General and the Solicitor-General agree to work with ministerial colleagues to begin a Government-led campaign to address the misrepresentations of and misconceptions about rape victims which get in the way of successful prosecutions?

[The Solicitor-General]

Of course we will. I am already a member of the inter-ministerial group on violence against women and girls, and as I indicated a moment ago I take my responsibilities with regard to the prosecution of rape cases extremely seriously. I have personally appeared in a number of applications to the Court of Appeal, dealing with unduly lenient sentences passed in relation to rape victims. We want to improve the attrition rate and the conviction rate, and the hon. Lady can be assured that this Government and these Law Officers are fully behind that momentum.

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

On the prosecution of sexual offences, the number of child sexual offences reported to the police last year was about 17,000, and the number of prosecutions was about 4,000. Does the Solicitor-General know the reason for that gap?

[The Solicitor-General]

I do not know—I have no empirical evidence that I can deploy this afternoon—but clearly there is an absence, often in such cases, of evidence that has reached the state in which it can be taken to court. My hon. Friend will know from his practice at the Bar that it is essential that we have adducible evidence to put before the court. Without evidence, we cannot prosecute.

[Andrew Selous (South West Bedfordshire) (Con)]

2. What steps he is taking to increase the number of convictions for human trafficking.

[The Attorney-General (Mr Dominic Grieve)]

The Crown Prosecution Service is working with law enforcement agencies and others in the UK, as well as in source countries, to improve the investigation and prosecution of those involved in human trafficking. The CPS is also encouraging victims of human trafficking to support criminal proceedings.

[Andrew Selous]

To what extent are prosecutors and police alert to the fact that British citizens are being trafficked both within the UK, as was uncovered shockingly in my constituency last September, and from the UK, as we learned earlier this month?

[The Attorney-General]

We are very much aware that this is a problem, but part of the difficulty is that trafficking for forced labour is notoriously difficult to establish, and often the victims will not come forward. That said, as my hon. Friend will be aware, there is now a national referral mechanism that alerts the police at neighbourhood level, the UK Border Agency, social services and charitable organisations as to how they can pick up such information and feed it into the specialist units of the police, which can then bring in the Crown Prosecution Service to try to deal with those matters.

[Kelvin Hopkins (Luton North) (Lab)]

If the Government are serious about more prosecutions and, indeed, about preventing trafficking, should we not substantially increase the UK Border Agency’s strength, with many more properly based staff so that they can do the job?

[The Attorney-General]

As the hon. Gentleman will appreciate, with my hat on as superintendent of the Crown Prosecution Service, it would be easy for me to ask for extra resources in all directions outside my own Department, but if he thinks that there are specific instances in which the service may be in some way deficient he should, I suggest, bring them to my attention or to that of my right hon. Friend the Home Secretary. The evidence that I have from the Crown Prosecution Service is that it receives very good co-operation from the agencies with which it deals.

[Mr Peter Bone (Wellingborough) (Con)]

I thought that the Government were carrying out a review of human trafficking sentences, with a view to reporting to Parliament by now on the changes that would make conviction easier. When is that report going to be published?

[The Attorney-General]

I am not in a position to give my hon. Friend a precise date. What I suggest, as he will appreciate that the issue is outside my departmental area, is that I write to him when I have ascertained whether we have further detailed information on it.

[Chris Bryant (Rhondda) (Lab)]

Surely we are going to get many more convictions only if there is much more effective co-operation between prosecutors and police in this country and elsewhere. Given that many such gangs are elsewhere in the European Union, is not the European arrest warrant a vital part of the necessary armoury? Will the Attorney-General tell his Back Benchers that he is not going to step outside the European arrest warrant, even if they want to do so?

[The Attorney-General]

I have no doubt at all that mechanisms for co-operation throughout the European Union and, indeed, elsewhere can be very useful in the apprehension of criminals, particularly in this field. How that should best be carried out is, if I may say to the hon. Gentleman, ultimately I suppose a matter for this House, if it ever comes up for review.

[Valerie Vaz (Walsall South) (Lab)]

3. What recent discussions he has had with the Secretary of State for the Home Department and the director of the Serious Fraud Office on the capacity and effectiveness of organisations tackling economic crime.

[The Solicitor-General (Mr Edward Garnier)]

The Attorney-General and I hold regular meetings with the director of the Serious Fraud Office, at which we discuss all aspects of its work, including individual cases and the development of deferred prosecution agreements as an additional weapon in our criminal justice armoury. We also hold regular meetings with the Home Secretary and her Ministers, but there have been no recent discussions on economic crime. I remind the hon. Lady of the Home Office paper entitled “The National Crime Agency: A plan for the creation of a national crime-fighting capability”, which was published in June 2011. The NCA will include an economic crime command.

[Valerie Vaz]

I thank the Solicitor-General for his answer. Given that the Serious Fraud Office is facing cuts of 23% and that the Law Society Gazette has reported on deferred prosecution agreements, will he update the House generally on those agreements? Specifically, will they be available for the public so that those dealing with companies that are subject to such agreements can see that?

[The Solicitor-General]

When DPAs come into the criminal justice system in this country, they will be available to the public in the sense that they will be operated by the director of the Serious Fraud Office, who is a public prosecutor. I am not sure that I can help the hon. Lady much further than that. The matter is under discussion and we are developing it within Government. Further announcements will be made just as soon as we are ready.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

Given that when investigating the failure of RBS, Adair Turner concluded that the FSA has little power under the existing rules to take action against individuals associated with the banking crisis; that the director of the SFO believes that

“things have got to change”;

and that we are still waiting for anyone in the UK to be prosecuted in relation to the global financial crisis, will the Solicitor-General use his best efforts to persuade the Attorney-General to look again at introducing a crime of corporate negligence so that prosecutors have a full range of weapons in their armoury to use in future against reckless financiers?

[The Solicitor-General]

The Attorney-General and I always use our best efforts. The development of the criminal law is within the remit of the Ministry of Justice. I am sure that the hon. Lady will address her remarks, via the right hon. Member for Tooting (Sadiq Khan), to that Department.

[Nigel Adams (Selby and Ainsty) (Con)]

4. What steps he is taking to promote reform of the European Court of Human Rights.

[The Attorney-General (Mr Dominic Grieve)]

I am working closely with the Foreign Secretary and the Justice Secretary, and talking to many member states and to key figures in the Court and the Council of Europe. Only last week, I spoke at the seminar on court reform for European civil society organisations. There is a keen appetite for reform of the Court and we are confident that we can gain agreement on a reform package.

[Nigel Adams]

There is an incredible backlog of 150,000 cases. Does my right hon. and learned Friend agree that that undermines the Court’s ability to perform its role efficiently, and that something needs to be done soon to improve that efficiency?

[The Attorney-General]

Yes, there is no doubt about that. The Court itself knows that. Some efforts have been made to reduce the backlog, particularly by streamlining the sitting hours of completely hopeless applications. The problem remains that there is a large number of cases that is in excess of the number of cases that can be heard each year. It is for those reasons that the United Kingdom, as part of its reform package, has asked those who are interested to examine how principles of subsidiarity can be introduced so that fewer cases have to be considered by the Court, with cases instead being resolved properly at national level wherever possible.

[Keith Vaz (Leicester East) (Lab)]

Does the Attorney-General not consider that there is a strong argument for fast-tracking certain cases, for example cases of national security, through the European Court? We will hear later about the case of Abu Qatada. That is an example of how it takes a long time to get a decision out of the European Court.

[The Attorney-General]

The right hon. Gentleman makes an important point. I have no doubt that things could be done better. The Court already has a system of prioritisation. I have no doubt that the reform process will look at whether the Court can do better in identifying cases of particular importance. As he is aware from remarks that I have made on another occasion, the length of time that someone may be detained in custody while a case is being considered at the European Court of Human Rights level is something to which great consideration should be given.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

I welcome the efforts that Ministers are making. Is there an appetite among the mature democracies, as the Attorney-General indicated, to ensure that the Court gives priority to cases of gross abuses of human rights, rather than to the refinement of the law in countries that have well-developed human rights?

[The Attorney-General]

I am sure that my right hon. Friend’s sentiments would be echoed by most member states that are asking for reform to take place. At the same time, I want to make it clear that any reform package must still leave autonomy for the European Court of Human Rights. Its own processes must be reformed, and it must have control of them. Those issues are being examined, and I hope that the reform package that we will initiate will make a real and substantial difference to how the Court can approach its work load and continue doing its important work.

[Jeremy Corbyn (Islington North) (Lab)]

In his reforms to the European Court of Human Rights, will the Attorney-General ensure that we do not end up by default making it much more difficult for people bringing human rights abuse cases from, say, Russia, Hungary or other places where there are serious abuses of human rights, by pushing them back to the national jurisdiction? The influence of the Court can be a force for good and help to curtail some of the most vile human rights abuses that are taking place across Europe.

[The Attorney-General]

The hon. Gentleman will be aware that we share his view that the Court has been of immense benefit in member states across the European continent in improving human rights standards. In that context, as I have indicated, there can be no suggestion that the right of personal petition, for example, should be removed. Although we need to ensure that the Court keeps its autonomy, there is widespread acknowledgment that there must be reform if it is to continue doing its work properly.

[Mr Tom Watson (West Bromwich East) (Lab)]

5. What recent discussions he has had with the Crown Prosecution Service on the progress made by the Leveson inquiry.

[The Solicitor-General (Mr Edward Garnier)]

None, save that the Director of Public Prosecutions has informed me recently that he has been asked to give evidence to the inquiry.

[Mr Watson]

Eighteen months ago, Alison Levitt, QC, was tasked with a review of the previous evidence from the 2006 hacking case. Will her conclusions be shared with Lord Leveson, and can they also be shared, maybe in a redacted form, with members of the Select Committee on Culture, Media and Sport, who are conducting an inquiry on the matter at the moment?

[The Solicitor-General]

That must be a matter for the Director of Public Prosecutions and Ms Levitt.

[Mark Pritchard (The Wrekin) (Con)]

Is it not the case that public confidence in both the Crown Prosecution Service and the police is absolutely vital? If so, does the Solicitor-General share my concern about the fact that we have had many arrests of journalists under Operation Elveden but only two arrests of police officers, and that the names of those police officers have remained unpublished? There seems to be one rule for the police and another rule for journalists.

[The Solicitor-General]

There is also another rule that the Law Officers do not tell the police what to do. It is entirely a matter for the police to deal with arrests. If matters come to their attention that need the advice of the Crown Prosecution Service, which the Attorney-General and I superintend, we will no doubt examine them.

[Helen Goodman (Bishop Auckland) (Lab)]

One issue that will arise in this context is contempt of court and the extent to which the media need to be controlled. I was rather disappointed to hear the Attorney-General’s responses on Radio 4 this morning. Would the Solicitor-General like to make it absolutely clear to the entire nation that, notwithstanding the rights and wrongs of particular cases, it is possible to commit contempt on Twitter?

[The Solicitor-General]

That is a deeply uncontroversial statement to make.

[Mr Speaker]

I call Mr Gerry Sutcliffe. Not here.

[Nick Smith (Blaenau Gwent) (Lab)]

7. What recent assessment he has made of the management and disclosure of evidence by the Crown Prosecution Service.

[Ann Clwyd (Cynon Valley) (Lab)]

9. What recent assessment he has made of the management and disclosure of evidence by the Crown Prosecution Service.

[The Solicitor-General (Mr Edward Garnier)]

The effective management and disclosure of evidence relies on the proper discharge of duties and obligations by both the police and the prosecutor. Although there have been failures in a small number of cases, in the vast majority of cases the disclosure duties are carried out well.

As the hon. Member for Blaenau Gwent (Nick Smith) will know, there is currently an inquiry into the Lynette White case in south Wales, more properly called the Crown v. Mouncher and others. The Independent Police Complaints Commission is carrying out a review of police conduct in that case, and the Director of Public Prosecutions has separately and additionally asked the inspectorate of the Crown Prosecution Service to carry out a review of the actions and decision making of the CPS in relation to disclosure in that case.

[Nick Smith]

It took nearly 10 years and cost the taxpayer about £30 million to bring eight former South Wales police officers to court on charges of perverting the course of justice and fabricating evidence. The case collapsed when the key documents were thought destroyed, but they have now been found. I thank the Attorney-General for his answer, but what assessment has the CPS made of the prospects of a future prosecution?

[The Solicitor-General]

It will not make an assessment until the two inquiries are completed.

[Ann Clwyd]

I echo what my hon. Friend the Member for Blaenau Gwent (Nick Smith) has said: there is considerable shock at the conduct of this case, in south Wales and elsewhere. In the past, there have been a particularly high number of miscarriages of justice under the South Wales police force. Is the Attorney-General aware of any other similar cases in which the disappearance and re-emergence of key evidence has led to a retrial?

[The Solicitor-General]

Off the top of my head, I am not aware of any such cases, but the right hon. Lady is right to point out that the collapse of the Lynette White case in south Wales just recently, which affects her constituents and neighbours and those of the hon. Member for Blaenau Gwent (Nick Smith), is a matter of huge regret. It is now being subjected to two inquiries. Once they have been completed, further announcements will be made.

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

Is not the lesson of the disclosure debacle in the Lynette White case this: when criminal allegations are made against police officers in one police force, disclosure should be handled by officers from an entirely independent police force? Will my hon. and learned Friend do all he can to ensure that such reforms take place so that such a disaster does not happen again?

[The Solicitor-General]

Clearly—particularly in large and complex cases such as the one we are talking about—the need to get disclosure right is key. That is also true, however, in what one might call less serious cases—although I do not want to be misunderstood when I use that adjective. My hon. Friend’s point about other police forces dealing with the disclosure in such cases must, surely, be a matter for the chief constable of the relevant police area. I have no doubt that the Home Secretary, who is sitting beside me, will bear that in mind in due course.

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

8. What discussions he has had with ministerial colleagues on reform of extradition law.

[The Attorney-General (Mr Dominic Grieve)]

The matter is being actively considered by the Government, led by my right hon. Friend the Home Secretary.

[Mrs Glindon]

Will the Government wait for the outcome of the Liberal Democrats’ review of the extradition law before making a decision on the coalition Government’s change to that law?

[The Attorney-General]

My understanding is that my right hon. Friend the Home Secretary is currently giving careful consideration to the recommendations of the independent extradition review panel. She wants to discuss the Government’s proposed response to those recommendations with Cabinet colleagues before announcing to Parliament what action the Government will take. In reaching a decision on what the Government propose to do, she will also take into account the report of the Joint Committee on Human Rights on extradition and the representations made by Members of the House during recent debates.

[Tom Brake (Carshalton and Wallington) (LD)]

A recent motion in this House called for the extradition treaty to be redrafted to enable the Government to refuse extradition requests if UK prosecutors have decided against beginning proceedings at home. What progress is being made on that?

[The Attorney-General]

As my right hon. Friend will be aware, the review is being led by the Home Office and it might therefore be best if my right hon. Friend the Home Secretary answered his question. The entire package being considered by the Government will take into account all representations made in coming to a decision.

[Mr Andy Slaughter (Hammersmith) (Lab)]

10. What recent assessment he has made of the implications for his policies of the successful application by the Serious Fraud Office to confiscate dividends paid by companies convicted of bribery.

[The Attorney-General (Mr Dominic Grieve)]

The Government are committed to protecting and building on the reputation of UK business. The recent use of the civil recovery process to recover shared dividend payments derived through contracts won through unlawful conduct reinforces that. The actions of the Serious Fraud Office send a clear message to shareholders and investors, particularly institutional investors, that they must satisfy themselves that the business practices of the companies in which they invest are legal and ethical. The Serious Fraud Office has signalled its intention rigorously to pursue similar civil recovery actions, where appropriate, in the future.

[Mr Slaughter]

It is good to see the Attorney-General being tough on bribery and he might want to have a word with the Justice Secretary about that. He will be aware that in the Mabey Holdings case, the director of the SFO said that

“the shareholder was totally unaware of…inappropriate behaviour.”

Will it be common practice for lay shareholders and pension funds to be penalised for the fraudulent activities of companies which, by definition, they will not know about, as bribery is not generally advertised?

[The Attorney-General]

I think it is right to say that in the case of Mabey Engineering, the company that held the dividends was a subsidiary company—that is, a holding company held the dividends. That said, I cannot give the hon. Gentleman any specific assurance as we will consider the matter on a case-by-case basis. The principle of the possibility of taking back dividends that have been paid wrongly, as they are the fruit of bribery and corruption, must clearly be kept in mind.

Petition

Tuesday 7th February 2012 Commons Chamber

Diana Johnson (Kingston upon Hull North) (Lab)

- Hansard - - Excerpts

The petition is from my constituents in north Hull, who are concerned about cuts to police in Humberside. I would like to mention in particular Demelza France, a shop worker who collected names at her workplace.

The petition states:

The Petition of residents of Hull,

Declares that the Petitioners believe that the Government has a duty to protect citizens from crime; that the significant increase in police officers over the past ten years has helped reduce crime and make people feel safer; notes that under Government proposals the police budget will be cut by 20%, that over 16,000 police officers will be lost and that for Humberside Police Force cuts will be even greater than the national average, with a 25% reduction in the police budget; further notes that Humberside Police Force is projected to have 250 fewer police officers in March 2012 than in March 2010; and declares that the Petitioners believe that this will hamper the efforts of the police to prevent crime and keep citizens safe.

The Petitioners therefore request that the House of Commons urges the Government to support the work of the police in ensuring that the downward trend in overall crime continues by at least maintaining 2010 levels of uniformed police officers in England and Wales.

And the Petitioners remain, etc.

[P001005]

Abu Qatada

Tuesday 7th February 2012 Commons Chamber

15:34

[Paul Goggins (Wythenshawe and Sale East) (Lab)]

(Urgent Question): To ask the Secretary of State for the Home Department to update the House on the decision to release Abu Qatada on bail.

[The Secretary of State for the Home Department (Mrs Theresa May)]

Since December 2001, successive British Governments have sought to deport Abu Qatada to Jordan, his home country, because he poses a serious risk to our national security. Qatada has a long-standing association with al-Qaeda. British courts have found:

“His reach and the depth of his influence…is formidable…He provides a religious justification for…acts of violence and terror”.

In Jordan, he has been tried and found guilty in absentia of terrorism offences including conspiracy to cause explosions at western and Israeli targets and involvement in the bombings of the American school and the Jerusalem hotel in Amman in 1998.

The House of Lords agreed with the Government that Qatada can be deported to Jordan to face a retrial because of the diplomatic assurances negotiated by Britain and the Jordanian Government. That agreement ensures that individuals deported to Jordan will not be tortured upon their return. Despite the House of Lords agreement that Qatada should be deported, and despite accepting that he would not face mistreatment in Jordan, the European Court of Human Rights ruled last month against his deportation. It did so on the grounds that deportation would violate article 6 of the convention, the right to a fair trial, due to the risk that evidence obtained from the torture of others would be used against him. Hon. Members should be aware that that argument had already been considered by a British court and rejected.

I hardly need tell the House that the Government disagree vehemently with Strasbourg’s ruling. We believe that Abu Qatada should be deported. We are considering all the legal options available, including whether to refer the case to the Grand Chamber. As we do so, we will continue to negotiate with the Jordanians to see what assurances they can give us about the evidence used against Qatada in their courts. Following the Strasbourg ruling, Qatada’s lawyers appealed to the Special Immigration Appeals Commission for bail. We opposed that appeal vigorously, but yesterday it was granted, and bail will start within a week.

The bail conditions are among the most stringent imposed on anybody facing deportation from the UK, and reflect the conditions set out when Qatada was bailed in 2008. He will be under a 22-hour curfew. He will not be allowed to access the internet or any electronic communication devices. He will not be allowed to travel outside an approved boundary. Visitors will need to be approved, under very strict conditions. He will be subject to a specific condition preventing him from attending mosques and leading group prayer. If any of those conditions are breached, he will be re-arrested and we will seek his immediate re-detention. But however strict the bail conditions, I continue to believe that Qatada should remain behind bars.

It is simply not acceptable that after the Jordanians have guaranteed his treatment, after British courts have found that he is dangerous and after his removal has been approved by the highest courts in our land, we still cannot deport such a dangerous foreign national. We continue to consider the case for a British Bill of Rights, and the Prime Minister is leading the Government’s attempts to reform the European Court of Human Rights.

The right place for a terrorist is a prison cell. The right place for a foreign terrorist is a foreign prison cell, far away from Britain. That is why we will do everything that we can within the existing legal regime to deport Qatada, and we are doing everything that we can to reform that regime to avoid such cases in future.

[Paul Goggins]

I am grateful to the Home Secretary for her answer. She will understand, of course, that there is considerable concern throughout the House about yesterday’s decision. I appreciate, as do we all, that it places her in a difficult situation, but the public will want reassurance that the Government are doing everything possible to protect their safety.

First, can she offer any explanation why Mr Justice Mitting decided to bail Abu Qatada now, while an appeal to the European Court of Human Rights is still possible, rather than give notice that that would happen at some point in future if Ministers were ultimately unable to deport him? Will she say more about the discussions with the authorities in Jordan? Does she expect to receive assurances on the use of evidence, and if so, when? Given the urgency of the situation, will Ministers be directly involved in those discussions? Does she intend to make further representations to the Special Immigration Appeals Commission? Has Mr Justice Mitting indicated that he would be prepared to reconsider the three-month deadline for removing bail conditions if the Government received the necessary assurances and appealed against the ECHR ruling?

The public will be reassured by the fact that Home Office lawyers were successful in pressing SIAC to impose a 22-hour curfew on Abu Qatada. What arguments were advanced for that level of control, and how do they compare with the much-reduced arrangements that would be available if Abu Qatada were made subject to a terrorism prevention and investigation measure? Will the Home Secretary confirm that, under a TPIM, Abu Qatada would be entitled to a mobile phone and have access to the internet, that an overnight residence requirement would not exceed 16 hours, and that she would be unable to relocate him to another part of the country?

What additional costs will fall to the police and the Security Service as a result of the decision to grant Abu Qatada bail? Will the Home Secretary update the House on progress made since the Prime Minister’s recent speech in Strasbourg on the need to reshape the relationship between the ECHR and the UK’s own judicial system? Does she agree that it should be only in truly exceptional cases that a Supreme Court judgment can be challenged in the ECHR? Finally, does she agree that it is a good thing that indefinite detention without trial was ruled to be unlawful, but that the answer in Abu Qatada’s case is deportation, with assurances, to Jordan, not release into the community in Britain?

[Mrs May]

The right hon. Gentleman has raised several issues in his supplementary questions, some of which relate to the approach that Justice Mitting might take in certain circumstances, but obviously it is not for me to indicate what approach the judge would take. However, were assurances received from the Jordanian Government—we are working hard on that—obviously that would change the scenario and, by introducing a new factor, would enable the Government to take action that would, I think, change SIAC’s approach. If any case were to go before it again, though, it would be for it to determine.

The right hon. Gentleman referred to the work being done on the ECHR. As he will be aware, because of our chairmanship of the Council of Europe, we are in a position for six months to take action on this matter, and we are working actively with other countries with a similar interest in ensuring that the European Court acts as originally intended, which is as a Court considering the most serious issues and key points of human rights law, rather than as a body to which people automatically appeal once they have gone through national courts. That work is being actively led by my right hon. and learned Friend the Secretary of State for Justice. Furthermore, as I mentioned, the Prime Minister has been to Strasbourg, spoken on these matters and explained our position.

The right hon. Gentleman mentioned TPIMs and bail, but of course they are two separate matters—one should not conflate the two. The Home Office made vigorous representations to SIAC arguing that Abu Qatada should not be released on bail, but that were it to happen, the most stringent conditions should be applied. As I said, these are among the most stringent conditions applied to anybody we are currently unable to deport from the UK.

As the right hon. Gentleman said at the end, it is absolutely right that in this country we do not have indefinite detention without trial. However, everyone on both sides of the House wants to ensure that we can deport those who represent a danger to the United Kingdom and whom we believe should be deported. That is why we are considering our options within the legal process, and why we are negotiating with Jordanians on further assurances in order to deport Abu Qatada. However, it is also why we are working to make the changes in the European Court to which the right hon. Gentleman referred, and looking at the whole issue of assurances with other countries, to ensure that we strengthen our ability to deport people who are a danger to us.

[Mr William Cash (Stone) (Con)]

The Home Secretary has made a robust statement; the Prime Minister has made robust statements. Unfortunately, the declaration that she made some months ago—that we would repeal the Human Rights Act—is the remedy. I would like to know, and I would be grateful if the Home Secretary would say, whether she intends to carry through our commitment—her own statement that she would repeal the Human Rights Act—return the remedy to this House and pass the legislation necessary to get this right; otherwise it will be all talk and no action.

[Mrs May]

I have been used, over time in my political life, to words that I have said being taken slightly out of context. I said that it was my personal view that the Human Rights Act should be repealed, not that I was about to repeal it—which my hon. Friend sort of implied in his question. I would simply remind him that even if we were to repeal the Human Rights Act, we would of course still be subject to the European convention and the European Court.

[Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)]

The Home Secretary has given a serious account of the risk from Abu Qatada. She will know that we agree that he should be deported, on the grounds of being a risk to national security. However, she has not said much about what she is doing now in response to the judgment. She is right to look at the legal options for appealing against the European Court judgment, but what more is she doing to get further assurances from Jordan so that he can be deported now? She will know that an agreement was reached by the British Government before the election, so it is possible to make diplomatic progress. We understand that the British ambassador has been in some discussions, but what actions have Ministers taken? Has the Home Secretary taken this up herself with the Jordanian Government? If she has not done so, will she do so now? If so, will she go back to SIAC to ask for a stay of the bail until those high-level discussions with the Jordanian Government have been completed, given the urgency and seriousness of this case?

On the second issue—protecting public safety in the meantime—it is unclear whether the Home Secretary is looking for more evidence to take to SIAC to overturn the bail decision. However, what will happen if the negotiations with Jordan fail and if the courts conclude that bail cannot be extended in three months’ time? Those are the circumstances that control orders were introduced to address, but her decision has been to weaken those counter-terror laws, and that will make it harder. Under the current system, if TPIMs have to be introduced after three months if bail is stopped, she will not be able to ask the courts for a curfew—only an overnight residence requirement—and she will have to provide access to the internet and telephones. She will not be able to ask the courts to relocate Abu Qatada outside London, should that be appropriate—during the Olympics, for example—nor will she be able to extend those restrictions for more than two years. The restrictions that the Home Secretary will have available to her in three months’ time are a far cry from the restrictions that she and the courts understandably believe are necessary now to protect the public, which include the 22-hour curfew, no access to the internet and no access to phones.

The Home Secretary cannot blame the European Court for her decision to weaken British counter-terror powers. The courts, the security experts and the Home Secretary have all made it clear that Abu Qatada is a continued threat to public safety and national security. We support her in her actions to protect the public and get the deportation in place, but she should be straining every sinew, on behalf of the public, to get him deported. If she cannot, she should make sure that we have the legislation and the safeguards in place to protect the public now.

[Mrs May]

I have to say to the shadow Home Secretary that she appears to have prepared her statement before listening to my answer, because I made it clear that I continue to believe that Qatada should face trial in Jordan and that the Government have begun discussions with the Jordanians to see what assurances we can secure about the quality of evidence used in their courts. We will be pursuing those discussions at every level that is appropriate to ensure that we work towards the aim that we share across the House: getting the assurances that will enable us to deport Abu Qatada. As I said, we will also consider the legal options that are available, including whether we should refer the case to the Grand Chamber, but we need to consider the consequences of those actions before we take a decision.

I referred, obviously, to the bail conditions that have been placed on Qatada, as the right hon. Lady did. I continue to believe that he should be behind bars. The bail conditions are among the most stringent on anybody facing deportation from Britain. She referred to the difference between TPIMs and control orders. I remind her that the bail conditions are stronger than would be possible under TPIMs or control orders. I also refer her to the wider point that I have made about TPIMs in the Chamber in the past, which is that the police and the Security Service are content with the package that was negotiated in relation to TPIMs and with the extra funding that has been made available to the Security Service and the police.

We should be able to deport Abu Qatada; that is the view across the whole House. He should be behind bars. Home Office Ministers and previous Home Secretaries under the previous Government have tried to do everything possible to get him to Jordan, and that is what this Government are trying to do. The case has been ongoing since 2001. In 2008, there was a brief period during which he was released on bail. We should send a clear message from across the House that we believe he should be deported, and this Government are doing what we can to ensure that we achieve that. That is what is right for the security of our citizens.

[Tom Brake (Carshalton and Wallington) (LD)]

What specific points does the Home Secretary believe still need to be negotiated with the Jordanians in order to allow Abu Qatada to be returned to Jordan?

[Mrs May]

The specific reason for the European Court finding against deportation was the question of whether the evidence that would be used against Abu Qatada in his retrial—he had been tried in absentia—had been obtained as a result of torture. That is the issue that was raised by the European Court, and that is the issue that we are addressing.

[Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)]

In 2002, when Abu Qatada was eventually apprehended, he was in a flat about 400 yards away from MI5 headquarters, using what was then the most sophisticated electronic equipment to communicate his message. Given that the Home Secretary has said time and again this afternoon that the bail conditions are tough and would restrict him from being able to do that again, how can she possibly justify allowing a situation to arise at the end of April, with the Olympic games and the Queen’s jubilee taking place, in which terrorism prevention and investigation measures would come into effect that would do away with all the restrictions that she has set out in the bail conditions?

[Mrs May]

I wish to be in a position in which we can deport Abu Qatada, so that he will not be in this country when the Olympics take place.

[Mr Julian Brazier (Canterbury) (Con)]

Does my right hon. Friend accept that, in our unwritten constitution, there is a distinction between the rule of law and the tyranny of lawyers? Does she also accept that the interaction between the European Court of Human Rights and the ruling by Justice Mitting on the question of bail has created a dangerous situation in which millions of people in this country are starting to lose confidence in our legal system?

[Mrs May]

I do not believe that millions of people are losing confidence in our legal system. I believe that they are concerned about the ability of the European Court to come to decisions that we do not believe to be in the best interests of the United Kingdom. This decision on Abu Qatada is clearly a case in point. That is why it is important for the Government to pursue the work that we are doing, not only in looking into the possibility of a British Bill of Rights but in trying to make changes to the way in which the European Court operates, so that in future we will be able to deport people who present a danger to us.

[Mr Jack Straw (Blackburn) (Lab)]

The right hon. Lady’s peremptory answer to my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) was simply not acceptable for a Home Secretary. My right hon. Friend asked her a very serious question, but she failed to give him any answer to it at all. All of us believe that Abu Qatada should be sent back to Jordan. Many of us, myself included, personally sought to negotiate with the Jordanians—unsuccessfully—to achieve that. If that cannot happen, however, and if the bail conditions lapse at the end of three months, will she accept that, on any analysis, the powers that she has put on to the statute book—these so-called TPIMs—are much weaker than the powers of the control orders that were in place and that worked satisfactorily in the past?

[Mrs May]

I will repeat the point I made in response to the right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett)—that our work now is to try to get the assurances necessary to ensure that we could deport Abu Qatada, but also to look at the other available legal options, such as whether or not to refer the case to the Grand Chamber.

The right hon. Member for Blackburn (Mr Straw) and many of his right hon. and hon. Friends have raised in the House on a number of occasions the issue of the conditions relating to TPIMs and I have every confidence that they will be raised again in future. I repeat the comments I made in response to the shadow Home Secretary, which I have made previously, that we have put together, from TPIMs and additional funding available to the Security Service and the police, the package that we believe is right and with which the police and the Security Service are content. Let me say to the right hon. Gentleman as I did to the shadow Home Secretary that the bail conditions applied in this case are more stringent than control orders, so even if control orders were in place, it would not be possible to apply the same conditions as have been made available under these bail conditions.

[Mr David Ruffley (Bury St Edmunds) (Con)]

Signatories to the European convention on human rights, such as Italy, have simply ignored in exceptional circumstances rulings from the Court. Have Her Majesty’s Government considered that course of action in the Qatada case?

[Mrs May]

As I made clear in my earlier responses, we are looking at every option available to us under the current legal regime in order to deal with this issue. We wish to be able to deport Abu Qatada; we do not believe he should be in the United Kingdom, but we are looking at all options under the existing legal regime.

[Hazel Blears (Salford and Eccles) (Lab)]

The Home Secretary said quite rightly that she wishes to be in a position to deport Abu Qatada, but I am afraid that, much as we all might wish that, if it does not happen in three months’ time, the Home Secretary will face a serious choice. The bail conditions might well be relaxed, so the only choice she will have under current legislation would be to impose a TPIM. Time and again, we have seen that TPIMs do not have the measures necessary to give the British people the degree of security that they need. In this year, with the Olympics and the diamond jubilee and with half a dozen people on control orders coming back to London and being relocated, there is layer upon layer of risk. What steps is the right hon. Lady going to take to make sure that we can be assured of our safety and security?

[Mrs May]

I can assure the right hon. Lady that this Government place the security of this country and its people as their priority. That is why we have put in place a series of measures that we believe will satisfy that requirement. Right now, the Government’s intention is to work to try to achieve what the right hon. Lady has recognised that all of us want across the House when it comes to dealing with Abu Qatada.

[Patrick Mercer (Newark) (Con)]

The European Court of Human Rights has yet again placed the Home Secretary and this Government in an extremely difficult position. In the short term at least, we are stuck with it, but can the right hon. Lady assure us that she will renegotiate not just with Jordan but with other countries that are subject to memorandums of understanding so that we can head these sorts of problem off—before they happen, not once they have happened?

[Mrs May]

Negotiations take place with a number of countries about the memorandums of understanding required to enable us to deport people so that we do not find ourselves unable to do so because of legal requirements. One important aspect of the Strasbourg Court’s decision in this case was that it supported the memorandum of understanding in respect of what would happen to Abu Qatada himself, were he to be returned to Jordan. In that sense, the memorandum of understanding was found to be workable by the Strasbourg court; access to a fair trial was the issue that it raised, but we will continue to be in negotiations with a number of countries where we feel it would be helpful to have such memorandums of understanding in place.

[Keith Vaz (Leicester East) (Lab)]

The Home Secretary’s robust approach on this case mirrors that of previous Home Secretaries who have spoken today, but is there not a case for fast-tracking cases of national security through the European Court? The main complaint is that it took three years to pass from the House of Lords to the European Court. In cases like this, urgent action needs to be taken. Will the right hon. Lady confirm whether Sheikh Raed Saleh is still in the country?

[Mrs May]

The issue with the European Court is not so much one of whether certain cases should be fast-tracked; rather, the question we need to ask is which cases should be going through to the European Court. One issue we need to look at is the fact that when cases have gone through every single level of judicial consideration through national courts, appeal to the European Court is too often seen as a natural thing to happen at the end of the process. That contrasts with the original intention, which was about defining some very key points of law relating to human rights. That is the issue on which we need to focus.

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

Yet again, it seems that the rights of terrorists trump the universal right of people in this country to feel that they have safety on their side. This must be costing some police force an enormous amount of resources. Would it not be better to allocate one police officer to go with Mr Qatada and hold his hand throughout the time he is in Jordan than to allocate someone to hold his hand here when he will potentially walk out of the door three months later?

[Mrs May]

As I said in answer to an earlier question, the European Court has upheld the memorandum of understanding on the basis of assurances in relation to the treatment of Abu Qatada himself were he to be returned to Jordan. The issue it has raised is that of a fair trial, and concerns the evidence that has been obtained from others and whether that evidence was obtained with or without torture.

[Mr George Howarth (Knowsley) (Lab)]

Does the Home Secretary agree that this case reflects a wider problem? Courts, whether in Europe or here, often weigh the integrity of their own proceedings against national security. Is it not now necessary for us to make absolutely clear how important national security is, and that it should be given priority? Should we not also make that absolutely clear in legislative terms?

[Mrs May]

The right hon. Gentleman has made an interesting point about the balance between judicial proceedings and the consideration of those proceedings, and the interests of national security. If I may say so, I think it possible that those who have been in the Home Office are often more acutely sensitive than others to the fact that the balance sometimes goes in a direction that we do not feel gives sufficient weight to issues of national security. However, as we try to bring 46 other countries along with us in our attempt to introduce some reform to the European Court, we shall need to examine exactly what sort of cases should be going there.

[Mr Dominic Raab (Esher and Walton) (Con)]

The Qatada case highlights wider chinks in our security strategy. It is a fact that the number of terrorism convictions has plummeted by 100% in the last four years. Will my right hon. Friend consider lifting the ban on intercept evidence so that we can prosecute more of these terrorists? Will she also consider amending the UK Borders Act 2007 to strengthen our capacity to deport, which we can do without touching the Human Rights Act? Above all, does not the Qatada ruling show that it is time for Britain to say no to Strasbourg?

[Mrs May]

Of course we are always in the business of considering what measures we can take to ensure that we can strengthen our ability to deal with potential terrorists. As for the issue of intercept evidence, we are still pursuing it, the advisory council of Privy Counsellors is considering it again, and it has been considered by successive Governments. It is a complex issue, but that work continues while we try to establish whether there is a way in which it would be possible to introduce intercept as evidence.

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

This person is clearly motivated by murderous hatred—there is no doubt about that—but can the Home Secretary answer this question? He has been here for some 16 or 17 years. If there is evidence that he was inciting murder, why was he not charged? Would that not have been the most appropriate way of dealing with this fanatic?

[Mrs May]

In all cases relating to terrorists, potential terrorists or those who are inciting others, our preference is always to be able to prosecute, and for those people to be behind bars. That is why all cases are looked at very carefully, and, obviously, the appropriate judgments are made.

[Philip Davies (Shipley) (Con)]

Does the Home Secretary not accept that the British Government are now in a rather pathetic, humiliating situation? A proud, sovereign country cannot deport foreign terrorists. It is no good the Home Secretary simply huffing and puffing about the decision. What the British public want to know is this: if we cannot secure the reforms that we need from the European Court of Human Rights, will we withdraw from the European convention? In the absence of that commitment, the Home Secretary will simply be spitting in the wind.

[Mrs May]

As my hon. Friend knows, the Government are putting considerable effort into ensuring we can do what he wants, notably to reform the European Court and how it operates so that we will not be in such situations in the future.

[Dr William McCrea (South Antrim) (DUP)]

What message does the Home Secretary think the Court’s decision sends to other terrorists who pose a threat to the safety and security of the United Kingdom?

[Mrs May]

One of the important messages comes from part of the Court’s decision, which is that where we have memorandums of understanding in relation to the treatment of individuals, that was upheld by the European Court. That is an important part of the judgment. Obviously, as I have said we vehemently disagree with the other part of the Court’s judgment in relation to the issue of a fair trial, which is why we continue to do what all hon. Members have said they want, which is to see if there are ways we can move to Abu Qatada’s deportation.

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

My right hon. Friend referred to the current legal framework. Will she confirm that it is open to Parliament to change this legal framework, and would it therefore be possible to repeal any rights of the European Court to interfere in our affairs and to return this matter to British courts—and could a Bill to achieve this be introduced tomorrow?

[Mrs May]

We are signatories to the European convention on human rights, and we remain signatories to that convention. That has been the policy across Governments in this country. As I have said in response to a number of questions, we are doing what we can at this time, with our chairmanship of the Council of Europe, to bring change to the way the European Court operates.

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

Is it true, as some press reports suggest, that, despite the stringent bail conditions, this individual will enjoy the privilege of a daily school run? If that is the case, what steps are in place to offer protection and reassurance to innocent parents and their children who may inadvertently find themselves forced into contact with this man?

[Mrs May]

As I have said, the bail conditions include a 22-hour curfew. The exact details of the curfew have yet to be determined by the Special Immigration Appeals Commission.

[Mrs Eleanor Laing (Epping Forest) (Con)]

Does my right hon. Friend appreciate that we have now reached the point where the vast majority of people right across the country are saying, “Enough is enough”? While we understand the difficulties the Home Secretary faces with the European convention on human rights, the Human Rights Act and so forth, will she reassure the House that the Government will use its presidency of the Council of Europe to seek to reform the European Court of Human Rights?

[Mrs May]

I am grateful to my hon. Friend, who in a nice way points out that I referred to our chairmanship of the Council of Europe when I should have referred to our presidency. I can absolutely assure her that we are putting considerable effort into the possibility of reform of the European Court and the way it operates. As my hon. Friend will know, the Prime Minister went to Strasbourg and gave a speech to assure people of the reasons why we feel that is necessary. We are, of course, working to bring the other 46 countries along with us in achieving what I am sure all Members want: appropriate reform of the Court.

[Richard Drax (South Dorset) (Con)]

May I compare this case to that of my constituent, Michael Turner, who under a European arrest warrant spent four months in jail in Hungary, without charge, for alleged fraud? Does the Qatada case show that there is one rule for fanatical terrorists and quite another for British citizens?

[Mrs May]

No, I do not draw that lesson from this case. As my hon. Friend will know, we are looking at the various measures on which we have the block opt-out or block opt-in in 2014 in relation to European matters, which includes the European arrest warrant.

[Mark Pritchard (The Wrekin) (Con)]

For people watching the news bulletins tonight, it will be both depressing and alarming that once again the European Court of Human Rights is undermining British justice and British national security. Is it not time that the United Kingdom temporarily suspended its membership of the European convention and European Court pending the reforms my right hon. Friend has set out today, and then once those reforms are in place go back into the convention and the Court? Will she set out a timetable for those reforms?

[Mrs May]

We have the opportunity, particularly with the six-month presidency of the Council of Europe, to bring other countries around the table to discuss the possibility of reform and we hope to achieve agreement on reforms that might be possible. We should be putting our energies into looking at how the European Court operates and at reasonable reform of how it operates.

[Charlie Elphicke (Dover) (Con)]

Does the Home Secretary agree that entrenching the convention by the Human Rights Act was a catastrophic error on the part of the previous Labour Government? Will she set out a process that she will follow to take us towards a British Bill of Rights?

[Mrs May]

I have made my views on the Human Rights Act clear, but I also point out that even before that Act we were signatories to the European convention and subject to the European Court of Human Rights. On the process of reforms towards a possible Bill of Rights, a commission is examining a possible UK Bill of Rights. It was set up by my right hon. and learned Friend the Justice Secretary and the Deputy Prime Minister, and I believe that it is due to report before the end of this year.

[Mr David Nuttall (Bury North) (Con)]

How are the bail conditions going to be enforced? How much will their enforcement, and any benefits that this individual will be entitled to, cost the British taxpayer?

[Mrs May]

The precise details of how the bail conditions are enforced will be a matter for the police. Abu Qatada does not have immigration status and therefore he is not entitled to claim benefits.

[Kris Hopkins (Keighley) (Con)]

This individual supports terrorists who want to kill our children. Regardless of what somebody says in Strasbourg, we must protect the human rights of the good people of this country, so I ask the Home Secretary to take the lead and put this man on a plane to Jordan.

[Mrs May]

I believe the feeling of the whole House is the same as that of my hon. Friend, in that we all want to be able to deport Abu Qatada. That is why the Government are making every effort to negotiate with the Jordanians to see whether it is possible to put in place the assurances that would enable that to happen.

[Bob Stewart (Beckenham) (Con)]

Surely this international law is an ass. It is clear that this man is a terrorist and he laughs at our weakness. He considers that he is at war with us—that is what he thinks. In wartime conditions, our Government can take extraordinary actions, so surely he should not come out of prison. If we cannot send him to Jordan now, he should stay in prison until we can send him there.

[Mrs May]

It was the Government’s view that he should not be given bail. We argued that vigorously before SIAC, but Justice Mitting determined that he should be given bail, on the conditions that I set out earlier.

[Mr Stewart Jackson (Peterborough) (Con)]

James Adams, a decent, gentle, law-abiding constituent of mine, was murdered by Islamist terrorists on 7/7, and my constituents will be appalled and disgusted by this judgment of the Court. Following on from the point made by my hon. Friend the Member for The Wrekin (Mark Pritchard), is it possible that the Home Secretary could consider the efficacy of doing what Sweden did and suspending our membership of the European convention on human rights?

[Mrs May]

Of course everybody in this country—everybody who wants to ensure that we can deport those who are a danger to us here in the United Kingdom—will be appalled by the decision that was taken by the Strasbourg Court. As I have said, we are doing everything we can to examine the legal options available to us. I continue to say that I believe it is right that we should be working to reform the European Court of Human Rights, and to do that we need to get the support of all of the other 46 countries involved.

[Mark Reckless (Rochester and Strood) (Con)]

We cannot currently repeal the Human Rights Act because the Liberal Democrats will not let us. However, so many Labour Members are running in the police elections that, come November—if they all win—it is possible that we may have a Conservative-Democratic Unionist party majority. Will we use it?

[Mrs May]

My hon. Friend is well aware of the position set out in our manifestos at the last election, but he is also well aware that the coalition Government have agreed that we will look at a British Bill of Rights. That work is being done by the commission and, as I said in response to an earlier question from another hon. Friend, I expect it to report by the end of the year.

[Several hon. Members]

rose—

[Mr Speaker]

Order. These hypothetical ruminations are always very enjoyable, but perhaps we can return to the subject of Abu Qatada. I know I can rely on Mr Henry Smith to do that.

[Henry Smith (Crawley) (Con)]

Is not the absurdity of the European Court of Human Rights such that Abu Qatada could even challenge his stringent bail conditions, and does that not mean that we really should be moving towards a British Bill of Rights?

[Mrs May]

As I have said in answer to a number of questions, it is right that we look at the prospect of a British Bill of Rights. That is why the Government have put in place the commission that will be reporting on that very issue later this year.

[Jason McCartney (Colne Valley) (Con)]

I joined many Members in this Chamber last year in voting to continue the ban on prisoners getting the vote. Could my right hon. Friend confirm to all my constituents, many of whom have been getting in touch with me today, what the sanctions would be if we just ignored the European Court and put national security first? If it were to be a fine, I personally would put £50 in the pot to help pay it off.

[Mrs May]

I have noted my hon. Friend’s suggestion that he could come forward with a sum of money of the sort he has described. It is right that the Government look at operating within the legal framework open to us and that we look at the legal options available, which include whether we should refer to the Grand Chamber of the Strasbourg Court. Also, on the other side, it is right that we continue the negotiations with the Jordanians. His constituents, mine and others across the country wish to see Abu Qatada deported and the Government will do what they can to see whether we can get to a position where that is possible.

[Robert Halfon (Harlow) (Con)]

Does my right hon. Friend accept that article 17 of the European convention says explicitly that human rights law should never be used to defend those aiming

“at the destruction of any of the rights and freedoms…in the Convention”

such as the activities of Abu Qatada? Article 16 makes it clear that Governments can restrict the political activity of foreign nationals in self-defence, and the Jordanian hate-preacher Abu Qatada is a clear case of that. Does she agree that it was never the intention of the framers of the European convention, which was founded to avoid a repeat of the horrors of Nazi Germany, to let the poison of Islamist terrorists go free?

[Mrs May]

I agree with my hon. Friend that the way in which the European Court operates is not how it was originally intended to operate. That is precisely why we are looking at possible reform and, as I have said, discussing with the other countries involved whether that reform would be possible in a way that enables us to be in a better position in future to deport those who are a danger to us.

[Mr Peter Bone (Wellingborough) (Con)]

We have a vicious, nasty terrorist, we have the Supreme Court, which says, “Send him home,” and we have a friendly Government. We also have a gutsy Home Secretary, who has listened to what Parliament has said today. She could become a national hero if, when she left the Chamber she picked up the phone and ordered that he be sent back to Jordan tonight.

[Mrs May]

I am always grateful for my hon. Friend’s contributions to these debates but as I have said, the right course for the Government to take at this time is to pursue negotiations with the Jordanians to see whether we can receive the assurances that would enable us to deport Abu Qatada, at the same time as looking at our legal options.

Offshore Gambling (Licensing)

Tuesday 7th February 2012 Commons Chamber

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

16:18

[Matthew Hancock (West Suffolk) (Con)]

I beg to move,

That leave be given to bring in a Bill to amend the Gambling Act 2005 to regulate remote gambling on a point of consumption basis; to require all operators selling into the British market, whether in the United Kingdom or overseas, to hold a Gambling Commission licence to enable them to undertake transactions with British consumers and to advertise in the United Kingdom; to provide that all relevant operators contribute to the Horserace Betting Levy; and for connected purposes.

I am proud to stand in the House to represent the global headquarters of horse racing. For centuries, Newmarket has been at the heart of that great sport. From the time when the merry monarch moved his court twice a year to gamble on the races, to modern times when the jobs of 5,000 of my constituents are linked to racing, the story of Newmarket has been, and remains, interwoven with the story of racehorses.

I declare an interest. I am widely supported by the racing industry, including as declared in my entry in the register, and I am an unwavering supporter of racing.

As the presence of so many Members in the Chamber shows, the issue is not just about Newmarket. Attendance at horse racing is second only to football. British racing is among the best in the world; our blood stock is the best in the world. More than 6 million people, from every walk of life, visit British race courses every year; £10 billion is placed in bets, £300 million is paid in taxes and 100,000 people are employed by the racing industry nationwide.

This great sport is under threat. Racing has suffered a devastating fall in funding. The horse-racing levy—the annual payment from betting to racing in return for the product on which so many bets are placed—has declined from more than £100 million in 2009 to less than £60 million last year. Prize money, the lifeblood of the sport, has fallen by half in two years. Even second place will no longer cover the cost of diesel to many of our smaller fixtures. The number of mares in foal is declining and more of our best stock is sent overseas for training, especially to France.

Race courses, trainers, jockeys and staff are struggling, and livelihoods are under threat, but with attendances at courses at record levels, why is there that decline? It is because since 2007, 18 of our 20 biggest bookmakers have moved offshore, so according to bookmakers’ own estimates they avoid £300 million in tax and tens of millions in contribution to the levy. As punters increasingly go online, that avoidance is set to grow. Offshore bookmakers also fall outside UK consumer protection rules and stifle competition from those who remain onshore. Smaller independent bookies lose out, as do responsible bookmakers who remain onshore, such as Bet365 and Coral. In their correspondence with me, independents despair that there is no level playing field. Why should they pay the tax and full levy when the big boys do not?

Offshore bookmakers tell me that they are only offshore because their competitors are, so I shall take them at their word. Let us have a level playing field, efficiently enforced right here in the UK. How should it be done? What is the proposed solution?

There is now broad consensus in the House and outside that the levy system is broken. It has failed to keep up with the times and it should be replaced with a commercially sensitive alternative, such as a racing right. Instead of the antagonism generated by the levy system, gambling and racing can work together to their mutual benefit. As Paul Bittar, the impressive new chief executive of the British Horseracing Authority has set out, the new system must be sustainable, able to adapt to ever-changing technology and to the rapid channel shift towards online and smartphone betting. Of course, those wider reforms must also encompass betting exchanges. After all, a bet is a bet whether one side is a company or another punter.

The basis of any commercial arrangement must be a level playing field for bookmakers—onshore paying tax. That is what the simple change in the Bill would bring about. It would not solve all the problems of the world, but it would have a big effect. It would define the location of the bet as not where the bookie is but where the punter is. Technically, gambling licences would be provided on the basis of point of consumption, not point of sale. A bookmaker who wants to market to British punters and take bets from them must be licensed by the Gambling Commission. Tax and levy would be paid. It is a simple change with a big effect. There are two concerns that I want to tackle head-on. First, some say that bringing bookies onshore would drive punters to unlicensed sites. Hold on: most sites are already offshore, outside full regulation. That, indeed, is part of the problem, so the Bill would bring the vast majority of bookmakers back onshore. Offshore bookmakers could not advertise and would face prosecution.

I am a practical man. Let us not make the best the enemy of the good. Just because we cannot do everything does not mean that we should do nothing. Indeed, the argument about leakage shows just how important it is that the onshore rule is enforced properly. I say, yes, there is concern about leakage: let us ban offshore gambling effectively. Others make the objection that the 15% tax rate is too high, and should be cut—we should use the carrot, not the stick—and I think there is merit in that argument. I am in favour of lower taxes, and no tax should be punitive. I say, yes, there is a tax rate that is fair to racing, bookmakers and the Treasury. It is not zero, and the Bill should be the first step in finding it.

British horse racing has a proud history, and a broad and passionate following. For generations, it has been the best in the world, attracting talent from around the world, and it is the envy of the world. At this moment—the moment of Frankel, Kauto Star and Her Majesty’s own Carlton House—when the glittering sport of racing is at its best, we should look to the future with optimism and hope, yet optimism there is not, because the sport’s financial currents are on a rip tide. However, there is hope. It begins with this Bill. The support of the House would give this finest of sports, the sport that we love, hope to compete in the world, hope that jobs can be saved and our heritage enhanced, and hope for a bright future. I commend the motion to the House.

16:27

[Philip Davies (Shipley) (Con)]

I should begin by declaring an interest as a racehorse owner and breeder. Despite that, I oppose the Bill introduced by my hon. Friend the Member for West Suffolk (Matthew Hancock). I do not quibble with his argument on a point-of-consumption tax on principle. My objection is that it addresses the wrong issue. In practice, the matter is far more complex and the measure is doomed to fail if it does not address the issue of tax.

As my hon. Friend knows full well as a Government insider, the Department for Culture, Media and Sport and the Treasury are already looking at the key issues. In July last year, the Government announced a proposal to regulate the remote gambling industry on a point-of-consumption basis to enhance the protection and regulation offered to UK online customers. Following that proposal, the Treasury announced its intention to review the taxation regime for remote gambling to bring it into line with the basis of regulation for the industry.

My hon. Friend is clearly a champion of the racing industry, so I am surprised by his unquestioning enthusiasm for the measure. He said that the levy had declined, which it has, but he failed to mention that bookmakers are paying more and more every year in picture rights. The combined amount of the levy and picture rights means that bookmakers are paying more than ever for their racing product, despite its being less and less of the bets that they take. A funding deal is being negotiated, and if betting firms have to pay more than they can afford, there will be a decline in their operating profits and in what they can pay to racing.

The idea that the Bill would enhance UK consumer protection is absolute nonsense. The British market is one of the most highly regulated markets in the world, and therefore one of the most protected. If we look at the white list—my hon. Friend said that businesses offshore were unregulated; they are not, as they all have to be on that list—the whole point is to ensure that the UK accepts only countries that have similarly rigorous levels of protection. If I accepted his insistence that this was a matter of regulation rather than taxation, I would regard the Bill as a solution looking for a problem, but I can tell him that it would reduce consumer protection if enacted.

A Deloitte report, “The impact of a point of consumption tax on the remote gambling industry”, published in December 2011, concluded that

“given the low returns that a significant proportion of the smaller operators currently earn, even relatively low levels of POC tax could force some of the smaller firms to exit the online gambling market.”

Therefore, a 15% point-of-consumption tax would increase the risk to punters in an otherwise well regulated and safe market, as bookmakers would be forced to exit the UK market and less compliant operators remaining outside the tax net would still target UK customers.

The Deloitte report cautions against any point-of-consumption tax, which is interesting in itself, but clearly states that a 5% tax

“would distort competition, leading to as much as 13% of UK online gambling… moving into the grey market.”

A 10% rate of tax would see 27% of gambling move into the grey market, and a 15% rate would see 40% of punters seek a competitive offering in the black and grey markets, thereby defeating the Government’s stated policy objective of increasing customer protection.

Regulating markets in the way my hon. Friend proposes is proving extremely difficult for Governments around the world. Some have tried internet blocking and some have focused on banning financial transactions to illegal sites, but they have all been spectacularly unsuccessful; that applies not only to the gambling sector, but to other sectors. Since the Italian market was subjected to a high-level tax regime, illegal gambling in Italy is now believed to be worth between €12 billion and €20 billion a year in turnover.

The US internet gambling market amounted to around $6.4 billion in 2010, including sports betting, horse racing, casinos, poker and bingo. Only around 4% of that was on horse race betting, which is licensed in the US, and the remaining 96% derived from licensed betting companies based outside the US, for example in Costa Rica. Such gambling is regarded by the US authorities as illegal, but measures to prevent it have clearly not been wholly successful. Norway’s gambling watchdog has admitted that its online payments ban has “not been a success”, as research showed that more than half of internet gamblers now play as often as they did before the prohibition, but on unregulated sites abroad.

The Government are always vocal about formulating policy based on evidence. If they are serious about that, they should practise what they preach. The Deloitte report concluded:

“International evidence from jurisdictions such as the US, France and Italy indicates that many of the regulations introduced in these markets have failed to prevent the emergence of a large unregulated sector. These examples highlight the potential for customers to switch between licensed and unlicensed sectors, and point towards some of the challenges that are involved in introducing effective measures to prevent this occurrence… enforcement is challenging, with no existing system proven to be entirely effective and some jurisdictions losing significant shares of the market to the unlicensed sector.”

Without proper enforcement to protect the market, the reality is that only those based in the UK will be caught by the tax. We would therefore be in a perverse situation in which those operators that take out British licences and become subject to our taxation would be at a significant competitive disadvantage and their businesses would suffer accordingly. We would also create an unregulated monster abroad.

The motivation behind the Bill seems to be to raise revenue. As a result, it could even be rendered illegal under EU law. That could prove a hugely costly battle, and one that I am not entirely sure the Government could be confident of winning. My guess is that that is why they want to focus on consumer protection and regulation in an attempt to get around this particularly sticky wicket, but I am afraid that it is doomed to failure. If the POC rate were in single figures, many betting companies would accept it, but the higher the rate, the higher the likelihood of legal challenge.

Interestingly, Denmark has introduced a lower rate of tax for online gambling than for offline gambling, so that is an option now open to the UK Government. However, unfortunately there seems to be little evidence that they are reviewing such a policy. I was greatly encouraged by my hon. Friend’s view that the tax should be as low as possible, because getting 5% of something is a lot better than getting 15% of nothing.

Please do not take my word for that, Mr Deputy Speaker. The Deloitte report concluded that

“a cautious approach to the introduction of a POC tax appears to be appropriate. Setting an initial tax rate below 10% would be consistent with minimising the risk of promoting a grey market”—[Interruption.]

My hon. Friend seems to dismiss the Deloitte report, but he should bear it in mind that the Treasury Minister concerned used to work for Deloitte, so she might have more faith in its work than he does.

We need to focus on why some betting companies are based abroad. The reason is the level of taxation, and the level of taxation alone, so the Bill is a blunt instrument that does not address the need for a competitive rate of gross profits tax or allow businesses to reclaim their VAT in the UK. That would be a far more sensible point from which to start the debate, and one which many in the industry would be more willing to accept.

I fully appreciate where my hon. Friend is coming from, and I do not object to his proposal on principle, but I urge him to concentrate on the benefits of a single-figure rate of point-of-consumption tax, to weigh up the possibilities of a legal challenge from a powerful consortium and, most important of all, to address the elephants in the room—the high rate of VAT and the high rate of tax—and ensure that they are part of the solution, because if they are not, my hon. Friend’s proposal, which is genuinely intended, will be doomed to fail.

Question put and agreed to.

Ordered,

That Matthew Hancock, Nicholas Soames, Mr Gerry Sutcliffe, Mr Don Foster, Sandra Osborne, Ian Swales, Miss Anne McIntosh, Brandon Lewis, George Freeman, Simon Hart, John Glen and Mr Sam Gyimah present the Bill.

Matthew Hancock accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 30 March, and to be printed (Bill 304).

Opposition Day

Tuesday 7th February 2012 Commons Chamber

[Un-allotted Half Day]

Banking (Responsibility and Reform)

Tuesday 7th February 2012 Commons Chamber

16:37

[Mr Chuka Umunna (Streatham) (Lab)]

I beg to move,

That this House notes with concern that the recent Bank of England publication, Trends in Lending, shows that net lending to businesses has fallen in nine out of the last 12 months and by more than £10 billion in the last year; further notes that a Department for Business, Innovation and Skills report published on 2 February 2012 states that the stock of lending to small and medium-sized enterprises peaked in 2009 and in November 2011 declined by 6.1 per cent. compared to November 2010, whilst banks were frequently setting bonuses for their senior executives which were too large; believes that bank executive remuneration should be related to performance and that banks either directly or indirectly supported by the taxpayer must recognise that the taxpayer expects very large bonuses only to be paid to reflect genuine exceptional performance; notes with concern that the Government has not given due consideration to repeating the bankers’ bonus tax, in addition to the bank levy, to pay for 100,000 jobs for young people; calls on the Government to increase transparency, accountability and responsibility in the setting of pay in the banking sector, including through the immediate implementation of the Walker Review on corporate governance, and the placing of an employee representative on the remuneration committees of company boards; and further calls on the Government to reform the banking sector so that it better supports businesses and provides the credit they need to create jobs and growth.

I should like to take this opportunity to tell the House that I have been informed that the Business Secretary is not able to be here today because he is at a funeral. I am sure that the whole House will want to join me in wishing him well on this sad day.

The subject of the motion, responsibility and reform in the banking sector and in the wider economy, has been a matter of immense public interest of late and is one on which many Members have already spoken out. Let us be clear—I think I speak for most Members when I say this—that in speaking out on these issues hon. Members simply reflect the strong views expressed by our constituents on the subject.

The Labour party’s starting point is this: we are proud of our financial services centre, the City of London being arguably the world’s leading financial services centre. I, my hon. Friend the Member for Leeds West (Rachel Reeves), the shadow Chief Secretary to the Treasury, who will make the Opposition’s winding-up speech, and many other Members are, I know, proud to have spent time working in the City of London before being elected to this place.

The City helps to give the country a competitive edge, thanks to the talent that we have here, our time zone, our company law, our jurisdiction and the free flow of capital in London. The financial services sector as a whole employs more than 1 million people nationally and makes up 10% of our total national income, but no witness to recent history could claim with credibility that the sector has functioned as British businesses, our economy and our society as a whole would have wanted over the past few years.

Ultimately, the fault for that lies with a minority of those working in the sector, but as the party in government through much of that period we, along with others in power throughout the world, must, and we do, accept with humility that we should have better regulated the sector, because dysfunction in the banking sector here and globally led to the financial crisis of 2008-09, to the recession that followed and to its aftermath. That recession, the gestation of which is found in the banking sector, is something for which the British people are still paying.

[Keith Vaz (Leicester East) (Lab)]

My hon. Friend will be aware that the current structures were set up following the closure of the Bank of Credit and Commerce International 20 years ago. There remain within the Treasury the confidential parts of the Bingham report. Does he think that it is time that those confidential parts were published? That would give us a better understanding of exactly what went wrong in the biggest collapse of a bank in British history.

[Mr Umunna]

I agree with my right hon. Friend. I know that that is something for which he has campaigned for a long time.

We all know the facts. From the middle of 2007, the losses sustained on securities backed by sub-prime mortgage assets led to a credit crunch. That credit crunch came about due to a loss of counterparty confidence and uncertainty about which financial institutions held toxic assets. Depressed asset prices and increased losses led to serious solvency issues in major banks here and in the United States.

In the US, Bear Stearns had to be rescued by J. P. Morgan, Lehman Brothers collapsed, and AIG was nationalised in 2008 by that well known socialist, the 43rd President of the United States, George Bush. Here, Northern Rock had already been nationalised by the Labour Government by 2008. Later that year, we put in place a £500 billion package of measures designed to recapitalise the banks. That included the special liquidity scheme and inter-bank lending guarantees. The Labour Government took stakes in two of our biggest banks so that, by the end of 2009, the Government held a stake in Lloyds of just over 40% and a stake in RBS that increased to more than 80%.

For all the criticism that is often heaped on my right hon. Friends the Members for Edinburgh South West (Mr Darling) and for Kircaldidy—sorry, for Kirkcaldy and Cowdenbeath (Mr Brown)—by Government Members, I believe that we owe a debt of gratitude to them both for the decisive action that they took to save the system from itself, to secure people’s savings and to ensure that the people we represent could continue to withdraw money from cash machines in the wall. The Opposition are proud of what they achieved.

As the Independent Commission on Banking stated:

“without the intervention of national authorities around the world—requiring taxpayers to incur significant direct costs and larger contingent liabilities—the consequences of the crisis would have been immeasurably worse.”

It is for that reason that this House has every right to take an interest in remuneration and reform in the banking sector. After all, our banks still benefit from an implicit taxpayer subsidy if they fail.

[Stephen Mosley (City of Chester) (Con)]

The Financial Services Authority blamed political pressure for the failure of RBS. Is the hon. Gentleman saying that the FSA is wrong?

[Mr Umunna]

I do not believe that that is what the report on RBS said. I did concede earlier that the Opposition accept that, in office, we should have better regulated the sector. I also think that Government Members who urged us towards a light-touch regulatory regime should accept that they, too, were mistaken.

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

Does my hon. Friend agree with me and some of my constituents who have been in touch that the one thing that is lacking in the current crisis is leadership? That was not the case a few years ago when my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) led the way.

[Mr Umunna]

I agree with my hon. Friend and thank him for correcting my pronunciation of the constituency of my right hon. Friend the Member for Kirkcaldy and Cowdenbeath.

It is worth taking our minds back to the months leading up to April 2009, when the former Prime Minister went around the world galvanising support and encouraging people to attend the summit. It is worth noting that President Obama of the United States was not planning to attend the G20 conference in London, but in the end many people came here and the conference achieved great things and helped to secure the system. That was, indeed, leadership.

[Mr Marcus Jones (Nuneaton) (Con)]

The hon. Gentleman is telling the House about the record of the previous Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown). Does he think the previous Prime Minister showed good leadership by recommending Fred Goodwin for a knighthood and giving him a £700,000 pension?

[Mr Umunna]

We have said that, if we had known then what we know now, we would not have knighted Fred Goodwin. However, I say to the hon. Gentleman that the future of the banking sector is bigger than the individuals who have featured in the headlines of late. It is important that we debate what happens in the sector as a whole rather than focusing on Fred Goodwin and other individuals, important though it is to make points about them.

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

As we are examining history—some Government Members do not like to hear accurate history—I point out that Lord Burns was the Chairman and I was the deputy Chairman of the pre-legislative Joint Committee that considered the financial services Act. I remember that very clearly indeed, because it took us many months and was the first time there had been a joint Lords-Commons pre-legislative inquiry. The context was bitter resentment from the banks, which tried to water down the Bill, and no help from the people who led the Conservative party.

[Mr Umunna]

I presume that my hon. Friend is referring to the Joint Committee that considered the Financial Services and Markets Act 2000. The consensus at the time was shown in the approach instilled in the Act, and we are now revisiting the regulation of the sector.

The crash was global in nature, and the causes cited by the Independent Commission on Banking include declining underwriting standards, the mispricing of risk, a vast expansion of banks’ balance sheets and rapid growth in securitised assets—in short, gross irresponsibility. The commission also stated in its report that one problem was that some bank employees were remunerated

“on the basis of reported profits that were neither time-adjusted nor risk-adjusted, and led to employee incentives that were not always aligned with the long-term interests of the bank.”

The US financial crisis inquiry commission established by President Obama, which reported last year, went further, stating:

“Compensation systems—designed in an environment of cheap money, intense competition, and light regulation—too often rewarded the quick deal, the short-term gain—without proper consideration of long-term consequences. Often, those systems encouraged the big bet—where the payoff on the upside could be huge and the downside limited.”

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Does my hon. Friend agree that we should not demonise one group in society, whether they be bankers or benefit claimants? This is about fairness. We know from recent evidence that fairer societies are better for everybody, improving life expectancy and increasing social mobility. We should use that evidence to inform policy that is principally about fairness.

[Mr Umunna]

I completely agree with my hon. Friend.

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

The Conservatives always tried to rewrite history when they were in opposition, but the truth is coming out now. Even Polly Toynbee, who was the biggest critic of my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), has now forgiven him and wishes he were back.

More importantly, if the man or woman in the street who goes to work every day fails in their job, they get the sack. No one but a banker would ever be rewarded for failure, but we now have a culture in this country of rewarding failure. Surely that must be wrong.

[Mr Umunna]

I agree with my hon. Friend and I shall come to that precise point shortly.

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

Will the shadow Minister confirm that at that time he was an employment lawyer and was involved in structuring the compensation packages of investment houses? Does he have any regrets about how he behaved at the time?

[Mr Umunna]

I am glad that the hon. Gentleman brought up that point, because I anticipated it. First, I think it is good that Members of this House have experience in working for business. Secondly, my experience of advising different companies and financial institutions on such arrangements has convinced me that we must reform the way in which the system works—[Interruption.] I would also say to Ministers, who are crowing, that they might wish to reflect on the fact that my ultimate boss at the time when I was more deeply involved in drafting such arrangements was the senior partner of Herbert Smith, whom the Prime Minister ennobled in the first tranche of peers at the beginning of this Parliament—no doubt because of his services to the legal profession and the City of London.

As the Leader of the Opposition said last week, we are still dealing with the aftermath of the moment to which I have referred and the recession it caused. Many thousands of people lost their jobs and now face the biggest squeeze on their living standards in a generation. Thousands of robust, profitable businesses have struggled to access finance or have gone under. At this juncture, I want to tackle head on the accusation that to raise those issues and criticise the financial services sector is to be anti-business—some have even referred to it as indiscriminate business bashing. That is an utterly absurd notion given that among the most vociferous critics of our banks are the small and medium-sized businesses that make up the overwhelming majority of businesses in this country. The people making those outlandish claims of anti-business sentiment talk as though large financial institutions are the only businesses in this country. Yes, those institutions are an important part of our business community, but there is so much more to British business than big finance. Indeed, we need to rebalance our economy not to diminish our competitive edge in financial services but to grow other sectors so that we are not so reliant on that one sector.

Businesses in other sectors are struggling right now. The most recent Bank of England trends in lending show that net lending to businesses has fallen in nine out of the past 12 months and lending has fallen by more than £10 billion in the past year. A report published by the Department for Business, Innovation and Skills last week states that the stock of lending to small and medium-sized businesses declined by 6.1% in November 2011 compared with a year earlier.

It is not just that the banks are failing to get the money out of the door to successful, profitable businesses with robust business models. There has been a move away from relationship banking, where banks saw it as their duty to get to know and understand their business customers properly. Yesterday, I met a number of successful export businesses in the home counties—businesses that help us pay our way in the world. I was told by the overwhelming majority that when it came to getting help from their banks to export and expand, their banks simply did not want to know.

Some have suggested that that is all the result of increased capital requirements on the banks, but Robert Jenkins, a member of the Bank of England’s interim Financial Policy Committee, told the Treasury Committee last month:

“Making the banks safer through greater resilience in their balance sheets and more capital does not, in and of itself, prevent additional lending.”

Despite all that, people and businesses have had to watch as billions in bonuses have been paid to bankers since 2008-09. It is worth stating that we are not talking about the sums earned by the average bank employee—the cashier, say, in a local branch—but about the enormous sums paid to investment bankers and a select few senior executives in the sector. Those bonuses have continued to be paid as a matter of course, regardless of the fact that many of the institutions, all of which directly or indirectly benefited from the interventions of the Government over the past five years and continue to benefit from an implicit subsidy, have been making thousands redundant, have seen their share prices and profits falling and have been found guilty of mis-selling payment protection insurance on a grand scale. To add insult to injury, Robert Jenkins, commenting on bank balance sheets, told the Treasury Committee:

“Every £1 billion of less bonus would support £20 billion of additional small business lending.”

It is no wonder that Sir Philip Hampton, the chair of RBS, himself said last week:

“Pay has been high for too long, particularly in the banks, particularly in the investment banks".

[Mrs Anne McGuire (Stirling) (Lab)]

Does my hon. Friend also accept that lower-paid staff in banks often took much of their bonuses in the form of shares? Not only have they lost their jobs, many have lost out in their pension savings.

[Mr Umunna]

My right hon. Friend makes a good point. We should, of course, spare a thought for the employees whom she mentions.

It matters because, as the Governor of the Bank of England said last month, people have seen an extraordinary squeeze in their living standards, but the institutions and bankers at the centre of the crisis that created those problems are not only not suffering a gigantic squeeze on their living standards but continue to get very high remuneration, in part because the taxpayer has been forced to step in and bail them out.

[Stephen Barclay (North East Cambridgeshire) (Con)]

Can the hon. Gentleman explain why, under the regulatory structure introduced by his Government, banks were able to hire staff on guaranteed bonuses totally unconnected with future performance, and why not a single individual in any of the five largest banks was subject to a fine? The two largest fines imposed on Northern Rock executives were less than the bonuses that they had received the preceding year.

[Mr Umunna]

On guaranteed bonuses, there is an element of contract in that, in terms of the arrangements between individual banks—[Interruption.] Will the hon. Gentleman listen and let me finish the point? There is an element of contract that provides for a bonus, but also an element of discretion. The fact that large bonuses were being paid out regardless of performance is, of course, what people outside Parliament object to.

[Julian Smith]

In order to create a balanced view, will the shadow business Minister confirm the tens of billions of pounds paid from those bonuses in income taxes and other taxes, such as employment taxes, during the period he is discussing?

[Mr Umunna]

Ultimately, the taxpayer had to put about £1.2 trillion into the system to support it. Juxtaposing that with the amount paid in tax by the sector, I am not sure that it comes to the same sum. I get the point that the hon. Gentleman is making. I do not deny that the financial services sector has contributed in tax receipts, but that is not outweighed by what we have had to pay out to save it from itself.

The status quo will not do. Change is essential. In November last year, Bob Diamond, chief executive of Barclays, said in his BBC “Today” business lecture that

“the single most important thing for banks and for businesses now is to focus on helping to create jobs and economic growth; and being able to do that requires us—banks in particular—to rebuild the trust that has been decimated by events of the past three years; and that rebuilding trust requires banks to be better citizens.”

I agree with Mr Diamond, but actions matter far more than words to people and businesses.

At the Business Secretary’s instigation, the Government established the Independent Commission on Banking, for which he deserves credit. If its recommendations are implemented, they will help to deliver a banking system that supports our economy’s interests in the long term. However, a number of things must happen to address the issues in the short term, not least of which is the matter of remuneration, which can be corrosive of public trust in our banks.

First, greater transparency on pay in the banking sector is needed. A good place to start would be immediate implementation of the Walker review. In 2009, Sir David Walker recommended new rules on the disclosure of bankers’ remuneration within pay bands above £1 million. In government, we legislated for that fairly modest scheme to be put in place so that irresponsible remuneration practices could be identified and rooted out. So modest were the proposals that the now Business Secretary told the House at the time that Sir David had produced

“an embarrassing mouse of a report”.—[Official Report, 30 November 2009; Vol. 501, c. 900.]

In the June 2010 Budget, the Business Secretary and his coalition partners pledged to take forward these modest proposals, but in November 2010 the Chancellor suddenly declared that he would not countenance implementation unless he could secure international agreement for the measures. In giving evidence to the Treasury Select Committee in December 2010, however, RBS’s Stephen Hester indicated that unilateral adoption of the Walker review proposals would not put the UK financial services sector at a significant disadvantage. Given the modesty of the Walker review proposals, why on earth will the Government not implement them?

Secondly, to increase accountability, we have said that an ordinary worker should be placed on the company remuneration committees setting pay. I do not understand why the Government have been so resistant to this idea. The Business Secretary has said that he is very sympathetic to the idea but has raised practical objections on the basis that there are many FTSE companies whose employees are predominantly overseas. These practical obstacles can be overcome, however, not least through technologies such as telephone and video conferencing, which in this day and age are a common feature of board meetings.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Having a worker on the board is not just about accountability. Would it not also address the fact that remuneration committees tend to comprise people much like the people whose salaries and bonuses they are assessing? It is not surprising, therefore, that they decide in favour of higher bonuses and salaries. That is another reason a different voice is needed on the committees.

[Mr Umunna]

I agree with my hon. Friend. First, an employee understands what is going on in the business—perhaps, in some respects, better than a non-executive director—and, secondly, employees have a stake in the business, and if the business fails, they ultimately pay the price, as thousands of RBS employees going through the redundancy process are now realising.

[Mr Sheerman]

I am certainly not against this sensible proposal to put employees on boards, but as I understand the Walker review and its recommendations, it does not meet the situation now. Instead of innovations, we need something so dramatic that we change the culture in our banking system and its understanding of what is right and wrong, as was mentioned earlier. The culture is what matters, but I see nothing coming from the Government that will fundamentally change the culture that motivates the people working in the sector.

[Mr Umunna]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We need shorter interventions.

[Mr Umunna]

Thank you, Mr Deputy Speaker.

I thank my hon. Friend for his contribution. The Walker review proposals are the start, not the end, of the reform needed, but my hon. Friend makes a strong point about the culture in the financial services sector. On the proposal to have an employee on the remuneration committee, would not the RBS board be in a stronger position if it could say, on matters of pay, that an employee representative had been involved in the decision making?

[Richard Fuller (Bedford) (Con)]

I am listening with great interest to the hon. Gentleman’s extended exposition on the failings of the previous Labour Government. It is nice to see him joined by so many for such an extended mea culpa. [Hon. Members: “Where’s the question?”] My question is this: does he think that the objectives of a company executive should be to maximise shareholder value for his business, to do the Government’s bidding or to do the bidding of a broader range of interests?

[Mr Umunna]

The hon. Gentleman asks a good question. Ultimately, of course, a director’s duty is to shareholders, but I take issue with those who suggest that the Labour Government did not introduce reforms, because we did introduce reforms, one of which was the Companies Act 2006, which changed the nature of company law so that other stakeholder interests could be accounted for. In some respects, though, shareholder interests are not necessarily completely separate from those of wider society. My strong view is that business and society are mutually dependent, and that goes for our banks as well. Banks rely on society to provide talent, skills and custom, and we rely on banks not only to perform a social utility function for individuals and businesses, but to provide growth and jobs. How does that relate to the hon. Gentleman’s point about shareholder value? If a bank fails its customers—as happened, for example, in the payment protection insurance scandal—that has a knock-on impact on reputation, which can ultimately have a knock-on impact on profit, which is against the shareholder interest.

[Richard Fuller]

rose—

[Mr Umunna]

I will move on, so that I can finish and others can get in.

What else needs to happen? The banks are accountable to their shareholders, and the Government have told shareholders to be more active. A starting point should be for the Government to practise what they preach in relation to their shareholdings in the publicly owned banks, particularly in the setting of pay and bonuses. It seems that their default position at the moment is that they do not want to get involved unless forced to do so. That has to change. More responsibility is needed. The public rightly expect the culture of excessive bonuses to stop. That means that bank executive remuneration that is described as performance-related should be just that: related to performance. Very large bonuses should be paid only to reflect genuinely exceptional performance, if trust in the system is to be maintained. The public expect the same of other organisations enjoying taxpayer subsidies. Network Rail—part of an industry backed by a £4 billion taxpayer subsidy—is a good example. It was planning to push through a new bonus scheme under which senior managers were due to receive 60% of their salaries as a bonus every year, and a further 500% at the end of each five-year funding period. That kind of bonus culture is unacceptable to people and difficult to fathom. Again, the Government did little to stop that, but in the end the Network Rail board saw sense.

[Mark Lazarowicz]

My hon. Friend is being generous in giving way. When bonuses are paid for performance, is it not also important that they should be paid for performance that is related to the activities of the people receiving them? They should not be bonuses that could depend on factors that have nothing to do with the activities of the directors concerned, as would have been the case with Network Rail.

[Mr Umunna]

I completely agree with the point my hon. Friend makes.

[Gordon Birtwistle (Burnley) (LD)]

rose—

[Mr Umunna]

I will move on.

Given that market mechanisms since the crash have not operated to rein in excessive pay in the banking sector, the bank bonus tax, we have argued, should be repeated, on top of the bank levy, in recognition of the fact that the banking sector owes a responsibility to society in general. If the claim that we are all in it together is to mean anything, the reintroduction of that tax is a must. It would create 100,000 youth jobs and 25,000 affordable homes. It would do immeasurable good to the reputation of the sector and support jobs, growth and business in the UK economy.

[Mr David Ruffley (Bury St Edmunds) (Con)]

I agree with some of the things that the hon. Gentleman has said, but the last Labour Chancellor said that

“it will be a one-off thing because, frankly, the very people you are after here are very good at getting out of these things”.

Those were the words of the right hon. Member for Edinburgh South West (Mr Darling) in autumn 2010. What has changed since?

[Mr Umunna]

I would say to the hon. Gentleman that they were not that good at getting out of it, because the bank bonus tax was expected to raise about £500 million, but in the end it raised £3.5 billion, which is a sizeable sum.

[Jack Dromey (Birmingham, Erdington) (Lab)]

With house building down, homelessness up and nearly 2 million people on waiting lists for council housing, does my hon. Friend agree with the unemployed building worker in Erdington who said to me that the time has come to tax the bankers, build homes, put people such as him back to work, and create apprenticeships and hope for our young people?

[Mr Umunna]

I agree with my hon. Friend, and that is why we are arguing for the reintroduction of the bank bonus tax, as part of Labour’s five-point plan for growth and jobs.

[David Mowat (Warrington South) (Con)]

Will the hon. Gentleman give way?

[Mr Umunna]

I want to make a little more progress.

We need a more diverse and competitive banking system that is rooted in our communities and that better serves the financing needs of our businesses, as the Federation of Small Businesses and other organisations have argued. We need better developed equity finance, too, which is why we are exploring the possibility of creating in the UK something akin to the US Government’s small business investment company programme. That programme financed the likes of Apple and Intel in their early stages. We are also considering plans to set up a British investment bank that could step in if the market failed to provide for our entrepreneurs.

[Mark Field (Cities of London and Westminster) (Con)]

We all appreciate that this banking crisis has gone on considerably longer than we envisaged. In 2008, we probably all thought that we would have divested ourselves of our huge stake in RBS and Lloyds Banking Group by now. I therefore fully support the idea of a structure for bonuses that would come into play only when we have divested ourselves of our stake in those two banks. However, I get the impression from all that the hon. Gentleman has said that he draws no distinction between those two banks, in which we have large holdings, and the rest of the banking sector. Am I correct in that assumption?

[Mr Umunna]

No; partly because, whether we like it or not, the way in which the public regard RBS and Lloyds is different from the way in which they regard, say, Barclays or other banking groups, simply because of the public stake in them. That is the issue that crept up on members of the RBS board over the past couple of weeks. For all that was said about the terms on which the different executives and employees were joining RBS, they were essentially joining an institution that the public have very much come to regard as a public entity.

[Mark Field]

Is the hon. Gentleman therefore working towards putting in place a policy that would be more onerous for RBS and Lloyds Banking Group, in which the public have a large stake, than for the rest of the banking system? Does he feel that that would be a sensible way to go forward?

[Mr Umunna]

That is not actually what we are arguing for. We have said, given that the Government have been lecturing shareholders on being more active in relation to their shareholdings, that the Government should of course take a more active approach to those banks in which we have a stake. As has been pointed out, however, the sector as a whole needs a change in its culture; that applies across the board.

Right now, we need the Government to make good on their promise to implement credit easing, to relieve the credit squeeze on businesses. That plan was announced to great fanfare more than four months ago, but nothing has happened. I am glad that the Financial Secretary to the Treasury, the hon. Member for Fareham (Mr Hoban) will be responding to this debate. Perhaps he can tell us what has become of the scheme. The lack of speed with which the Government have proceeded with it is in marked contrast to the actions of the German and US Governments, for example. In Germany, KFW doubled the amount of small business finance available very quickly over the past couple of years through its lending programmes.

Some people suggest that if we do all these things, wealthy bankers will simply move abroad. We are for ever being held to ransom by that threat. It is notable, however, that many of those who put that argument benefit from the status quo. They have been making the argument for a number of years, but they are still here. They tend to ignore the fact that it is the banks’ shareholders—not just politicians and society at large—who are calling for reform. Shareholders such as Jupiter, F&C Asset Management and Legal & General have all reportedly told the banks to be sensitive to the popular mood, and to moderate pay rises to match sharp falls in shareholder returns. The Association of British Insurers is reportedly meeting all the banks at the moment, including Barclays. Those people also ignore the fact that bankers and executives in other countries are being required to change their ways. For example, our banks’ US rivals are cutting bonuses by up to 30% at the moment.

[Mr David Hamilton (Midlothian) (Lab)]

Where would those chief executives go? In Europe, they would get a lot less, and in America some chief executives have gone to court and even to prison. Perhaps they want to stay where they are because they feel safe here.

[Mr Umunna]

I am sure that many of those executives are watching the debate, and that they will pay attention to what my hon. Friend has said.

I will finish by returning to where I started. We are proud of our financial sector; it is an asset. We need it to help create the jobs and growth that are so lacking at present. All we ask is that it better serve the real economy in this endeavour—and that it does so more responsibly. With that in mind, I urge all Members to support our motion.

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

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Before I call the Minister, let me say that we are going to introduce a time limit of eight minutes for Back Benchers.

17:15

[Mr Hoban]

May I thank the hon. Member for Streatham (Mr Umunna) for his remarks about my right hon. Friend the Secretary of State for Business, Innovation and Skills? I am sure that the whole House will identify with them.

I welcome the opportunity to debate business lending and the reform of the British banking system. As hon. Members are well aware, we face extremely tough economic circumstances as we weather the ongoing crisis in the eurozone and fix the underlying damage that the previous Government inflicted on the economy.

The UK banking sector in particular faces a long and difficult road to repair, unwinding the irresponsible and unsustainable excesses of the previous decade. In the aftermath of the worst financial crisis in almost a century, bank balance sheets are shrinking under market and regulatory pressure. It is absolutely right that we ensure that our banks build their capital and liquidity reserves in these turbulent times. It was because of that action that all our banks passed the European Banking Authority stress tests.

It is stability that we are safeguarding for the long term by discarding the shadow Chancellor’s discredited tripartite system and implementing the recommendations of the Vickers committee. It is this Government who are ensuring that we build a stable financial sector with the capacity and the market confidence to provide sustainable lending to our most innovative, ambitious and entrepreneurial private sector firms.

[Sheila Gilmore (Edinburgh East) (Lab)]

Given that the Minister feels that the industry is more stable, is he concerned to hear the chief executive of the National Australia bank, which owns the Clydesdale and Yorkshire banks, say today that the bank might have to consider selling, or at least restructuring, the business—partly because the UK Government’s austerity programme has contributed to the harsh business environment, which is why the bank is carrying out a review?

[Mr Hoban]

The reason we have to have the austerity programme in place is to tackle the mess left by the Labour party when it was in government.

As I was saying, we are seeking to reform the sector to ensure that it can lend to businesses in the long term, but we have also taken decisive action to stimulate credit in the short term. That is why the Government secured an agreement with the UK’s largest banks to provide £190 billion of new lending to business in 2011. By the third quarter of last year, those banks had loaned more than £157 billion to UK businesses, which is 11% above their implied target. That includes £56 billion of lending to small and medium-sized enterprises—10% higher than at the same point in 2010.

I noted that during the rather long speech of the shadow Business Secretary, he talked about lending but put forward no ideas about how Labour would tackle it, yet we in government have taken action to get the banks lending to businesses and to make sure that there is a supply of creditors to SMEs.

[Mr Umunna]

rose—

[Mr Hoban]

I have clearly provoked the hon. Gentleman, so I shall give way.

[Mr Umunna]

I am grateful to the Minister for giving way. I have to say that many of the organisations that represent our SMEs will listen with incredulity to the Minister’s suggestion that credit conditions are somehow all fine and that all is well. The fact is that, according to the Bank of England’s latest figures, we have seen a net contraction in lending to SMEs in nine of the last 12 months. It is clearly still a problem. In fairness, the Government announced that they were going to provide some credit easing—admittedly when the Chancellor said so in his speech to the Conservative party conference, although I never quite understood what he was talking about—but so far we have seen absolutely no action. When will this credit easing system come into effect?

[Mr Hoban]

I had hoped that the hon. Gentleman would come up with some ideas, yet he took a rather lengthy intervention to demonstrate that Labour has no ideas about what to do. Let me set out some of the structural measures we are taking to tackle the supply of debt and equity finance to businesses, and SMEs in particular. We are continuing the enterprise capital funds, and we are simplifying and refocusing the venture capital trusts and enterprise investment scheme to encourage more equity investment in start-ups.

[Margot James (Stourbridge) (Con)]

The issue of lending to small and medium-sized businesses is much more complex than the hon. Member for Streatham (Mr Umunna) suggested. Some months ago I spent a day at Barclays SME sector lending centre in Birmingham. It is clear that many small businesses are focusing on paying down their existing debts, building up reserves, and using their existing overdraft facilities at around the 50% mark. Does my hon. Friend not agree that that is one of the causes of the problem?

[Mr Hoban]

Indeed. My hon. Friend has made an important point which should be noted by the Opposition. Net lending takes into account not just banks’ gross lending but decisions that businesses make to pay down their debt, and that is what we are seeing. We are seeing businesses deleverage in the same way as banks are deleveraging. I do not know whether the Labour party believes that banks should stop businesses paying down their debt in order to force up the net lending figures.

[Derek Twigg (Halton) (Lab)]

rose—

[Mr Hoban]

I have already been generous in giving way, and I will be generous again in a minute.

We will implement a new seed enterprise investment scheme to encourage investment in early-stage companies, with income tax relief and a capital gains tax holiday to kick-start the programme. We will ensure that our adventurous and ambitious small enterprises receive the support that they need to become the next world leaders.

[Derek Twigg]

rose—

[Chris Williamson (Derby North) (Lab)]

rose—

[Mr Hoban]

Will hon. Members calm down for a minute, and allow me to deal with the point about credit easing?

I think that bank credit will remain the principal source of finance for businesses throughout the United Kingdom. That is why in our autumn statement we went further to ensure access to finance. Last year the Chancellor of the Exchequer announced two bold new credit-easing measures to provide up to £21 billion of new lending for UK businesses. Through the national loan guarantee scheme, we are allowing participating banks to raise up to £20 billion of funding with Government guarantees, lowering their cost of funding and enabling them to reduce lending rates to business by as much as 1%.

[Derek Twigg]

An increasing number of subcontractors in my constituency, especially in the construction industry, are having short-term cash problems, either because their contractors have gone out of business or because the contractors are deliberately not paying the subcontractors. However, when the subcontractors go to the banks for help, the banks say “We are not going to help you.” As a result, subcontracting businesses are going bust and people are being thrown out of work, although it would be possible for the banks to provide finance in the short term.

[Mr Hoban]

The hon. Gentleman should tell the businesses in his constituency to use the appeals mechanism that was introduced to enable businesses to challenge decisions by banks and ensure that they are reviewed. Since the introduction of that scheme, 40% of bank managers’ decisions have been overturned through the appeals process.

[Mr George Mudie (Leeds East) (Lab)]

When the Governor of the Bank of England appeared before the Treasury Select Committee, he deplored the banks’ refusal to meet the Merlin targets. Furthermore, he said that the Government had chosen the wrong targets, which allowed the banks to hide the fact that they were not lending properly to small businesses. Was he misleading the Committee?

[Mr Hoban]

I gave the hon. Gentleman the figures earlier. As I said, by the third quarter of last year banks had exceeded their Merlin targets for lending to businesses as a whole, and were about 10% ahead of their lending to SMEs in comparison with the same point last year.

Let me say a little more about the credit-easing measures that we are introducing. There will be a £1 billion business finance partnership to co-invest in funds that can lend directly to middle-sized businesses and further stimulate non-bank lending channels for SMEs. Those schemes capitalise on the Government’s commitment to tackling the deficit that the last Government left behind. Unlike the Opposition, we are determined to safeguard our economic stability and protect our credibility in the world market—credibility which has secured our triple A rating and kept our interest rates at record low levels, and which allows us to pursue innovative credit-easing measures to reduce costs for businesses and ensure that more money goes where it is needed.

[Richard Fuller]

In referring to the “non-bank” ways in which credit easing could be used, my hon. Friend has identified one of the best ways of establishing responsibility and reform in our banks: through the creation of powerful alternative mechanisms enabling our small and medium-sized businesses to raise finance.

[Mr Hoban]

My hon. Friend makes a very important point. For too long businesses have been dependent on banks for their finance. We need to broaden the range of sources of finance that is available to business. This model works well elsewhere in the world. There has clearly been a market failure here, and our business finance partnership is aimed at tackling that failure. There are people out there who are willing to bring forward ideas to enable more investment to go into small and medium-sized businesses.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

While we think about how to address these problems and encourage alternative forms of finance in the future, what will we do about the small businesses that are going bust now because they are not getting access to finance and do not have the time to go through what is a bureaucratic appeals process?

[Mr Hoban]

The challenge is to ensure that banks are ready to lend and have the resources to do so. Project Merlin has delivered that. It is a more ambitious programme of ensuring the flow of credit to the economy than the previous Government tried or the current Opposition have even thought about.

The credit easing schemes we have proposed are supported by businesses throughout the country, as well as by the CBI, the British Chambers of Commerce and the Federation of Small Businesses. These schemes, coupled with our reforms to the financial sector, will ensure that the UK banking sector continues to provide the fuel for a private sector recovery.

After the excesses of the last decade, it is clear that we can build a sustainable financial sector and a sound economy only by reforming the regulation and structure of banks. Yesterday the House held the Second Reading debate on the Financial Services Bill, at which the shadow Chancellor, the right hon. Member for Morley and Outwood (Ed Balls), found himself in the awkward position of being forced to defend the failed tripartite system of regulation that he designed. He did not strike the same contrite note that the shadow Business Secretary has struck today. The Bill debated last night abandons the dysfunctional tripartite system and returns micro and macro-prudential regulation to the Bank of England, making the Bank the single point of accountability for financial stability. It also creates a new and strong conduct regulator to promote competition and protect consumers. Through these changes, along with the Basel reforms, living wills and new resolution regimes, and the reforms to the structure of banking from the Vickers report, we are remedying what the Chancellor called

“the biggest failure of economic management and banking regulation in our country’s history.”—[Official Report, 6 February 2012; Vol. 540, c. 43.]

That failure was, of course, presided over by the Labour party.

We need to build a foundation for the sustainable flow of lending to households and businesses across the country, and we must take a lead in building a financial sector that is based on the principles of responsibility, prudence and sustainability. In fulfilling that commitment, we must act on bank remuneration in order to tackle excessive and irresponsible levels of pay.

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

Yesterday, Ernst and Young said UK bank lending will shrink for the first time since 2009. It has predicted lending will shrink by 2.2%, with further shrinkage in 2013. Given that, does the Minister think Project Merlin has been a resounding success, or will he choose not to continue with it next year?

[Mr Hoban]

Project Merlin set lending targets for banks. At the point of the third quarter, the targets for lending to all business had been achieved and those for lending to small and medium-sized enterprises had just been missed. Project Merlin therefore has certainly achieved in respect of its goal of getting credit flowing to the economy. I agree that businesses face challenges in borrowing money. They need to have a viable plan, and we need to work more closely with businesses to ensure that the support is in place to enable them to make successful applications for bank funding.

[Mark Field]

We have a very large holding in RBS and we clearly will not be divesting ourselves of much of that holding for probably the next 10 years or so. What thought has the Minister given to using RBS, with its expertise and huge distribution network, as a mechanism for credit easing? I am sure that all Members hear from business people that these problems are not going to be solved unless we ensure that our SMEs have access to the capital that they so desperately need.

[Mr Hoban]

The national loan guarantee scheme will be open to all banks, including RBS, Lloyds, Barclays and HSBC, and we are currently taking that work forward.

Under the last Government, we witnessed the growth of the bonus culture, where bonuses could be paid in cash, in one year, and were never clawed back in the event of failure. We are changing that culture. Bonuses under the Financial Services Authority code are paid out over at least three years, in shares, not just cash, and failure can be punished by clawing back bonuses, and at both RBS and Lloyds cash bonuses will again be limited to £2,000.

[Chris Williamson]

Will the Minister give way?

[Mr Hoban]

Let me make some more progress.

Through the disclosure regime, we have provided more transparency than ever before, revealing the executive pay of the five highest-earning non-board executives for the Project Merlin banks last year. We are consulting this year on extending the requirement to cover eight executives at all banks operating in the UK, and UK banks now also have to disclose the aggregate pay of all their key risk-takers. These are some of the toughest rules in the world. It is because of our pressure and our leadership that the Commission’s capital requirements directive—CRD IV—contains proposals for additional regulations on remuneration disclosure which closely follow the recommendations of the Walker report.

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

The Minister points out that the so-called “cash bonus system” emerged under the previous Government. Perhaps he can remind me, but I do not recall many Opposition day debates promoted by his party against the bonus culture. Did he personally, as a member of the shadow Treasury team at the time, mount any kind of opposition to or campaign against that bonus culture?

[Mr Hoban]

Clearly we had more power in opposition than we thought; we seem to be being blamed for the bonus culture and what was happening in the banks. As the hon. Gentleman will recognise, we have seen a bonus culture develop in this country and action needs to be taken. It is a bit rich for Labour Members to be criticising us, given that they were in government for the past 13 years and had the power to do something about the situation.

[Chris Williamson]

rose—

[Mr Hoban]

I will give way to the hon. Gentleman, as I do not want him to feel missed out.

[Chris Williamson]

I am grateful to the Minister for giving way, at about the 35th time of asking. Will he now accept that it would be appropriate to repeat the bankers’ bonus tax and create 100,000 new jobs and 25,000 affordable homes, and give a boost to the construction industry, which is on its knees as a result of his Government’s policies?

[Mr Hoban]

I was going to discuss the bank payroll tax a little later, but let the hon. Gentleman just ponder for a while why the person who introduced that tax, the former Chancellor, described it as a “one-off” and something that was not workable because it did not change the behaviour. What we have done is introduce the bank levy, which the Labour party opposed when it was in government, and every year that is raising £2.5 billion more than the bank payroll tax raised in a single year. That is the product of well-thought-through taxation policy. We have gone ahead and imposed that bank levy, but the Labour party, when in government, opposed it.

Let me discuss the interaction of bank bonuses and capital. We agree with the interim Financial Policy Committee that capital levels, not bonus payments, have to be the priority. Banks must strengthen their balance sheets as a foundation for lending to families and businesses. That is why the FSA is rigorously scrutinising bank distribution plans, and it will not approve plans unless they are consistent with required capital levels, ensuring that banks maintain the capital they need in order to finance businesses. It is because of our leadership that bonus levels have already started to fall. According to the Centre for Economics and Business Research, City bonuses tripled under Labour, and when the shadow Chancellor was Minister for the City they were £11.6 billion. At the time, the shadow Business Secretary was carefully drafting the contracts to ensure that people could earn those bonuses. Last year, bonuses were almost half that figure, at £6.7 billion, and we fully expect them to fall further this time. Thanks to the action we have taken, bonus pools have come down and Labour’s cash bonus culture has been ended.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

The Minister may be aware that the number of bank branch closures is beginning to rise again, as is the number of branches with restricted opening hours. Will he tell the House what decisive action he has taken to reverse those trends?

[Mr Hoban]

The hon. Gentleman needs to reflect on what is happening in banking. I think his hon. Friend the hon. Member for Edinburgh East (Sheila Gilmore) even got as far, in last night’s debate on the Financial Services Bill, as suggesting that people should not use online banking so as to keep bank branches open. People are changing the way that they access banking and are thinking about whether they need to go into bank branches. We need to ensure that branches are there to meet needs where that is commercially viable, but there is no free lunch here. If the cost of maintaining branch networks continues to rise and insufficient numbers of people use them, the cost will be passed on to the customers who use the branches. The hon. Gentleman needs to think quite carefully about how many additional costs he wants to impose on bank customers in order to keep branch networks viable in that way.

[Anas Sarwar (Glasgow Central) (Lab)]

Is the Minister aware of today’s announcement by the Clydesdale bank about its restructuring programme, which it says is taking place as a result of the UK Government’s austerity Budget, which is causing difficulties for the bank and a difficult economic climate? It employs 2,000 people in my constituency. There are real concerns about job losses in Glasgow and about the closure of branches of that bank, which was going about its business in a meaningful way.

[Mr Hoban]

If the hon. Gentleman had been here a little earlier, he would have heard my reply to his hon. Friend the hon. Member for Edinburgh East, who asked about exactly the same problem. The reality is that there are issues facing banks in the UK, and Clydesdale needs to reflect that. The hon. Member for Edinburgh East also raised the issue of the austerity programme, but that is in place to tackle the problems the Labour Government left behind.

On corporate governance, the previous Government failed to tackle the bonus culture and failed fundamentally to reform corporate governance. The Business Secretary has announced a package of measures to tackle the disconnect between top pay and company performance. Shareholders need the information and powers to hold boards to account on pay. We will give them that and we expect them to use those powers. The Institute of Directors, the National Association of Pension Funds, the CBI and the Association of British Insurers all support the Government’s ambitions. As Otto Thoresen, the director general of the ABI, said when he wrote to bank chairmen last December,

“it can no longer be business as usual for this remuneration round”.

Across the board there is consensus that we need to tackle excessive pay and this Government are answering that, but it is not an easy task. Across the economy, and especially in the banking sector, the previous Government allowed an unjustifiable sense of bonus entitlement to grow, whether in the public or private sector. Under them, a bonus became a right, not a reward, and simply par for the course. After 13 years of Labour Government, we now have a substantial challenge ahead—dismantling the culture of excessive pay in the banking sector. We have already gone some way towards dismantling that culture, but we still have a long way to go.

[Mr Umunna]

Will the Minister at least concede that this issue and the kind of perverse incentive structures we have heard about, with rewards for failure and excessive pay in the boardroom and the City, have grown over the past three decades under different Governments of different colours? Will he have the humility to accept that?

[Mr Hoban]

The culture of bonuses did change under the previous Government. There was a tripling of bank bonuses between 2001 and the peak of the financial crisis. That is what we saw happening.

[Mr Gordon Marsden (Blackpool South) (Lab)]

What were you saying about it at the time?

[Mr Hoban]

Well, one thing is for certain: I was not designing the contracts that gave the big payouts.

It is time that the banking sector demonstrated leadership, and the coming bonus round is another chance for it to demonstrate leadership on pay. As we empower shareholders to drive remuneration policy, the banking sector has to be at the vanguard of the debate on responsible executive pay.

[Mark Field]

The Minister is being admirably forward-looking in his speech by trying to present where we should go for the future rather than focusing too much on some of the battles of the past. One of the biggest concerns in this area is about institutional shareholders who have large stakes in FTSE 250 companies and in our banks. How are we going to embolden them to use the notional power they have as shareholders? Many of them have 5%, 6% or 7% shareholdings and could do something. What is going to ensure that there is a culture of change such that they become shareholder activists rather than shareholders who sit on their hands and their dividends year on year?

[Mr Hoban]

My hon. Friend raises an important point. The reforms outlined by my right hon. Friend the Business Secretary ensure that shareholders have the information they need to act. We are also giving them the power to vote and their votes will have a binding impact on future pay plans. The pervading culture today and the sense of concern in the wider economy mean that institutional shareholders need to play their part by looking after the interests of the people who invest in their funds—the people whose pensions are dependent on good returns from their investments. Those shareholders owe an obligation to their customers to exercise their rights to determine the pay policies of boards. We need to focus on that in coming years. My predecessor, Lord Myners, talked about it a great deal. Our reforms have provided the tools and we must ensure that we use them to hold institutional shareholders to account.

[Mr Mudie]

The problem for the public is that the Minister can lecture private shareholders in private banks to use their power to limit bonuses in their banks, but Ministers, who are the owners of RBS, have not intervened and used shareholder power to get good behaviour in the bank they own. Why?

[Mr Hoban]

We have been very clear as shareholders that we expect RBS to act as the back marker on bonuses. We have been keen to ensure that it restricts cash payments to only £2,000 a year. It is not just the Government who agree with that view. In an article about RBS, the right hon. Member for Edinburgh South West (Mr Darling) pointed out that the Government should not run RBS; they should not get involved in the day-to-day business of banks but should run them at arm’s length. That was a structure set up by the previous Government and I understand that the Leader of the Opposition supported it. [Interruption.] The shadow Business Secretary says that we should change it, but he should speak to his leader. The right hon. Member for Doncaster North (Edward Miliband) clearly endorses the structures set up by the previous Government. They should sort out their internal differences—it is not as though they are brothers.

I have spoken for quite some time and others want to speak, so I shall conclude. This Government have secured the stability of our economy by tackling the dreadful deficit left behind by our predecessors. This Government have secured the stability of our financial sector with tough regulatory reforms. This Government are supporting our entrepreneurs in rebalancing our economy, away from the unsustainable and wasteful spending under the previous Government. We are securing stable interest rates through our commitment to tackle the deficit. We are reducing the bureaucratic burden on businesses by slashing red tape and overhauling planning. We are unleashing private sector ambitions by cutting corporation tax to the lowest rate in the G7 and the fifth lowest rate in the G20. We are ensuring that our most ambitious and dynamic businesses have the finance they need to lead recovery in every part of our economy and our country.

[Several hon. Members]

rose—

[Mr Speaker]

Order. The House will be aware of the level of interest, and therefore the imposition of an eight-minute limit on Back-Bench speeches.

17:43

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

Obviously, I support the motion. The manner in which my hon. Friend the Member for Streatham (Mr Umunna) introduced it reflected the widespread concern among the public about the issues it encompasses. He gave a proportionate and balanced view of what has happened over the past few years and gave us an insight into how we have arrived where we are now.

I support my hon. Friend in saying that the Labour Government did not get it all right, and as a supporter of that Government I take my share of the responsibility. It will be interesting to read speeches made by some Government Members in debates before the 2008 recession. They advocated less regulation, not more. Indeed, the only person I can remember continually warning us about the consequences of the banking system was the current Secretary of State for Business, Innovation and Skills. In opposition, as a Lib Dem spokesman, he repeated the warnings so often and so apocalyptically that he became known as the Member for doom and gloom. I can assure Members that now that he is in a position to do something about it, the Select Committee on Business, Innovation and Skills will interview him to see whether, in government, he lives up to the statements that he made in opposition.

[Stephen Williams (Bristol West) (LD)]

I thank the hon. Gentleman for giving way and for remembering accurately that my right hon. Friend the Member for Twickenham (Vince Cable) warned repeatedly, in the run-up to the crash, that we were heading for a crash. Does the hon. Gentleman recall—I am sure that he did not do this—that many Labour Members used to jeer my right hon. Friend, saying that he was indeed a doom-monger and that he was wrong?

[Mr Bailey]

I acknowledge that, shall we say, continued repetition on that theme earned the right hon. Gentleman a certain notoriety among Government Back Benchers of the time. Most people would look back and say, “Yes, there was some truth in what he said,” but they would also say, “Let’s see if he lives up to what he said.” That is what my Committee and I will seek to find out.

The situation is profoundly worrying and contravenes the sense of fairness in this country. To most people in the street, there is something perverse about a system that punishes people on low and medium incomes for something for which they were not responsible, yet those who were responsible are rewarded. Even worse, that sense of injustice is compounded when the taxes of people on low and medium incomes finance that reward. It not only offends a deep sense of fairness but, it could be argued, it is socially and economically dysfunctional. That is the context of the debate.

[Mark Lazarowicz]

Does my hon. Friend agree that among those who have the right to be most angry at what happened are the many thousands of people who work for banks, such as many individuals in my constituency, who are not on higher pay and do not receive massive bonuses, but who keep the banks going by working in offices, branches and so on? They are the real victims of this saga, more so than anyone else.

[Mr Bailey]

I agree. Lower-paid bank employees, of whom I was once one many years ago, have suffered collateral damage as a result of the antics of those who were their superiors and managers. If we are to debate the matter in the round, we must make that distinction.

[Mr Adam Holloway (Gravesham) (Con)]

Will the hon. Gentleman give way?

[Mr Bailey]

No, I have given way twice, and there is a time limit on speeches.

There is a disconnect between wealth creation and money making in our society, which is offensive to our sense of fairness and bad for the economy as well. The business context can be demonstrated in a number of ways, one of which came home to me when I visited Rolls-Royce in Derby, and spoke to a bright, young girl at the company who was an Oxbridge engineering graduate. She told me that of her Oxbridge cohort she was the only one to go into engineering with an engineering degree: other engineers went into banking. Given the debate about the importance of manufacturing, engineering excellence and rebalancing the economy, to my mind, that demonstrates an important issue: we will not rebalance the economy unless we rebalance the rewards for working in different sectors. We cannot achieve one without the other.

Another factor is the relationship between banks and industry. It is fair to say that the German economy has survived better than those of other European countries, and one of the reasons for that—I accept that it is not the whole picture—is the relationship between banks and industry, which historically have worked together on a much longer-term basis. German SMEs are not totally immune to the problems facing their British counterparts, but they are not nearly as great. The Minister set out the situation with Project Merlin and gave a litany of schemes that have been put in place to help small businesses, but the fact is that lending is falling. Probably every Member has an example of an SME in their constituency coming to them and saying, “If only we could get a grant or get the bank to help, we could invest this or buy that, and we would be able to employ more people and expand, and that could get us out of recession.” The fact is that there is a dysfunctionality in our banking system’s relationship with industry that is grossly impeding our ability to create jobs and grow our way out of recession.

My hon. Friend the Member for Streatham (Mr Umunna) quoted Robert Jenkins, a member of the Bank of England’s Financial Policy Committee, when he made the point that £1 billion less in bonuses could provide £20 billion for SMEs. Banks must factor in risk when lending to businesses, but that £1 billion, if diverted, would be written off their balance sheets anyway. Why not look at some scheme whereby money that might have been allocated for bonuses is diverted, either through taxation or another scheme, to lending for small businesses? That could make a huge difference to the capacity of small businesses to play a full role in growing us out of recession.

Alternatively, we must look at tax. The bankers bonus tax would provide the basis for stimulating the economy. A high proportion of small businesses say they are not applying for loans because they are so lacking in confidence about their future prospects and current levels of consumer spending, and that is a barrier. Getting 100,000 more people into work as a result of that stimulus would help to overcome the problem.

I will conclude my remarks by acknowledging—one or two Members have mentioned this, quite validly—that our financial services industry in itself is hugely important to our economy, so we must be careful to ensure that any measures are proportionate and will not have unintended consequences that could damage the industry. However, there is no doubt whatsoever that the industry is not serving our wider economy or society as well as it could do. The sorts of measures that the Opposition propose would go a considerable way towards changing that.

We have a window of opportunity, with public opinion behind us and all the economic and social statistics demonstrating the validity of the case for taking action. The Government should lead on this, but at the moment they seem to be finding excuses for not doing so. If they would only apply to this matter the same resolution and commitment they have shown on welfare reform and other areas, we could have a change that would transform the economy and generate that sense of fairness in this country.

17:54

[Stephen Williams (Bristol West) (LD)]

Here we are again in another Opposition-day debate centred on the economy, banks and bonuses. The handwritten notes I prepared earlier this afternoon read, “And yet again we hear no contrition from the Labour Front Bench.” However, as this is a debate and we have to respond to it, I will at least acknowledge that there was some contrition from the hon. Member for Streatham (Mr Umunna). I guess it must be easier for him, and indeed for his Front-Bench colleagues, who were all elected in 2010, to wash their hands of the last Labour Government’s decisions and offer at least some apology for what their predecessors did in office. However, it would be good to hear a collective apology from the Opposition, including those Members who were here in the previous Parliament, for the ineffective regulation and supervision of the banking industry, which was a major factor in the collapse of the banks and the economic failure and contraction that happened four years ago.

[Chris Williamson]

On the point about contrition, will the hon. Gentleman not also call on Government Front Benchers to apologise for calling for less regulation prior to the banking crash in 2008? While on the subject, what about having some contrition from him about tuition fees?

[Stephen Williams]

I am responsible for my party’s statements and, indeed, my party’s mistakes in certain instances but, as I said in my intervention on the hon. Member for West Bromwich West (Mr Bailey), in the previous Parliament, my right hon. Friend the Member for Twickenham (Vince Cable) warned consistently about the coming economic catastrophe. The hon. Gentleman was not here at the time, but I think that he would have been ashamed to hear the jeering and cat-calling that my right hon. Friend had to put up with at the time.

It was the culture, not just the lax regulation, that led to some of the problems we have experienced in recent years. During the last decade of the Labour Government, executive pay rose on average by 13.6% per annum, while the FTSE share index rose by just 1.7% a year. In 2002-03, the bankers bonus pool, which is at the centre of the motion, totalled £3.3 billion. In 2006-07, the year before the crash and everything starting to go wrong, the pool was £11.4 billion. In the year of the crash itself, when all the bankers were staring into the abyss, the pool was £11.5 billion. I do not recall any Minister at the time being worried about the size of the bonus pool or the distorting effect it must have had on executive behaviour.

[Mr Holloway]

I do not know whether the hon. Gentleman finds this attitude terrifying, but I do, and it is on both sides of the House. We can blame the bankers all we like, but the truth about the problems across the developed world and the reason we are in schtuck is that successive Governments have not been able not to give in to demands to spend more money. In a global economy savvy investors and taxpayers—the best people—run off when they see a lynch mob. This is crazy.

[Stephen Williams]

My hon. Friend makes an interesting philosophical point about the whole culture that we have perhaps all grown up in over the past 30 years. It would require more than an eight-minute speech in a three-hour debate to deal seriously with those issues, but I am trying to raise some of them. For instance, when considering how to respond to the outbreak of collective madness on the streets of some of our cities last summer, we should recognise that some of what he says is relevant to the feelings of dislocation and despair that some people felt, but it was also about out-of-control remuneration, lax regulation and complacent political oversight. Opposition Members do not like me saying this, but I say it every time and will say it again: a previous Labour Business Secretary, Peter Mandelson, said that new Labour was intensely relaxed about people getting filthy rich. Because of that, we saw the dislocation of director and shareholder interest.

[Mr Umunna]

Will the hon. Gentleman give way?

[Stephen Williams]

No, because I have given way twice and I have a time limit, and the hon. Gentleman took rather a long time making his opening speech.

All of this happened under the previous Government, and the coalition Government are now having to clear up the mess. We have heard once again that all that is needed is the magic wand of the bankers bonus tax but, as my hon. Friend the Minister has pointed out, in every year of this Parliament, under the coalition Government, more money will be raised—£2.6 billion—from the permanent levy on the banks’ balance sheets. It is the behaviour of the banks, and their boards in particular, that needs to change, rather than necessarily the pay and remuneration of their employees, which I remind the House is now taxed at a higher rate than it was when Labour was in government.

The behaviour in the boardroom needs to change, especially in the remuneration committees. As I understand it, the Walker report, which is mentioned in the Opposition’s motion, simply recommended that remuneration of bank employees over £1 million should be disclosed in broad pay bands, which is hardly revolutionary.

The Merlin agreement, an interim measure while we await the implementation of more wide-ranging banking reforms, now states that a bank’s five highest-paid executives, as well as its chief executive and chairman, have to disclose their remuneration, so at least seven people each year now have to do so. That is the highest number in any global financial centre and more than in the United States, and, as the Minister pointed out, bonuses at the banks that are under effective state control, such as Lloyd’s Banking Group and the Royal Bank of Scotland, are limited to £2,000 in cash, with anything beyond that having to be offered on a deferred basis in shares.

My right hon. Friend the Business Secretary has responded to the High Pay Commission with a series of measures that were announced a couple of weeks ago, and central to those is changing the behaviour and composition of the remuneration committees, so that on the forward pay agreements that they recommend for approval they have binding votes: not the advisory votes that were in place under the Labour Government, but binding votes, so that shareholders really are empowered to make a difference and to instruct directors, who are supposed to have stewardship of their investments in those companies.

That will end the revolving door, whereby executives of one company become non-executives and sit on the remuneration committees of another, and whereby inevitably it is in everybody’s interests constantly to bid up pay in each quoted company. Indeed, they will also have to state how they have involved and consulted employees of what, in many cases, are global companies.

Labour, in its manifesto at the most recent general election, said—I had someone check this for me before the debate—that it would

“strengthen the 2006 Companies Act where necessary”.

I remember that legislation, which, along with the Crossrail Bill, was probably the least popular Standing Committee on which a Member could sit, because it was such a fat Bill and its proceedings went on for so long, but there was nothing in it proposing the regulation of corporate pay. Throughout the previous Government’s 13 years in office, they did little to act on that issue, and despite the huge legislative opportunity that they had in 2006 they did not seek to strengthen shareholder power.

The manifesto went on to state that Labour would strengthen the UK stewardship code for institutional investors so that they would have to declare how they vote on remuneration policies, which in turn should be approved by directors. It was silent on the interests of employees, and the shadow Business Secretary did not say much about that this afternoon, either. He certainly did not commit to having an employee on the board of every company.

It is the behaviour of the banks, not just their remuneration policy, that needs to change. One of the first acts of the coalition Government was to set up the Independent Commission on Banking. We have now had the Vickers report, but in our proceedings on the Financial Services Bill, which received its Second Reading last night, we went through all those issues, so I shall not go through them again today.

We also need a change of behaviour at company annual general meetings, whereby shareholders really engage with the power that they have over their companies. Recently I met the charitable group FairPensions, which is urging institutional investors, the pension fund managers who act on behalf of many of us, our constituents and local authorities, to use their power at company meetings in order to control executive pay and to act as responsible investors.

Some hon. Members may have noticed that I tabled early-day motion 2678 last week, supporting the Move Your Money UK campaign. Mr Speaker, you and I are of roughly the same political generation—although from different points on the spectrum. We would first have become involved in politics during the 1980s. So we would have been students at the time of the Boycott Barclays campaign, and indeed I had a Boycott Barclays poster up on my bedroom wall as a student. I suspect that you did not, Mr Speaker, but people of my generation will remember that the behaviour of consumers can make a real difference to the behaviour of companies, so I urge all hon. Members—I hope this is a cross-party issue—to support my early-day motion and to urge all our constituents as consumers to consider the behaviour of companies when they use their purchasing power as well as when they exercise their power as shareholders.

There has been systemic failure for quite some time, as the Opposition Front Bencher at least acknowledged. There was reckless behaviour by Mr Goodwin, but there was reckless behaviour also in the Cabinet room by the last Labour Government. The coalition Government are clearing up the mess. We are putting in place regulations and legislation to control pay policy, to introduce transparency into the implementation of that policy and to regulate the banks so that we have a sustainable financial services sector and sustainable banks, which are so essential to supporting the businesses that are required to grow our economy.

18:04

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

No one can seriously doubt that Britain urgently needs fundamental banking reform, but what has been done so far, since the crash of 2008-09, is timid beyond belief. Hardly any of the factors behind the crash have been effectively dealt with. Extreme light-touch regulation left too much to the markets; a vast global market was created in credit derivatives, which were not well understood but were recklessly securitised throughout the world because of their huge profitability; the selling frenzy was stoked even further by enormous bonuses, which drove the recklessness; the banking structure was so over-concentrated in the lead banks that, when disaster struck, they were judged too big to fail, with catastrophic and desperate consequences for the national budget and debt; and the business model linked speculative investment with retail deposit-taking, with the former as well as the latter protected by an implicit taxpayer guarantee.

All those problems, which were familiar to all of us, need to be dealt with, but none has been, partly because of the intransigence of the banking lobby in resisting reform, and partly because of the weakness of political supervision. That makes another crash quite likely, but if there is one we might find it much more difficult to get public support for a bail-out.

First, no significant action has been taken to curb complex financial derivatives, which were, perhaps more than any other factor, central to the collapse. Derivatives are the obvious candidate to trigger the next crisis, because they add opacity and leverage to the financial system. The obvious requirement is transparency, and in the United States that was provided by the Dodd-Frank Act, which requires that all derivatives be traded across public exchanges. We all know that in this country some highly dubious securities gained a spurious status due to the scandal of the credit-rating agencies, which were paid by the very institutions whose creditworthiness they were supposed to assess. That ought to be made illegal; better still, the function should be transferred to the public sector to ensure integrity and transparency.

Secondly, there is public outrage—even now at this late stage the Government find it difficult to accept it—at a banking system which owes its continued existence to massive Government intervention, paying itself mega-salaries and bonuses, and at the fact that 90% of investment bank profits are, in an age of austerity, directed not at strengthening balance sheets, not at shareholder dividend, not at lower fees for customers, but at gigantic personal pay-offs.

Ministers say that to do what some countries such as France are doing, with a mandatory cap and the removal of the bonus guarantee, is impractical, but there can be no doubt that, if the G20 Governments insisted on limits and made continued liquidity provisions dependent on compliance, no bank could refuse.

Thirdly, to avert financial crises, the Government have placed far too much emphasis on enhancing capital controls, and they have done so in a manner that is unlikely to be effective. At the outset of the 2008-09 financial crisis, almost all financial institutions across the globe had capital adequacy at least equal to, and in some cases even twice as much as, the minimum Basel regulatory requirements. But, despite the near-global collapse of the system under those provisions, Basel III proposed in 2010 that the core top-tier capital requirement be only 4.5% and the contingency capital requirement be only 2.5%. Of the EU's top 50 banks, 45 had already met those requirements, and Basel III does not even require them to come into force until 2019. For the Government to accept that is incredibly feeble. It is far too little, far too late and it reflects the Government’s connivance with the banks in minimising reform.

Fourthly, the Vickers commission proposals that the Government, unsurprisingly, have accepted are weak and deeply flawed. Trying to separate retail banking from investment banking with some kind of internal Chinese walls is doomed to failure because of regulatory arbitrage. Financial institutions always invent ever more sophisticated products simply to get around regulatory controls. That is the argument for a clean break between retail high-street banking and investment casino banking. That would have the key advantage of removing the implicit taxpayer guarantee, which allows financial conglomerates safely to use retail deposits for proprietary trading.

Britain arguably retains the most profoundly dysfunctional banking system of any G7 country. It came closer to collapse than any other in autumn 2008. The banking sector in this country is twice as large, relative to the rest of the economy, as in any other major EU country. It is stuffed with mega-banks that are addicted to property, mortgage lending, offshore speculation and tax evasion. Barclays Capital is only the most obvious example of that. Britain needs a much more diversified banking structure with smaller banks, in particular specialist business banks such as infrastructure banks, housing banks, green banks, creative industry banks and knowledge economy banks.

[Jim Shannon (Strangford) (DUP)]

Does the right hon. Gentleman share my concern and that of many people inside and outside this House over bank charges for the ordinary account holder? The ordinary account holder seems to pay a higher price every time, whereas those at the top of the banks get the dividends.

[Mr Meacher]

I wholly agree with the hon. Gentleman. The mega-bonuses go along with small businesses having to pay exorbitant interest charges, if they can get a loan at all. The Financial Secretary says that the Government are doing their best with RBS, but why do the Government not tell RBS what level of business lending there should be and what the conditions on it should be?

[Margot James]

In fact, RBS has a reasonably good record of lending to small and medium-sized enterprises. It just missed its Merlin targets. It launched a new product at the end of last year for businesses with low fixed interest rates, no early repayment charges and no fees for the first three months. It is above the market average for small business loans. Some 40% of all SME loans are from RBS, which is—

[Mr Speaker]

Order. I say gently to the hon. Lady that interventions must be brief. There is substantial pressure on time and I would like to accommodate Members.

[Mr Meacher]

The hon. Lady has obviously received a detailed RBS briefing. However, what she describes is very different from the experience of our constituents, who complain about how difficult it is to get loans and about the prohibitive conditions that are attached to them.

I want to make one more point. It is little recognised that 85% of the British public’s money is held by just five banks, which are able to use that money with little or no accountability to the public. Investment in the UK economy therefore reflects the interests not of the public or of society, but of the senior decision makers at the five largest banks. Given that the total gross spending of the banking sector in the run-up to the crash exceeded by far total Government spending, the decision makers in those banks potentially have more spending power to shape the UK economy than the whole machinery of Government. That is a significant fact. In effect, control over the money supply and the allocation of credit has been largely privatised. That is central to Britain’s problems.

Britain needs above all to escape the dangerously mounting deficit in our traded goods account, which in the last two years has been up to £100 billion a year or 7% of GDP. The allocation of credit cannot be left in the hands of private commercial banks, which currently channel only 8% of the money supply into productive investment. Instead, they generate colossal asset bubbles through mortgages and household borrowing.

What is needed is the re-adoption of the rationing of bank credit through official guidance, enforced where necessary through quantitative ceilings. That prevailed successfully in this country until the 1971 competition and credit control measures, which inaugurated the era that said that the market always knows best and in which the deregulation of finance depended almost exclusively on the price mechanism and variable interest rates.

Bonus figures released last week show that the top 1,250 executives in the eight leading London banks received an average of £1.8 million in 2010. That is £34,000 a week. What is really needed in banks, as elsewhere, is whole company pay bargaining, whereby the pay at each level, including at the top, has to pass the examination and approval not just of shareholders, but of the employed staff who are the bedrock of the organisation.

18:16

[James Morris (Halesowen and Rowley Regis) (Con)]

Before I was elected to this House, I spent a 15-year career in small business in IT and software, during which I experienced the ups and downs that are typical of start-up businesses. I also experienced the ups and downs of dealing with banks, including the Royal Bank of Scotland.

Entrepreneurs such as me and my colleagues felt that there was a gap between the risks that we were taking as entrepreneurs and the attitude of the banks, with their demands for personal guarantees and other security, and their occasional unwillingness to negotiate credit terms. When I have talked to small businesses in my constituency over recent months, I have heard similar stories about the attitudes of the banks. I hear about foreclosures on viable businesses, sudden unannounced changes to credit terms, and people who have worked hard to build a business being forced to face impossible choices. I welcome the action that the Government have taken to unblock credit and, as the Financial Secretary described, to improve the appeals process when companies feel that they have been badly treated by their banks.

A big gap opened between the banking culture and the entrepreneur and the small business man, and that gap has grown into a chasm. As other hon. Members have mentioned, our banking culture grew up during the boom and the banking industry became disconnected from the needs of the real economy. It became a self-reinforcing culture in which bonuses and rewards simply got out of control. We then had a spectacular bust that took many viable small businesses down with the banking industry.

This debate is important because Britain’s future depends on our building a viable, dynamic, entrepreneurial culture. Jobs growth will come only from a viable culture of small and medium-sized enterprises. Britain’s future depends on our fostering a culture of entrepreneurship, in which people are prepared to take risks to create new businesses. We need a banking sector that is designed to support that vital endeavour. We also need the banking sector to play a central role in rebalancing the British economy. It must help to create the businesses and infrastructure that we need in places such as the black country, part of which I represent. That is why I welcome the Government’s introduction of the banking levy, which will help to funnel investment into areas such as the black country.

The banks also have a wider moral duty to rebuild the British economy after the follies of the boom years. It is therefore right that we take steps to control the bonus culture in British banks and seek to reform the banking sector. That is why I welcome the Government’s acceptance of the recommendations of the Independent Commission on Banking.

However, we must not allow ourselves the indulgence of engaging in anti-business rhetoric or appearing to be anti-business. It is perfectly viable for us to be against the bonus culture that built up but also very pro-business, and it is important that we are. We need to celebrate the success of entrepreneurs, wealth creators and small businesses. As I have said, they represent the future of the British economy and create the jobs and skills that we need for the future.

As I learned in my 15 years as an entrepreneur, business is about profits and cash. However, there is also a moral dimension to business and the capitalist system. One of the proudest moments of my entrepreneurial career was receiving a commendation from Investors in People for how my business managed people. My motivation as an entrepreneur was about both profits and people. In the capitalist system, it is vital that people who take risks are rewarded, but also that they recognise the moral dimension of the capitalist system. We need banks to play a role in building a culture of what we might call “responsible capitalism”, which can promote the entrepreneurial culture that Britain desperately needs to secure its future.

18:22

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

I rise to support the motion. I will begin with the obvious point, which my hon. Friend the Member for Streatham (Mr Umunna) also made, that however poorly some of our banks behaved, they are an essential part of our infrastructure and will be an essential driver of ensuring that our economy improves. The question, however, is whether we relied on them too much, which has to be answered with a resounding yes. When the crash came, we not only had to bail out some of the banks that had become too large to fail but lost a huge percentage of our revenue.

A wry smile comes across my face when I see Government Members’ crocodile tears for manufacturing industries, because I remember the period from 1979 to 1997, when I was a young man, when a lot of them were responsible for the demise of manufacturing. That ensured that my late father lost his job in heavy engineering and never got back into it.

Although RBS has become a byword for profligacy, we have to recognise that other banks, such as Barclays, did not request or need a bail-out. We know that we live in difficult times, but today the National Australia bank announced a review of its Clydesdale bank and Yorkshire bank. Combined, they employ 8,500 people in this country and have two UK networks, and the NAB is to re-evaluate its UK wing. Cameron Clyne, the NAB’s chief executive, said in his statement:

“It is clear that the UK economy is likely to experience a much longer period of subdued growth with the ongoing sovereign debt crisis in the Euro-zone and the continuing austerity program by the UK government.”

Perhaps the Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk), can respond to that point later.

Government Members take great glee in complaining about what they describe as the mess that was left behind, despite the fact that we are nearly two years into their time in government and even though the urgent action that we in the UK took led the world. However, they should remember the saying, “What goes around comes around.” The chief executive of the NAB was actually saying that their economic policies are contributing to the problems that it is facing, because the Government are concentrating on austerity measures, not the growth of the economy. I hope that the Minister will respond to that point instead of jumping over it as the Minister did.

Although I recognise that the banks make a significant contribution to our economy, their reward structure and behaviour have been brought into sharp focus in the past four years. Based on the experience of businesses in my constituency, banks went from a Viv Nicholson “Spend, spend, spend” policy on lending to a Steptoe and Son penny-pinching policy. The businesses in my constituency with which I have been involved tell me that RBS wants to charge them exorbitant interest rates for safe, copper-bottomed business deals and has put itself first instead of looking after small and medium-sized enterprises.

Most outrageously—Ministers should take note of this—RBS stands accused of deliberately putting in place conditions to put businesses out of business, so that it can reclaim their assets at the cheapest price possible. That is an outrageous way for a bank to do business when the economy is in such difficulty. We need to ensure that we keep people in employment so that they can contribute to the wider good.

The remuneration situation is even more bizarre. When my colleagues were speaking earlier, I heard some chuntering among Government Members about the fact that business people who get large bonuses pay their taxes. There are many millions of our constituents who also pay their taxes, and I bet they wish they were getting the remuneration packages that are being given out in RBS.

As a former trade union official, I have negotiated more pay deals than I care to remember. In the civil service, in the early days of performance-related pay, the reward structure was changed from plain salary to salary plus a performance-related element. Irrespective of which bargaining unit I was dealing with, I always asked how performance would be defined and what an individual would have to do to get that additional payment. In 26 years as a lay and then full-time trade union officer, I never got a straight answer to that question. A job is a job, and someone is paid a salary to do it, but in response to that question I was given platitudes such as “We’ll give it to someone who puts in an effort above and beyond the norm”, and “We’ll reward exceptional performance.” However, when we tried to dig a little deeper into what those words meant, answer came there none.

We have to remind ourselves that the salary package that people such as Stephen Hester get is pretty significant in the first place. We therefore need to know the definition of exceptional work that brings a bonus. That needs to be clearly outlined and transparent.

[David Mowat]

I am a little bit puzzled by the hon. Gentleman’s argument and that of the Labour Front Benchers on bankers’ bonuses and salaries. Are they against bankers’ salaries only, or all very high salaries? He mentioned Stephen Hester, but Carlos Tevez earns five times as much. Why is the Labour party not honest enough to say that it wants higher taxes instead of just focusing on bankers?

[Mr McCann]

The crucial point that has come through in this debate is that RBS is owned by the public. Up until last week, when Stephen Hester did the right thing and announced that he was not going to accept the bonus, Government Members remained silent. Ministers said that it was up to him, if my memory serves me correctly—if the Minister wants to intervene, I will be happy to allow him to do so. The Prime Minister said that it was up to Stephen Hester. In relation to Carlos Tevez, I am not a Manchester City fan, so I will leave that issue alone. I have enough problems with Glasgow Celtic football club without worrying about Manchester City.

[David Mowat]

The hon. Gentleman seems to make a distinction between entities that are state-owned and those that are not. Is he therefore saying that if Hester worked for a non-state-owned entity, the hon. Gentleman would be quite happy with his bonus package? That seems to be the implication of his answer.

[Mr McCann]

There must be responsibility across every business, whether it is private or public. I am not a communist—the hon. Gentleman will be delighted to know that. I do not suggest that we move to the Cuban model and are all paid the same for doing different jobs, as I recognise that people have different contributions to make and should be paid different salaries for doing so. Often, examples that go to the extreme, such as those about footballers, and that go into other systems of capitalism in the country in which they work do not take the debate much further forward. My analogy is between the civil service and the Royal Bank of Scotland, as the civil service is in the public sector as is the Royal Bank of Scotland, because we own the largest share in it. The difficulty we had in defining performance-related pay in the civil service reads across, it strikes me, to the difficulty we have in defining performance-related pay in the Royal Bank of Scotland.

[Ben Gummer (Ipswich) (Con)]

Will the hon. Gentleman give way?

[Mr McCann]

I think I have been generous enough in giving way, and other Members want to speak.

On bankers’ bonuses, it appears that when the behaviour being rewarded is non-productive—the Royal Bank of Scotland and other banks have not met their Merlin targets and, in each of the past 12 months, they have not met their targets for lending to SMEs—it is surely a case of the emperor’s new clothes. Bankers’ bonuses cannot be based on an opaque set of rules. They are a travesty, a charade and the practice should be outlawed not only in RBS but in other organisations that cannot properly define a performance-related pay system. The era of these unacceptable bankers’ bonuses must come to an end, as we need a direct relationship between reward and performance. Most importantly, the Royal Bank of Scotland has an economic duty to lend to small and medium-sized enterprises to ensure that the economy of our country starts to improve. On that note, I commend the motion and I will support it tonight.

18:31

[Mr Marcus Jones (Nuneaton) (Con)]

I welcome the debate and want to discuss a number of issues that arise from the motion, but, having explored it, I think it contains a strong hint of political expediency and opportunism. To a degree, the Opposition seem to be ignoring part of the history of the UK Government between 1997 and 2010. That said, this is an extremely important and topical issue and the motion therefore deserves proper consideration and scrutiny.

My starting point would be to reflect on where we are today with some of the issues at hand and on what we are trying to achieve.

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

Although the reform of banking is important, does my hon. Friend agree that we have not heard today about the importance of the financial services sector and banking as a whole? The sector employs 1.1 million people and contributes 12% of the total tax take and 10% of UK GDP. We should be talking about how to create a strong and vibrant sector that helps to grow the UK economy.

[Mr Jones]

My hon. Friend makes a very important point and I hope that some of my comments later will enthuse her about my stance on that issue.

Not many people would disagree that we need to move from irresponsible banking practice to responsible but successful banking, from poor Government regulation to effective regulation, from bailing out the banks to getting taxpayers’ money back, from the state ownership of banks to putting them back into private ownership, and from the state guaranteeing banks to ensuring that they stand on their own two feet and are not too big to fail. We need to draw some important distinctions when we consider such matters. There is a distinction between taxpayer-owned banks and private banks and we also need to take into account the taxpayer guarantee. When we consider irresponsible bankers—who now seem to be epitomised by Fred Goodwin, who should not be singled out but seems to be taking the brunt of the blame for all the irresponsibility in the banking industry—there should be a distinction between their type of banking and the more responsible banking that many are trying to promote.

One person who was brought in to try to promote more responsible banking and to get RBS back on its feet was Stephen Hester. He came in and took on a job, and although we might all agree or disagree with the definition of the success that he was tasked with bringing about, the fact is that he was given that definition—I think by the Labour party, when it was in government—and now Labour seems to want to move the goalposts and change the definition of success or failure within his remit.

[Margot James]

Despite the fact that the opening speech from the Opposition spokesman was couched in such reasonable terms, did my hon. Friend see the shadow Chief Secretary to the Treasury on “Newsnight”, remarking that Stephen Hester’s bonus was a reward for failure? Does my hon. Friend not agree that that is a gross distortion of the reality? He will agree, I have no doubt, that Stephen Hester has brought many more benefits to RBS.

[Mr Jones]

I concur absolutely with my hon. Friend’s comments. Had it not been for the fact that Stephen Hester decided not to take his bonus, I suspect that tonight’s motion would have vilified him—

[Rachel Reeves (Leeds West) (Lab)]

Will the hon. Gentleman give way?

[Mr Jones]

I will not, because other Members want to speak. I think the motion would, in such circumstances, have been completely anti-business. We need to be careful—

[Rachel Reeves]

rose—

[Mr Jones]

I will not give way. We need to be careful that we do not vilify people whom we entrust with such positions—we should not vilify wealth creators, because they are the very people we need to get UK plc back on to its feet.

That brings me on to regulation. The tripartite system given to us by Labour clearly failed; we had banks that were thought too big to fail, with no proper checks or balances on their activity. I am pleased to say that the Financial Services Bill, which had its Second Reading yesterday unopposed, will change that situation of ring-fencing banking, so that we no longer have banks that are considered too big to fail.

That leads me on to other issues, particularly the bailing out of the banks, state ownership of banks and state guarantees for banks. They are all probably undesirable for the taxpayer and it is important that we work to try to reverse the unsustainable position that the taxpayer has been put in. We need to consider carefully how we facilitate our banking and finance industry to ensure that we can try to right the wrongs. One way of doing that is through the regulatory framework, which we are dealing with, but we can also do it through competition. We must be well aware of global competition.

I did not take part in last night’s debate on the Financial Services Bill, but spent some time listening to speech after speech from Opposition Members saying that regulation of our banking system needed to take into account the global situation that our banking industry found itself in. I totally agree, but they must therefore acknowledge in tonight’s debate that our banks must be competitive within that global market. Vilifying our banking and business sectors with an unbalanced argument and approach and putting excessive taxes on those sectors will move us away from having banks that are competitive in that global environment.

That brings me, quite neatly, to the bankers’ bonus tax, which is mentioned by the Opposition time after time. They seem very keen on that tax, which they mentioned before the Government put in place the bank levy, which raises £2.5 billion a year, rather than the £2 billion that the bankers’ bonus tax would have raised. The goalposts seem to have moved again and the Opposition seem now to be advocating that it should be an additional tax for the banks to pay.

[Jake Berry (Rossendale and Darwen) (Con)]

Will my hon. Friend give way?

[Mr Jones]

I shall give way to my hon. Friend in a moment.

[Rachel Reeves]

Will the hon. Gentleman give way to me, then?

[Mr Jones]

The Opposition’s position is interesting, as we are now trying to encourage our banking sector to lend, particularly to small businesses, to put their balance sheets in good order and to keep bank branches open—we expect them to do an awful lot of things as well as pay additional taxes. We need to be careful about how we approach this matter.

[Jake Berry]

My hon. Friend makes an important and powerful argument. On the specific point of the Opposition’s proposals for the banker bonus tax, is he aware that it is a tax that keeps on giving, because—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The intervention is far too long. The hon. Gentleman has just come in; I am not sure whether the hon. Member for Nuneaton (Mr Jones) was aware of that when he gave way. We are short on time.

[Mr Jones]

I thank my hon. Friend for his intervention; I apologise for the effect that time is short.

Lending to small business is extremely pertinent, and it is important that it is in the motion, but we should not forget that we need to encourage our banks to lend to small businesses rather than curtailing lending. One of the most important areas in which we need to do that—it has been mentioned by Opposition Members—is manufacturing industry, but they forget to mention that the reason we are in our present position is that the economy was completely unbalanced and we lost 1.7 million manufacturing jobs under their party.

To conclude, although the motion might be populist bordering on opportunist, it does little to solve the problem of irresponsible bankers and poor regulation. It takes no account of the importance of the banking industry not just to bankers but to the rest of industry and commerce in this country and to the UK Exchequer. It does little to get banks to stand on their own two feet, repair their balance sheets and lend again, and it does little to set out a proper strategy for creating sustainable employment for our young people, an agenda that this Government are now tackling with vigour.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I am reducing the time limit to six minutes, to try to get everybody in.

18:41

[Caroline Lucas (Brighton, Pavilion) (Green)]

I welcome this important debate, the ramifications of which stretch far beyond the banking sector in particular and economic policy in general. The issue of high pay and bonuses is central to the kind of society that we want to live in. I share the disgust and outrage of my constituents at the fact that successive Governments have allowed the incomes of the wealthiest 10% of the population to rise by 37% in the past 10 years while those of the poorest 10% have fallen by 12%, and that the earnings of top executives at Barclays have increased by a stratospheric 4,899% since 1980, while wages for the average worker at the bank have increased only threefold.

We have heard much about a more responsible economic system in recent weeks, and I welcome that debate, but unless that fine rhetoric is backed up with concrete and far-reaching action, I fear that we will merely see more of the same bankrupt business as usual. The first thing we must do to address properly the concerns raised today is ask one important prior question: what purpose do we actually want the banks to serve?

I believe that banks ought to be useful servants of a productive economy and of the new economic, social and environmental challenges that we face. Introducing a statement of purpose requirement for banks and banking activities, in order to allow regulators and customers to assess how much or how little those activities contribute to a productive economy that serves and protects the environment, would be a useful starting point. It has already been done by the German Sparkassen network of community banks, and would go some way towards giving power back to people and allowing them a say in the future of our banks.

The bottom line is that markets alone cannot deliver the kind of banking system that we need—one that is safe and fit for purpose. Governments must step in, and not just when bail-outs are required. Tackling pay at the top end of the sector is an important first step. I support a special tax on bankers’ bonuses, but we should make it permanent. At the top rate of 50%, Labour’s one-off tax raised about £3.5 billion for the Exchequer, but did not do anything like enough to curb the excessive bonus culture, as we now see. Curbing Stephen Hester’s bonus and stripping Fred Goodwin of his knighthood are a start, but let us not pretend that throwing some red meat to the tabloids is a substitute for urgently needed thoroughgoing reform of the banking system. In the absence of major re-regulation, our financial system remains dangerously dysfunctional.

If we are intent on curbing excessively high pay, as we should be, we must recognise that it is not a problem in the finance sector only, and match any action with measures to improve wages at the opposite end of the scale. That means supporting a genuine living wage and considering policies such as a 10:1 ratio between the highest and lowest-paid staff of a company, or a guarantee that no member of staff should receive an annual bonus exceeding the annual wage of the lowest-paid worker in that business or organisation.

I have said that tackling pay was just one part of the challenge. There are many others: 3 million people in the UK do not even have a bank account, and 9 million lack access to affordable credit. Banking reform must address that urgently as well. A universal banking obligation could ensure a taxpayer quid pro quo for future bank support. It would have to cover where banks lend and include a banking code to ensure that everyone has access to essential financial services. A people’s bank could operate via the post office network to address financial exclusion and provide real, fairly priced competition in local communities. A UK community reinvestment Act would ensure that banks lend money where they are prepared to take deposits. We also need to separate banks’ retail and commercial arms properly, not just ring-fence them as the Government plan to do.

Ecological theory suggests that a system is most resilient when it is divided into compartments to protect it from external danger. In order for banks to be resilient, they too should be modular, without excessive connections between them that can transmit shocks rapidly through the system. For that reason, serious restrictions on inter-bank lending and derivatives trading and the reintroduction of exchange controls designed, among other things, to reduce sharply international flows of money between banks should be explored in much more detail.

The next round of quantitative easing may well be announced on Thursday. Recently, I met the man credited with inventing the term. He explained that he was in Japan at the time and wanted to talk about credit creation, but that those words in Japanese meant something different. Credit creation goes to the heart of how the banks operate. The current economic system enables commercial banks and other financial institutions to exert an unacceptably large influence on the economy. Now is surely the moment for us to challenge the virtual monopoly that we have allowed the private banking sector to exercise over credit creation.

One step towards achieving that might be to introduce green quantitative easing. We know that during the last round of QE, the Bank of England purchased £275 billion in Government bonds, yet that money did not find its way into the real economy or help small businesses get loans. Green quantitative easing would inject money directly into the economy, circumventing the paralysed banking system. By purchasing green assets such as solar photovoltaic assets for a nationwide roll-out, for example, we could create far more jobs, stabilise the economy, reinvigorate our local businesses and reduce our emissions.

There are many other things to be said, and I have only 20 seconds left in which to say them. We need diversity on our high streets. We need more community banks and credit unions. We will not get the banking system that we need if we leave it to a monopoly of four or five main high street banks. We need a diversity that we can learn from ecology. If we bring that into our banking system, we might just have a chance at a banking system fit for purpose.

18:47

[Richard Fuller (Bedford) (Con)]

It has been interesting to sit in this debate and hear such an extended series of mea culpas from Opposition Members for the failings of the last Labour Government on this issue. Let us not forget that that Labour Government presided over the decline of British manufacturing, under which the concentration of banks about which they now complain took place and the meaning of the word “bonus” became so debased. There is so much for them to say sorry for, and so little time in a three-hour debate for all of them to come forward and repent.

[Chris Williamson]

rose—

[Richard Fuller]

I see we have a new repenter.

[Chris Williamson]

I am not repenting, but the hon. Gentleman might like to repent for the fact that the real origins of the problems that we are facing can be traced back 30 years to Margaret Thatcher’s Government. [Interruption.] I can hear hon. Members cheering, but it was Margaret Thatcher’s Government who undermined the manufacturing industry, used financial services as an alternative engine of economic growth, ran down the mining, steel, shipbuilding and car-making industries and totally destroyed manufacturing in this—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Shorter interventions, as I have already expressed, are the order of the evening.

[Richard Fuller]

I thank the hon. Member for Derby North (Chris Williamson) for what will appear in print as a helpful intervention.

I turn to the mishmash of observations that the Opposition have called a motion. It might, to them, make a motion, but it certainly does not make a policy.

On the key issues, the coalition Government have already taken sensible steps towards reform: they have found an answer to the mess of regulation by centralising it under the Bank of England; they will implement the recommendations of the Vickers report; and they are introducing changes to the compensation culture so that it can get back to supporting enterprise and rewarding merit, which is what we all want.

The shadow Business Secretary did a good job of holding back the hostile anti-business rhetoric. I just hope that the shadow Chief Secretary to the Treasury can restrain herself in her usual anti-business rhetoric when she winds up for the Opposition.

[Rachel Reeves]

Will the hon. Gentleman give way?

[Richard Fuller]

I would like to give way very much, because the hon. Lady did not get a chance to comment earlier.

[Rachel Reeves]

The hon. Gentleman is much more generous than his colleague the hon. Member for Nuneaton (Mr Jones). With long-term unemployment up 157% in Bedford since the start of 2011, does the hon. Gentleman think that the priority should be a tax cut for the banks this year or a programme to invest in youth jobs?

[Richard Fuller]

That is a very good point. Perhaps the hon. Lady will be interested to know that I am leading the establishment of an enterprise investment scheme fund in Bedford to get local people to invest in jobs and create businesses in Bedford. Government Members believe in practical action to support entrepreneurs and jobs, not the empty rhetoric that we get from Opposition Front Benchers. I invite her to Bedford to see the successes that we are having and from which perhaps her party can learn. The shadow Business Secretary made some interesting points, and I only wish that he had had time to speak more about his idea for moving forward with a UK equivalent of the small business investment company in the United States. That is an interesting direction of travel from the Labour party.

It is always hard in a free society to explain or justify why some people earn more—sometimes fantastically more—than other people. That justification can be secure only when clearly based on merit—the merit that comes from taking a risk that works out or from delivering exceptional performance. It is clear, however, that throughout large swathes of the economy, those two forms of merit have been losing hold in the setting of compensation in our country. My hon. Friend the Member for Halesowen and Rowley Regis (James Morris) spoke eloquently about that disconnect between the financial sector and our entrepreneurs. I know that the Government are committed to changing that.

It is sensible to look for measures that focus remuneration more on merit, but that is precisely what the Government’s recommendations seek to do. The problem with the speeches from Opposition Members was that they could not define the problem that they were trying to solve. Were they trying to solve the problem of compensation in state-owned enterprises? Were they trying to solve the problem of compensation in banking? Were they just hostile to high compensation generally in the economy? They could not define the problem owing to the different points of view among Opposition Members. Some call for a return to the rhetoric of the 1980s, attacking people for earning too much money and trying to draw false and upsetting comparisons between people who get paid a lot and those who cannot find a job.

In this country, we need to support the risk takers and the entrepreneurs to create the jobs that people in my constituency and constituencies around the country want. The promotion of an anti-business rhetoric will be harmful. As my hon. Friend the Member for Nuneaton (Mr Jones) said, the reaction to Mr Hester’s bonus sent the unwanted signal to business that this country was anti-business. As many have said today, Members on both sides of the House have a responsibility to make it clear that that is not the case and that we all want business to be strong in our communities.

Strengthening shareholders’ responsibilities will be central to that. One of the perhaps unintended consequences of the raid on pension funds by the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) was to weaken the ability of shareholders, particularly pension fund holders, to hold boards to account over remuneration. There was a change in the ownership of shares, which increasingly went offshore, while those custodians of long-term interests—our insurance companies and pension funds—had their voices and representation weakened on boards. It is right, therefore, for the Government to consider in detail how to strengthen shareholder representation and control over compensation in general.

Several speakers made the connection between banks and support for small business. I ask the Government to be bolder in looking for alternatives to banks in meeting the challenge of financing our small businesses. We need to consider ways of growing bond markets for small business, and we need to go even further than we already have by adopting innovative schemes for promoting equity financing for our small and medium-sized businesses. There is no more honourable a thing for people with money today to do than putting it into equity and our small businesses, and the Government have already provided tax incentives for them to do so. I only encourage the Minister to do more.

On credit easing, will the Minister be cautious about the ability of Governments to stimulate the economy in the short term? By the time that Governments get round to deciding what to do, often the problem has passed. However, credit easing presents another opportunity, which is to use financing, through a credit easing facility, to reduce some of the long-term debt obligations in this country. As the Minister knows, I have spoken before about the possibility of using either some or all of the credit easing financing to create a future fund and unburden the next generation of taxpayers of some of the tax that would otherwise be needed to meet the unfunded public pension liability. We must look to the long term when considering how to fund our small businesses, and not always think that the Government have the answer in the short term. They rarely do.

18:56

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

The hon. Member for Bedford (Richard Fuller) said that we must reward the risk takers, but is not the problem and the reason for this debate the fact that the risk takers took too many risks with the world economy and completely destroyed it, and that while destroying the world economy, they got massive bonuses, pay and entitlements to which they were not entitled? That is why we need to look at these risk takers, who he says are the wealth creators.

Opposition Members have no problem with business or with people who want to work hard, achieve, create jobs and stimulate the economy, but it is important to remember—this is what this debate is about—that, as the Leader of the Opposition said in his party conference speech last year, there are producers and there are predators. As always, those comments were taken out of context, but what he talked about is what the Prime Minister now talks about: responsible capitalism and responsibility in society.

In the light of that, we are having this debate, which is not surprising—in the light of that, we are having this debate. I repeat myself because it is important to know why we are having the debate. As my hon. Friend the Member for Streatham (Mr Umunna) said, this debate on the crisis is timely but, more importantly, the question is: how do we prevent the problem from reoccurring? We should be concentrating on that, instead of the point scoring that we have seen.

We realise that there have been problems with the regulation of the banking and the financial services over the past 20 or 30 years. As my hon. Friend said, the Opposition have accepted responsibility and acknowledged that the Labour Government could have done more to regulate the sector, but as has been pointed out no one in the Conservative party at the time complained or argued that regulation should be tighter—if anything, they asked for even less regulation. Nevertheless, they continue to say, “We didn’t do anything.” We have accepted our mistakes, but Government Members made them as well. Furthermore, as everyone knows, the relaxation of regulation started in the ’80s, when a Conservative Government were in power. It is about time that they apologised for getting this whole thing going.

I do not want to get into a party ding-dong. I want to talk about what we can do to help to create a situation in which businesses and banks can work properly and the country can prosper. The Opposition have argued that the Walker review, which states that, if a banker’s remuneration is more than £1 million, that information should be published, should be implemented as soon as possible. That, coupled with the recommendations of the independent High Pay Commission, should be implemented in full, with investors and pension fund managers required to disclose how they vote on remuneration decisions, so that those paying into pension funds know where their money is going. Additionally, to boost transparency, the Government should publish figures setting out the largest pay ratios.

Another thing that we should be doing is using our influence in the banks in which the taxpayer has a stake to restrain excesses and promote good practices. Where the Government—the state—have discretion, they should intervene, such as with Network Rail recently. We should introduce a framework for fair pay across the economy, including through employee representation on remuneration committees and measures to enable greater shareholder activism. We should repeat the tax on large bank bonuses and use the money to get 100,000 young people into work. In tough times, when there is less money around, fairness matters more than ever. Instead of providing leadership, the Government have been dragging their feet on tackling excessive pay and rewards for failure. They have taken 20 months to come forward with any plans, and they are delaying even those that they are implementing. That is in stark contrast to the autumn statement, which took three times as much from families with children as it did from the bankers.

As we know, Robert Jenkins, a member of the Bank of England’s interim Financial Policy Committee, told the Select Committee on the Treasury:

“Every £1 billion of less bonus would support £20 billion of additional small business lending.”

I urge the Government to act on that, and to support Project Merlin—which we do not think has been as successful as it should have been—to ensure that the banks involved in the scheme lend more. Evidence has shown that investment and credit lending by those banks has decreased by 6% in real terms, whereas investing and giving more credit would be a real step to boost the economy. At the end of the day, some of the banks have been bailed out with public money. They and the Government should be doing more to—

[Madam Deputy Speaker (Dawn Primarolo)]

Order.

19:02

[Margot James (Stourbridge) (Con)]

In opening the debate, the shadow Business Secretary stressed the importance of a strong financial sector and called for a new culture, given the high pay and excessive bonuses that we have seen. Many of us on the Government Benches agreed with what he said in that direction and with the overall tone that he struck. He was asked how much money had been given away in bonuses under the last Government. According to my figures, £66 billion was paid out in bank bonuses under the last Government. Much of that was encouraged by the last Government, for the massive tax revenues that it generated, with more than 50% coming back to the Exchequer.

Much has been made of the linkage between businesses and bank lending, but I would dispute that. We need to see much more lending to small businesses, but, as I explained in an intervention, the reason for the current lending issues is not just that the banks will not lend. Opposition Members do businesses a disservice by continuing to promulgate the myth that banks will not lend, because one reason that businesses are reluctant to approach banks is that they think they will be rejected. We must not engage in too much rhetoric, accusing the banks of not lending, when RBS, for example, grants 85% of the loan applications that it receives from small and medium-sized enterprises.

[Mr Umunna]

First, I accept that the reason there is not as much lending to SMEs as one would expect is not just because of the banks, but because of people’s confidence in the economy—one might argue that the Government’s policies have had an effect on that. Secondly, I pointedly made it clear in my speech that it is not just a question of the banks not getting the money out of the door to robust, profitable businesses; rather, it is a question of their relationship with their business customers in this day and age. Often, people are put on the phone to some person in a regional office who knows nothing about their business and is therefore not in a position to assess the risk properly.

[Margot James]

First, on the causes of why businesses are not seeking loans to invest, that has much more to do with the eurozone crisis and the global economy in general. For any company seeking to export, there is a general nervousness across the world—not just in the west, but in China and the far east. Secondly, I agree with the hon. Gentleman about banks losing a lot of skills over the past 10 to 20 years in managing their business customers, but I see signs of change. I visited Barclays in Birmingham a couple of months ago, and I sensed the real commitment, along with an upgrading of skills, that that bank—to name one—is making to its business customers.

[Steve Brine (Winchester) (Con)]

Will my hon. Friend give way?

[Margot James]

I will give way one more time and then I must make progress.

[Steve Brine]

I am listening carefully to my hon. Friend’s speech. Further to her discussion with the shadow Business Secretary, there are new entrants to the high street lending market, which I think, without name-checking them and giving them the publicity, will shake up the “Computer says no” culture. [Hon. Members: “Name them.”] Virgin Money is coming on to the high street, and it will shake up that culture. Sometimes we are in danger of talking about just the traditional high street banks and lenders, when there are new entrants coming into the market that will really shake things up and change things.

[Margot James]

I thank my hon. Friend for that excellent intervention. Indeed, I attended a Virgin-sponsored event last week at which its youth capital fund was launched, to try to get money available for young entrepreneurs as seed finance, so I very much agree with his point.

The Opposition want us to raise taxes—again—to fund a youth unemployment initiative, but I strongly object to the motion. We cannot do enough for youth unemployment—I agree with that. It is an absolute scourge in my constituency, so I am pleased about the new proposals we are seeing, with the youth contract getting £1 billion in funding, which will create 410,000 work opportunities for our young people. We are also seeing record numbers of apprenticeships across the country. I would therefore argue that the Government are doing all they can to support young people back into work, which I absolutely agree is a challenge facing us all.

I want to speak on behalf of taxpayer interests, because we all own a stake in two of our high street banks. I also want to talk a bit about the protection of our tax revenues, as well as employment in the financial services sector, because I fear that by raising yet another tax on bonuses—on employment, essentially—we are jeopardising that investment. The shadow Business Secretary is the acceptable face, perhaps, of the Opposition, but many other Opposition Members, including the shadow Chief Secretary, the hon. Member for Leeds West (Rachel Reeves), alighted on one individual—Stephen Hester—a couple of weeks ago, repeating the mantra that “It’s all about rewards for failure.” The record really ought to be set straight when it comes to RBS. She should not judge the performance of that company just on the share price, and she is peddling a half-truth when she does so. She should look at the repair of the company’s balance sheet and the extensive disposal programme undertaken by RBS, which is on track despite incredibly difficult market conditions. The capital ratios have been improved, with SME lending by the bank making up 40% of total bank SME lending, which is higher than its market share. This country and its taxpayers would be dealt a mighty blow if the chief executive, Stephen Hester, were to react to the terrible publicity that he has had to endure by leaving that taxpayer-owned bank. Who do the Opposition think would want to take his place, after all that has happened?

On the question of the bonus tax—I shall choose my words carefully—I feel that taxes are plenty high enough already. The Opposition are proposing to raise them even higher, however. On any employment income at the level of bank bonuses, the higher rate tax of 50% applies. With employers’ national insurance and a degree of personal national insurance on top of that, the effective tax rate on some of those bonuses is already more than 60%. Let us not forget, too, that under the Government’s proposals, everything in a state-owned bank bonus apart from £2,000 in cash has to be deferred and taken in shares. If the individual then sells their shares, that will incur capital gains tax at the increased rate of 28%.

I shall finish by issuing a warning to Members on both sides of the House. In the days of the last-but-one Labour Government, under whom I grew up in the 1970s, the top marginal rate of tax was 98%. Do the Opposition really want to take us back to those times, during which enterprise was absolutely stifled?

19:19

[Nic Dakin (Scunthorpe) (Lab)]

I had not intended to speak in the debate, but Lloyds TSB has today announced 300 job losses in Scunthorpe, as part of 1,000 job losses across the country. That is on top of the 30,000 job losses that have been announced by that organisation over the past three years. I want to talk about the importance of the banking sector in our communities as a provider of jobs and services at local level. Too often, the debate is about the banks and bankers at national level, and that has been well covered in today’s debate, but it is important that we also remember the value of the banking sector within the communities that we represent. Another case in point in my constituency is the announcement by HSBC that it is to close its branch at Kirton-in-Lindsey. It is the only branch for 9 miles, and its closure will have a significant impact on the way in which that community manages its business.

The hon. Member for Halesowen and Rowley Regis (James Morris) made a thoughtful and insightful contribution to the debate. He drew on his experience of the disconnect between the banks, on the one hand, and the small and medium-sized enterprises and the communities of which they are a part, on the other. He said that it was possible to be anti-bonus but pro-business. There is unity across the House on that point. We need a better and more responsible capitalism that better serves the people of this country. Excessive pay and rewards for failure are bad for shareholders, bad for the economy, bad for society and bad for business. I hope that the people listening to the debate, in the banking community and in the communities that we serve, will recognise the importance of banking as a provider of services and jobs in our communities, and as an engine of the growth of this proud nation.

19:19

[Sheila Gilmore (Edinburgh East) (Lab)]

There are some basic questions of fairness that people in Britain feel strongly about, and we have to reinstate that fairness. In 1979, the top pay at Barclays was only 14.5 times that of the average pay. It is now 75 times higher. Did people not want to work at the top of Barclays then? Did they not want to work hard for their bank? I think that they did. The problem is that the top levels of pay have accelerated to a level that no one considers fair. The suggestion that, if we do something about that, people will go elsewhere and that we will be unable to recruit seems strange. The hon. Member for Stourbridge (Margot James) spoke of a time when personal tax rates were higher, but people were still prepared to do those jobs here. We cannot go on accepting the mantra that they will go elsewhere—

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

They left the country.

[Sheila Gilmore]

They did not go, and the banks did not collapse. They recruited chief executives and board members.

In fact, in 1979, the inequality gap, as measured by the Gini coefficient, was at its lowest in the entire post-war period. Does that matter? I suggest that it does. If I were an employee of Barclays, working as a teller or in a back-room job, my motivation to work hard would go down as I learned about the huge disparities in pay. This is not about jealousy, or about feeling that people should not be able to earn. If we want people to accept, as we have suggested, that we cannot increase public sector pay in the way that we want to, and if we are all in this together, it has to be fair. That is primarily what the motion is about. Those who do not support it will find that, rather than wanting to dig in and be “all in this together”, people will be dissatisfied and demoralised, and our businesses simply will not grow.

19:17

[Rachel Reeves (Leeds West) (Lab)]

It is right and proper that we have had this debate in the House this afternoon. Today, we have shown that the concerns of the country are the concerns of this House. But I am sorry and disappointed—notwithstanding the fact that the Business Secretary is at a funeral—that no member of the Cabinet has been willing to attend the debate. I am disappointed—[Interruption.] Oh! I am sorry! The Education Secretary has arrived. I am not sure how long he has been here—[Interruption.] Five minutes, apparently.

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The Education Secretary has been here for some time, actually, and he has been heckling, even though I have asked him not to. He is also still a member of the Cabinet, and he is in the Chamber.

[Rachel Reeves]

I am disappointed that the Chief Secretary to the Treasury has not been willing to explain the Government’s failure to follow through on the Walker review’s recommendations on transparency and high pay. I am disappointed that the Chancellor has not been willing to explain why they oppose the inclusion of ordinary workers on remuneration committees. I am also disappointed that no Cabinet Minister has been willing to come to the House to defend the tax cut that this Government are giving to banks this year.

People up and down the country are amazed when they read about individuals receiving bonuses in a single year that amount to more money than most people will see in their entire working life, especially at a time when families are struggling to make ends meet, when small businesses are finding it hard to access finance, when people are finding it hard to get a job, and when many young people are struggling to get their first job.

The “Oxford English Dictionary” tells us that a bonus is

“a sum of money added to a person’s wages as a reward for good performance”.

It goes on to say that a bonus is

“an extra and unexpected advantage”.

It is clear, however, that for a few, bonuses have come to be expected, an automatic part of their pay. Whatever their performance or that of their businesses, bonuses can be cashed, year in and year out. That seems to be the case even when the share price is falling, even when thousands of jobs are being lost and even when lending targets to small businesses are not being met. And this is happening in an industry that is significantly supported by us, the taxpayers, and that risks rapidly losing the trust and confidence of those it is supposed to serve, because of the actions of a few at the top.

Let me speak plainly. Labour Members recognise the importance of the financial services sector to our economy. A high proportion of jobs in my constituency are directly or indirectly dependent on the continued success of Leeds as a financial hub. Private sector employers whom I meet tell me time after time of the critical importance of bank finance to their ability to grow and employ more people.

The financial services industry is, and must remain, a strong part of the British economy. It offers an opportunity for Britain to play a positive role in the global economy and it plays a critical part in supporting the small businesses that could be and should be the driving force of our economic recovery. That makes it all the more important that Members are not afraid to approach the banking sector as a critical friend—not afraid to deliver home truths or the views and perspectives of the people we represent.

In expressing public concerns about excessive bonuses, we must remember that the vast majority of people who work in banks earn modest salaries. Those I know in Leeds are on salaries of £20,000 or £30,000 a year, and they find these six or seven-figure bonuses as shocking and alien as the rest of us do—especially a few years after failures in the banking sector brought the global economy to its knees.

These are the concerns we have heard in contributions to today’s debate. It must be a matter of regret that throughout this afternoon, save for the Education Secretary, no Cabinet member has been here to hear them. It is a shame that no Cabinet members were present to hear the passionate speeches by, for example, my hon. Friend the Member for Scunthorpe (Nic Dakin), whose constituents are fearful this evening for their jobs. It is a shame that no Cabinet Minister is going to respond to the concerns expressed in the passionate speeches of my hon. Friends the Members for East Kilbride, Strathaven and Lesmahagow (Mr McCann), for Edinburgh East (Sheila Gilmore) and for Bolton South East (Yasmin Qureshi) or of the hon. Member for Brighton, Pavilion (Caroline Lucas). Those Members spoke about the increasing disconnection between a small number of people at the top of the banking sector and the experiences and values of the rest of the country. This disconnect must be repaired if we are to strengthen the national purpose and shared interest that we need to get through these tough economic times.

It is a shame, too, that no Cabinet member will respond to the contributions about struggling businesses—especially to the thoughtful contributions of my hon. Friend the Member for West Bromwich West (Mr Bailey), who spoke about the dysfunctional relationship between banks and industry, which grossly impedes our ability to grow out of the recession, and of my right hon. Friend the Member for Oldham West and Royton (Mr Meacher), who forcefully rebutted an intervention suggesting that the banks are lending. That suggestion was totally out of touch with the experience of small businesses in all our constituencies. The reality is that many businesses are being refused the loans they need to tide them over or to keep people in work. We all need a banking sector that lends, supports small businesses and acts as a sector that we can trust and rely on.

We also heard contributions from the hon. Members for Halesowen and Rowley Regis (James Morris) and for Bristol West (Stephen Williams), which I thought added important dimensions to today’s debate. I want to pick up on the contribution by the hon. Member for Nuneaton (Mr Jones), as he would not let me intervene when I tried to do so earlier. Both he and the hon. Member for Stourbridge (Margot James) seem to disagree with the decision of the RBS chief executive to hand back his bonus, when I had thought that every Member of every party would welcome that. The fact is that the chief executive of RBS earns a salary in excess of £1 million a year—46 times more than the average worker. That should be reward enough for doing his job; he should not be getting a bonus of £963,000 on top of that when few others could expect to earn that sort of salary in a lifetime.

[Richard Graham (Gloucester) (Con)]

Will the hon. Lady explain the Opposition’s policy on creating growth in the financial sector? We have heard a great deal of criticism about everything, about how dreadful bonuses are and all the rest of it. That is fine, but what is Labour’s policy for growth, for being creative and for going forward?

[Rachel Reeves]

We have argued a five-point plan for jobs and growth—to put money in the pockets of ordinary families with a VAT cut and a national insurance holiday for small businesses that are struggling to take on new workers. Those are the sort of policies that will get the economy moving again and will protect jobs in all our constituencies.

We should welcome the RBS chief executive’s decision to hand back his bonus. The reality is that, over the last year, the RBS share price has fallen, it failed to meet its lending targets and it laid off workers. As I said, I would have thought a salary in excess of £1 million reward enough.

Today’s debate, however, is not about one man or one bonus or one bank; it is about the need for an overhaul of the way in which bonuses and pay are structured. As my hon. Friend the shadow Business Secretary has spelled out and as many contributions have highlighted, issues of pay and performance—of individuals and of the banking industry as a whole—cannot be separated.

Banks need to show that they recognise the need to change, the need to reform their business models, the need to rebuild their relationships with small businesses and customers and, most of all, the need to restore public trust. The British people deserve a banking system that they can believe in and respect—a banking system that inspires trust and is seen as a responsible custodian of our earnings, our savings, and our pensions. I know that the majority of people who work in banks at all levels also want to feel proud of the job they do, so today’s debate is about beginning to restore that trust and integrity.

Opposition Members have set out clear, constructive proposals in three key areas: transparency, accountability and fairness. [Interruption.]On transparency, the Labour Government legislated for the implementation of David Walker’s recommendations on high pay, including for rules to disclose the numbers of employees paid over £1million a year. [Interruption.]

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I am sorry to interrupt the hon. Lady, but Members are holding conversations in the Chamber, but they expected others to listen to them when they made their speeches. I expect Members who want to conduct private conversations to do so outside the Chamber and not in it.

[Rachel Reeves]

Thank you, Madam Deputy Speaker. I think that some Members do not want to hear the truth.

Transparency would give shareholders the vital information they need to rein in excessive remuneration, but what have we seen from the Government? No answers and no action. On accountability, the High Pay Commission has recommended the inclusion of an employee on company remuneration committees. We have called on the Government to legislate, but what have we had? No answers and no action. Yet again, on the matter of fairness, when banks continue to award bonuses beyond most people’s imagination at a time when everyone else is being squeezed, why will the Government not do what is right and tell the banks that if they continue to pay out large bonuses, they will impose a tax to ensure that some of that money comes back to the taxpayer? Hundreds of thousands of young people have been looking for work for months and even years now, struggling with the consequences of a crisis that was caused by the financial services sector for which they are paying the price. That is the real crisis our country is facing—the crisis of more than 1 million young people out of work, but what do we see from this Government? We see no answers and no action.

On transparency, on accountability and on fairness, our constituents want answers and they want action, so why do the Government not take responsibility? At the end of the day, it comes down to priorities. Labour’s priorities are those of the British people: of families facing a squeeze in living standards, of the 1 million young people trying to find work and of the thousands of good businesses trying to stay afloat.

By contrast, this Government’s priorities are increasingly clear: a tax cut for the banks and a quiet life for the Cabinet. Well, we can tell the Government that this issue will not go away. We will continue to raise the concerns of voters and if this Government will not take the necessary action, the public will draw this conclusion—that this out-of-touch Prime Minister just does not get it, that his Cabinet colleagues do not get it either and that the Labour party is the only party that does.

19:28

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

We have heard 11 interesting contributions from Back Benchers, although I cannot say that the last contribution was either interesting or, indeed, informed. I should begin by drawing the House’s attention to my entry in the Register of Members’ Financial Interests.

I have to say that the last contribution was in sharp contrast to the more emollient tones of the shadow Secretary of State, the hon. Member for Streatham (Mr Umunna), who actually admitted—I think for the first time from the Dispatch Box—that Labour got it wrong on this issue when it was in government. What is not clear, however, is whether he cleared those remarks with the shadow Chancellor. It seemed that this set of remarks was new to a number of faces on the Back Benches.

We heard very good contributions from my hon. Friends the Members for Halesowen and Rowley Regis (James Morris) and for Nuneaton (Mr Jones) and excellent contributions, too, from my hon. Friends the Members for Bedford (Richard Fuller) and for Stourbridge (Margot James). We heard an interesting contribution from the Chairman of the Select Committee, the hon. Member for West Bromwich West (Mr Bailey), who pointed out that it was my right hon. Friend the Member for Twickenham (Vince Cable)—[Interruption]—who, notwithstanding the shouting and screaming from Labour Members, highlighted the existence of real challenges and problems when his party was in opposition. I am sure that my right hon. Friend will be happy to acknowledge that.

Let me begin by making it clear that this Government have an absolute commitment to addressing excesses in the banking system that were allowed to go unchecked and unregulated for much of the 13 years before we came to office. It was a system in which light-touch regulation and record bonuses were encouraged by a Government who were keen to reap the rewards. Since coming to office, we, as a coalition Government, have made a return to responsible banking a key priority. We have taken concerted action to ensure that, in return for extensive taxpayer support, banks must once again live up to their obligations to support the wider United Kingdom economy.

That is why, as my hon. Friend the Financial Secretary to the Treasury pointed out, we are discarding the discredited tripartite system and implementing the recommendations of the Vickers commission. It is also why we are actively supporting the flow of lending to businesses, especially small businesses, so that they can gain access to the finance that they need if they are to invest and grow. We on these Benches passionately support the entrepreneurs and hard-working small business owners who create the wealth and jobs on which the rest of us rely.

There has been some discussion about the Merlin agreement this evening. Let us be clear about that. Under the terms of the agreement, the five major UK banks committed themselves to making £190 billion of new credit available last year. Of that new lending capacity, £76 billion was dedicated to small and medium-sized enterprises, which would be a 15% increase on the previous year. The latest figures, for the third quarter, show that the banks are broadly on track. At that point banks had lent more than £157 billion to UK businesses, 11% above their implied target, and three—Barclays, Santander and HSBC—have all made recent statements to the effect that they have met their Merlin targets. We await the final figures, but that is good news that we should bear in mind.

Moreover, a report from my Department, to which the motion refers, reveals—although I did not hear this from Labour Members—that three quarters of SME employers are being given the loan or overdraft they request. My hon. Friend the Member for Stourbridge rightly pointed out that it is wrong to suggest—as some Opposition Members do—that no small firm can obtain a loan.

[Mr Umunna]

rose—

[Mr Prisk]

I will not give way. The hon. Gentleman spoke for 45 minutes, which meant that Back Benchers did not have a chance to contribute to the debate.

I understand—we understand—that to the 25% of SME employers who do not obtain that loan or overdraft, the fact that 75% do will be no consolation. That is why the Chancellor is taking decisive action to provide some £21 billion, £20 billion of it under the national loan guarantee scheme, which will be available over two years and will allow banks to offer lower-cost lending to smaller businesses. [Interruption.] Notwithstanding the chuntering of Opposition Members, that scheme is supported by the Federation of Small Businesses, the British Chambers of Commerce and the CBI. The details will be made clear in the next few weeks.

[Rachel Reeves]

rose—

[Mr Prisk]

No, I will not give way to the hon. Lady. We heard a diatribe of clichés from her, but we heard no policy, no original ideas and no original thoughts.

We are also making available an initial £1 billion through a business finance partnership that will allow small businesses to invest through non-bank channels. My hon. Friend the Member for Bedford was absolutely right to say that we should not just consider the bank channels, but should ensure that other players in the market can come forward. My hon. Friend the Member for Halesowen and Rowley Regis—who, unlike many Opposition Members, has actually run a business—was also right to draw attention to the importance of choice and competition. I agreed with the shadow Business Secretary when he said that we should think about the business model and the return of relationship management. I hope that we shall hear some positive contributions about that from Labour, and not just the usual flannel.

The Opposition motion refers to the need for a reform of banking, and to the need for more regulation and responsibility. The motion is right to refer to responsibility; it is just a shame that that was not one of Labour’s policies when it was in government. However, I suppose that it is nice to have a convert, even if the conversion is late in coming.

Yesterday the Chancellor introduced the Financial Services Bill, demonstrating that we would overhaul the regulatory environment that we had inherited. The Bill’s principles are important: responsibility, prudence—I think we may remember that word—and sustainability. That means addressing the old system of excessive and irresponsible levels of pay.

As we have heard this evening, under the new FSA remuneration code we have ensured that bonuses will be deferred by at least three years and linked to the performance of employees and companies. Through the disclosure regime, we are providing more transparency than we ever saw from the Labour party when it was in government. Bonus levels are already starting to fall. As we heard earlier, last year they stood at £6.7 billion, just half as much as when the shadow Chancellor was the City Minister in the last Government.

This evening’s debate has also dealt with the wider issue of executive remuneration. The Government strongly believe that successful people who work hard should be properly rewarded. It is vital that, in a debate about the excesses of a few, we do not give the impression that enterprise and endeavour are unwelcome in Britain; but, sadly, quite a few Opposition Members simply do not understand that. We need to make our message clear. The Government are determined to work with businesses to reform executive pay, and to do so in a way that strengthens business in Britain in the long term. As was alluded to but never actually examined by the hon. Member for—

[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 put accordingly.

19:36

Division 461

Ayes: 244

---

Labour: 227
Democratic Unionist Party: 6
Scottish National Party: 4
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Alliance: 1
Green Party: 1
Independent: 1

Noes: 295

---

Conservative: 252
Liberal Democrat: 43

Backbench Business

Tuesday 7th February 2012 Commons Chamber

[Un-allotted half day]

Metal Theft

Tuesday 7th February 2012 Commons Chamber

[Relevant document: the Fourteenth Report from the Transport Committee, Cable theft on the railway, HC 1609.]

[Madam Deputy Speaker (Dawn Primarolo)]

Before we start this debate, may I inform the House that 20 Members have asked to speak in it and we are going to start with a time limit of five minutes? May I ask Mr Graham Jones, who is going to introduce the debate, to speak for no longer than 10 minutes?

19:50

[Graham Jones (Hyndburn) (Lab)]

I beg to move,

That this House notes that metal theft is becoming a serious issue for the UK; welcomes the Government’s announcement on introducing a cashless system and higher penalties; is concerned that the comprehensive package of measures which is needed to address this issue is not being introduced at the same time; believes that to effectively stamp out metal theft there needs to be a radical change in how the scrap metal industry is regulated; and calls on the Government to introduce a number of additional measures as a matter of urgency, including a robust licensing scheme for scrap metal dealers to replace the present registration scheme, a licence fee to fund the regulation of the licence, greater police powers to close unscrupulous scrap metal dealers in line with alcohol licensing, police authority to search and investigate all premises owned and operated by scrap metal dealers, use of photo identification and CCTV to identify sellers of scrap metal, and their vehicles, vehicle badging for mobile scrap metal dealers, and magistrates’ powers to add licence restrictions and prevent closed yards from re-opening.

First, may I express my thanks to the hon. Members for Dudley South (Chris Kelly) and for Worcester (Mr Walker) for co-sponsoring this topical Back-Bench debate and to the Backbench Business Committee for allowing Members of this House to debate this issue tonight? I also wish to mention my hon. Friend the Member for West Bromwich East (Mr Watson), who first raised this issue back in 2010. I understand that just last night, in the other place, metal theft was once again the subject of much discussion.

Metal theft is at epidemic levels. Industry is being hard hit by daily thefts and the general public are not only horrified at the escalation and cost, but disgusted at the theft of Britain’s heritage; reports of war memorials being desecrated have shocked the nation. We have seen lifeboat stations without communications, and last month Llandough hospital in Wales had to cancel 80 operations because of cable theft. Remote rural broadband services across Britain are too frequently knocked out. The Energy Networks Association claims that there has been a 700% increase in theft from the energy networks between 2009 and 2011. The Association of Chief Police Officers conservatively puts the cost at £770 million. I believe that a lack of accurate reporting—there is no specific crime code—probably means that the true cost is higher, but Deloitte puts the figure more conservatively at between £260 million and £600 million.

[Mr John Spellar (Warley) (Lab)]

Is not one of the key factors the disproportionate relationship between the value of the metal being sold and the cost of replacing it? For example, manhole covers are being sold for a few quid but the cost to Sandwell council of replacing them is £400, and it is losing 40 or 50 of them a month. A similar comparison can be made between the price of the cable that is being stolen and the disruption to travel. Should not the penalties reflect that cost rather than the value of the metal?

[Graham Jones]

My right hon. Friend is absolutely right and many in the House will share his view.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

Will the hon. Gentleman give way?

[Graham Jones]

I would like to make some progress, if possible.

The British Transport police state that there are eight attacks on the transport system each day, and that is of grave concern. Ecclesiastical Insurance reported that in 2011 there were 2,500 lead thefts from church roofs. Perhaps most shockingly, the War Memorials Trust estimates that one memorial is vandalised every week in the UK, and for only a very small amount of metal. Today’s debate is a reminder of the urgent need to tackle this scourge and of the importance of doing so; with the Olympics around the corner, it reminds us of the threat to essential services. Paul Crowther of the British Transport police described metal theft as

“the second biggest threat to our infrastructure after terrorism”.

Nigel Martin, the head of supply at Wessex Water, has said:

“Any one of these cable thefts can turn into a civil emergency.”

The Government’s response so far has been unclear. My comprehensive Bill was rejected, despite its forensic drafting by the Public Bill Office—I wish to thank the people there. The announcement of a ban on cash trade and the introduction of unlimited fines for those trading in stolen metal are welcome steps. However, the Government’s announcement misses key elements that underpin the success of a cashless payments system. First, a robust licensing system is required to overhaul the inadequate and flawed Scrap Metal Dealers Act 1964. Secondly, and as importantly, we need a UK wide taskforce to gather best practice and to bring together the key partners: the United Kingdom Border Agency; Her Majesty’s Revenue and Customs; the Environment Agency; local government, the National Crime Agency; banking; local police forces; and, importantly, industry. Those bodies need to come together in a positive way to tackle this scourge.

[Mark Tami (Alyn and Deeside) (Lab)]

My hon. Friend mentioned church roofs. Is he aware that insurance companies now have a £5,000 limit and will pay out only on that, but in most cases that does not get anywhere near covering the cost of the stolen lead?

[Graham Jones]

I am aware of that, and it appears that that figure is falling as a result of the escalation in lead thefts from church roofs. That is of some concern, especially as insurance is very hard to come by for some of the churches that have suffered.

The measures in this motion were agreed by the affected industries and, importantly, by members of the all-party group on combating metal theft. However, the Government’s two announcements somewhat sit in isolation, and that is where the concern lies. The Legal Aid, Sentencing and Punishment of Offenders Bill is an unsuitable legislative vehicle, so we need to move beyond it. It appears to be have been commandeered at the 11th hour and, unfortunately, no other measures have been allowed to be added to it. The Bill passed through this House only last November and notably absent were any measures to tackle metal theft. That raises further questions about this House’s ability to scrutinise last-minute amendments from the Lords.

In November, the Chancellor announced a £5 million pilot which has been started in the north-east—Operation Tornado. However, it will not report back until July, when the Olympics begin and Parliament starts its summer recess. I am concerned about that, as the approach being taken all seems a little disjointed, and I appeal to the Minister to bring coherence to the Government’s strategy.

Metal theft is a very particular type of crime. That is because, as my right hon. Friend the Member for Warley (Mr Spellar) said, its effects are disproportionate to the impact it has on other people; stealing £20-worth of metal can cause £100,000-worth of damage. Such a theft can remove a war memorial or result in the loss of life, and it cannot be calculated in financial terms in some cases. A theft in the Dartford tunnel area caused £29 million-worth of damage and a recent metal theft in Glasgow caused a further £14 million-worth of damage, including the part closure of a hospital.

Metal theft is also a very particular type of crime because the effectiveness of policing it is limited; the nation’s metal estate is so vast that there is not a police solution. The Government must look more intelligently and co-operatively if we are to “design out” the problem. We are talking about a failure of regulation and of joined-up working, not of policing.

[Several hon. Members]

rose—

[Graham Jones]

I have only 10 minutes available and I would like to make some progress.

In 2010, only 21 people were proceeded against under the 1964 Act, and only 18 were found guilty and sentenced. Of these 18, 10 received a fine and eight were given a conditional discharge. The average fine was £379, and only once was the maximum of £1,000 used. I welcome the response by the Home Secretary on sentencing and the comments of Keir Starmer, the Director of Public Prosecutions, who recently said that the Crown Prosecution Service would be taking a “firm stand” against metal thieves and would spell out the level of public disgust to judges.

Unfortunately, I am never shocked by the scale of criminal activity in the scrap metal industry. Cash is king for one reason and HMRC needs to wake up to that, as the Treasury is losing millions in revenue. A sting article in the Daily Mail last week exposed the size of the problem in the industry, as 40% of the dealers approached accepted metal that the undercover journalist told them was stolen. Shockingly, none of them reported this alleged crime to the police, and this is simply not good enough.

Two previous sting operations by BBC London and The Daily Telegraph have shown that those cases are not isolated. The measures called for in the motion will support honest dealers who play by the rules. Without those changes, the dishonest and the criminal will have a commercial advantage. I welcome the story of a south London scrap metal dealer, Stuart Nebbett, who is donating £21,000 to replace stolen plaques from war memorials in south London.

The industry needs reform. Last night, in the other place, the Minister stated that a robust licensing scheme would be brought in “as soon as possible”, but I should like to know when and how. I do not want to see any drift on this matter or any relaxation of tough regulation. The way to deal effectively with this crime is to choke it off at the point at which it enters the system, before war memorials can be laundered through apparently legitimate metal dealers and before all traceability is lost. Legitimate dealers are being infected through actions at entry-level points in scrap metal trading. The public need a commitment from the Government that they will introduce a full licensing scheme funded by a licence fee. That is the first step towards fully legitimising the scrap metal industry and is a prerequisite to the introduction of cashless payments, as it would provide a robust legal framework with traceability at the heart of the process, particularly by giving magistrates the power to add licensing restrictions.

There is also a need for increased powers for police to enter, search and close the premises of those suspected of dealing in illegally obtained scrap metal. At the moment, they require a warrant to enter premises that are not registered by the local authority. It is important in identifying stolen metal entry points that the Environment Agency waste carrier notices are enforced and that other agencies and, crucially, the public can identify itinerant traders and, at the other end of the scale, illegal containerisation with the introduction of vehicle badging.

The robust measures called for in the motion are one half of the solution, but good practice is the other half and I am concerned that we might turn a blind eye to good practice should we regulate the industry. Together, those two kinds of action will free up scarce resources to deal with displacement of the crime and to allow the agencies involved to shift resources to the hardcore criminals who will seek to divert their criminal activities away from regulated scrap metal dealers.

I conclude by affirming that the House wants to know what the Government are going to do and when they are going to do it. Lord Henley said last night in the other place that

“as soon as possible…by whatever legislative means is appropriate, we will bring forward the further amendments that need to be made, particularly to the Scrap Metal Dealers Act 1964.”.—[Official Report, House of Lords, 6 February 2012; Vol. 735, c. 54.]

I welcome those comments. If the Government do have a clear strategy, I hope that the Minister will be able to make that clear and provide a road map and timetable for regulation. At the moment, it appears to the industry and those outside it that this might be policy on the hoof.

20:03

[Chris Kelly (Dudley South) (Con)]

My interest in this vital subject was sparked by the near-nightly chronicling of metal thefts in the black country by the excellent six-nights-a-week Express and Star newspaper, which is the most widely read regional paper in the country. As the global price of metals such as lead and copper has climbed higher due to surging demand in emerging economies such as China, so the number of reports of metal thefts in local newspapers in my constituency has increased. Having studied the impact of this particular crime, and having set up with my friend the hon. Member for Hyndburn (Graham Jones) the all-party group on combating metal theft, it is my belief that most stolen metal is laundered within a few miles of where it is stolen. The most obvious reason for this is that the opportunist, unprofessional thief does not have the means, inclination or transportation to move several tonnes of stolen metal. Therefore, a car, pick-up truck or van-load of metal is usually weighed in at the nearest scrap yard that is known to pay cash with no questions asked.

[Nadine Dorries (Mid Bedfordshire) (Con)]

Does my hon. Friend agree that many of the vehicles that transport stolen metal have been filled with red diesel that was also stolen from the place where the metal was stolen, so it is actually a double theft?

[Chris Kelly]

I thank my hon. Friend for that intervention. There is certainly a loss to the Exchequer and one often finds that the vehicles are uninsured and have no MOT. There is often criminality at all levels in this area.

I have a number of scrap yards in my constituency and there are many in the Dudley borough, the majority of which are run by law-abiding people who would not dream of laundering stolen metal for cash. I have visited one such dealer, Hudsons of Dudley in Brierley Hill, to see how the legitimate side of the trade operates. However, I suspect that the concentration of metal dealers in the Dudley borough and the black country has made my constituency and neighbouring constituencies a metal theft hot spot.

Legitimate metal dealers have told me that yards they know of are regularly visited by youths carrying bags—often sports bags or even supermarket carrier bags—containing copper wire that is promptly weighed in for cash. I have even been told of a metal dealer’s customer record book containing the name Mickey Mouse and the address Disneyland, Paris. That reinforces my view that metal is usually sold within a few miles of where it has been stolen. A youth carrying copper wire in a plastic bag to a scrap yard clearly is not a professional, licensed or regulated commodity dealer who is monitoring the market, moving stock and options around, buying when the price falls, selling when the price rises and transporting metal between supplier and customer in liveried, professional fleets of vans and trucks. That is not to say that everybody who sells small quantities of metal for cash on a regular basis is handling stolen goods, but it is clear from police reports, infrastructure, energy and transport networks and insurance company records that much of it is stolen.

The problem of metal theft was becoming so acute in my community that last February I arranged for the Under-Secretary of State for the Home Department, my hon. Friend the Member for Old Bexley and Sidcup (James Brokenshire), to meet a delegation of metal dealers and business people from the black country. They came down to the House to meet the Minister and his officials to discuss measures to combat metal theft, and Mr Hudson of the aforementioned Hudsons of Dudley was one of the business men present. One of the problems we discussed with the Minister was that a legitimate metal dealer cannot compete with the cash-in-hand payment of a dealer who is prepared to launder stolen metal. A legitimate dealer paying the market price and declaring everything to the tax authorities cannot compete with a dealer who is prepared to pay cash and who does not declare all that he or she should to the relevant authorities.

It seems to me that there are only two reasons for wanting cash payments in business. The first is that one is prepared to launder stolen goods, with the cash rendering the seller untraceable, and the second is that one wishes to avoid the all-seeing eyes of Her Majesty’s Revenue and Customs. In some cases, it may be both. I know from my time in business that the use of cash is actively discouraged today. There are sensible but quite onerous reporting requirements in place to prevent money laundering and tax evasion by companies. There is also a massive security risk while the cash is on the company’s premises—typically an ordinary office and not a bank-like building with all the necessary security features—and while the cash is being transported in the footwell or boot of, say, a company car and then on foot from the parking bay to the local high street bank to be paid in. It is high time that this industry was modernised and properly regulated. I am a natural deregulator, but this is one industry for which, as the Home Secretary said in her written statement last week:

“Cash transactions…are often completed without any proof of personal identification or proof that the individual legitimately owns the metal being sold. This leads to anonymous, low-risk transactions for those individuals who steal metal. In addition, the widespread use of cash facilitates poor record keeping by the metal recycling industry and can support tax evasion activity.”—[Official Report, 26 January 2012; Vol. 539, c. 26WS.]

Having spoken out several times about metal theft, I have received representations from the British Metals Recycling Association, which appears to make the sole argument that eliminating cash from the metal trade will drive the illegal trade underground. First, I would hope that no members of an organisation such as the BMRA would knowingly be involved in laundering metal above ground. Once stolen metal enters the chain of supply it is hard, if not impossible, to trace, and once it has been melted down it is virtually impossible to trace. That is why it must be prevented from entering in the first place through measures such as those we are calling for in the motion. Large metal recyclers cannot verify the source of every ounce of metal they process, and stolen material is undoubtedly laundered lower down the chain, ending up in domestic use or being exported to fast-emerging markets abroad.

Secondly, there will always be a small minority of rogue traders willing to launder stolen metal. The Government’s recent actions will not completely eliminate metal theft—hence the need to go further and faster, as we have called for in our motion—but I confidently predict that outlawing the use of cash will do much to reduce dramatically instances of this particular crime.

20:09

[Mr Alan Campbell (Tynemouth) (Lab)]

May I begin by congratulating my hon. Friend the Member for Hyndburn (Graham Jones) on the way he introduced the debate and on the lead he has shown on this important issue? I congratulate also the other authors of the excellent motion we are debating. This is an important time for tackling this issue.

I start my brief remarks by congratulating the Government and agreeing with them on some of what they are doing. I agreed with the Home Secretary when she said last month that people who deal in stolen metal are criminals “pure and simple.” Yes, they are. I also agree with the crime prevention Minister, the Under-Secretary of State for the Home Department, the hon. Member for Old Bexley and Sidcup (James Brokenshire) when he said last year that metal theft is not “a victimless crime.” No, it is not.

My constituents would agree with both those statements, particularly if they use the east coast rail line, where cable theft seriously disrupts services at least once a week. Tynemouth residents would agree too, because they are angry when war memorials are vandalised or cowardly thieves steal commemorative plaques from seafront benches. They ask why it is taking such a long time to get to the right place on the matter.

The Government sometimes stand accused, particularly by Opposition Members, of going too far, too fast, but on this issue they are not going far or fast enough. For example, when the pilot scheme to tackle metal theft in the north-east was announced—Operation Tornado—I sincerely welcomed and supported it, but there was an earlier pilot, Operation Fragment, in 2009, and when I asked the Home Office in a parliamentary question whether any evaluation of that pilot had taken place since the election, the Government said that they were learning from previous operations.

The Home Office then announced a metal theft taskforce, which sounds very much like the metal theft unit in the Home Office that was disbanded. Yesterday in another place, the Government announced that they are considering legislative changes, but as my hon. Friend the Member for Hyndburn said, he has introduced a private Member’s Bill that is fit for purpose, so the Government need consider no further.

It is baffling. Why has it taken so long to act? Was it because after the general election Home Office officials were told to disregard everything that had gone before and start a year zero policy? Has the Home Office, like the Justice Secretary, been convinced of the view that in a recession crime will inevitably go up? It did not go up during the 2008 recession and it does not have to be inevitable now. Alternatively, did the Home Office fail to see the link between commodity prices and theft and thus what was coming?

What can be done? Certainly cashless sales and increased fines will help, but the answer is not reform of the Scrap Metal Dealers Act 1964, but its replacement. The police need real powers to enter scrap yards and to close premises if necessary.

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

I am enjoying my hon. Friend’s speech immensely. I am sure that, like me, he goes on operations with his local police force, and if he has not done so, he should. I have sat outside a scrap yard in my constituency with police officers, observing the arrival of vehicle after vehicle that was known to the police. They know the criminals are there, but they are powerless to do anything. Does my hon. Friend share that view?

[Mr Campbell]

Yes. It is important that we give the police powers to do something about that situation. If I was sitting outside a scrap yard in the circumstances my hon. Friend describes, I hope I should not just be there with police officers. I hope I would be there with people from the Department for Transport and the tax office. If people are breaking the law by illegally selling and buying scrap metal, they will be breaking other laws. It is important that officials work together in what used to be known as the Al Capone approach—if we cannot get them for scrap metal sales, get them for something else.

We need to license scrap yards, which is important not simply to crack down on illegitimate dealers, but to protect legitimate businesses, because as we have heard, they are being dragged down by some of the practices elsewhere. Criminals must pay for their crime, not just through increased fines but by our making sure that when they are convicted, their assets are seized.

The Government need to act quickly to get a grip on the problem. As my hon. Friend the Member for Hyndburn said, they cannot even give a proper estimate of the cost to the public purse and to the community of metal theft. Figures vary from Deloitte’s estimate of £220 million to £770 million. That is a big gap and I am not sure even those figures give a proper view of the scale of what is going on. Nor can the Government say in how many cases assets are seized after conviction of the perpetrators.

I shall be genuinely interested in hearing the Minister’s response. She is the fifth Minister in this Government to deal with the matter, so I hope she will bring focus and action. The answer is in the motion. I hope the Government accept the motion and that they implement it as soon as possible. They could make a good start by indicating this evening that they intend to take up the private Member’s Bill of my hon. Friend the Member for Hyndburn.

20:15

[Heather Wheeler (South Derbyshire) (Con)]

Metal theft has been a major issue in Derbyshire. Since October alone, more than 800 crimes have been reported. Fortunately, Derbyshire police have taken the issue to their heart. Operation Calanthia has led to 63 arrests and I am delighted to say that people have been arrested for the metal thefts in Smisby and Melbourne.

However, it is not just my beloved Derbyshire that is suffering; the picture is much bigger, as we have already heard. The most interesting question is what we should do with metal dealers who make cash payments and say that they have robust recording arrangements. We really need to discuss what sort of licensing agreements there should be.

We have good metal dealers in South Derbyshire. They run robust premises.

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

As a former councillor, my hon. Friend will know that local authorities, which license alcohol and gambling, are perfectly set up to undertake licensing. I commend to her what is going on in north Lincolnshire where the police and the local council have been working together on a voluntary licensing scheme, which has considerably reduced metal theft over the last six months.

[Heather Wheeler]

My hon. Friend makes a good point. There are voluntary agreements, but the difficulty is when cables have been stolen, or great big metal electricity boxes—substations. I do not know how on earth people manage to steal these things without anybody noticing.

[Mr Edward Leigh (Gainsborough) (Con)]

My hon. Friend the Member for Brigg and Goole (Andrew Percy) mentioned Lincolnshire, where I too have been a victim of metal theft. My whole home was trashed because thieves stole the boiler without turning off the water. Ordinary people are suffering and we demand that the Government take urgent action. People are fed up. There has been too much prevarication for too long.

[Heather Wheeler]

My hon. Friend is absolutely right, but how do we have a robust licensing process that is not too onerous and expensive? Local authorities are the obvious people to do it, falling in line with alcohol licensing. That would fit really well. I do not want good professional firms to be penalised by more red tape and more cost, but they have to step up to the plate—no pun intended—and say that we need to clean up the whole process. It is not acceptable for everybody to turn a blind eye to the rogue dealers in all our areas.

My hon. Friend talked about boiler theft. It is a most amazing new theft and I keep hearing about it. People are encouraged to put in new eco-boilers that are very green and efficient. Three months’ later their houses are burgled and the boilers are taken. I suggested to the police that we ought to put identification numbers on boilers, but it would be a huge piece of new bureaucracy, so my good police came up with the suggestion of using SmartWater. It is a very good system, but will we really be putting SmartWater on every church roof? Will we put it on memorials? The situation is quite incredible. [Interruption.] We shall to buy need shares in SmartWater.

[Jack Dromey (Birmingham, Erdington) (Lab)]

St Mary’s Church in Erdington has been robbed four times of the lead on its roof. Does the hon. Lady agree with a parishioner of that fine church who said that it is not until such time as the police have power to put out of business rogue scrap metal merchants that we shall see an end to this scandalous trade?

[Heather Wheeler]

Absolutely right. One of the most robust statements by the Home Secretary was about her stance on this policy. We have had a green light to say that we have had enough. Our communities are up in arms, and people are suffering enormously. The cost to the taxpayer and communities is beyond the pale. I am delighted that this Back-Bench motion has been tabled, and I look forward to the Minister’s reply. South Derbyshire will be a better place when we finally get this sorted out.

20:20

[David Wright (Telford) (Lab)]

I begin by paying tribute to my hon. Friend the Member for Hyndburn (Graham Jones) for securing the debate; I am grateful to colleagues from the West Midlands and West Mercia police areas for signing the motion. As Members will know, the iron bridge is in my constituency, so it is appropriate that I should speak. When I left yesterday, it was still there, I am pleased to say. People sometimes call my constituency the birthplace of global warming—I do not know whether that is a tribute or not.

I follow my hon. Friend the Member for Hyndburn in saying that metal theft has reached epidemic proportions. It is not a new problem, let us face it: it has been going on for many years. Households face repeated problems, including power cuts. Commuters face delays on their way to work; metal is being stolen from churches, schools, factories, private homes and public buildings.

[Robert Flello]

One of my constituents recently faced a ridiculous situation. They cleaned their fridge-freezer, put it out by the back door, washed it down and went inside for a cup of coffee. When they came out, they found that it had gone. Does my hon. Friend agree that theft is happening at all sorts of levels?

[David Wright]

I do, and I shall come on to the gangs who travel round estates taking property from people, often from their premises. Those gangs may do a good job clearing up material that would otherwise be fly-tipped, but they need to do it with permission, and they should be regulated.

I have been contacted by the chairman of my police authority in West Mercia, who told me that there has been an alarming increase in the number of recorded metal theft offences. An additional 131 offences were recorded when comparing April to December 2011 to April to December 2010—a 12% rise—and those figures exclude the figures for the theft of catalytic converters, which have risen by 152%, and of lead flashings, which have shown a 92% rise.

[Mrs Jenny Chapman (Darlington) (Lab)]

My hon. Friend mentioned catalytic converters, which reminds me of a case in Darlington. The owners of Bathroom World—bathroom fitters—had the catalytic converter stolen from their van, resulting in their being unable to fulfil orders and spending £3,000 to replace a piece of metal that was worth just a couple of hundred pounds. There are often consequences beyond the missing piece of equipment itself.

[David Wright]

My hon. Friend is absolutely right. We need to discuss the knock-on effects on businesses and on the wider economy this evening. She makes a valuable contribution.

I understand that in West Mercia, recent offences have been committed at telephone base stations and national grid substations. The view of the police in our area is that the amount of metal being stolen shows that these crimes are being perpetrated by organised criminal gangs who are diverting their activity from other criminal arenas. They are using the cash environment for metal theft to fund other crime, which is extremely worrying. Cash generated by metal theft can be diverted into other crime, including organised crime. Those arrested often have previous history for distraction burglary and rogue trader offences. That organised component of criminal activity is significant.

We have heard that the Scrap Metal Dealers Act 1964 is no longer adequate for the modern day, and we need a licensing regime, as Members have said. I shall come on to that. Metal theft is dangerous. The British Transport police report a significant increase in cable theft, and say that from April 2010 to 31 March 2011 there was a 70% increase in such theft. It is one of the biggest crimes that the railway industry has to deal with. It puts people’s lives at risk, and it costs the economy a fortune. In the Wales and Western BTP area, thefts, including attempted theft and malicious damage, rose from 369 in 2009 to 549 in 2010.

As I said earlier, public buildings are being targeted, and we have all heard stories of churches and chapels being targeted for metal theft. I was listening to Radio 4 as I travelled down from Telford yesterday, and I heard about the issue that my hon. Friend the Member for Alyn and Deeside (Mark Tami) raised in an intervention. The loss that ecclesiastical insurers are willing to cover is £5,000 on a church building—£10,000 if an alarm is fitted to the roof. The problem, however, is that the scale of metal theft is enormous, and it costs tens of thousands of pounds to replace the metal stolen from church buildings. It is impossible to secure an entire building with an alarm system, so there is a serious problem.

I find it disheartening that people would want to steal from religious buildings, but it does not stop there. Some metal thieves really know how to plumb the depths. I said earlier that metal theft is not a new phenomenon, and my family has experience of that. A number of years ago, thieves stole a commemorative plaque relating to my wife’s parents from the crematorium in Shrewsbury. How low can someone go? They have to stoop pretty low to do that kind of thing, but some people are trying to stoop even lower. As we have heard, they are stealing metal from war memorials that commemorate people who made the ultimate sacrifice for our country. [Interruption.] I will not give way again, because I am running out of time.

I am pleased that steps have been taken to protect war memorials. SmartWater, which has been mentioned, is based in my constituency. The company is working to ensure that memorials are protected by using a water product to place a chemical signature on them. It is invisible to the naked eye, but it can be traced. However, as we have heard, it cannot be put on everything. It can be put on certain artefacts, and it can be used internally in buildings. People can also buy it to use in their home.

We have to get rid of the cash environment for metal. We have to make sure that people process sales through cheques, BACS or other credit systems, and we need a more robust licensing regime. Banning cash transactions on its own will not be enough. We need better licensing arrangements to tackle metal theft. We need tougher police powers. The police need the capacity to go into scrap metal dealers’ yards, inspect the premises under the licensing regime, and tally off sales, matching what has been spent with payments to people coming in. It is really important, and the Government need to act.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. A large number of Members wish to speak, as can be seen from looking around the Chamber. I know that everyone wants to try to speak in this important debate, so I am reducing the time limit for speeches to four minutes. Will Members please remember that interventions add time to those four minutes? They help the person on their feet; they do not help the Member who is still waiting make a speech.

20:29

[Mr John Leech (Manchester, Withington) (LD)]

I would like to start by congratulating the hon. Members for Hyndburn (Graham Jones), for Dudley South (Chris Kelly), for Worcester (Mr Walker) and for Peterborough (Mr Jackson) on securing this Backbench Business debate on a subject that undoubtedly has an impact on constituents of every Member of the House. The scale of metal theft has rocketed in recent years as the price of scrap metal has risen. For example, the price of copper has risen by more than 200% since the end of 2008, and by more than 400% since 1997, so the incentive to steal it has increased significantly over the past 15 years.

The problem is most acute on the railways. In 2010-11, 35,000 rail services were either cancelled or delayed as a result, at a cost of over £16 million. Theft has cost Network Rail £43 million in the past three years, and the Association of Train Operating Companies estimates that the knock-on effects cost the wider economy between £16 million to £20 million. However, the problem is certainly not confined to the railways. Churches, other religious buildings and monuments have become easy targets for thieves. Metal theft has cost churches in Manchester over £1 million in the past five years, including in my own constituency, where the lead was stolen off the roof of one of the church buildings in Southern cemetery twice in one month. Since 2007 there have been 480 claims from the Anglican diocese, and Ecclesiastical Insurance, which covers the insurance of churches, paid out more than £8.5 million in 2010.

Local authorities and water companies fare no better. Thames Water estimates that metal theft costs it £1.2 million each year, and Wessex Water claims that it has cost it £1 million since 2010. Manhole cover theft costs North Somerset council £40,000 a year and Newham council £60,000 a year. In Manchester we have a particular problem with the theft of drain gully tops, so much so that they are now replaced by a non-metallic alternative. In fairness, the local council is quick to respond to reports of missing gully tops, but their theft is a real hazard to the safety of cyclists, pedestrians and motorists, as gaping holes are created on the road next to the pavement.

In November last year the Transport Committee undertook an inquiry into cable theft on the railways. Its conclusions were not altogether surprising:

“A key factor to the increase in cable theft is the ease with which illegally obtained copper cable can be sold on and laundered into the legitimate trade. The Scrap Metal Dealers Act 1964 is inadequate to regulate the modern industry and reform of this legislation is necessary.”

Clearly the scrap metal trade is the weak link in efforts to combat metal theft crime. The Committee’s recommendations were not dissimilar to those put forward in the motion, and ultimately these additional steps might be required finally to bring about a reduction in scrap metal theft.

However, there has already been a swift response from the Government. In November they provided £5 million to establish a dedicated metal theft taskforce that will improve law enforcement on the illegal sale of scrap metals. Moreover, the Home Secretary laid a ministerial statement before Parliament only four days after the Transport Committee’s report was published. The statement proposed amending legislation and creating a new criminal offence to prohibit cash payments for the purchase of scrap metal and to significantly increase the fines for all offences under the Scrap Metal Dealers Act 1964, which regulates the scrap metal industry. That will be done by amending the Legal Aid, Sentencing and Punishment of Offenders Bill—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I call Mrs Louise Ellman.

20:32

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

I congratulate my hon. Friend the Member for Hyndburn (Graham Jones) and other hon. Members on their work to secure this important debate on the epidemic of metal theft. In the short time available, I would like to concentrate on the work of the Transport Committee on its recent report on cable theft on the railways, to which the hon. Member for Manchester, Withington (Mr Leech) has already referred.

Cable theft on the railways is an escalating problem of increasing importance. First, there is the disruption. Last year alone over 35,000 national rail services were cancelled or delayed, which meant 3.8 million passenger journeys thwarted. Secondly, it costs the public purse a great deal of money. Network Rail estimates that it has paid £43 million out directly over the past three years, and there has perhaps been an additional £20 million cost to the economy. Thirdly, lives are at risk. The British Transport police have said that 10 people lost their lives last year because of cable theft, and the problem is escalating.

What is the solution? The solution lies in a package of measures. First, more preventative action is needed. Network Rail can do more to prevent theft by having better surveillance, burying cables, using alternative materials and using traceable technology marking such as RedWeb. There should be stricter licensing and regulation of scrap metal dealers and stronger enforcement of the conditions of that licensing; proof of identity for those selling metals at scrap metal dealers should be made compulsory; there should be better surveillance, including CCTV, when transactions take place; there should be records of those transactions; and cashless trading should be trialled.

[Nadine Dorries]

Much of that work can be done in conjunction with the police and local councils. The Localism Act 2011 gave new powers to those councils that are prepared to go the extra mile and implement procedures for some of that work, so some councils, such as Central Bedfordshire, are already doing some of that work. I accept that more needs to be done, but councils can go some way already.

[Mrs Ellman]

I thank the hon. Lady for her comments and recognise what she says, but the Committee advocates a compulsory system of registration, stronger licensing and enforcement, too.

There must also be an increase in police powers to enter sites and to search them. There should be new offences, such as aggravated trespass on the railways, to make the theft of metal on the railway something for which thieves consider they will be apprehended. That requires more funding—more funding for British Transport police and for other authorities. Operation Tornado, which is being undertaken in the north-east of England, is to be welcomed, but it is a limited and voluntary scheme.

This problem is not a new one. Back in 2008 the National Audit Office warned about the problem of metal theft, and during our inquiry we were told that the industry thought it was better to keep quiet about it. None of us will keep quiet about it any longer.

I note and applaud the Government’s response following the publication of the Committee’s report, and some actions have now been taken, with others promised, but the full package of recommendations has not been adopted, so I look forward to hearing from the Minister how the Government intend to enact the full package of measures that the Committee proposed. We addressed the theft of cables on the railway, but our recommendations apply to the epidemic of metal theft wherever it may occur.

20:36

[Mark Garnier (Wyre Forest) (Con)]

I, too, congratulate those hon. Members who have managed to secure this debate. It is an incredibly important issue and, as many Members have said, a big scourge throughout the country.

I also voice my gratitude to the Home Secretary for announcing a couple of weeks ago the end of cash payments in scrap metal yards. It is testament to how seriously the Government take the issue that they are doing something fairly constitutionally important, which is to introduce a law that prevents an entire section of society using legal tender. This is a very welcome move, but we should not forget that important point.

Last week I met the Wyre Forest Safety Partnership, which includes the police, and talked about how we can best help them. It is worth bearing in mind that there are plenty of laws available to prevent the scourge; it is just a question of helping the police to gather more evidence in order to implement the law and to effect more prosecutions.

[Gavin Williamson (South Staffordshire) (Con)]

In South Staffordshire my local district council has worked closely with the police to crack down on those who collect scrap metal, and it has found an exceptionally large number of vehicles that are not MOT’d, not insured and should not be allowed on the road at all. Is that something on which other district councils need to follow suit?

[Mark Garnier]

I am grateful for that intervention. Not only are a lot of dealers not insured, but many are not even licensed, and one suggestion from the police in order to deal with the problem is to license those scrap metal merchants who used to be the rag and bone men with whom we will be familiar thanks to “Steptoe and Son”, but who are now more technically minded and have flatbed trucks. So licensing is another measure that could be helpful.

In our talks, the police came up with a number of ideas, and they have been successful locally in Wyre Forest. After seeing 60 offences last March, they managed to get the number down to 17 in November, but I shall give the House a flavour of the anomalies that they mentioned, and discuss some of the ways in which we can help them to gather evidence in order to effect prosecutions.

An anomaly that I found surprising is that the police are allowed to visit licensed scrap metal yards, but need a warrant to visit unlicensed yards. I was not aware that there were unlicensed yards, but apparently there are. That situation favours the unlicensed premises, which is ridiculous. We definitely need to do something about that.

The police would like an absolute offence of possession. One problem is that a scrap yard might have a pile of manhole covers, but the owner can say, “A lorry came in, weighed in, unloaded and weighed out, and I paid them for the scrap difference, not having seen the manhole covers that were hidden at the bottom of the lorry.” That is a reasonable defence, apparently. The police would like the law to be changed so that the possession of stolen goods—clearly, manhole covers will probably be stolen—is an offence in itself. That would put the onus on the scrap metal merchant to explore the contents of the load, rather than just check its weight. That is incredibly important.

My hon. Friend the Member for Dudley South (Chris Kelly), who I think has slipped off to get a cup of coffee, mentioned the walk-in trade. It is one thing to be able to photograph vans and their licence plates when they come in. It is another thing when youngsters come in, perhaps saying that they are apprentice electricians, with bags of copper wire, because there will be no record. A ban on walk-in trade would be incredibly important.

Finally, there is the concept of specialisation. There are two sides to this argument. The first, which the British Metals Recycling Association pointed out when I met it a couple of weeks ago, is that some large companies that have a lot of scrap metal, such as utility companies and Network Rail, deal with 500 or 600 organisations to dispose of their scrap. If they were to limit that to just a handful of organisations, we would know, if rail track were found in a yard that was not a specialist rail disposal yard, that it was stolen. Similarly, the police suggest that some yards might want to specialise in certain areas, so that people know that they will deal only in cable, for example. That is an idea. I am not sure that it is workable, but I certainly think that it should be considered.

Clearly, this is a big problem and a lot of people are keen to sort it out. The sooner we deal with it, the better.

20:42

[Steve Rotheram (Liverpool, Walton) (Lab)]

I congratulate my hon. Friend the Member for Hyndburn (Graham Jones) on securing this debate and on his tenacious approach to this issue from the outset. I was a sponsor of his ten-minute rule Bill in November; he has not rested on his laurels since.

As colleagues have said in this debate and in previous exchanges, there has been a huge increase in the theft of cable and other metals. The exponential rise in thefts requires an equally robust legislative response, which the Government should be pushing through, but instead they are trying to catch up with the momentum given to this issue by Opposition Members. Although legislation will not stop all such crime—it never does—it would make it more difficult for criminals to profit from their ill-gotten gains and make it easier to track and prosecute those responsible. Nobody should be in any doubt that the Scrap Metal Dealers Act 1964 needs to be updated. We did not have things such as CCTV and SmartWater technology back then.

As we have heard, metal theft is not simply a matter of the illegal sale of stolen scrap; its consequences can have profound knock-on effects. Without a tougher regulatory framework, trains will continue to face disruption because of missing signalling gears and cables, electricity supplies will be interrupted because of the theft of power lines, and our heritage will be poorer because of the vandalism of plaques and war memorials.

[Nicky Morgan (Loughborough) (Con)]

Will the hon. Gentleman give way?

[Steve Rotheram]

No, I will make some progress.

Even some of our churches have been hit by metal thieves. The stripping of a few hundred quid’s worth of lead has resulted in many thousands of pounds’ worth of damage to the building’s structure. Some churches have actually closed.

This is a serious crime that requires Members to produce a serious and viable solution that increases police power but safeguards legitimate, socially responsible scrap metal firms from financial restriction. We must do all in our power to clamp down on rogue dealers and metal laundering. Unless the Government agree to introduce a form of licensing for metal dealers and insist that anyone producing scrap metal must produce photographic identification, their limited response to a growing problem will be seen as no more than a sop. They need to grant the police and magistrates powers, which must be combined with vehicle badging for mobile scrap metal dealers. Trends suggest that without those necessary safeguards, the problem will continue to grow.

As the hon. Member for Wyre Forest (Mark Garnier) said, not every dealer in the scrap metal industry is a Steptoe and Son-esque, turn-a-blind-eye fly-by-night. The industry provides a service that is both environmentally friendly in recycling terms and economically beneficial to UK plc. It is estimated that it contributes £5 billion a year to the UK economy, with much of that figure coming from small firms. Our plans would restore confidence and make it a better-regulated business. I firmly believe that there has to be a stronger law enforcement mechanism and regulatory framework in place, so I urge colleagues of all parties to support the motion.

20:46

[Mr Robin Walker (Worcester) (Con)]

I am pleased to be able to speak in this timely debate about a problem that has become endemic, and I am grateful to the Backbench Business Committee for finding time for it to be held so quickly. I pay tribute to my hon. Friend the Member for Dudley South (Chris Kelly) and the hon. Member for Hyndburn (Graham Jones), and to the noble Lord Faulkner of Worcester, who has done much to advance the cause of better regulation of the sector. It is good that we have been able to work together on a cross-party basis, and in keeping with that approach I echo the praise we have heard from throughout the House for the Government’s swift action to ban cash payments. However, I wish to make it clear that Members feel that we need to see more.

I need not list the endless disruptions, expenses and outrages that we have seen across the country, because other Members have already done a very good job of doing so. I merely point out a few local examples to add to that catalogue. Last year saw a brazen attempt to steal metal in daylight from the roof of Worcester cathedral, at the very heart of my constituency; a number of long delays on the train lines that link us to London and Birmingham; and, as the hon. Member for Telford (David Wright) pointed out, a huge rise in metal theft reported to West Mercia police. Only today there are reports from the north of the county, in the constituency of my hon. Friend the Member for Wyre Forest (Mark Garnier), of major flooding caused by metal theft after thieves broke into a building and stole just £6-worth of copper piping but left a trail of destruction in their wake. That is a fine example of how the costs of the crime can far outweigh its returns.

No area has been safe from this crime. In a quiet residential square at the heart of Worcester, Britannia square, where for many years my grandmother lived in a nursing home, every front door was attacked and every door knocker removed in an opportunistic bout of metal theft.

[Nicky Morgan]

One category of theft that has not been mentioned so far in the debate is the theft of gold. That is a particular problem for the Asian community in Leicester and the Bangladeshi community in my constituency of Loughborough. It backs up the point that metal theft is not a victimless crime, because people are having their homes broken into and precious items stolen which cannot be replaced.

[Mr Walker]

Absolutely. My hon. Friend makes an excellent point. It is not a victimless crime.

The many utilities, train companies, councils and other organisations that have given evidence to the all-party group have all been clear that they do what they can to improve security and mark their property, but there is simply no way to secure all the metal at risk from theft and police every part of the network of which it forms part. Likewise, residents and constituents who might have taken every effort to secure their home and its contents cannot secure the metal fittings on the outside of their home or the lead on their roof in the same way. That is why it was so vital for the Government to act fast to ban cash payments, and I welcome the move to do so through amendments to the Legal Aid, Sentencing and Punishment of Offenders Bill.

I am particularly grateful that the noble Lord Henley has agreed to meet the all-party group, and it is positive that even ahead of doing so he has taken action on one of our main points. Quite apart from the main benefit of closing down the prime channel for metal thieves to dispose of their goods easily, as the hon. Member for Hyndburn pointed out, there is also potential for huge savings to the Treasury by closing down one of the main ways in which some scrap metal dealers have avoided paying VAT.

However, there is considerable concern that a straight ban on cash payments, in the absence of better regulation of the industry, could lead to an increase in black market metal recycling. The industry bodies have made it clear that they feel a proper licensing regime is needed, as have local legitimate scrap metal dealers who have spoken to me. That would protect the good businesses that go to great lengths to check that the source of their metal is legitimate, and ensure that those who failed to do so were put out of business.

It is right, too, that metal theft should be made a specific crime in its own right and it is reasonable, given the many additional problems that it can cause—not least danger of death—that there should be a significantly higher penalty for metal theft than for other thefts. Energy companies have provided a number of examples to the all-party group of power exchanges being attacked, and in Worcestershire gas heating systems for swimming pools were attacked, and had that not been swiftly discovered and repaired it could have resulted in horrific or deadly injuries to innocent passers by. The group estimates that the number of deaths already caused by metal theft stood at around six last year, but the total number could be much higher. This is a crime that, quite apart from its enormous economic costs, has literally been killing people.

I am therefore grateful to the hon. Member for Hyndburn for setting out in the motion a comprehensive list of measures to deal with the issue. They speak for themselves as a comprehensive, common-sense approach to regulating the industry. Having discussed them with police officers, councillors and scrap metal businesses, I am confident that they can be implemented in a way that works.

It would be wrong to pretend that the police have no powers to deal with metal theft already and I pay tribute to the excellent work of West Mercia police in Worcester in targeting this crime and recognise that they have succeeded in a number of instances, most recently making arrests, seizing stolen goods and £3,000 in cash while closing down an illegal scrap metal merchant in a targeted operation last week.

Today’s debate is urgent as we can do more on this issue. It is an example of Parliament working as it should, addressing an urgent problem through cross-party action and a co-ordinated effort through representatives in both Chambers. I congratulate the hon. Members who have contributed to the debate so far and welcome the decisive action that the Government have already taken, but I urge the Minister to consider carefully the well-researched and detailed recommendations in today’s motion as well as the support for them from so many in industry, in transport and in the vital utilities that keep our country going. The economics of metal theft have changed, making it more attractive for people to take a risk and break the law. It is up to this House and this Government to change the equation and put an end to the rise of this crime.

20:51

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

I support today’s motion, tabled by my hon. Friend the Member for Hyndburn (Graham Jones) and the hon. Members for Dudley South (Chris Kelly), for Worcester (Mr Walker) and for Peterborough (Mr Jackson). It acknowledges that the comprehensive package of measures needed to address the issue is not being introduced at the same time.

Those measures, documented in the motion, are many. It is clear from the motion that Back Benchers in the House do not believe that the Government are doing anywhere near enough to deal with this issue. Metal theft is reaching all-time new heights. In my constituency, as reported in Coastal View and the Evening Gazette, St Leonard’s Church of England parish church in Loftus has had lead stolen from its roof recently, and St Agnes’s Church of England parish church in the Easterside area of Middlesbrough has suffered a similar fate, with copper foil being lifted only this weekend. In 2010-11, the Church of England estate alone suffered £4.5 million-worth of theft and vandalism. In St Agnes’s case, the cost of replacing the copper stolen from the church roof could cost as much as £100,000.

Cable theft is also hampering our infrastructure capability. Since 2009-10, when there were 1,593 incidents of cable theft, there has been a huge increase to 2,712 incidents. In the north-east, cable theft has almost doubled from 593 incidents in 2009-10 to 1,087 in 2010-11. Although the Government’s proposals to end cash payments and increase the fines are welcome, they are only part of what is required. On its own, the ending of cash payments only displaces the problem. In fact the Government can rightly be accused of having good intentions while the breeding ground for further black market activity increases because proper follow-through is not delivered through other measures.

Without other measures, such as those proposed in the motion, yards can simply continue to trade in illegally acquired metals. Without adequate legislation for police entry on site, police force numbers, UK Border Agency funding and staff, vehicle badging and a proper national taskforce, the black market activity in metal theft will persist. Unfortunately, that already happens with vehicles and allows the mobile black market industry to thrive in industrial estates and car parks. Meanwhile, churches, war memorials, rail track, communication cable and industry are picking up the costs. I ask the Minister, is this a question of cost? For me, the real cost of increasing crime, with its consequences for my constituents, is the fact that they will continue to incur higher costs.

More importantly, we need to support legitimate businesses that deal in surplus metals. By not acting, the Government are undermining legitimate businesses. Power cuts, commuter delays, industrial delays and church war memorial desecration are not acceptable and it is now time for the Government to govern, rather than passing the buck, before it is too late.

20:54

[Andrew Stephenson (Pendle) (Con)]

I welcome today’s debate and commend the Members who were responsible for securing it. I want to highlight the scale of the problem in Pendle, where losses from metal theft have risen sharply in recent years. The impact of metal theft, as many Members have said, is not restricted just to the railways, although they are the main victims of the crime. In my area of East Lancashire, in particular, it is having a real and acute effect on smaller businesses.

In Pendle, metal theft has become a major concern of the local council and police. They have both told me that it is now one of their top priorities. The leader of the borough council, Councillor Mike Blomeley, wrote to the Secretary of State in November to describe the problems that we were having in Pendle and call for a ban on cash payments. I am pleased that the Government have announced that that will happen. Councillor Blomeley wants the criminal justice system to focus on the impact of the crimes on individuals and communities, not the value of the metal stolen. I am sure that many other hon. Members would agree that that is the most appropriate approach, particularly given how all our communities have suffered due to metal theft. We have heard from several Members about theft from war memorials and other sites of particular interest.

[Andrew Percy]

While my hon. Friend is discussing war memorials, I want to place on record the fact that last July in Hull, East Yorkshire, we lost a 6-foot bronze statue, a memorial to dead fishermen—trawlermen who lost their lives at sea—given by the people of Vik in Iceland. Does he share my disgust at that and similar thefts?

[Andrew Stephenson]

I share my hon. Friend’s disgust. It is a classic example of some of the disgraceful incidents that have happened.

In Pendle, historic churches such as St Mary’s in Kelbrook have been stripped of lead. Boilers, pipes and outside taps have been ripped from both occupied and unoccupied homes. Some businesses that have been targeted are now struggling to cope, putting many jobs at risk. The head teacher of Barrowford primary school told me just today that it cost more than £60,000 to repair the damage caused by lead theft from the school roof. Another example is the town of Colne, where I live. The theft of metal grate covers from back streets has been so great that the Colne area committee has had to allocate a special budget of £5,000 to replace them.

According to figures made available to me by Lancashire police, there were about 2,228 metal theft crimes in Lancashire in 2010 and about 3,400 last year, representing a 50% year-on-year increase. In the whole of 2006, there were only 508 offences. That is a fivefold increase in five years. Lancashire police think that £7 million is a conservative estimate of the value of metal stolen since 2006 and tell me that currently only 13% of offences are detected. Lancashire constabulary confirms that the rise in offending is consistent with the rise in metal prices, especially copper. Officers who have spoken to me feel hampered in identifying stolen metal and frustrated by the light sentences received by offenders who are caught.

An ongoing police operation, Operation Starling, is addressing metal theft in Lancashire. However, the problem is now so significant that it is having a big effect on local crime statistics. Despite a good record on most fronts, the huge increase in metal thefts in East Lancashire makes it look as though the police force are actually doing badly. That is not the case. They are doing a great job, but they need Government support to tackle metal theft.

I will briefly highlight the case of one of my constituents, a local businessman in Colne who has been the victim of metal theft in the past two years. He estimates the losses to his business in the past 24 months at around £100,000. He has been targeted repeatedly. Everything from lead on the roofs to electric cabling inside properties has been stolen. One gang, spotting a “for sale” sign, hit one of his buildings over a bank holiday weekend, taking so much metal that the building, with 80,000 square feet of commercial space, will now have to be demolished.

My constituent attributes the crimes to the increase in metal prices, which we all know are expected to rise even higher in the coming months. He supports the Government’s ban on cash payments and the other steps that we are taking, and thinks that we should consider other measures. I pass to the Minister his suggestion that the Government consider the old 715 vouchers that we used in construction, where tax was paid up front but receipted so traders could claim it back. He feels that a similar scheme should be introduced for scrap metal dealers. The Minister might wish to consider my constituent’s suggestion along with the others that the Government are considering. I urge the Government to continue doing everything they can to support the police and councils in their efforts to tackle the problem.

21:00

[Mrs Siân C. James (Swansea East) (Lab)]

I congratulate my hon. Friend the Member for Hyndburn (Graham Jones) on securing this debate.

I am sure that many legitimate yards and dealers take care to ensure that their supplies come from legal sources, but others are not so scrupulous and purchase from less-than-honest individuals. Dishonest scrap dealers encourage theft and provide an easy and quick way for thieves to dispose of stolen metal. It beggars belief that no checks are made and no proof of ownership requested. I believe that these dealers create the market for dishonestly obtained metal.

Nowhere is safe. We have heard about war memorials, church plaques and pieces of metal around and about buildings. They are stolen regularly and monotonously, causing much grief and anger. Many people will recall a news story in the Swansea area where every brass instrument of a well-known local brass brand was stolen. Within hours, each instrument had been paid for and processed by a local dealer. It was all caught on CCTV and had been done from the back of the thieves’ van. What did the poor brass band get back? They got a big lump of squashed metal. Where did the dealer think that this metal had come from? Cable theft has become a big problem in my constituency.

[Nick Smith (Blaenau Gwent) (Lab)]

Does my hon. Friend agree that there is a massive problem with cable theft from the Welsh train service? In my constituency, on the Ebbw Vale to Cardiff railway line, there have been terrible delays for commuters. We need to stop this expensive crime, which has such a corrosive effect and prevents people from getting to work.

[Mrs Siân C. James]

Certainly. I will refer to that later.

Cable theft has grown. My own office was struck twice just before Christmas, which was of great inconvenience to me and my constituents. Those who have faced the disruption and reality of cable theft are aware of what people are going through. Last weekend, Morriston hospital, a large hospital in my constituency providing services to people from across south Wales, experienced a breakdown in communication connectivity, resulting in a delay in transmitting essential information that I believe could even have put lives at risk.

Every power outage has a severe effect on our communities: ever-increasing numbers of households experiencing cuts in power, more travel delays, and community and recreational establishments unable to open to the public. Both Virgin Media and Network Rail, two of the best-known organisations in the UK, have experienced considerable disruption from cable theft in and around my constituency. In December alone, there were more than 50 metal thefts affecting cable services in Swansea East. Virgin Media has provided me with these figures, and they show a distinct pattern. Thefts took place every other week, with constituents along Neath road, which is a major thoroughfare that you, Mr Deputy Speaker, will know quite well and which is a key access route into the city, experiencing severe disruption and inconvenience to their media and telephone services with monotonous regularity.

Similarly, as my hon. Friend the Member for Blaenau Gwent (Nick Smith) alluded to, Network Rail has experienced huge levels of theft. This year alone, there have been 46 incidents, causing more than 22,000 minutes of delay, more inconvenience for travellers and businesses in the Swansea area and more costs for the company. On a UK level, metal and cable theft has caused more than 16,000 hours of passenger delays and cost the rail industry £43 million in the past three years.

It is clear to me and others that we need a much tougher licensing regime for dealers. We have to end this buying-at-the-back-door-mentality and require that anyone selling materials to scrap metal dealers prove their identity and provide documentation on where and when the metal was sourced. Local police are ever vigilant, and they are doing a fantastic job and are working within our communities to tackle this scourge. They have successfully prosecuted people, but I support calls to give them greater powers to investigate and prosecute. Enough is enough. This is an illegal practice that affects us all, and it cannot be allowed to continue. Action is needed and I appeal to the Government: it is needed sooner rather than later.

21:04

[Mr Mark Spencer (Sherwood) (Con)]

I congratulate the Backbench Business Committee on securing this debate, and colleagues from all sides of the House on pushing this issue forward. We have heard many examples of what a terrible crime metal theft can be. I know that my constituents, among others, will be completely taken aback by how bad it can be, and by the mentality of someone who can steal a war memorial or a memorial from a park bench. One has to be a certain type of person to be able to commit such a crime. There are also examples of the crime that put the public at risk. They involve the theft of railway lines, telecommunications lines or electrical supply equipment.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

Another example, in agricultural areas, is where metal thieves nick gates, which is not only inconvenient, but has the knock-on effect of allowing cattle and horses to get out and cause damage. That costs money, the insurance premiums go up and it all causes massive disturbance.

[Mr Spencer]

I thank my hon. Friend for that intervention. One cannot underestimate the potentially disastrous consequences of a herd of cattle wandering on to a railway line. Indeed, rural areas can find themselves particularly targeted. He mentioned agriculture, but rural churches have also been targeted, because they are so isolated and are not overlooked by other properties. Edwinstowe church in my constituency has had the lead removed from its roof seven times, which is simply outrageous.

One way of dealing with the problem would be to improve the legislation. However, I would also encourage English Heritage to consider alternatives. English Heritage forces churches to replace the lead, but if we could find a fibreglass replacement that looks like lead, that would solve the problem and deter the thieves, because the value of fibreglass is zero. Indeed, not only have churches in my constituency been affected, but Newstead abbey, the home of Lord Byron, has been targeted, with its gutters and downrights stolen. Again, we are talking about an historic building, owned by the city council, which has taken the decision not to replace the gutters and downrights because it cannot protect the property in the short term. The council will have to leave that historic building in a poorer state of repair, which is an absolute tragedy.

I am therefore happy to support the motion. I hope that the Government will take the firmest and strongest action. Not only do normal members of the public support that, but the scrap dealers I have talked to—the legitimate businesses—also want us to take action. I pay tribute to my constituent Edward Donnington, a local trader who has been constantly lobbying me to try to improve the way in which such trades are recorded. He is a registered scrap dealer who welcomes the Government’s intervention to try to resolve the issue, because his business has also been targeted. He has had people breaking into his yard to steal his lorry and take scrap from his premises. The legitimate scrap dealers are looking to us to take firm action and clamp down on those involved. The only way we can do that is to stop cash transactions and also to have photographic evidence of those who undertake transactions, so that they can be clearly identified at a later date if something goes wrong.

Before I finish, I want to mention what has been happening in Nottinghamshire. I pay tribute to Nottinghamshire county council trading standards and Nottinghamshire police, as they have taken the issue very seriously. They have put together a local group of all the relevant authorities, to take action and, more importantly, to inform each other about what is correct and what is not, because a normal bobby on the beat might not be aware of some of the relevant issues in those scrap yards. For instance, there is only one registered scrap dealer in Nottinghamshire who can deal in, as it were, railway steel, and only one who is registered to deal in telecommunications cable from British Telecom. If such cable is found in any scrap yard other than the one that is registered, it is clearly in the wrong place and a crime has been committed. It is all about informing those authorities so that there is cross-information, as it were, and ensuring that when someone sees something out of line, they take firm action.

I hope that this debate is a step in the right direction, and that the Government grab this issue and drive the frankly terrible people involved out of the industry.

21:10

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

I congratulate my hon. Friend the Member for Hyndburn (Graham Jones), the hon. Members for Dudley South (Chris Kelly) and for Worcester (Mr Walker) and others on securing this debate. In the few minutes that I have, I should like to concentrate on one line in the motion, which calls for

“a radical change in how the scrap metal industry is regulated”.

We have heard a lot about the behaviour of the scrap metal man who goes round in his van, hawking and trying to get bits of scrap metal, and who is, as I mentioned in an earlier intervention, not averse to lifting anything that is not nailed down. Indeed, sometimes he goes so far as to rob roofs and memorials, and to commit other shameful acts.

I want to focus on the scrap metal yards, and on one in particular. I would like to be able to say that it is dear to my heart, but it is quite the opposite. It epitomises the worst aspects of the industry, which we need to stamp out if we are to start to regulate it properly. The people who bought the yard put up two buildings in it, for which they had no planning permission. They built them 15 months ago, irrespective of any rules or regulations, to service the end-of-life processing of vehicles. They also put up CCTV columns. The yard abuts a large housing development; it is right behind people’s houses, and the 360 CCTV cameras can look into those homes. The owners also put up lighting columns that illuminate the yard late into the evening, seven days a week. This, too, was done without planning permission.

The owners also built a wall. Regardless of the fact that the existing planning permission for the area allowed for a 2-metre high fence, they built a wall that was higher than that, so that they could pile the scrap higher. Such a fence was banned under the previous planning permission, which they have ignored. They have also built supports for the wall on council land that they do not even own.

The most incredible thing that those people have done is quite recent. Residents in the area have understandably expressed concerns about the noise, dust and vibration pollution that they have to put up with. The noise is terrible; the crashing can be heard from a mile away. To get round the problem, the owners came up with a great wheeze. They constructed a wall of shipping containers, piled three high and welded together. And, yes, this was done without planning permission. Thankfully, the council managed to act quickly, and it issued a stop order that has another week to run.

[Paul Blomfield (Sheffield Central) (Lab)]

My hon. Friend is painting an appalling picture of one particular rogue operator. In South Yorkshire, we have the fourth highest incidence of metal theft in the country, and in Sheffield it rose by 46% last year. The acting chief constable has raised the issue with me, and he told me that it is the issue on which we in the House could do the most to support what he is trying to do to crack down on crime. Does my hon. Friend agree that we therefore need to give the police greater powers, particularly powers of entry and the power to shut down rogue dealers of the kind that he is describing?

[Robert Flello]

I agree with my hon. Friend. We need a complete review of everything relating to the scrap metal trade. We also need to bring in a really robust set of proposals quickly, if we are to eliminate these problems.

The problem is one of identifying the rogue traders. The company in my constituency, European Metal Recycling, says that it is the biggest scrap metal firm in Europe. What a recommendation that is, if it behaves in such a way in my constituency and treats with shameful disdain anyone who lives within earshot of the site. The council got wind of the plan to put up the wall of shipping containers when the company started to prune some of the trees. When council officers went to the site to ask why that was happening, they were told, “It’s just a bit of routine pruning”—but, hey presto, a few days later, up went the shipping containers.

Unfortunately, sorting out the rogues from the good guys is very difficult. We need a robust, detailed system that will cover all metal dealers: the folk who drive round our estates at all hours of the day and night calling for scrap metal; those who walk around with carrier bags full of metal that they have liberated from somewhere; and the supposedly large concerns that trade internationally in the metal that they process. We need a system that will do a proper job of clamping down to ensure that our communities are no longer blighted by this menace.

21:14

[Ian Swales (Redcar) (LD)]

I, too, congratulate the Members who have initiated this debate, which, as we can tell by the turnout in the House, is on a hugely important issue. Metal theft will not go away easily. Why? Because it is so worth doing. Some of the figures are quite staggering. While BT’s stock-market value is about £15 billion, the estimated current value of the metal in its cables is £50 billion. There are billions and billions of pounds’ worth of metal in our country, in some cases literally lying around—in the railways, for example. Thieves are now sawing down metal railings, and I recently canvassed a street in my constituency where all the drain covers had been stolen. Making the assets themselves secure is obviously impossible.

Because of the sums involved, the people engaged in this activity run all the way from petty thieves to organised crime. Just as in other organised crimes such as drug dealing, some of the big players will not do their own dirty work; others will be stealing to order for them. We all know that these crimes can cause massive costs and disruption. Recently visiting friends in a village in Oxfordshire, I could communicate only by text in the last two days before the visit because the village had been entirely cut off by the theft of telephone and internet cables.

Shortly before I came into the Chamber this evening, a member of the House staff told me that Norwood library recently had its roof stolen and £2 million-worth of damage was done to books and computers as a result. We have heard other stories from other Members, so I shall not say much more about that. Such stories show that these crimes are far from victimless, as a single theft can impact on thousands of people.

I am vice-chairman of the all-party steel and metal recycling group, and in that role I recently visited two sites of European Metal Recycling, the largest metal recycler in Europe, which has 67 sites across the UK and employs 2,000 people. The notes for my speech state that this is a “highly reputable organisation”, but I might need to speak to the hon. Member for Stoke-on-Trent South (Robert Flello) about that. At its small site in Marske in my constituency, I saw many of the measures mentioned in the motion already in action—for example, documentation, video recording, photo and vehicle identification are routine and there are clear rules about how to check material. The original source might be a council as in the case of road signs or items might be labelled as BT equipment. At its large site in Hartlepool, I saw what a huge-scale operation, including car shredding, looks like.

Companies like EMR support regulation. EMR says:

“All we ask is that the Government takes the necessary time to work with the industry to ensure that regulations are as tightly and effectively drawn as possible and that the necessary level of resource is committed to enforce rigorously once in place. We have had 20 years of increased regulation and poor enforcement in our industry. Without doing both of these things the legitimate industry will be harmed, the illegitimate thrive and there will be little or no impact on metal theft.”

Let me touch briefly on another area—prevention. All people with metal-related assets need to think more about how they can discourage theft. I have already mentioned BT’s franking of its equipment, but a lot more could be done. Energy companies, Network Rail and many others should look at how to make it easy for dealers and enforcement officers to spot stolen material. They must ensure that their legitimate scrap disposal routes are advertised to the industry so that anyone else receiving identifiable material knows that it is stolen. More questions must be asked about the source of the material, such as high voltage cables or transformer equipment. We must make it easy for people to report others that they see involved in this activity.

We should not legislate for the sake of it, but we should ask the police what is necessary—and make the punishments fit the crime. It is time for action and I urge the House to support the motion.

21:19

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

I, too, congratulate my hon. Friend the Member for Hyndburn (Graham Jones) and other hon. Members who tabled the motion.

Some members of the public have said that the current economic climate and the financial plight in which some individuals find themselves have led to the massive increase in metal theft that we are witnessing. Frankly, I find such a statement to be naive. There can be no excuse for theft at the current levels. I believe that across the House we are united in our determination that something should be done—and it should be done now. As we have heard this evening, the incidence of metal theft has soared throughout the country as metal prices have increased, and we all want the police to be given the powers that will enable them to tackle the epidemic.

The figures given by Members can leave us in no doubt that the amount that individuals are receiving for the stolen metal in their possession represents but a fraction of the cost of replacing it. The weekend before last, ScottishPower reported the theft of power cables from a farm near the town of Castle Douglas in my constituency. In such instances, not only are people put in danger because the cables carry thousands of volts of electricity, but misery is caused to communities and neighbourhoods that are left without power—sometimes for a number of hours—until repairs can be completed.

I know that many other Members wish to speak, so I shall not repeat much of what has already been said. Let me merely emphasise the need to replace the Scrap Metal Dealers Act 1964 and take immediate action to end cash transactions, especially large-scale high-value transactions. Anyone selling scrap metal must provide proof of identity, which must be recorded at the point of sale. We must give the police powers to enter premises and shut down rogue metal scrap yards, thereby protecting decent and legitimate dealers. There are such dealers out there, and they want the House of Commons to act. I also believe, as someone from north of the border, that the powers vested in the Scottish Government will enable it to act in conjunction with the House.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Six Members are trying to catch my eye. The winding-up speeches will begin at 9.38 pm, so brevity is the order of the day.

21:22

[Tony Baldry (Banbury) (Con)]

I will try to observe your admonition, Mr Deputy Speaker.

On behalf of the Church of England, I thank the Home Secretary and Ministers in the Home Office for what they are doing. For some time, tragically, lead has been stolen from the roofs of an average of some 10 churches a day. We have heard of many instances from Members this evening.

Whether such a theft is from a church in an inner-city parish or from a rural church, the devastation caused to the local community is enormous. For that reason, the churches and cathedrals division of the Church of England set up a working party which, over a period, took evidence and consulted a number of organisations including English Heritage, insurers, police forces throughout the country, and scrap metal merchants themselves. The working party concluded that the one measure that was needed above all was to take cash out of metal transactions.

Anne Sloman, who chairs the group, the Bishop of London and I went to see Ministers in the Home Office, and I think it should be put on the record that those Ministers listened and acted. I do not understand why Members suggested this evening that Ministers were slow. In my experience, Ministers often say “I understand what you mean, Baldry, and you have a very good point, but we shall have to wait for a legislative slot” but on this occasion, Home Office Ministers reached for the first Bill that passed by, which was the Legal Aid, Sentencing and Punishment of Offenders Bill. They said, “Look, we can get this into the long title of that Bill: we will table amendments immediately.” That is exactly what they did, and I think that they should be thanked for it.

Let me say on behalf of the Church that we accept that additional measures may be necessary in due course. For example, my hon. Friend the Member for Wyre Forest (Mark Garnier) mentioned the need for warrants to go into unregulated yards. I understand that view, but I do not think the House should be unmindful of what Ministers have done in persuading colleagues in Whitehall to accept amendments to the Legal Aid, Sentencing and Punishment of Offenders Bill. Members should also not be unmindful of the fact that this will be the first ever commercial activity where cash is not allowed to be used—and, indeed, where using cash will be a criminal offence. Credit should be given where credit is due, and I therefore simply say thank you.

21:25

[Henry Smith (Crawley) (Con)]

I congratulate the hon. Member for Hyndburn (Graham Jones) on securing this debate. As my hon. Friend the Member for Dudley South (Chris Kelly) said, this is an important debate because metal theft has been growing exponentially over the past several years. This issue is a national concern and also affects individuals and communities. I cannot believe that any of the UK’s 650 constituencies has not been affected in one way or another by the blight of metal theft.

In 2011 in Crawley constituency there were 108 reported incidents of metal theft. However, the police tell me that that is, in fact, only a small fraction of the total number of such thefts, and I am sure they are right. There has been a range of different types of metal theft in my constituency, as I am sure is also the case throughout the country. In my constituency, eight schools and three churches had lead taken from their roofs in the last year. Such crimes are often only discovered when it rains several days later and the buildings concerned suffer a great deal of structural damage. Other types of theft include thefts of catalytic converters from garages and thefts from domestic dwellings.

I pay tribute to my local police. Chief Inspector Steve Curry is in charge of Crawley police station, on behalf of Sussex police. He has done a phenomenal job over the last year in reducing crime in my constituency. Dwelling burglaries have fallen by 25.8% over the last year, for instance. Unfortunately however, non-dwelling theft has increased by 25.7%, and much of that has been metal theft.

Metal theft has a massive effect on the UK economy. Many of my constituents commute to London every day, and, sadly, it is not uncommon for the theft of cable, often miles away, to result in trains grinding to a halt across London and the south-east. I am not fishing for sympathy, but I have suffered from that myself. On a day when I was planning to get to Parliament very early as I had an early question on the Order Paper, I almost did not arrive on time.

The cost of these thefts to our economy runs to many tens of millions of pounds, and I congratulate the Government both on their £5 million investment in the taskforce to tackle this problem and, as my hon. Friend the Member for Banbury (Tony Baldry) said, on introducing amendments to the Legal Aid, Sentencing and Punishment of Offenders Bill. The Scrap Metal Dealers Act 1964 was written for a “Steptoe and Son” age. I therefore greatly welcome the Government’s commitment to updating it for the sake of our constituents, the country and the economy.

21:30

[Julian Sturdy (York Outer) (Con)]

As we have heard, the explosion of metal theft in recent years has affected churches, railways lines, war memorials and countless public sector buildings, ranging from schools to hospitals, up and down the country. Criminals are hitting our city centres as well as many rural villages, making this a truly national crime. The growing problem of metal theft is costing the British economy more than £770 million a year, although the suspected number of unreported metal theft cases means that it could be argued that the overall cost to the economy is actually even higher. It is therefore right that the Government tackle this issue as a matter of urgency. As such, I am pleased to see that they are prohibiting the use of cash to pay for scrap metal. A cashless system will bring greater transparency to the scrap metal industry and will reduce the often anonymous transactions that enable criminals to sell on much of their stolen metal before disappearing without trace. Like my hon. Friend the Member for Crawley (Henry Smith), I wish to use this opportunity to welcome the Government’s £5 million funding, as outlined last November, to establish a dedicated metal theft taskforce.

Although I commend the Government’s recent actions on this issue, I wish to focus the rest of my contribution on how we must now keep the momentum going. It would be foolish for us to believe that a cashless system alone will adequately stem the tide of metal theft. After all, as with all robust reforms, there is always a danger that clamping down on illegal activity within a specific sector will drive the activity further underground and into a deeper and more dangerous black market. So I urge Ministers to commit to a fundamental review of the situation in six months’ time, when I believe that the Government’s timely reforms will have had time to take hold. It is imperative that we do not simply introduce such reforms and then sit back, because there is a real chance that the scale of the problem will require even more measures to be implemented in due course. For example, should the first draft of the robust reforms fail to cut it, will the Government also consider providing police officers with new powers to enter and inspect registered and non-registered scrap metal sites, as suggested by the Select Committee on Transport? Likewise, should metal theft be plunged into a deeper black market, will Ministers consider implementing the sensible measures proposed in today’s motion? I will not go into all of these radical suggestions in detail, but they could all play a vital role in a strong second phase of the fight against metal theft.

I urge the ministerial team not to take their eye off the ball on this issue. Metal theft is a hugely expensive and disruptive crime, which has offered criminals a high return in recent years because of the rise in global commodity prices. After a suitable period of time I hope that the Secretary of State will update the House on progress and, if necessary, introduce further measures to penetrate the core of this damaging criminal activity, which cannot continue to go unchecked.

21:32

[Fiona Bruce (Congleton) (Con)]

As a member of the all-party group on combating metal theft, which offices initiated this debate, I welcome and support the motion. We must address the widespread and growing problem of metal theft, and ensure that together we deliver a robust approach to fight this crime, which is blighting so many lives and communities. My constituent, the venerable Ian Bishop, Archdeacon of Macclesfield, asked me some time ago to highlight the issue in the House, and I am pleased that the Government are taking action to introduce a cashless payments system. They are perhaps doing so in no small part because of the number of questions that have been raised by those of us who attend questions to the Church Commissioners in this House—this is perhaps evidence of the worth of attending those questions.

Ian Bishop has asked me to reiterate the concerns that he has expressed. Every Church of England church in my constituency has been hit by metal theft in the past four years, and that has had a seriously debilitating effect on both the financial stability and morale of churches. He recounts one minister sobbing on his shoulder following a metal theft. The insurance available to churches is wholly insufficient to offset the consequences of this crime. He explained it as follows today. Ecclesiastical Insurance, the major insurer of churches, can provide only £5,000 of compensation for incidents of metal theft. In extreme cases, when the historic fabric of a church suffers water damage, the costs of repair easily exceed £100,000, which means that churches are, in effect, uninsurable and left at the mercy of those who perpetrate these crimes.

Ian Bishop has also highlighted to me the “ludicrous position” of the Church Buildings Council and English Heritage being too slow to allow churches to use alternative materials on grade I listed buildings. Such an approach encourages metal theft to become a cyclical crime, with the criminals winning again. I feel another Church Commissioners question coming on.

It is not only churches that suffer. In my constituency there has been a significant increase in the number of thefts of iron work from highways in the past 18 months—sometimes as many as 20 to 30 gullies a day. These are very expensive to replace, with installation costing £300 to £400 per gully, and the costs are paid by local council tax payers. Just last Saturday a constituent reported that on walking to my surgery he noticed the theft of metal posts that had been put in place to protect the public from falling into the canal at a risky point. That left a dangerous gap between the water and the popular walkway alongside the canal. It was reported to me today, on telephoning his home to check his account, that on his return from my surgery he noticed that the next set of posts had been stolen too.

The Scrap Metal Dealers Act 1964 needs to be updated. I, too, applaud the Government for their initiative in amending the Legal Aid, Sentencing and Punishment of Offenders Bill and I thank Home Office Ministers for introducing the move towards cashless transactions. However, we also need changes to police powers to close unscrupulous scrap metal dealers and to give police the authority to search all premises owned and operated by scrap metal dealers. The police should be given the power to inspect any articles or records kept on site and there should be an ability to close dealerships. We need a move to a robust and compulsory licensing scheme to replace the present inadequate and outdated registration scheme. The use of CCTV should help. A comprehensive package of measures is needed to address this grave and far from victimless crime.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I call James Morris—to sit down at 9.38 pm.

21:36

[James Morris (Halesowen and Rowley Regis) (Con)]

There have been many disturbing instances in my constituency relating to metal theft. Just before Christmas, tenants had to be evacuated from their flats after a gas leak was discovered on an estate in Halesowen. Lives are clearly being put at risk by criminals stealing this metal. We know that most metal dealers take all appropriate steps to check the provenance of the scrap metal they are buying. Soon after I was elected, I toured the Mason Metals recycling centre in Halesowen. Mason Metals was working with Dudley police on “Scrap Yard Watch”, an appointment-driven collection scheme to help householders to dispose of large white goods legally and responsibly. It has now launched a new membership card programme for its customers. That scheme is in addition to the statutory waste transfer note records and is run alongside other measures.

I very much welcome the Government’s announcement that cash transactions for scrap metal will be outlawed. I understand the concerns voiced by legitimate metal recyclers, but the growing problem of metal thefts cannot be tackled effectively without proper traceability. We also need tougher penalties for those who are caught and convicted so that punishments are more proportionate to the scale of the crime. A £1,000 fine is hardly a deterrent for the unscrupulous minority. The Home Secretary has said that sentences will be significantly increased, which is very good news. Scrap metal dealers who offer a market for stolen metal, whether knowingly or by failing to carry out adequate checks—

[Mr Deputy Speaker]

Order. I am terribly sorry. I call Mr David Hanson.

21:38

[Mr David Hanson (Delyn) (Lab)]

I start by thanking my hon. Friend the Member for Hyndburn (Graham Jones) and the hon. Members for Dudley South (Chris Kelly), for Worcester (Mr Walker) and for Peterborough (Mr Jackson) for securing this debate on behalf of the all-party group. Today has been one of those rare occasions on which the House has a unanimity about it, as it does regarding our objectives for the Bill. Let me add to that unanimity by saying that the Opposition support the motion and hope that the Government will too, because urgent action is needed on metal theft.

As my hon. Friend the Member for Tynemouth (Mr Campbell) reminded us, this has been an emerging and long-standing problem. Indeed, Operation Fragment, which he commenced when he was at the Home Office, when I had the privilege of sharing an office with him at that Department, was an important effort in developing a programme to tackle metal theft at the end of the previous Government. Sadly, the problem has increased in that time, although this is not the fault of the current Government. About 15,000 tonnes of metal are stolen each year, with as much as half of that being stolen from scrap metal dealers themselves, as the hon. Member for Sherwood (Mr Spencer) mentioned. Industry and commercial victims agree that the figure is an underestimate. As the hon. Member for Crawley (Henry Smith) has said, there is still a significant problem with metal theft across the board.

There is a particular problem with churches, as was mentioned by my hon. Friends the Members for Middlesbrough South and East Cleveland (Tom Blenkinsop) and for Liverpool, Walton (Steve Rotheram) and the hon. Members for South Derbyshire (Heather Wheeler), for Congleton (Fiona Bruce) and for Banbury (Tony Baldry): 2011 was the worst year on record for the number of metal thefts from churches, with more than 2,500 claims. The problem of insurance has been drawn to the attention of the House today.

[Mr Tobias Ellwood (Bournemouth East) (Con)]

In Bournemouth, we find that it is not just individuals who steal metal but organised groups. Does the right hon. Gentleman agree that we need to legislate not just against individuals but against those who organise the crime?

[Mr Hanson]

Serious organised crime as well as opportunistic individuals are behind metal theft.

Cable theft caused the delay or cancellation of more than 35,000 national rail services, with more than 365,000 minutes of delay and a £16 million bill. Those points were made by the hon. Member for Manchester, Withington (Mr Leech) and my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman). Her Committee’s report highlighted them particularly, and my hon. Friend the Member for Barrow and Furness (John Woodcock) has played a role in raising the issue.

Every day, there are eight actual or attempted thefts on railways. I was particularly struck by the contribution of the hon. Member for Pendle (Andrew Stephenson), who illustrated the impact of metal theft on small businesses in his constituency.

Over the past year, 10 people have been killed in metal theft incidents. The gas leak referred to by the hon. Member for Halesowen and Rowley Regis (James Morris) was an extremely important incident. The Association of Chief Police Officers has estimated that metal theft costs the UK about £770 million a year, a figure that the hon. Member for York Outer (Julian Sturdy) mentioned, and which my hon. Friend the Member for Telford (David Wright) showed has been rising over the past few months.

I am most struck by the despicable nature of the crime. In his contribution, the hon. Member for Worcester said that door-knockers had been stolen from old people’s homes. People have talked about war memorials. The hon. Member for Brigg and Goole (Andrew Percy) spoke about the theft of a memorial in the city of Hull for fishermen lost at sea.

These crimes are committed by people who do not respect their neighbours, their communities or the people who live in them, so I welcome the fact that the Government have acted to tackle metal theft head-on, but I genuinely say to the House that they need to go much further. I welcome the proposals to end cashless payments, as did the hon. Members for Congleton and for Wyre Forest (Mark Garnier). The proposals to increase fines are welcome too, but that is only part of what is required. The motion today, and its support from Members, has indicated that the House agrees.

I worry that the situation could be made worse by the amendments to the Legal Aid, Sentencing and Punishment of Offenders Bill that Lord Henley has indicated he will table on Report, which is likely to take place next month. Banning cash transactions, while positive, will not of itself solve the problem. Legitimate scrap yards will go cashless, but some yards, as has been said, will continue to take cash and to operate a black market. Only yesterday evening in the other place, my noble Friend Lord Rosser tabled an amendment that would give the police greater powers of entry and to shut down rogue scrap metal yards—measures welcomed by my hon. Friend the Member for Swansea East (Mrs James) and others. Those proposals are in the motion and were welcomed by Members this evening, yet the vote last night—for vote there was, Mr Deputy Speaker—was lost by six.

Lord Henley argued against the amendment, but he should read the debate we have held today. The feeling on both sides of the House is that it is an important proposal, so he needs to revisit it when he and his officials draft amendments to the Legal Aid, Sentencing and Punishment of Offenders Bill. As my hon. Friend the Member for Dumfries and Galloway (Mr Brown) said, and as Lord Henley himself said last night, the 1964 Act is “beyond its sell-by date.” It was designed for the time of Steptoe and Son, not for the multifaceted organised criminals and opportunists of today. Lord Henley said:

“We wish to see a reform to that Act as soon as is possible, and we will make sure that we do it…We are looking for a coherent package of measures to tackle metal theft.”—[Official Report, House of Lords, 6 February 2012; Vol. 735, c. 52-4.]

Let me be presumptuous and recommend that Lord Henley look at the motion in detail. I commend the suggestions of my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper) on tackling metal theft. As the hon. Member for Redcar (Ian Swales) mentioned, those who follow best practice already do the things that the motion suggests.

My right hon. Friend the Member for Normanton, Pontefract and Castleford has introduced proposals to tackle metal theft, and that plan is supported by the British Transport police, the Association of Chief Police Officers, Neighbourhood Watch, BT, E.ON, energy networks, and Network Rail, to name but a few. It includes powers of entry for police, and tougher powers for them to close down rogue traders—a proposal that has been welcomed tonight across the board. It means that anyone selling scrap has to provide proof of identity, which will be recorded at the point of sale—again, that has been welcomed tonight across the board. It includes licensing scrap metal dealers, rather than the current system of registration with local authorities. It means, yes, doing what the Government say they are doing— banning cash transactions, especially for large-scale, high-value scrap metal transactions.

Those measures will allow legitimate trade to continue, which is what my hon. Friend the Member for Stoke-on-Trent South (Robert Flello) wants, but, by our making it harder and more expensive for opportunists and organised criminals to profit from metal theft, the cowboy traders that he mentioned will feel the burden of those measures very strongly. Prevention can play an important part. Private sector solutions such as SmartWater, which was mentioned by my hon. Friend the Member for Telford, are important. Other suggestions, such as the one made by the hon. Member for Sherwood, for alternatives to lead, are valuable, and can be looked at by the private sector.

We cannot, however, get away from the fact the House has spoken with one voice, and it wants the changes proposed in the motion. The Opposition support those measures, and I want the Minister to support them too. We need a much tougher licensing regime, and we must ensure that we require people to do the things that I have outlined so that we can stop extensive metal theft. The Minister will say that she certainly supports the banning of cash transactions. She will say that she supports increased fines, but if she says that she does not support the other measures in the motion she must explain to the House and to her hon. Friends why not, and why she will not undertake those actions. From my perspective—and I think that I speak for most Members who have spoken tonight, not on a party political basis, but on a House of Commons against the Government basis—those are important measures that we want collectively, across the board.

The motion was drafted by the all-party group, with support from every party. It has the support of every Member who has spoken tonight. Time is pressing, and we need to do this. Households face power cuts, commuters face increased delays, and churches and public buildings have been damaged. If the Minister does not support the motion, will she explain to the House why not? I genuinely hope, however, that she does and that she drafts measures in the Legal Aid, Sentencing and Punishment of Offenders Bill in a different way. I will even forget the fact that her party voted against the amendment in the other place. I urge her to support such proposals, and she will receive a great cheer from the House when she does.

21:48

[The Parliamentary Under-Secretary of State for the Home Department (Lynne Featherstone)]

I congratulate the Backbench Business Committee on securing a debate on an issue that rightly concerns all of us. I congratulate the hon. Members for Hyndburn (Graham Jones), for Dudley South (Chris Kelly) and for Worcester (Mr Walker) on tabling the motion.

Metal theft is a crime that affects us all and strikes at the very heart of our communities. As we have heard from Members on both sides of the House, it is a dreadful crime. They have painted a thoroughly depressing picture of the mentality of those who would desecrate churches and commit theft—whole brass bands gone and a building having to be demolished because of the amount of metal taken from it. There were really horrible stories from every constituency.

The consequences are there for all to see, not least the loss and disruption to telecommunications, as every hon. Member mentioned—I am not going to go over everything that was said, as more than 22 contributions were made—as well as to electricity and transport networks, and the damage to our religious and heritage sites. There were horrific stories right across the country.

We are not prepared to stand by and see our infrastructure and heritage destroyed, which is why the Government are taking the problem of metal theft so seriously and taking action. We are clear that the only sustainable, long-term solution is legislation, but we are equally clear that legislation alone is not enough. That is why we propose a coherent package of measures to tackle metal theft. We want to cut out the easy, anonymous reward for metal thieves by banning cash payments for scrap metal and making it much harder for illegitimate dealers to trade in stolen metals by introducing a more rigorous licensing scheme, which many Members across the House have called for. We want to deter thieves and illegal metal dealers by introducing more focused and sustained enforcement and tougher penalties.

To those who say that the Government are not going far enough or fast enough, I say that we are going as fast as we possibly can. Metal theft is a horrific crime, and the Government are stepping forward to take action. Two weeks ago the Home Secretary announced to Parliament the legislative action we will take as part of our package of measures. We will increase the fines for all offences in the Scrap Metal Dealers Act 1964—the maximum fine will be unlimited—which will strengthen the deterrent and improve industry compliance with the current registration scheme. We will also create a new criminal offence in order to prohibit cash payments for the purchase of scrap metal. That has been welcomed on both sides of the House.

Prohibiting cash from an entire sector is a bold step, but cash transactions for scrap metal are often completed without any proof of personal identification or that the individual legitimately owns the goods being sold. This leads to anonymous transactions that create such a low risk for criminal activity that we have seen this epidemic across our country. Requiring transactions to be completed with traceable payments will dramatically improve the ability of the police and local authorities to enforce the existing registration scheme. The widespread use of cash, coupled with lax record keeping, also creates easy opportunities for tax avoidance. We will work constructively with the British Metals Recycling Association on how his measure will operate in practice.

The legislative changes to increase fines and ban cash payments will be made through Government amendments to the Legal Aid, Sentencing and Punishment of Offenders Bill. This is the quickest and most practical way that we can get these measures into law and crack down on metal theft. Members across the House have made it perfectly clear tonight that the House wants us to go further, but let me stress that we need realistic, achievable and effective legislative measures.

[Robert Flello]

Will the Minister give way?

[Lynne Featherstone]

I will not, as I am really short of time.

That is why we took the difficult decision not to support the private Member’s Bill proposed by the hon. Member for Hyndburn. It was not because we do not agree with the principles, but because unfortunately the Bill would not have received the necessary parliamentary time to achieve Royal Assent in this Session.

[Graham Jones]

Will the Minister give way?

[Lynne Featherstone]

I am sorry, but I really want to make some particular points. If I have a minute at the end I will give way. Members have been asking all evening for me to answer the points raised, and I intend to do so.

Strong legislation is absolutely vital, but it must be backed up by strong enforcement action from the police and other law enforcement agencies. We are working with the Association of Chief Police Officers, local police forces and the British Transport police to strengthen law enforcement activity. Recognising the damage that metal theft causes to our economy, the Government have committed £5 million of additional funding to establish a dedicated national metal theft task force. The taskforce will complement and expand existing enforcement activity not only by the police, but by a range of law enforcement agencies.

The message we are sending out is clear: metal thieves will have nowhere to hide. We have recently seen some significant sentences given to metal thieves, which I hope will continue. I welcome the recent announcement by Keir Starmer, the Director of Public Prosecutions, in which he instructed prosecutors to use every tool at their disposal to take a firm stand to convict metal thieves. I make it clear that we are in no way targeting the legitimate metal recycling industry, which does important work that is good for our economy and good for our environment.

Many Members on both sides of the House asked about a number of measures, and the Government believe that the measures that we have already announced will make a big difference, but we are open to new ideas and are already considering how we can further strengthen our approach to metal theft, including the proposals outlined in the motion.

We are considering, for example, how the existing registration scheme can be strengthened, with a robust licensing scheme for scrap metal dealers to replace the current registration scheme, and we agree that the existing scheme under the Scrap Metal Dealers Act is outdated and in need of improvement. The Home Office is already seeking to make such changes as soon as parliamentary time allows.

On greater police powers, which Members on both sides have asked for, we are keen to provide the police with sufficient powers, including entry and closure powers covering the scrap metal industry, to tackle metal theft offenders, and we are seeking clarity on whether we can include amendments to police powers of entry as part of wider measures in the Legal Aid, Sentencing and Punishment of Offenders Bill.

We want to regularise the position under the 1964 Act, whereby the police have the power to enter yards that are registered under the Act, because, as my hon. Friend the Member for Wyre Forest (Mark Garnier) said, their inability to go into unregistered yards is a real anomaly. In the meantime, the work of the dedicated metal theft task force, along with unlimited fines and the end of cash transactions, will tackle the problem until we can bring all those powers into being.

Any new scheme must support legal operators and promote the green economy, but it must also have the power to tackle scrap metal dealers who wilfully help the stolen metal trade, so we will consider further measures, listen to the outcome of the debate and see whether there is more we can practically do to stop metal theft. I shall now give way to the hon. Member for Hyndburn, but I hope that Members appreciate that they did ask for an answer to these questions, and I have been trying to give them one.

[Graham Jones]

I am grateful to the Minister for giving way, and I have just a simple and straightforward question. Will Government Front Benchers support the motion tonight?

[Lynne Featherstone]

Government Front Benchers will not oppose the motion tonight, and I am sure that hon. Members on both sides will support it.

We are strengthening the law, cracking down on rogue scrap dealers and targeting the criminals who supply them. That is the right way to tackle this devastating crime. That is what this Government are doing, and this Government are taking action. Nothing happened during the previous 13 years.

21:57

[Graham Jones]

First, I welcome the Minister’s words, because we are beginning to move in the right direction. We still have some outstanding issues, including whether the Government are going to be robust enough, but we have heard everybody’s comments tonight, and we in the plural sense—the public, Members and those in the other place—want to see tough action, so that is a key question for the Government.

Secondly, on the point about timing, Members want to see measures introduced as soon as possible, and one key issue for many Members is the fact that we have the summer recess coming up and the Queen’s speech, so legislation needs to come forward. We also have the Olympic games, and, to cite again the words I mentioned earlier, we are not far from a national catastrophe. Paul Crowther from the British Transport police said that the issue is second only to terrorism, so urgency is key in this issue, and many people both nationally and locally feel that way.

[Robert Flello]

Would it not be extremely embarrassing for this country if the Olympics were disrupted by metal theft?

[Graham Jones]

I say politely to my hon. Friend, “It wouldn’t be very good, would it?” It would not be a good advert if London ground to a halt and the rail network stopped, so it is imperative that we are seen to act.

I am grateful to Members for being here tonight in such numbers in order to express their opinion on the need to act on metal theft. The Government need not just to look at the timetable and to bring forward legislation as soon as they can; they need to go beyond legislation. We need to consider being far more proactive, so I am very grateful for Members’ contributions this evening.

Question put and agreed to.

Resolved,

That this House notes that metal theft is becoming a serious issue for the UK; welcomes the Government’s announcement on introducing a cashless system and higher penalties; is concerned that the comprehensive package of measures which is needed to address this issue is not being introduced at the same time; believes that to effectively stamp out metal theft there needs to be a radical change in how the scrap metal industry is regulated; and calls on the Government to introduce a number of additional measures as a matter of urgency, including a robust licensing scheme for scrap metal dealers to replace the present registration scheme, a licence fee to fund the regulation of the licence, greater police powers to close unscrupulous scrap metal dealers in line with alcohol licensing, police authority to search and investigate all premises owned and operated by scrap metal dealers, use of photo identification and CCTV to identify sellers of scrap metal, and their vehicles, vehicle badging for mobile scrap metal dealers, and magistrates’ powers to add licence restrictions and prevent closed yards from re-opening.

[Mr Deputy Speaker (Mr Nigel Evans)]

Before we come to the next business, may I say that this clearly was a popular debate and apologise to Members who put in to speak, but were constrained or did not get in at all?

Business without Debate

Tuesday 7th February 2012 Commons Chamber

Delegated Legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Local Government

That the draft City of Coventry (Mayoral Referendum) Order 2012, which was laid before this House on 5 December, be approved.—(Angela Watkinson.)

The Deputy Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until tomorrow (Standing Order No. 41A).

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Local Government

That the draft City of Wakefield (Mayoral Referendum) Order 2012, which was laid before this House on 5 December, be approved.—(Angela Watkinson.)

The Deputy Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until tomorrow (Standing Order No. 41A).

European Union Documents

Motion made, and Question put forthwith (Standing Order No. 119(11)),

EU Accounting Requirements

That this House takes note of European Union Document No. 16250/11 and Addenda 1 to 4, relating to a draft Directive on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings; supports the Government’s aim to reduce administrative burdens, particularly on small companies, through the harmonisation and simplification of requirements, including those for micro-businesses; and, as an aid to this, supports, within the scope of the proposal, increasing relevant thresholds whilst resisting harmonisation in areas that will increase administrative burdens on small business; and further supports, within the scope of the proposal, the Government’s aim of aligning the wording of new requirements for transparency in the reporting of payments to governments by companies engaged in the extractives sector (oil, gas and mining industries) with similar requirements which apply in the United States of America.—(Angela Watkinson.)

Question agreed to.

Business of the House (21 February)

Ordered,

That, at the sitting on Tuesday 21 February, notwithstanding the provisions of Standing Order No. 20 (Time for taking private business), the Private Business set down by the Chairman of Ways and Means shall be entered upon (whether before, at or after 7.00 pm) and may then be proceeded with, though opposed, for three hours, after which the Speaker shall interrupt the business.—(Angela Watkinson.)

[David Wright (Telford) (Lab)]

On a point of order, Mr Deputy Speaker. I seek your advice in relation to questions that are tabled for a response on a named day. I am frugal and careful in my use of named-day questions and have tabled very few in my parliamentary career. I think that it is important that when named-day questions are put down, they are answered accordingly. Last week, I tabled three questions to the Ministry of Defence on an important issue relating to workers in my constituency. The response that I received was that the questions would be answered shortly. That is an increasing trend with named-day questions. I would like to know whether you can assist Members in getting the Government to answer named-day questions in a timely fashion.

[Mr Deputy Speaker (Mr Nigel Evans)]

Mr Speaker has made it known that it is important that named-day questions are answered on time. The hon. Gentleman has got his point across and those on the Treasury Bench will have heard it. I will bring the matter to Mr Speaker’s attention.

Police Cuts (Humberside)

Tuesday 7th February 2012 Commons Chamber

22:02

[Diana Johnson (Kingston upon Hull North) (Lab)]

The petition is from my constituents in north Hull, who are concerned about cuts to police in Humberside. I would like to mention in particular Demelza France, a shop worker who collected names at her workplace.

The petition states:

The Petition of residents of Hull,

Declares that the Petitioners believe that the Government has a duty to protect citizens from crime; that the significant increase in police officers over the past ten years has helped reduce crime and make people feel safer; notes that under Government proposals the police budget will be cut by 20%, that over 16,000 police officers will be lost and that for Humberside Police Force cuts will be even greater than the national average, with a 25% reduction in the police budget; further notes that Humberside Police Force is projected to have 250 fewer police officers in March 2012 than in March 2010; and declares that the Petitioners believe that this will hamper the efforts of the police to prevent crime and keep citizens safe.

The Petitioners therefore request that the House of Commons urges the Government to support the work of the police in ensuring that the downward trend in overall crime continues by at least maintaining 2010 levels of uniformed police officers in England and Wales.

And the Petitioners remain, etc.

[P001005]

Asbestos in Schools

Tuesday 7th February 2012 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Mr Newmark.)

22:04

[Ian Lavery (Wansbeck) (Lab)]

I sought this Adjournment debate in an attempt to highlight a most serious situation facing the nation’s schools—the presence of asbestos in many school buildings and the risk of exposure to it among pupils and workers alike. I say at the outset that in no way am I looking to score political points. I hope that my views, comments and questions in this debate will attract cross-party support.

Of the 33,600 schools in Britain, the Department for Education has estimated that more than 75% contain asbestos. Some 14,000 schools were built after the second world war, and almost all those built before 1975 contain asbestos. Schools refurbished during that period are also likely to contain it.

Exposure to asbestos fibres, even at low levels, can cause lung cancer and mesothelioma, which is a cancer affecting the lining of the lung. We should not be complacent about the presence of those dust fibres and the effects that it can have on an individual’s life. It is estimated that more than 4,000 people a year die as a result of exposure to asbestos. Mesothelioma has a lengthy latency period, which simply means that the condition may not surface for perhaps 20, 30 or even 40 or 50 years following exposure. However, once the disease is diagnosed, it is largely fatal, with most victims dying within 18 months of diagnosis.

Does the Minister agree that the Government’s policy should be the phased removal of all asbestos from schools, with priority being given to those schools where the asbestos is in the worst condition or considered to be the most dangerous or damaged?

Exposure to asbestos in schools is endangering the lives of tens of thousands of schoolchildren and teachers, many of whom are completely unaware of their daily exposure. It has continued for generations, and year after year, individuals diagnosed with lung cancer, mesothelioma and other asbestos-related diseases are puzzled about the whereabouts of their exposure. In many cases, it happened while they were at school.

More than 140 school teachers have died from mesothelioma in the past 10 years. Disturbingly, figures relating to other school workers, such as cleaners and administration staff, and relating to the number of children who have died as a result of exposure, are unknown. Children are likely to be particularly vulnerable to asbestos exposure, because their lungs are still developing. If we use the ratio calculation used in the US, which is that for every teacher who dies nine children will die, that translates into the alarming statistic of 100 people dying each year here in the UK as a result of exposure at school.

The materials of greatest concern are those that readily release asbestos fibres into the environment. Many people mistakenly believe that those fibres are confined to asbestos lagging, sprayed asbestos and asbestos insulating boards, but that is not the case. Asbestos was commonly used to spray ceilings and structural beams, and extensively used in wall constructions and many other areas that are vulnerable to damage and disturbance by the school population on a daily basis.

Does the Minister agree that by law, all schools should be required to carry out a thorough asbestos survey, which should include air tests and detailed independent inspections? Will immediate consideration be given to that?

[Jim Shannon (Strangford) (DUP)]

I fully endorse the hon. Gentleman’s comments. In 2004, the Northern Ireland Assembly took a decision to undertake asbestos tests in all schools and to have it removed, and such decisions have been taken in other regions of the UK. Does that not reinforce his point that it is now up to England to follow suit?

[Ian Lavery]

That is the very reason for this debate. I want a survey to be carried out, followed by the phased removal of asbestos in a strategic manner between now and a given date. The hon. Gentleman’s comment adds strength to my argument.

[Mr David Hamilton (Midlothian) (Lab)]

I congratulate my hon. Friend on obtaining this debate. If we can identify where the asbestos is within each school, that stops repairs being done when the people doing them do not know that there is asbestos in there. It is important that that identification is done as quickly as possible.

[Ian Lavery]

My hon. Friend makes a very important point. One of the big problems—I will come on to this—is that many different types of asbestos are unidentified in the school buildings. People are very unaware of where and what it is. If we are not going to remove the asbestos immediately, how we manage it over that period is very important.

A report commissioned by the Medical Research Council concluded:

“It is not unreasonable to assume…that the entire school population has been exposed to asbestos in school buildings”.

Furthermore, the MRC report assessed lifetime asbestos exposure levels and it concluded that even in schools where the asbestos is in a good condition, the everyday background asbestos fibre levels are five to 500 times greater than outdoor levels. To try to put that into some context, the Industrial Injuries Advisory Council defines “significant exposure” as

“a level above that commonly found in the air in buildings and the general outdoor environment”

and states that an exposure above that level would materially increase the risk of mesothelioma developing.

According to leading experts, the frightening reality of asbestos exposure is that there is no known threshold below which there is no risk. Even the most common of classroom activities can release dangerous fibres. That can be something as simple as slamming the door five times, which could release levels of amosite fibres more than 600 times greater than outdoor levels. That action routinely occurs in Britain’s schools on a daily basis. There are even simpler reasons for fibre release in classrooms, such as placing drawing pins in the wall and removing books from the book shelf. They are daily occurrences, too, in every school in the UK, and that is why I sought this important debate.

If the respected experts are correct—as of yet, there has been little opposition to their findings—children and school staff are being exposed considerably day in, day out, which is deeply concerning. Will the Minister consider the introduction of a national audit of the extent and condition of asbestos in schools, in which the data should be centrally collated and open to public scrutiny?

The exposure to the lethal fibres on such a scale means that people are dying from the asbestos-related disease mesothelioma. We all agree that to do nothing is not an option—or should I say that I hope that we all agree? Fresh action is needed urgently.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

I thank the hon. Gentleman and congratulate him on securing this very important debate. Will he join me in congratulating the Department for Education on making movements on training packages for staff? I hope that he will agree that we must go much further to ensure that staff are trained to cover the problems caused by drawing pins in walls. Does he further agree that if parents have any inkling that the age of the building is such that it might contain asbestos, when they visit the school they should ask to see its asbestos management plan?

[Ian Lavery]

The hon. Lady makes a number of very important points, which I hope to clarify in my speech.

The current system is difficult to remedy and, as such, Government policy is to manage the asbestos in schools and try to reduce the exposure incidence. So long as the asbestos is in good condition and is unlikely to be disturbed, it is thought that managing the asbestos in a prescribed manner is preferential to its removal.

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

I congratulate my hon. Friend on securing this important debate. Laurence Jackson school in Guisborough in my constituency, built at the time of the Macmillan Government, has about six or seven boilers whose piping is lagged with asbestos. Due to the antiquated boiler system, constant work is needed, meaning that the pipes are constantly being interfered with, increasing the likelihood of asbestos contamination. The school has a plan, but its capital requirement for dealing with the ongoing situation is only about £25,000. The likelihood of asbestos contamination increases every time the system is tampered with. Would he not say that even schools that have a plan can get into tricky situations like that?

[Ian Lavery]

My hon. Friend makes an important point. That is one reason we can no longer agree to leave asbestos in schools virtually until they are knocked down. We need a strategy in place for the immediate phased removal of asbestos. Yes, it will take time, but we need a strategy.

[Mr Richard Bacon (South Norfolk) (Con)]

I am delighted to hear the hon. Gentleman say that phased removal is the right strategy for the long term. Does he agree that most parents understand that it cannot all be done at once, but that there is nothing to fear from sharing information more publicly so that there is more pressure from parents and more knowledge from schools about what they need to do in the meantime to mitigate the problem properly rather than to deal with it inadequately until phased removal is possible?

[Ian Lavery]

I accept that point, and I will come to it in my contribution. It is extremely important that parents and everyone involved in schools understand exactly what the management plans are, and understand everything relating to asbestos presence in the school building.

The problem at the moment is that we have the worst of both worlds. Asbestos is not being removed due to cuts to the schools refurbishment programme, but at the same time, it is not being managed properly. Effective asbestos management systems must be put in place and registered and monitored accurately, asbestos-containing materials must be clearly identified and marked, regular independent inspections must take place and defects must be repaired immediately.

Does the Minister agree that children should have the same rights as adults in an asbestos environment? Those rights could reasonably be exercised through parents, guardians and teachers. In addition, does he agree that schools should be treated as special places, as they are in other countries? Children’s special vulnerability to asbestos should be recognised in asbestos management procedures. Most importantly, does the Minister accept that the details of asbestos incidents in schools need to be collated centrally and open to public and internal scrutiny, so that the effectiveness of Health and Safety Executive, Department for Education and local authority asbestos management policies can be assessed?

A recent report by the Asbestos Testing and Consultancy Association was critical of many schools. The report criticised ineffective and at times dangerous asbestos management systems. ATAC expressed the view that school systems’ failures are not minor in the main, but fundamental, serious and endemic in schools across the UK.

If, as is likely, Government policy is to be maintained—that is to say, if the problem of asbestos is to be managed—then managed it must be. A well-trained work force are essential, as is a culture of openness with parents, pupils and teachers. Quality training of head teachers, teachers, school governors and others expected to manage asbestos is a must. All staff should be adequately trained in asbestos awareness so that any actions that might disturb asbestos fibres can be prevented. Also, instructions should be given to children to ensure that any disturbance is avoided.

If any management system is to work efficiently, individuals must be up to the job. Those tasked with managing the system must clearly understand their role and responsibilities under the current law. That is not happening at the moment, although some local authorities are better than others. However, the Secretary of State for Education recently announced that he proposes to move responsibility for health and safety in schools away from local authorities and give it to individual schools. That will make good and effective management even more unlikely. Will the Minister confirm that such training is adequately funded and will continue as long as management systems are in place? Furthermore, will he comment on the notion that standards in asbestos training should be set and that training should be mandatory? Will he recommend that the Department for Education and the HSE jointly develop asbestos guidance specifically for schools and that current standards be reviewed?

We have a huge problem with openness. The presence and incidence of asbestos fibre release is often played down. It is accurate to suggest that many parents are wholly unaware and not informed of the presence of asbestos in their children’s place of education. A recent survey showed that at least half of school staff were not informed of the problem either. Will the Minister demand a policy of openness and complete transparency about asbestos in schools? Does he agree that parents and teachers should have a right to know what asbestos is present in their and their children’s school, and does he accept that parents, teachers and support staff should be annually updated on the presence of asbestos in their schools and on the measures being taken to manage it?

In conclusion, this issue has often been seen by successive Governments as too big to handle. It is crystal clear that there are serious concerns about how asbestos is managed in schools. The longer the issue remains unaddressed, the more people will be exposed, increasing the cost to be picked up by future generations, as has happened in past decades. The Government and other interested experts should work together to ensure greater co-ordination, aiming at the complete eradication of asbestos fibres in our schools. Children, parents and staff should feel totally comfortable in the school environment and free from potential harm. Will the Minister agree to revisit this issue as a matter of great urgency, and take up the cudgels and introduce a detailed programme to secure our nation’s prized assets—our children—from this killer fibre?

22:22

[The Minister of State, Department for Education (Mr Nick Gibb)]

I congratulate the hon. Member for Wansbeck (Ian Lavery) on securing this important debate. I know that he is passionate about this subject, having campaigned for victims of asbestos-related lung conditions and pleural plaques in the north-east and in his role as secretary of the all-party parliamentary group on health and safety. I have read its report, “Asbestos in Schools: the need for action”, very carefully.

The priority for this Government, as for the previous Government, is to ensure the safety of staff and pupils in schools. The report is welcome in raising awareness of the asbestos issue and makes several important recommendations, which I will address, as I will the hon. Gentleman’s questions. The Government’s policy remains consistent with that of the previous Administration. The Health and Safety Executive advice is clear. If asbestos is in good condition and not disturbed or damaged, it is safer to leave and manage it in place than to remove it. In the view of the HSE, removing it would involve a far greater risk to school children, staff and contractors than managing it until the eventual demolition of the building.

The Department for Education and the HSE are proactive in promoting good asbestos management in schools. To oversee this important work, my noble Friend Lord Hill, the Under-Secretary of State with responsibility for schools, established the asbestos in schools steering group, which is chaired by the Department and has a membership that includes my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke), trade unions, campaigners, the HSE and Partnership for Schools.

Under the Control of Asbestos Regulations 2006, responsibility for complying with asbestos legislation lies with those responsible for the maintenance or repair of non-domestic premises. For most state schools that will be the local authority, not the school itself, but where budgets for building management are delegated to schools by the local authority, the duty—as it is called—to manage asbestos will be shared between schools and the local authority.

[Ian Lavery]

Will the hon. Gentleman explain what would happen with the newly introduced free schools? Who would be responsible for the management plan and for ridding those schools of asbestos?

[Mr Gibb]

The duty to manage is the duty of the employer. In academies and free schools, that would be either the governing body or the academy trust. However, I will write to the hon. Gentleman shortly to ensure that I am correct on the technical question of who, precisely, is the employer in those circumstances.

There is a need for head teachers and governors to be aware of their responsibilities when commissioning building or maintenance work. Duty holders should have already taken steps to identify whether asbestos is present in their buildings and assessed the condition of the asbestos, and should have access to records of that information. The duty holder also needs to assess and manage risks to ensure that people are not exposed to asbestos fibres. If the asbestos-containing material is deteriorating or subject to damage, remedial measures will be required. The HSE guidance on the 2006 regulations gives schools clear procedures to follow in assessing the risk from asbestos. The guidance requires assessment of the location, type and condition of the asbestos-containing material, and it is the duty of schools and local authorities to take the appropriate measures.

The Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), who has responsibility for employment, has set out the Government’s plans for reform of the health and safety system in Britain in the document “Good Health and Safety, Good for Everyone”. The proposals make it clear that there is a need to focus attention on the highest risks. As a result, the HSE will not routinely inspect local authority-maintained schools. However, managing asbestos needs effective and ongoing attention from duty holders. The HSE’s recent inspection initiatives of schools under local authority control and those outside it, to which the hon. Gentleman referred, found that the majority were adequately managing asbestos, but a proportion fell below acceptable standards. The findings of those inspections have been published, so that all schools can review their asbestos management in areas where common weaknesses were identified. The HSE is also gathering intelligence to see whether further inspections of schools are necessary. If so, the HSE will monitor the duty to manage asbestos requirements through a series of inspections in 2013-14 to ensure that the HSE’s guidance and the findings of its recent inspection initiatives are properly implemented.

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

Very briefly, what proportion of schools fell below the standards?

[Mr Gibb]

I do not know the proportion that fell below the acceptable standards, but I will write to the hon. Gentleman shortly with the precise figure from the HSE.

Everyone in the education sector has a role to play in raising and maintaining awareness. Where duty holders fall below acceptable standards, HSE inspectors will continue to take action, and they have robust procedures in place to enforce regulations. The Department and the HSE have put in place clear guidance for schools and local authorities to help them identify and manage the risks posed by asbestos. We are currently producing an asbestos awareness training website, containing online training packages for head teachers and governors, and teaching and support staff, as well as premises and caretaking staff. In addition to training, the website will allow schools and local authorities to share good practice and documentation on asbestos management. The head teacher’s course is undergoing trials and will be released later this year. We do not propose to make the training mandatory, as we do not want to impose one particular model where good practice may already be in place.

Another recommendation in the report, to which the hon. Member for Wansbeck referred, was that data about the extent, type and condition of asbestos should be collected by central Government. There is a need to maintain a register of asbestos surveys at local authority level, but we do not see the need for a national register of asbestos surveys of public buildings in England and Wales. It would result in the unnecessary duplication of the records that local authorities and other employers are required by law to keep, and the need to maintain two sets of identical data would increase bureaucracy.

Another recommendation in the report was that a system should be introduced so that parents and school staff could be regularly informed about the presence of asbestos and how it was being managed. A similar system is in place in the United States. We encourage a policy of openness, but it is for duty holders to determine which information to share with parents.

On the issue of proactively removing all asbestos, the HSE’s advice is clear. Removing all asbestos when a risk assessment has determined that that is not necessary is considered more dangerous to those removing it and to the building’s occupants than leaving it undisturbed. If the control of asbestos regulations are followed and asbestos surveys and management plans are put into effect, with periodic checks on the condition of any asbestos, the expert advice is that this will result in no significant exposure to asbestos.

The Government take very seriously the issue of managing the problem of asbestos in our schools. As the all-party group’s report makes clear, the majority of schools contain asbestos-containing materials, as do many other buildings, both domestic and non-domestic. The asbestos in schools steering group, established by my noble Friend Lord Hill, has asked the committee on carcinogenicity of chemicals in food, consumer products and the environment to look into the relative vulnerability of children to even low-level exposure to asbestos fibres. I have taken on board the hon. Gentleman’s point about the exposure of children to asbestos. This will be the first such assessment, as previous assessments have been for adults exposed to high exposure levels. We will review our policy on asbestos management and our advice to schools when we receive the committee’s report later this year.

I thank the hon. Gentleman for raising this issue. I hope that he will be reassured that the Government are taking it very seriously. As previous Governments have done, we are following the expert advice of the Health and Safety Executive in formulating policy and managing safely the asbestos in school buildings.

Question put and agreed to.

22:32

House adjourned.