House of Commons

Wednesday 29th February 2012 Commons Chamber

Wednesday 29 February 2012

The House met at half-past Eleven o’clock

Prayers

Wednesday 29th February 2012 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 29th February 2012 Commons Chamber

The Secretary of State was asked—

[Gavin Williamson (South Staffordshire) (Con)]

1. What steps she is taking to promote Wales as a destination for inward investment.

[The Secretary of State for Wales (Mrs Cheryl Gillan)]

You may have noticed, Mr Speaker, that some Members are wearing leek ties or daffodils in advance of St David’s day. May I take this opportunity to wish everybody a happy St David’s day for tomorrow, 1 March?

I am committed to working with UK Trade & Investment, the Welsh Government and others to improve the level of inward investment that is attracted to Wales. Last week’s report by the Welsh Affairs Committee highlights a number of important issues. In particular, the need for joint working between this Government and the Welsh Government is very clear.

[Gavin Williamson]

Does my right hon. Friend welcome the Welsh Affairs Committee report and agree with it that the Welsh Government should engage more positively with the UK Government to attract investment to Wales?

[Mrs Gillan]

I can reassure my hon. Friend that I welcome the sterling work of the Welsh Affairs Committee, as I am sure do all Members, given that it was a unanimous report. It highlights areas that must be addressed by the UK Government and the Welsh Government. Recently, I met Nick Baird, the chief executive of UKTI, to discuss the response. I have said right from the start of this Government that I want to encourage closer working between the Welsh Government and the UK Government, particularly in the light of some of the disappointing figures in Wales.

[Chris Evans (Islwyn) (Lab/Co-op)]

General Dynamics has celebrated 10 successful years in my constituency. Will the Secretary of State congratulate the Labour Government, who were instrumental in bringing General Dynamics to my constituency?

[Mrs Gillan]

I have always said that politicians of all parties should co-operate to bring inward investment to both the United Kingdom and Wales. I have great pleasure in congratulating any individuals who were involved in bringing General Dynamics to Wales. I have visited General Dynamics on many occasions and it is an excellent company. I am pleased to concur with the hon. Gentleman’s sentiment.

[Karen Lumley (Redditch) (Con)]

Does the Secretary of State believe that restoring the Welsh Development Agency brand would reignite inward investment to Wales?

[Mrs Gillan]

I think that—[Interruption.] The personal remarks from a sedentary position have put me off my stride temporarily, even though they were not about me. My hon. Friend is absolutely right that branding is exceedingly important. There is no doubt in the UKTI report by the Welsh Affairs Committee that the WDA was a great brand for Wales that was well known across the world. I know that many people would like to bring it back. I think that is worth considering, although perhaps in another form. There is no doubt that branding is an important aspect when marketing Wales.

[Mr Peter Hain (Neath) (Lab)]

I join the Secretary of State in marking St David’s day. Will she join me in marking Wales’s magnificent triple crown victory over England on Saturday? I am sure she will have no trouble in doing so.

Since coming to office, how much private sector inward investment have the Secretary of State and her Government helped to bring to Wales?

[Mrs Gillan]

What a magnificent victory that was. It brought a tear to a girl’s eye to see the team doing so well. As far as the match on Sunday goes, Cardiff were robbed and they played very well.

Inward investment and that side of business life are devolved to the Labour Welsh Assembly Government, as the right hon. Gentleman should know, given that he was an architect of the legislation. Since coming into government, I have met delegations from Taiwan, China, Turkey, Japan and Russia to promote Wales as an investment decision. Indeed, I launched the first ever trade mission of Welsh businesses to Bangladesh, led by the Wales Bangladesh chamber of commerce. I stress to the right hon. Gentleman that there needs to be a partnership between the UK Government and the Welsh Government because when making inward investment decisions companies look at the UK as a whole. We need to give them reasons to go to Wales.

[Mr Speaker]

The Secretary of State’s replies are immensely courteous, but I am afraid that they are a bit long.

[Mr Hain]

I thank the Secretary of State for her reply, but remind her that in the 15 months since the Government spending review, the UK economy has grown by a miserable 0.2%—15 times less over the same period than the Office for Budget Responsibility’s 3% growth prediction in June 2010 after Labour left office. That collapse has massively damaged inward investment and jobs in Wales. Is it not high time that the Government changed course and followed the lead of the Labour Welsh Government with their Jobs Growth Wales scheme, which provides jobs for 4,000 young people in Wales? Where the Tories are hammering Wales, Labour is standing up for Wales.

[Mrs Gillan]

I have to say that I will take no lessons from the right hon. Gentleman, particularly given that, since we came into government, we are investing £1 billion in electrifying the great western main line and putting £60 million into broadband. It is important that both Governments work together. If the First Minister goes on a business delegation and brings back business to Wales I will be delighted, but I think that we should work together—and, for the right hon. Gentleman’s information, we will be sticking to plan A.

[Mr David Hanson (Delyn) (Lab)]

2. What assessment she has made of the effect of changes to feed-in tariffs on the Welsh economy.

[The Parliamentary Under-Secretary of State for Wales (Mr David Jones)]

We are continuing to consult and engage with the solar industry on changes to the feed-in tariff scheme and our assessments are ongoing. There are several key innovative businesses in the solar industry in Wales and we are committed to ensuring that they have a prosperous future.

[Mr Hanson]

According to the Department of Energy and Climate Change’s own figures, the industry is likely to shrink by a third, which means 5,000 jobs, in 2012 as a direct result of Government policies that the Under-Secretary has supported. How many of those jobs will be lost in Wales? Will he put his hand up and say that it has been a hash from start to finish?

[Mr Jones]

I would certainly say that it was a hash at its inception, because the scheme that the Government of which the right hon. Gentleman was a member put in place was poorly designed and lacked the flexibility to respond to changes in the cost of installing PV and in the price of electricity. The measures that the Government are now putting in place in response to the recent consultation will provide consumers with a proper rate of return, of the sort that was originally envisaged.

[Jonathan Evans (Cardiff North) (Con)]

Does my hon. Friend agree that the important thing is that there is a fair, not an excessive, return? As a result of that, Italy, France and, in the past week, Germany have significantly changed the tariffs, as the Government have endeavoured to do in the UK.

[Mr Jones]

Yes, of course, and that underlines the fact that the scheme was poorly designed from the start. The Government’s proposals will provide a fair rate of return for investors.

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

But this retroactive policy has shattered business confidence in Wales. We are set for advances in the green economy, but who will invest when moneys can be wiped out at the mere flick of a pen in Whitehall? It is simply not good enough, and the Under-Secretary should realise that we are considering a key industry in Wales.

[Mr Jones]

The right hon. Gentleman’s criticism would be more properly directed at the previous Government. The measures that the Government have now put in place will ensure stability in the industry and a fair rate of return for investors, and restore confidence to manufacturers.

[Mr Llwyd]

I hear what the Under-Secretary says, but can he guarantee that this sort of mess will not happen again and that we can further develop green technology in Wales, where we are well placed to do that, in my constituency and throughout Wales? We need to develop those industries, so will he assure the House that we will not again have this kind of mess, which undermines confidence in the whole sector?

[Mr Jones]

I agree with the right hon. Gentleman that the sector is extremely important to the Welsh economy, but I am afraid that, as ever, it has been left to the Conservative party to clear up Labour’s mess.

[Nia Griffith (Llanelli) (Lab)]

Given the feed-in tariffs fiasco and this week’s news that big investors in wind energy are threatening to take millions of pounds worth of green jobs abroad because they are losing patience over the Government’s shilly-shallying about renewables policy, how will the Under-Secretary convince companies to invest in the installation and manufacture of renewable energy equipment in Wales, securing much-needed jobs and reducing our dependence on ever costlier imported gas and oil?

[Mr Jones]

The Government’s response to the consultation does just that: it provides a sustainable framework for the industry to go ahead and for investors to have a proper rate of return.

[Alun Michael (Cardiff South and Penarth) (Lab/Co-op)]

3. If she will discuss with ministerial colleagues the potential benefits of Wales being the test bed of the People’s Rail revised governance proposals; and if she will make a statement.

[The Parliamentary Under-Secretary of State for Wales (Mr David Jones)]

My right hon. Friend the Secretary of State has regular discussions with my right hon. Friend the Secretary of State for Transport about a range of transport issues that affect Wales. I am aware that the right hon. Gentleman spoke to my colleague the Minister of State for Transport only recently.

[Alun Michael]

I am sure the Minister recognises that the Welsh Government—led by Carwyn Jones, and including Carl Sargeant as the Minister with responsibility for local government and transport—are showing a capacity for innovation and for bringing co-operative principles to bear. Would it not be a good idea to support the Co-operative party’s idea of the People’s Rail, so that railway services in and around Wales are accountable to the travelling public? Will the Minister support that idea?

[Mr Jones]

The People’s Rail proposals are a helpful contribution to the continuing debate on how we improve our transport infrastructure—I believe they were first floated some four years ago when the Labour party was in power. The Government are currently considering our response to the McNulty review, which has identified ways in which to make the railways more efficient and affordable in the longer term.

[Hywel Williams (Arfon) (PC)]

Rather than setting up a consumer mutual, which raises concerns about accountability to all the people of Wales, will the Government consider the utility of transferring responsibility for all railways in Wales to the directly democratic body, namely the Welsh Government and Assembly?

[Mr Jones]

That is not currently on the agenda, but no doubt the hon. Gentleman will make his representations to the Silk commission.

[Fiona Bruce (Congleton) (Con)]

4. What recent discussions she has had with (a) ministerial colleagues and (b) others on measures to reduce administrative burdens for businesses in Wales.

[Chris Kelly (Dudley South) (Con)]

6. What recent discussions she has had with (a) ministerial colleagues and (b) others on measures to reduce administrative burdens for businesses in Wales.

[The Secretary of State for Wales (Mrs Cheryl Gillan)]

I have regular discussions with ministerial colleagues, the First Minister and other organisations on reducing the regulatory burden on businesses and the public in Wales.

[Fiona Bruce]

Does the Secretary of State agree that although some decisions on business regulations are devolved, it is vital that the Welsh Government do not introduce any measures that are seen as a disincentive to invest in Wales?

[Mrs Gillan]

My hon. Friend is absolutely right. The Government—whether the UK or Welsh Government—must be careful to send signals to business that we are on its side. We must not place any more barriers in the way of businesses creating jobs in Wales, which is why I was particularly disappointed when the First Minister supported the extra financial transactions tax. I am sure the financial services industry in Wales will have been daunted by that.

[Chris Kelly]

The UK Government are scrapping new regulations that would have cost businesses more than £350 million a year and are radically reforming the planning system in England. Many such decisions are devolved to the Welsh Government, but would my right hon. Friend like Labour Ministers in Cardiff to follow suit?

[Mrs Gillan]

Yes. We are aiming to be the most business-friendly Government in history. By scrapping new regulations and with the red tape challenge, we have thrown down the gauntlet to all those organisations that put barriers in the way of business. I wrote to the First Minister about that some time ago—I am still waiting for his response, but I am sure he would share my sentiments that we need to encourage and not stifle business.

[Geraint Davies (Swansea West) (Lab/Co-op)]

At a time when unemployment is at a 17-year high and more people than ever are forced into short-term work, is the Government’s decision to withdraw working tax benefits from low-paid, part-time workers an example of reducing administrative burdens, or is it simply an example of the Government kicking someone after they have thrown them on the ground?

[Mrs Gillan]

I hope the hon. Gentleman has noticed that in creating the most competitive tax regime in the G20, which is the aim of the Treasury and this Government, we have also taken the lowest-paid out of tax. That will make a great difference to families and individuals across the UK, including in Wales.

[Ian Lucas (Wrexham) (Lab)]

But John Longworth, the director general of the British Chambers of Commerce, says that businesses tell him that they are still not feeling the burden of regulation lifting. Will the Secretary of State listen to business and confirm that the Cabinet was yesterday lambasted by the Chancellor of the Exchequer for not achieving satisfactory growth?

[Mrs Gillan]

Right from the beginning when I was appointed Secretary of State for Wales, I set up a business advisory group so that I could listen directly to the concerns of business and industry. I hold regular meetings with that group, and as recently as this week I met the new chief executive of the CBI Wales. I certainly listen to what businesses are saying, as do this Government.

[Jessica Morden (Newport East) (Lab)]

5. What assessment she has made of the effects of Government funding reductions on women in Wales.

[The Secretary of State for Wales (Mrs Cheryl Gillan)]

We want to put women at the heart of our economic future. Although we have had to make difficult decisions, we are ensuring that the reductions made are shared fairly, while still protecting the most vulnerable in society.

[Jessica Morden]

Not only are Welsh women being hit particularly hard by the cuts but, as my hon. Friend the Member for Swansea West (Geraint Davies) said, on April 6 more than 9,000 families in Wales will discover that they will be hit by a change to working tax credits that could mean the loss of up to £3,800 a year unless they increase their hours. Does the Secretary of State have any comprehension of how hard it will be for those families to increase their hours, especially in retail, and what is she doing to fight their corner?

[Mrs Gillan]

As the hon. Lady knows, the Government’s top priority is an economic recovery that provides jobs for everybody, including women. In difficult times, the Government have been helping families with the cost of living. For example, we have been freezing council tax, while the Welsh Labour Government have refused to implement a similar policy in Wales, and extending free health care and child care. We have increased that entitlement in England. I challenge Labour, in power in Wales, to match that record.

[Guto Bebb (Aberconwy) (Con)]

Many of the claims made about the effect on women of the reform of the welfare state in Wales have unfortunately been repeated in reports published yesterday by Cuts Watch Wales which, despite making claims about the effect on Wales of changes to the welfare system, state that there is no evidence to back up those claims. Does the Secretary of State agree that it is unfortunate that many public sector organisations, supported by the taxpayer, have agreed to be mouthpieces for Labour party propaganda on this issue?

[Mrs Gillan]

I always condemn organisations funded by the taxpayer being propaganda mouthpieces for the Labour party, so I agree wholeheartedly with my hon. Friend. He must remember that the Government are providing flexible parental leave, working with employers to end the travesty of the gender pay gap, establishing a women’s business council and providing enterprise mentors to help more women to start their own businesses. We have a proud record on women. [Interruption.] And as my right hon. Friend the Minister for Women and Equalities has just joined us on the Front Bench, I would like to offer her my congratulations on her work on this front.

[Stuart Andrew (Pudsey) (Con)]

7. What recent discussions she has had with (a) ministerial colleagues and (b) others on the delivery of public services in Wales.

[The Parliamentary Under-Secretary of State for Wales (Mr David Jones)]

My right hon. Friend the Secretary of State and I have regular discussions with ministerial colleagues and Welsh Government Ministers to discuss a wide range of matters, including public services in Wales.

[Stuart Andrew]

Given the reports of patients in Wales crossing the border for better health care in England, does my hon. Friend agree that the NHS in Wales is in need of reform and deserves proper funding as in England?

[Mr Jones]

Yes indeed. The Government are seeking in England to create an NHS that is fit for the 21st century and that gives greater discretion to professionals and choice to patients. By contrast, Wales increasingly has a one-size-fits-all health service that is falling behind the rest of the country.

[Chris Bryant (Rhondda) (Lab)]

One of the key public services in Wales is housing, but a constituent who came to my surgery last week is in work and works a full week but unfortunately is homeless. Were he to resign from his job, the local authority would be required to find him a home, and it would be paid for by the taxpayer. He does not want to do that. What will the Government do to end the manifest unfairness whereby somebody who is in work and paying Child Support Agency fees can still be homeless?

[Mr Jones]

I am sure that the hon. Gentleman, as the constituency MP, is making appropriate representations to the Welsh Assembly Government, who are responsible for housing in Wales.

[Stephen Lloyd (Eastbourne) (LD)]

Another area of public service delivery is the additional £350 million for child care tax credits that the coalition Government are delivering. What difference does the Minister think that will make to working mothers and mothers trying to get into work?

[Mr Jones]

This is currently a matter for discussion between the Welsh Assembly Government and the relevant Whitehall Department, and those discussions continue.

[Kevin Brennan (Cardiff West) (Lab)]

8. What plans her Department has to mark St David’s day.

[The Secretary of State for Wales (Mrs Cheryl Gillan)]

Tonight my right hon. Friend the Prime Minister is holding a reception for St David’s day. Tomorrow the Welsh flag will be flying over No. 10, and I will be attending the Back-Bench St David’s day debate and welcoming Welsh children from the Dreams and Wishes charity to the House of Commons and Gwydyr house. Tomorrow I will also be attending a St David’s day dinner in London and a church service in the Crypt, at St Mary Undercroft. I presented the Prime Minister with daffodils from the national botanic garden of Wales yesterday, and Gwydyr house is full of daffodils.

[Mr Speaker]

Almost enough material for an Adjournment debate.

[Kevin Brennan]

This St David’s day will be tinged with some sadness, as Wales plays a memorial match in my constituency tonight in memory of Gary Speed, the Wales manager who died so tragically at the age of 42. Money will be raised for a charity called CALM—the Campaign Against Living Miserably—to help to prevent suicide among young men. Will the Secretary of State hold a collection in support of that charity at her St David’s day event?

[Mrs Gillan]

I hope that the memorial match in the memory of Gary Speed goes extremely well and that a lot of money is raised for the charity. In answer to the hon. Gentleman’s question, I will come back to him and let him know, because I would like to ask the people who work in the Wales Office. We are having a charity called Dreams and Wishes come in on St David’s day tomorrow. That is what we are focusing on, but I will see what I can do for the hon. Gentleman. [Interruption.]

[Mr Speaker]

Order. We could do with a bit of quiet, both out of respect for St David’s day and in order to hear the Chairman of the Select Committee on Welsh Affairs.

[David T. C. Davies (Monmouth) (Con)]

I wonder whether the Minister would consider marking St David’s day by allowing patients to opt out of the NHS in Wales and instead enjoy the lower waiting lists, lower infection rates and better funding that are the hallmark of the NHS in Conservative-run England.

[Mrs Gillan]

I am grateful to my hon. Friend for reminding us, on the eve of St David’s day, of the differences that are arising because of Labour Government policies in Wales. I am sure that his question will be heard by many people across Wales. I hope that the Welsh Labour Government will emulate our reforms and produce a first-class health service in Wales for all our citizens.

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

9. What discussions she has had on Barnett consequentials to Wales for High Speed 2.

[The Parliamentary Under-Secretary of State for Wales (Mr David Jones)]

My right hon. Friend the Secretary of State and I have had recent discussions with ministerial colleagues in Her Majesty’s Treasury on a range of issues, including funding for Wales.

[Jonathan Edwards]

HS2 is clearly an England-only project, yet the Chief Secretary to the Treasury said last week in answer to a question that I had tabled that Barnett consequentials would be decided after “budgeting and funding arrangements” had been completed. Will the Minister ensure that Wales does not lose out on the £1.9 billion that it should receive as a result of HS2, by securing guarantees that the project will be funded via a stream that results in Barnett consequentials? [Interruption.]

[Mr Speaker]

I hope the Minister caught the thrust of that—the Prime Minister was momentarily troubled by some sort of insect.

[Mr Jones]

I did get the thrust of that, Mr Speaker, and there might be some force in the hon. Gentleman’s argument were it not for the fact that the rail network in Wales is not a devolved issue. As such, there is no force in his argument whatever.

[Mr Wayne David (Caerphilly) (Lab)]

10. What recent discussions she has had with the Secretary of State for the Home Department on crime levels in Wales.

[The Parliamentary Under-Secretary of State for Wales (Mr David Jones)]

My right hon. Friend the Secretary of State and I have regular discussions with Home Office Ministers on a range of issues relating to crime in Wales.

[Mr David]

We have already lost 40 police officers in Gwent. Does the Minister believe that this cut in police numbers will help or hinder the fight against crime?

[Mr Jones]

I visited Gwent police last week, and I was delighted to see that the most recent crime figures show an 11% reduction in crime in that force area. One might have thought that, rather than talking Gwent police down, the hon. Gentleman would offer the force some support.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

Does the Minister agree that policing in Wales will be more effective and more accountable following the election of commissioners in November?

[Mr Jones]

Yes I do. I believe that, for the first time, some democratic accountability will be introduced into the policing process in Wales and throughout the United Kingdom.

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

11. What recent discussions she has had with (a) ministerial colleagues and (b) others on the promotion of tourism in Wales.

[The Secretary of State for Wales (Mrs Cheryl Gillan)]

As this is Welsh tourism week, I have been out on visits. I also have regular discussions with ministerial colleagues and others on the promotion of tourism in Wales. Tourism is primarily a devolved matter for the Welsh Government but, as usual, we are keen to work with them to promote Wales internationally. [Interruption.]

[Mr Speaker]

Order. The Secretary of State’s answers can scarcely be heard, and that is simply not fair. Let us have a bit of order for Mr Mosley.

[Stephen Mosley]

Thank you, Mr Speaker.

There are huge opportunities for boosting tourism in north Wales by working with the beautiful, historic border town of Chester. Has my right hon. Friend had any discussions with the Welsh Assembly Government to encourage the joint marketing of our tourism gems on both sides of the Anglo-Welsh border?

[Mrs Gillan]

I will certainly ensure that my hon. Friend’s request is on the agenda at my next meeting with the First Minister. I also hope that many people visiting this country, particularly for the Olympic games, will take the opportunity to visit the many attractions on both sides of the border, but especially in Wales.

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

What more could be done to capture the Irish tourist market in Wales, especially north Wales?

[Mrs Gillan]

As the hon. Gentleman knows, that is the responsibility of the Labour Welsh Government, but I will certainly ensure that that matter is brought to the attention of Irish Ministers in my conversations with them.

The Prime Minister was asked—

[Mr Andy Slaughter (Hammersmith) (Lab)]

Q1. If he will list his official engagements for Wednesday 29 February.

[The Prime Minister (Mr David Cameron)]

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

[Mr Slaughter]

According to Revenue and Customs, some families earning just £13,000 a year will lose £1,000 a year in tax credits from April. Before the election, the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), now the Work and Pensions Secretary, described our warning that low-income families would lose tax credits as a lie and as irresponsible “scaremongering”. Did he mislead the public?

[The Prime Minister]

What we have done is increase tax credits for the lowest-paid people in our country, and we have actually lifted over 1 million low-paid people out of income tax altogether by raising the personal allowance. If the hon. Gentleman is worried about taxation issues, he should have a word with his candidate for Mayor of London, Ken Livingstone, and ask whether he is going to pay his taxes.

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

Many Irish people were moved by what the Prime Minister said about Bloody Sunday. Given that it is becoming increasingly clear that eurozone support for Ireland is conditional on its saying yes in the referendum, will the Prime Minister confirm that this country will support Ireland, whatever it decides?

[The Prime Minister]

We are certainly very good friends of the Republic of Ireland and the people of the Republic of Ireland. It is their choice whether to sign the treaty of fiscal union, and their choice whether to have a referendum on that treaty. As in all things, people’s views in a referendum should be respected.

[Edward Miliband (Doncaster North) (Lab)]

Before turning to other matters, does the Prime Minister agree with me that the allegations made by Deputy Assistant Commissioner Sue Akers in the Leveson inquiry about widespread corrupt behaviour at the heart of the press and the police are devastating, and that such behaviour can have no place in the national institutions of our country? Does he further agree with me that this underlines the importance of the police inquiry, which must get to the bottom of these allegations without fear or favour, and of the Leveson inquiry itself?

[The Prime Minister]

I completely agree with the right hon. Gentleman about this issue. There is all-party support for the Leveson inquiry, which needs to get on with its work—which it is conducting in a very reasonable and thorough way—and also proper support for the police inquiry. It is important to make the point that there is always a debate about what is right for newspapers to do to get stories that are in the public interest, but it is hard to think of any circumstances in which it is right for police officers to take money.

[Edward Miliband]

I thank the Prime Minister for that answer. On the Leveson inquiry, may I ask him to ensure that, in the weeks and months ahead, none of his senior Ministers does anything to undermine its work? Would he accept that it was ill-judged of the Education Secretary to say last week that the inquiry was having a “chilling” effect on freedom of expression? Does the Prime Minister now dissociate himself from those comments, and urge his colleagues, whatever their closeness to particular newspaper proprietors, not to undermine the Leveson inquiry?

[The Prime Minister]

I answered this question last week. The Education Secretary, like the rest of the Cabinet, fully supports the Leveson inquiry and wants it to proceed with the very important work that it does. That is the position of the Education Secretary and the position of the entire Government.

[Edward Miliband]

I thank the Prime Minister for that answer, but I have to remind him that the Education Secretary said:

“The big picture is that there is a chilling atmosphere towards freedom of expression which emanates from the debate around Leveson.”

I hope that the Education Secretary, who is sitting further down the Bench, will have heard the Prime Minister’s words.

Now, let me move on from one area where I hope there can be cross-party agreement, to an area where there is not. On Sunday, Lord Crisp, the man who ran the NHS for six years, said about the Prime Minister’s Bill:

“it’s a mess…it’s unnecessary…it misses the point…it’s confused and confusing and…it’s…setting the NHS back.”

Why does the Prime Minister think that, with every week that goes by, there are yet more damning indictments of his NHS Bill?

[The Prime Minister]

Let me just make one further point about the Leveson inquiry, because I think it is important. What my right hon. Friend the Education Secretary was saying—and I think it is important for all of us in this House to say—is that while these inquiries are going on, it is important for politicians who, let us be frank, benefit sometimes when the press are a little bit less hard hitting than they have been in recent years, to say that we support a free, vibrant, robust press. I do think that that is an important point, which is what my right hon. Friend was saying.

Turning to the health reforms, the right hon. Gentleman actually said something last week that I agreed with. He said:

“The NHS will have to change.

…because of the rise in the age of the population”,

because of the rise in

“the number of long-term conditions”,

and because of the rise in “expectations and costs.” It sounds a bit familiar. He is right that it has to reform. The problem for the Labour party is that it is against the money that needs to go into the NHS, which it says is irresponsible, and that although it supported competition and choice in the past, it does not support them any more.

[Edward Miliband]

The Prime Minister seems to have forgotten the question I asked him; it was about Nigel Crisp who ran the health service for six years. He was the chief executive of the national health service and he says that the Prime Minister’s Bill is “a mess…and confusing”—but the right hon. Gentleman will obviously not want to listen to him.

Let me ask the Prime Minister about somebody else, who appeared on the Conservative party’s platform at the spring conference in 2010. He hosted the first speech of the Health Secretary—he is not here, I do not think—and he advised the Labour Government, that is true. He is the GP at the head of the clinical commissioning group in Tower Hamlets. He wrote to the Prime Minister on Monday and said this:

“We care deeply about the patients that we see every day and we believe the improvements we all want to see in the NHS can be achieved without the bureaucracy generated by the bill.”

[Interruption.] Government Members say no, but this is a man who is in charge of a clinical commissioning group. Is it not time that the Prime Minister recognised that he has lost the confidence even of the GPs whom he says he wants to be at the heart of his reforms?

[The Prime Minister]

There are 8,200 GP practices covering 95% of the country implementing the health reforms, which is what they want to see happen. The right hon. Gentleman asks me if I will listen to those people who ran the NHS over the last decade, so let me give him a selection of people who ran the NHS in the last decade and see what they think of competition. This is what Lord Darzi said:

“The right competition for the right reasons can drive us to achieve more”.—[Official Report, House of Lords, 11 October 2011; Vol. 730, c. 1492.]

This is what John Hutton said. He was a Health Minister under the last Government—[Interruption.] Opposition Members do not want to listen to Labour Ministers from when they used to win elections. Anyway, this is what he said:

“Competition can make the NHS more equitable.”—[Official Report, House of Lords, 11 October 2011; Vol. 730, c. 1569.]

That is the view of a former Labour Secretary of State. What about an adviser to the last Labour Government, Julian Le Grand, who specifically looked at competition? This is what he said:

“the measured effects of competition have not been trivial…evidence shows that the introduction of competition in the NHS could be credited with saving hundreds of lives.”

The truth is that the right hon. Gentleman does not want to listen to past Labour Ministers because he is taking a totally opportunistic position in opposition to this Bill.

[Edward Miliband]

The reason that 95% of GPs are now having to implement part of these changes is that the Prime Minister has imposed them. Dr Everington addresses this in the last line of his letter, where he says:

“Your government—

I believe that this is a letter to the Prime Minister—

“has interpreted our commitment to our patients as support for the bill. It is not”.

And 98% of those in the Royal College of General Practitioners oppose the Bill. I have to say that it is hard to keep track of opposition to this Bill, because in the past seven days alone the Royal College of Physicians has called the first emergency general meeting in its history about the Bill, and the Prime Minister has lost the support of the British Geriatrics Society and the Royal College of Paediatrics and Child Health. So every week that goes by more and more health care organisations come out against this Bill. I have a simple question for the Prime Minister: can he now give the House a list of significant health organisations that are still wholehearted supporters of the Bill?

[The Prime Minister]

The right hon. Gentleman specifically said—[Interruption.] This is very important—[Interruption.]

[Mr Speaker]

Order. The Prime Minister has been asked a question, so let us hear the answer.

[The Prime Minister]

He said that 98% of GPs oppose the reforms—that was the figure. Let me give him the actual figures. There are 44,000 members of the Royal College of General Practitioners. Out of a total of 44,000, just 7% responded opposing the Bill. What about the royal college of physiotherapists? Of the 50,000 in the royal college of physiotherapists, 2%—[Interruption.] I know that that is enough for the unions to elect him leader of the Labour party, but that is about as far as it will go.

[Hon. Members]

More!

[Edward Miliband]

Government Members are obviously well trained today, but let me tell them that their support for the health Bill is digging their own burial at the next general election. I asked the Prime Minister a specific question. I know, by now, that he does not like to answer the questions, but I just simply asked him who supports his Bill, and answer came there none from this Prime Minister. Let me refresh his memory as to who opposes his Bill. By the way, it is no good the Deputy Prime Minister smirking—I do not know whether he supports the Bill or opposes it.

[The Deputy Prime Minister (Mr Nick Clegg)]

I support it.

[Edward Miliband]

Oh, he supports it! Well there is firm leadership for you.

Let me refresh the Prime Minister’s memory as to those who want the Bill withdrawn: the Royal College of General Practitioners; the Royal College of Nursing; the Royal College of Midwives; the Royal College of Radiologists; the Faculty of Public Health; the Chartered Society of Physiotherapy; the Community Practitioners and Health Visitors Association; and the Patients Association. Does it not ever occur to him that, just maybe, they are right and he is wrong?

[The Prime Minister]

The right hon. Gentleman did not mention: the National Association of Primary Care—supporting the Bill; the NHS Alliance—supporting the Bill; the Association of Chief Executives of Voluntary Organisations—supporting the Bill; the Foundation Trust Network—supporting the Bill; Lord Darzi, a former Labour Minister—[Interruption.] Who was Lord Darzi? He was the surgeon Labour hired to run the health service. Here we are having had four weeks in a row of NHS questions but not a single question of substance—not one. It is all about process, all about politics, never about the substance. We all know that it is leap year, so maybe just this once I get to ask the question. We all know what the right hon. Gentleman is against, but is it not time he told us what on earth he is for?

[Ian Swales (Redcar) (LD)]

Q14. In my area, there are plans for 120 metre-high wind turbines between the beautiful villages of New Marske and Upleatham, which are less than a mile apart. Does the Prime Minister agree that such giant turbines should not be built so close to residential areas without local people having a say?

[The Prime Minister]

We want to see a balanced energy policy and there is a place for renewable technologies in such a policy. We are making two changes that I think will be welcome to the hon. Gentleman. First, we are cutting the subsidy to onshore wind, because I think that it has been over-subsidised and wasteful of public money. Secondly, when the Localism Act 2011 fully comes in, that will give local communities a greater say about issues such as wind turbines. Of course, we tried to do that earlier by abolishing the regional spatial strategies that the previous Government put in place, but we lost that case in the courts so we need the Localism Act to come into force in full.

[Tony Lloyd (Manchester Central) (Lab)]

Q2. Earlier, the Prime Minister answered a question from my hon. Friend the Member for Hammersmith (Mr Slaughter) with a little more abuse than he would have wanted. Does the Prime Minister recognise that 200 couples in his constituency with 400 children and 600 couples in my constituency with more than 1,500 children will lose working tax credit, possibly up to the level of £3,800 or more, which can be 25% of their income? Without sounding complacent, can he say how he will answer those couples and their children?

[The Prime Minister]

As the hon. Gentleman knows, we have had to take difficult decisions because of the enormous debt and deficit that we inherited. In taking those decisions, we have protected the poorest families by increasing the child tax credit. That is what we have done. We have also helped the poorest who are in work by lifting 1 million people out of income tax. The question must come back to Labour: “You left us with this mess, what would you do about it?”

[Richard Graham (Gloucester) (Con)]

This summer, in my constituency of Gloucester, and everywhere around the country, people will be looking forward with huge excitement to the start of the Olympic games. It is a great opportunity to celebrate how well the UK manages these great global events, but not everybody sees it as that sort of an opportunity. The general secretary of Unite sees it instead as an opportunity for a general strike. Does the Prime Minister agree with me that nothing could be further from the spirit of the Olympics and nothing could do more damage to the reputation of our country?

[The Prime Minister]

I think my hon. Friend speaks for the whole country about what the general secretary of Unite said. Let me quote it directly:

“I’m calling upon the general public to engage in civil disobedience.”

That is what he said. Let us remember that Unite is the biggest single donor to the Opposition, providing around a third of their money, and had more of a role than anybody else in putting the right hon. Member for Doncaster North (Edward Miliband) in his place. It is not good enough for the Opposition just to put out a tweet; they need to condemn this utterly and start turning back the money.

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

Q3. No top-down reorganisation of the NHS, no reduction in front-line police officers and no cuts to tax credits for low-income families: why does the Prime Minister find it so hard to keep his promises to the British public?

[The Prime Minister]

We promised to increase spending on the NHS and we are boosting spending on the NHS. We promised the cancer drugs fund, and 10,000 people have got extra drugs through that fund. We promised that the number of doctors would grow faster than the number of bureaucrats and, since the election, the number of doctors has gone up by 4,000 and the number of bureaucrats has gone down by 5,000. That is what coalition policy is doing for our health service.

[Mr Stewart Jackson (Peterborough) (Con)]

When will the Prime Minister close the loophole for multinational companies that allows the migrant cap to be flouted using intra-company transfers, or is that another tough immigration policy that will fall victim to the “curse of Clegg”?

[The Prime Minister]

On this one, my hon. Friend is being unfair. We have a tough migrant cap for migrant workers, and business said how important it was to have intra-company transfers, but only at relatively high salary levels. That is what we put in place and it demonstrates that over time we will be able both to control immigration and to do so in a way that does not damage business.

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

Q4. We now know that the Government were made aware of fraud allegations at A4e before the Prime Minister appointed that company’s chairman as his family tsar. As the Prime Minister is in danger of acquiring a reputation for ill-judged personal appointments, will he tell the House what independent checks he believes should be carried out before such appointments are made and whether any such checks were carried out in respect of Emma Harrison?

[The Prime Minister]

First, let me be absolutely clear that I was not aware of any allegations of irregularities when Emma Harrison became an adviser to the Government on troubled families. At the time she was appointed, there were no formal investigations into A4e; there was just the company’s own probe into irregularities. I think that this issue needs to be properly dealt with and I am concerned that subsequent to Emma Harrison’s appointment, information needed to be passed up the line to Ministers more rapidly. I have asked the Cabinet Secretary, Sir Jeremy Heywood, to review the guidelines across Government and this particular case. When the right hon. Gentleman talks about the horse having bolted, he might want to put into his question the fact that Emma Harrison was given a CBE by the previous Government and that all the allegations that are being made are into contracts that his Government handed out. A little more transparency about that might be a good thing.

[Dr Sarah Wollaston (Totnes) (Con)]

Will the Prime Minister join me in paying tribute to the courage of the war photographer Paul Conroy from Totnes, who was injured showing the world the horrors of the Syrian regime? Will he join me in thanking all those who helped to secure Mr Conroy’s safe passage to Lebanon?

[The Prime Minister]

I certainly join my hon. Friend in doing that. The role that the media play by being in incredibly difficult places such as Homs in Syria to bring the truth and the news to the world is very important. That is what Paul Conroy was doing and that is what Marie Colvin was doing when she tragically lost her life. I certainly pay tribute to Paul Conroy and above all, as my hon. Friend says, to the very brave people who helped to get him out of Syria, many of whom have paid an incredibly high price. I can tell the House that Paul Conroy is now safe; he has been in our embassy in Beirut in Lebanon. He is being properly looked after and I am sure that soon he will want to come home.

[Sheila Gilmore (Edinburgh East) (Lab)]

Q5. Last October, the Chancellor announced a new policy called credit easing. Can the Prime Minister tell us how many businesses have been helped?

[The Prime Minister]

The Chancellor said at the time of the autumn statement that the policy would be in place in time for the Budget, and that is exactly what is going to happen. [Interruption.]

[Mr Speaker]

Order. Let us hear Mr Peter Aldous.

[Peter Aldous (Waveney) (Con)]

Q6. High streets across the country, including those in Lowestoft, Beccles and Bungay in my constituency are facing tough trading conditions at present, including the prospect of a 5.6% increase in business rates. Can the Prime Minister outline what the Government are doing to support traders to enable them to grow their businesses and create jobs?

[The Prime Minister]

My hon. Friend is right to raise this issue. There are real concerns about the hollowing out of some of our high streets and the number of empty properties. What we have done is double the small business rate relief scheme, and that has helped an estimated 330,000 small firms. We are also removing legal red tape that requires ratepayers to fill in paperwork to claim that relief, which is something that Labour refused to do when in office. From working with Mary Portas, we have a whole plan for how we can try to help reinvigorate our high streets, which is absolutely vital for our towns and cities across the country.

[Mr Nigel Dodds (Belfast North) (DUP)]

The Prime Minister might have seen the headlines in the newspapers today that the happiest people live in Northern Ireland. As the Democratic Unionist party has been the major party of government for the past five years in Northern Ireland, we on the DUP Benches are not surprised by that. Of course, one thing that overshadows that happiness is the high and escalating price of petrol and diesel, which is the highest not only in the United Kingdom but in the European Union. Can the Prime Minister bring happiness to all parts of the UK by agreeing to do away with the August fuel tax increase and address fuel allowances as soon as possible?

[The Prime Minister]

I am delighted to hear that the people of Northern Ireland are the happiest in the United Kingdom, although I have to say that their representatives in the House do not always give that impression. Perhaps I have been missing something. We recognise that families and businesses are continuing to feel the pressure from very high prices. We have cut the fuel duty and scrapped the automatic fuel duty stabiliser. That has meant that average pump prices are 6p lower than they would have been under the previous Government’s plans, but clearly we are also being impacted by a higher oil price.

[Mike Freer (Finchley and Golders Green) (Con)]

Q7. This week, the Government took action on unacceptable tax avoidance. Does the Prime Minister agree that the principles of paying a fair share of tax should apply both to banks and to former Mayors of London?

[The Prime Minister]

My hon. Friend makes an important point. Whether it is Barclays bank or, frankly, Ken Livingstone, people should pay the proper amount of tax, and I hope that Her Majesty’s Revenue and Customs will look carefully at all these sorts of cases. Londoners, many of whom live in Labour-controlled areas with high Labour council taxes, will be pretty angry about what they have seen and will probably conclude that red Ken has been caught red-handed.

[Julie Hilling (Bolton West) (Lab)]

Q8. The Institute for Fiscal Studies has reported that the Government’s tax and benefit changes will hit families with children five times harder than those without children. Is that what the Prime Minister means by “the most family-friendly Government…ever”?Is it fair, or is it just another broken promise?

[The Prime Minister]

What this Government have done is increase tax credits for the least well-paid; lift people out of tax; and introduce free nursery care for two, three and four-year-olds, and expand it for families. All those things have made a difference.

Incidentally, the hon. Lady did not mention that she is sponsored by the Unite union. She could have taken this opportunity to condemn Len McCluskey. [Interruption.]

[Mr Speaker]

Order.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

Q9. Since the furore about work experience broke out, has my right hon. Friend had any businesses and/or organisations come forward to support this vitally important and publicly popular initiative, which will help young people to get the skills that they need to get into work?

[The Prime Minister]

My hon. Friend is entirely right: the whole country wants to see more young people given the opportunity that work experience provides. The good news is that since this row in the pages of our newspapers, we have had expressions of interest from 200 small and medium-sized employers who want to get involved in the programme. It is time for businesses in Britain, and everyone in Britain who wants to see people have work experience, to stand up against the Trotskyites of the Right to Work campaign, and perhaps recognise the deafening silence there has been from the Labour party.

[Mr Jeffrey M. Donaldson (Lagan Valley) (DUP)]

Q10. Happily, Mr Speaker, I am able to welcome the Prime Minister’s commitment to the reform of the European convention on human rights and the powers of the European Court of Human Rights. Will the Prime Minister give a commitment to allowing this House a proper debate on the subject when the Brighton declaration is published, and will he ensure that, once again, the principle of subsidiarity is respected, and that the British courts have a proper say in what goes on in this country?

[The Prime Minister]

I do want to see the principle of subsidiarity get a fairer hearing at Strasbourg—that was in the speech I made at the Council of Europe about reform of the Court—so that it does not become a court of the fourth instance, whereby someone who has already been in front of a local court, a court of appeal and a supreme court in their country then comes to the ECHR. We do have proposals for reform. On what is debated in this House, we now have the Backbench Business Committee, which has an enormous number of days in this House—

[Mr Peter Bone (Wellingborough) (Con)]

Not enough.

[The Prime Minister]

Not enough, I hear. It has more than enough in my view, and it can make over a day for that debate.

[Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)]

Does the Prime Minister agree that one of the best ways to deliver on our commitment to the fairness agenda is to go ahead as quickly as possible with implementing the coalition’s agreement to raise the tax threshold to £10,000?

[The Prime Minister]

The coalition agreement commits us to real increases in that threshold. We have achieved that in Budgets over the past two years in spite of the difficult conditions that we face in the economy. I think it is a good idea to lift people out of tax. It particularly helps low-paid people, and it particularly helps low-paid women.

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

Q11. The Ministry of Defence is buying tankers from South Korea when the work could be done here. The MOD says it will “not consider wider employment, industrial, or economic factors”in procurement. Why will this arrogant and complacent Prime Minister not stand up for world-class British industry?

[The Prime Minister]

I do stand up for world-class British industry, and as I said, when I travel the globe, I am very happy to have British Aerospace and Rolls-Royce on an aeroplane with me, promoting Great British companies. It is just a pity that when I do that, I get attacked by the Labour party.

[David Morris (Morecambe and Lunesdale) (Con)]

Q13. Is the Prime Minister aware of the tragic death of my constituent, Penny Hegarty from Over Kellet? Penny’s husband, Dr Phil Hegarty, believes that his wife’s death is just one example of systemic management failures at the University Hospitals of Morecambe Bay NHS Trust. Will the Prime Minister assure Dr Hegarty and all my constituents that recent work to improve the management will continue, and that this trust will be turned around?

[The Prime Minister]

I can certainly give my hon. Friend that assurance, but first I am sure that the whole House will want to send the deepest condolences to the husband and family of my hon. Friend’s constituent, Penny Hegarty. I know that the Minister of State, Department of Health, my right hon. Friend the Member for Chelmsford (Mr Burns), has met local MPs on a number of occasions to keep them updated. Clearly, patients have the right to expect far better standards of care. I know that the Care Quality Commission and Monitor have both raised concerns about standards at the trust. As my hon. Friend says, it is being turned around, but that work needs to be undertaken with all speed.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

Q12. Is the Prime Minister aware that Graeme Brown, who is the director of Shelter Scotland, described the proposal for a bedroom tax as“grossly unfair and shows the UK Government is simply failing to listen to the voice of reason being put forward by housing professionals, social landlords, MSPs and individuals”?Does the Prime Minister accept that widows and widowers left in their family home when their children leave and on a low income can lose up to 25% of their housing benefit support if he continues with this? Is he unfeeling, or is he just determined to get his way?

[The Prime Minister]

The issue is this: we desperately need to reform housing benefit. If we had not done anything about housing benefit, it was expected to cost over £24 billion a year. As the hon. Gentleman’s own welfare spokesman, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) said, Beveridge

“would scarcely have believed housing benefit alone is costing the UK over £20bn a year. That is simply too high.”

I am getting slightly frustrated with these statements in principle about reform. The Opposition say they are in favour of a benefit cap, but they vote against it. They say they are in favour of welfare reform; they oppose it. They recognise that housing benefit is out of control, but they frustrate every attempt to deal with it.

[Amber Rudd (Hastings and Rye) (Con)]

On this leap day, when shy men throughout the country will be nervously hoping that their girlfriends might make a commitment to them, may I ask the Prime Minister to give romance a nudge and to remind us and confirm that the reforms made through the welfare system will always, always support hard-working families?

[The Prime Minister]

I was wondering where my hon. Friend was going with that for a minute or two, but she is right. It is a leap year, a very special day, when all sorts of things can happen—all sorts of possibilities. The key thing is that through both our tax system and our welfare system we should be encouraging families to come together and stay together, and celebrating commitment.

[Sir Gerald Kaufman (Manchester, Gorton) (Lab)]

Is the Prime Minister aware that the entry clearance office in Abu Dhabi has rejected an application by Mrs Maqsood Jan to come from Pakistan to attend her granddaughter’s wedding in Manchester? Would the right hon. Gentleman specify what kind of employment a 72-year-old woman who does not speak English and has never left Pakistan is liable to obtain in my constituency, where unemployment is 10.6%? Will he overrule this barmy decision and allow Mrs Jan the once-in-a-lifetime opportunity to attend her granddaughter’s wedding? If the Home Secretary has said—[Interruption.]

[Mr Speaker]

Order. The right hon. Gentleman has been lucidity itself. I am sure he is bringing the question to an end.

[Sir Gerald Kaufman]

I am; I am bringing it to an end. If the Home Secretary has whispered to the Prime Minister that Mrs Jan can appeal, I should add that the wedding is on 2 April and the appeal procedure is too slow to make that possible.

[The Prime Minister]

To answer the right hon. Gentleman very directly, I was not aware of the individual case. There are hundreds of thousands of people who travel between Pakistan and Britain every year. We must have tough controls to prevent the abuse of our immigration system, but I suggest that he takes up the case individually with my hon. Friend the Minister for Immigration, who has a superb grip on these issues and I am sure will be able to give him some satisfaction.

[Mr Peter Bone (Wellingborough) (Con)]

Under Tony Blair’s regime, we could sleep safely at night because we knew that Lord Prescott would take over if Tony Blair was incapacitated. What would happen if the Prime Minister were incapacitated?

[The Prime Minister]

I have been waiting for this question for some time, because I know that my hon. Friend has asked almost every Cabinet Minister, including the Deputy Prime Minister who, I think, replied that my hon. Friend seemed to have a morbid fascination with the end of the leader of the Conservative party. All I can say is that I have no plans to be incapacitated.

[Mr Speaker]

We are very relieved.

[Helen Goodman (Bishop Auckland) (Lab)]

Further to the Prime Minister’s answer to my right hon. Friend the Member for Doncaster North (Edward Miliband) on the Leveson inquiry, he is of course absolutely right that we need a free press, but the nation will not thank him if he goes along with the suggestion made by Tory peer Lord Hunt, chairman of the Press Complaints Commission, that the Defamation Bill, which is coming forward in September, should be used to legislate for a new system. That would pre-empt the Leveson inquiry. Will the Prime Minister make it clear that he will not do that?

[The Prime Minister]

I am glad that the hon. Lady asked that question, because I have absolutely no intention of pre-empting the Leveson inquiry in any way at all. I think that if we look back to the debate we had in this House, we will see that both the leader of the Labour party and I said how important it was to trust Leveson to get on with the job and to give every signal that we want to be able to adopt what is proposed without there being regulatory arbitrage between the parties. I think that there is an understanding on that basis but, given that there is that understanding, I repeat again that it is important that hon. Members on both sides stress the importance of a free press to the health of our democracy.

[Bob Blackman (Harrow East) (Con)]

Hard-working families in my constituency are absolutely astonished that a benefit cap of some £26,000 is being opposed by the Labour party. Does my right hon. Friend agree that we will always make work pay and provide benefits for those who are unable to work?

[The Prime Minister]

I am delighted, Mr Speaker, that my hon. Friend caught your eye, because today is the day that the Welfare Reform Bill becomes an Act, and for the first time we will have a proper cap on welfare. That is supported by this side of the House, opposed by that side, but backed by the overwhelming majority of people in our country.

Points of Order

Wednesday 29th February 2012 Commons Chamber

12:36

[Julie Hilling (Bolton West) (Lab)]

On a point of order, Mr Speaker. Further to the Prime Minister’s statement that I am sponsored by the union Unite—I am grateful that he has waited to hear this—can you advise me on how this untruth can be corrected, as I am not sponsored by Unite, and on what opportunity the Prime Minister will be given to correct the record?

[The Prime Minister (Mr David Cameron)]

Further to that point of order, Mr Speaker. I believe that I was reading something from the Register of Members’ Financial Interests, which is that Bolton West constituency Labour party received £1,250 from Unite in 2010 and that the hon. Lady registered a donation of £2,250 from Unite in 2010 in the register. Of course, if I have in any way got that wrong, I will come back to the House at the earliest opportunity.

[Mr Speaker]

I am most grateful to the hon. Lady for her point of order, to the Prime Minister for his response to it and for this opportunity to set out the position. Let me say this for the benefit of the hon. Lady and the House: whether or not she is sponsored by Unite, and I emphasis whether or not she is—I am happy to accept that she is not if that is the factual position, because I do not know—[Interruption.] I do not need any help from a junior Government Whip—he would not know where to start—[Interruption.] The hon. Member for Lichfield (Michael Fabricant) says that he is a senior Government Whip—[Interruption.] I do not think that the Speaker has ever greatly cared about the level of seniority of Whips as far as that goes.

Whether or not the hon. Lady is sponsored by Unite, I emphasise that there is nothing wrong constitutionally in our arrangements with being sponsored by a trade union, so it is not an accusation. The matter is not—[Interruption.] Order. The hon. Member for Ealing North (Stephen Pound) is a man of magnificent qualities, but he is in no position to advise the Chair on what is or is not allowed. This is not—I repeat “not” for the benefit of the hon. Gentleman—a point of order for the Chair. That, as I often say, is the beginning and the end of the matter. The hon. Lady has put her concerns on the record.

[Robert Halfon (Harlow) (Con)]

On a point of order, Mr Speaker. Following my point of order with you on Monday about charges for the Clock Tower, do you have any information about whether Members will be given a vote on that very unfortunate decision to charge people to visit the House of Commons?

[Mr Speaker]

No, I have no such information, and I am afraid that it is not a point of order for the Chair. I have known the hon. Gentleman for over 20 years—probably nearer to 25—so I know what a tenacious terrier he is, but he must raise these matters in an orderly way. I think that we have got his point; he has got my response; and at least as far as today is concerned we will leave it there.

If there are no further points of order, we come now to the ten-minute rule Bill, for which the hon. Member for Wycombe (Steve Baker) has been so patiently waiting. It would be helpful if people going past him would do so quickly and, preferably, quietly, so that we can hear from Mr Steve Baker.

Financial Institutions (Reform)

Wednesday 29th February 2012 Commons Chamber

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

12:40

[Steve Baker (Wycombe) (Con)]

I beg to move,

That leave be given to bring in a Bill to enforce strict liability on directors of financial institutions; to require directors of financial institutions to post personal bonds as additional bank capital; to require personal bonds and bonuses to be treated as additional bank capital; to make provision for the insolvency of financial institutions; to establish a financial crimes investigation unit; and for connected purposes.

I draw the House’s attention to my registered interest in Cobden Partners.

In a developed society such as ours, we need a vibrant, dynamic, reliable and robust means of executing payments and intermediating savings to entrepreneurs: we need a good banking system. Unfortunately, as the Governor of the Bank of England said in his 2010 Bagehot lecture:

“Of all the many ways of organising banking, the worst is the one we have today.”

Elsewhere in that speech, he said:

“At the heart of this crisis was the expansion and subsequent contraction of the balance sheet of the banking system.”

We might well discuss why balance sheets expanded so far and which factors and choices drove that expansion, but for today’s purposes it suffices to quote Martin Wolf, writing in the Financial Times on 9 November 2010, who said:

“The essence of the contemporary monetary system is the creation of money out of nothing, by private banks’ often foolish lending.”

Further, on 23 February this year the Bank of England’s executive director for financial stability, Andy Haldane, published an article in the London Review of Books, in which he wrote:

“The continuing backlash against banking, as evidenced in popular protests on Wall Street and in the City of London, is a response not just to the fact that the world is poorer, as pre-crisis riches have turned to rags, but to the way these riches were privatised, while the rags are being socialised. This disparity is nothing new. Neither in the main, is it anyone’s fault. For the most part the financial crisis was not the result of individual wickedness or folly. It is not a story of pantomime villains and village idiots. Instead the crisis reflected a failure of the entire system of financial sector governance.”

It seems that there is an increasingly unified message coming out of the Bank of England.

We must rise above that inadequate story of pantomime villains. Entrepreneurial error and gaming rules in the pursuit of self-interest are nothing new, and the system should have been able to cope. It is that foolish lending of new money, that failure of the entire system of financial sector governance, which must be addressed.

What is to be done? Mr Haldane supplied an answer. He wrote:

“The best proposals for reform are those which aim to reshape risk-taking incentives on a durable basis”.

That is what my Bill intends to do. It aims to reconnect risk and reward in the financial system, and to deal with the moral hazard that allowed the privatisation of vast gains and the projection of vast risks and losses on to the public.

I believe that profit is right and proper when earned through voluntary exchange without force or fraud. Bonuses based on just profits are a good thing. If some people gain but the costs of their actions are forced on to others through state power, however, that is an injustice. It is one from which our constituents are still smarting, and it is one which is causing people to question the basis of our social system. If we are to prosper, we must preserve and extend commercial freedom, promote personal, professional and mutual responsibility and facilitate enterprise under the rule of law. In banking, a business that is categorically different from others, we must ensure that those who stand to gain also bear the risks of their actions. I therefore propose the following measures.

First, on the liability of bankers, board members of financial institutions should be strictly liable for losses—that is, liable without the need to prove fault on their part. In the event of bank insolvency, board members would be subject to unlimited personal liability. Their own wealth—all assets, houses, pensions and so on—would be at risk. In addition, bank directors would be required to post personal bonds that would be potentially forfeit in the event of losses, not as a cap but as a guarantee. Bonds should be at £2 million, adjusted for inflation, or 50% of net wealth. Any board member who resigned would still be subject to unlimited liability and the requirement to post bonds for a period of two years following their resignation, so that they could not run away from impending disaster.

Secondly, bonus payments would be deferred for a period of five years. The bonus pool would be invested in escrow accounts, with appropriate provision for stocks, dividends, stock options and cash.

Thirdly, personal bonds and the bonus pool would be used to make good bank losses. Should a bank report losses over any period, they would be borne by beneficiaries of the bonus pool in the first instance. Further losses would be borne by board members and made good from their posted bonds. Any further losses would then be borne by shareholders in the usual way. Finally, in the event of insolvency, bank directors would be exposed without limit.

Additional measures would cover the definition of core capital and accounting standards, provide a robust definition of bank insolvency, require a new fast-track receivership regime for banks, which is long overdue, and produce a programme to end state support and return financial institutions to normal operations. There would also be provisions relating to EU passporting rules and provisions for criminal investigations and criminal liability.

Those measures are targeted at banks, which are categorically different from other businesses, but whether they can be achieved without extending the scope of the Bill to any company regulated under the Financial Services and Markets Act 2000 is a matter for debate. To promote diversity and competition, wholly owned mutuals and new small banks might be exempted from certain provisions, such as the requirement to post bonds.

The obvious question is who would become a director of a bank under a regime of unlimited liability. Actually, unlimited liability banking has an illustrious history. The two greatest bankers of the 19th century, Nathan Rothschild and J. P. Morgan, both operated highly successfully under unlimited liability. It made them conservative in their risk-taking and reassured counterparties who appreciated what they stood to lose if a deal went wrong. I am grateful to my hon. Friend the Member for Wyre Forest (Mark Garnier) for reminding me that unlimited liability partnerships were relatively common until the 1980s.

The principle of unlimited liability for directors in certain circumstances was placed on a statutory basis in 1929 and remains in section 232 of the Companies Act 2006. My Bill would make bank directors’ duties openly enforceable. Let us not forget that, as colleagues in all parts of the House will know, banks are often quick to require small business directors to provide personal, secured guarantees. What is sauce for the goose is sauce for the gander.

Members will have seen that both HSBC and Lloyds have been engaged in bonus clawbacks, and that, too, establishes the principle that bonuses should be at risk in the event of losses and damage. The banking system is, after all, capable of generating losses so large as to threaten our entire economic system.

Hard-working families and individuals paying tax out of typically modest incomes must never again suffer the injustice of carrying the risks, and consequences of risks, taken in the pursuit of often enormous private returns. Risks must fall to those who take them. Instead of vicarious liability of taxpayers, there must be responsibility in the banking system. The Bill represents an opportunity to free the banking sector and the public from regulatory capture and lobbying. It could raise standards from the bottom up, through the preservation and extension of commercial freedom and the development of professional, personal and mutual responsibility.

The Prime Minister has called for a responsibility revolution, and that is what this Bill would provide. It would end the culture of rewards for failing in the banking system and establish a basis on which London could continue to grow into the future as the world’s leading trustworthy financial centre. It is time for us to say to bankers, “Put your money where your mouth is. By all means make a fortune, but if you want the reward, bear the risks.”

Question put and agreed to.

Ordered,

That Steve Baker, Mr Douglas Carswell, Ian Paisley, Peter Aldous and Mr Richard Bacon present the Bill.

Steve Baker accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 312).

Treaty on Stability, Co-ordination and Governance

Wednesday 29th February 2012 Commons Chamber

Emergency debate (Standing Order No. 24)

12:51

[Mr William Cash (Stone) (Con)]

I beg to move,

That this House has considered the matter of the legal and other action now to be taken by the Government in upholding the rule of law and protecting UK interests in respect of the nature and content of the Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union.

Thank you, Mr Speaker, for approving my application for this debate. I am also deeply grateful to all those Members—some 100 or so—who rose so spontaneously and strongly to support the proposal that I put to the House yesterday afternoon. This is only the fifth emergency debate since 2001. The debate is about the rule of law: not only the rule of law as it affects the United Kingdom but, inevitably, the rule of law in Europe as a whole. The Prime Minister, to his great credit, rightly exercised the veto to protect UK interests, but this is not simply a question of the single market and financial services, however important they may be to the UK economy.

The rule of law is inseparable from democracy, which, based on freedom of choice, leads to the making of law through general elections in line with the wishes of the voters. That is as important as it is simple. Unfortunately, the European Union, despite its much-vaunted claims and aspirations, has increasingly departed from democratic principles and from the rule of law in the pursuit of ideology. We are now witnessing ever-increasing tendencies towards bureaucracy, and even the imposition of technocratic Governments on individual member states, as in Italy and Greece. Yesterday, as it has in the recent past, the Bundestag voted on European bail-outs. According to opinion polls, about 80% of the German people are against the bail-outs, yet the German Government and the Bundestag passed the proposals by a massive majority.

[Mr Denis MacShane (Rotherham) (Lab)]

This line about European technocrats imposing technocratic Governments all over the place is very fashionable. However, the truth is that the current crisis, which is very serious—the hon. Gentleman is right to hold this emergency debate—is about the raw power of politics. It is about the politics in Germany in not wanting to bail out Greece; the politics here; the politics in Greece, where people voted pretty overwhelmingly to accept the bail-out package, with parties splitting up; and the politics in Italy, where people dumped the wretched Berlusconi and put in quite a good guy, Monti, for the time being. The Commission is not involved in this; the technocrats are out of the game; the Eurocrats are off the pitch. It is about raw politics. We are in the driving seat, and the hon. Gentleman might be as well.

[Mr Cash]

I am grateful to the right hon. Gentleman, who makes an important point. However, this is not merely about technocrats but about the brutal fact that the political game as it is now being played is increasingly coercive. That is part of the problem that I shall address.

[Henry Smith (Crawley) (Con)]

Following yesterday’s announcement of the Irish referendum, does my hon. Friend share my concern that if the result is the wrong one as far as the European establishment are concerned, it will be ignored and overruled by some method or another?

[Mr Cash]

I do indeed. A new rule is being imposed through the arrangements under this treaty which involves a kind of qualified majority voting for referendums whereby if member states do not have the requisite number of referendums in which they say that they do not want the treaty, they will simply be ignored. I hope that when it comes down to it and the Irish people have this explained to them, that will be a spur to their voting no, because people are being taken for a ride.

[Mr John Baron (Basildon and Billericay) (Con)]

I congratulate my hon. Friend on securing this emergency debate. Does he share my concern that with democracy having been suspended, in effect, in two countries, with a deepening democratic deficit across the eurozone as rules are bent, and with a eurozone fiscal compact that seems to undermine the EU institutions, we could fast be reaching a tipping point as regards the EU’s credibility and legitimacy?

[Mr Cash]

Absolutely. For those of us who have been critical of the European Union, but not of Europe, because we believe that we need stability and prosperity in Europe, my hon. Friend’s remarks are entirely justified. We are now facing the breaking of the rule of law through the imposition of European rules. It is an extraordinary paradox that the law should be used to break the principle of law itself.

[Chris Bryant (Rhondda) (Lab)]

How is the hon. Gentleman going to vote on this motion? As I understand it, his idea is that the treaty should not go forward, but if the motion is agreed to, we will have decided that we have considered the matter, and the Government will therefore be able to proceed with the treaty.

[Mr Cash]

The hon. Gentleman is rather missing the point. The question before the House is that we should have a proper debate about legality. There will not be a vote, as far as I am concerned, because we need to have an open discussion among Members of Parliament, not only in the European Scrutiny Committee, as has been the case so far. We have heard evidence from many distinguished lawyers and economists, and from the Minister for Europe, although sadly, and deeply regrettably, not from the Foreign Secretary, who has twice declined to come before us. He did say that he would come on 27 March, but that is far too late for the purposes of our proceedings. The most important thing is that we have an open and transparent debate about questions that otherwise would not get across to Members of Parliament, let alone to the people at large.

I have just spent two days in Brussels as Chairman of the Committee, with my hon. Friend the Member for Hertsmere (Mr Clappison). We had an extremely constructive dialogue with members from the national Parliaments and Members of the European Parliament. The only remedy that is provided in this time of economic and, I submit, political crisis in Europe is more Europe, not less. That completely misses the point.

As I discovered only a few months ago at the multi-annual surveillance framework meeting, some people want further European institutional change towards greater political union. In effect, they say that the solution to the problem is the European Parliament, rather than the national Parliaments, although they do want us to be involved so that we can sign our own suicide note. On economic matters and the multi-annual surveillance framework, they want more money to be spent, irrespective of the failure of the European economic systems that they have put in place. The Minister for Europe, who was at that meeting, will recall that he, I and others who were being realistic about this matter were simply astonished by the continuing stream of determination to seek more and more money for the European Union, through the financial transaction tax, by increasing its resources and through the common commercial tax base.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

No one can beat the Chairman of the European Scrutiny Committee for diligence. However, I will not be staying to take part in this debate for one reason: I am disappointed at his timing. The Committee has yet to hear from the Financial Secretary to the Treasury, we have not yet finished our evidence sessions and we have not yet presented our report. I know that the Government are desperate for something to fill the gap in this debating hall, which has frankly turned into a disappointing—

[The Vice-Chamberlain of Her Majesty's Household (Mr Mark Francois)]

Do you think we put him up to it?

[Michael Connarty]

I am not immune to the value of the Whips, but I honestly believe that they have got themselves into such a situation that they have allowed even this debate because they are desperate to fill the Order Paper.

[Mr Speaker]

Order. First, the hon. Gentleman’s intervention is too long. It is very enjoyable, but too long. Secondly, although I do not usually comment on the content of debates at all, I feel that I must do so for the benefit of the House. I know that it will please the senior Government Whip—I must get my seniority right—when I make the point that this debate was granted by me. It was nothing whatever to do with any Whip, senior or junior, and that is the end of it.

[Chris Bryant]

On a point of order, Mr Speaker. Of course, what you say is absolutely true, but you would not have granted this debate unless 100 Members had stood up. My hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) is absolutely right to say that a lot of Tory Back Benchers have been dying for anything other than the complete vacuum—

[Mr Peter Bone (Wellingborough) (Con)]

What rubbish!

[Chris Bryant]

The hon. Gentleman said so last night to me in the gym. They are dying for anything other than the absolute vacuum that there has been in the business in this, the longest parliamentary Session since the Long Parliament.

[Mr Speaker]

That is an interesting point, like many of the hon. Gentleman’s points, but it is not a point of order for the Chair, as he knows perfectly well.

[Mr Cash]

That was not really a point worthy of comment, but I will certainly reply to the hon. Member for Linlithgow and East Falkirk (Michael Connarty), who is my colleague on the European Scrutiny Committee. The question of legality has already been canvassed. The Government have demonstrated that in the letter written by Sir Jon Cunliffe, on their instruction, to the secretary-general of the European Council, which expresses severe reservations about and, in effect, disputes the advice of the legal adviser to the European Council. Without wishing to prejudice what the European Scrutiny Committee may conclude in our report, the fact is that there is already sufficient notice of the concerns over legality for the matter to be considered by the whole House, rather than just in the Committee, as important as that is. There is one simple reason for that: silence or acquiescence can be assumed to be consent. I will explain that point in a moment.

While the question of legality is allowed to continue without challenge, and while it is decided whether the European Court of Justice should be called upon to make a judgment about this matter, which will itself take time, we are depending on the action, legal or otherwise, of the Prime Minister, who is going to the Council tomorrow. It is therefore important for us to at least indicate our view in this debate, in amplification of what the European Scrutiny Committee is considering and what it may yet conclude. I cannot make any assumptions about what its conclusion will be. We have certainly had the most powerful evidence from the likes of Professor Paul Craig, who is by no means unknown in European Union circles as a person of immense stature.

[Michael Connarty]

I am about to leave the Chamber, because I believe that this is not the right time to debate something that we are considering in the European Scrutiny Committee. I am used to all-party Back-Bench Committees being run as the fiefdom of the Chair. However, as a former Chair of the European Scrutiny Committee, I think that it is extremely discourteous, when we have not finished our inquiry or published our report, to have a debate on something that the Chair of the Committee sees as a matter of interest. It is wrong to do that and I think that it should be discussed in the Committee. I am now going to read my papers for the Committee sitting at 2 o’clock so that we can have some debate.

[Mr Cash]

I will reply to that point simply by saying that it is important that we, as a House, consider matters as they are going on concurrently. There should be no presumption that other Members of the House necessarily know the detail of the matters that we are discussing.

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

May I reinforce my hon. Friend’s point that it is important for the House as a whole, and indeed for departmental Select Committees, to have thematic debates about issues that arise from the EU? Such debates should happen at an earlier stage than they do, which so often seems to be at the last minute. I agree with him on that point.

[Mr Cash]

There is also the important question of whether action might need to be taken on the advice of the Attorney-General in relation to the ratification process, which, as I shall explain in a moment, was initiated by the German vote yesterday.

[Mr John Redwood (Wokingham) (Con)]

It is quite right to have this debate as it is urgent and on a matter of great moment. Does my hon. Friend think that there is any way in which 25 countries can construct a treaty that presumes to use the EU institutions that belong to the 27 member states as a whole, without having an adverse or substantial impact on the UK? Should we not be warning our Prime Minister of that threat before he negotiates?

[Mr Cash]

Absolutely. Given that the Prime Minister is going to the Council tomorrow, where it is inconceivable that this matter will not be raised, and that the ratification process is under way, it is important to get that point on the record. I believe the arguments to be self-evident.

[Neil Carmichael (Stroud) (Con)]

I am enjoying this interesting debate. It is an opportunity to air some key issues. Why does the European Scrutiny Committee meet in private? It would be more helpful if it was open to us all more often.

[Mr Cash]

We have periodically sat in public, but then the position has been reversed. That depends on what is decided by the House as a whole, because these matters relate to the Standing Orders. I see that the Leader of the House is here. He knows how vexed this question is. We have gone backwards and forwards on it. However, the issues that we are discussing have been discussed extensively in public. My hon. Friend is more than welcome to come along if he wants to listen to any of our sessions. [Interruption.] As my hon. Friend the Member for Rochester and Strood (Mark Reckless) has just indicated, if he does not want to come along, he can read the transcript. I have copies of it here if he wants to look at it. I do not think that anyone can dispute the fact that the information is out there.

The question of when action needs to be taken is highly relevant in determining whether the Government are seen to acquiesce in decisions that are being taken by other Parliaments, which, as my right hon. Friend the Member for Wokingham (Mr Redwood) said, will affect us vitally.

[Mr Nigel Dodds (Belfast North) (DUP)]

rose—

[Mr Speaker]

Order. Before the hon. Member for Stone (Mr Cash) takes an intervention, may I say that it is always a privilege to listen to his speeches, and today is no exception, but gently point out that about a dozen people wish to speak? I therefore confidently anticipate that he is approaching the conclusion of his remarks.

[Mr Dodds]

I congratulate the hon. Member for Stone (Mr Cash) on securing the debate. I think that it is right and proper that the whole House considers such matters. On the Irish referendum, will he confirm that the rules have been rigged so that if 12—never mind the rest—eurozone countries approve, the pact will be deemed to be ratified?

[Mr Cash]

Absolutely. I do not know whether the right hon. Gentleman was in the Chamber at the time, but I referred to that in reply to another colleague. We are effectively having a new qualified majority voting system for referendums.

The catalogue of breaches of the spirit and the specific legal requirements were epitomised in Madame Lagarde’s remarks on 17 December 2010 about the first bail-out fund, otherwise known as the EFSM—the European financial stabilisation mechanism. She said:

“We violated all the rules because we wanted to close ranks and really rescue the euro zone.”

That is the objective and the method. She is now head of the International Monetary Fund, and we are faced with the prospect of the United Kingdom being expected to contribute to the IMF for what everybody knows is a back-door arrangement to underpin and guarantee the bail-outs in the European Union, which the IMF was not set up to provide, as the United States and other countries have made clear.

Indeed, Germany and France broke the stability and growth pact as it was originally instituted. Now we have a new feature in the big political landscape: in the pursuit of a tax and fiscal policy and compliance with a so-called golden rule to balance their budgets by a form of coercion, 25 member states of the European Union have now come up with an agreement to increase the powers of the stability and growth pact as it applies to them, irrespective of whether a country held a referendum and voted no, as the right hon. Member for Belfast North (Mr Dodds) just suggested. The vote would simply be swept away by a majority vote of the other countries, which insisted on applying the golden rule. One is bound to ask what kind of golden rule it is and whether it is not possible for individual countries to balance their budgets out of self-interest and through their own democratic decisions, rather than having a rule imposed on them in pursuit of the ideology of economic and political union. Indeed, the imposition of such a rule will, of itself, not balance the budgets anyway, as has been found in the past. This is using rules of law to breach the rule of law.

The real solution to the European crisis, which is not confined to the eurozone and deeply affects the United Kingdom, is that the levels of public expenditure, which led to the breaches of the criteria in the treaties, can be solved only by generating growth and giving oxygen to small and medium-sized businesses, for example, through deregulating the massive over-regulation and multiplicity of laws, such as the working time directive, among many others. The list is vast.

Yet again, the whole treaty is a vain attempt to sacrifice practicality and democracy on the altar of ideology, just as the referendums in Ireland, France, Holland and so on were all simply thrown away.

[Martin Horwood (Cheltenham) (LD)]

Will the hon. Gentleman give way?

[Mr Cash]

I will not give way again. I have listened to what Mr Speaker has said and I have no intention of giving way. I have given way a great deal already, as I am sure Mr Speaker appreciates.

Even today, the European Central Bank is departing from its established rules in providing what some suggest is as much as a trillion euros of guarantees, and flooding the markets with unearned money to support countries which are failing to run their economies properly. There is a further problem, which is an increasing trend towards coercion, again in pursuit of ideology.

There is an increasing tendency by Germany to impose its will on other member states, but it should not be forgotten that although Germany pays vast sums into the European Union, it benefits enormously from that, and it could be argued that both French and German banks have played roulette with the Greek economy, and are now, through the rules and the treaty, seeking to obtain repayment and bolster their own banks and their own economies by imposing new rules to suit their requirements. Germany, of course, wants to help the euro. It has an enormous investment in it, but I would argue that the tendencies to coercion are not in the interests of Germany, the European Union or the United Kingdom. Indeed, today, we read that the constitutional court in Germany yesterday blocked the powers of a special parliamentary panel to fast-track emergency decisions affecting the rescue fund.

The new treaty is described as the “treaty on stability, co-ordination and governance” in the EU, yet it is not, contrary to what the Opposition said at an earlier stage, an EU treaty. The Lisbon treaty lays down specific requirements before changes can take place. They specify that the rules shall not be changed unless everyone agrees. The false assumption underlying the new treaty between the 25 is that, despite the failure to achieve unanimity, and even though the rules on enhanced co-operation have not been used, they claim that it remains legitimate to obtain those ends by a different route. I put that to the Minister for Europe the other day—namely that the treaty is based on the dangerous assumption that the end justifies the means, and that they would argue that, even if it is unlawful, the requirement to introduce the treaty for political reasons overrides the law. The question is whether it is lawful for the EU institutions, such as the Commission and the European Court, to be involved in such an agreement.

The new treaty is the triumph of expediency over the law. Professor Paul Craig sets out his arguments in 11 pages of carefully analysed argument. I am certain that the Government know all that and I am glad that the Attorney-General is here. If he wishes to intervene, I shall be only too happy. As a former shadow Attorney-General, I am sure that my right hon. and learned Friend knows the parameters of the unlawfulness of this treaty, which is why I suggested that he should come today.

I believe profoundly that the Government know that the treaty is unlawful and, in the words of Professor Paul Craig, it is important to consider whether it can

“confer new functions on EU institutions.”

He continues:

“I believe this would be contrary to the existing Lisbon treaty and to legal principle.”

He then examines articles 7 and 8, which I have no time to go into, as well as articles 3(2) and 273. They all raise questions that are before the European Scrutiny Committee about detailed matters, which we will tackle in due course in our report.

[Chris Kelly (Dudley South) (Con)]

Will my hon. Friend encourage people who wish to find out more to visit the European Scrutiny Committee’s website at www.parliament.uk/ESCOM?

[Mr Cash]

I certainly would, as I said earlier.

Angela Merkel is quoted in The Wall Street Journal a few days ago as saying:

“As Chancellor of Germany, I should and sometimes must take risks but I cannot embark on an adventure.”

I cannot think of any more dangerous adventure than moving away from the rule of law and inviting the tendency to coercion, which is increasingly evident in German policy making. Indeed, I believe that new rules of law are being asserted to break the rule of law. I am sorry to say that in Germany they seem to believe in government by rule. We believe in government by consent.

The process will not work. We are now in the period of a phoney war. Those who have seen the play “Three Days in May”, about 1940, may well wonder whether it is now obvious that, if we were to acquiesce in imposing the new and unacceptable rules, and in using EU institutions, that would become a new process of appeasement. Fortunately for us, in those dark days, Churchill refused to accept Halifax’s advice at the end of that fateful month.

The letter that the Prime Minister has sent, through Sir Jon Cunliffe, to the secretary-general of the European Council makes it clear that we have serious reservations. We now have two Europes, both built on sand. It is essential that we have a referendum in this country so that the people can have their say because there are such profound questions—

[Mr Buckland]

On what?

[Mr Cash]

On what kind of Europe we want. It is increasingly obvious that the position has become unacceptable and that the rule of law itself is now in jeopardy. We are involved and we must have a referendum on our relationship with the EU. However, first the Government must decide what action they will take about the challenge to the rule of law in Europe. They must put referral to the European Court of Justice firmly on the agenda, follow that through and, at the same time, reassess our policy towards the European Union and insist on a renegotiation of the treaties to ensure that the United Kingdom is not found wanting.

13:19

[Emma Reynolds (Wolverhampton North East) (Lab)]

I congratulate the hon. Member for Stone (Mr Cash) on his innovative use of House procedures to secure this debate. In fact, it would have been unnecessary for him to use such innovation if the Government had agreed to re-establish the pre-Council debates that Labour held when it was in government.

I welcome the opportunity to debate this important issue. The Opposition would not usually want to intrude on the private grief of the Conservative party, or indeed of the coalition, but we nevertheless have a duty to point out the inconsistencies in the Government’s position. I might not always agree with the hon. Gentleman, but I sympathise with him today, because the only thing that is clear is that the Government’s position is manifestly unclear.

The fighting talk we heard from the Government in December and January flies in the face of reality. Ministers loyally and repeatedly rehearse the script that the Prime Minister vetoed the use of the European institutions. The Foreign Secretary was categorical in his assertion that EU institutions were reserved for the use of the 27. He stated:

“What we are clear about is this, that the institutions of the European Union belong to the 27 member states”.

On the eve of the January European Council, the Secretary of State for Work and Pensions, who is listened to closely on those issues by Conservative Members, could not have been clearer. He said:

“The fact is the prime minister vetoed them using the institutions”.

The Chancellor took to the airwaves just hours after the January European Council ended, saying, without hesitation and seemingly without equivocation:

“If we had signed this treaty…we would have found the full force of the…European Court, the European Commission, all these institutions enforcing those treaties, using that opportunity to undermine Britain’s interests…We were not prepared to let that happen”.

[Martin Horwood]

The hon. Lady makes a robust call for clarity on policy. Can she confirm whether the Labour party is in favour or against the use of EU institutions by the 26?

[Emma Reynolds]

If only the position of the Liberal Democrats were clear on that matter—[Interruption.] I will come to that.

There was a guarantee from the top of the Government that EU institutions would not be used—I hesitate to describe it as a “cast-iron” guarantee, because it might upset some Conservative Members, but none the less, the position seemed to be clear. The evidence seemed compelling and the Government seemed to be clear what they were saying, but how quickly things unravelled—on the European Commission, on the use of the buildings and on the role of the European Court of Justice. One by one, the Government’s guarantees faded into yesterday’s headlines, and their empty rhetoric was painfully exposed.

[Mr Baron]

The shadow Minister will accept that the fiscal compact is designed to save the euro. Could we therefore have clarity on the official Opposition’s position on the euro? Given that all the economic evidence and the 85 currency devaluations since the second world war show that countries that have left a currency bloc benefit, and given that Greece desperately needs a devaluation, will she explain why she supports the cry to save the euro when that policy serves only to make the austerity packages worse?

[Emma Reynolds]

Unlike the hon. Gentleman, the Opposition believe that the stability and preservation of the eurozone is in our country’s interests. If those countries took on their former currencies, there could be a disastrous impact on our economy. I do not agree with him.

David Cameron walked out of the negotiation at the—

[Mr Bone]

Who?

[Emma Reynolds]

I am sorry. I meant the Prime Minister. I do apologise.

[Mr Baron]

Will the shadow Minister give way?

[Emma Reynolds]

Not for a minute—I have taken a couple of interventions already.

The Prime Minister walked out of the negotiation at the December Council with no additional guarantees or safeguards to protect British interests; no protections on the single market; no additional safeguards for financial services; and not even a seat at the table of eurozone meetings to ensure that we had a voice, if not a vote. In short, he gained nothing apart from the short-lived praise of some Conservative Back Benchers, but even that is changing.

Article 8 of the new treaty states that the Commission, the European Court of Justice and the buildings will all have a part to play in the working of the fiscal compact. In fact, the Government’s representative in Brussels, Sir Jon Cunliffe, stated in a letter to the European Council that articles 3, 7 and 8 all make explicit reference to the role of the EU institutions in the fiscal compact.

Despite profound confusion over the Government’s interpretation of the legal basis for the treaty, the treaty is clear. According to the terms of reference set out in the text of the agreement to be signed tomorrow, the fiscal compact will rely on the operation of the EU institutions upholding the terms and workings of the agreement. The Europe Minister told the European Scrutiny Committee last week that one can argue about the politics of the terms, but they amount to a promise by 25 countries that they want to support doing certain things under the European treaties. He said that in those cases, the use of the European institutions is, by definition, already authorised.

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

Will the shadow Minister give way?

[Emma Reynolds]

Not for a minute.

Will the Minister therefore state clearly, and once and for all, whether the Government believe the legal status of the agreement, as set out in the terms of the fiscal compact, and specifically in the articles I have cited, is wrong? If it is wrong, what will the Government do to correct it? If they will do nothing to correct it, are we right to assume that that is their way of quietly admitting that they have been forced into a humiliating U-turn?

[Mr Baron]

Will the shadow Minister give way?

[Emma Reynolds]

I will not give way. I have given way once to the hon. Gentleman already.

At least the leader of the Conservatives in the European Parliament, Martin Callanan, has been clear. He said:

“There is no doubt that the government’s position has altered since the December summit, when they were insisting the institutions could not be used…I blame a combination of appeasing Nick Clegg, who is desperate to sign anything the EU puts in front of him, and the practical reality that this pact is actually quite hard to prevent.”

Does the Europe Minister therefore agree with the analysis of his party’s leader in the European Parliament?

[Andrew Percy]

Will the shadow Minister give way?

[Emma Reynolds]

Not for the minute.

Does the Minister agree with what the Deputy Prime Minister said on “The Andrew Marr Show” in December? He said:

“Well it clearly would be ludicrous for the 26, which is pretty well the whole of the European Union with the exception of only one member state, to completely reinvent or recreate a whole panoply of new institutions.”

Perhaps there is more agreement between Martin Callanan and the Deputy Prime Minister than first meets the eye. They both believe, as the Opposition do, that the Government have flip-flopped. Despite their initial bravado, they have been unable to veto the use of the institutions.

[Henry Smith]

I have waited patiently since the intervention from my hon. Friend the Member for Basildon and Billericay (Mr Baron) to hear exactly what the official Opposition policy is on the fiscal treaty. Incidentally, is it still official Opposition policy to join the euro?

[Emma Reynolds]

The shadow Chancellor has made it clear that we do not think we will join the euro in his political lifetime.

The ultimate irony is that the Prime Minister, who has previously been so scathing of the EU, has now been reduced to relying on that institution to be the last line of defence in the protection of British interests, because the EU, unlike him, will be in the room. The UK will be barred from key meetings, rendering us voteless and voiceless in future negotiations. Without being in the room, we stand little chance of knowing—let alone influencing—whether eurozone Ministers will stray into areas of decision making that affect the 27.

The Opposition are right to be concerned at that prospect and to doubt the effectiveness of such a system in protecting British interests, and we are right to ask questions on how that situation was allowed to happen.

[Andrew Percy]

The shadow Minister said strongly and clearly that she believed the euro needed to be saved, and that any country leaving the euro would have a negative impact on our country and economy. What evidence does she draw on to support that assertion?

[Emma Reynolds]

A disorderly default by any member of the eurozone could have disastrous implications for that country and knock-on effects for the rest of the EU. There would be a contagion effect that the hon. Gentleman would be naive to think would not take place.

We are right to stress that the response by the Government and centre-right Governments across the EU to the eurozone crisis has been economically inadequate, and any worsening of the crisis will have a devastating impact on our economies. Although we welcome the fact that in January the European Council spoke about the need for growth and jobs in order to ensure the recovery of the eurozone, we are concerned that this is merely an add-on to the current deal rather than an integral part of it. In the light of that, will the Europe Minister comment on the position of the French Socialist presidential candidate, who is visiting the UK today and urging EU member states to reopen the treaty to include more commitments to growth and jobs?

I will cite the words of one Member of the House who seems to share our deep scepticism about the consequence and cause of the Prime Minister’s diplomatic defeatism last December—the Deputy Prime Minister. Earlier this month, he explained:

“The language gets confusing. Veto suggests something was stopped.”

The phantom veto of December has now been exposed. He also said that over time the treaty would

“be folded into the existing EU treaties so you don’t get a permanent two parallel treaties working separately from each other…We all see this as a temporary arrangement rather than one which creates a permanent breach at the heart of the EU.”

According to him, the Prime Minister’s walkout in December was a temporary arrangement.

The crux of the issue was eloquently and pithily expressed by the hon. Member for Rochester and Strood (Mark Reckless) the day after the 30 January European Council, when he asked the Prime Minister:

“Will the Prime Minister explain what it is that he has vetoed?”—[Official Report, 31 January 2012; Vol. 539, c. 687.]

Nothing, it seems. The Government Back Benchers who gave the Prime Minister a hero’s welcome in December have now realised that he did not prevent anything from happening. We said at the time that his walkout was not an expression of the bulldog spirit but a form of diplomatic defeatism.

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

Is the hon. Lady aware of one thing that the Prime Minister seems to have achieved with this veto—as it has been described? In Ireland, the Irish Attorney-General has said that the fact that the compact is outside the EU treaties has influenced the advice that Ireland needs a referendum.

[Emma Reynolds]

That suggests that the Prime Minister’s influence is greater than it is. It is up to the Irish people to decide whether to accept the treaty, whether within the European treaties or outside.

Despite the penny dropping with everyone else, the Prime Minister resolutely clings to his phantom veto. At the press conference after the January European Council, he said:

“There isn’t an EU treaty because I vetoed it; it doesn’t exist.”

That flies in the face of the evidence. The European treaty involves 25 out of 27 of the member states. It involves the European Commission and the European Court of Justice. It sounds like a European treaty; it walks like a European treaty; it clearly is a European treaty. The Deputy Prime Minister is at pains to describe this situation as temporary, but in truth he was powerless to prevent the Prime Minister from putting the Conservative party interest above the national interest, as it was reported he was advised to do by the Foreign Secretary.

[Bob Stewart (Beckenham) (Con)]

Does that mean that the official Opposition would be happy with the treaty, leave it as it is and do nothing?

[Emma Reynolds]

We have made it clear that we are not happy with the treaty. We would not have walked out of the negotiations in December when a text was not even on the table. We would have negotiated a different treaty. We believe that this is a fiscal straitjacket like the one that the Government are putting on our country, and it is not in the interests of the eurozone or the UK.

As a result of the Government’s actions, Britain has never been so excluded from decisions affecting its vital national interests. That is bad for British business, bad for jobs and bad for families across the country. No British Government, regardless of political colour, have been as complacent as this Government about the emergence of a two-speed Europe. By putting party interest above the national interest, the Prime Minister has rendered the Government dependent on what could be described, euphemistically, as the Conservatives’ least-favourite institution—the European Commission—to protect the UK from decisions being taken without us even being in the room. Even Baroness Thatcher, a staunch critic of the EU, understood that being in the room was of paramount importance. She would never have relied on the European Commission to defend the British national interest.

13:35

[Andrea Leadsom (South Northamptonshire) (Con)]

I find the Opposition’s stance rather astonishing, because it focuses only on micro-details and fails to address the big picture. As an eternal optimist, I feel that the big picture—the opportunity for Britain—has rarely been better, because real change is in the air. As a banker by background, I have very real concerns about the prospects for the euro’s survival, and I think that the European Central Bank’s long-term repo arrangements will not endure beyond the first roll-over and may well collapse long before then. But regardless of the outcome for the euro in the short to medium term, there is no doubt that change is in the air.

I should mention to the shadow Minister that, as I am sure she realises, the treaty is not an EU treaty but a fiscal compact treaty that does not include all the EU member states. She did not seem to make that clear. The fiscal compact treaty will create a euro summit for those who are part of the eurozone and those who have ratified that treaty. The euro summit will consider things such as competition and structures, and inevitably will, therefore, be a forum for caucusing. That is almost inevitable. So change is in the air.

I take great pleasure in the fact that, because change is in the air, there is the opportunity for change for Britain too. The prospect is no longer of a two-speed Europe but of a multi-tier Europe—in respect not just of those in the eurozone and those outside it but of those in the Schengen arrangement and those outside it, and of those great fishing nations interested only in the common fishing area and those who wish to be excluded from it. A multi-tier Europe in which member states can pursue their own particular interests but join together in areas of common cause is the opportunity facing us.

I am delighted with everything I hear from our Government about our approach to that. We should welcome and support those in the eurozone area who wish to work more closely together on further fiscal integration to support their currency, and we should also be pressing for change in the best interests of Britain. In that context, I want briefly to mention the work of more than 120 Conservative Back Benchers in forming the Fresh Start project. I pay tribute to my hon. Friends the Members for Daventry (Chris Heaton-Harris) and for Camborne and Redruth (George Eustice). The three of us, together, have been pulling together an enormous project that looks at every single policy area under the EU and attempts to determine where it acts in Britain’s interests, where it goes against Britain’s interests and what the options are for change. To my knowledge, such work has not been done for a good long time. It was astonishing that the shadow Minister could not come up with any detail, but could only nit-pick at what the Prime Minister has been doing.

I also pay tribute to the hon. Member for Dunfermline and West Fife (Thomas Docherty), who sits on the shadow Minister’s side of the House and who has become co-chair with me of an all-party group. That group has seen significant engagement from both sides of the House in the interests of EU reform and what could be a better deal for Britain.

[Emma Reynolds]

I would like to make it clear to the hon. Lady, who is making an eloquent speech, that the Opposition are in favour of European reform, but not the same kind that she is. For example, we are not in favour of repatriating European social policy, and we also think that, even were it desirable, it would be a pretty unrealistic aim.

[Andrea Leadsom]

I am glad that the hon. Lady made that intervention, because I can assure her that the all-party group on European reform, with which her hon. Friend the Member for Dunfermline and West Fife other Labour Members, Government Members and Members across the House are closely involved, is investigating the options for change. It is not a campaign group but an investigative group. It is a disappointment to me and to others that the hon. Lady has not engaged in that debate, because we have turned up some extremely interesting facts.

As the devil in the EU is in the detail, I would like briefly to mention three areas. The first is financial services. Before the financial crisis, the single market for financial services was a very good thing. It significantly added to British GDP, as well as the GDP of Germany, France and Italy. All the change at EU level was about creating a better single market, including in UCITS—undertakings for collective investment in transferable securities, the most successful financial services export from the UK ever.

Financial services had great legislation; however, since the financial crisis the EU has turned to stopping, slowing down, preventing and shutting down financial services, almost in a sort of act of revenge against the bankers. Indeed, I have heard many EU politicians talking about how City-style financial services are to blame for the problems they have found themselves facing. However, that is simply not true, and our Prime Minister did absolutely the right thing for British businesses and the British economy by standing up for financial services and seeking the safeguards that would enable us to protect the industry, which employs a total of nearly 2 million people in this country and contributes 11% of our GDP on an ongoing basis. He therefore did absolutely the right thing, entirely contrary to what the shadow Minister suggested.

Secondly, the shadow Minister mentioned social policy and the working time directive, and said that the all-party Fresh Start group would repatriate those powers. Not true: we are looking at what the options for change are. She will know, as do many people, that trainee doctors in the NHS are severely hampered. In fact, a coroner in the west country recently attributed the death of one elderly gentleman to the working time directive, which had meant that not enough doctors were on call and that the two doctors on duty were seeing 300 to 400 patients between them. Change is therefore vital.

My third and final point is about structural funds, where we now have a genuine opportunity. Back in 2003, the hon. Lady’s Government’s policy was to repatriate the local element of structural funds. In Britain we have been contributing €33 billion to structural funds over the past seven years. Some €9 billion comes back to the UK, but that is decided by the EU. What on earth is the point of that? We can decide best where to allocate that €9 billion. Interestingly, some of our poorest regions are net contributors to structural funds, not net beneficiaries, so the potential for reform is massive.

[Bob Stewart]

Does that mean that we can change quite easily without any further ado, simply by adopting my hon. Friend’s suggestions?

[Andrea Leadsom]

All the changes that the all-party group is investigating would require negotiation. Some things are more complicated than others, although we are setting everything out in the research that we are undertaking. [Interruption.] I have been asked to finish, so I will.

My two final points are these. For far too long we have tried to avoid the EU and not engage with it, so the other thing that the Government are doing that I welcome is engaging far more and far better with EU policy making at all levels. My second point is about better EU scrutiny in Parliament. We have been rather bad at that in the past, so I am glad that the Minister for Europe will be doing far more of it in future.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I know that this is an important debate and that everyone wants to get in, but we have so many speakers that I am going to have to impose a seven-minute time limit. However, even then it will be very tight, so if Members could save some time and ease up on the interventions, that would be helpful.

13:43

[Mr Denis MacShane (Rotherham) (Lab)]

I will do my best, Mr Deputy Speaker.

I do not really disagree with some of the points that the hon. Member for South Northamptonshire (Andrea Leadsom) has just made, but to achieve her aims she will have to find allies. The difficulty is that the Conservative party is perceived as profoundly hostile to European co-operation. It is allied with some very odd gentlemen in the European Parliament, as we know, and it sits with the Russians at the Council of Europe. We represent a democratic political organisation in this Parliament, and we cannot achieve co-operation at a supra-parliamentary level by just telling people what we want and expecting everybody else to agree. Therefore, there has to be a new approach to Europe.

I congratulate the hon. Member for Stone (Mr Cash) on securing this debate under Standing Order No. 24. It is absolutely outrageous that we do not have proper debates on Europe in Government time. Indeed, I am sorry that the Leader of the House is not here—I have made that point to his face; I am not saying anything behind his back. It is unfair to ask the Backbench Business Committee, which is generous on a number of issues.

[Mr Bone]

The right hon. Gentleman is making a fair point. The Backbench Business Committee is not given the time in advance to plan any of these debates, so he is absolutely right.

[Mr MacShane]

And it is not as if this place is crammed full of legislation, is it, Mr Deputy Speaker? I really wish that the Government would stop continually hiding behind the Backbench Business Committee’s existence to deny their allocation of time for what are important debates.

The hon. Member for Stone made the interesting observation that the EU institutions could not be used for just a group of EU member states, but of course that is nonsense. They are used if there are rows over Schengen, which does not include us, or if there are rows over fisheries policy, which on the whole does not involve Austria, Hungary or other land-locked nations. Also, there have always been groups or clusters of EU member states with particular concerns which the European institutions have to have some regard for.

[Bob Stewart]

Will the right hon. Gentleman give way?

[Mr MacShane]

If the hon. Gentleman will forgive me, I want to give time to other colleagues and do not want to take up my full time.

I should inform the House that I might not be here for the wind-ups, because I have to go and hear Monsieur François Hollande speak at King’s college London. I am excited about meeting Monsieur Hollande, this socialist who is proposing to increase the income tax on people earning €150,000 to 45%—in other words, lower than the business-crushing tax rate that the present Chancellor of the Exchequer imposes on higher earnings. Of course, Monsieur Hollande is not proposing to rip off the epaulettes or the légion d’honneur from bankers he does not like—as our Prime Minister did with Sir Fred Goodwin—nor is he proposing retrospectively to deny bankers their bonuses or to introduce retrospective tax legislation on what bankers earn. We have the most anti-banking Prime Minister in the history of Great Britain. As a low-tax socialist, I will be glad to be at the college listening to Monsieur Hollande, who seems to have a much more moderate and pragmatic policy.

I would be interested to hear from the hon. Member for Stone, who has left his place, why exactly the Royal Bank of Scotland—partly owned by us—and HSBC are running to the European taxpayer, in the form of the European Central Bank, to ask for cheap loans. Why on earth should the European taxpayer bail out appallingly badly run, inefficient British banks that do not lend their money, but continue to try to pad out their bonuses and salaries? I certainly do not object to their doing so; indeed, I hope that the European taxpayer will show some generosity.

[Mark Reckless]

The right hon. Gentleman is commenting about two banks, which he has given as an example, but as for HSBC at least—a large international bank with interests throughout the world, particularly in Asia—the UK is only a modest part of its operations. Frankly, his comments are unjustified in that respect. What is the objection to those banks accessing liquidity ECB support on the same terms as anyone else, and why should they not do so?

[Mr MacShane]

Because of the breathtaking hypocrisy of the Conservative party, in that when action is needed to allow HSBC and RBS—British firms—to continue functioning and operating in a Europe that needs to keep its head above water, and which therefore might need some help from the IMF, all we hear from the Conservatives is that we should not be part of it. However, what is sauce for the RBS and HSBC goose—going and asking for euro taxpayer handouts—has to be sauce for the UK gander. We are all in this together.

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

Will the right hon. Gentleman give way?

[Mr MacShane]

Although I will lose time, I will give way—it is the hon. Gentleman, for heaven’s sake.

[Jacob Rees-Mogg]

I am grateful to the right hon. Gentleman; I will be very brief. RBS has business in Ireland. It is lending against its loans in Ireland, which are in euros and are therefore a matter for the eurozone. Of course it ought to be able to get money from the ECB on that basis.

[Mr MacShane]

And 50% of our exports go to the eurozone; therefore, it makes sense for us to help the eurozone stay alive. However, that will be difficult, because in our broad economic and fiscal policy we are more European than the Europeans. We are implementing anti-growth, deflationary, 1930s-type policies that Herbert Hoover or Heinrich Brüning would have instantly recognised. That is why unemployment is going up, why job creation is falling and why growth is flatlining. The paradox is that we need new policies for Europe, but they are not on offer from this Government, this Chancellor or this Prime Minister, who is entirely on the same wavelength as Chancellor Merkel, President Sarkozy and all the others who are currently pursuing job-killing, growth-crushing, deflationary, austerity, Treasury-driven financial and fiscal policies in Europe. I am surprised that we have not heard the terms “Camkozy” or “Merclegg”, because there is undoubtedly very little difference between the right-wing Conservative policy of our political leaders and that of the politicians controlling the big continental countries.

Let us be clear: the Commission is not involved in this. The European technocracy and bureaucrats are not involved in this; they are utterly sidelined. This is about the raw politics of anger in Germany against Greece, and the raw politics in Greece against Germany. It is also about the raw politics of the Conservative party in this House, some of whose members rightly feel that all the pledges made by their leader, now the Prime Minister, on referendums, renegotiation and repatriation have not in any way been delivered. That is what is causing upset and concern in the House of Commons. I am sure that it was also raw politics in Ireland that led the Taoiseach to agree to the referendum there. We know that Monsieur Hollande has said that, if elected, he will renegotiate the treaty. We also know that Mr Rajoy, the new conservative leader in Spain, has said that he will not implement a Merkozy-type dose, because Spain could not take it.

We need a new approach in Europe, and in this country. I would have no problem if, after 15 years of wallowing in Euroscepticism, the Conservative party rejoined the real European world. I would like to see Conservative MEPs sitting with other centre-right MEPs, precisely to create the links that the hon. Member for South Northamptonshire mentioned. We need more engagement, and not in order to join some Euro-federalist nirvana—that is not on offer at the moment. We are living in not a two-tiered Europe but a multi-tiered Europe, and we have to be part of it. We are not at the moment, but I hope that the Government can change their course before it is too late.

13:51

[Martin Horwood (Cheltenham) (LD)]

It is always a pleasure to follow the right hon. Member for Rotherham (Mr MacShane) in debates on Europe. He is the authentic voice of Euro-enthusiasm on the Labour Benches—[Interruption.] He is one of the authentic voices. I could not, however, work out from listening to his speech whether he was in favour of the treaty or not.

It is also traditional to congratulate the hon. Member who secured a debate such as this, but in this case I think that the hon. Member for Stone (Mr Cash) has missed the point on a colossal—almost historic—scale. There are questions of legality and politics around the treaty, but they are dwarfed by the really big issue, which is the future of the European economy. The treaty represents a sincere and concerted attempt to make that future stronger, safer and more prosperous. We can argue about its chances of success, but I think that the hon. Gentleman is trying to have his cake—perhaps I should say “gâteau”—and eat it. He is calling on European economies to practise fiscal responsibility without the treaty, while simultaneously criticising them for not sticking to the previous, more flexible, regime. I do not think that he can have it both ways.

That is in stark contrast to the letter written by the Prime Minister and 11 other Heads of Government in the run-up to the summit, which tried to address the real issue of promoting prosperity in Europe. It talked about completing the single market in service markets and promoting the digital economy, as well as

“providing a secure and affordable system for cross-border on-line payments, establishing on-line dispute resolution mechanisms for cross-border on-line transactions”.

It also proposed promoting an “internal market in energy” and “energy interconnection”, as well as a

“commitment to innovation by establishing the European Research Area, creating the best possible environment for entrepreneurs and innovators to commercialise their ideas”.

That is exactly the agenda that should be dominating our discussion of the summit. We should be talking about how we are going to get the whole of the European economy back on track towards creating jobs and sustainable prosperity.

We have to ask ourselves: what is the real threat to the UK’s national interests? Is it really the use of EU institutions by fiscal compact countries? Could that not be interpreted as a connection that will strengthen the interests of the 28, relative to the fiscal compact countries? That connection, and the involvement of the Commission, will mean that at least one institution will have to uphold proper adherence to the European Union treaties and the safeguards in the fiscal compact treaty.

Is there any threat to the single market, which is one of Britain’s primary interests in all this, given the safeguards that we have succeeded in inserting into the treaty by having a seat at the table and being part of the discussions that led to the drafting of the treaty, despite not being a signatory to it? That is in contrast to the view expressed by the hon. Member for Wolverhampton North East (Emma Reynolds), who is no longer in her place. I believe that that was a positive step by the Government, and a positive example of the re-engagement that we have seen since December.

[Mr MacShane]

Does the hon. Gentleman still share the view of his leader, now the Deputy Prime Minister, that the Conservative party’s colleagues in the European Parliament are “nutters”, “anti-Semites” and “homophobes”?

[Martin Horwood]

I think that the right hon. Gentleman is misquoting the Deputy Prime Minister, who was referring to the other parties that are members of that group. I obviously have a great deal of sympathy with that point of view, but I can assure the right hon. Gentleman that our leader was not accusing Conservative MEPs of that.

What is the most serious threat to the UK’s national interests? Is it the use of the EU institutions? Is there a threat to the single market, given the safeguards that have now been inserted into the treaty? I would say not. The most serious threat to the UK’s national interests is the most serious economic crisis in Europe’s post-war history. It is a real and present danger to British jobs, British prosperity and British companies. Why would we now throw a spanner into the works of the only vehicle with a chance of bringing that crisis under control? To use the term used by the hon. Member for Stone, I think that such an idea reveals something about his own pursuit of ideology, rather than any real defence of the UK’s national interests. For that reason, I think that he might even be losing sympathy among his Conservative colleagues for what must now count as the political equivalent of antisocial behaviour in continuing to be completely obsessed by the legal minutiae and institutional details, rather than the really big picture that is facing Europe and Britain within the European economy.

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

The hon. Gentleman said that he was going to make a really big point, but I do not think that he is doing so. The really big point is surely that Europe cannot grow while policies for competitive deflation are in place. They involve either one country, Greece, which is bankrupt and will never be able to pay its debts, or four countries. That situation is never going to lead to a stable Europe that can grow and with which we can trade. Is not that the really big point? Would not we all be better off if Greece left the euro in as stable a way as possible?

[Martin Horwood]

The hon. Gentleman has raised some of the issues that we should be debating, although they are not the subject of the motion, which is about legal compliance. There are issues about whether the compact will work and whether it will do enough to stimulate growth, and the Prime Minister and the other Heads of Government have addressed them in their letter, and in the agenda for growth, jobs and sustainable prosperity that they are pursuing. I think that that addresses the hon. Gentleman’s question.

Those questions about the economic situation are what we should actually be debating here, and there is an argument for reinstituting regular debates in advance of European Councils. It is unsatisfactory that we have ended up debating this matter with less than a day’s notice and with very little preparation, at the very last minute before the European Council. There is also an argument for a thorough revision of the whole scrutiny procedure for European legislation in this place. With all due respect, I think that the European Scrutiny Committee keeps bringing us back to discuss the technicalities, yet we never seem to have debates on the substance of issues such as the fundamental economic questions and the structure of the European economy, as the hon. Member for Blackley and Broughton (Graham Stringer) has just pointed out.

[Mr James Clappison (Hertsmere) (Con)]

Will the hon. Gentleman give way?

[Martin Horwood]

I will not give way again, because I will not get any more time and the Deputy Speaker has instructed us to be brief.

Where is the report from the European Scrutiny Committee on the economics of this matter—and where, come to that, is the report from the Treasury Committee on the economic aspects? We must address these issues in revising the way in which the House of Commons scrutinises European affairs; we need to take a step up and get away from this constant obsession with legal technicalities and the minutiae of organisational details. We need to get away, too, from Eurosceptic obsessions that see conspiracies everywhere to try to undermine British sovereignty, and to get on to the real issues of how to promote jobs and prosperity in Europe as a whole. That is the mission that the Prime Minister with the other 11 Heads of Government has set out in the letter. I think that is exactly the right agenda, and it is in stark contrast to some of the suggestions made in today’s debate.

14:00

[Chris Bryant (Rhondda) (Lab)]

It is a delight to follow the hon. Member for Cheltenham (Martin Horwood), even though we were in English classes together at school and I still bear grudges about that. He was broadly right in his analysis—I appreciate that my right hon. Friend the Member for Warley (Mr Spellar) will worry that I am praising a Liberal Democrat—and I agree with him. I agree, too, with all those who said that it is a shame that we had to use the Standing Order No. 24 procedure to secure a debate on one of the biggest issues affecting parliamentary sovereignty, our economic future and our relationship with some of our biggest allies in Europe. In addition, we do not usually get to hear enough from the Minister for Europe.

If the Government take away one thing from today’s debate, I hope it is the fact that we need properly structured debates before European Council meetings, so that they have a strong mandate from us and we are able to inform what they take to the meetings.

It is a shame that the hon. Member for South Northamptonshire (Andrea Leadsom) is no longer in her place. I gather she is often referred to nowadays as the new iron lady—although I do not know who will get an Oscar for playing her in the future. I profoundly disagree with her that a multi-tier Europe is a good idea. During my four and a half seconds as Minister for Europe the BRIC economies—Brazil, Russia, India and China, and for that matter, Mexico—repeatedly told me, “It is essential that we know that we are dealing with a single market.” If we decide to cut up the single market, with lots of different tiers of different elements of legislative proposals, it will do us damage with the growing economies of the world. China is not interested in dealing with 27 different countries in Europe; it is interested in doing business in Europe. If it is going to be more difficult to do business in Europe, it will do business elsewhere—and we will have cut off our nose to spite our face.

I wholeheartedly agree with the hon. Member for Stone (Mr Cash) about the danger of technocratic Governments being imposed on other European countries. There has always been an element of democratic deficit within the European Union. In a sense, it is almost inevitable—unless we choose to elect a single President and Government of Europe, to which I would be wholeheartedly opposed because I do not think that there is a single people of Europe. That is why we will always have a strange mixture of elected Governments in member states working alongside a European Commission and a European Parliament. It will never be perfect, but I would say that this House is not perfect in different regards either. The historical process of parliamentary democratic reform in this country has always been a matter of trying to improve on what we had last year—not some golden ideal, but improving on what we had and have last year and this year.

Of course there need to be changes in Europe, but if the economic solutions effectively being enforced on some European countries have so little support within those countries, there is a danger not only that the individual Governments will face riots and significant civil disturbance, but that the whole European Union could face big problems.

I agree with the hon. Member for Stone in his analysis of Germany, too. That country has tended to suggest to the world that it is paying for rescuing the countries in trouble. That is far from the truth. The honest truth is that Germany is making an awful lot of money out of the present arrangements and intends to make even more money out of the arrangements on the table in the near future. We sometimes need to push back to the Germans and say, “Actually, you need to be little bit more honest about exactly where your economic and financial interests lie in all of this.”

The broad position is that there are two choices. We can try to make the euro work because the UK believes that if it were to fall apart it would lead to significant dangers, particularly given that we are the banker and the financial powerhouse of Europe. I believe that that is the right approach for us. There were problems with the initial creation of the euro, particularly when there was no enforced audit, and countries could simply make up the numbers, sometimes even employing extremely expensive accountants to help them to do so. Some big countries in the EU wanted to turn a blind eye to it because they themselves worried about the enforcement of the stability and growth pact, so they allowed some countries to do that. It is important that we rectify some of those inherent problems in the creation of the euro, which is why, broadly speaking, advancing towards some kind of fiscal union, as adumbrated in the treaty, is the right direction for us to take, although there might be some details about which I would be worried.

There is an alternative route, however, which is essentially to dismantle the euro. I know that some Conservative Members believe, for perfectly legitimate reasons, that that is the right course to take. They believe that we cannot have a single currency with a single interest rate for the very different labour markets across the whole of the EU. I just think that that they are wrong on that. I believe, and I suspect I will be proved right, that not a single country will leave the euro this year or next year; in fact, a couple more might join it.

There were problems with the UK veto exercised before Christmas. It has, to coin a term, left us with a Bulgarian muddle. In truth, we have neither an EU treaty nor a not-EU treaty; we have a sort of European treaty that is a halfway house with legal dubiety at its centre. That is where the hon. Member for Stone is absolutely right. I think it would have been better if we had stayed at the table and made sure that we had an EU treaty that was right for Britain. I disagree with those who say that this is a question of more Europe or less Europe—

[Martin Horwood]

Will the hon. Gentleman give way?

[Chris Bryant]

I cannot; I have all of one second—I am finished.

14:07

[Mr John Redwood (Wokingham) (Con)]

This debate is about the future of democracy itself. There can be no more important issue. We are considering a draft treaty that presumes to take substantial powers of decision over how much a country can spend, how much a country can tax and how much a country can borrow from the democratic choices of the member state to a centrally imposed system, which it is hoped will make the euro work better. This matter is of vital importance to the United Kingdom because we wish our neighbours to live in democratic prosperity for their own sakes, because we wish to trade with them successfully and because we wish to make sure that there is no danger whatever that our cherished freedoms and independence as a member state that has deliberately kept out of the euro could in any way be damaged by this treaty, which presumes to use European Union institutions to enforce a non-European institution will.

The peoples of western Europe are right to be mightily worried about the bad state of health of their respective democracies where they have adopted the euro. We see daily on our televisions or hear reported on our radios dreadful scenes from Greece, Spain and Italy, which are struggling with the common economic discipline and policy being imposed today. The German-led new treaty says that such discipline is not strong enough, that there needs to be more mutually assured deflation and that there needs to be a madness imposed on these countries to try to see whether the euro will work.

Ministers rightly say that they must not say anything in public or be seen to do anything in public that makes the difficulties of the euro area worse. I fully endorse that approach. They should never normally comment on the euro, because it is too dangerous, it is too difficult and it is up to those in the euro to say what they wish about how their currency is developing. But how it develops is of grave interest to us, so I urge my right hon. Friend the Prime Minister to ensure that, in private, when he is round the table, as he will be, with all the other leaders and with a right to a view, he speaks truth to their impotence. He should say to those assembled leaders struggling to get a grip on their recalcitrant economies and some stability into their very unstable currency, “This is not working.” He should tell them that, in truth, the treaty before us this afternoon cannot conceivably make the euro work. Other things can help to ease the pain of the euro, and in another debate we could discuss many other policies that could pull off the trick of getting many countries through and the euro out the other side, but this treaty is not the way to do it.

This treaty is deeply offensive to many democratic peoples in the countries of western Europe that will face it. It reinforces a German view of how to make the economies of western Europe work that clearly is not working. If part of the medicine for a country that has borrowed too much is to spend less and borrow less in the public sector—that can be the right approach, and I can think of countries where that could apply—at the same time a series of policies have to be adopted to promote growth in the private sector, so that there is some hope, there are some new jobs and there could be new tax revenue coming in.

Where the EU is proposing tax rises, it needs tax reductions on enterprise, business and success. Where it is proposing a bigger monetary straitjacket, it needs monetary ease. It is now creating a very big monetary easing across the eurozone as a whole by tipping trillions of printed money into the system to try to make it work, but that new money cannot possibly help Greece or Portugal, because they have frozen and damaged banks, they are under the austerity cosh, and representatives of the European Union are going in and treating them as if they are damaged economies that cannot conceivably pull through.

The euro scheme is damaging the confidence that Greece and Portugal need in order to see light at the end of the tunnel; it is putting people off investing there. Why would someone go to Greece to invest through euros, if they think that it may be driven out of the currency and forced into a big devaluation? Why would they seek to do business in Greece when the banks are frozen and they are not benefiting from the liquidity injection that is helping the corporate bond market and the Government bond market, temporarily, in Italy and in Spain?

Above all, our Prime Minister has to secure and protect the British interest. We in this House should be very proud of what our predecessors created, obtaining control over how much is raised in taxation, how much is spent and how much this country borrows and prints. We are rightly out of the euro, because those in it cannot conceivably maintain democratic control over those issues. I am grateful to my hon. Friend the Member for Stone (Mr Cash) for raising this issue today before the summit, but we are worried that—inadvertently, I am sure—the Government might get us dragged into much greater supervision of our economy by the European Union, in a way that signs us up to the very mad policies that we are rightly warning them cannot conceivably work.

Europe is at risk: jobs are being destroyed; economies are being gravely damaged; the people are on the streets; and the main political parties in these European countries are signing up to exactly same policy, so even where a general election takes place the popular will is thwarted, as people do not have a proper choice if they stick to the main parties. In one or two countries Governments are even being changed by the European elite without a single vote being cast and without the democratic view of the people and their parties being consulted. Surely everyone in this House is ashamed of that. Surely we all unite in saying that the thing that brings us together is our belief in the power of the ballot box, the voice of the elected representative and the right of people to choose and to say that a policy is failing. We are told by the European establishment that only its policy can work. There is no evidence whatsoever that the policy is working, but there is massive evidence of the damage it is doing.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Eight speakers wish to speak and the Minister would like 15 minutes in which to wind up, so it would be helpful if Members tried to be generous to others.

14:14

[Mr James Clappison (Hertsmere) (Con)]

It is a great pleasure to follow my right hon. Friend the Member for Wokingham (Mr Redwood), and I strongly endorse the sentiments he uttered throughout his speech, including those at the end. I warmly congratulate my hon. Friend the Member for Stone (Mr Cash) on securing this debate.

I heard the comments made by the hon. Member for Cheltenham (Martin Horwood), who speaks for the Liberal Democrats on Europe and does so consistently. He suggested that my hon. Friend is being technical or difficult in raising these matters for debate, but he had the House’s support for an emergency debate. My memory of events in this House goes back a long time, and I recall that similar comments were made when my hon. Friend was raising concerns about the Maastricht treaty and about the single European currency. Yet a very wide body of opinion in this House now suggests that the Maastricht treaty should never have been signed and that the single European currency is not a self-evident good. The hon. Member for Cheltenham would do well to remember that. When my hon. Friend the Member for Stone rings the alarm bells, we should all prepare to man the barricades.

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

Does my hon. Friend agree that mission creep over the years means that we are right to be sceptical now?

[Mr Clappison]

My hon. Friend is absolutely right, and the apposite point is that this treaty is a new form of mission creep by the European Union. We need to be clear that something new and important is happening in the European Union, as has been suggested by learned legal opinion submitted to the European Scrutiny Committee. We have seen in the past, under our European Union treaty obligations, that notwithstanding the promises made to us, there has been a massive erosion of the United Kingdom veto and a substantial extension of EU competences—but at least we have always known that that has been done within the framework of the treaties themselves and that we have conferred power on the EU within that framework.

We are now dealing with something novel, because when hon. Members come to look at this agreement in detail they will find that it is not within the framework of the EU treaties; it is a separate international agreement that deals with how the European Union might act. Although it is said to be an international agreement, it is not an EU treaty and it will not describe itself as such, but the EU runs through it like a golden thread. It is as if the EU has come up against an obstacle in proper legal procedure and just decided to ignore proper legal procedure and go its own way; it has looked at the rulebook, the rulebook was not convenient for it and so it has torn up the rulebook and drawn up a new set of rules. The way in which it may act within that new set of rules could have substantial implications for our country. I hasten to add that our Government have taken the right course so far in dealing with that.

[Martin Horwood]

The moment had almost passed, but the question I was going to ask was: if the hon. Gentleman is questioning even back to Maastricht, does he still support the single market, which Conservatives would surely see as one of the greatest achievements the European Union has delivered?

[Mr Clappison]

With the Single European Act, we had a single market established before the Maastricht treaty. I do not have time, in the seven minutes available, to go over the whole Maastricht treaty, but a very wide body of opinion now suggests that it should never have been signed—I have heard that said from the Government Front Bench. All the safeguards that were put in place have turned to dust. Let us bring things a little more up to date. The hon. Gentleman will recall that his party was so upset about the signing of the Lisbon treaty that it wanted a referendum on getting out of the EU altogether, and Liberal Democrat Members walked out of the House.

The hon. Member for Rhondda (Chris Bryant), who is no longer in his place, made some apposite points, as did the right hon. Member for Rotherham (Mr MacShane), although he was completely wrong. He asked what was wrong with groups of states coming together within the European Union to do something where not all member states are participating, as in the case of the Schengen agreement and many other things. That comes back to my main point, because that was all being done within the framework of a treaty. A completely different treaty is being set up now, but it is one within which member states are still co-operating and operating within the framework of the European Union, using the EU institutions, as we know. It was apparently drawn up by the European legal service, the European Commission has a central role in it, the European Commission is mentioned in the whole of the preamble and throughout every article, and the final decision-making body with arbitration powers over this is the European Court of Justice.

[Bob Stewart]

rose—

[Mr Clappison]

I will give way to my hon. Friend at the end, if I may, because I need to make one or two other points before then.

I would respectfully draw to the attention of the Minister the fact that although we are rightly not a part of this treaty, it brings about some fundamental innovations in decision making among EU member states. In particular, I refer to articles 7 and 8. My hon. Friend the Member for Stone rightly referred to the coercive powers being taken by the European Union, and I urge my right hon. and hon. Friends to consider just how coercive those powers are and to try to ensure that they are never brought to bear against this country. No pressure should be put on us to submit.

There is a body of opinion in the EU that wants to make this country submit to the EU deficit procedure and we have, unfortunately, entered into some commitments on that. We must keep out of those commitments because they run completely counter to the principles of democracy both in the individual member states and in the EU. Under article 7—let us remember that this is not an EU treaty and is outside the EU—when the Commission is of the opinion that a country is in breach of the deficit procedure, it brings the matter before the other member states and unless there is a qualified majority vote against taking the decision that the commission wants to take, the matter must be treated as a breach and the offending country will be hauled before the European Court of Justice. This is a very significant procedural development.

We are familiar with how we used to have a veto in European Union matters. It goes back to 1975 and we were promised when we joined the European Union that we would always have a veto. That was eroded and we agreed to abide by the qualified majority vote for more and more things, particularly in the single market, but at least it was a qualified majority vote and a qualified majority of states had to be in favour of a measure before it could take effect and legally bind this country. Under the new EU method of decision making, the Commission gets its way unless there is a qualified majority vote against what it wants to do. There could be a clear but simple majority of EU member states against the Commission’s finding a member state in breach, but it will still legally be necessary for the country to be considered to be in breach and hauled before the European Court of Justice even though a majority of EU states were against that course of action, and despite what individual electors in the countries concerned might want. There could scarcely be anything more coercive than that.

My hon. Friend the Member for Stone is right to ring the alarm bells. This is a new procedure—it is very new—and it is taking EU integration to a completely different level.

[Martin Horwood]

Will the hon. Gentleman give way?

[Mr Clappison]

I have given way to the hon. Gentleman once and I am afraid I am not going to go back to all the treaties—Lisbon, Maastricht, Amsterdam— we have had in the past. He has had his chance to have his say.

I warn right hon. and hon. Members to look at the detail of the treaty. It is new and very important and is worrying in the context of what is taking place in Europe, particularly as regards the lack of democratic control that countries now have over their decision making and over very important fiscal and economic matters that go to the heart of democracy. I urge colleagues and my colleagues on the Front Bench to be vigilant. The Government took the right decision in vetoing the treaty—we had the right to do so, it was in our interests to do so and we should never have considered being part of such a framework.

My right hon. and hon. Friends have been right to reserve the Government’s position, as they have through the letter that has communicated the Prime Minister’s view through Jon Cunliffe to the European Council. We reserve our position on the use of EU institutions, which we are entitled to do, and there should be no criticism of the Government—the Opposition are being very opportunist if they try to make something out of it—but, in its typical way, the EU has taken no notice. We should take no notice of the EU, however, and we should insist on the strict letter of what we are entitled to under the treaty provisions and be extremely vigilant to ensure that there is not, to use the words of my hon. Friend the Member for St Albans (Mrs Main), any further mission creep by the EU. We should ensure that we have no part in these matters. We are not part of the euro and we should be very careful to ensure that the EU does not try to extend the scope of what it is trying to do over this country. If it does, it will be at the expense of democracy and of this House. We have seen far too much of that already in my time in the House, and we need to be vigilant and to stand firm against these very worrying new legal developments in the EU.

14:23

[Mr Peter Bone (Wellingborough) (Con)]

It is a great pleasure to follow my hon. Friend the Member for Hertsmere (Mr Clappison) and I agree with every word he said. I shall try to discuss some different issues in my speech.

Let me start by congratulating my hon. Friend the Member for Stone (Mr Cash) on achieving a debate under Standing Order No. 24. I want to comment first on its parliamentary significance. This is only the second time in my parliamentary career that I can remember such a debate being granted, and the first was on the phone hacking scandal. This shows the importance that Mr Speaker gives to the matter. More than 100 Members rose in the Chamber when he agreed to the debate and they were not just from one side of the House, but from both, and they were not just from the Conservative and Labour parties, as all the Democratic Unionist party members were here. It was a very significant show that this House wanted to discuss its views in advance of the European summit and that Members wanted to get their message across to Ministers. I hope that when the Minister sums up, he will be in receiving rather than transmitting mode. That is why this debate is important— Ministers should know what the House is thinking before they go to Europe to debate the issue and, if necessary, cast any votes.

I want to return to the question of the procedure that has led to the mess we find ourselves in today.

[Graham Stringer]

The hon. Gentleman is making a point that has previously been made in this debate in slightly different ways, which is that there should be more opportunities for this House to say to the Government what position they should take before they go into European negotiations. Does he agree that such debates should not only be reinstated but be on votable and amendable motions?

[Mr Bone]

The hon. Gentleman is psychic, because that was the very point I wanted to come on to. It is ridiculous that we are not having such debates and it is even more ridiculous to suggest that they should be scheduled by the Backbench Business Committee. Everyone knows that the Backbench Business Committee is supposed to get 35 days a year, but that has not happened in this double Session of Parliament. I am very pleased to see the Leader of the House pay close attention to the debate and it would help the House enormously if the Committee had the days marked in advance. If that were the case, perhaps the Backbench Business Committee could put on such debates, because we would at least know in advance that we had the days. We did not have a day before the summit on which we could have scheduled this debate. That is not the issue, however. This debate should not be put on by the Backbench Business Committee but by the Government, and it should be on an amendable motion rather than a “take note” motion. I agree entirely with that point.

Let me briefly mention the veto. The Prime Minister rightly vetoed the EU treaty, and no one can pretend that this is an EU treaty—it clearly is not, because we vetoed it. It is also clear that the Prime Minister and the Government believed that the EU institutions could not be used.

[Mr John Spellar (Warley) (Lab)]

rose—

[Mr Bone]

I shall give way in a moment. As on any other occasion when the EU is defeated, the EU has ignored that and carried on as if the rules were not there.

[Mr Spellar]

I think that the hon. Gentleman might just have answered my question. He was stridently asserting that the Prime Minister had asserted his veto, and I wanted to know what he had vetoed and what effect it had had.

[Mr Bone]

I do not honestly believe that the right hon. Gentleman, who has sat all through this debate, could possibly not understand what the veto is about. The Prime Minister quite clearly vetoed the treaty so it could not be an EU treaty. That is what happened. That is why the British people were 100% behind the Prime Minister and why coalition Members—or at least the Conservative coalition Members—were wholly supportive of him. He had a better reception for that veto than for any other of the very good things he has done as Prime Minister.

The next issue is whether the treaty will work. I am sorry that the hon. Member for Rhondda (Chris Bryant) is not in his place, but he made a very good point when he said that there were two ways of looking at this matter. One was that we could create this European political and economic union dominated by Germany and that the euro would work. I do not think there is any chance of that system working and it would actually result in the greatest political unrest in Europe since the second world war.

[Bob Stewart]

It looks to me very much as if we would have a centralised economy commanded by Germany. If there were any chance of it working, it would be brought down by the fact that the people of Europe—the people most affected by it—would reject it. There would be a total rebellion by the people of those countries.

[Mr Bone]

It is very appropriate that my hon. Friend in particular made that point. What we would see is extreme nationalism. We would have extreme nationalists saying, “This is the fourth reich,” and all that that would mean. I am talking not just about little political demonstrations on squares outside Parliaments; it would overturn democratically elected Governments. That is why the solution that the hon. Member for Rhondda suggested would not work.

The solution to this problem is to allow countries to leave the euro in an orderly way. Greece, Spain and Portugal at least would come out of it and would then be able to do what every other country has done in the past when it has had an economic problem—devalue its currency and set its own interest rates. There would then be some hope for growth in the future. The idea that we will permanently have regions of Europe that will always be depressed and have the most horrible austerity funded by German taxpayers is beyond belief. I have a feeling that the good and the great of Europe have a policy at the moment of hoping that something will turn up. It is like borrowing more and more on one’s credit card hoping that one’s Euro lottery ticket will come up. It will never come up. What they have to do is deal with the problem now. That will not be pain-free but it will result in a Europe that will begin to grow again. That would be not only in our interests but in the interests of other individual countries.

Probably the main point I want to address is whether we as a nation are being a good Samaritan. It seems to me that we are not, although we see the problem. We did not go into the euro because we always thought that we could not put different countries with different political structures into one economic area with one interest rate and one currency and expect it to work. We said that was wrong, and that has proved to be the case. What we are doing at the moment—this is where the good Samaritan point comes in—is walking by on the other side of the road. We can see what has happened and that something is seriously wrong—that someone is seriously sick—but are we prepared to risk being unpopular and say something about it? If we were a real friend and a real good Samaritan we would say, “You’ve got this wrong and the way to fix it is not to carry on but to stop, think of the problem and solve it by having an orderly reduction in euroland.” That is where we are letting down not only ourselves but other countries in Europe. I urge the Minister not to walk by on the other side of the road but to be a good Samaritan.

14:32

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

This debate is not just about legality; it is about how we best protect our interests, which are best served by having a strong and vibrant growing European economy. Currently, we do not have that, and the reason we do not have it is the euro. The idea that the solution to that is more euro is no more credible than the Opposition’s suggestion that the solution to a crisis caused by borrowing is more borrowing. If we are to protect our interests, we need to know where those interests are, to be modest and to recognise that our influence on these matters is limited. I believe Greece would be far better off if it were to leave the euro, default, devalue and price its way back into the market. We could encourage our constituents once more to go on holiday in Greece and it would recover in a way that it cannot if it stays within the euro. However, that is a decision for the Greek people and is one over which we have precious little influence.

I shall concentrate on Ireland. Yesterday, the Taoiseach announced there would be a referendum in the Republic to reaffirm, or otherwise, the country’s commitment to the euro. Ireland faces a fork in the road and has three potential choices: to stick with the euro and the programmes being imposed on it; to reinvent its own currency; or to re-establish a relationship with the pound sterling. In December 2010, I commissioned an opinion poll across the Republic of Ireland by a company called RedC, which interviewed a representative sample of 1,000 Irish people, somewhat more than a third of whom agreed that in light of the financial crisis they would support Ireland’s leaving the euro and re-establishing a link with the pound sterling. Earlier, we heard from the Prime Minister that while the eurozone says, “We will only support the Irish people if they vote as we tell them to,” the UK will support the Irish people whatever choice they make in this referendum on their future.

We in this country have very clear interests in Ireland. Last year, we were exporting more to Ireland than to all the BRIC countries—Brazil, Russia, India and China—but that has now changed and we now export 8% to the BRIC countries but only 4.5% to Ireland. That is because the Irish economy has contracted so much that there has been a significant negative impact on the UK, and particularly on Northern Ireland, in terms of our exports. Irish migration has turned from a net migration from this country into Ireland to a very strong migration the other way. That is something we have allowed for many years. I should declare an interest because my mother came to this country from Ireland as a 17-year-old nurse. If the euro prevents Ireland from creating jobs for its young people, we will create those jobs and they will come here and continue to be welcome, but would it not be better if Ireland had a monetary policy more suited to its needs?

The euro is destabilising the Irish economy, and it will do that again, just as it has already done, at great economic cost to Ireland and some economic cost to the UK. In addition, the bail-out we are told that Ireland is getting is a bail-out not of the Irish people but of the European banks. The current position is that the European Central Bank has extended—in my view extremely unwisely—very large sums of money to the Irish banking system, ostensibly as liquidity support, initially for the short term but increasingly for three years, at very low interest rates. The Irish bail-out replaces that credit with official credit that the Irish taxpayers, not just the Irish banks, will have to pay back. Instead of the European Central Bank supplying all the credit, which it is, realistically, unlikely to get back, that credit is being displaced by taxpayer financing from the EU, the eurozone, the International Monetary Fund and, indeed, this country. The Irish people will have to pay that back instead of the European Central Bank suffering the losses it deserves for causing this crisis in Ireland and for having very unwisely extended credit.

Ireland faces a choice: whether to stick with that system, grind further into poverty and give control, in this Carolingian settlement, to France and Germany to lord it over them, or to reinstate its own currency. Were it to do that, it would need capital controls, otherwise there would be capital flight, and it would not have access to overseas capital. It would need to pay the difference between its spending and tax by printing its own money, there would be significant devaluation and probably quite a lot of inflation, and in the short term there would be very severe uncertainty. None the less, that would be better for Ireland than sticking with the current European programme.

Instead, the other option, which, when I question the Chancellor and the Prime Minister, at least appears to be on the table, is re-establishing the old link that Ireland had with sterling within a single currency area. I am talking about a common currency area that makes some sense for similar economies with similar housing markets, in which the interest rate does not lead to the boom-and-bust cycle that the euro that has been applied to the Irish economy so inevitably does. Instead of relying on official European credit with all the terms, conditions and subjugation that involves, and instead of cutting the country off entirely from overseas credit for a period with all the risks that entails, the Irish economy could look to the UK private sector, much as, to a degree, it is now doing, certainly in terms of the property market, to give the support and credit that the Irish banking system cannot provide itself.

When we look at our interests—we have the Royal Bank of Scotland and the Ulster bank—we see that UK banks have already written off or taken impairments for £40 billion-worth of loans to the Irish economy, but the Bank of Ireland, despite negative equity of perhaps £15 billion in respect of its Irish property loans, has taken only a £1 billion impairment. Very few Irish people have had their homes repossessed, and there has just been a carrying on, with massive negative equity and with the interest just about being paid. That cannot be sustained in the long term, and this country should stand ready to support a recovery in Ireland by sharing our currency if necessary, in our own interests, in Irish interests and in Europe’s interests.

14:39

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

It is a pleasure to participate in this welcome debate, which, as my hon. Friend the Member for Stone (Mr Cash) said, allows for the expression of a wider spectrum of the opinions in the House on matters germane to the European Union and the crisis in the eurozone, and I am grateful to him for securing it. I reiterate a point that I made to him in an intervention, and that needs to be underlined today: it is incumbent on both Houses to raise their game when it comes to the scrutiny of European legislation in its various forms, and to raise their game significantly when it comes to debates about thematic developments in the European Union.

The European Scrutiny Committee, which my hon. Friend chairs, does an admirable amount of work, but its limited remit, as I think he would concede, does not allow it to go as far as he and others would perhaps like in looking at some of the thematic issues raised today. That is why I strongly believe that it is the role of subject Select Committees, at a far earlier stage, to do the work of scrutiny, examination and report. That would add to the quality of debate on the detail of European policy.

I am a member of the Justice Committee, and together with other members, I recently paid a most instructive visit to Brussels. We met the Vice-President of the Commission who has overall responsibility for justice and home affairs, and we met other members of the directorate-general. Frankly, it was instructive, because it became blindingly clear to me and my colleagues that we as domestic parliamentarians need to have an input into the detail of proposed regulations at a far earlier stage. I am thinking particularly of the justice and home affairs pillar; by 2014, we have to have considered whether we opt into the entire mechanism, or stay out and perhaps adopt some of the regulations that we have chosen to opt into thus far. That is important work that we are missing.

The Liaison Committee has met my right hon. Friend the Minister for Europe, and I know that the Government are keen for Parliament to take a far more proactive role. I am glad that they take that view, and I look to the Liaison Committee and the Chairs on it to take up the cudgels, or the baton, and get that scrutiny right.

Far too often in debates about the European Union—I speak as a lawyer with 20 years’ professional experience—we end up talking about the legalistic aspect of Europe, and we forget that Europe is nothing without its people. I have the honour of representing a constituency in Swindon that has many links with the European Union. We have many major manufacturers, including car manufacturers such as Honda, which exports 50% of its vehicles to the 27. We have a number of other international companies that export widely to the European Union. Our links and trade with Europe are vital.

I yield to no one in my enthusiasm for widening trade with the BRIC countries—Brazil, Russia, India and China—and the wider world. That agenda is something that we all agree on, but we have to accept the reality of Britain. The reality is that the EU—the 27—is still our major trading partner. Any scintilla of schadenfreude, or a wish that the eurozone would break up, is dangerous. It suggests that somehow we are not linked at all with the affairs of the EU—that it is a faraway place of which we know little. I think of Neville Chamberlain when I say that, and I resent bitterly the suggestion that those of us who favour positive engagement in Europe are the heirs of appeasement—far from it. We are fully engaged with the affairs of Europe. The lesson from history is that when Britain disengages, we end up having to go in to sort the mess out, and I for one am not prepared to take that path.

[Richard Drax (South Dorset) (Con)]

Does my hon. Friend not accept that all of us in this country want to trade with Europe? There is no question about that. There is no “little island” mentality. We want to be part of, and trade with, Europe; we just do not want to be told what to do by Europe, and we want our own currency. It is not a matter of “little Britain”. We do not want to get out; we want to trade with Europe—that is it.

[Mr Buckland]

I do not disagree. My hon. Friend the Member for South Northamptonshire (Andrea Leadsom) made a powerful point about variable geometry; we should use Europe in our national interests, and work with it where appropriate. My hon. Friend the Member for South Dorset (Richard Drax) is absolutely right about trade and the single market, which was, let us face it, a British invention. Lord Cockfield did a huge amount of work to make sure that that aspiration became a reality, and my hon. Friend is right to emphasise the issue. As for not being told what to do, again he makes a fair point. I do not accept that, at any stage, the British Government, or the people of this country, should be put in a position in which they end up doing something against their will. That is why I supported the Bill on European referendums, now the European Union Act 2011, why I agree with the mechanism that the Government proposed, and why I was happy to speak in support of that Bill on Second Reading and at other stages.

To come back to the reality of the debate about Europe, we are talking about real jobs. We should be talking about trade, widening the single market, the digital economy and the energy market—all things that form the subject matter of a very helpful letter, signed by the Prime Minister and 11 other Heads of Government on 20 February, which set out a plan for growth. That should be at the core of negotiations at the European Council. That should be the agenda, because that is the agenda that is relevant to my constituents and the wider country. It would be wholly ridiculous for me, an elected representative of Swindon, to say to my Honda workers, “What we need is more arcane debate about the legality of Europe,” when what they want to hear is debate and discussion about how we can grow the economies of Europe and expand the growth agenda. That is what I call on Ministers to do.

[Mr Cash]

rose—

[Mr Buckland]

I shall take an intervention from my hon. Friend, as he was good enough to allow me to intervene on him.

[Mr Cash]

I entirely agree with my hon. Friend, and it has been, in a way, my political life’s work to try to draw attention to the effect that this legal framework has on our daily lives, but it is absolutely unacceptable to suggest that we can make any changes of the kind that he would prefer to make, in order to benefit his constituents or mine, without having regard to the legal constraints imposed on us as a result of treaties.

[Mr Buckland]

I yield to no one in my respect for my hon. Friend, and he and I have had many conversations on these issues, but we cannot get away from the point that the European Union is an exercise of political will first and foremost. It is the political will of its members that drives the future course of the European Union. I accept that we all work within a legal framework, but let us be clear about where we are. The 25 have agreed to sign a treaty that is not an EU treaty. If there is to be any proposed fold-in in five years, the British veto will apply. We have the right to say no, and that is an important point that we need to underline.

[Jacob Rees-Mogg]

rose—

[Mr Buckland]

I shall take an intervention from my very good and honourable Friend.

[Jacob Rees-Mogg]

I am grateful to my hon. Friend for giving way. We may not have the ability to say no, because the issue may qualify for enhanced co-operation in five years’ time.

[Mr Buckland]

As a lawyer, I love a legal debate, and bearing in mind what has been said and the aspirations signed up to by the 25, I think there is a very strong case for saying that when the five-year period comes to an end in 2021 or ’22, we will still be in a good position, bearing in mind the clear political will that the Prime Minister has shown by his refusal to participate, and to allow the United Kingdom to participate. That is a very clear statement of intent, and I would be happy to argue the case on that point in five years’ time, just as I am happy, and happy for the British Government, to argue the case about some of the articles in the fiscal compact. Where there is reference to the European Court of Justice, it is incumbent on the Government to argue the point, and to make it clear that we wish the compact to be entirely outwith the institutions of the EU.

Those are matters of legal debate. I do not accept that they are now set in stone, or in some way unarguable or unimpeachable. Let us bear in mind what happened in the economic crisis of 2008, when member states cast to the four winds rules that we all thought immutable. We need to remind ourselves at all times that the institution is an exercise of political will or it is nothing. That is why clear expressions of political will, such as the one that we heard from the Prime Minister in December, are the right approach. I welcome the debate, and I thank my hon. Friends for taking part.

14:49

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

May I join in the congratulations to my hon. Friend the Member for Stone (Mr Cash) on getting this crucial debate, and say how shocked I am by my hon. Friends the Members for South Swindon (Mr Buckland) and for Cheltenham (Martin Horwood) for their view that the legality does not desperately matter and it is all about politics? This is a novel and somewhat eccentric view for parliamentarians to take, when the heart of the matter is the law and the detail of the law. Without the rule of law, what we are doing here ends up being a waste of time.

[Mr Buckland]

rose—

[Jacob Rees-Mogg]

My hon. Friend is bursting to intervene, so I happily give way to him.

[Mr Buckland]

As I said, as a lawyer I realise that although the law is not irrelevant—of course it is not—political will often takes precedence, as we have seen in the history of the development of the EU. Surely my hon. Friend can accept that.

[Jacob Rees-Mogg]

I am afraid to say that I disagree with my hon. and almost learned Friend. Law is the foundation of what politicians do, and politicians use their political will through the law. Indeed, they have the ability through Parliament to change the law, but they cannot just ignore it.

That is why I want to come on to Sir Jon Cunliffe’s important letter. He makes two significant points. First, he notes that

“the EU institutions must only be used outside the EU Treaties with the consent of all Member States, and must respect the EU Treaties.”

In response to a question at a meeting of the European Scrutiny Committee last week from my hon. Friend the Member for Hertsmere (Mr Clappison), the Minister for Europe—who, if I may say so, was extremely helpful at the evidence session—said when asked whether permission had been given by the Government for the EU treaties to be used:

“No, we have not been asked so to do.”

It ought to be of grave concern to the House and to the country that the member states of the European Union, excluding us and the Czech Republic, have decided to proceed with a treaty without establishing that they are following the correct legal forms.

[Mr Cash]

My hon. Friend may be interested to know that yesterday in the European Parliament, which I attended as Chairman of the European Scrutiny Committee, in a dialogue between MEPs and MPs, one of the French representatives said from the platform to the chairman that she did not think it appropriate for me to be able to make certain comments because the United Kingdom Parliament and the United Kingdom were not part of the eurozone. My hon. Friend might find that rather extraordinary.

[Jacob Rees-Mogg]

Indeed, but one never knows what people might say in relation to the European Union.

As I was saying, it is a shocking state of affairs that our partners in Europe should want to proceed with a treaty without even bothering to go through the proper forms to ensure that that treaty is lawful under EU law. They have not even asked the question. It may be that they know what the answer will be, but if they do, they are one up on most Members of Parliament.

The other point raised in Sir Jon Cunliffe’s letter is that

“we must reserve our position on the proposed treaty and its use of the institutions”.

This, again, is very important because what we are trying to find out is whether the Government are reserving their position on the current legality of the treaty, or how the treaty will be used in practice. If it is the former—if the Government are concerned about the current legality of the treaty—it is important that they act now to establish their concern and to have a judgment from the European Court of Justice, rather than waiting. If the Government wait, as my hon. Friend the Member for Stone said earlier, he who is silent is seen to consent, and we will find that we have allowed the treaty to be implemented and we will have lost our ability to have recourse—

[Martin Horwood]

rose—

[Jacob Rees-Mogg]

It is a particular honour to give way to my hon. Friend the Member for Cheltenham.

[Martin Horwood]

It is an equal pleasure to intervene on my hon. Friend. I am grateful to him for allowing me to do so. Does he accept that by reserving their position, the British Government may gain something of a tactical advantage by perhaps retaining the ability to challenge any future perceived breach of this treaty and therefore encouraging compliance with the European Union treaties?

[Jacob Rees-Mogg]

I am afraid I do not agree with my hon. Friend because a key part of the treaty may already be in breach of European Union law. I refer hon. Members to article 8, which states:

“If the European Commission, after having given the Contracting Party concerned the opportunity to submit its observations, concludes in its report that such Contracting Party has failed to comply with Article 3(2), the matter will be brought to the Court of Justice of the European Union by one or more Contracting Parties.”

What that says is that the European Commission may end up enforcing requirements under the stability pact in direct contradiction of TFEU—the treaty on the functioning of the European Union—126(10). We discussed this at length in the European Scrutiny Committee and the Foreign Office’s wise legal counsel, Mr Ivan Smyth, gave us a very helpful answer—that in treaty terms, “will” is not an obligation, and if it were an obligation, the wording would have to be stronger than “will”.

It seems to me that that is a pretty narrow basis for maintaining the legality of what the treaty requires the Commission to do. Let us bear in mind that under the treaty law, the European Commission does not have the authority to enforce the requirements of the stability pact on member states; under this treaty it does not quite have that authority directly, but it is so close to doing so that it would not make any difference at all.

A further aspect of the treaty concerns me. Article 16 says that the treaty will be rolled into the TFEU within five years, so it will become part of the whole package of European Union law within five years. It is currently thought, though others may think differently, that it would not have been possible for this treaty to be brought in under enhanced co-operation. However, there is a school of thought that maintains that the European Stability Mechanism treaty which is awaiting ratification by Parliament would allow enhanced co-operation to be used, in which case this treaty could be rolled into the European Union’s treaties without the say-so of the House, under enhanced co-operation. We should be deeply concerned about that, not least—going back to article 8—because it refers to how countries may be fined. Let us bear in mind that the treaty is supposed to be all about the eurozone member states, and is nothing to do with non-eurozone members and nothing at all to do with the United Kingdom because we are not a signatory and it is not yet part of the TFEU. But if that is the case, why does it say

“The amounts imposed on a Contracting Party whose currency is the euro”—

that is, a fine of up to 0.1% of GDP—

“shall be payable to the European Stability Mechanism. In other cases, payments shall be made to the general budget of the European Union”?

We have here a treaty that is making provision for fining non-euro members for their budgets, even potentially ones that have not signed up to the original treaty if it is rolled in within five years, as the treaty itself requires. That is why this debate is so important to establish the legality and see whether we can at this early stage stop this treaty—a genuine veto, rather than a soggy veto—or whether we will find that by doing nothing now, by being friendly, kind and generous to our neighbours, we do not really help them with the economic situation that they face. I agree with those who say it would be better for some countries to default and devalue. We will instead find that by being silent, we have consented to a treaty that is against our fundamental national interests.

14:58

[Neil Carmichael (Stroud) (Con)]

Thank you, Mr Deputy Speaker, for allowing me to contribute to this important debate. I have listened carefully to a large number of speeches, many of which have raised interesting points, including that of my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg). I recognise that there are issues relating to the legality of the proposed treaty, but it is important to stress that this is not an EU treaty. That is the key point and the one on which our case must rest; otherwise, we will get terribly confused. The second key point about the treaty is that it includes not only all members of the eurozone, but aspirant members. However, it does not include us as we are neither members nor aspirant members of the eurozone.

[Mark Reckless]

My hon. Friend suggests that there might be confusion and asserts clearly that the treaty is not an EU treaty, but surely if it was an international treaty it would be in international public law and subject to the jurisdiction, such as the states agree, of the International Court of Justice at The Hague. However, it is actually being implemented through the European Commission and will be subject to the European Court of Justice, both of which are creatures of European Union law.

[Neil Carmichael]

I thank my hon. Friend for his intervention. That does not alter the fact that it is not an EU treaty, and that is the point. The Commission might well take a view on these matters, and that brings me to another key point. It is in our nation’s interests to ensure that the treaty works in protecting the euro in the long run. We do not want the euro to fail, because that would badly affect our economy. It is important that we continue a dialogue with the process but are not actually involved in it. It seems to me that what we have secured through the veto and our continued resistance to being a part of the treaty is essentially an overview on proceedings to ensure that the EU positions are safeguarded, because in so doing we will protect our interests and those of the overall single market.

It is important to note the comments of the US Secretary of State, Hilary Clinton, who noted that the United States was concerned not about our failure to be part of the treaty, but about whether the treaty itself would succeed in its principal mission of enhancing the position of the euro. That is a clear expression of the American Government’s position, and it is consistent with our position because we, too, recognise that that is a fundamental priority. I am not often asked by constituents whether the treaty is an EU treaty or some other kind of treaty; what they are worried about are the economic circumstances in which they live, and that is what we have to start talking about.

Although I welcome the debate, I am disappointed that it was secured only as a result of Standing Order No. 24, and that for that reason we had less than 24 hours to consider it, but it is also necessarily important to talk about what will happen at the European Council, which is almost immediate. At that Council we need to drill down on the key issue of what we need to do to ensure that growth comes to Europe and to Britain.

[Mr Buckland]

On that point, should not priority be given to tackling the tariff barriers and, indeed, non-tariff barriers that often exist between the EU and countries such as Japan and other major competitors, which are a real block to more effective trade?

[Neil Carmichael]

My hon. Friend is absolutely right, and I thank him for that intervention. It is crystal clear that we need to engage properly with the large economies, such as those of Japan, China and the US, because they understand that we are talking about a European dimension. He has hit the nail on the head in that regard. It is critical that we look outward for trade opportunities and inward to ensure that we are internally competitive. That means that the single market needs to be further upgraded and that the energy market needs to be made into a European market, because until it is we will continue to suffer from price variance and supply problems. If Members want to know about that, then rather than worrying too much about what is happening in Europe with regard to policy, they should just ask their constituents, who will tell them that they want more stable and lower energy prices, and the way to achieve that is by developing an energy market.

To do all those things, Britain must be a key player in the European Union, and the Government are rightly ensuring that we are. We have to be there in order to develop bilateral relationship and to be part of the leadership of the European Union, so it is right and proper that we show a responsible attitude to the way in which the treaty we are talking about unfolds. If we are seen to object to any measure intended to protect the euro or to deliberately obstruct the measure they wish to introduce, we are at risk of taking some blame for something that we do not want to happen in the first place. Therefore, it is in our interests to start co-operating with those nation states that are considering the treaty. That is why we should be sensible about the use of the EU institutions.

At the beginning of this whole process, immediately after the veto, I said that we should consider the questions relating to the use of the EU institutions. There are two good reasons for allowing the use of the EU institutions: first, to secure our reputation as a country that is involved, engaged and ready to contribute to the future of the EU; and secondly, to ensure that we can easily observe what is going on, because we have a clear and obvious interest in making sure that the EU treaties, such as the Lisbon treaty, are enforced and maintained as part of the governance of the EU. That is how we will be able to check the legality of the treaty we are talking about today. We will do that not by complaining about it or chucking grenades into the process, but by allowing it to happen and ensuring that we keep an eye on what is happening. That is the Government’s key objective and I am pleased to note that that is what the Government are doing.

I will end with the points that are really important to my constituents. In my constituency we need jobs, growth and investment. There are firms in my constituency that depend on European markets and that are part of significant and complicated supply chains stretching across Europe. We need to think about the importance of those supply chains to our economy and ensure that we encourage investment across Europe and between nation states where appropriate. The critical issue is to move the terms of debate away from the questions of treaties and so on and towards what we actually want the EU to do and how we express this country’s objectives for the EU. The electorate are much more impressed if we talk about economic growth, because that is one of their priorities, as it is ours. It is also a question of labour mobility, because when people are thinking about moving jobs they appreciate a flexible labour market, and one of the things the European Council should focus on in the coming days is labour mobility and youth employment. I note that that is on the agenda, and rightly so, and think that the electorate and the House will welcome it when the results are announced.

15:08

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

Thank you, Mr Deputy Speaker, for allowing me to speak in the debate. I have to leave at 3.30 pm, as I have advised you, but I have been here for the entire debate. I am pleased to follow my hon. Friend the Member for Stroud (Neil Carmichael) but must say that I disagree with just about every word that he said. I congratulate my hon. Friend the Member for Stone (Mr Cash) on securing the debate, but as my hon. Friend the Member for Stroud observed, we have had only a day’s notice of it. That was because my hon. Friend the Member for Stone was so fleet-footed and secured it through Standing Order No. 24. Should we not have had that emergency measure, we would have had no discussion whatsoever.

My hon. Friend the Member for Stroud said that we had not had enough time to contemplate the matter, but we should contemplate the impact of this form of legislation even if we do not get debates on it. My hon. Friend the Member for Stone and my hon. Friend the Member for Hertsmere (Mr Clappison), who is not here at the moment, have spent many long years studying the implications of what goes on in Europe for our economy and our legislature. It is extremely important that we do so. This is not about navel gazing.

I was somewhat disappointed in my hon. Friend the Member for South Swindon (Mr Buckland), who seemed to feel that by studying the matter we are somehow being disloyal. It is not disloyalty. We are doing just service to our constituents, because although there may be the political will or ambition in Europe, the impact will be very much on us as a democratically elected Parliament. I, like many other colleagues, have been extremely disappointed by the mission creep throughout Europe, which has in effect led to imposition on a democratic country—such as Greece—by people who were never elected by that country but who now make decisions about it.

[Mr Buckland]

I am grateful to my hon. Friend for allowing me to correct a misapprehension. I apologise if I created the impression to which she refers, because it was not my intention at all. I think that we are all patriots in this House—we should be—and that although we may agree on the ends, we may differ on the means by which we achieve them. I should not for a moment question my hon. Friend’s integrity or her sincere devotion to her country.

[Mrs Main]

I thank my hon. Friend for that intervention, and I end this part of the debate on that conciliatory note.

I have sincere concerns, however, that the mission creep that I mentioned in an intervention has led us to the point at which a democratic country can have something imposed upon it, leading to riots and civil unrest, because it is not willing to take the necessary pain that the EU must inflict on it. Although we are not today debating whether Greece should leave the EU, we all should heed the warning that when Greece signed up to being a full member of the EU it did not sign up to have something imposed upon it, as it has had.

[Martin Horwood]

Will the hon. Lady give way?

[Mrs Main]

No; the hon. Gentleman has made many speeches and many interventions, and I am sure that as the lone representative of the Liberal Democrats today he has had more than his fair share of the debate. I shall not take interventions from him.

I am extremely concerned that we will find ourselves dancing on the head of the same pin as we did in the previous Parliament. The hon. Gentleman was a Member then, so he will remember the Liberal Democrats saying, “We need to have a full EU in/out vote on this, and we will give you a genuine vote,” whereas the Conservatives, in opposition at the time, said that we needed to have a vote because there was a treaty. We were assured, “Oh, no, no, it is not a treaty. It is just something we don’t need to have a referendum on.” Such dancing on the head of a pin is what most of us on the more Eurosceptic side of our party find worrying about this particular treaty-that-is-not-a-treaty, into which we supposedly do not need to have any form of input.

[Mark Reckless]

Does my hon. Friend accept that the difference between our commitment to a referendum on the Lisbon treaty and the Liberal Democrat commitment to an in/out referendum is that theirs is still possible?

[Mrs Main]

I thank my hon. Friend for that intervention. As we know, Liberal Democrats tend to change their minds, so they can always change their minds and retain that possibility. He is absolutely right—

[Martin Horwood]

Will the hon. Lady give way, as she is attacking us directly?

[Mrs Main]

I am not attacking any Liberal Democrat; I am just saying that they are quite within their rights to change their minds, and have been known to do so.

[Martin Horwood]

Will the hon. Lady give way?

[Mrs Main]

No, I am not giving way to the hon. Gentleman. I have made my views clear about why I will not. He has had plenty of opportunity.

I am extremely concerned also that the package under discussion could be incorporated into EU law within five years, because this situation is very much like our bleating about the Lisbon treaty, when we kept saying, “It does have a big effect, it does have a big effect,” and we were constantly told that it did not. The treaty under discussion has a potentially big effect, and that is why I offer encouragement to the Minister, which I am sure he has been offered by many hon. Members today, including my hon. Friend the Member for South Swindon (Mr Buckland). The Minister has the huge support of the House and the political will of this Parliament, and the Prime Minister had the support of the majority of the House in using the veto. He had robust support, which I believe he has also among the public, for exercising the veto, but, despite the fact that we are not ultimately part of the process, what we do not want is to become a part of it because of mission creep.

So I say to the Minister, who is going along to discuss those matters, that we could be affected by them, despite the fact that they are not designed to affect us. They are designed to affect those countries that are happily allowing themselves to be influenced in that way, but my fear is that, like all the other treaties that have come our way over the years, including Maastricht, ultimately five years down the line, when this one is incorporated, we will somehow feel its chilling effects.

I felt the need to jump up and down when my hon. Friend the Member for South Swindon said, “What does the EU make us do that we don’t wish to do?” Well, I should like to deport Abu Qatada, but I cannot. I should like not to be fined or pursued in the European Court of Justice for trying to introduce a means of not allowing people who have never paid into our benefits pot to claim—a habitual residence test—which was overturned on the ground that we were somehow being discriminatory. Those are just two examples of our regularly being made to feel that we must do something, and, what is more, the European courts now have a punitive nature, whereby they routinely fine countries that are non-compliant and say, “If you don’t do so we will place people in your country to deliver whatever we want delivered.”

The European courts are intent on getting their own way, and they have found a new method of getting around the rather difficult matter of our veto. They have decided to ignore us, inasmuch as they have said, “This agreement isn’t to do with you,” but ultimately it will be because we will feel its effects. So I encourage the Minister to go along to the discussions with a truly sceptical mind, based on his long and distinguished career in the House, during which time he has seen these arguments made again and again, and seen how in reality the situation has translated into something very different further down the line.

15:16

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

I rise not to detain the House, as I know that the Minister will shortly be on his feet, subject to other contributions, but because it seems to me, having listened to the majority of speeches in the debate, that the issue under discussion is extraordinarily important—so important, in fact, that I am disappointed not to see more Members on the Opposition Benches.

Be that as it may, and given that the Minister will, on behalf of the Government, shortly respond to the debate, I think it important that he give a direct response to three points that I have listened to during our proceedings. First, there is the point, which my hon. Friend the Member for Wellingborough (Mr Bone) made so ably, about the procedure by which the matter has come before the House. We are fortunate indeed that Mr Speaker yesterday acceded to the request from my hon. Friend the Member for Stone (Mr Cash), whom I too congratulate on securing this debate under Standing Order No. 24. It is perfectly right that he should have sought that liberty and, therefore, that we debate the matter today.

But for the fleet-footedness, as another hon. Member described it, of my hon. Friend, there would have been no opportunity for the House to discuss the matter before the end of the week, when the treaty will be signed by those who choose to do so. Given its provisions, to which I shall turn in due course, that would have been a matter of very grave concern not just to those of us on the European Scrutiny Committee, who look at such matters with great interest and, I hope, care, but to the whole House, albeit that it would have been in ignorance of some points that have been made about the importance of precisely what is going on.

It is a great shame in those circumstances that Government time was not scheduled in advance of the end of this week for the debate to take place. Although I know that it is not directly my right hon. Friend the Minister’s responsibility, I have no doubt that he, who will answer for the Government, has discussed the matter with the Leader of the House, and it is perfectly appropriate that the House be told why no debate was scheduled in Government time. That is the first point that he must answer.

The second point concerns the legality of using the European Union’s institutions in the context of the treaty to which those 25 countries will become signatories. We know, because the Prime Minister has told us, that the Government have their own concerns about whether it is appropriate that EU institutions be used outside the framework of the treaties that already exist for the governance of the European Union.

I understand and accept—the Government are entirely right—that there must be a degree of pragmatism in relation to the aims of the treaty, which we hope will succeed in stabilising the euro, although many Government Members, many Opposition Members, I suspect, and, indeed, many people in the country are concerned that it is just yet another piece of paper, and that all we are doing is putting off the evil day when the euro finally unravels and countries such as Greece, Portugal, Cyprus and perhaps even Italy have to drop out.

Let us assume in favour of those who have put the treaty together and framed its provisions and that it stands some chance of making things better in the eurozone. As my hon. Friend the Member for Stroud (Neil Carmichael) indicated, that is important to all our constituents, because we all want to be able to trade with a successful eurozone. Let us therefore make that assumption in favour of the treaty and those who have framed it.

Even in those circumstances, there still exists the problem of the legality of the use of the institutions of the European Union. I hope that my right hon. Friend the Minister will make it absolutely clear to the House, and through the House to the British public and our partners in Europe, that the Government will not countenance anything that not only damages this country and its interests but is unlawful under the treaties to which we have already subscribed. That is the second point with which he must deal.

The third point is the most important. The treaty is potentially the thin end of a very large wedge. Other Members have alluded to the fact that when the European Union and the faceless bureaucrats in Brussels do not get their own way, they simply look for a solution that is not necessarily lawful but is at least pragmatic, to ensure that what happens is precisely what they want, rather than what the people of Europe want. That has been the hallmark of European governance since the EU was established, and certainly since the Maastricht treaty. We see it very clearly in this case.

My right hon. Friend the Prime Minister was absolutely right to veto the suggestion of any further European treaty that would have damaged the interests of this country and the City of London. When Opposition Front Benchers ask, “What was vetoed?”, as they did earlier in the debate, I say that it is very clear. It was a further European Union treaty that this House does not want and that, more importantly, the people of this country do not want. It would have been damaging to the interests of Britain and all our constituents. It would have been extraordinarily straightforward for the Leader of the Opposition to stand behind the Prime Minister, but he chose not to do so. Perhaps he is fearful of Europe, and perhaps the fact that none of his Back Benchers and almost nobody from the Labour party is here for the debate indicates that Labour is perfectly willing to see imposed upon the British people the same sort of treaty that it gave us in Lisbon without a referendum, having promised one in the first place.

[Emma Reynolds]

Can the hon. and learned Gentleman explain to the House what in the fiscal compact treaty would have applied to the UK, and therefore why the Prime Minister felt the need to veto it?

[Stephen Phillips]

If the hon. Lady had actually read the fiscal compact treaty, and if she had been here when my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) made his speech—I do not think she was—she would know that article 8 of the treaty provided for penalties in relation to countries that are not eurozone members. She would also know that article 16 required the treaty to be rolled into the treaty on the functioning of the European Union within the next five years. That is the thin end of a wedge and indicates clearly to me and other members of the European Scrutiny Committee that in the current case it is possibly being contemplated that the provisions of the treaty will in due course become binding on the United Kingdom, notwithstanding the fact that the UK is not a member of the eurozone. That is the direct answer to her question.

When the Leader of the Opposition says that he would have negotiated further on the treaty, Conservative Members are entitled to ask with whom he would have negotiated. The negotiations had come to an end. Is the hon. Lady saying that the Leader of the Opposition would have negotiated with himself? The Opposition need to stop opposing just for the sake of opposition, and instead stand behind the Prime Minister and his veto and behind debates such as this. With that said, I hope that the—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order.

I have three speakers still to call, and we have 10 minutes before the wind-ups.

15:24

[Mr Christopher Chope (Christchurch) (Con)]

It is a pleasure to be able to participate briefly in this very important debate and to follow my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips). I congratulate and thank him, the Chairman of the European Scrutiny Committee and all its other members for putting the spotlight on this important issue.

My hon. and learned Friend said that the UK Government must make it clear that they will not countenance anything unlawful. The question is whether anything in the treaty is unlawful, and that is where the rule of law comes in. My understanding is that one of the most important elements of the rule of law is that the law should be clear and easily understood; otherwise, it is very difficult for people to know whether they are complying with it. Over the years, ambiguity has been the hallmark of the laws that the EU and the European Court of Justice have gradually developed, which have been against this country’s best interests.

What is in the treaty is very unclear, as my noble Friend Lord Howell, the Foreign Office Minister, made apparent when he said in the other place:

“There has been much comment about the use of the European Union institutions, and I want to come to that. The new agreement sets out limited roles…The legal implications are complicated and hinge upon how the agreement is implemented. It is for this reason that we have reserved our position.”—[Official Report, House of Lords, 16 February 2012; Vol. 735, c. 936.]

As my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) asked, what is the point in reserving our position? If we remain silent, it could be interpreted as an estoppel or a consent to what is going on.

Why are not the Government asking the European Court of Justice to interpret the treaty now? The ECJ will have a role in interpreting the arrangements for the European Union’s accession to the European convention on human rights. If it can do that, why cannot it examine the treaty? We would then know exactly what it thought about the legality or otherwise of the treaty. If we wait for it to interpret the treaty, we will find that it does so in a purposive manner, in accordance with the principle that it is right and proper for the EU to have more and more power. Why do we not get a proper and authoritative interpretation of the treaty now, before we proceed?

If one needed any ammunition to support the principle that the treaty is ambiguous, one would need look no further than the opinion of the Council of Ministers. Four questions are asked in it and the answers are set out, and they confirm that it is incredibly ambiguous.

15:27

[Richard Drax (South Dorset) (Con)]

I pay tribute to my hon. Friend the Member for Stone (Mr Cash) for securing the debate. He stands up for everything in which I and a lot of Members on both sides of the House believe.

I simply do not understand why we all look at this huge abyss, this black hole, this legal and financial federalist nightmare, yet go on pouring billions of euros into it in the hope that it will somehow recover. It will not. The political elite in the entire eurozone are betraying the very people they say they represent.

We are going to have tears over this. We have, unfortunately, already had riots in Greece: God forbid that we have riots in this country one day when the people wake up to realise that we have been, dare I say it, disingenuous—I will not say untruthful because I am not allowed to use that word in this House—to our electorate. We have to be truthful, and we have to base our politics on common sense and the law. I want us to have jobs, growth, wealth and mobility, but we will not get them under the current EU federalist state. We must renegotiate and start talking. I urge those on the Front Bench, please, for our party and our country, to say at the meeting, “Enough is enough: let’s sit down and find a more common-sense approach for the future.”

15:29

[Laura Sandys (South Thanet) (Con)]

I am sorry that my hon. Friend the Member for South Dorset (Richard Drax) is going to be crying over the treaty. His constituents will be worried about this, as we all are, but it is not only about the treaty, because that is merely the result of a major crisis. In debates in this House, we often express concern, in many respects, about many countries, whether they be Somalia, India, or the economies of the far east. Those economies impact on this country. It is crucial that whatever emerges from the way in which the EU implements the treaty serves our national interest by ensuring our greater economic security.

I share Members’ fears about whether the treaty will deliver the right result. Over the past 18 months, we have watched the economic meltdown across Europe being met with inactivity and summit after summit, as Ministers from all over Europe have come together but there has been no endgame, no result, and no agreement. This comes extremely late in the game. That means that whatever is done will cost Europe—the eurozone—a lot more money than if the situation had been addressed 18 months ago. This is not a day when Europe is shining in its glory. This has come too late, in a crisis, and as a result Europe has cost itself more money.

It is not in our interests to be part of the treaty, but it must be in our interests to support Europe in sorting out its own economic situation. I worry whether it will be successful, but very much hope that it will be. I know, however, that we are in a better position than we were before the Prime Minister went off to Brussels to veto the treaty. The veto is in place protecting the UK from the treaty, and we are giving our support in ensuring that the European economies get their act together.

15:34

[The Minister for Europe (Mr David Lidington)]

I thank my hon. Friend the Member for Stone (Mr Cash) and all hon. Members who have taken part in the debate. I am conscious that in the limited time available I am unlikely to be able to do justice to all the various and detailed questions that have been asked. As my hon. Friend said, I gave evidence on this subject to the European Scrutiny Committee for nearly two hours last Thursday. I am not sure whether the transcript is yet available on the Committee’s website, but if Members wish to explore these matters further, I refer them to the detailed answers that I attempted to give to my hon. Friend and other members of the Committee.

I take very seriously the comments made by a large number of hon. Members about the importance of scrutiny. I completely agree with those who have said that while the European Scrutiny Committee does an excellent job within its prescribed terms of reference, which are confined to looking at documents as they come from the EU institutions, there is a powerful case for what one might term more upstream engagement by Parliament in examining the strategic direction of European policy before it takes the form of specific items of European legislation. Some, at least, of the Chairs of the departmental Select Committees are interested in pursuing that further, and I very much hope that they will feel encouraged to do so.

In response to my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) and others who asked about having debates before European Councils, I can only repeat what has been said before from this Dispatch Box: it was an explicit part of Tony Wright’s report, which led to the creation of the Backbench Business Committee, that such debates should be among those for which responsibility was transferred from the Government to the Backbench Business Committee, to be dealt with in the time that was allocated to that Committee.

[Mr Bone]

rose—

[Mr Lidington]

I will not give way, but I take seriously the point that my hon. Friend the Member for Wellingborough (Mr Bone) made about the Backbench Business Committee wanting to have predictable times at which it can schedule such debates. The Leader of the House was listening carefully when he made his remarks and, I am sure, will be attentive to that particular point. I draw my hon. Friend’s attention to the fact that a review of the procedures suggested by the Wright Committee is due in the near future.

I did not agree with my hon. Friend the Member for Stone when he laid strictures on individual EU countries. Greece and Italy may do things differently from how politics is done here, but everything that has happened in those countries so far has been within the bounds of their constitutions. The legislation that the Governments of those countries take through has to be enacted by the democratically elected Parliaments.

My hon. Friend the Member for Stone was right to point to what I believe to be a genuine, underlying tension in European affairs at the moment between two important pressures. The first is the economic logic, which prescribes that if we had a single currency, interest rate and monetary policy, logically we would have to move towards greater fiscal integration. That, after all, is one reason why I and most members of my party opposed the United Kingdom entering the euro. We felt that that was the inherent logic of the project. Against that, there is the political challenge, which is whether, if there is to be greater fiscal integration among countries that share a single currency, there is a sufficient sense of common political identity, not just for the Governments of those countries, but for their voters, that they can accept major decisions in economic policy being taken at, and democratic accountability being transferred to, the European institutional level, rather than being based solely at national level.

[Mr Baron]

My right hon. Friend is well respected in his post. Can he highlight the concrete and substantive guarantees that will exist to prevent the two-tier Europe that is being created through the establishment of the fiscal compact from acting against the best interests of this country?

[Mr Lidington]

There are two parts to my answer. First, the action that the Prime Minister took in December ensured that what other countries chose freely to do, through sovereign decisions, will not be binding on the UK through European law. Secondly, as a number of my hon. Friends have said, the Government are determined to work actively with other members of the European Union in pursuit of common interests. Although this might not give the assurance that can be given by a rule book, the culture that I see at work in the European Union week by week is one in which countries come to the table with interests and views of their own. Countries do not act as a predictable bloc or cohesive caucus because they happen to belong to the euro. There are eurozone countries lined up with us to support budgetary discipline. Other eurozone countries—largely net recipients—want to see a greater EU budget. There are also euro-outs that are net recipients and that want to see a bigger European budget. The way in which countries line up on particular issues does not follow logically from where they stand in relation to the fiscal compact or from whether they are members of the eurozone.

[Several hon. Members]

rose—

[Mr Lidington]

I will not give way again, because I have limited time and there are a lot of points to which I wish to respond.

I will not dwell on what happened in December because I want to get on to what hon. Members asked me this afternoon. However, I draw the House’s attention to the fact that my right hon. Friends the Foreign Secretary and the Chancellor of the Exchequer have now sent detailed accounts of the approach to the December European Council meeting and the events that took place shortly afterwards to my hon. Friends the Members for Croydon South (Richard Ottaway) and for Chichester (Mr Tyrie) in their capacities as Chairs respectively of the Foreign Affairs Committee and the Treasury Committee. Those letters have been copied to my hon. Friend the Member for Stone and are already available on the websites of the Foreign Affairs and Treasury Committees. I am making arrangements for them to be placed in the Library today.

The Prime Minister’s decision in December ensured that the treaty, to which 25 countries subscribed, was “outside” the European Union. As my right hon. Friend told the House in January,

“we are not part of it and it places no obligations on the UK. It does not have the force of EU law for us, nor does it for the EU institutions or for the countries that have signed it”.—[Official Report, 31 January 2012; Vol. 539, c. 678.]

I want to deal with some of the points that my hon. Friends the Members for North East Somerset (Jacob Rees-Mogg) and for Hertsmere (Mr Clappison) made. The treaty does not govern how the European Union shall act. It imposes certain obligations on the contracting states, which are linked to the EU. However, in so far as it refers to EU treaties, it makes it clear that they and their rules have primacy and apply in any circumstance where there might be overlap or apparent contradiction.

My hon. Friend the Member for North East Somerset asked about the prospect of non-eurozone members being fined under the fiscal compact. If a non-eurozone member state has ratified the treaty, until it joins the euro, it can decide which parts of titles III and IV of the compact apply to it. Once that country joins the euro, the whole fiscal compact applies to it. The fiscal compact rule in article 3(2) and the jurisdiction of the Court under article 8 fall within title III, so pending membership of the euro, the non-euro countries can choose whether they wish to be bound by those aspects of the compact. A member state, whether in the euro or not, can be fined only once it has ratified the fiscal compact through its national means.

My hon. Friend also asked about the risk of the treaty somehow being imposed on us in the next five years by underhand means.

[Jacob Rees-Mogg]

I want to clarify the point that I was trying to make. The treaty might possibly come in through enhanced co-operation, so although it would not formally be imposed on us, it would reach the status of an EU treaty if the current treaty that we are in the process of ratifying is ratified.

[Mr Lidington]

I do not know whether we will have time to explore that this afternoon. I may write to my hon. Friend setting out the answer in greater detail, but I do not believe that his fears are justified. Treaty change can take place only under the procedures for treaty change in the treaty on European union and the treaty on the functioning of the European Union. It cannot take place under enhanced co-operation, which can, in any case, bind only those countries that choose to participate in it. That is clear in the treaties.

The role given to the European Court in the compact in relation to the balanced budget rule—and, indeed, the imposition of that rule—could not be introduced under enhanced co-operation. Although the compact declares that it has the objective of being incorporated in the EU treaties in five years, that is only an aspiration, not a given. Any changes to the EU treaties would have to be agreed by all 27 member states, using the procedures under the EU treaties themselves for treaty amendment. Change cannot be made through the EFSM treaty, which is to be signed intergovernmentally by the eurozone members only.

[Stephen Phillips]

Will the Minister give way?

[Mr Lidington]

Forgive me, but I will not because I want to press on and try to answer more of the questions asked during the debate.

It is a fact that the compact says that it is a treaty that shall be applied in conformity with the obligations set out in the EU treaties. The declared intent of the signatories is that they shall act at all times in accordance with EU law.

It is a matter of legal fact that the primacy of EU law laid down in the EU treaties is not and cannot be affected by the drafting of an intergovernmental treaty. Article 2 of the compact explicitly states that if there is any conflict or overlap, the EU treaties will prevail. In any case, even if that phrase were absent from article 2, it would be against EU law for EU member states to enter into any kind of international agreement that contradicts the EU treaties and EU law.

However, it is also true that elements of the fiscal compact give us serious concern. Our concerns relate to certain tasks accorded to the European Commission and the European Court of Justice. I set out our concerns in greater detail in my evidence to the European Scrutiny Committee last Thursday. In fairness, it is worth alluding to the fact that others who gave evidence to the Committee—I am thinking of Professor Dougan, of Martin Howe, who is by no means a euro-enthusiast, and of the Council Legal Service written evidence to the Committee—presented a different interpretation and argued that article 273 of the EU treaties could be interpreted as justifying what was set out on the use of the institutions under the fiscal compact.

The concern of the British Government is that the example set under the compact for the EU institutions, the role and functions of which are determined by treaties agreed by all 27 member states, could be used in future either to set unwelcome precedents or to impinge on the integrity of EU law and the arrangements set out in the EU treaties. That is why we have reserved our legal position. That in turn means that we are vigilant and ready to act, including by taking legal action in the European Court of Justice, if we believe that the EU institutions are being used in a way that is contrary to the provisions of the EU treaties and that harms our national interest.

The Prime Minister made clear at the informal January European Council that the EU institutions can be used outside the EU treaties only with the consent of all member states. He also said that the treaty should not undermine the operation of the single market or otherwise infringe on areas of policy that are properly for discussion by all member states in the EU context. That position was repeated in writing by Sir Jon Cunliffe, our permanent representative to the EU, on 22 February. I deposited that letter in the Library of the House on the same day.

The actions the Government have taken in respect of the compact have been informed by advice from across Government. I will not be drawn into a detailed discussion of what the Government’s legal analysis says, not least because reserving our position means that we might at some stage wish to go down the path of legal action. I do not want to say anything that might prejudice or reveal a position that we might take in court in such circumstances.

I am sure most hon. Members realise how foolish it would be to speak in such a fashion, but I am confident that reserving our position is the best way of protecting UK interests. It enables our partners to undertake economic and political tasks that we hope will help to stabilise the eurozone while preserving our right to take legal action should that become necessary.

The problem all our economies face in Europe is a lack of growth. That growth will not come from increased Government spending, nor will it come from consumer spending funded by increased private indebtedness; it can come only from structural reform and a growth in trade, both within Europe and beyond. My right hon. Friend the Member for Wokingham (Mr Redwood), and my hon. Friends the Members for South Swindon (Mr Buckland), for Cheltenham (Martin Horwood) and for Stroud (Neil Carmichael), spoke strongly in the interests of their constituents when they urged the Government to press forward with an innovative and assertive agenda for economic reform and growth in Europe. We are working with our partners to do that, as was evidenced by the letter to which the Prime Minister added his signature to those of 11 other Heads of Government, and for which Bulgaria, Slovenia, Portugal and Lithuania have voiced support. The Government intend to be active in promoting our economic interests in Europe and the wider world, and I commend our approach to the House.

15:49

[Mr Cash]

Undue delay in reserving our position on the necessity of getting concrete guarantees and an answer to the question of whether we will go to the European Court of Justice over this matter is no substitute for action. We must take action now because the advice from the legal adviser states:

“within five years…when this happens”.

His assumption is that this will happen within five years. We must take action now. We cannot allow delay to trump the necessity of getting this right. It is essential that we move, and move now. I shall speak to the Prime Minister about this shortly. I seriously hope that the Attorney-General will take the necessary action and advise accordingly so that the Cabinet is fully apprised of the fact that this is not a lawful treaty.

15:51

Three hours having elapsed since the start of proceedings, the motion lapsed (Standing Order No. 24).

[The Leader of the House of Commons (Sir George Young)]

On a point of order, Mr Deputy Speaker. Owing to the debate under Standing Order 24 that has just ended, the time available for the debate on the Water Industry (Financial Assistance) Bill has been reduced. It is therefore the Government’s intention, if necessary, to make more time available to complete the debate that is about to commence at a later date. I will give more details in the business statement tomorrow.

[Mr Deputy Speaker (Mr Nigel Evans)]

I am grateful to the Leader of the House for that clarification.

Water Industry (Financial Assistance) Bill

Wednesday 29th February 2012 Commons Chamber

[Relevant documents: The First Report from the Environment, Food and Rural Affairs Committee, Future Flood and Water Management Legislation, HC 522, the Fourth Report from the Committee, the draft National Policy Statement on Waste Water, HC 736, and the Government’s responses thereto.]

Second Reading

15:51

[The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)]

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

In December, the Government published “Water for Life”. The White Paper set out many of the challenges facing the water sector. These challenges are not just about how much water we have available now and in the future; they range from the environmental impact of water management to the means by which we deal with waste water and, not least, the issue of affordability.

There have been dramatic improvements in the health of many of our rivers, but more needs to be done. The House will recall that the Government have invested £92 million to improve our rivers and waterways. Despite that, however, over-abstraction and pollution of our rivers, lakes and streams means that only a quarter of our water bodies are fully functioning ecosystems. The water and sewerage sectors have, though, made significant progress. More than £90 billion has been invested in the 22 years since privatisation to reduce the water industry’s impact on the natural environment and to continue to deliver high-quality drinking water while keeping water bills generally affordable.

It is also worth noting that last year, despite the driest spring on record, there were no hosepipe bans, which was testament to the 36% reduction in leakage achieved by the industry since privatisation.

[Mr Tobias Ellwood (Bournemouth East) (Con)]

I do not want my right hon. Friend to digress too far from her speech. She mentioned hosepipe bans last year, but there are likely to be bans this summer owing to the lack of rainfall now. Has any thought been given to the long term and to providing a national grid for water so that we can share the water supply up and down the country?

[Mrs Spelman]

Thought has been given to that. We had a drought summit last week, and I have said publicly that hosepipe bans are more likely this year because we have had our second dry winter. The important point, however, is local connectivity. That is the key. Water companies explained to us at the summit how they are connecting to their neighbours. It is important for the House to know that transporting water over a significant distance is prohibitively expensive. The idea of building a pipeline to transport water from the north-west, which pleasantly has it in abundance, to the south-east, which traditionally does not, might sound attractive, but it is prohibitively expensive. However, local connectivity produces, in essence, a virtual national grid.

Today, our reward for all that investment is world-class drinking water and a cleaner environment. Water supplies are also safer, better and more secure than ever before. Water and sewerage services also remain relatively inexpensive compared with other household bills, and are good value for money. The average bill stands at just over £1 a day. At the same time, water companies are investing £22 billion over the current five-year price round in mains replacement, flood resilience, river improvements and better water quality in 55 wetlands and bathing areas.

However, a minority of customers struggle to pay their water charges, either because they are on low incomes or because they live in areas where bills are higher than average. In fact, 23% of household customers across England and Wales spend more than 3% of their disposable income on water and sewerage charges. We now want to start tackling that problem. The Water Industry (Financial Assistance) Bill will allow us to provide support to keep bills down in the south-west and to reduce the risk of future infrastructure developments, such as the Thames tunnel super-sewer, raising bills disproportionately. Clause 1 creates a general power to enable the Government to make a payment to water companies for the purpose of reducing charges payable by customers. The only circumstances under which we currently envisage using that general power is in support of South West Water customers. We believe that the circumstances they face are exceptional.

Anna Walker’s review of charging for household water and sewerage services, which was commissioned under the previous Government, identified why households in the south-west face the highest water bills in the country. At privatisation, South West Water had the lowest regulatory asset base per property. Since then, the company has had to invest around £2 billion to raise the standard of its infrastructure to the same level as the rest of the country. With comparatively fewer customers, the cost of new investment per property has been higher there than anywhere else. The benefits of that investment include improved water quality, reduced leakage, cleaner beaches and better bathing water quality, as enjoyed by the south-west’s many visitors. However, the costs have been borne solely by South West Water customers, whose bills have risen as a result. I would like to pay tribute today to hon. Members past and present in all parts of the House who have devoted years to raising the profile of this historic unfairness on behalf of their constituents.

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

Does the Secretary of State accept that average water bills across the country are set to rise by almost 6% in April and that this Bill will do nothing to help the vast majority of people, who have seen their incomes cut or frozen? Why should water companies not have to tighten their belts like everybody else?

[Mrs Spelman]

I can give the hon. Gentleman the assurance that water companies are indeed tightening their belts like everybody else. The rise that he described is the one set out by the economic regulator Ofwat, as an indicator of the overall level of inflation, which has not a little to do with the economic mess that we inherited from the previous Administration. However, the important point for the hon. Gentleman is this. He and I share the use of Severn Trent Water’s services, and companies such as ours will be able to introduce a company social tariff, which would assist the most vulnerable in the water area where we reside. Indeed, it would be open to every company to do so, and we have published a consultation about the company social tariff.

[Andrew George (St Ives) (LD)]

Let me congratulate my right hon. Friend on bringing forward this measure and remind her of the cross-party nature of the origins of the Bill and the fact that we have been working towards it across all parties for many years, including under the previous Administration, and not only following the Anna Walker review, as there has clearly been every intention of addressing what has been a clear historic unfairness for South West Water customers.

[Mrs Spelman]

My hon. Friend is quite right. Indeed, I look across the Chamber to the right hon. Member for Exeter (Mr Bradshaw) as a demonstration of the cross-party consensus that existed, which I have acknowledged. The diligence with which south-west constituency Members raised awareness of this historic unfairness is the reason our Government have sought, finally, to do something about it and stop turning a deaf ear to families struggling with that historic legacy, which is what had happened for too long.

There are limits to the help that we can give, because of the vast economic deficit that we inherited. However, we believe that the Government should help to correct the historic inequity that has left water bills in the south-west so markedly out of kilter with those elsewhere in the country. We have therefore committed to funding South West Water to enable it to cut bills by £50 a year for all household customers. The payments will start in April next year and will be maintained to the end of the next spending review period. The £50 reduction will be transparent on customers’ bills and, contrary to the impression that might have been gained, will not provide any sort of benefit to South West Water. It will simply be passported straight through to the householder, who will receive that money in full.

We take pride in helping hard-pressed families in the south-west, but we recognise that the challenge of helping vulnerable customers with water affordability problems is a different and more general problem that can be felt in households anywhere in the country, as the hon. Member for Birmingham, Selly Oak (Steve McCabe) suggested. As constituency MPs, we all know the families that we are talking about. That is why our water White Paper has set out definitively the dual approach that we are taking to tackling affordability issues. First, we are taking measures now to enable water companies to introduce social tariffs and to tackle bad debt. Secondly, over the longer term, we are introducing a package of reforms to increase competition and innovation in the industry that will help to keep bills down and improve customer service.

We consulted recently on how water companies could design social tariffs to reduce the bills of those who would otherwise struggle to pay in full. We will publish final guidance in the spring to enable companies to bring forward social tariffs in their charging schemes from 2013. Water companies’ responses to the consultation have shown their commitment to addressing customers’ affordability problems. Many already have schemes in place, such as trust funds, matched payment schemes, referrals to benefits advice and some existing social tariffs, but we have to be realistic in acknowledging that bad debt is also a serious problem in the water industry.

Bad debt adds an average of £15 to all paying customers’ bills, and this Government are taking action to address that. We are consulting on measures to reduce bad debt, and we are considering two options. The first is a regulatory measure that would make landlords liable for the water charges for their tenants’ properties if they failed to supply details of those tenants to the water company. However, we are mindful that the measure has to be proportionate and easily administered, so we are also consulting on whether we should ask landlords to share their tenants’ details with water companies voluntarily.

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

Will the proposals that the Secretary of State has just mentioned be similar to the present regulations involving landlords and energy companies, or might they be somewhat different?

[Mrs Spelman]

Electricity utility bills are the domain of the Department of Energy and Climate Change, rather than the Department for Environment, Food and Rural Affairs. We are seeking to ensure that people who use water pay for it; it is a question of fairness. Water has historically been treated somewhat differently from other utilities such as electricity and gas, so there might be some differences in the details of the proposals. The hon. Lady will have an opportunity to raise that point as part of the consultation.

This Government are going to get a grip of the issue of bad debt, which is forcing up bills for those who do the right thing and settle their bills on time. We are on the side of those who play by the rules and pay their bills in good faith and, unlike the previous Government, we are going to ensure that their interests are properly served by clamping down on those who do not, or will not, pay their bills.

Despite the considerable progress that has been made on cleaning up our water environment, challenges still remain, not least in the river that ebbs and flows outside these very walls. The House has previously debated the fact that London’s sewerage system is operating close to capacity. We are now at a stage at which waste water containing untreated sewage overflows into the Thames between 50 and 60 times a year, involving an average total of 39 million cubic metres a year. The sewage discharges kill fish and leave litter and debris floating in the water. Because of the tidal ebbs and flows, that debris can take up to three months to reach the mouth of the river, and frankly, it stinks—just ask David Walliams. Hon. Members will recall his Sport Relief challenge last spring to swim 140 miles along the length of the Thames here to Westminster. His challenge should have been the distance, the strong currents and the undertows, not the quality of the water he swam in—water that was bad enough following heavy rain to place his entire endeavour in jeopardy.

We might not quite face the “Great Stink” of 1858, when the stench of sewage led to this House’s curtains being soaked in chloride of lime in an attempt to disguise the overpowering smell and, ultimately, to Parliament being suspended, but the sewer outflows will only get worse with population growth, increased urbanisation and more extreme rainfall events caused by climate change. This, as I am sure all Members will agree, is unacceptable.

We are the world’s seventh largest economy; this is our capital city; this city is a shop window for our entire country—and the status quo is simply not good enough. This Government are going to put the “Great” back in “Great Britain”—a Government who are showing that Britain is open for business and competing globally. That is why we need a 21st century solution, not a 19th century one that would still rely on allowing the Thames to function as a sewer.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

Over 1 million customers of Thames Water are in what is termed water poverty. The Thames tunnel, which I support, is estimated to cost something in the region of £4.2 billion, putting £1 a week on the bills of Thames customers. What are the Government going to do to ensure that more people will not fall into water poverty as a result?

[Mrs Spelman]

Naturally, Thames Water will be one of the water companies looking at a company social tariff. That provides a means, as with Severn Trent Water and every other water company, of really helping the most vulnerable customers. It is important, too, to put in context what Thames Water customers, probably including some hon. Members, pay now. Unlike South West Water, Thames Water currently has significantly below average water bills. The average combined water and sewerage bill is £356 a year. South West Water ratepayers pay £517 a year, whereas Thames Water’s ratepayers have a combined bill of £319 a year. We are starting with Thames Water’s ratepayers who have a significantly below average bill.

[Mr Andy Slaughter (Hammersmith) (Lab)]

rose—

[Mrs Spelman]

Let me make a little progress, if I may.

We need a solution that prevents sewage from entering the Thames in the first place. Today, the proposed Thames tunnel offers the most timely, comprehensive and cost-effective solution to the combined sewer outflow problems. We are very aware, though, of the impact its construction would have on local communities. Thames Water has just finished its second public consultation on its proposals, and will consider the responses it has received. It plans to publish its response in the latter half of May. Thames Water will continue to work hard with those potentially affected to minimise the impact where practicable.

We recognise that the large and complex Thames tunnel project comes at a cost, which will impact on Thames Water sewerage bills, but we are confident that the bills would still remain below the current national average and below the average bills of Southern, Anglian, Wessex and Severn Trent Water customers—and well below those of South West Water customers.

[Mr Slaughter]

Does the Secretary of State agree that

“the cost of the tunnel is too large to justify the environmental benefits”,

and that the

“Projected costs ... outweigh the advantages of a cleaner river”?

[Mrs Spelman]

Is the hon. Gentleman saying that his party is not in favour of trying to clean up the sewage out of the Thames? He will know that the initial study on the Thames tideway was launched when his party was in power—in 2001—and that a significant amount of time was spent looking at alternatives and carefully assessing with the greatest rigour what the costs of such a complex project might be. Just to put this in context, the proposed cost for the Thames tunnel is comparable to the amount having to be spent in Paris to do almost exactly the same thing, and on what the German Government are having to do to deal with an outdated system on the Rhine-Ruhr. So I do not accept his argument that the expenditure on cleaning the sewage out of the Thames is not justified.

The objective of our approach is to help relieve the extent to which households in London are being asked to contribute. As I said in my written ministerial statement on 3 November 2011, the Government believe that the private sector can and should finance this project, but we accept that there are some risks that are not likely to be borne by the private sector at an acceptable cost. We are willing, in principle, to provide contingent financial support for exceptional project risks where this offers best value for money for Thames Water’s customers and taxpayers. However, I will want to be assured that, when we offer this contingent support, taxpayers’ interests remain a top priority. We are working with Ofwat, Infrastructure UK and Thames Water to ensure that the financial structure for the proposed Thames tunnel includes safeguards, so that the likelihood of Government support being called on is minimal.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

I do not oppose the Bill at all, but may I just alert my right hon. Friend to something? Leaving aside the arguments about whether there should be a full tunnel or another solution, which I hope to address if I am called to speak, there are concerns about the Government giving money to a company such as Thames Water. It is not a very transparent organisation, being a private equity-funded company that has 10 layers of corporate structure, including in tax havens in some parts of the world. The Government should attach tough conditions to support for any water company if this is to be seen as transparent and good value for money.

[Mrs Spelman]

I share the right hon. Gentleman’s concern that there should be rigour in this exercise, and I have just talked about the safeguards we are seeking. I can also assure him that we have been advised by Ernst and Young that the projected cost of this project does represent value for money, but the rigour will continue to be maintained throughout the elaboration of the project.

[Several hon. Members]

rose—

[Mrs Spelman]

I wish to make a little more progress.

We believe that simply having this power available will help us to maximise private sector investment in the tunnel and keep the cost of financing down. The Bill in 1858 that provided the money to construct a new sewer scheme for London, and to build the Embankment in order to improve the flow of water and of traffic, was rushed through Parliament and became law in a mere 18 days. Although we do not anticipate such swift progress, we need to ensure that assistance is provided promptly to South West Water customers and, similarly, that Londoners can be assured that the power to provide contingent financial support is in place while we work with Thames Water and other stakeholders to plan for the financing and structuring of the tunnel.

[Mr Slaughter]

rose—

[Mrs Spelman]

I have already taken one intervention from the hon. Gentleman.

As the Bill contains just two simple spending powers to implement intentions that the Chancellor set out in the autumn statement, our intention is that the Speaker be able to certify it as a money Bill. I am, however, mindful of the limitations that would place on discussions in the other place and of the desire to debate the need for the Thames tunnel, in particular. The need for the proposed Thames tunnel will no doubt be discussed in detail if, as I expect, the waste water national policy statement is debated before the end of March. We will also shortly be laying a draft order before Parliament to amend section 14 of the Planning Act 2008. This section 14 order would enable a major sewer such as the Thames tunnel to be included as a nationally significant infrastructure project, and we look forward to hearing any concerns that hon. Members may have.

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

My right hon. Friend will be aware that the Select Committee undertook some work on the waste water policy statement, largely addressing the whole issue of the Thames tunnel. I am mildly surprised that we did not use that opportunity, either during the Committee’s work or the Government’s response to it, to discuss this particular planning point.

[Mrs Spelman]

I thank my hon. Friend for that question. As I just said, there were 21 working days for the national waste water policy to be debated from the moment it was laid before Parliament on 9 February. There is still time and I am sure that hon. Members will take advantage of that.

Finally, those looking forward to seeing the other legislative reforms proposed in the White Paper should rest assured we are firmly committed to our programme of market reform for the water and sewerage sector.

[Frank Dobson (Holborn and St Pancras) (Lab)]

Will the right hon. Lady give way?

[Mrs Spelman]

I am just summing up.

It is right, however, that the House should get the chance to scrutinise our proposals in detail and, to that end, we will publish a draft water Bill in the coming months. I commend this Bill to the House.

16:15

[Mary Creagh (Wakefield) (Lab)]

The Bill is welcome, if a little unexpected. It is welcome because it provides assistance to the people hit hardest by the botched Tory privatisation of the water industry, which created a water company in the south-west with too few people to pay for the £2 billion investment needed to create the south-west’s sewerage system over the following 20 years, with just 3% of the population clearing up 30% of the nation’s coastline. It left them with the highest unmetered water bills of any region and the Bill seeks to provide some relief, a fact that we welcome.

[Miss McIntosh]

I am delighted that the hon. Lady had the opportunity to visit my constituency and I look forward to hearing from her how that went. Does she not appreciate the fact that, as the Secretary of State has just mentioned, £90 billion has been invested since privatisation that probably would not otherwise have been invested? There was also a debate among the hon. Lady’s hon. Friends in the past about privatising the railways, but there is general agreement in the country that water privatisation has been a success bar the unfortunate circumstances that pertain in the south-west in the context of its having the longest coastline and the application of the EU bathing directive in that regard.

[Mary Creagh]

I am happy to report that the pigs I met in the farmer’s field in the hon. Lady’s constituency were extremely well. There was a very strong smell of bacon coming off them, even while they were alive, which was very nice, and I was very happy to see them.

On privatisation, we accept the consensus that privatisation is here to stay and that it has delivered the investment in the infrastructure at no direct cost to the taxpayer. It is clear that that cost has been paid indirectly by customers through their bills, however, with particular damage to customers in the south-west. That is why the Bill is with us today.

[Stephen Gilbert (St Austell and Newquay) (LD)]

This seems to be a particularly smelly debate. Can the hon. Lady explain why over 13 years, despite recognising the problems of privatisation in Cornwall and the south-west, Labour did nothing to help address the concerns that the Bill addresses?

[Mary Creagh]

I have in my hand a graph from Ofwat’s website about the annual average bill. The hon. Gentleman will see—I am not sure whether he can see this far, but I would be happy to pass it on to him—that when we passed the relevant water legislation in 2000 water bills dropped from an average of £325 a year to £285 a year. During that water review period, water bills were much lower. We took action across the country and that will also have affected the hon. Gentleman’s constituents in the south-west. He is also ignoring the fact that we asked Anna Walker to consider the issue of affordability. We have had the Walker report and only one aspect of its many recommendations is being debated today. The rest are being left, I am afraid, on the long finger.

[Sheryll Murray (South East Cornwall) (Con)]

I paid water bills in the south-west for 13 years under the hon. Lady’s Government and I cannot remember my bills ever being stable or not increasing considerably. I do not know where she has got her figures from—perhaps she is looking at a national figure—but I can assure her that my bills have not reduced.

[Mary Creagh]

Does the hon. Lady think that the £50 a year for which the Bill provides until the end of the spending review period is adequate compensation for her constituents? It will undoubtedly be eaten up by the next two years-worth of price increases in cash terms.

[Neil Parish (Tiverton and Honiton) (Con)]

Does the hon. Lady accept that this coalition Government have done more in 13 months than the Labour Government did in 13 years? We have 3% of the population in the south-west and 30% of the beaches, and that is why we have got these extreme costs. This Government have faced up to their responsibilities and delivered real cash to water bill payers, rather than just talking about it like the previous Government.

[Mary Creagh]

I am disappointed at the hon. Gentleman’s tone, because he is ignoring the fact that we commissioned the Walker report when we were in government. He is also ignoring the action we took, not least to prevent customers from being disconnected. I am sure that many of his constituents were affected in the early days of water privatisation when hundreds of thousands of customers were cut off—disconnected—from their water supply for non-payment of bills. We changed that. We changed the law and effectively instigated a right to water, which we think is a basic human right and is required for basic dignity and decency. I am sure that affected many people in the south-west.

The Bill is welcome because it lays down powers exercised by the Secretary of State to provide finance for the huge infrastructure investment that is needed to clean up the Thames, which has had very little investment since the great sewer drilled by Bazalgette 150 years ago. However, there are a number of questions that the Secretary of State must answer. First, why is the Bill so short? We are in a time of drought not seen in this country since 1976, so why is she focusing on the little picture rather than the big picture? Why was the water White Paper that was due in spring 2011 not published until December 2011? Her colleague the Minister with responsibility for water is now promising a draft water Bill this spring, so can she confirm that there will not be a full water Bill to take forward the other measures in Anna Walker’s report in the Queen’s Speech this May—yes or no?

[Mrs Spelman]

The Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Newbury (Richard Benyon), will be happy to answer this point in detail, but we do not need new measures to do some of the important things we need to do right now to tackle this drought. I mentioned the drought summit. As we saw last year, flexibility in terms of abstraction licences helped our farmers and we did not need hosepipe bans.

The extra time we took for the water White Paper improved it, putting resilience at its heart, and the climate change risk assessment vindicated that decision. I am sure that hon. Members would like the time to debate, through proper pre-legislative scrutiny, the measures set out in the water Bill. The Prime Minister gave an undertaking to the Chairman of the Select Committee on Environment, Food and Rural Affairs that a draft bill would come forward within months and I have repeated that commitment today.

[Mary Creagh]

I take it from that answer that there will not be a full water Bill in the Queen’s Speech this May. On the issue of abstraction, the proposals so far in the water White Paper talk about reforming the abstraction licence with an end date of 2027. The Secretary of State has had three drought summits—

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)]

Much can be done now.

[Mary Creagh]

That is fantastic; so we can look forward to a reform of the abstraction regime that will not take until 2027.

[Frank Dobson]

In considering any water shortages that may or may not occur this year, will my hon. Friend and the Secretary of State bear in mind that in the 22 years since privatisation there has been no net increase in reservoir capacity in England?

[Mary Creagh]

I am sure that the Secretary of State will have digested that point from my right hon. Friend.

This is an orphan Bill, which is decoupled from the long-term reforms required to tackle climate change and keep water affordable. Why does the Bill, which affects two areas—the south-west and London—not mention those two areas? Is it because that would make it a hybrid Bill, which would require full and proper scrutiny in the other place? Is it because by not mentioning those two areas and drawing the Bill widely, the Secretary of State is able to define it as a money Bill, which means that it receives only a cursory one day’s scrutiny in the other place? What possible reason could she have to fear their lordships’ scrutiny of this worthy and timely Bill? We can surmise that she is keen to get her short Bill through Parliament—an endeavour that does not seem to have been properly communicated by the Whips to her own Back Benchers, if today’s sudden change of business is anything to go by.

[Andrew George]

I note that the hon. Lady described the Bill as worthy and timely. I am curious about her line. She says that £50 per household in the south-west is insufficient; I would like to know whether she and her party propose offering more to the south-west, and how that would be funded. Secondly, in view of the line that she is taking, is she suggesting that she and her party will vote against the Bill today?

[Mary Creagh]

I am happy to say that we will not vote against the Bill. If the hon. Gentleman waits, I will come on to some of the wider affordability issues and will, I hope, answer some of his questions on the wider issues.

The next unanswered question is: why are we debating the Bill now? We know that the Government ran out of meaningful new legislative business about two months ago, and the House has been surviving on thin rations—a meagre diet of one-line-Whip business and Back-Bench business debates, valuable though they are. There was no new Government legislation, but suddenly—boom!—out of the Department for Environment, Food and Rural Affairs, a Department whose Ministers are the embodiment of clout, grip and competence, spurted a sudden, short water Bill, born of the realisation that if the Department has lost its slot in May’s Queen’s Speech, it had better deliver on the Chancellor’s promises to the south-west and his coalition partners. That happened just six short weeks before the end of one of the longest parliamentary Sessions ever held. Clearly, such a masterstroke of parliamentary planning and timing could have been confected only by the Department that brought us the forest sell-off.

Labour in government corrected many of the injustices of water privatisation. As I said, in 2000 we banned water companies from cutting off the water supply of homes, schools and hospitals for non-payment. It is extraordinary to think that legislators would allow provisions that let hospitals—care givers and providers of sanitation—be cut off for non-payment of bills. We allowed for compulsory metering in areas of scarcity, and a more muscular Ofwat, holding the water companies to account, has emerged in recent years.

[Dan Rogerson (North Cornwall) (LD)]

Will the hon. Lady give way?

[Mary Creagh]

I will make some progress, and then I will give way. Where specific issues required careful consideration, we brought in experts to advise us. We commissioned the Pitt report after the 2007 floods, the Cave report to look at competition and innovation, and the Walker report, which analysed water charging and looked explicitly at the problem of high bills in the south-west. My hon. Friend the Member for Ogmore (Huw Irranca-Davies) legislated for water companies to introduce social tariffs in the Flood and Water Management Act 2010. I shall now examine each of those issues in turn.

Some have questioned why the Tory and Lib Dem Government wanted to extend £40 million a year in financial assistance to a region dominated by Tories and Lib Dems. I will leave others to speculate about the politics, but it is clear that customers in the south-west face bills that are, on average, 43% higher than in other areas. That is why we examined the issue in government and did the groundwork on helping those 700,000 households. I pay tribute to colleagues in all parts of the House, and to our former colleague, Linda Gilroy, for their work on the issue.

[Mr Matthew Offord (Hendon) (Con)]

Perhaps the hon. Lady could tell the House the average cost of a water bill in the south-west pre-privatisation, and say how that compared with bills in other parts of the country.

[Mary Creagh]

I do not know what the costs were, but I can say that all water bills were considerably lower pre-privatisation. If the hon. Gentleman looks at graphs of what happened to bills post-privatisation, he will see that they went up exponentially, particularly in the early 1990s. They were kept down in ’91 and ’92, and then they went up exponentially across the board. From memory, they were around £250; that has gone up massively.

[Mr Offord]

How much was it in the south-west?

[Mary Creagh]

I do not have those figures. Does the hon. Gentleman have them? Perhaps he will share them with the House in the debate.

We accept the argument that the south-west requires additional help to keep water affordable, but stopping there misses the point. Ofwat, the independent regulator, estimates that a fifth of households are already spending more than 3% of their income on their water bills, yet Ministers have failed to bring forward any plans to tackle high bills, apart from in the south-west, which has the highest bills in the country. There, around 200,000 people spend more than 3% of their disposable income on water bills, but in the Thames region there are a staggering 1 million people in the same predicament, so surely we should be working towards extending help through a national affordability solution. Without one, the effect of the Government’s £50-a-year payment in the south-west will soon be wiped out by price rises; prices will rise by more than inflation in each of the next three years. The assistance is welcome, but decoupled from wider reform, it will provide little lasting help on water affordability. I hope that answers the point raised by the hon. Member for St Ives (Andrew George).

We know from Ofwat that the groups most vulnerable to water poverty are single parents, pensioners and jobseekers. When we were in government, we introduced WaterSure, a national affordability scheme paid for by a cross-subsidy from water customers, and paid only to metered households with three or more children or to people with certain medical conditions, but the limitations of the scheme are apparent, because not everyone in water poverty has three or more children, and many pensioners and jobseekers will not be eligible for the scheme.

There is a further problem of penetration of WaterSure. Only a third of eligible households access the scheme, so there is big issue relating to the role of the water companies in educating their customers about WaterSure and the role of places such as jobcentres in making sure that people have access and understand their entitlement.

[Mrs Spelman]

When the hon. Lady’s party was in power, what did it plan to do about the fact that two thirds of people eligible under WaterSure were not taking it up? Will she acknowledge, therefore, that with the baton being passed to the present Government, who continue to run the WaterSure policy but with more determination to enable more eligible households to take it up, we have supported that with the introduction of guidance on social tariffs to all companies?

[Mary Creagh]

The right hon. Lady might want to answer her own question. We commissioned the Walker report, which said that Ofwat should do a six-monthly league table of water companies showing the best and worst performers. She has had 18 months. Has she implemented the recommendations of the Walker report? She has made her own guidance to water companies on social tariffs voluntary, not mandatory, and I fail to see how allowing them to choose whether to implement them will help customers.

[Alison Seabeck]

Perhaps I can shed some light on what was going on under the previous Government. In the Plymouth south-west area, a detailed pilot was undertaken to identify people for whom water was unaffordable. That was to feed through into forward policy development. Anna Walker used that as part of the basis for some of the work that she did, so it is not true that we were not considering how to reach the people who needed help.

[Mary Creagh]

I thank my hon. Friend for that clarification. It is clear that much work was done in the south-west because it has the highest penetration of WaterSure customers and the highest rate of metered households, despite the fact that water is plentiful in the south-west, so it has nothing to do with scarcity. It has to do with people making a rational economic choice and understanding that if they move to metered bills, their costs will go down.

The Government should be using existing data about benefits to ensure that everyone who is eligible is on the WaterSure tariff. I hope we have described the heavy lifting that we did on that tariff. Last year the Government consulted on taking on the costs of WaterSure and absorbing them at a cost to the Exchequer of £10 million a year, as opposed to continuing the cross-subsidy. This idea was dropped from the water White Paper. What has happened to that notional £10 million? Why is it not being used to part-fund company social tariffs or a wider tariff to help the wider population?

Londoners will see their bills rise by £70 to £80 a year when the Thames tunnel is finished in, we hope, 2020. London has some of the poorest people in the country and a significant number living in water poverty. WaterSure will not help most of them. It is imperative that company social tariffs are introduced well before the Thames tunnel is completed to minimise the financial impact on Londoners, yet the Government’s draft guidance on company social tariffs shows that they are adopting a minimalist approach.

The Government have ruled out data sharing, which is key to helping water companies identify customers in water poverty and enabling them automatically to reduce their bill, which is obviously the least painful way, rather than allowing people to get into water debt and then taking action through the courts to pursue the money. They have ruled out an affordability scheme administered nationally, and they have ruled out an extension of WaterSure, which is the only national social tariff. Under DEFRA’s draft guidance, the design of social tariff schemes is left entirely to the water companies. Indeed, it is their choice whether to implement a scheme at all. This is the big society in action: a postcode lottery for millions of customers facing water poverty. We believe that it is untenable for the Government to pass a water financial assistance Bill without providing any assistance to the rest of the country. We will pursue amendments that would oblige water companies to deliver a social tariff scheme that meets clear and uniform criteria.

[Dan Rogerson]

On the question of how WaterSure will be funded and placing obligations on companies, if we have a funded social tariff in the south-west, it will have a disproportionate effect on the other bill payers who are paying into the pot. More work needs to be done before we start pushing regions down the route of having generous social tariffs, because we need to know what costs are being loaded on to other bill payers in the region.

[Mary Creagh]

That is an excellent point. That is why we were interested in the Government’s consultation, which talked about a national affordability scheme and offered the potential to absorb the costs of WaterSure. I hope that the Minister will offer some clarity on that in his closing speech, and I am sure that we can work together on that.

[Simon Hughes]

I do not mean to pre-empt what the hon. Lady might say on the other aspects of bills for water rate payers, but are she and her colleagues concerned—I put this point to the Secretary of State—that the value to water rate payers in London of the Thames tunnel, which is now priced a £4.1 billion, might not be what it was when the previous Government thought it was a good idea? There are big questions about whether it represents value for money for water rate payers and is the best solution in the light of the evidence.

[Mary Creagh]

We believe that the allocation of sums, guarantees, indemnities, or whatever form the financial assistance takes, should be done with full parliamentary oversight, and I will address that when I move on to clause 2.

We believe that the tariffs should be paid for by cracking down on bad debt, which the Secretary of State mentioned in her speech. Ofwat’s website states:

“More than five million households currently owe money on their water bills and over the last five years the amount owed has increased by more than 50%.”

In 2010, £1.6 billion was outstanding, three times the amount of bad debt for gas and electricity bills, despite the fact that water bills are much lower. As she said, the people who cannot or will not pay add an average of £15 a year to the bills of consumers who play by the rules. Bad debt arises in part because landlords are under no legal obligation to provide their tenants’ details to water companies. Rather than a voluntary approach, the Government should compel landlords to share their tenants’ details with water companies, and I know that the consultation is ongoing and is due to close fairly soon. If we reduce bad debt, we can reduce everyone’s bills and fund social tariffs that help those struggling to pay.

Clause 2 creates financial mechanisms and guarantees to support the construction of the Thames tunnel. Why do the Government avoid using the words “Thames tunnel”? Are they trying to avoid a proper discussion of the merits? Labour supports the project. Our Flood and Water Management Act 2010 introduced a “provision of infrastructure” regulation, creating the framework for the tendering, designation and building of such projects. However, costs have risen and time scales have stretched. The Government need to show leadership and make a clear commitment to the project and ensure that the right vehicle for managing and delivering it is put in place. The consultation process for the tunnel is vital for ensuring that sites are placed correctly and the environmental impact of the work on residents is minimised.

[Mr Slaughter]

I agree with what my hon. Friend says about the Thames tunnel, and to that extent I agree with the Secretary of State. However, had the Secretary of State not chuntered through her speech in such a cursory manner on an issue that is very important to London Members, I could have told her that the virulently anti-tunnel comments that I quoted were not mine, but those of my neighbouring Tory MP, the hon. Member for Chelsea and Fulham (Greg Hands), who happens to be a Government Whip. This is just another example of members of the Government saying one thing in the House before going back to their constituencies and saying the exact opposite.

[Mary Creagh]

That used to be the province of the Liberal Democrats, but perhaps saying two different things, depending on whether one is at the top or the bottom of the hill, in the House or in one’s constituency, is contagious. We should all take the necessary precautions, but such indiscipline would never have been allowed when I was a Government assistant Whip.

There remain, however, a number of hurdles to clear, not least that of the Communities and Local Government Secretary, who has an effective veto over the tunnel, so DEFRA support alone will be insufficient. We see the tunnel, in addition to its environmental benefit, as an opportunity to create up to 4,000 direct jobs for Londoners, to expand apprenticeships and to regenerate London. With the provision of financial assistance, we expect not just those apprenticeships but higher-level training to be a non-negotiable part of the deal.

In an infrastructure project of this scale, complexity and duration, we should be setting targets not just for apprentices but for the number of young people who will achieve masters-level civil engineering qualifications over the project’s lifetime, as well as encouraging local and national procurement to secure growth and the economic recovery in London.

No impact assessment has been produced alongside the Bill. The rather short explanatory memorandum states that this is because the Bill is associated with public expenditure, but clearly there will be burdens on water companies when administering any schemes under clauses 1 and 2, so what conditions will South West Water have to fulfil? Presumably, there will be an audit process, so what will the company’s administrative costs be, or has it agreed to waive them?

Of more concern, however, is the fact that there is no provision anywhere in the Bill to require potentially large sums of taxpayers’ money to be spent transparently and accountably. Clauses 1 and 2 state that undefined “terms and conditions” can be attached to the use of public money, but that falls well short of making clear exactly what will happen, and we believe that certain safeguards should be specified in the Bill.

I had a little look at the Water Industry Act 1991 this morning, and section 152 states that the Government can pay out money to water firms only

“in the interests of national security.”

So it is clear that infrastructure projects of the scale and cost of the one before us were simply not envisaged at the time of privatisation.

Today’s Bill shows those limitations, and section 154 of the 1991 Act also states very clearly that if any financial assistance or guarantee is given,

“the Secretary of State shall lay a statement of the guarantee before each House of Parliament”

and

“as soon as possible after the end of each financial year…lay before each House of Parliament a statement relating to that sum.”

The right hon. Lady says that the subsidy to South West Water will continue until the end of the next comprehensive spending review period, but that again is not in the Bill or in the explanatory memorandum, and we want to see those things guaranteed.

[Mr Adrian Sanders (Torbay) (LD)]

Will the hon. Lady commit her party, should it ever return to power, to continue the £50 discount each year?

[Mary Creagh]

We have to look at the cost of water bills in the round—the average, unmetered cost of water bills. We want to bring them down throughout the country, but we are not sure what sort of economy we will inherit, so I shall not make any election promises today.

We will seek to amend the Bill in Committee so that the Government are required to seek further parliamentary approval for such payments through the laying of a statutory instrument. That power should be triggered after a sober assessment of the facts, and after the Secretary of State has made her case to the House.

The explanatory memorandum is silent on state aid. Is the Bill compatible with EU state aid rules? Has the Environment Secretary discussed the matter with the European Commission? [Interruption.] Okay. So water customers do not run any risk of having to repay the assistance at a later date. That is a relief.

In conclusion, despite the right hon. Lady’s warm words, this “financial assistance” Bill is poorly named. It extends no financial assistance to anyone except those living in the south-west. It is an orphan Bill, conceived in haste, which is silent on the wider affordability issues, and it ignores the cost-of-living crisis for households hit by this Government’s assault on the squeezed middle.

We recognise that privatised water has brought benefits, with £90 billion invested in our infrastructure at no direct cost to the taxpayer, and we believe that water should remain a properly regulated private industry. Today, however, is a day for thinking about the water customer. Since privatisation, customers’ bills have increased year on year, wherever they live. Many have found themselves adjusting to metered water, and by 2015 there will for the first time be more metered customers than unmetered ones. Climate change will mean more regions being under greater water stress, with consequences for customers’ water use. That is why it is down to us to hammer out a new consensus on water affordability. I ask Ministers to work with us to amend the Bill and help hard-pressed families.

16:45

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

I congratulate the Secretary of State and the Department on bringing forward what some might call a small but perfectly formed Bill. The House will be at a loss to understand from what the shadow Secretary of State said whether the Labour party is in favour of the Bill, the Thames tunnel super-sewer structure and the more affordable water bills that the Bill proposes.

I would have welcomed the opportunity to put my points to the Secretary of State, but I see that she has been called away urgently. She talked about the 21 days available for a debate on the national waste water policy. I am delighted that the relevant documents have been selected for this debate, which allows me to draw attention to the conclusions in the Environment, Food and Rural Affairs Committee’s fourth report, on the draft national policy statement on waste water. We stated:

“Given the importance of this NPS in delivering waste water and water quality objectives, we recommend that it be subject to a debate on the floor of the House of Commons on an amendable motion prior to desgination.”

When the Under-Secretary of State, my hon. Friend the Member for Newbury (Richard Benyon), winds up the debate either today or on some future date, will he confirm whether the Government intend to table an amendable motion for debate?

[Simon Hughes]

The Minister knows that some of us have been asking for that process to be followed, and we look forward to such a motion coming before the House. I therefore endorse the hon. Lady’s request, which I think will have widespread support from all parties.

[Miss McIntosh]

I am sure the Secretary of State, wherever she is, and my hon. Friend the Minister will have heard that point.

[Mr Love]

I, too, express my interest in having a debate on the national policy statement, which is very important. The hon. Lady mentioned the need for an amendable motion, but from speaking to the Minister’s office and the Department’s parliamentary office, I understand that it will be non-amendable. An amendable one would be greatly preferable.

[Miss McIntosh]

I am grateful to the hon. Gentleman, and I commend his work in bringing his constituents’ concerns to the Select Committee and continuing to represent them now. Those of us who work in London during the week all wish to see the super-sewer in place, but we understand the length of time that it will take. There has not been an engineering project of that nature since, I think, 1858, and the Committee has no doubt about the impact that the sewer’s construction will have on his constituents and others.

The Committee’s wish, as recorded in our report, is for an amendable motion, and I am delighted that there is support for that. It may be within the gift not of the Minister but of the party managers, and looking further along the Treasury Bench I see how well represented they are today. I am sure that our point will be taken back to the highest possible authorities. I welcome, in passing, the Leader of the House’s commitment to allow more time for this debate.

At the conclusion of her speech, the Secretary of State made some remarks—on which, unfortunately, she would not take any interventions—about the amendment relating to planning, which will be of great interest to the Select Committee and, I am sure, to right hon. and hon. Members who live along the path of the proposed super-sewer. I hope that my hon. Friend the Minister will be able to clarify those remarks.

On the waste water national policy statement, the Committee is pleased that the Government’s response to our report set out the areas where DEFRA has accepted our recommendations and consequently amended the NPS—for example, in line with our recommendation that the inclusion of a project in Ofwat’s asset management plan be removed as a criterion of proof of the need for the project.

[Neil Parish]

It is absolutely right that the planning process be taken into consideration. In my view, the Thames tunnel must go ahead, because when I was returning to Battersea from this House late one evening, cycling along the Embankment, the tide was low, and I could smell the sewage being pumped out into the Thames. [Interruption.] Hon. Members may turn their noses up, but I have smelt it, and we must do something about it.

[Miss McIntosh]

Given what the hon. Member for Edmonton (Mr Love) said as well, I do not think that the House is in any doubt about the need for the Thames tunnel super-sewer, but we should not underestimate how long the project will take and its cost. Concerns about rising costs, to which hon. Members alluded, were expressed in the evidence to the Committee.

[Mary Creagh]

The hon. Lady said that she was not clear whether we support the Bill. I want to put it on the record that I said at several points that we do support it. As for whether we would continue with it, we would have no plans to repeal it in government if we were elected in 2015.

[Miss McIntosh]

I am sure that the whole House will welcome the hon. Lady’s helpful clarification, because her concluding remarks were a little ambivalent.

Returning to DEFRA’s acceptance of some of our conclusions, some of the site-specific material has been moved to an annex that is part of the document that is not to be relied on by the decision maker in reaching a decision on a project. That meets, to some extent, our criticism about the inclusion of weak material on the Thames tunnel, as well as on Deephams sewage treatment works. Perhaps my hon. Friend the Minister will also give us a status report on those treatment works.

[David Mowat (Warrington South) (Con)]

In the Select Committee’s consideration of the £50 reduction in the south-west, did it look at water poverty more generally across the United Kingdom, including whether other regions have more consumers in water poverty than the south-west, so that it might have been fairer for the money to have been allocated in a different way?

[Miss McIntosh]

In our report on the Thames tunnel, we did not consider aspects of affordability, which are rightly covered in an earlier report to which I will turn shortly.

I am delighted that DEFRA accepts that the remaining site-specific sections have been improved and that the Government have, as recommended by the Committee, moved to change the definitions in the Planning Act 2008 to include sewerage transfer and storage projects such as the Thames tunnel in the process for deciding applications for nationally significant infrastructure projects. The Committee welcomes that. I hope that we have discharged our duties comprehensively, given that this was one of our first opportunities to do so under the Planning Act.

[Simon Hughes]

I pay tribute to the hon. Lady and her colleagues on the Select Committee. May I make an unashamed, but well-linked plug? Next Tuesday, 6 March, at 7 o’clock in Committee Room 11, I will be hosting a meeting to discuss the state of the issues that relate to the Thames tunnel. I hope that she or one of her colleagues will be able to come and listen to what is said.

[Miss McIntosh]

I am most grateful. If it does not clash with our Committee meeting, all of us who are available will endeavour to be there.

I echo the comments of the hon. Member for Wakefield (Mary Creagh) about there not being an impact assessment. The explanatory notes state that because the Bill is concerned solely with public expenditure, no impact assessment has been undertaken. Clearly, it is not just about public expenditure; a substantial amount of money is being requested by the water companies, through the Government, to give a £50 reduction. The Minister will be aware that some of those who live in and represent the south-west are concerned that increases in inflation will wipe out the £50 reduction.

Today, the Select Committee took evidence from the Minister of State, Cabinet Office, who is responsible for providing policy advice. He told us that an impact assessment is meant to look at the environmental impact of a project. I am not suggesting that the Bill is defective because it does not have an impact assessment, but I would like to record my personal disappointment that there is no impact assessment. It would have allowed the House to perform proper scrutiny on Second Reading and in subsequent parliamentary stages. It should have been incumbent on the Government to produce an impact assessment on the implications for the water companies of the reduction of water bills in the south-west of England and on the impact that the Bill will have on Thames Water.

The Select Committee produced an excellent first report of this Parliament, if I may describe it as such, entitled, “Future flood and water management legislation”. It is right at this moment to pay tribute to the work of the previous Government. There was all-party support for the Pitt report and its recommendations. There was also all-party support for, and obviously positive scrutiny of, the Flood and Water Management Act 2010. The fact that we are having to wait for the draft water Bill, which will cover all the other aspects, is a source of concern. We are approaching apace 30 June 2013, when the Association of British Insurers will look to replace its statement of principles on the provision of flood insurance. There will also be a host of other measures to consider.

Perhaps in responding, the Minister could explain what he is doing about insurance. I want to record my personal resistance to any state funding of insurance. There are hard cases, which many of us will have in our own constituencies, where houses remain at a substantial or high risk of flooding. I can think of examples such as Thirsk, Pickering, Malton in the past, and Sinnington at the moment. There are therefore insurance aspects that need to be considered. However, as soon as a Government introduce an element of state funding or state insurance, it leads others who are on a low or fixed income to argue that they have concerns about their ability to pay insurance. I know from the visits I made as shadow floods Minister to parts of the country such as Cumbria that there is real concern, particularly when properties are rented, about whether those on low incomes can afford even contents insurance.

[Stephen Gilbert]

With some 200,000 homes in the country at risk of flooding, what mechanism would my hon. Friend propose for ensuring that the people affected can access affordable insurance?

[Miss McIntosh]

Speaking in an entirely personal capacity, and looking at sustainable development and flood prevention, the one thing we could do today is to stop building on floodplains. Perhaps the House would like to unite around that and an amendment could be tabled to a future water Bill.

There are things that we can do now. There has been lots in the papers recently about water stress and scarcity, and drought. That will inevitably have an impact on homes. There is a risk of subsidence and there are reports of roads cracking. That obviously has insurance implications for householders and business properties, but also for highways. Again in a personal capacity, I challenge the Minister on how we will pay in those mostly rural areas for roads that are cracking now because of drought rather than the flood damage that occurred in the previous two years.

I welcome the fact that our report discusses the new responsibilities of the upper-tier authorities for flood and water management, and that funds are available. The Government response talks about providing the funding to lead local flood authorities through direct grants and says that that is expected to fund fully their new responsibilities under the Act. However, my local authority tells me that those moneys are not ring-fenced. If that is the case, and we are reducing, because of austerity, the money for the core tasks of the upper-tier authorities—county and unitary—that will pose real difficulty for them, and I put that to the Minister.

My hon. Friend the Member for Tiverton and Honiton (Neil Parish) mentioned affordability. The Minister and others have been challenged about that in many forums, not only the Select Committee, but all-party groups. It is right that the Bill focuses on affordability for the south-west region. [Hon. Members: “Hear, hear.”] I have no connection with the south-west, other than hoping that I have many friends on both sides of the House who represent the region extremely ably. However, there is a particular issue in that the population is small and there is a heavy emphasis on fixed and lower incomes. As I said, the application of the EU drinking water directive, and especially the bathing water directive, posed enormous problems for the south-west.

I therefore welcome the fact that the Bill addresses affordability. I hope that when the House has ample time—I am sorry if it will not be this year; we keep hearing that something will happen in the coming weeks or the coming months—and the draft Bill is before us, we can address some of the other affordability problems and also a social tariff.

[David Mowat]

I have listened to the points about the south-west, and I, too, have no problem with the region being helped through the Bill. However, there is an issue about water poverty and in which regions it is greatest. There is a case for helping them, notwithstanding the specific problems that exist in the south-west. I believe that there is more water poverty in the north-west than the south-west, and there is therefore a case for doing something there at the same time.

[Miss McIntosh]

I do not want to rehearse the arguments I have just made, but every hon. Member could point to examples of water poverty. I am sure all of us have constituents who write to us or come to our surgeries to talk about the affordability of their bills. Dealing with that is the role of Ofwat. I should like to record my thanks to the chief executive, and more especially the chairman, of Ofwat for their work in that regard. They have a real role to play.

One other piece of unfinished business that I expect to be included in the draft water Bill—this was raised in the Committee’s scrutiny of future flood and water management legislation and the Government’s response—is the Gray review of regulatory aspects. I hope my hon. Friend the Minister confirms that that will be covered by the draft Bill, along with the Cave review, which is on aspects of competition—specifically, the level of competition that there will be—and the Walker review. In times of water stress and scarcity, it is important that we encourage people to use water sensibly and, as Ofwat and Anna Walker have frequently said, that we encourage households and businesses not to heat their water beyond the supply that they need, because doing so leads to unsustainable use.

Another issue pertains specifically to the Thames tunnel and more widely. The Committee is persuaded that the Thames tunnel is the best way to proceed for the purposes intended, because sustainable drainage systems were excluded. However, we just touched on how to prevent floods, and I hope the Minister can today report on progress on establishing sustainable drainage systems throughout England and Wales. Will he renew the commitment, or give us a once-and-for-all-time commitment, that the Government will end the automatic right to connect, which goes to the heart of water stress and scarcity? In Filey in my area, 300 houses will be built on a functional floodplain against the council’s advice. The field takes surface water surplus, but there is nowhere to displace it to. Yorkshire Water is trying hard to accommodate proper capacity and connection for those 300 extra homes without making others short of supply, but the area is not flush with water, if you will pardon the expression, Mr Deputy Speaker.

I welcome the debate and the opportunity to draw the Committee’s wider concerns to the House and the Minister. On the two specific points to which my right hon. Friend the Secretary of State referred, I hope the Minister will confirm that there will be a debate on an amendable motion on the Floor of the House on the national policy statement on waste, and clarify what planning issue the Government will bring before the House.

17:04

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

It is a pleasure to follow the hon. Member for Thirsk and Malton (Miss McIntosh), who as Chair of the Environment, Food and Rural Affairs Committee obviously speaks with great authority on such matters. As one of her vice-chairs on the all-party parliamentary group on local environmental quality, I am used to following her—I have certainly done so for the past couple of years. Perhaps in future I will get ahead of her, but that is something to hope for.

I shall not speak for long. I want to raise two issues, the first of which is the Thames tideway tunnel and how it will impact on my constituency. I am grateful to the Minister who has responsibility for the natural environment and fisheries for the letter he sent to London MPs yesterday to explain how the Bill will help. The second issue relates to water for fire sprinkler systems, which we have discussed before. It could be referred to in the Water Industry Act 1991, which the Bill amends. This might be a missed opportunity to amend the Act further to deal with that issue.

I shall deal with the constituency matter first. As a former Minister in the Department for Environment, Food and Rural Affairs and a former Minister for London, I am familiar with the challenges facing the Government in dealing with the problem of massive sewage discharges into the Thames. Since the formation of the coalition Government, all the political parties, as well as the Select Committee, have considered the matter and concluded that something needs to be done.

In my constituency, Thames Water’s original plans would have taken nearly all of King Edward memorial park, which, given the population density, is one of the very few green open spaces in Tower Hamlets in east London. Not surprisingly, the plans caused considerable outrage—and that hostility continues today—and it led to the formation of the Save King Edward Memorial Park campaign. It comprises local residents, freeholders, leaseholders, council and social tenants, and residents from the new expensive blocks on the river as well as from the established estates and nearby. All were determined to protect the park from being destroyed by Thames Water.

I pay tribute not only to the campaign officers but to all residents, local councillors and officers of Tower Hamlets council, as well as to the local papers, the East London Advertiser and The Wharf, for the campaign to save the park. The campaign officers are Carl Dunsire, Emma Dunsire, Robin Milward, Toni Davey, Mahbub Mamun Alam, Raihan Islam and Mark Baynes. They have all done an excellent job bringing the community together and lobbying Thames Water and myself—and I have been in discussions with DEFRA, so the campaign has clearly made an impact. Local celebrities, including Sir Ian McKellen, Lee Hurst and Helen Mirren—to name but a few—have also registered their support.

I must also pay tribute and give credit to Thames Water. That will not go down well in the constituency because it is still regarded pretty much as the enemy, but to its credit, it has engaged with us, understood and several times changed its plans for King Edward memorial park. Mr Phil Stride and his team deserve credit for that. Some months ago, Thames Water also engaged as a consultant our former colleague, Mr Martin Salter, the former Reading MP. That has helped the consultation process with local residents. Also, I recently chaired a constituency public meeting to which more than 100 people turned up.

The Save KEMP campaign, which, as well as local residents, comprises people of professional standing—for example, Carl Dunsire is an engineer—identified an alternative brownfield site on Heckford street. That proposal was put to Thames Water a considerable time ago, and since then the company has floated it as a secondary option. Having said that, the company’s preferred option remains to build out on to the river from the foreshore of King Edward memorial park, rather than in the park.

John Biggs, the Greater London assembly member for east London, and I wrote to Thames Water this week seeking the latest consideration of the two options and the costings. Heckford might be slightly more expensive but given the disruption to the local community, the support for the project and everything else, if the costs were equitable, the local community would be strongly in favour of Heckford.

[Frank Dobson]

Will my hon. Friend bear it in mind, when talking about the extra expense, that Thames Water, over the past six or seven years, has made profits totalling £1 billion, which have been paid out to its currently Australian shareholders and before that its German shareholders?

[Jim Fitzpatrick]

My right hon. Friend makes an important point that will be a matter for scrutiny in Committee. I expect it to be raised in Committee in due course.

East London assembly member John Biggs and I are seeking Thames Water’s latest considerations, and obviously the Bill would affect the building of the Thames tideway tunnel. The local community is resolute on this issue. My only concern about the choice between the Heckford street site and the Thames foreshore site is that building the interceptor to the sewer on the foreshore would mean much more traffic by water, on the Thames. If Heckford street is chosen, there will be several thousand heavy goods vehicles on the streets of Tower Hamlets and further east for several years. That would not be a welcome dimension, but these things are in the balance, and obviously we are pressing for the best possible outcome for the local community.

The second issue that I want briefly to mention is fire sprinklers. I pay tribute to the Minister, who is always courteous and efficient. I am grateful for the meeting that he afforded me and the officers of the all-party group on fire safety and rescue to discuss the matter only four to five weeks ago. There is a myth perpetrated by the media—mostly in adverts on TV and in the cinema—that when a fire in a building activates the sprinkler system, every sprinkler right across the building is activated and the whole place is doused in water and damaged. The reality, of course, is that the only sprinkler activated is the sprinkler head immediately above the seat of the fire, as the heat generated by the fire melts the soldered link, causing the blockage to fall away and allowing the water to act as an extinguishing agent. The problem with the myth is that people are frightened of sprinklers, because they think that if they install them in their building and they are inadvertently activated—we know that smoke detectors can go off because of burning toast—their home would be damaged. However, that is not the case, and the cost to society of not installing sprinkler systems in buildings includes the hundreds of millions of pounds lost to schools damaged by fire every year—a cost that is often passed on to local council tax payers, as most local authorities self-insure.

[Mr Slaughter]

My hon. Friend is making a good point about a matter that was brought home to me recently. Hon. Members will remember the serious fire that closed Wood lane, opposite the BBC in Shepherd’s Bush—perhaps that is why it got so much publicity. The consequence of such events in major buildings with no sprinkler systems is not just the risk of loss of life, but often the permanent loss of jobs where buildings cannot reopen and the huge damage to industrial and public buildings.

[Jim Fitzpatrick]

My hon. Friend anticipates the point that I am coming to, immediately after I make the point that when a school burns down, the problem is not just the damaged building, but the disruption to the education of the students at that educational establishment and the impact on parents, who have to take their kids to schools further away, with disruption to friendships and the rest of it. As for the point that he correctly makes, when there is damage to an industrial or commercial premises, there is not only the damage to the building, but the cost of insurance for the company, a loss of production and, more often than not, unemployment costs to the individuals who work on those premises, because it takes months and sometimes longer to rebuild or replace, if at all possible.

Most critical of all is the loss of life. Fire deaths affect the most vulnerable in society. The majority of people who die in fires are the most vulnerable—the old, the sick, the young, people with social difficulties or people with addiction problems. The most vulnerable are the ones who predominantly die in fires. Tragically, we have recently seen a number of major multiple fatalities across the country, most recently in London—in what was formerly Brent East—where a mother and five children died in a fire. However, the experience of local authorities where fire sprinklers are the norm is entirely different. There is a district in Arizona called Scottsdale—one of Phoenix’s five districts—that is the fire sprinkler capital of the world, as I am sure the House will be pleased to learn. Scottsdale has had a city ordinance for 30 years that says that if someone builds something, they have to install a sprinkler system. One person has died in a fire in Scottsdale in 30 years. Scottsdale has 250,000 people. They smoke, they cook, they burn candles and they probably have heating too, despite the desert climate. Sprinklers save lives. That is now becoming the UK experience. More local authorities, more registered social landlords and more developers are recognising the benefits of sprinkler systems.

There has been extensive correspondence between the all-party group and DEFRA on the Water Industry Act 1991. If I may, I shall quote from a letter from former chief fire officer Ronnie King, who is a highly regarded officer in the fire service, as well as being the active administrative secretary of the all-party parliamentary group on fire safety and rescue and the chair of the water liaison group. In reference to the Act, which the Bill amends, he says:

“To this end I outline in this letter a proposed change to section 57 on the provision of water for firefighting. Section 57 covers the duty to provide water for firefighting and currently this duty is limited solely to providing water from designated fire hydrants. Increasingly householders are seeing the benefit of installing sprinkler systems, which will lead to significant reductions in fire deaths and injuries if they could be more widely used. Under the current legislation such supplies are classified as non-domestic supplies and are subject to agreement of terms and conditions on a case by case basis. An amendment of section 57 to include as firefighting water that taken from service pipes connected to a sprinkler system will clarify the status of connections to the water system for automatic fire sprinkler purposes. The current ambiguity is a barrier to the proliferation of sprinkler systems.”

I acknowledge that the Minister has asked his officials to examine that matter and to report on it. If nothing can be done in this Bill, we would be grateful if it could be considered for the water Bill that is coming along not far behind it. I also want to acknowledge that the vast majority of the water companies already do the right thing in co-operating, without the legislative clarity that the proposed amendment would provide. An amendment to the Water Industry Act 1991 in the Bill would be welcomed by the fire service and the fire industry as another major step towards a safer society, but I recognise that that might not be possible yet. School fires are increasing, and I am told that 10% of schools are affected by vandalism involving fires each year. More fires are occurring during school hours, and it is only a matter of time before there is a major tragedy. Most fire legislation is reactive and retrospective, drafted on the back of a major loss of life. The amendment that I have suggested could take us forward significantly, and protect our children in the future.

In conclusion—and as a complete aside—we really need to hold a fire evacuation drill in this place at some point, because we need to give leadership to the rest of the country on these issues. I am grateful for your indulgence, Mr Deputy Speaker.

17:22

[Andrew George (St Ives) (LD)]

It is always a great pleasure to follow the hon. Member for Poplar and Limehouse (Jim Fitzpatrick). As a former fireman, he demonstrates his passion for and knowledge of that subject. The last two contributions have shown how wide-ranging this debate can be—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I have been thanked for my indulgence, but let us just say that a conversation went on about how relevant some of the contributions were. Please do not test my patience too much.

[Andrew George]

Thank you, Mr Deputy Speaker. I was in no way implying any criticism of your great office, or of the way in which you apply the rules to our debates. I have carefully cut out of my speech all the parts referring to swimming and surfing in the waters of the south-west, and any other matters that you might consider a further indulgence.

As a Member of Parliament from the south-west, it is my primary objective to address the two issues that represent the primary purpose of this three-clause Bill before us today. Having said that, the hon. Member for Poplar and Limehouse spoke about the associated issue of fire sprinklers, which I hope will be dealt with elsewhere. Similarly, I know that the hon. Member for Thirsk and Malton (Miss McIntosh) never misses the opportunity to address the important matter of flood defences in her constituency.

I come to this debate to congratulate the Government warmly on what they are achieving through this measure, particularly by the clause that is intended, although not by name, to benefit or at least address an unfairness to the water bill payers of South West Water that has gone on for 22 years. The unfairness has been identified across all parties and by the Anna Walker review, which was commissioned by the previous Government in August 2008 and concluded in December 2009—just before the last general election. It highlighted the need to address this significant and long-standing unfairness.

I welcomed the comments of the shadow Secretary of State, the hon. Member for Wakefield (Mary Creagh). She clearly enters into debates in a full-blooded manner in a debating Chamber that often becomes extremely tribal. At certain points in the debate, I was not sure whether Labour Members were going to be encouraged to vote against the Bill. Following my intervention on the hon. Lady, however, she made it clear that she and her hon. Friends would support the Bill. That will resonate through the House, following what is, after all, a cross-party consensus on this issue. She raised legitimate questions about problems of affordability—across the country generally, but particularly for the customers of South West Water—that need to be looked at further. I hope that my hon. Friend the Under-Secretary will deal with some of those issues in his response. I hope, too, that legislation will be forthcoming soon after the next Queen’s Speech so that we can further meet concerns about affordability issues.

Speaking about how South West Water operates itself, I have in the past called it an ethics-free and risk-free money extortion system. I know that is rather strong language; it goes back primarily to the days when Bill Fraser was the chief executive of South West Water. His management of the business in a rather belligerent and Thatcherite style has largely been remedied by both his successors, Bob Baty and Chris Loughlin. With Chris Loughlin and his board of directors addressing the legacy, it might no longer be appropriate to describe the company as ethics-free. Chris Loughlin has managed the company well and genuinely wants to address the concerns about water affordability. I take my hat off to him and his board members for their efforts.

That said, one thing we cannot escape from is the fact that all water companies—certainly including South West Water—have a monopoly within their areas. There is effectively no competition at all. Significant questions have been raised about the effectiveness of Ofwat as a regulator. It is supposed to establish the “K” factor every few years to restrain the levering up of water bills, but water companies are still able almost to predict the end-of-year dividends at the beginning of each financial year.

[Sheryll Murray]

Does my hon. Friend agree that about 20,000 households in the south-west could reduce their bills by about £350 to £400 if they took up the option of water meters, and that many of those households include the elderly and the most vulnerable?

[Andrew George]

I absolutely agree that there are still many customers of South West Water who could enjoy lower bills as a result of transferring to water meters. Ultimately, however, the unit charges are bound to have to increase once all households switch to water meters. Unmetered households are currently charged significantly more than metered households, so when companies plan for the future it will simply not be possible for them to maintain the same level of profitability and dividend to their shareholders if they continue to charge at the current rate.

The point that my hon. Friend makes is extremely valid, but I must also say that I have taken up issues with South West Water, as I know other hon. Members have done. One such issue relates to customers living in sheltered accommodation or in houses in multiple occupation where they have single unmetered bills but do not have the benefit of being able to convert their property on to a meter because of the circumstances in which they live. In those circumstances South West Water has to be asked for what is known as an “assessed charge”, which often results in those people—inevitably, they are vulnerable households—having their water bill halved or significantly reduced to below that level. So there is further work to do to address the problems of water affordability for those living in households that cannot convert from unmetered to metered properties. I have asked South West Water if they would, as a default, automatically offer the assessed charge to those living in such accommodation, rather than their having to trigger it by requesting it. That is an important point.

[Miss McIntosh]

May I return to the hon. Gentleman’s comment about almost being able to predict the dividend at the beginning of the year? Water companies do not rely solely on water bills for their income and investment. Given that they are now viewed as a fairly reliable investment for pension and insurance funds, is it not a good thing that their dividend is fairly stable?

[Andrew George]

I certainly would not wish to denigrate or diminish in any way the importance of successful British companies. Where a company provides a good basis for investors, I celebrate that, along with others. I am simply commenting on the reality of the situation of water companies in relation to all other private companies, which ply their trade in a much more risky environment. That is simply a matter of fact, not of debate.

[Simon Hughes]

There is a link between the experience of colleagues and constituents in the south-west and that of people in the Thames area, because Kemble used to own South West Water and it now owns Thames Water. When it owned South West Water the bills were significantly high and there were a lot of complaints. People are fearful that some of the practices it used then, which included paying out dividends greater than its income—that seems to be not about saving the capital—might be being applied at the moment.

[Andrew George]

I am grateful to my right hon. Friend for that intervention.

On the question of the high water bills in the south-west, let me put on record the fact that in 2010-11, bills for South West Water customers were, on average, £486, which is certainly higher than the average bills in the rest of the country, which were £339. Unmetered customers had much higher bills, of course, at a rate of £721, whereas bills for metered customers in the south-west were £394 on average. As I and others have said, that was the focus of the Anna Walker inquiry.

[Mr Offord]

Does the hon. Gentleman agree that this is about not only the cost of water bills in the south-west but the fact that the average weekly wage is about 30% lower than that in parts of the south-east and London?

[Andrew George]

My hon. Friend is absolutely right. Cornwall has been at the bottom of the earnings league table pretty much since records began. It has significantly higher water bills than anywhere else in the country, high levels of unemployment in some parts, as well as dependence on benefit, pensioner households and so on, and if we add to that the low average incomes across the households in the area, it is inevitable that in many households people will pay more than 3% of their income to meet their water bills.

As my right hon. Friend the Secretary of State said earlier, the problem is partly caused by a lower level of infrastructure at the time of privatisation in the early ’90s and by the fact that the south-west has been significantly more burdened by the costs of the bathing water directive than any other region in the country. I have drawn the same parallel as others. The bathing waters around the Cornish and south-west coast are a national asset yet only 3% of the population must pay for the cost of cleaning up. The cost is very high, because many outfalls must all be dealt with very expensively, which is the primary cause of the excessive bills across the south-west. The general populace enjoy other national assets, such as the museums and galleries of London, and it is the general taxpayer who pays for them. We do not ask just London taxpayers to pay for the National Gallery, the British Museum and the other museums—we, as a country, contribute and that is an important parallel.

There has been a long-standing campaign and the Anna Walker review was rather belated but at least welcome and took us a long way down that road. I congratulate the previous Government for that and pay tribute, as other hon. Members have, to Linda Gilroy, a former Member of this House who contributed a great deal towards advancing the case for fairness in the billing of water customers, particularly in the south-west. I also congratulate the hon. Member for Plymouth, Moor View (Alison Seabeck) for calling a debate on 14 June 2010, which can be found at column 710 of Hansard, and my hon. Friend the Member for Torbay (Mr Sanders) for doing so on 9 March 2011.

There are issues that need to be addressed. To sum up—I am aware that I have taken as much time as the previous speakers—I hope the Minister will address my questions. Clause 1(3) concerns the discretion of the Secretary of State in determining which customers within any particular water company area might benefit from the intervention of the Secretary of State to vary the bills or make a contribution, and my question, which relates back to the announcement of the payment of £50 per household in last year’s autumn statement, concerns how a household will be defined.

In my area, a large number of households run bed-and-breakfast facilities, guest houses and other businesses, and they are businesses for the purposes of South West Water’s billing structure. However, there are also many wealthy second home owners who have water meters and pay virtually nothing towards the very high costs of getting water to their properties, which are often very remote—on cliffs and so on—and taking away their sewage. Often, they let their properties at very high prices and make a lot of money, but they are not considered to be businesses and so they will get the benefit of the reduction of £50 per household. That clear and evident unfairness is one of many, but I shall not bore the House with a raft of examples regarding this issue of how households should be defined. If we are addressing issues of vulnerability and affordability amongst water rate payers, we need to be very careful how we define households.

The £50 per household reduction is a rather blunt instrument. Yes, it is efficient and it means that the administrative costs will, one hopes, be less than would have been the case with a more elegant and sophisticated measure for targeting vulnerable households. However, because of the problems with adopting a WaterSure system across the south-west and because of the evident unwillingness of water rate payers in the south-west to make any further contribution to a scheme that would benefit vulnerable households, it is unlikely that those households will be able to benefit from any application of a regionally based WaterSure system. I therefore urge my hon. Friend the Minister to look again at whether we can resurrect any form of a national WaterSure system. Clearly, we will go back to South West Water and talk to it again about how it might address the issue of particularly vulnerable households.

A number of matters need to be addressed and I am sorry that I have not addressed those concerning London, but I know they will be addressed by many other people. I look forward to hearing my hon. Friend’s reply and his responses to the questions that have been raised.

17:42

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

May I start by apologising to the House? I have an urgent constituency engagement and will have to leave before we conclude the debate.

Let me say at the outset that my constituents and I support the construction of the Thames tunnel. There is no doubt that we cannot continue to discharge raw sewage into the Thames. Much as I would like to debate many of the wider issues, I am essentially here to make a statement on behalf of my constituents, because Thames Water has a proposal to intercept the Deptford storm relief sewer that runs through Deptford discharging north into the Thames.

The site selected by Thames Water is a triangle of green, open space—the Crossfield amenity green, which is bounded by Coffey street, Crossfield street and Deptford Church street. For those who do not know it, Deptford Church street is a major dual carriageway intersecting the Crossfield residential housing estate. Thames Water proposes at least four years’ work on the site, the permanent legacy of which will be four main ventilation columns at least 6 metres high, with associated control units and maintenance requirements. During the phase one consultation, the preferred site was Borthwick wharf foreshore, but for the phase two consultation Deptford Church street is the preferred site and the Borthwick wharf foreshore is put forward, together with the Sue Godfrey nature reserve in Bronze street, as an alternative.

We in Deptford cannot understand Thames Water’s change of plans, which will have a great impact on an exceptional area of my constituency. The phase two consultation site information paper identifies three reasons why Deptford Church street is now preferred. The reasons given are, first, that Deptford Church street has relatively good access compared to Borthwick wharf foreshore; secondly, that using Deptford Church street would avoid work to the Thames foreshore; and, thirdly that the potential effects on residents, visitors and business amenity would be less than with the alternative site.

On access, no traffic impact assessment is provided to enable comparison between the two sites, so how can we judge? On avoiding work on the foreshore, there is a particular paradox. The majority of the site selection assessments favour sites in close proximity to the river, with jetty or wharf facilities. Clearly, the Borthwick wharf foreshore would have a great advantage over Deptford High street, in that material and spoil could be delivered and removed using the River Thames. Furthermore, the alternative site is located at the point at which the combined sewer overflows are discharged into the River Thames. Intercepting the sewer at that point would capture the contents of the entire length of the sewer. Intercepting it further inland, at Deptford Church street, would leave a length of the sewer uncaptured.

Thames Water has provided no data on the number of people, households and businesses affected at both sites, so it is impossible to compare the sites. In addition, the impact on St Joseph’s Catholic primary school on Deptford Church street is direct and severe when compared to any comparable community impact resulting from the use of the Borthwick wharf foreshore. A number of businesses will be directly affected by the use of Deptford Church street, while Borthwick wharf and the adjacent Payne’s wharf are both vacant.

Let me turn to the issues specific to the Deptford site chosen by Thames Water. There are two primary schools close to the proposed site: St Joseph’s Catholic primary school is opposite the site, and the new Tidemill academy is close by. As I say, the proposed works will take at least four and a half years, which represents most of the period of primary school attendance. That area of Deptford appears in the top 10% of areas in the country in the index of deprivation, making primary education of paramount importance. Both indoor and outdoor learning will be impacted by noise and air pollution.

Fire evacuation for St Joseph’s during the period is of concern. The school requires an off-site space near the school for 260-plus children and 25-plus staff, and they need to reach it quickly and safely. The site currently used is the green space that Thames Water proposes using for its shaft and associated construction works. No impact assessment on the school and its fire regulations has been offered.

Sited alongside the green is the grade-I listed St Paul’s church, the single most significant listed building in Lewisham. The proposed shaft and associated building works directly affect the setting and structure of the church, the boundary wall to the church cemetery, which is listed in its own right, and the grade-II listed railway viaduct to the south. It is therefore not surprising that English Heritage has expressed a preference for the alternative site to the Deptford Church street site, as there would then be less impact on heritage assets in our area.

The effects of the disruption to traffic patterns would be numerous, and the disruption would cause congestion and danger. The proposal involves closing the two northbound lanes of Deptford Church street; the two southbound lanes would provide one lane in each direction. Again, no detailed traffic modelling has been provided. There could even be emergency vehicle access restrictions associated with the traffic management measures along the proposed construction vehicle routes. Bus lanes in both north and southbound directions would be temporarily suspended, yet the width of the southbound carriageway is insufficient to accommodate heavy goods vehicles and buses in a two-way traffic scheme, particularly as Deptford Church street is on the borough’s oversized vehicle route.

There can be no doubt that the proposed works will impact on existing businesses along Crossfield street, particularly given that access, both vehicle and pedestrian, could be disrupted and restricted. The construction vehicle movements would have a highway safety impact in Coffey street, particularly for those accessing St Paul’s church, and when the movements coincide with St Joseph’s school’s arrival and departure times. Narrowing Crossfield street would have an impact on the commercial units on Crossfield street, particularly in relation to deliveries and servicing. A further raft of transport concerns have been raised by Lewisham council in its formal objections to Thames Water, but they are too numerous for me to go into now.

[Mr Ben Bradshaw (Exeter) (Lab)]

Hear, hear.

[Dame Joan Ruddock]

I am most grateful to my right hon. Friend for that intervention. I will now slow down, as I know that he is desperate to be able to speak in the debate.

Overlying all the concerns that I have outlined is an aspect of Deptford that has been completely neglected. Planning consents have already been given for the construction of thousands of new homes in the immediate vicinity of the Deptford Church street site. Work is already under way and the nearby Convoys site, which has a footfall—this is quite amazing—equivalent to the whole of the south bank, is expected to be redeveloped over precisely the same period as the Thames tunnel. This is a prescription for chaos. It is particularly unfortunate because Deptford has enjoyed a prolonged period of regeneration led by Lewisham council, financially underpinned by the Labour Government and supported by a number of private sector partnerships.

Lewisham is the 12th most densely populated local authority in the UK, and my constituency the most dense of all. As a consequence, every small piece of open space is greatly valued and provides essential green lungs for the city. The Crossfield amenity green will be made unavailable and inaccessible for at least four years in an area of very limited open space.

Lewisham borough’s core strategy emphasises the importance of improving connectivity throughout the area for pedestrians and cyclists. The recently completed links project from Deptford high street through to Margaret McMillan park, as well as the work on Giffin square, the Deptford Lounge, Tidemill academy and Wavelengths, demonstrate the implementation of the council’s strategic aspirations for the area.

The completion of the Thames tunnel site works is not expected until 2021, resulting in an unacceptable delay to the delivery of the council’s strategic objectives for links to and connections through the area. Furthermore, Deptford high street is classified as a site of nature conservation importance in the adopted unitary development plan. If the borough were the local planning authority for this application, it would either refuse permission that had adverse impacts on nature conservation or, if development were considered essential, it would require an environmental appraisal that included methods of mitigation and proposals for compensation.

I appreciate the need for the Thames tunnel, so I would not be objecting to this site if I thought this was a case of simple nimbyism. It is not. There is so much at stake that we have to make the loudest and clearest objections on the grounds that I have outlined. Already 1,300 people, in an area where there is not a great deal of activism, have signed a petition opposing the use of the Crossfields amenity green. I support the measures in the Bill that will enable Thames Water to undertake a much needed improvement on behalf of all Londoners, but I| believe that it can provide the necessary shafts elsewhere with less damage than that which would result in my constituency. My plea to Thames Water is, in the words of the local campaign, “Don’t dump on Deptford.”

17:54

[Mr Matthew Offord (Hendon) (Con)]

I rise to support the Bill, as I have much experience of both South West Water and Thames Water, However, I must say that my perceptions of the two companies differ widely. They appear to operate at different ends of the spectrum: South West Water levies one of the highest surcharges in the UK and has the lowest number of consumers, while Thames Water levies one of the lowest surcharges and has the highest number of consumers.

The Bill is about a decade overdue. The shadow Secretary of State said that many of the problems are the result of privatisation, but that is an erroneous assertion. If we look at the value of the water companies before privatisation, we will see that Anglian Water was worth £357 million, North West Water £458 million, Severn Trent £476 million and Thames Water £558 million, but South West Water was worth a lowly £106 million. In general terms, at the time of privatisation South West Water had the lowest amount of assets per property, and since privatisation the company has invested about £2 billion, in 2007 prices, to bring its infrastructure to the same level as that elsewhere in England and Wales.

At privatisation, South West Water’s bills were about £50 higher than the national average. This disparity was exacerbated by the impact of the bathing water directive and, of course, the urban waste water treatment directive. As the Public Accounts Committee and the National Audit Office recognised in 1992, privatisation of the water industry was an unprecedented task, with 10 utility monopolies floated on the stock market at the same time after years of restricted investment and an obligation then to spend more than £24 billion in a decade in order to catch up. Any perception of failure now can be attributed only to the lack of governmental interest in the industry 10 years after privatisation and, in the case of South West Water, in the 19 years its consumers have had to wait for the Walker review.

If greater interest had been shown, one industry practice that is causing problems across the country would have been identified: the use of combined sewer overflows. CSOs are intended to act as release valves at times of higher operational use. When Sir Joseph Bazalgette first planned the sewers for London, he gave every person a sewage production allowance and decided the diameter of pipe needed to remove it. He then doubled that diameter. We should all be grateful that he did so; had he not, the smaller size of the sewers would have ensured that they overflowed in the 1960s.

However, the Metropolitan Board of Works said that the cost of Bazalgette’s plans was too high, so he proposed and installed the combined sewer overflow system. This ensured that when it rained the accumulation of rain water that enters the sewerage system can be released through the CSOs, taking the sewage with it. London’s current population is estimated to be about 8 million and rising. In a typical year, 39 million tonnes of untreated sewage is discharged into the River Thames with as little as 2 mm of rainfall. To put that in perspective, that is enough to fill the Royal Albert hall 450 times, and the discharges occur about once a week on average.

The emerging effluent contains not only sewage and storm water, but biochemical oxygen demand material, pathogens, nutrients, heavy metals, pesticides, oils and suspended solids. In short, London’s Victorian sewers can no longer cope, which is why London desperately needs the super-sewer, or Thames tunnel. The CSOs discharge into the river not only chemical and biological contaminants, but nearly 10,000 tonnes of litter every year, including toilet paper, wipes, sanitary towels, condoms, cotton buds and other flushable items. I know that the hon. Member for Hammersmith (Mr Slaughter) accompanied Thames Water on a trip, as I did, where he saw for himself the problems at the pumping station at Fulham. The hidden dangers of the effluent that goes into the river include pathogens, viruses and bacteria, such as E. coli, hepatitis A and faecal streptococci.

Due to the ebb and flow of the tide, it can take up to three months for sewage that has entered the uppermost reaches of the Thames to reach the sea. That is a problem in itself, but the persistence of infection is a real problem. Around 50% of typhoid bacteria are destroyed in an aquatic environment in one to three days, and 90% is destroyed in three to 13 days, but the most resistant can remain for weeks and retain their power of infection, which has an impact on not only the people who use the river, but those who live around it.

[Mr Slaughter]

The hon. Gentleman is making a powerful case, and he is right to say that I visited a pumping station, although it was the Hammersmith one. When most people think about pumping stations, they think that some form of treatment is going on there. On the contrary: a structure that is probably half the size of this Chamber fills up with raw sewage, which is then pumped straight into the Thames, and that happens on at least a weekly basis. Does he agree that it is highly irresponsible to say that we should clean up the Thames so that it is so clean that salmon can thrive and prosper in it? We need to clean it up because it is an essential health matter.

[Mr Offord]

I thank the hon. Gentleman for his intervention. I am probably aware who he is citing, and, having had conversations with the former leader of Hammersmith and Fulham council, I can assure the hon. Gentleman that we do not agree on this subject, though we may agree on many others.

The super-sewer in London is essential to ensure that the UK complies with European environmental standards and, most particularly, the urban waste water treatment directive. All British taxpayers are at risk of having to fund hefty EU fines if the UK is confirmed to be in breach of that directive.

It is not just London and Thames Water that need to take action, however. All water companies have a contract with their consumers not only to provide them with clean water, but to remove their sewage and to treat it responsibly, but that is not happening. The water quality of Britain’s beaches is being jeopardised by thousands of unregulated overflow pipes that dump raw sewage into coastal waters and rivers. It has been estimated that 3,500 pipes operated by water companies pump unlimited amounts of raw sewage into more than 80 rivers and along sections of our coastline. That comprises more than 60 operated by South West Water, including pipes on the River Torridge, which flows to a popular Devon beach; more than 250 outlets operated by Yorkshire Water, including sewage flowing into the North sea; sewage overflows on the River Don, where thousands of fish were killed by sewage pollution in 2006; and an overflow, operated by United Utilities near Manchester, which was blamed for polluting a fishery in 2005.

[Dan Rogerson]

The hon. Gentleman is making a powerful case for the need to be mindful at all times of how outdated sewerage systems can cause problems. People may be more accepting of occasional discharges during periods of very high rainfall, but he knows north Cornwall well, and if he considers the area of Trevone he may wish to look again at South West Water’s record on delivering its promises, because in that area discharges have been occurring several times a month, and the company has yet to take action. I have raised that issue with South West Water, and we hope to address it soon, but he is absolutely right that there is a problem not just here in London, but throughout the country.

[Mr Speaker]

Order. There is a worrying pattern developing whereby the erudition of interventions is equalled only by their length.

[Mr Offord]

I take it from that only that you would like me to talk for even longer, Mr Speaker.

I absolutely agree with the hon. Gentleman, however, and having had some experience as a lifeguard in Cornwall I have seen at first hand the problems that South West Water has caused. I intend to go on to address the points that he raises.

From my experience in Cornwall and elsewhere, I am aware also that there are 500 regulated sewer overflows on Britain’s beaches that, as the hon. Gentleman rightly says, are supposed to operate only after heavy rain. However, swimmers and surfers often complain, even to me, that the overflows operate more regularly to relieve pressure on sewerage systems that are said to be “at bursting point” by the various water companies.

Despite a £10 billion investment programme by water companies since privatisation, about one in four beaches still fails to qualify for the European Union’s top category. The investment has ensured that 96% now meet the lower mandatory standard, but this still means that a swimmer, surfer or scuba diver has a 14% chance of contracting a bacterial or viral infection, and that is simply not acceptable.

Every year the water companies factor into their operating costs the insignificant fines, ranging from a couple of thousand pounds to tens of thousands of pounds, that can be levied on them, and they know that it is cheaper to pay them than to ensure that their infrastructure performs within the terms of their licences. Water companies are labelled repeat offenders, as year on year they are fined for impacting the environment with unlicensed discharges of untreated sewage. Only last Friday South West Water was ordered to pay almost £40,000 in fines and costs for allowing sewage to escape into the River Dart near Galmpton in south Devon, after effluent entered the river last May and caused the closure of a shellfishery.

The 1976 EU bathing water directive is not designed to identify effectively the impacts on the environment from combined sewer overflows. It is useful in giving an indication of water quality over the bathing water season, but all that it really tells us is the water quality during 20 short periods over 140 days, and only in the most popular bathing zones, not at the points where water is most likely to be polluted, such as the mouth of a river or the nearest CSO on the beach.

The revised bathing water directive, which will come into force in 2015, will mean four years’ consecutive data being examined and water being measured against tougher standards. However, there will still be 20 samples, and many pollution incidents will fall between the gaps. I remain concerned that many CSOs are deemed not to have an impact on bathing waters, and so are licensed for even more frequent discharges—the licences do not contain a set figure.

The CSOs also discharge when a predetermined volume of water is being passed forward within the sewerage system. When that volume is reached, the CSO can be employed to release pressure from the system, resulting in raw sewage on beaches and in rivers more than 100 times a year, equal to the frequency in London. Those CSO discharges can also have an impact on the coastal environment. Our over-reliance on CSOs has resulted in the European Commission taking the UK to court over a breach of the EU urban waste water directive of 1991. The case has been heard, but we are still waiting for the judgment.

I support the Thames tunnel, the super-sewer or whatever we want to call it, for the environmental and economic benefits that it will achieve in London. The project is expected to add £70 to £80 to the average Thames Water waste water charge, which has been among the lowest in the country, and I recognise the problems that that would cause some people. Even with the Thames tunnel, however, Thames Water’s bill would rise only to the national average. The additional resources from the Government should allay some of the fears of the people whom colleagues have mentioned.

I also welcome the reduction for South West Water customers, but according to one estimate highlighted by the company itself, the cost of removing or further reducing the impact of CSOs in its region’s network would be about £500 million, which could add as much as £40 a year to the average bill in the region. If the Government propose to subsidise each South West Water customer by £50, the company should by its own evidence be able to afford to undertake that work from its current resources. I should like that to happen, particularly given the introduction of the new bathing water directive. Until that occurs, it is anathema for any Government to claim that we have bathing water of a high standard in this country. My experience, and that of other Members, has been that that is simply not the case.

18:07

[Mr Ben Bradshaw (Exeter) (Lab)]

I wholeheartedly associate myself with the final comments of the hon. Member for Hendon (Mr Offord).

I welcome the Bill, and I thank the Minister and the Secretary of State for introducing it. As my hon. Friend the shadow Secretary of State said, it goes a small way towards righting the terrible injustice that was done as a result of how the water industry was privatised, particularly in the south-west, in 1989.

As other Members have said, other people deserve credit, too. I thank the excellent public servant Anna Walker, whose year-long review in 2008-09 made recommendations, some of which the Government are now implementing. I also thank my right hon. Friend the Member for Leeds Central (Hilary Benn), who was the Secretary of State who commissioned the Walker review.

I also thank somebody else who has been named by a number of Members today—my colleague the former Member for Plymouth Sutton, Linda Gilroy. Linda worked tirelessly as a leading member of the all-party water group during her 13 years in this place. She was like a terrier with a bone on the issue—I remember seeing two Prime Ministers and several other Ministers scurrying away from her whenever they saw her approaching them in the Division Lobby, because they knew she would pin them against the wall to talk about water prices. She brought not just great persistence but huge expertise to the subject, and she helped to change minds. It is no exaggeration to say that without Linda Gilroy’s contribution, the Walker review would never have happened. We might have got there in the end, but we would have been much less far down the road. It is gratifying that Members in all parts of the House have paid tribute to her, because she is no longer in this place to smile on her legacy.

I would be grateful if the Minister could answer a couple of questions. What will happen at the end of the next comprehensive spending review period? Will further legislation be needed if the £50 rebate is to be extended beyond the next CSR period; and if so, how will the legislative mechanism be put in place to do that? Given that when the Labour Government considered this issue in the past there was a problem with European state aid rules, is he satisfied that there will not be such a problem with what the Government are doing?

Why are the Government implementing only part of the Walker review? Will the Minister assure us that the other bits will be implemented when the Government bring an all-singing, all-dancing water Bill to this House? I am a little disappointed that we will apparently not get such a Bill in the forthcoming Queen’s Speech, but I hope that we will during this Parliament. That is absolutely vital because, as the hon. Member for St Ives (Andrew George) said very clearly and convincingly, there is a desperate need for root-and-branch reform of the water industry.

The £50 cut in bills in the south-west is extremely welcome, but our bills will still be the highest in the country, and the cut will already have been wiped out by the time we get it owing to the increases in the current and forthcoming financial years, with a 5.7% increase in April.

[Anne Marie Morris (Newton Abbot) (Con)]

Does the right hon. Gentleman agree that despite the fact that the £50 cut will be impacted by high inflationary rises, those rises apply across the country, so one cannot say that we are worse off in the south-west, because we are still better off by that £50?

[Mr Bradshaw]

That is absolutely right. I am afraid that water customers across the country are paying the price for this Government losing control of inflation. The reason we are all facing these massive increases in the current financial year and the next is that inflation is out of control. We in the south-west are suffering like everybody else. However welcome the £50 cut is, it will already have been wiped out by the time we get it. People will not notice it because their bills will be no lower than they were before, as a result of the two years of increases that they will suffer this year and the next.

We must stop the culture of annual increases, and I hope that the Government will do that when they bring forward their full water Bill. The hon. Member for St Ives is absolutely right about this. We always talk about the water industry as though it were the same as the gas industry, the electricity industry and the other privatised utilities, but it is not—it is a monopoly private provider. Customers in the south-west cannot choose where they get their water from. Admittedly there is also a problem in the energy industry, but people do have a limited choice of provider for their gas and electricity.

The other reason it is completely wrong to put water in the same category as the other privatised utilities is that water is plentiful. We live in a wet country; it rains. If it stops raining, we might as well all pack up go home, but that is not going to happen—we hope. Water is not like gas, electricity or oil, where the resources are finite. The Government must challenge the assumption that water prices should always rise. Given the advances in modern technology, there are strong arguments for water bills coming down rather than going up. I ask the Minister to look carefully at the structure of the industry and the strength of the regulator. For the reasons that the hon. Member for St Ives and I have mentioned, there is a very good argument for the water regulator being much stronger than the regulators of the other privatised utilities.

The Prime Minister is fond of making speeches about crony capitalism; well, he can show us his mettle by dealing with an industry that is a private monopoly where customers have no choice. The industry has its hands round their necks, they cannot go anywhere else, they are fed up, and they do not understand the inevitability of year-on-year increases.

Of course we have to improve our outdated infrastructure, and a lot of work has been done on that. However, when I hear industry spokespeople and Ministers saying that we are about to face a terrible drought, worse than that in 1976, I wonder why the industry and the Government have not looked more carefully at the idea of water trading, which I think has been mentioned by a Government Member. Why do we not pipe water from the Severn catchment area, where it is plentiful, to the Thames catchment area? That could be done quite cheaply. It is not hugely expensive or terrible for climate change, as the Secretary of State said in her opening remarks. A similar thing could be done across the country. My right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) mentioned reservoir capacity.

There is no reason why in this country, which has a cool, temperate climate with plenty of rain, we should pay such high prices for our water. We should not accept inexorable rises year on year, particularly when families are feeling the pinch. I share the admiration of the hon. Member for St Ives for the current management of South West Water. However, in the increases that that company and the rest of the industry have asked for in this financial year and the next, they have not shown the sensitivity that they might have shown to the state of household finances.

[Richard Benyon]

I urge the right hon. Gentleman to read our water White Paper, which addressed many of the points that he is making. It was long overdue in doing so. It is important that water companies talk to each other about bulk trading, moving water and the connectivity between water company areas. That is precisely what the White Paper sought to achieve. It addressed a long-standing problem.

[Mr Bradshaw]

I look forward to the recommendations in the White Paper being implemented in legislation. I hope that that will happen in the next Session and that we will not have to wait another year or more, but there is talk of the legislative process being clogged up by House of Lords reform. We need this legislation as soon as possible to address the problem once and for all.

I will end my remarks on this point. The Bill is a welcome development, as far as it goes. Of course the £50 cut is welcome, regardless of the fact that it will be wiped out by the big increases in water bills this year and next. However, it is only a temporary solution to the problem in the south-west and nationally. Although it will assuage the public anger in the south-west over the cost of water bills temporarily, if those bill continue to go up every year, this bit of help will be but a distant memory in a few years’ time. I address my final remark as much to those on the Opposition Front Bench as to the Government. Whoever is in power has to grasp this nettle once and for all and reform this industry properly, so that it operates for the benefit of the consumer and the customer.

18:17

[Anne Marie Morris (Newton Abbot) (Con)]

I congratulate the Government, because they have done an extremely fine job. Frankly, I find the comments about the £50 reduction being cheeseparing a bit sad.

I was interested to hear the comments of the right hon. Member for Exeter (Mr Bradshaw) and I agreed with him on many points. He said that he is concerned that the £50 will be wiped out by price rises. As I said, there will be price rises across the country. Is he saying that the Opposition would have provided more money to give a greater subsidy? If so, how would they have funded that? I will leave him to ponder that.

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

The hon. Lady asked about Opposition policy. We support the £50 payments in the south-west, but are looking for further action on water affordability across the piece, which this Bill does not provide.

[Anne Marie Morris]

Like the hon. Gentleman, we are all looking at how we can deal with the affordability issue. However, the Bill is intended purely as an academic piece of legislation to allow the £50 reduction, not to address the whole gamut of water issues, which is substantial. I welcome the £50 reduction and think that the 710,000 householders who will benefit from it will be absolutely delighted.

I will raise some technical points, because this is a technical Bill. I will not talk about the big picture of water issues. I will be grateful if the Minister considers the points that I raise in his winding-up speech, whether that be today or on another occasion. My concern is that the £50 is aimed at the domestic user as opposed to the non-domestic, commercial user. I understand why the Government are trying to be careful with their resources, but I emphasise that including the non-domestic, commercial user would mean an extra £3.5 million, which falls within the £40 million ceiling. I recognise the Government’s concerns, but there is a potential issue with domestic households that pay through commercial intermediaries.

For example, park homes cover a significant number of residents throughout the south-west, and the rates are effectively levied against the park home owner. I am therefore concerned that those living on park home estates will not receive the benefit. There is a similar problem with sheltered housing. I am worried that subsection (7) of proposed new section 154A in clause 1 does not fully address that. I would be grateful if the Minister considered that because I cannot believe that anybody feels that those individuals should be excluded from the benefit.

My second technical concern relates to the debate about WaterSure and support for those who cannot afford to pay their water bills. I will not go into the debate because it is something for the water Bill. My concern is technical because, if the Government decide to support the Consumer Council for Water’s view that WaterSure should be nationally funded, I am not sure whether subsection (2) of proposed new section 154A would enable them to take that position. I would therefore be grateful if that were reviewed.

Otherwise, I think I will make history by making the shortest speech of the afternoon and simply say, “Well done Government—huge benefit! £40 million should not be sniffed at.”

18:21

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

It is a great irony for us in the south-west, surrounded by water as we are, that we have the highest water bills in the country. I represent a coastal city that sits on three rivers, and the injustice of the expense of water bills in Plymouth aggravates almost everyone I know in my constituency and the wider region.

Water bills in the south-west are, on average, 43% higher than in the rest of the country and we have 200,000 households under water stress—paying, as we have heard several times, more than 3% of their income towards their bills. A Government Member said that there were more people in his region to which that applies, and that is true, but we have the highest percentage of people in that position. Those people are pensioners and families with high and essential water needs. They are often supported through WaterSure, but only about a third of those eligible get that help.

People have been paying through the nose for a basic commodity. I accept that it needs to be valued because, with climate change and other pressures, it could become more scarce. If we do not prepare well for the decades and century ahead how we manage the future costs of the necessary work and, from my perspective, prevent a repeat of the mistakes that were made when water was privatised and the south-west paid a disproportionately high price, we will all fail water bill payers. The Bill clearly tries to set out some ground rules in that regard.

The high cost of water is not a new problem, but it has dominated concerns in Plymouth throughout my time in Parliament and for many years before that. It has posed problems for Governments of all political persuasions and it will clearly continue to exercise the current Minister in the months and years ahead.

As we have heard, for many years, I and other south-west Members have campaigned to address the higher bills left us by privatisation. The detailed Walker review did, to Anna Walker’s credit, much of the groundwork for the announcements that followed, including the Chancellor’s announcement of the £50 refund for households in the south-west, and ultimately led to the Bill.

Through parliamentary questions, Adjournment debates and the work of the all-party parliamentary water group, which was initially chaired by Linda Gilroy, who has rightly been lauded in the Chamber today, then by the hon. Member for Thirsk and Malton (Miss McIntosh), and then by the hon. Member for St Ives (Andrew George), Members of all parties have sought to keep the issue high on the agenda.

At a time of soaring utility bills, high inflation and stagnant wages, action on water bills is welcome. However, it needs to be meaningful and lasting to make water bills more affordable in the long term. The continuing upward pressure on the south-west, despite the refund, will mean that many families dip below the poverty line. It is not acceptable to increase the number of children and pensioners in poverty. Although I welcome any help that the Government are able to give—it would be churlish not to welcome the £50—it is small relief from ever-rising bills. This is not the end of the debate and the problem extends beyond the south-west.

That said, all of us who live in and represent constituencies in the south-west—I should declare an interest as a South West Water bill payer—have a duty to ask whether the Bill will effect meaningful and lasting changes. Sadly, my conclusion is that it will not. There is a strong view that this gain will be temporary, and that even with the changes, water bills in the south-west will be back at their current levels within two or three years, for the reasons I have set out, with wages stagnant and inflation high.

Will the Minister look at the issue of water companies overcharging for surface water drainage, which affects water bill payers specifically in the south-west, but also more generally? Very many households do not connect their waste water into the sewerage system and water companies do not have complete data on where those properties are—I have been out in my patch trying to identify them. In Plymouth, no council data exist for the 1950s from the plans, and it is believed that later plans are inaccurate in terms of the connection of mains sewers to properties. It is wrong that the default position is to assume that people are connected and charge them. As a result, the onus is on the bill payer or house owner to understand exactly where their water goes and whether they have a direct connection into the mains sewer. That adds further unfairness to the system, and I ask the Minister to address it at some point.

I wholly support the comments of the hon. Member for Newton Abbot (Anne Marie Morris) on park home owners. Many people in Glenholt park in the north of my constituency are anxious about how the proposals will play out for them, and I am afraid that not all park home owners are responsible or willing to be generous with the people on their sites.

A number of related issues, including the adoption of private sewers, will impact on the cost of water nationally, and they need to be understood with regard to the Bill. I note that the explanatory notes state that the Bill gives the Secretary of State

“a power to give financial assistance”

with regard to the

“construction of…sewerage infrastructure”.

I assume that that is partly designed to reassure Thames Water bill payers on the linked new ring main sewer. However, civic schemes are not mentioned in the Bill, so when the Minister winds up, will he tell the House whether assistance could be applied for by a water company that finds it has a much more extensive private sewer commitment than it believed it had inherited? The Minister will know—we have written to each other on the subject—that we are unclear what the burden is likely to be for some water companies in that respect.

The Government need to introduce measures to tackle long-term water affordability, not just in the south-west but nationally, and they should consider the feasibility of a national social tariff. We have heard that from other hon. Members and I hope the Government will consider the proposal.

Anna Walker, who dedicated a whole chapter to the injustice felt and experienced in the south-west, set out a number of main challenges nationally, including the cost that other bill payers incur as a result of bad debt—it is around £15 per person, as we have heard. She looked at the implications of metering and considered how future costs should be met, acknowledging some of the issues that we have debated. She was also clear that it was appropriate for water customers to pay for improvements to the quality of water and the disposal of sewage, because they ultimately benefit from such improvements, but she was also clear that customers should be fully consulted before the Government agree to such changes to avoid the accusation of imposing a stealth tax. I believe that the proposals of my hon. Friend the Member for Wakefield (Mary Creagh), the shadow Secretary of State, on parliamentary oversight of specific schemes, should be debated seriously in Committee on the Floor of the House.

The Bill will be a waste of time if, within a short period, the problem of affordability comes back on to the agenda, not just in the south-west but nationally, and if customers feel that they have not had input into the reasons for the higher bills that they pay. The Government will do them no favours if they simply appease us in the south-west who have kicked off over the years and made a lot of noise about our bills, and they will miss an opportunity not only to consider water affordability in a more strategic and inclusive way but obviously to tackle the historical injustice in our region.

Whatever the new regime, basic standards must apply, but that is not entirely clear from the Bill, and it needs the appropriate regulation, which also is not entirely clear. As has been said, the House must be able to consider every proposal on its merits, but that is not in the Bill either. So more work needs to be done. Given the expertise and experience of Members across the Chamber, I hope for further and more detailed debate in the short Committee stage because it would be of benefit to the Bill.

18:30

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

I am grateful for the opportunity to take part in the debate and to follow the hon. Member for Plymouth, Moor View (Alison Seabeck), who rightly concentrated on matters in the south-west.

May I say, as I have said in other policy areas, that as a London MP I fully support the Government’s proposal, derived from a Liberal Democrat election commitment, to assist people in the south-west? Over the years, I have campaigned with colleagues to improve water quality in the south-west and to clean up sewage on its beaches—I and my hon. Friend the Member for St Ives (Andrew George) helped with the Surfers Against Sewage campaign. I am also clear that there is a collective responsibility for Members across the UK to legislate to end disparities in water prices. As a London MP, therefore, I do not resent our legislating to assist colleagues in a beautiful part of the country where bills have been disproportionate compared with ability to pay and the justice of the case.

[Sheryll Murray]

Does the right hon. Gentleman agree that, from a south-west perspective, this is truly a cross-party initiative? I cannot think of another example where every major political party has campaigned on the water issue.

[Simon Hughes]

I absolutely accept that. I was not disputing the cross-party nature of the campaign. I was trying to support my hon. Friend and colleagues across the House by saying that those of us who do not come from the south-west have supported them too.

A pledge made by the Liberal Democrats bas been honoured, and a pledge made by the coalition Government has also been honoured—generally, then, this is a good proposal.

The second part of the Bill is the one that preoccupies those of us with London constituencies and constituencies served by Thames Water. It is the largest water company in the country and covers a significant number of colleagues with constituencies in the Thames valley as well as in the capital. That relates to clause 2. I support the general proposal that the Government should be able to assist major infrastructure projects, and I am aware that last year and the year before, the Chancellor rightly identified a set of infrastructure projects around the country to get people back into work. Good, long-term, viable infrastructure projects are a good thing, and we should support them.

There is always a danger, however, that infrastructure projects start with one price tag but end up with another. When the Thames tunnel scheme to deal with sewage in the Thames—the system built in the Victorian era by Bazalgette is no longer fit for purpose—was first proposed, the general cost was said to be between £1 billion and £2 billion, but everybody now accepts that, at 2011 prices, the Thames tunnel would cost £4.1 billion or more. That excludes financing costs, as the notes to the Bill explain, but includes £900 million for risk and optimism bias. So this is a big project that will cost a lot of money.

In 2006, the water regulator warned potential buyers of Thames Water that it would not allow them to saddle the company with high debt levels and pass financial risk on to the customers. I want to concentrate my remarks on the financing, and the financing structure, but I also want to place on the record my position on the project. I have supported the general position that we need to deal with the infractions on air quality and water quality in London that have brought us before the European authorities. That is what we are facing in relation to water and air quality; therefore, we need to act.

I have started from the proposition that the Thames tunnel, as proposed by Thames Water, is the right answer. When it was endorsed by the last Government it had my support, but I am increasingly troubled that it looks as if it may not be the answer that everybody once thought it was. Therefore, when I recently made a full submission as part of the consultation process, I asked—I am also about to write to the Secretary of State to ask this question, after this debate and after a meeting on Monday—whether, at least between now and the point in the normal timetable when Thames Water might be in a position to make an application, there could be a final independent review of the viability of the current project.

Those driving the project have an interest—Thames Water has an interest, and there are others with an interest. It is important not just to have a battle between those with an interest in favour and local authorities such as mine—[Interruption]—and that of the hon. Member for Hammersmith (Mr Slaughter), who is about to intervene on me—which, because of the effect on their constituents, have become opposed. At the moment we have a dialogue of two different interested groups, and I think we need to get some people involved who do not have a vested interest. There are people in the European Commission who do not have a vested interest, there are people in international environment agencies who do not have a vested interest, and there are also people who do not have a price interest. Before they commit their support to a project that is rapidly increasing in cost—I will say why that is a danger for the Government, as well as for everybody else—I think the Government would be wise to commit themselves to one last review. I hope I can persuade colleagues over the next few weeks that this can be done in a way that is compatible with the timetable in general terms.

[Mr Slaughter]

The right hon. Gentleman took part in a Westminster Hall debate last September—less than six months ago—at which I think I was also present, when he said:

“The Thames tunnel is the best direction.”—[Official Report, 14 September 2011; Vol. 532, c. 316WH.]

Is he saying that he has changed his mind since then? If he is saying that he has reservations about cost or individual sites, I would say that I probably share them—if I get a chance to speak, I will probably address them. Is he, however, saying that he has now changed his mind about the project as a whole?

[Simon Hughes]

The answer is that there is a proposal on the table for what is called “the full tunnel”. I am not as certain now that what is called the full tunnel is the right solution. There is already the tunnel being built in the east—that is well under way—and there is an argument for a smaller tunnel and other measures. I just think we need to satisfy ourselves before we go for the full tunnel that that is the right solution. There are also site issues, of course, but I regard those as secondary, although in my constituency, as in the hon. Gentleman’s, they are hugely important to our constituents, not least with a major site being planned in the middle of my constituency affecting thousands of people, thousands of homes and two or three major schools.

[Mr Slaughter]

rose—

[Simon Hughes]

I will give way one last time.

[Mr Slaughter]

The right hon. Gentleman is being very generous. When he says “not the full tunnel”, I should point out that the context of his remarks last September was his objection to the wholly inadequate Selborne report, which proposes a partial tunnel—a disastrous tunnel—in west London. I hope he is not saying that he supports that.

[Simon Hughes]

Rather than have a long dialogue, I will let the hon. Gentleman have a copy of my submission to Thames Water later, so he can read my full views. However, let me summarise, as I did in my submission:

“I am now clear that, since the end of the first round of consultations in 2011, the arguments for a review of the full tunnel proposal and possible alternatives have substantially increased. There has been a growing amount of opposition against the full tunnel from my constituents and other constituents in greater London.”

I go on to say that we should therefore give that argument greater weight.

Let me turn to the substance of the financial issues, which are dealt with in this part of the Bill. Back in 2007, a memorandum was submitted to the Treasury Committee by a Mr Martin Blaiklock—consultant, infrastructure and energy project finance—on the subject of Thames Water specifically, but also on equity-type investment generally. He said:

“Over the last 12 months I have be keeping a particularly close watch on the activities of Thames Water, not least because I am a Thames Water customer, but also because it is one example,—and a good example,—of Private Equity involvement with public services. The case of Thames is significant as it is the UK’s largest privatised water utility, serving the Capital and 13 million customers, and also a monopoly service provider...Thames Water Utilities Limited…is the utility licensed by OFWAT. However, Thames Water Utilities Limited is 5 or 6 times removed from the controlling investor group…of whom a number are based offshore in Luxemburg…Is this the ‘transparent’ corporate structure expected of a UK monopoly public service provider?”

I cannot put this on the record, but there is a helpful graph in that memorandum to the Treasury Committee showing Thames Water Utilities Ltd at the bottom. Above it are lots of holding companies, including Thames Water plc, Thames Water Holdings plc, Kemble Water Ltd and Kemble Water Holdings Ltd, and intermediate holding companies. The list goes right up to non-Macquarie investors and then to Macquarie, and shows the purchase of part of the company by the Chinese state finance organisation and others. That shows an organisation that does not do transparent finance. We therefore need certain safeguards to be put in place to protect any taxpayer investment and Government support.

The company also has considerable activity in the Cayman Islands. I am not sure whether that is the most appropriate way for a major utility company to spend its money. The tax arrangements of Thames Water, having been bought by Kemble, have involved setting up a subsidiary financing branch in the Cayman Islands, based at Ugland House, which has 18,856 other businesses registered at it. There is a real question of transparency for Thames Water, and the Government need to have a public debate on it. We need to look at this matter in Committee and on Report to determine exactly how the financing arrangements are arrived at. There is at the moment no proposal from Thames Water as to how it will raise the £4.1 billion to finance the project, and I am concerned that the cost might ultimately be borne by the Thames Water ratepayer, which might not provide the best value for money for our constituents who pay their bills.

Mr Blaiklock concluded:

“There is no doubt that the introduction of Private Equity-type investment into the privatised UK public services has sharpened up the financial management of such enterprises. However, such Private Equity investment has also

(a) introduced a lack of transparency in the control, governance and, therefore, the accounts of such utilities. Some utilities, such as Thames Water, are effectively owned and controlled offshore, possibly by companies with limited liability and domiciled in tax havens. Corporate information is, not surprisingly, hard to come by for such Private Equity investments! Hence, in the event of operational failure by such utilities…it is quite possible that the controlling company and its directors cannot be called to account, notwithstanding OFWAT’s Conditions P and F licensing requirements…

(b) increased the leverage and, thereby, decreased the financial strength of such utilities, at the expense of customers and the security of service; and

(c) introduced corporate uncertainty. The investment horizon for Private Equity is traditionally three to five years, which is short for public service utilities, which require long-term capital and financial stability. The only balancing feature has been the increased intervention, as direct investors, by pension funds and life insurance companies—as principals, not clients—albeit some are offshore owned and controlled. Such investors have longer time horizons and are ideal investors for such public service utilities.”

The other activity that is certainly questionable is the way in which Thames Water has managed its affairs in recent years. Extremely high dividend payments have been made over the past years, representing a direct transfer of income and capital out of Thames Water to private investors. At the financial year end in 2011, Thames Water made £225.2 million in profits, but it distributed £271.4 million in dividends. This high dividend policy is a recent development, but it is not limited to last year. In 2010, the unadjusted common dividend payout ratio, in percentage terms, was 141.5%—that is, nearly half as much again, on top of profits, was paid out. The figure for 2009 was 126.7%—a quarter as much paid out again as was made in profits, and in 2008, 61.3% was paid out. That contrasts with Anglian Water’s dividend ratio of 81.%, Southern Water’s 58.7% and South East Water’s 48.4%. The policy of paying higher returns to investors started immediately after the company was purchased by the consortium behind Kemble Holdings in 2007. The company paid out £535 million in dividends in 2007, and £233 million in 2008.

All this has happened while the company has vastly increased its debt position. In the financial report of 2008, the change in the amount of debt held by Thames Water was more than £1.5 billion. Ofwat warned the bidding companies to keep a good debt ratio, advising that 45% would be appropriate. The ratio is now at 80%. We—Parliament—and the Government need to ask why Thames Water has increased its debt holding by so much when it is known that it has an extremely large capital project coming up, which will need a substantial amount of borrowing.

My question to my right hon. Friend the Secretary of State is whether the Government have investigated whether Thames Water would have been able to make a greater contribution to any scheme from its own funds if it had not spent the last few years borrowing money in order to pay itself. Both the financial policy and the tax arrangements of Thames Water seem to me to be appropriate for us to debate.

My conclusion is that we might need to insert conditions into the Bill regarding any financial arrangements whereby the Government underwrite the borrowing by Thames Water, making it clear that they should be transparent, ethical and accountable so that Thames Water users, those of us who represent people in the Thames Water area and everybody else in the country can understand that there has been some pretty strange organisational finance going on in the last five years. We must make sure that the objectives do not feather the nests of the equity investors rather than benefit Thames Water users, so we must ensure that we have the right financial vehicles if we are to go ahead with infrastructure projects like this one. We will have plenty of opportunity to debate the project itself on other occasions, but I hope that the Secretary of State will be sensitive, as I know the Treasury is sensitive, to these real concerns about how Thames Water runs its financial affairs.

18:47

[Alex Cunningham (Stockton North) (Lab)]

I would like to talk about the Bill’s impact on people in north-east England and to outline some of the responsibilities that water companies, which make billions of pounds of profit between them, might need to be compelled to fulfil, although I acknowledge that some do the right thing—part of the time, at least.

I would also like to take the opportunity to invite those who want a consistent and high-quality water supply to come to the north-east—industrialists, manufacturers, green revolution companies, call centres, breweries and individual people would all be made welcome in the region. My message to allcomers is clear: “You need water; we’ve got it”—and I would encourage anyone needing water for their businesses to get in touch with Tees Valley Unlimited, and we will work with them to develop their business without fear of ever having to do without their water supply.

What of domestic supplies and customers? About 370,000 people in the north-east spend more than 3% of their income on water, which is why I am glad that the Opposition will introduce a new clause to enable the introduction of national minimum standards for water company social tariffs. Such tariffs will ensure that financial assistance is provided to those most in need across the country—not just to those in the south-west, about whom we have heard so much. It is worth noting that the south-west has almost exactly the same number of households paying a disproportionately large part of their income for water supplies.

Some Members have talked about water meters, and I would encourage all individuals and families to explore using them. My personal saving in my home came to about 60%, so people should look at this option to solve some of their financial issues. However, I recognise that that is more difficult for families than for a couple living in a larger house.

There has been a lot of consensus around the place today, but it saddens me to say that the Government are taking a similar approach to that being taken to the big six energy companies. The Government seem incapable of taking on the powerful vested interests of the large water companies and are set to miss the opportunity to make a real difference with a more comprehensive Bill that would put pressure on companies to deliver for our communities the services they deserve at a reasonable and fair cost. From April, water bills will rise by an average of 5.7%, which is a huge amount, given that for many ordinary families pay freezes and job losses are the name of the game. Such a hands-off approach from the Government is truly shameful and it is even more appalling when people are already contending with a 20% increase in energy bills over the past year.

More important than that, however, is the following question: did we really hand over or sell our water assets to allow companies to make huge profits, borrow on the back of those assets to pay dividends and still fail to provide enough water for people in the south to water their gardens if they choose to do so? I am particularly concerned and surprised about the proposals in clause 1 to allow the Secretary of State to provide financial assistance—taxpayers’ money—at the stroke of a pen if she

“considers it desirable to do so”

to a privately owned water or sewerage company that may be failing in its basic duty to deliver an adequate water supply all year round in parts of our country. I do not know how much cash the Secretary of State will have to splash around, but providing a blank cheque at taxpayers’ expense and at a whim to any water company she likes, whenever she likes, is absolutely not what is needed to ensure that ordinary people get a fair deal on their water.

That issue is all the more pressing given that huge areas of the south and east of England are suffering their worst drought in almost 35 years. One recently proposed solution is shown in the decision by a utility company to draw up plans for a £2.6 billion pipeline to send water from the north to the drought-hit south. United Utilities has revealed plans for the pipeline, but I must question whether it is really the answer. It would be incredibly expensive to transport water from north to south, and I know who will end up meeting the cost.

The Environment Agency last looked at the idea of a pipeline in 2006 and estimated that it would cost up to eight times more than developing the existing infrastructure. Water is heavy—1 cubic metre of water, which is what one person uses a week on average, weighs a full metric tonne—so the energy required for the construction, development and operation of large-scale water transfer systems also adds further to carbon emissions, which lead to climate change.

The north-east of England has significant infrastructure for industrial and domestic water supply. One of Europe’s largest man-made lakes, Kielder water in Northumberland, was created to supply water to the industry of north-east England, much of it on Teesside, in and around my constituency. Sadly, the growth of some of the industries, such as steel, that are heavily water intensive did not materialise. As we have seen, the north-east economy has been rebalanced in recent times, with different industries and a wider range of jobs. That was done under the previous Government and, of course, the work was led by the now defunct One North East regional development agency.

In recent years, Kielder water has come into its own, with underground springs ensuring that it always remains at a high level, regardless of the prevailing climate. That means that while the south of England is often forced to implement drought strategies and hosepipe bans, north-east England enjoys plentiful water supplies. People in the north-east have, of course, had to pay the price for an abundant water supply, which is now managed by Northumbrian Water. Unlike other companies, it has pegged its price rise to inflation this year. Over the years, however, consumers in the region have paid higher bills to finance this reservoir, and given such an abundance of water there are surely no excuses for a hike in prices when there is no need for investment in reservoir infrastructure. Northumbrian Water does do the right thing; it does invest in works and it works hard for its communities. We all like the idea of reduced bills, but we also need investment and the constant water supply that we have in the north-east. Indeed, with such an abundance of water, instead of transferring large amounts of water to the overcrowded and drought-ridden south, would it not make both environmental and economic sense for industry to move to the north-east? I have already issued the invitation: “Come north, we have all the water anyone needs.”

If we are going to go down the north-south route, I want to know what the benefits will be for people in north-east England. They have paid for the investment—will they get a dividend through reduced bills when their water is moved elsewhere, if that ever happens?

On a different matter, is it not an absolute disgrace that in England and Wales leakage rates, at about 25%, are higher than a decade ago? Some private companies, now exporting their profits to their shareholders overseas, are failing in their duty to create 21st century services for our people. Water companies might have done well on investment, but they have done so at the expense of consumers.

What action will the Secretary of State take, for example, to cut Thames Water’s obscene leakage rates? The company loses 30% of the water it puts into the mains—200 litres a day for every customer—yet it has posted profits, in what could be considered a bad year, of £208.5 million. That money could go a long way towards investing in improvements and helping the company to move towards the record of Paris and New York, which lose only 10% in leakage, or perhaps, one day, to equal Singapore, where the leakage rate is about 5%.

I have already personally dismissed the idea of the water-rich north sending our supply south, but water companies in the south could help themselves, each other and consumers. Last December, the Environment Agency told Ministers that the myriad small water companies in south-east England could save £500 million by 2035 if they shared supplies. Instead, the companies were planning to saddle customers with a bill of £760 billion for unnecessary new reservoirs. What will the Government do about that? Will they introduce legislation to deal with some of those matters?

Will the Government make any moves to force the private water companies to take the right action, stop the leaks, share supplies around the country where necessary and deliver for consumers? I do not think the Bill demonstrates that the Government have a long-term vision for affordable water supplies or the industry as a whole, and I only hope Ministers will take action to sort it out. My message tonight is: “If you want water and you’re an industrialist, come to the north-east.”

18:57

[Oliver Colvile (Plymouth, Sutton and Devonport) (Con)]

It is a delight and a pleasure to participate in this debate, particularly as I come from a city that has Burrator reservoir, which was built by Sir Francis Drake and is in the Torridge and West Devon constituency. I also want to thank hon. Members for the tone of the debate. It has most certainly been a cross-party debate and we have been able to support what is being proposed. I thank the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Newbury (Richard Benyon), who came to Plymouth earlier this week to support south-west Devon and to visit Plymouth Marine Laboratory, a premier marine scientific research organisation. He was able to talk about how the cost on top of the water rates is £15 for those people, because of bad debts.

I am aware that the issue of water rates has been very important, particularly in my constituency. I pay tribute, oddly enough, to my predecessor, who was the Labour Member of Parliament for Plymouth, Sutton and campaigned very effectively along with the hon. Member for Plymouth, Moor View (Alison Seabeck) to ensure that this message was heard. I have become aware in the course of today’s debate that we have all worked together to achieve this, but that it is this Government who have delivered the ability to ensure the £50 provision. We have all worked together as Members of Parliament and, more importantly, we have made sure that 90% of the Members of Parliament in the south-west have been sending a clear message, too.

There has been an enormous amount of regeneration in my constituency, but in 1997 St Peter’s ward was one of the poorest wards in the whole country. People in the ward have been challenged to ensure that they can meet their water bills. The £50 reduction is welcome, and I thank my hon. Friends for the hard work that they have done, but the 4% increase—

19:00

The debate stood adjourned (Standing Order No. 9(3)).

Debate to be resumed tomorrow.

Business without Debate

Wednesday 29th February 2012 Commons Chamber

SUPPLY AND APPROPRIATION (ANTICIPATION AND ADJUSTMENTS) BILL

Motion made, and Question put forthwith (Standing Order No. 56), That the Bill be now read a Second time.

Question agreed to.

Bill accordingly read a Second time.

Question put forthwith, That the Bill be now read the Third time.

Question agreed to.

Bill accordingly read the Third time and passed.

Delegated legislation

Wednesday 29th February 2012 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Social Security

That the draft Social Security (Contributions) (Limits and Thresholds) (Amendment) Regulations 2012, which were laid before this House on 30 January, be approved.—(Mr Dunne.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

That the draft Social Security (Contributions) (Re-rating) Order 2012, which was laid before this House on 30 January, be approved.—(Mr Dunne.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Education

That the draft Schools (Specification and Disposal of Articles) Regulations 2012, which were laid before this House on 19 January, be approved.—(Mr Dunne.)

Question agreed to.

European Union documents

Motion made, and Question put forthwith (Standing Order No. 119(11)),

Safety of Offshore Oil and Gas Activities

That this House takes note of European Union Document No. 16175/11 and Addenda 1 to 4, relating to a Draft Regulation on the safety of offshore oil and gas prospection, exploration and production activities; supports the Government’s view that the UK has a proven, robust offshore environmental and safety regime; and further supports the Government’s intention to negotiate a legal instrument which ensures that high standards of health and safety and high levels of protection for the environment are maintained across Europe in respect of oil and gas operations, and that any new proposals do not negatively impact upon the present UK regime.—(Mr Dunne.)

The Deputy Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 7 March (Standing Order No. 41A).

BUSINESS OF THE HOUSE (5 March)

Wednesday 29th February 2012 Commons Chamber

Ordered,

That at the sitting on Monday 5 March paragraph (2) of Standing Order No. 31 (Questions on amendments) shall apply to the motions in the name of Edward Miliband as if the day were an Opposition Day.—(Mr Heath.)

BUSINESS OF THE HOUSE (6 March)

Wednesday 29th February 2012 Commons Chamber

Ordered,

That, at the sitting on Tuesday 6 March, 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.—(Mr Heath.)

Private Hire and Hackney Carriage Vehicles

Wednesday 29th February 2012 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Mr Dunne.)

19:02

[Richard Fuller (Bedford) (Con)]

I was prompted to call this debate to discuss the safety of private hire and taxi drivers and their passengers as a result of recent events in my constituency—the death of a constituent who was a private hire driver and an assault on another driver. More broadly, I want to encourage the Minister to make it his priority to transform the perception, and too often the reality, that private hire and taxi drivers are given second-class status in our public transport system when it comes to their safety. I also wish to highlight to the Minister some of the impediments to the safety of passengers that have been highlighted to me by Am I Safe?, a developer of applications to help passengers to verify at the point of hire that a vehicle is legitimately licensed. Those impediments arise from the complex regulatory structures, differing rules, and inconsistent interpretation of access to information rights that arise from the various licensing authorities.

Private hire and taxi drivers are a vital part of our public transport system, and when it comes to their physical safety and the safety of their property, they deserve to be afforded the same protection as our bus drivers, airline staff and railway employees, but they are not. In many towns such as Bedford, if a person has been out for the evening with their friends, private hire vehicles and taxis are often the only answer to the question, “Who will take me home tonight?”, yet drivers routinely have to deal with people who can be abusive, and may be under the influence of alcohol, drugs or both. A journey may end with someone vomiting in the vehicle or running off without paying. Private hire and taxi drivers run those risks—not routinely, of course, but much more frequently than many of the public would appreciate.

Let me turn to recent incidents in Bedford. As Adam Thompson of the Bedfordshire on Sunday newspaper reported,

“Fayaz Alhaq…who runs AGS Cars in St Peter’s Street, Bedford, says his employees are ‘running a gauntlet’ every weekend and have a job ‘as dangerous as the police’. His words come after 61-year-old grandfather Mehar Dhariwal of…Kempston…died…having been assaulted the week before while working.”

Mr Thompson’s report went on:

“Only last month Bedfordshire on Sunday reported how 24/7 private hire driver Turbez Ahmed…was attacked…by a gang of eight who wouldn’t pay their fare up front.”

Efforts by Bedfordshire police to bring to justice the assailants in those two horrific and sad cases go on. I do not want to obscure those efforts by talking further about those instances, but although they are specific cases, sadly they are not isolated examples.

A freedom of information request to Bedfordshire police showed that there had been 93 assaults in the preceding 12 months on private hire and taxi drivers, including 35 cases of aggravated bodily harm and 30 common assaults. My local authority estimates that that amounts to 2% of drivers being assaulted each year. Very few jobs have such a high rate of unprovoked violence.

I have spoken with the National Private Hire Association, the Licensed Private Hire Car Association, and Private Hire News, and I am indebted to them for their engagement and assistance with my preparation for the debate. They all, without exception, talked openly and depressingly about the widespread nature of violence towards drivers, and said, even more worryingly, that the level of violence continues to increase.

The National Private Hire Association sent me news reports of attacks on drivers with knives; guns, fake and real; baseball bats; a hammer; a fire extinguisher; and even a wheelie bin. Drivers have been set on fire and run over by their own vehicles. I have not found any nationally collated statistics on assaults and murders of private hire and hackney carriage drivers. Perhaps the Minister can tell me whether those statistics are collated. If not, that in itself indicates that the issue of safety is not receiving the attention that it should. The GMB union kept a record of attacks between April 2007 and February 2008; it listed that nine drivers were killed and 45 suffered serious physical assaults while doing their job. The Department for Transport conducted research on personal security issues in 2008 and found that, on average, three drivers a year are unlawfully killed—evidence from across the country that our private hire and taxi drivers are at risk. I would argue that we have not made sufficient progress in mitigating those risks.

My hon. Friend the Member for Northampton South (Mr Binley) raised the issue in a debate on 24 June 2009. That debate was interesting because of a number of points that he raised, but also because he noted the extent of the private hire and taxi sector. He said that

“we are talking about an industry that employs 340,000 people…The industry makes about 700 million taxi journeys a year, which means an average of roughly 11 journeys for each member of the population. About £3 billion is spent on fares each year. We are therefore talking about a sizeable industry that plays a major role in our public transportation.”—[Official Report, 24 June 2009; Vol. 494, c. 912.]

The Minister responding that day, the right hon. Member for Tooting (Sadiq Khan), was alert to the issue of driver safety and made some useful suggestions, but underlying that debate and much of the industry commentary is a sort of shrug-of-the-shoulders view that the issue is just too tough to tackle, and in some sense that it is the cost of doing business. What strikes me is not the fair and sometimes compelling explanations of the complexities of implementing changes that will tackle these widespread instances of assault, but that given these horrific attacks at such high incidence rates for so many years in a single sector of the economy, we have allowed the complexities to thwart our action for so long.

In the search for remedies, I turn first to the perception of the industry. Department for Transport research in 2008 found that

“a strong belief held by many drivers, controllers and others representing the trade is that the root cause of many of the problems is a lack of respect from the public for taxi and private hire drivers.”

That lack of respect can make the transition to abuse or to violence a much easier step to take. It is a sad fact also that this lack of respect too often descends into racial abuse.

I understand that a similar issue confronted the door security sector—I am not sure whether we can call them bouncers these days. The violence against bouncers was seen as part of that job, but a focused effort on changing that perception, together with other initiatives, has had a positive impact, reducing the incidence of attacks on door security staff at our pubs and clubs. What, in practical terms, has the Department for Transport done since 2008 to tackle the public perception of the industry, and what steps would the Minister consider undertaking? Perhaps it would be appropriate for the Transport Committee to assist in this effort.

Also in 2008 under the previous Government, the Sentencing Guidelines Council included taxi and private hire drivers in that category of workers where longer sentences would result from a crime. What assessment has the Department made of the impact of those changes in sentencing guidelines? Does the Minister believe that further action to strengthen the guidelines is warranted?

The national associations and the GMB raised with me the issue of the introduction of CCTV and/or driver shields. I will be interested to hear the Minister’s thoughts on those, as I understand that there are differing opinions about the desirability of each of those options, but he will be aware of the initiatives by some local authorities to investigate or roll out CCTV solutions. They have been considered for Brighton, Braintree, Oxford, Manchester and other locations. He will be equally aware of the very high cost of some of these solutions. It is unfair to expect drivers to bear the full cost of the equipment, particularly if the market price continues to be hundreds of pounds.

[Jim Shannon (Strangford) (DUP)]

There has recently been a change to legislation in Northern Ireland to increase safety for taxi drivers and passengers and to regulate the sector. That resulted from attacks on both parties. Does the hon. Gentleman think that where there is good practice somewhere in the United Kingdom—in this case, in Northern Ireland—that could be used as an example to produce better regulation for taxi drivers on the mainland?

[Richard Fuller]

The hon. Gentleman makes an excellent point, which highlights the fact that so many authorities are responsible for licensing, and the complexity of various initiatives taking place. I understand that the Law Commission will examine certain aspects of regulation, but he makes an excellent point about the need for best practice to be applied across the country. I shall be interested to hear the Minister’s response and his thoughts on the balance between localism and trying to tackle a national concern.

My view is that it would be unfair to expect drivers to bear the cost of CCTV, particularly if the price of the equipment remains in the hundreds of pounds. I do not expect public money to be made available in these straitened times, but I do know that in 2006 Bedford borough council worked with Bedfordshire police to use some of the proceeds of crime moneys to implement CCTV in a pilot scheme at low or no cost to drivers. In Leicester, funds from the tackling knives action programme have been used. In other local authorities, advertising on cabs has been enabled to fund the cost of CCTV. I ask the Minister to consider the possibility of the more widespread use of proceeds of crime moneys for this purpose.

I mentioned the lack of statistics on crime. I always think that if we do not track something, we will find it hard to make improvements. Therefore, will the Minister work with the Home Office to track more formally the statistics on criminal attacks on private hire drivers, including aggravated racial abuse? Will he also comment on whether he will seek opinions from the private hire and taxi trade as input to the Prime Minister’s alcohol strategy? Unfortunately, so many of these incidents of crime correlate with alcohol and drug misuse.

[Jonathan Lord (Woking) (Con)]

I commend the work of Woking street angels in my constituency, and similar street angels across the country, and also pay tribute to the licensed taxi drivers who have an arrangement with the street angels to take drunk and incapacitated passengers safely home, unless they are potentially violent, in which case the police are called. The drivers sometimes do that at no cost to the passengers. Is that something that my hon. Friend would like to see in more parts of the country?

[Richard Fuller]

My hon. Friend makes a good point. There are many excellent initiatives in towns across the country. They have recognised the problem of growing levels of alcohol abuse and the late night trade generally. We see organisations such as street angels working with the police, local authorities and taxi companies to ensure that towns do not suffer as a result of people staying out too long and that they get home safely. That relates to the point the hon. Member for Strangford (Jim Shannon) made about the importance of local initiatives being given a national profile so that we can make changes all the way across.

My hon. Friend the Member for Woking (Jonathan Lord) enables me to segue over to talk about the safety of passengers. It is a sad reflection on the taxi industry that, despite the significant efforts made by local authorities, which he mentioned, any cursory review of local newspapers will readily identify cases of assault—frequently sexual assault—of passengers by taxi drivers. That is the flipside of the issue of vulnerability. There is the vulnerability of drivers who are on their own, perhaps with cash, and the vulnerability of people being driven home on their own. In 2002, the Metropolitan police estimated that in London alone 214 women had been raped or sexually assaulted in such circumstances in the preceding year. The figure fell to 93 by 2009 but has recently increased.

There is a range of initiatives that national Government and local authorities are taking to reduce risks to passengers. I will not dwell on those in too much detail, but a particular issue I want to highlight for the Minister is the limitations and availability of publicly held data that might be useful in reducing offences against passengers. There are currently 384 licensing authorities in the UK, each of which will have its own policies on the collection of data on drivers, such as their Criminal Records Bureau checks, and on their vehicles, and each authority will have its own rules about sharing that information. As we know, information is power, and that power ought to be available to passengers, should they wish to have it, when they hire a cab. It would provide reassurance to know that the vehicle and the driver are properly licensed.

Am I safe? is a service that currently operates in more than 50 towns and covers 10% of the UK population, but it reports that local authority information gathering is patchy and that the timeliness of updates varies. I do not know whether that application is the best, but I believe that it makes sense to make this regulated information more accessible and more accurate. Therefore, I ask the Minister for his views on the value of a national registration database of private hire drivers and licensed vehicles and, more broadly, his comments on the need for rigour in data collection and CRB checks.

Often, in towns and villages throughout our country, the only public transport option for getting back home after a night out is a cab—a private hire vehicle or hackney carriage. It is time for the Government, notwithstanding the Law Commission’s review of legislation, to come forward with some initiatives that will make our private hire and taxi sectors a respected part of our transport system—a status that they and we, the public, deserve.

19:19

[The Parliamentary Under-Secretary of State for Transport (Norman Baker)]

I thank my hon. Friend the Member for Bedford (Richard Fuller) for raising this important subject of taxi and private hire vehicle safety, and for securing the time to allow us to debate the issues. This debate comes at a time when there have been a number of very serious alleged assaults on and by taxi drivers, and that is a matter of great concern.

Licensing authorities will do their best, I am sure, but the unfortunate fact remains that taxis and private hire vehicles can never be perfectly safe. They are often hired from isolated places at night; drivers carry cash; and, self-evidently, taking a taxi or private hire vehicle generally involves getting into a car with a stranger. That combination of factors makes drivers and passengers particularly vulnerable to violence, and it is important that we take what steps we can to minimise the risks.

In looking at safety, we normally focus on the passenger’s perspective, but my hon. Friend quite rightly refers to the dangers that exist for drivers as well. A report from the Department in 2007 found that on average three drivers a year are killed unlawfully. Each crime is of course unacceptable, but it is worth putting into context the fact that journeys in taxis and private hire vehicles account for just over 1% of all journeys per person per year, and that is 700 million journeys or 3.5 billion miles per year. That, of course, is of no comfort to those who are subject to the unwarranted and unprovoked attacks to which my hon. Friend referred.

Let me look at how we might make the experience safer for the passenger and driver, starting with the passenger. First, local authorities, as licensing authorities, are obliged to ensure that only those who are “fit and proper”—the term in law—should be licensed as taxi or private hire vehicle drivers, and it falls to individual councils to ensure that that is the case.

The Criminal Records Bureau check is a central element of that assessment process. A number of organisations have raised with me their concerns that some taxi drivers have only a standard criminal record check because the law does not allow for all of them to have enhanced checks. Enhanced criminal record checks include any relevant local police information, in addition to a record of previous criminal convictions, cautions and warnings, but those checks have, in law, been restricted to drivers who work regularly with vulnerable adults or with children.

I agree that licensing authorities should be able to see enhanced criminal record checks in respect of all taxi and private hire vehicle driver licence applicants, regardless of the type of work that they intend to undertake once licensed, and I have been working closely with colleagues in the Home Office and, in particular, with my hon. Friend the Minister for Equalities, who announced in January that all taxi and private hire vehicle drivers will be entitled to enhanced criminal record checks. The necessary legislative change has now been made by the Home Office, and today I can confirm that it will come into force on 26 March.

The Minister for Equalities also announced that licensing authorities will be entitled to check whether any applicant is barred from working with children or with vulnerable adults under the Safeguarding Vulnerable Groups Act 2006. That is a good example of the Government listening to the experts and acting accordingly. Licensing officers have told us that they need to be able to see enhanced criminal record checks in order to make a proper assessment of applicants’ suitability, and we are responding by providing them with the tools that they need to carry out that vital task.

There is also a growing need for information about licensed vehicles, a point that my hon. Friend helpfully made in his lucid comments. That information enables the public to verify immediately whether a given vehicle is licensed, and it helps with the “traceability” trail. There is a difficulty when it involves personal information relating to individuals, but that is a matter for local authorities to weigh up against their wider obligations and considerations, including, under the Data Protection Act 1998, the protection of personal information.

I am happy to say, however, that I am aware of Transport for London’s vehicle-checker facility, which enables the public to input a vehicle registration plate and discover whether the vehicle is actually licensed as a private hire vehicle. That is a helpful facility, and I for one cannot see why licensing authorities should hold back on providing such information. As I was aware that my hon. Friend might raise that matter, I spoke to a leading national licensing organisation just yesterday and said that I thought it ought to respond positively to requests for vehicle licensing information, if not proactively put it on its website. It agreed, and said that it would disseminate that message to its member authorities.

I move on to the hugely important issue of drivers’ personal safety. I was very sorry to learn of the incidents in my hon. Friend’s constituency. I extend my sympathies and those of the Government to those who have been subject to serious assaults there and elsewhere, and perhaps particularly to the family of the 61-year-old grandfather to whom he referred. I was particularly horrified by my hon. Friend’s description of the range of weapons that are sometimes used against drivers who are simply going about their lawful business. It is intolerable that they should be subject to attacks such as he described. The lack of respect to which he referred is clearly an important factor to be taken into account.

I turn to the questions that my hon. Friend asked. I agree with him that there is a problem of perception. We will examine the parallel position of doormen, to which he referred, to see whether there are lessons that might be sensibly transferred across.

My hon. Friend asked about statistics. Because licensing is largely a local function—it has been since 1847 or before—there is not the depth of national statistics that he or I might like. However, we will talk to the statisticians to see what is available, and I will write to him to let him know. We will also consider whether the statistics that are available in different places might be accumulated to give us a better picture of what is happening. Of course, local authorities may hold information, and I will ask my officials to talk to the national body of licensing officers to see whether it has information that might throw a light on the matter and what else might usefully be done. If there is information such as he mentioned, I will happily share it with the Prime Minister’s team that is examining the alcohol strategy and with the Home Office more generally in respect of the crime statistics that it collects. I certainly agree that it might be useful to track criminal attacks on private hire vehicle and taxi drivers more formally.

I am familiar with the Proceeds of Crime Act 2002, because I was on the Bill Committee when it was taken through Parliament. It was a useful Act. I am not aware that it has been applied directly in cases such as we are discussing, but I am happy to ensure that my colleagues at the Home Office are made aware of my hon. Friend’s comments and concerns on that matter and others affecting them. I will write to the relevant Minister to make him or her aware of the contents of today’s debate and my hon. Friend’s comments, including those relating to the Act.

My hon. Friend mentioned CCTV. Any decision to install it in cabs or elsewhere must of course involve clarity about the purpose of doing so. It is important to consider carefully its potential contribution towards achieving that purpose, the costs and whether the intrusion into individual privacy is appropriate and proportionate. CCTV in taxis and private hire vehicles is by its nature intrusive, putting law-abiding people under surveillance and recording their movements, although it might be argued that individuals accept that by flagging down a taxi or booking a private hire vehicle.

CCTV can be effective in both preventing and detecting crime and antisocial behaviour, and owners and drivers of vehicles understandably often want to install security measures to protect the driver. However, there is a balance to be struck, not least given the Data Protection Act’s provisions on the processing of personal data. Nevertheless, the personal security of taxi and private hire vehicle drivers and staff clearly needs to be considered as well.

The Crime and Disorder Act 1998 requires local authorities and others to consider crime and disorder reduction while exercising all their duties. The Department’s best practice guidance suggests that the installation and use of appropriate safety measures is best left to the judgment of the owners and drivers themselves, but we would encourage licensing authorities to look sympathetically on, or actively encourage, measures that protect drivers.

As my hon. Friend will be aware, the Protection of Freedoms Bill is being considered in another place. The Bill includes provisions further to regulate CCTV and other surveillance camera systems. Those provisions include the introduction of a statutory surveillance camera systems code of practice and the appointment of a surveillance camera commissioner to encourage compliance, provide advice and information, and monitor the code’s effectiveness. I will maintain an interest in the development of the code to ensure that CCTV associated with public transport, including taxis, is addressed appropriately.

Drivers can use a range of other security measures to improve their personal safety, including conflict avoidance training. The Department has issued guidance for taxi and PHV drivers about how best to protect themselves, and that is on the Department’s website.

Clearly, enforcement is a hot topic. I commend Transport for London’s Safer Travel at Night campaign, which aims to reduce the number of cab-related sexual offences by raising awareness of the dangers of using unbooked minicabs, also known as touts, and illegal cabs. It also involves targeted police and enforcement activity to identify, disrupt and deter illegal cab activity. Transport for London has, through a sustained effort, made great strides in reducing cab-related sexual offences and instances of touting, although I accept that there remains an outstanding concern relating to pedicabs, which are outwith the PHV and taxi licensing system.

More generally, I am pleased that, as my hon. Friend said, the Law Commission has agreed to undertake a comprehensive review of the law governing taxis and PHVs. The fact that taxis outside London are licensed under an Act of 1847, and those inside London under an Act dating from 1869, speaks volumes. The Law Commission is a body dedicated to, and expert in, unravelling complex and archaic legislation and replacing it with modern, simplified legislation, and I hope that it will take on board issues relating to safety as part of its work. The commission embarked on the review in July 2011, it will be consulting in the spring, and it will provide us with a report and draft Bill in November 2013.

I hope that that is helpful in taking forward the genuine and proper concerns that my hon. Friend has raised.

Question put and agreed to.

19:31

House adjourned.