House of Commons

Wednesday 3rd December 2014 Commons Chamber

Wednesday 3 December 2014

The House met at half-past Eleven o’clock

Prayers

Wednesday 3rd December 2014 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 3rd December 2014 Commons Chamber

The Secretary of State was asked—

[Jenny Willott (Cardiff Central) (LD)]

1. What recent discussions he has had with Ministers in the Welsh Government on the provision of free child care places for three and four-year-olds in Wales.

[The Parliamentary Under-Secretary of State for Wales (Alun Cairns)]

Support with high-quality flexible child care is key to enabling parents to stay in the work force and gain financial stability for their families. The UK Government are increasing the provision of tax-free child care from next year; the Welsh Government need to do their part in supporting working families in Wales.

[Jenny Willott]

Parents in Cardiff complain that they cannot access their free child care entitlement. They can only get a place if they apply for three hours a day, five days a week at a state-run nursery school, which is useless if they work. Given that that means that parents in Wales are worse off than those in England, will the Minister speak to Assembly Ministers to ensure that parents can access their entitlement to free child care places in a way that suits them and not the Labour council?

[Alun Cairns]

I pay tribute to the hon. Lady for her work in this area in a number of roles in Parliament. The UK Government have pressed authorities in England to be as flexible as possible and have structured their policies around flexibility to enable more people to get into work and to manage their daily lives better. I will happily pursue the matter with the Welsh Government on her behalf.

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

We have heard about problems in Cardiff, but of course there are problems with good and affordable child care throughout Wales. For example, in rural areas there is sometimes a 200% difference in the cost from one local authority to the next. Will the Minister do his best to ensure that the Welsh Government access funds, if they exist, for that purpose and that there is a proper dialogue on this subject?

[Alun Cairns]

The right hon. Gentleman makes an important point about the variation in child care costs. Stability has finally come to the marketplace. The Government’s £2,000 tax-free child care account will create greater flexibility, provide more choice to parents and hopefully contribute to driving down costs.

[Mr Llwyd]

That is a step forward, but the Minister will be aware that good, affordable child care is key to economic development. He is probably also aware that in the UK we pay far more for child care than most other OECD countries—40.9% of the average wage compared with 18%. In Sweden, by contrast, the figure is 7.1%. Does he think that we have anything to learn from the Nordic countries in that regard?

[Alun Cairns]

It is important that we learn from wherever good practice is in place. The greater choice will help to drive down costs, but it is important that we provide the right level of care, and the quality of care is important. I have no doubt that the stronger role that parents have to play in exercising that choice will also drive up the quality of care.

[Glyn Davies (Montgomeryshire) (Con)]

2. What discussions he is having with the Welsh Government on waiting times for cross-border health treatment in Montgomeryshire and Shropshire.

[The Secretary of State for Wales (Stephen Crabb)]

The performance of the Welsh health service is the most pressing issue for the people of Wales at this time. My ministerial colleagues and I regularly raise concerns with the Welsh Government, including on the issue of cross-border services. It is essential that all patients, wherever they live, can access the very best health care that meets their needs.

[Glyn Davies]

Does my right hon. Friend agree that the Welsh Government should follow the UK Government’s example of commitment to the NHS by using the £70 million boost to its budget, which came about as a consequence of increased spending on health in England, on the Welsh NHS?

[Stephen Crabb]

Decisions on how the Welsh Government use Barnett consequentials are a matter for them, but it is true that a great many people in Wales would be baffled, bemused and hugely disappointed if Welsh Ministers chose not to use every single penny of the £70 million that we have made available to them by protecting and increasing NHS budgets here at Westminster.

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

3. What assessment he has made of the level of infrastructure investment in Wales since 2010.

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

4. What recent discussions he has had with the Welsh Government on investment in transport infrastructure in Wales.

[Neil Carmichael (Stroud) (Con)]

5. What steps he is taking to improve transport infrastructure links between Wales and England.

[The Secretary of State for Wales (Stephen Crabb)]

For too long, Wales has suffered from under-investment in infrastructure, so I am proud to be part of a Government who are putting that right. By working closely with the Welsh Government and providing additional economic resources, we have been able to set out a long-term vision for how first-class infrastructure will make Wales a more attractive place in which to invest, benefiting the people of Wales for generations to come.

[Andrew Jones]

I thank my right hon. Friend for his answer and commend him on his work in securing the valley lines electrification. Does he agree that this project will have a transformative effect on those communities that were often left behind by previous Labour Governments?

[Stephen Crabb]

I thank my hon. Friend for his question and his kind remarks. He is absolutely right. It was precisely because we did not want to leave those valley communities behind that we worked so hard with the Welsh Government to secure the full electrification package, electrifying the great western line all the way through to Swansea, plus electrifying those valley lines, which, as he says, will have a transformative economic and social impact for many years to come.

[Jonathan Edwards]

The Welsh Government have published figures on proposed roads expenditure showing that spending per head of population in south-west Wales will be £89, whereas the figure will be £815 for south-east Wales. Carmarthenshire, Ceredigion and Swansea will not have a single penny spent on roads, which means that there will be no money for relief roads for Llandeilo, Ammanford and Pencader in my constituency, and nothing for upgrades to the link between Newcastle Emlyn and Carmarthen. Does the stitch up between the UK Government and the Welsh Government to spend all Wales’s new borrowing capacity on a new M4 relief road not mean that there will be no transport infrastructure for the rest of Wales?

[Stephen Crabb]

With respect to the hon. Gentleman, he has got this wrong. A Plaid Cymru former Transport Minister in the Assembly championed the upgrade of the M4, but could not achieve it, because the money was not available. We are providing the resources for that upgrade. That does not mean that no other project can happen throughout Wales, however, and I agree with the hon. Gentleman that we want more infrastructure investment in west Wales; we share that objective.

[Neil Carmichael]

Does the Secretary of State agree that the Government’s investment in redoubling the Stroud to Swindon railway line, plus the promised investment in the A417 roundabout, add up to much improved links between the midlands and north Wales, which will be excellent for trade, manufacturing and tourism?

[Stephen Crabb]

My hon. Friend makes his point extremely well. There is a broader point: infrastructure investment not necessarily inside Wales, but in border areas, benefits people and businesses across Wales. We should not be insular when considering infrastructure investment throughout the UK because it often delivers real benefits to all parts of Wales.

[Mrs Siân C. James (Swansea East) (Lab)]

Tidal Lagoon Power in my constituency is mentioned in the national infrastructure plan. Will the Secretary of State join me in congratulating that important company on how it has worked with determination and grit to get the project through?

[Stephen Crabb]

I echo the sentiments of the hon. Lady, who is a strong supporter of this important project. The quality of that company’s management, vision and business plan was precisely why I wanted the project to be included in the national infrastructure plan. It is also why I have been working hard with colleagues in the Treasury and the Department of Energy and Climate Change to get this potentially strategic project included in our long-term infrastructure plans.

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

In 2009 I managed to convince my right hon. Friend the Member for Neath (Mr Hain) to allow Denbighshire and Conwy into the objective 1 bid. Since then, those two counties have received about £500 million of EU funding. Will the Secretary of State congratulate the EU on that funding and recognise the danger to Wales of our pulling out of the EU?

[Stephen Crabb]

The biggest danger to Wales, including north Wales, would be to abandon our clear long-term economic plan, which I know Labour Members are calling for. When I spent two days in north Wales on a business tour last week, I visited many Labour Members’ constituencies and saw just how dynamic the private sector is. Businesses in that sector are leading the economic recovery, so they are the ones that we should be saluting.

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

I commend my right hon. Friend on his commitment to the M4 relief road. The Severn bridge will link on to that relief road, so will he consider the importance of having a plan for when it returns to public ownership in approximately 2018?

[Stephen Crabb]

My hon. Friend talks about an important issue that has been raised by Members on both sides of the House in recent months. I commend his work personally and that of his Select Committee on examining the impact of Severn bridge tolls on businesses and consumers in Wales. I share his concerns about the levels of the tolls. I want a long-term plan in place, so I look forward to discussing his ideas with him in more detail.

[Nia Griffith (Llanelli) (Lab)]

The Secretary of State says that his Government are investing in the electrification of the railways and building a prison, and now he talks about the tidal lagoon, but is not the reality that they have not yet spent a single penny on any of those projects? They have not laid a brick or a yard of electric rail. In fact, the situation is worse, because his Government have cut the Welsh capital budget by a quarter, and no amount of jam tomorrow can sweeten that unpalatable truth.

[Stephen Crabb]

I am genuinely bemused by the hon. Lady’s question. Let us just remind ourselves that under the Labour Government no work was done to improve the M4, and not a single mile of railway line was electrified in Wales. We are cracking on with a long-term plan for infrastructure investment, and I am very proud to be part of a Government who are doing that.

[Mr Mark Williams (Ceredigion) (LD)]

I very much welcome what the Secretary of State said about electrification in south Wales, but will he turn his sights to the position in west Wales? Is he prepared to meet a delegation from the Traws Link Cymru group, which is campaigning to reopen the Aberystwyth to Carmarthen line? That would benefit our economy immeasurably and open up our part of the world generally. Is he prepared to push that agenda forward?

[Stephen Crabb]

My hon. Friend is a strong voice for improving all transport connections in west and mid-Wales. We are seeing the largest investment in our railway infrastructure since Victorian times, and I want Wales to get the maximum benefit from that. I would very much welcome a meeting with the group that he has mentioned so that we can discuss further how we can make sure that west and mid-Wales benefit from rail infrastructure investment as much as anywhere else.

[Jessica Morden (Newport East) (Lab)]

6. What discussions he has had with the Secretary of State for Transport on cross-border rail services.

[The Parliamentary Under-Secretary of State for Wales (Alun Cairns)]

The Wales Office has worked closely with the Department for Transport and the Welsh Government to resolve the dispute over funding for rail electrification. Electrification of the south Wales main line will bring significant journey time savings, an increase in capacity and a much improved passenger experience.

[Jessica Morden]

My constituents who use commuter services to places such as Bristol are increasingly frustrated by overcrowding and lack of capacity. Will the Minister make the point to the Department for Transport that the operator of the new First Great Western franchise must be able to meet demand for such services now, and anticipate future demand, which will only grow?

[Alun Cairns]

The hon. Lady has already made that important point to my right hon. Friend the Secretary of State for Wales. The Secretary of State for Transport has set a minimum service requirement based on the current level of services between south Wales and London, and I have no doubt but that the hon. Lady will be a feisty champion for ensuring that those local services remain.

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

I congratulate the Front-Bench team on securing great investment in the railways, particularly for cross-border services between England and Wales. They know that I have long supported improvement in those services. Will Ministers tell me what discussions they have had with either the Treasury or the Department for Transport on the possibility of Barnettising the investment in High Speed 2? That would make a great difference to investment in Wales.

[Alun Cairns]

I pay tribute to my right hon. Friend for the role she played at the Wales Office, which contributed to early negotiations on the electrification of the railways. Of course, HS2 is a UK strategic project and therefore will not be Barnettised.

[Albert Owen (Ynys Môn) (Lab)]

What is missing from this failed economic plan is any rail strategy that deals with freight. The main corridor from the Republic of Ireland to Wales and England comes through north Wales. Will the Minister press the Treasury to ensure that we alleviate the problems on our roads, not by building motorways in marginals, but by building freight lines across England and Wales?

[Alun Cairns]

The hon. Gentleman makes an important point. Early in the new year, we plan a transport summit in north-east Wales to highlight businesses’ needs, and to ensure that business has the opportunity to make its case for electrification, so that the electrification taskforce of my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones), and the recommendations made to the Secretary of State, can be taken into account. Freight is of course an important part of that.

[Michael Fabricant (Lichfield) (Con)]

Although the south Wales to London line always attracts a great deal of publicity and concern in this Chamber, the Minister should not forget the importance of the Birmingham to Machynlleth line, which is fragile and often single track. Will the Government maintain their position that the line should, wherever possible, always be open?

[Alun Cairns]

I am grateful to my hon. Friend for his persistent interest in these sorts of matters in Wales. This is an important issue, not only for the Wales Office but for the Department for Transport. It is a subject in which the Welsh Government will also want to show an interest.

[Mr David Hanson (Delyn) (Lab)]

In all of this, things seem to have gone a little bit quiet on the issue of north Wales electrification. Will the Minister update the House on his plans to ensure that it is an objective that he will seek to achieve?

[Alun Cairns]

On the contrary, things have not gone quiet on north Wales electrification. My right hon. Friend the Secretary of State for Wales was in north-east and north-west Wales last week, championing the need for business to grow and make its case, so that when the Secretary of State for Transport makes his final judgments on the next round of investment, north Wales is at the forefront of his mind.

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

The Silk commission has proposed devolving the Wales and Borders rail franchise to the Welsh Assembly. That franchise includes services from Chester to Manchester, Chester to Warrington and Chester to Crewe. What action is my hon. Friend taking to make sure that services in England are not devolved to the Welsh Assembly?

[Alun Cairns]

The devolution of the electrification of the franchise is part of the electrification decisions that were taken for the valley lines and I am sure my hon. Friend will want to make a case for services that start and finish in England. The joint agreement between the Department for Transport and the Welsh Government continues, and my hon. Friend will no doubt want to make his views known.

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

7. What assessment he has made of the reasons for changes in average weekly earnings in Wales in the last 12 months.

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

10. What assessment he has made of the reasons for changes in average weekly earnings in Wales in the last 12 months; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Wales (Alun Cairns)]

Salary levels are not where we would like them to be, but over the past year the earnings gap between Wales and the average for the UK as a whole has narrowed. Since 2010, average earnings in Wales have increased by more than the UK average, and Wales has seen the second largest increase of all the English regions and devolved nations.

[Chris Evans]

Caerphilly county borough council is clocking up a year as a living wage employer. Will the Minister follow its example and that of the Welsh Assembly by becoming a living wage employer at the Wales Office?

[Alun Cairns]

The Wales Office already pays above the living wage. That is an important part of our policy, but it is a matter for employers. The best solution is to deliver a long-term economic plan so that employers can pay the living wage where possible. The greater competition that we see in the work force will help to drive wages even further.

[Mark Tami]

Average earnings in Flintshire fell again this year by 1.5%, in the Vale of Glamorgan by 1.3% and in Pembrokeshire by 5%. When will the Government own up to their terrible management of the economy and deliver for Welsh families?

[Alun Cairns]

That accusation about the management of the economy is not reflected in the fastest growing economy among the developed nations of the world, because this Government’s long-term economic plan is working. The hon. Gentleman talks of average increases in salary. The trends from 2010 to the present show that average weekly earnings in Wales have increased by 5%, compared with 3.9% across the whole of the UK.

[Robert Halfon (Harlow) (Con)]

Does my hon. Friend agree that the best way to increase average earnings in Wales and in constituencies such as Harlow is to cut council tax for low earners and freeze fuel duty and council tax, just as this Government have done?

[Alun Cairns]

My hon. Friend makes an important point. Whereas council tax in England has broadly been frozen, council tax in Wales has gone up by 13% in spite of additional funding being given to freeze it. If there was such a cost of living crisis as the Opposition claim, they would be pressing their colleagues in local authorities and in the Welsh Government to ensure that they do not increase council tax as they have.

[Mr Peter Hain (Neath) (Lab)]

Does the Tories’ much trumpeted economic plan not mean depressed earnings in Wales, generating lower taxes, and Government borrowing overshooting Labour’s planned target by more than £20 billion—the very deficit target luridly denounced by the Tories, who said it would bankrupt the country? Why does the Minister not apologise for this abysmal failure in the Government’s austerity strategy?

[Alun Cairns]

As the right hon. Gentleman was part of the previous Government, he should apologise for leaving Wales the poorest part of the United Kingdom. He should further apologise for the fact that wages fell at the sharpest rate between 2008 and 2009. The Government’s long-term economic plan is working for Wales, and wages are rising quicker in Wales than across the rest of the United Kingdom.

[Owen Smith (Pontypridd) (Lab)]

The Minister knows that low wages and poor jobs affect not just individuals and their families, but the public finances. Will he tell us what has happened to tax receipts and welfare spending in Wales since his Government came to power?

[Alun Cairns]

We will receive a statement from my right hon. Friend the Chancellor a little later which will cover the UK financial position, but I hope the hon. Gentleman, who is the shadow Secretary of State for Wales, will welcome the progress that the Government are making in reducing unemployment and in growing wages in Wales.

[Owen Smith]

The Minister does not need to wait for the autumn statement, because the numbers are publicly available. Tax receipts in Wales have fallen by £2 billion since 2010, and benefit spending has gone up by £1.5 billion. That has piled an extra £6,000-worth of borrowing on every Welsh worker, and what have they got for it? They have got a twentyfold increase in food bank usage, the lowest wages in Wales and a cost of living crisis. The Tories have failed on the deficit, failed on the cost of living crisis, and they are failing in Wales once again.

[Alun Cairns]

The shadow Secretary of State has clearly got his facts wrong. The long-term economic plan is working for Wales. If there has been a reduction in tax receipts from Wales, it is because of our increase in the personal allowance, under which next year the average worker will pay less than £800 as a result, taking 155,000 people in Wales out of income tax altogether by next April.

[Nick Smith (Blaenau Gwent) (Lab)]

8. What discussions he has had with the Secretary of State for Transport on when the electrification of the valleys railway line will be completed.

[The Secretary of State for Wales (Stephen Crabb)]

When I became Secretary of State, I made resolving the dispute over funding for the electrification project my No. 1 priority. I have had many discussions with my right hon. Friend the Secretary of State for Transport in recent weeks, and I am delighted that we have settled a deal between the Department for Transport and the Welsh Government to deliver that important project.

[Nick Smith]

Has the Secretary of State considered improving the frequency of trains after electrification? Two or three trains an hour on the valleys line to Cardiff would be a massive boost to my constituents in Ebbw Vale, Llanhillith and the surrounding valley towns.

[Stephen Crabb]

The hon. Gentleman makes an important point. There are frequency issues on those lines, but he must recognise that decisions on the frequency of services will need to be taken by Welsh Ministers, because we are devolving the franchise to the Welsh Government as part of the electrification deal.

[Ian Lucas (Wrexham) (Lab)]

Part of the valleys line package is a contribution by the UK Government to the capital costs involved. In principle, are the UK Government prepared to support capital investment in railways in north Wales?

[Stephen Crabb]

I spent two days in north Wales meeting business leaders and local authorities to talk about how we can drive up the quality of infrastructure in north Wales, and I can tell the hon. Gentleman that we have a long-term plan that will deliver the improvements for infrastructure in south Wales and north Wales too. [Interruption.]

[Mr Speaker]

Order. Let us have a bit of quiet in the Chamber so that Mr Howell can raise the subject of the Newport investment summit.

[John Howell (Henley) (Con)]

9. What discussions he had with business leaders at the recent Newport investment summit.

[The Secretary of State for Wales (Stephen Crabb)]

The UK investment summit in Newport was another important opportunity to focus on all that is good about the Welsh economy at this time. I was proud to stand shoulder to shoulder with my right hon. Friend the Prime Minister, the First Minister of Wales and businesses in Wales to bang the drum for all that is great about our nation. During the summit I met numerous companies that are looking to invest or to expand their investment in Wales.

[John Howell]

Did my right hon. Friend discuss with business leaders the fact that there were 79 foreign direct investment projects in Wales in 2013-14, the highest level in 24 years?

[Stephen Crabb]

My hon. Friend is exactly right; there has been a sharp increase in inward investment in Wales. The important point to note about those projects is that they were all secured with the help of UK Trade & Investment and the UK Government.

[Paul Flynn (Newport West) (Lab)]

13. Does the brilliant success of that second summit, following the NATO summit, not illustrate what a marvellous habitat Newport provides for international conferences —almost certainly the best in the United Kingdom?

[Stephen Crabb]

I am delighted to see the hon. Gentleman stand up and champion business investment in south Wales. He is exactly right that Newport, and the Celtic Manor in particular, provide a superb venue for not only international leaders’ summits, but inward investment conferences. It will be a key player as we look to regenerate and improve the economy of south Wales.

[Roger Williams (Brecon and Radnorshire) (LD)]

15. Business leaders have welcomed the introduction of the employment allowance, which reduces employers’ national insurance bills by up to £2,000 per annum. It has been taken up by 1,200 businesses and charities in Brecon and Radnorshire, but it is estimated that nearly 1,000 of all employers have not applied. What can the Government do to encourage further uptake of that important concession?

[Stephen Crabb]

My hon. Friend is right. The employment allowance has been a huge success for small businesses up and down Wales. There is a responsibility not just on Government but on all of us as Members of Parliament to champion that project and to tell businesses in our own constituencies how they can benefit from the allowance.

[Guy Opperman (Hexham) (Con)]

14. It is clear that the successful investment summit in Newport brought in overseas investors and created jobs as part of the long-term economic plan. Does the Secretary of State agree that we should have a northern powerhouse investment summit—and if they like, the north Welsh can come too?

[Stephen Crabb]

I agree wholeheartedly with my hon. Friend. The northern powerhouse represents an exciting vision for economic and civic renewal in the north of England, and it poses huge opportunities and potential for north Wales too.

[Hywel Williams (Arfon) (PC)]

11. What recent discussions he has had on delivery of the online universal credit application process in the Welsh language.

[The Parliamentary Under-Secretary of State for Wales (Alun Cairns)]

I recently discussed the provision of Welsh language services for universal credit with the welfare reform Minister, Lord Freud, who confirmed that the Department for Work and Pensions is making good progress with the development of the universal credit digital service. A meeting is scheduled with the Welsh language commissioner in the new year to discuss Welsh language provision for the live service.

[Hywel Williams]

I recently met the team delivering the service, who are doing a good job under difficult circumstances. They told me that the Welsh language version will not be available until after the English language version is available. Will the Minister find out why that is, and when it will happen?

[Alun Cairns]

My right hon. Friend the Secretary of State for Wales was there only last week when this issue was discussed at the Jobcentre Plus. I have also raised it with the DWP Minister. We are meeting the Welsh language commissioner to ensure that we develop a service that is appropriate and applicable, and that grows with the growth of universal credit across the whole of Wales.

The Prime Minister was asked—

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

Q1. If he will list his official engagements for Wednesday 3 December.

[The Prime Minister (Mr David Cameron)]

I am sure the whole House will join me in paying tribute to the British embassy staff who were killed and injured in Kabul following the horrific bomb attack last week. Our thoughts are with their families and their friends at this time. We will not allow such inhumanity to deter us from building a stable future for the Afghan people. We have nothing but admiration for the staff of the embassy, British and Afghan, who work together, at great personal risk, to help achieve that.

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

[Robert Flello]

I would like to associate myself and my constituents with the Prime Minister’s remarks about our brave staff, not just in the embassy in Kabul but, of course, across the world in very dangerous places.

The Prime Minister promised to balance the books by 2015 and to cut the debt. Despite punishing the poorest with cuts, the deficit has barely been touched, and borrowing has been greater in the last four years than it was in the previous 13. Does this country not desperately need a Labour Government?

[The Prime Minister]

We have got the deficit down by a third because we have taken tough and difficult decision after tough and difficult decision, and they have all got one thing in common: each and every decision was opposed by Labour.

[Mr Richard Bacon (South Norfolk) (Con)]

On Monday morning at Norwich research park, I thought I heard the sound of a cuckoo, which was remarkable since we have not even reached Christmas, let alone spring. Does the Prime Minister agree that this may be further evidence of the strength of our long-term economic plan?

[The Prime Minister]

I was delighted to meet my hon. Friend and other Norwich MPs at Norwich research park to talk about the expansion of infrastructure in our country, and particularly the improvements that we are going to make to the A47, which will not just help Norwich and Norwich research park but help all of East Anglia right out to Lowestoft. I know how important it is to make sure that that important part of our country also benefits from our long-term economic plan.

[Edward Miliband (Doncaster North) (Lab)]

I join the Prime Minister in paying tribute to the British embassy staff killed in the appalling terrorist attack in Kabul last week. It is a reminder of the danger that our embassy staff and military personnel still in Afghanistan face on a daily basis. All our thoughts are with the family and friends of those who died.

The Prime Minister said earlier this year:

“woe betide the politician that makes…big promises and then says ‘Oh, sorry, I didn’t really mean it.’”

Can he recall any time he might have done that?

[The Prime Minister]

Let me tell the right hon. Gentleman the promises we have kept. We promised to get the economy growing—it is the fastest growing in the G7. We promised to get unemployment down—we have created 1.8 million new jobs. We promised to make Britain a great place to start a business—there are 760,000 more businesses in this country. This Government are a Government who have made their commitments, kept their commitments and, as a result, have a plan that is working.

[Edward Miliband]

Come to think of it, the Prime Minister might have broken a big promise quite recently: immigration down to the tens of thousands—no ifs, no buts. What did he say in his contract with the British people? He said:

“If we do not deliver our side of the bargain, vote us out in five years’ time.”

When he said it, did he mean it?

[The Prime Minister]

Yes, and we have cut immigration from outside the EU by 24%. With immigration, every single step we have taken in the past four years was opposed by the Labour party. What did they do for 13 years in government? They put immigration up as a deliberate act of policy. This Government made promises to our pensioners—promises kept; promises on our NHS—promises kept; and above all, a promise to turn our economy around from the mess left by those two on the Front Bench.

[Edward Miliband]

So the Prime Minister did mean it: throw him out because he broke his promise. What he ought to be saying, but dare not say, is that he made a solemn promise, and he broke it.

Let us turn to another one of those big, solemn promises. This is what he said to the nurses’ conference just before the last election:

“I want to tell you what we’re not going to do: there will be no more of those pointless reorganisations that aim for change but instead bring chaos.”

When he said it, did he mean it?

[The Prime Minister]

What we have done is seen more doctors, more nurses, more patients treated, but if we are on promises, I have a little list. I have a list of the right hon. Gentleman’s promises. Right, here we go. Mr Speaker, he promised—[Interruption.] However long it takes. I have all day, and I can tell you, I am looking forward to what is coming next, and I think he will be too. He promised detailed plans for a graduate tax. Where is it? He promised an alternative spending review. That was in 2010. Where is that? He promised he would tell us the list of business people he had dinner with in 2011. Where is that one? He promised to stand up to the unions on public sector pay. When has he ever done that? He promised he would not let the unions run the Labour party, and they run it more than ever.

[Edward Miliband]

What the Prime Minister ought to be saying, but dare not, is that he made a solemn promise of no top-down reorganisation of the NHS, and he broke that promise.

Let us turn to his promise on living standards. The 2010 Conservative manifesto made this big promise of

“an economy where…our standard of living...rises steadily.”

When he said it, did he mean it?

[The Prime Minister]

Yes, I meant it, and 26 million people are having their taxes cut, and 3 million people—[Interruption.]

[Mr Speaker]

Order. Both the questions and the answers must be heard.

[The Prime Minister]

Twenty-six million people have had their taxes cut, and 3 million of the poorest people have been taken out of income tax altogether. The minimum wage has been increased for the first time since the right hon. Gentleman’s great recession. Now, people who have been in work for a year are seeing a 4% increase in their pay. They bankrupted our economy. We know that “Mrs Brown’s Boys” was a comedy; “Mr Brown’s Boys” was a tragedy.

[Edward Miliband]

The Prime Minister has obviously recently been visiting the David Mellor school of charm. What he ought to be saying, but dare not, is that he made a solemn promise to improve living standards and he has broken it.

What about his biggest promise of all, which was on the deficit? In October 2010, he promised:

“In five years’ time, we will have balanced the books.”

When he said it, did he mean it?

[The Prime Minister]

We promised to cut the deficit. It is down by a third. In a moment or two, we will see the progress that has been made. Obviously, I cannot reveal what is in the Chancellor’s autumn statement, as that would not be proper, but I make this prediction—[Interruption.]

[Mr Speaker]

Order. The answers must be heard.

[The Prime Minister]

I simply make this prediction: in a moment or two, the right hon. Gentleman will be looking as awkward as when he ate that bacon sandwich. [Interruption.] Oh yes!

If we are talking about predictions, let us remember the right hon. Gentleman’s predictions. He said that our policy would lead to the disappearance of 1 million jobs—wrong. He said that it was a fantasy that the private sector would create the jobs—wrong. [Hon. Members: “Wrong!”] He said that we would choke off jobs and growth—[Hon. Members: “Wrong!”] The Opposition told us that there would be a lost decade, that there would be a double-dip recession and that there would be 1 million more people unemployed. They have been wrong on every single economic issue.

[Edward Miliband]

The Prime Minister has failed every test he set himself. The thing about this Prime Minister is that he has turned breaking promises into an art form. As the election approaches, the thing the British people know about this Prime Minister is that when he says it, he does not mean it.

[The Prime Minister]

What a contrast: this is a Prime Minister and this is a Government who have turned our economy around, sorted out our public finances and got the economy growing. No one in this country will ever forget that the Opposition are the people who sold the gold, who broke the economy and who bankrupted the nation; and still they sit there, completely hopeless and unelectable.

[Julian Sturdy (York Outer) (Con)]

Q2. The city of York is truly benefiting from the Government’s northern-led economic plan. The Government are rightly investing in transport infrastructure across Yorkshire. With that in mind, will the Prime Minister meet me and a delegation of local businesses to discuss their campaign to dual York’s northern ring road, which, given the high levels of congestion, is seen as a serious barrier to further economic growth in our city?

[The Prime Minister]

My hon. Friend is absolutely right. I know what a problem that road can be. Infrastructure investment does unlock growth. That is why, on Monday, we announced the biggest roads programme in a generation, including £2.3 billion for major roads in Yorkshire and the north-east. I am very happy to arrange a meeting between him and the Secretary of State for Transport to discuss the matter. He will know that we have substantial plans to upgrade the Hopgrove junction, where traffic from the northern ring road gets on to the A64. We believe that that will make a real difference.

[Angus Robertson (Moray) (SNP)]

Does the Prime Minister intend to devolve corporation tax to Northern Ireland and Scotland in tandem, or, in contrast with the vow, has he decided to veto the devolution of corporation tax to Scotland entirely?

[The Prime Minister]

We are implementing the Smith commission. That is what we believe should be implemented. The Chancellor will set out our position on Northern Ireland in a moment or two. Let us be absolutely clear about the big differences between Northern Ireland and Scotland: Northern Ireland has a land border with the Republic and had all the difficulties and troubles—

[Angus Robertson]

indicated dissent.

[The Prime Minister]

By shaking his head in that way, the hon. Gentleman shows how little the Scottish nationalists care about the rest of our United Kingdom.

[John Glen (Salisbury) (Con)]

Q3. Fifty-six years ago, Simon Wingfield Digby, the then hon. Member for West Dorset, made the first plea for improvements to the A303 in this House. Thanks to the Government’s careful management of the economy, the Prime Minister was once again warmly welcomed in Wiltshire this week to announce the £1.3 billion investment in the tunnel under Stonehenge. Will he reassure the people of the south-west that we will not have to wait another 56 years for it to be delivered?

[The Prime Minister]

I can certainly make that commitment. I was one of a number of people who made their way to Stonehenge this week to see how important this tunnel will be. It will be at least 1.8 miles and is part of an overall plan to create that expressway all the way between the M3 and M5 and down into Cornwall, to ensure that we improve that vital road network. As for Stonehenge, the tunnel will ensure that this extraordinary monument has the setting and attention it deserves.

[Graham Jones (Hyndburn) (Lab)]

Q4. A Haslingden constituent, 20-year-old Sophie Lancaster, was brutally murdered in 2007, kicked to death in a park by a group of males simply for being part of a sub-culture—a goth. She was a victim of hate crime, and the implications of that tragedy continue today. Will the Prime Minister meet the Sophie Lancaster Foundation to see its excellent work, and do everything he can to ensure the clear message that there are no exceptions to hate crime?

[The Prime Minister]

I remember that tragic case and the appalling way that that girl was treated and beaten. I am happy to see what meeting I can arrange to ensure that the agenda of how we combat hate crime in all its forms is properly addressed in our country.

[Mike Crockart (Edinburgh West) (LD)]

This week 40 banks and building societies issued a joint declaration to deal with the multimillion pound crimes of vishing and courier fraud, when people are called by criminals posing as police officers or bank employees and asked to hand over bank cards and pin numbers to assist fraud inquiries. I have worked with Age UK, the Alzheimer’s Society, and call blocker manufacturers to build a scheme to protect the most vulnerable in society from that crime, but Ministers at the Department for Culture, Media and Sport are too busy to discuss it. It seems that they are able to block my nuisance calls, so will the Prime Minister help the vulnerable to do the same?

[The Prime Minister]

I will certainly ensure that DCMS Ministers meet the hon. Gentleman if necessary, and the group he is talking about. It is important to deal with all such issues, wherever they come from.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

Q5. The 2010 Conservative manifesto promised an economy in which not just our standard of living, but everyone’s quality of life would rise steadily and sustainably. Why in the last year have wages grown by the smallest amount since records began?

[The Prime Minister]

I am delighted that after four and a half years, the Labour party finally wants to debate the economy at Prime Minister’s questions. This is a golden day for us; it means we can talk about the 1.8 million jobs created and the fact that those who have been in work for a year are seeing their pay go up by 4%. It means that we can talk about how we have lifted the threshold for the basic rate of income tax to £10,500, and taken 3 million people out of tax. All those things are helping to ensure that millions more of our countrymen and women have the dignity and security of a job, and the ability to provide for their families. That is what is happening in Britain; the economy has been turned round from the disastrous situation left by the Labour party, and that is something the whole country can be proud of.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

May I commend to my right hon. Friend the debate in Westminster Hall this morning, which was kicked off by my hon. Friend the Member for Meon Valley (George Hollingbery), on the catastrophic decline of sea bass stocks across northern Europe? We heard that successive Governments have been trying to persuade the EU for decades to address that problem. Will the Prime Minister undertake to put the Government’s entire weight into addressing the collapse of sea bass stocks when considering European Union fisheries policy this month?

[The Prime Minister]

My hon. Friend raises an important point about sea bass stocks but also about fish stocks more broadly. Under this Government there have been improvements in the way that fisheries policies work in the EU, with a greater level of devolution. We need to keep pushing that forward to ensure that our fisheries and stocks can recover, as that is the only way to ensure a long-term, sustainable industry.

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

Q6. Will the Prime Minister please explain why the Government have borrowed almost £4 billion more this year than at the same time last year? Does he regret his firm promise to balance the books by next May?

[The Prime Minister]

This Government have had to borrow a lot of money because we inherited the biggest budget deficit in the world. [Interruption.] Yes, it was 11% of our GDP when we came to government. We have already cut it by a third, and we will hear in a moment or two how we are now getting on. I would like to highlight something the shadow Chancellor said this week. He said that he would be tough on the deficit and tough on the causes of the deficit. As he is one of the causes of the deficit, I think we have just found the first ever example of political masosadism. [Interruption.]

[Mr Speaker]

Order. We all know what the Prime Minister meant.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

rose—. [Interruption.]

[Mr Speaker]

Order. I understand that the House gets excited, but Mr Kawczynski will scarcely be able to hear himself, let alone will anybody else have the chance to hear him. Let the hon. Gentleman be heard.

[Daniel Kawczynski]

Thank you, Mr Speaker.

I would like to thank the Prime Minister sincerely for all the help he has given to all Shropshire MPs in securing our direct train service to Shrewsbury, which starts later this month. It is a vital boost for tourism and inward business investment in Shropshire. Will he take advantage of our now being connected to London, and visit Shrewsbury and the wonderful new university we are creating in our beautiful town?

[The Prime Minister]

I look forward to the opportunity of visiting Shrewsbury if I can.

Let me be clear: I meant to say ‘masochism’. I am sorry, Mr Speaker. Normally I say that the shadow Chancellor likes to dish it out but cannot take it, but after this quote I think he obviously quite likes taking it as well. So there we are. [Laughter.] We have learned a lot of interesting things today.

What is happening in Shrewsbury is magnificent. There have been improvements to 400 stations across the country, including Kings Cross.

[Stephen Timms (East Ham) (Lab)]

Q7. The Prime Minister said that his economic policy would eradicate the deficit in this Parliament. All he can claim today is that after four years it came down by a third, but in the past few months it has been going up. Will he accept that the big fall in real wages since the election is a large part of the explanation for why his economic policy has fallen so far short on its central objective?

[The Prime Minister]

After four years of never mentioning the deficit and opposing every single spending cut we have had to make, there seems to have been a Damascus-like conversion—Labour Members are all suddenly interested in the deficit. Let me give the right hon. Gentleman a bit of a lesson. Yes, we have had to make very difficult decisions, cutting some Government Departments and some by as much as 20%, but every single decision was opposed by the Labour party. In terms of what is happening on wages, as I have just said, the recent figures out show that people who have been in work for more than a year are seeing pay increases of 4%. We are helping everyone in work by cutting their taxes. In the end, the only way to raise living standards sustainably is to grow the economy, create jobs and cut taxes— three things we are doing; three things Labour would never do.

[Charlie Elphicke (Dover) (Con)]

Q8. This morning, more people went to work than ever before in the history of our nation. Is the Prime Minister aware that in Dover and Deal unemployment has fallen by 37%, thanks to our welfare reforms and thanks to our long-term economic plan? Why would we ever return to where we were less than five short years ago?

[The Prime Minister]

My hon. Friend is absolutely right. In Dover, the claimant count is down by 24% since the election. Across the south-east, the number of people employed is up by almost a quarter of a million. We have record levels of employment. Anyone getting a job is someone else who has the security and stability to provide for their family. At the same time as this increase in employment, we have also seen the pay gap between men and women, particularly under 40, reduced to its lowest ever level. We are seeing a strong and solid recovery. As the Chancellor will explain in a moment, there is no room for complacency. We have to stick to the long-term economic plan and deliver it.

[Mr Dennis Skinner (Bolsover) (Lab)]

Is the Prime Minister proud that the Government have added £430 billion to the national debt—more than all the Labour Chancellors of the Exchequer this century? He cannot blame Labour for that figure.

[The Prime Minister]

Oh yes I can. We inherited the biggest budget deficit in Britain’s peacetime history. The Labour party had the longest and deepest recession in a century. That was what we were delivered. Since then, we have turned the economy round; we have 2 million private sector jobs; we have cut the deficit; 760,000 more businesses are operating in our country; and we have the fastest-growing economy of any G7 or major European country. That is an economic record that no Labour Government could ever match.

[Sir Peter Luff (Mid Worcestershire) (Con)]

Q9. Droitwich Spa boxing academy, run entirely by volunteers, trains talented boxers and provides a highly valued community resource, turning round the lives of many disruptive and troubled young people. It is a shining example of the big society. Does the Prime Minister understand my deep concern that the blinkered decision of Her Majesty’s Revenue and Customs to insist on a draconian interpretation of the VAT rules for its new building will result in the academy’s closure?

[The Prime Minister]

First, I know of the important job done by the Droitwich Spa boxing academy, which is run entirely by volunteers, and I know how hard my hon. Friend works for his constituents. We will look carefully at this case. As he might know, unfortunately the zero rating of VAT on construction services is limited and does not apply to buildings used as sports clubs, but HMRC is willing to discuss with the owners flexible arrangements for paying the VAT through its time to pay scheme. I will ensure that discussions take place rapidly between him and HMRC to see what can be done.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

Q10. Cancer waits for no one and, with fast-growing cancers in particular, time is of the essence. The cancer treatment target in England has been missed for nine months and more than 15,000 patients are waiting more than two months to start treatment. Does this not prove, yet again, that you cannot trust the Tories with the NHS?

[The Prime Minister]

I share the hon. Lady’s concern about how rapid our cancer treatment must be, which is why I am proud that under this Government an extra 460,000 people per year are getting cancer treatment, are getting referrals. There are about seven key cancer targets, and we are meeting all but one of them. That is quite a contrast with Wales, where the Labour party has been in control for the last four years and where it has not met a cancer target since 2008.

[Seema Malhotra]

indicated dissent.

[The Prime Minister]

It is no good the hon. Lady shaking her head. Her party is in charge of the NHS in Wales, and it is letting down cancer patients day after day.

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

Following the threat of a legal challenge, NHS England has scrapped its processes for approving drugs for rare conditions, which is affecting 200 children in the country, including six-year-old Sam, in my constituency, who has Morquio. Will the Prime Minister today instruct the Health Secretary to re-establish the highly specialised commissioning service so that we can approve these drugs and ensure that children get the drugs they need immediately, before a new process is put in place?

[The Prime Minister]

I am happy to discuss that issue with the Health Secretary. As the hon. Gentleman knows, we have a procedure for licensing drugs and, for cancer drugs, we have the additional benefits of the cancer drugs fund, but I am happy to discuss his point with the Health Secretary.

[Nic Dakin (Scunthorpe) (Lab)]

Q11. The Prime Minister promised the British people that this Government would eliminate the deficit and significantly reduce immigration. Why has he failed the British people on both counts?

[The Prime Minister]

To sum up, the Labour party’s approach seems to be this: “We created an enormous problem, and we have come here today to complain that you have not cleared it up fast enough.” That is the extent of Labour Members’ intellectual analysis of Britain’s problems—it is quite ridiculous, given that Labour left us with the biggest budget deficit since the war. We have started to get on top of it, and we will make more progress.

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

Given the record number of small businesses today in Chiswick, Brentford, Isleworth and Hounslow; given that small and medium-sized businesses represent 99% of the business community; and given that Saturday is small business Saturday, will my right hon. Friend join me in encouraging everyone to shop small and shop local on Saturday, and will he make small businesses a priority in our long-term economic plan?

[The Prime Minister]

I absolutely agree with my hon. Friend. We now see a record number of small businesses in our country—a total increase of 760,000 over this Parliament. Small business Saturday is an excellent event, by which we can boost small businesses and draw attention to the work they do. We will kick-start this event on Friday with a small business fair in Downing street. Now is a good moment to make sure that small businesses are benefiting from all the changes that we have made, such as the cut in the jobs tax of £2,000 for businesses and charities, the abolition of national insurance contributions for under-21-year-olds when they employ them, the doubling of the small business rate relief and, of course, the cutting of corporation tax for small business as well. This Government have a very strong record for saying to small business, “We respect what you do in creating the jobs, the wealth and the prosperity that our country needs”.

[Rosie Cooper (West Lancashire) (Lab)]

Q12. Skelmersdale in my constituency is the second largest town in the north-west without a railway station—a station that would bring social and economic benefits to the town, as we have heard happened in Shrewsbury. As the Prime Minister is in spending mood, albeit a little bit further south, I wonder whether he could give the people of Skelmersdale an early Christmas present with the promise of a railway station.

[The Prime Minister]

I am very happy to look at what the hon. Lady says. What we are seeing are more railway lines opening, more stations opening and more railways being electrified. In the entire period of the last Labour Government, I think they electrified just 13 miles of track—an absolutely pathetic record for a Government who had 13 years to do something about it. We now have the biggest road programme since the 1970s, the biggest rail investment programme since the Victorians and, under this Government, stations, lines and electrification are all taking place.

[Bill Wiggin (North Herefordshire) (Con)]

Q13. Will my right hon. Friend meet me to help get more beds for Hereford hospital? Will he send a Minister to meet the magnificent staff and, possibly, Welsh patients who have acquired addresses in England so that they can access life-saving cancer care drugs that are not available under the Labour-run Welsh NHS?

[The Prime Minister]

I am sure my hon. Friend will welcome the £2 billion for the NHS in England, which the Chancellor announced at the weekend. That money will go directly to the front line. Obviously, we want to see continued improvements at the Hereford hospital. There are pressures from people from Wales crossing the border and wanting to use services in England. That is why it is so important that the Welsh NHS has the improvements that we have been talking about. As to meetings and visits to my hon. Friend’s hospital, I will look very carefully at what we can do to help.

[Kevin Brennan (Cardiff West) (Lab)]

Q14. Cutting net migration to tens of thousands, reducing spending on welfare and, yes, eradicating the deficit by the end of this Parliament formed the triple crown of the Prime Minister’s promises to the British people. How does it feel as Prime Minister when you are once, twice, three times a failure?

[The Prime Minister]

I will tell the hon. Gentleman how it feels to lead a Government who have created 2 million private sector jobs. I will tell him how it feels to lead a Government who have turned round the British economy, and I will tell him how it feels to have an economy in Britain in which businesses right around the world want to invest. That is the record of this Government: recovering from the complete shambles and mess that the hon. Gentleman left when he was part of the previous Government.

[Steve Brine (Winchester) (Con)]

As he may well remember, the Prime Minister experienced this summer the congestion regularly faced by my constituents at junction 9 of the M3 motorway. May I thank him on behalf of the people I represent for the comprehensive package of improvements announced by the Transport Secretary earlier this week? Does he share my view that my constituents can benefit from this kind of investment only because we have a taken the decisions to get our economy in a place that we can?

[The Prime Minister]

My hon. Friend is absolutely right, and I know about the importance of the M3 improvements that he mentions. The fact is that all these things—whether it be improving our road network, investing in our NHS, building new railway stations and electrifying railway lines—can be done only if we have a successful and growing economy, a long-term economic plan and a demonstration that the public finances are under control. With this Chancellor and with this Government, we have all of those things in place. That is why we have been able over the previous days to talk about improving our NHS, investing in our transport infrastructure, building the flood defences that this country needs and putting in place all the infrastructure—whether it be ports, airports or energy—that a modern economy needs in order to sustain a level of growth that can deliver the prosperity and security that the British people deserve.

[Teresa Pearce (Erith and Thamesmead) (Lab)]

Q15. In the past four years the NHS has spent more than £5 billion on agency staff, about 20% of which will have gone into the pockets of the agencies rather than those of NHS staff. How many full-time permanent nurses would that have paid for?

[The Prime Minister]

What we have in the NHS under this Government are £1,300 extra nurses and 8,300 extra doctors, and because we have cut the bureaucracy, we have managed to remove 21,000 bureaucrats. No one wants to see extensive use of agency staff. All well-run hospitals will have fewer agency staff and more permanent staff: that is what is happening under this Government.

Autumn Statement

Wednesday 3rd December 2014 Commons Chamber

12:35

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

Four years ago, in the first autumn statement of this Parliament, I presented the accounts of an economy in crisis. Today, in the last autumn statement of this Parliament, I present a forecast which shows that the United Kingdom is the fastest growing major economy in the world. Back then, Britain was on the brink. Today, against a difficult global backdrop, I can report higher growth, lower unemployment, falling inflation, and a deficit that is falling too. Today, the deficit is half what we inherited. Our long-term economic plan is working.

Now, Britain faces a choice. Do we squander the economic security that we have gained, and go back to the disastrous decisions on spending, borrowing and welfare that got us into this mess, or do we finish the job, and go on building the secure economy that works for everyone? I say: we stay the course. We stay on course for prosperity.

Today, we do not shy away from the problems that remain unresolved in the British economy. Although the deficit is falling, it remains too high, so the measures that I announce today are not a net giveaway, but actually tighten the public finances a little. I could have eased up on our determination to deal with our debts; I have not.

Although business investment is rising strongly, we know that there is still much more to do on productivity, so today we boost our skills, our exports, our science and our infrastructure. Although employment is at a record high, we must never give up on the task of finding work for all young people, so today we move further towards full employment by supporting the businesses that create jobs and apprenticeships. For decades our economy has been too unbalanced, so we do more now to build the northern powerhouse. And today we back aspiration—the aspiration to save, to work, and to own your own home—in stark contrast to those who would hit people’s pensions and jobs and homes with higher taxes, for that is an approach that we entirely reject. Instead, we support people who want to work hard and get on, and it is for their sakes that we resolve to stay on course for prosperity.

I now turn to the report from the Office for Budget Responsibility. Let me again thank Robert Chote and his team for their hard work, and for restoring integrity and independence to our country’s economic forecasts.

Since the Budget, new international statistical standards have changed the assessment of the British economy in recent years. We now know that, contrary to claims that were made at the time, there was no recession in this Parliament, and no double dip. Indeed, the only recession was the great recession under the last Labour Government. We also know that the economy has grown faster than previously reported. It is up by more than 8% over the current Parliament: that is the third fastest growth in any major advanced economy since 2010. We know, too, that growth has been more balanced. We were told that business investment had risen by 4% over this Parliament; in fact, it has risen by 27%.

That is what we know about the recent past. Let us turn to the future. The warning lights are flashing over the global economy. Japan is in recession, the eurozone is stagnating, and the geopolitical risks are rising. I can tell the House that the OBR has therefore revised down its forecast for global growth this year and in every year. It notes that the slowdown is particularly acute in our main export markets, such as Europe, where growth is a full 1% lower this year than previously forecast. It makes it even more imperative that we connect British firms to the faster growing emerging economies of Africa, Asia and south America. Today I am providing a £45 million package to do that and to provide new support to first-time exporters.

As one of the most open trading economies in the world, with a large financial sector, Britain cannot be immune to the risks in the global economy, but nor are we powerless—provided we go on working through our plan to put our own house in order.

That brings me to today’s forecast. In the Budget, I reported that the OBR had revised up its forecasts for growth this year. A year ago, we expected GDP to grow by 2.4%. In March we expected 2.7%. Today, the British economy is forecast to grow by 3%. Over the last year we have grown two and half times faster than Germany; over three times faster than the eurozone; and over seven times faster than France. I think we can safely reject the advice of those in this House who told us on the steps of the Élysée palace that we should be doing to Britain what has been done to France.

Growth in the UK next year is also forecast a little higher at 2.4%, with quarterly growth moderating as it returns to trend, then 2.2% in 2016, 2.4% the year after, then 2.3% in 2018 and 2019, and the growth we are now seeing is more balanced. Manufacturing is growing faster than any other sector, and investment is set to be up 11% this year—growing faster in the UK than in any other major advanced economy.

This balanced growth is creating jobs, too, with a record number in work. At the Budget, the OBR expected that over the last year employment would rise by 265,000. Today, I can tell the House that it doubles that number. Over the last year, half a million new jobs have been created. In March, it forecast that in the first three quarters of the year the number claiming unemployment benefit would fall by 7%. Today, it says that it actually fell by 23%. The number of young people on long-term unemployment benefit has almost halved in the last year alone. Unemployment is revised down in every single year of the OBR forecast, falling from the 8% we inherited to 5.4% next year, before settling at 5.3%.

On average, for every day this Government have been in office, 1,000 new jobs have been created, 1,000 new opportunities for people, new economic security for 1,000 families every single day. Britain’s long-term economic plan is working.

In response to the caricature that some like to draw—that these jobs are being created only in London, that they are part time with women losing out—I say, look at the facts. How many of the jobs being created are full-time? Eighty-five per cent. Where are the jobs being created fastest right now? In Scotland and in the north of England. What is happening to the gender pay gap? It has just fallen to its lowest level in the entire history of this country. That is progressive politics in action.

Regular earnings growth is now faster than inflation. For those in full-time work for over a year, earnings grew 4% over the last year. The compositional effect of many more people finding work, particularly young people, is weighing down on overall average earnings, but the OBR today predicts that “meaningful real wage growth” will pick up through next year and grow above inflation for the next five years. Indeed, I can tell the House that GDP per capita has grown faster on average in this Parliament than over the last two Parliaments combined.

Living standards are also supported by our robust monetary policy arrangements with the Bank of England. Today, there is welcome news that the OBR has significantly revised down its forecast for inflation: it is expected to be down to 1.5% this year, 1.2% next year and 1.7% the year after, before it returns to target. So we have lower inflation, lower unemployment and higher growth.

That brings me to the forecasts for debt and deficit. There are those in this House who have been predicting from the Opposition Dispatch Box in recent weeks that I would have to announce today that the deficit was rising and that borrowing this year would be higher than last year. We discover today—I am afraid not for the first time—that their predictions are wrong: the deficit is falling this year and every year, and, not only that, but in the final four years of the forecast, borrowing is actually lower than predicted in the Budget. [Interruption.] The Office for National Statistics has made revisions to the way the national accounts are measured—[Interruption.]—and one of the advantages of having created an independent OBR is that it has ensured that the figures presented today are comparable on a like-for-like basis with the forecast made in the Budget. [Interruption.] On this revised basis, the forecast at the Budget would have shown borrowing falling from the £150 billion we inherited to £99.3 billion last year, £86.4 billion this year, £68.3 billion next year, then £41.5 billion, £15.8 billion, and then a small surplus of £3.7 billion in 2018-19. [Interruption.] That is the Budget forecast. [Interruption.] Today’s forecast shows borrowing falling from £97.5 billion last year to £91.3 billion this year, then £75.9 billion next year, then £40.9 billion, £14.5 billion, and then a surplus of £4 billion in 2018-19. So borrowing falls every year. It falls slightly less than expected in the first two years, but then falls slightly more than expected in the four years after that. [Interruption.] We end in a marginally stronger position than expected at the Budget, and I can tell the House that by 2019-20 Britain is now predicted to have a —[Interruption.]

[Mr Speaker]

Order. There is now excessive noise in the Chamber. The Chancellor should not have to shout in order to make himself heard, and to some degree he is having to do so at the moment, and that is not right. The House knows the track record: I facilitate the fullest possible questioning of the Chancellor—always have done, always will do—but colleagues must, please, give the Chancellor his head.

[Mr Osborne]

I can tell the House that by 2019-20 Britain is now predicted to have a surplus of £23 billion—out of the red and into the black for the first time in a generation, a country that inspires confidence around the world because it seeks to live within its means.

As a percentage of GDP, today the deficit is also forecast to fall this year, down by 0.6% of GDP—down from what the OBR describes today in its own report as

“the post-war record deficit of 10.2% of GDP”

in 2009-10 to 5% this year. The deficit is no longer down by a third, but is now cut in half. It is still too high, but with our plan it falls again to 4% next year, then 2.1%, then 0.7% before we move into surpluses of 0.2% and 1% of GDP. The structural deficit also falls and moves into surplus at the same pace over the next five years, as forecast at the Budget.

We continue to meet the debt mandate a year late and the fiscal mandate two years early. Again, because of the statistical revisions and the reclassification of Network Rail—given that Labour tried to put it off balance sheet—the OBR has given us a like-for-like comparison on debt as a share of GDP. On the new basis, it is 80.4% this year, next year it peaks at 81.1% —half a per cent. lower than previously forecast at the Budget—and it is then lower in every subsequent year, at 80.7% in 2016-17, 78.8% the year after, then 76.2%, before reaching 72.8% in 2019-20. Again, this is less than was forecast at the Budget.

Borrowing is falling. The deficit is down this year to half what we inherited. Debt is falling in the same year predicted, and lower in every year thereafter. There will be a surplus that is higher and by the end of the period worth £23 billion. Britain is back living within its means. Our long-term economic plan is on course.

The House will want to know why the public finance numbers are much better than some were predicting, even though tax receipts have deteriorated. The answer is that we cannot look at taxes alone; we have to look at spending, too. As has been widely reported, tax receipts have not been rising as quickly as the OBR had previously predicted. The OBR now forecasts that revenues will be £23 billion lower by 2017-18. However, that is more than offset by three things. First, we are paying less in welfare and saving money on public service pensions because of lower inflation and more people being in work. That saves £4 billion a year.

Secondly, the revisions to our national accounts have slightly increased the measured rate of spending cuts in this Parliament. We have a choice: we can ease up, or we can continue with our plans. Our policy of continuing the spending cuts in the first two full years of the next Parliament, at the same pace as we achieved in this Parliament, now produces £4 billion less spending. Thirdly, and crucially, the interest we pay on our national debt is £16 billion lower in that year. That is, by a large margin, the biggest saving and demonstrates the value of our fiscal credibility around the world. Some have pointed to lower tax receipts and put forward policies for higher taxes. I prefer lower tax receipts offset by lower debt interest payments, and that is what we are seeing today.

I do not hide from the House that in the coming years there are going to have to be very substantial savings in public spending. Next week we will publish a new charter for budget responsibility that will reinforce our commitment to finish the job in the next Parliament, and we will ask the House to vote on it in the new year. However, no charter, valuable as it is, can be a substitute for the hard work of identifying real savings in the cost of government and delivering them in practice. That is what we have done in this Parliament, and it is what we will have to do in the next.

The work starts with our spending plans for 2015-16, which save £13.6 billion. We have published the detailed and specific departmental proposals that will achieve them. There will be two further years where decisions on this scale will be required and, as I have said before, we are going to have to go on controlling spending after those years if we want to have a surplus and keep it. Of course, people are already saying it will be impossible to achieve those levels of savings. We heard exactly the same thing in 2010, often from exactly the same people. In fact, we have come in under budget every year of this Parliament. This year I can confirm that we will be spending £10 billion less than set out in our original spending plans.

There are those who say we should cut even faster, and those who say we should cut more slowly. But we have got the pace right, as is clearly demonstrated by the fact that our economy is growing faster than almost any other. And because of careful management, we can afford to put part of that underspend money into our national health service to cope with the pressures it faces: £2 billion every year to the front line of the NHS—not money that busts our plans, but extra money that is available because we have a plan.

Instead of returning the foreign exchange fines paid by the banks to the City, as happened under the previous Government, we are using that windfall for a £1.2 billion investment in GP services across the UK. That is a down-payment on the NHS’s own plan, proving definitively for anyone in any doubt that we cannot have a strong NHS without a strong economy. I can also tell the House that we will help with the employment of carers, who do so much, by extending the £2,000 employment allowance to include them.

We have shown in this Parliament that we can deliver spending reductions without damaging front-line public services if we are prepared to undertake reform. Crime is down. Satisfaction with local government services is up. Savings and reform—and we will do exactly the same again. Continuing to reduce departmental spending in the first two years of the next Parliament would mean at least £15 billion off Whitehall budgets. Our control of public sector pay in the past four years has delivered £12 billion of savings. By continuing to restrain public sector pay, we expect to deliver commensurate savings in the next Parliament until we have dealt with the deficit. Today I can confirm that we are committing to complete the public service pension reforms proposed by Lord Hutton, bringing total savings of £1.3 billion a year. Administration costs in Whitehall are already down 40% over this Parliament. Today, the Minister for the Cabinet Office and Paymaster General, my right hon. Friend the Member for Horsham (Mr Maude), is publishing a plan for a further £10 billion of efficiencies.

I am also confident that in the next Parliament we can continue to crack down on tax avoidance and evasion, and aggressive tax planning. Doing so at the same rate as in this Parliament would raise at least another £5 billion, and today I commit to delivering that. Then there is the new welfare cap that we have introduced to control the one sixth of public spending that was subject to absolutely no control at all. The OBR today reports that

“the Government is on track to meet the welfare cap commitment”.

Today we undertake further steps to control benefit spending by freezing universal credit work allowances for a further year, cutting tax credits when overpayments are certain, and ending unemployment benefits for migrants with no prospect of work. Total welfare spending is now set to be £1 billion a year lower than forecast at the Budget and it will go on falling as a share of our GDP. And, as I have made clear, I believe that we need to freeze working-age benefits for two years, saving billions more.

Decisions to control public spending are never easy, but the impact on people’s lives when economic stability is lost is far, far greater. I have always believed that we should be straight about what is required to restore stability and what is required to stay on course. Our task is made easier by the deal we secured for this country when we got the European Union budget cut. Some people claimed that our payments to the European Union would go up this year. Instead, I can confirm that the OBR’s forecast today shows Britain’s net payments to the EU falling by around £1 billion for this year and next year, and falling in real terms over the next five years. That is the dividend we receive thanks to a Prime Minister who fights hard for our national financial interest in Brussels.

Another bill that has gone down is the cost of our overseas military operations. The end of our operations in Afghanistan allows us to save an additional £200 million this year from the special military reserve. I join the rest of the House in saluting the brave men and women of our armed services who for more than a decade have risked their lives for our security in Iraq and Afghanistan. Even as we speak, they are tackling the horrific Ebola virus in west Africa, a fight that reminds us all of the value of Britain’s commitment to 0.7% in development aid. Today I am extending our inheritance tax exemption to cover our aid workers who lose their lives in dealing with humanitarian emergencies. LIBOR fines will continue to support our military and emergency service charities with support for our armed services benevolent charities and the Gurkhas and £10 million for veterans with hearing problems. We will ensure that the first world war continues to be properly commemorated, and this morning I have announced we will repay the entire outstanding national debt incurred to fight the first world war.

We will extend the cathedral renovation fund to cover repairs to our country’s churches. Thanks to the brilliant campaigns run by my hon. Friends the Members for Filton and Bradley Stoke (Jack Lopresti) and for Bristol North West (Charlotte Leslie) and others, we will use the LIBOR money for new helicopters for the Great Western air ambulance, and the Kent, Surrey and Sussex air ambulance, too. I will go further and refund VAT for our search and rescue and air ambulance organisations across the UK. Our hospice charities also make an enormous contribution to our communities. They have long been subject to unfair rules that force them to pay VAT, when the NHS does not. I am today refunding the VAT that these hospice charities incur.

I turn now from those who have paid too much tax to some of those who have paid too little. First, we will make sure that big multinational businesses pay their fair share. Some of the largest companies in the world, including those in the tech sector, use elaborate structures to avoid paying taxes. Today, I am introducing a 25% tax on profits generated by multinationals from economic activity here in the UK which they then artificially shift out of the country; that is not fair to other British firms and it is not fair to the British people either—today, we are putting a stop to it. My message is consistent and clear: low taxes; but low taxes that will be paid. Britain has led the world on this agenda and we do so again today. This new diverted profits tax will raise more than £1 billion over the next five years.

Secondly, I am taking action today to make sure that our banks pay their fair share, too. Under the rules we inherited, banks can offset all their losses from the financial crisis against tax on profits for years to come. Some banks would not be paying tax for 15 or 20 years, which is totally unacceptable. The banks got public support in the crisis and they should now support the public in the recovery. I am today limiting the amount of profit in established banks that can be offset by losses carried forward to 50%, and delaying relief on bad debts, which together will mean that banks contribute almost £4 billion more in tax over the next five years. We will also put in place internationally recognised measures on hybrids and the reporting of tax by country.

That is multinationals and banks paying their fair share, and so should people aggressively trying to avoid their tax—that is the third step. I am taking measures to prevent the disguising of fee income by investment managers; the avoidance of tax through special purpose share schemes, miscellaneous losses and payments of benefits in lieu of salary; the avoidance of stamp duty on takeovers; and unfair benefits from the transfer of some intangible assets on incorporation. Those measures and others set out in the document raise £2.8 billion. We are also consulting on other measures, including the use of so called “umbrella companies” to deprive people of basic employment rights such as the minimum wage, and, as a result, to avoid tax.

Fourthly, I want to preserve the non-dom status that makes our country attractive, but I want these people to pay a fair contribution while having certainty about their future arrangements. In the next Parliament, the £30,000 annual charge will remain unchanged, but those who have been here for 12 of the last 14 years will see their payment rise to £60,000; and I am introducing a new £90,000 charge for those resident in this country for 17 of the past 20 years. To tackle the continued use of enveloped properties to avoid stamp duty, I am increasing the new annual charge by 50% above inflation on properties worth over £2 million. All these tax measures I have announced amount to £9 billion over the next five years The distributional analysis the Treasury publishes today shows that the decisions across this Parliament mean that the rich are making the biggest contribution to deficit reduction. In fact, the net contribution of the richest 20% will be larger than that of the remaining 80% put together, proving that we are all in this together.

We will make further reductions in Government spending and welfare, and we will make sure taxes are paid, but ultimately our future living standards depend on Britain earning its way in the world, so we must increase our productivity. Today, we take steps to back business, support science and invest in infrastructure. This Government have succeeded in making Britain the most entrepreneurial economy in Europe, and today we want to go further. To ensure that our growing smaller businesses have access to credit, we will expand the British business bank and act to encourage peer-to-peer lending. With the Governor of the Bank of England, I am extending the funding for lending scheme by a further year and focusing it exclusively on smaller firms. We will strengthen entrepreneurs’ relief and the social investment tax relief. We will accept almost all the recommendations of the Office of Tax Simplification to reduce the administrative burden on firms, and I thank Michael Jack and John Whiting for their work.

Our tax breaks have ushered in a golden age for Britain’s creative industries as well. Today, we will extend our new theatre tax break to orchestras; and we will help one area of television production that has been in decline, with a new children’s television credit, alongside our new animation credit. I know that the whole House has been saddened to hear that Wallace and Gromit may no longer be produced because the man behind Wallace’s voice has retired, but after next May I am sure the whole House will unite behind a suitable and by then available candidate.

We also want to help British businesses do more research and development—that is crucial to our productivity. Today, I am increasing the R and D tax credit for small and medium companies to 230% and the credit for larger firms to 11%. This Government have repeatedly helped small business deal with the burden of business rates and we do so again today. We will double small business rate relief for yet another year. The last Government were going to close it, but it benefits half a million firms and means a third of a million firms pay no rates, and we are going to continue to fund it. I will also continue to cap the inflation-linked increase in business rates at 2%. I am also announcing a full review of the structure of business rates, and I urge business groups to engage with us on that. Last year, to help our high street shops, pubs and cafes, I introduced a new £1,000 discount on their rates. With the brilliant small business Saturday this weekend, I am increasing that help for the high street by 50%, to £1,500 next year.

The fall in the global oil price has meant a welcome boost to much of the British economy and to families. There is record investment this year in the North sea, but the lower oil price clearly presents a challenge to this vital industry. My right hon. Friend the Chief Secretary to the Treasury will set out our full proposals in Aberdeen tomorrow, but I can tell the House today that we will go ahead with an immediate reduction in the rate of the supplementary charge from 32% to 30%; we will expand the ring-fenced expenditure supplement from six to 10 years; and we are introducing, with immediate effect, a new cluster area allowance. That demonstrates our commitment to the tens of thousands of jobs that depend on this great British industry.

Despite falling fuel prices, let me make this absolutely clear: we have cut fuel duty and we will keep it frozen—with my hon. Friend the Member for Harlow (Robert Halfon) sitting right behind me, I would not dare do anything else. Just as we demand that falls in oil prices should be passed on to people at the pumps, other fuel price surcharges should also come down. We are going to require airlines to list the charges separately from the taxes on tickets, but I also want to reduce the cost of those tickets for families directly. My hon. Friends the Members for Altrincham and Sale West (Mr Brady) and for North West Leicestershire (Andrew Bridgen), and many others, have asked me to help reduce air passenger duty for children on economy flights, so from 1 May next year APD for children under 12 will be abolished. I will go further than they asked: from the following year, we will get rid of APD for children under 16 altogether.

Improving productivity for all businesses also demands a major investment in our nation’s infrastructure. Because we have controlled our day-to-day spending, I can confirm that we will invest more as a share of our GDP over this Parliament and the next than was achieved under the whole period of the last Labour Government. This week we have set out plans for the biggest road building programme for a generation. We have committed billions to our flood defences, and today I take forward the recommendation of my hon. Friend the Member for Waveney (Peter Aldous) and expand tax relief on business investment in those flood defences, too. It is all brought together in the national infrastructure plan, which is now helping our country attract more investment from around the world than any other single country in Europe.

Britain is raising its ambition, and nowhere is that clearer than in our commitment to science. It is a personal priority of mine as Chancellor. Scientific advance is a human endeavour worthy of support in its own right, but it is also crucial to our economic future. When this Government came into office, the UK was ranked 14th in the global innovation index—today, we are ranked second. But we aim to be the best. A year ago, I abolished the arbitrary cap on the total number of undergraduates at our universities. Today, I am going to revolutionise the support for our postgraduate students, too. Until now, there has been almost no financial support available, and the up-front costs of postgraduate degrees deter bright students from poorer backgrounds. Today, across all disciplines, we will make Government-backed student loans of up to £10,000 available, for the first time ever, to all young people undertaking postgraduate masters degrees.

The next step is the allocation of £6 billion on the biggest ever sustained programme of investment in the research facilities of our scientific community. This includes money for major new scientific challenges, including the search for advanced materials, ground-breaking work on ageing and the exploration of the universe. The Rosetta comet mission captured the nation’s imagination. I can tell the House that, yesterday, Britain was awarded the lead role in the next international effort to explore the planet of Mars. We on the Government Benches have often gazed at the barren and desolate wastelands of the red planet, and we have long given up hope of finding intelligent life there, but signs of any life at all would be a major advance.

Many of the new science investments will be made in the north of England. One of the great challenges of this country is to create a more balanced national economy—a challenge that has eluded Governments for generations. Our ambition is to build a northern powerhouse as a complement to the strength of our capital city, bringing together our great cities of the north. Since I set out that ambition less than six months ago, we have proposed, reported on, and given the green light to the concept of High Speed 3. This week, we commit billions of pounds to other road and rail improvements across the whole of the north of England. I can today confirm that we will tender for new franchises for Northern Rail and the TransPennine Express, replacing the ancient and unpopular Pacer carriages with new and modern trains.

When I set out the ingredients of a northern powerhouse, I promised to make progress. Today, I deliver. A few months ago, there were no proposals for major scientific institutions in the north of England. Today, we commit to a massive quarter of a billion investment in a new Sir Henry Royce Institute for advanced materials science in Manchester, with branches in Leeds, Liverpool and Sheffield. We back the brilliant work on ageing being conducted at Newcastle university, and big data computing at Hartree.

We are also committing to the industry of the north, with investment in new high-value manufacturing research. We are supporting new academy schools, and we are announcing a new sovereign wealth fund for the north of England so that the shale gas resources of the north are used to invest in the future of the north. The cultural life of the north will get a boost too, including a major new theatre space in Manchester. Manchester city council proposes to call it the Factory Manchester. Anyone who is a child of the ’80s will think that that is a great idea.

Six months ago, people would have said it was completely impossible to get the 10 local authorities of Greater Manchester to come together with the Government to agree a major devolution of power to the city and the creation of a new directly elected mayor. We have delivered in Manchester, and my door is open to other cities who want to follow its cross-party lead. I said that I had put the northern powerhouse at the heart of this autumn statement, and with billions of investment in science, transport and new civic power in our great northern cities, that is exactly what we have done this week. We show today what can be achieved if we have the determination and ambition to deliver a truly national recovery.

We will also respect and fully implement the devolution settlements across the nations of our United Kingdom. Today, I announce that we recognise the strongly held arguments for devolving corporation tax-setting powers to Northern Ireland. The Treasury believes it can be implemented provided that the Northern Ireland Executive can show that they are able to manage the financial implications. The current talks will see whether that is the case. If it is, the Government will introduce legislation in this Parliament.

In Wales, we are working towards a cross-party agreement on further powers for next March. I confirm today that we have reached agreement with the Welsh Government on the full devolution of business rates. This is a great opportunity to grow the Welsh economy. Last week, the Government supported the proposals of Lord Smith’s commission on Scotland. They will lead to the devolution of income tax rates and thresholds and other powers and ensure that the Scottish Government are responsible not just for spending money but for raising the taxes to pay for it. We will publish the draft clauses in the new year. The sheer scale of the devolution to Scotland now makes unanswerable the case for English votes for English laws.

To improve the productivity of our economy, we back business, build infrastructure and support growth across the whole UK. But in the end, Britain’s future lies in the hands of its people and their aspirations—aspirations to save, to work and to buy a home. Today we support each one.

First, on saving, from next April, we will trust people with control over their own pensions. In this autumn statement, I confirm that the 55% death tax that currently applies when a person passes an unused pension pot on to their loved ones will be abolished. People will be able to pass on their pensions to their loved ones tax free. I can also tell the House today that we will ensure that people who die before the age of 75 with a joint life or guaranteed-term annuity can pass that on tax free, too.

Next week, we will publish the market-leading rates on our new 65-plus pensioner bonds, which will be available from January. Our £15,000 new individual savings accounts are hugely popular with savers, too. Next April, we will increase the limit to £15,240. But we will do something more. At the moment, when someone dies, the savings in their ISA lose their tax-free status and their spouse starts paying tax on that money. From today, I can announce that when someone dies, their husband or wife will be able to inherit their ISA and keep its tax-free status. Pass on your ISA tax free and pass on your pension tax free. We are delivering fairness to savers and to those who aspire to work, too.

The number of young people on unemployment benefits has halved. Our goal is to abolish youth unemployment all together. To support businesses that take on young people, we are already, from next April, abolishing national insurance contributions for employing anyone under the age of 21. Today, I can go further. Under this Government, almost 2 million people have taken up an apprenticeship. The Prime Minister has set this country an ambition of 3 million apprentices in the next Parliament. We back the businesses that employ apprentices, especially young apprentices under the age of 25.

At the moment, we charge national insurance on businesses that employ apprentices. Today, I can announce that the jobs tax on young apprentices will be abolished altogether. When a business gives a young person a chance in life, we will support them, not tax them.

We also back people of all ages in work, which is why the Government have raised the tax-free personal allowance to £10,000. Next year, the tax-free personal allowance, which was set to rise to £10,500, will rise instead to £10,600. That is a total wage boost for working people of £825 a year. It means that 3.5 million of the lowest paid will now be taken out of tax altogether. That shows that we on the Government Benches do not sneer at people who want to work hard and get on. [Interruption.] I just wanted to flag that up.

It is the first step to the new goal that we have set of raising the personal allowance to £12,500 so that people working full time on the minimum wage pay no tax at all. Today, I can also announce that, unlike previous increases in the personal allowance threshold, this increase will be passed on in full to higher-rate taxpayers paying 40% tax. So the higher-rate threshold goes from £41,865 this year to £42,385 next year. That is the first increase in the higher threshold in line with inflation for five years. This year’s increase means that 138,000 fewer people will pay the higher rate than would otherwise be the case. It is a down-payment on our commitment to raise the higher-rate threshold to £50,000 by the end of the decade.

There are those who have said that it was impossible to control public spending, improve public services, reduce the deficit and still cut income taxes for hard-working families on low and middle incomes. Today, we have settled that argument: it is possible, provided that we hold to our long-term economic plan, and we are doing it.

I turn now to my final measure. As well as the aspiration to work and to save, there is the aspiration to own our own home. Today, I am announcing the complete reform of a tax that has been described as one of our worst designed and most damaging. Stamp duty is charged at a single slab rate on the whole purchase price of a home. It means big jumps in tax when house values tip into a new band. The distortions can be particularly damaging at the lower end: someone buying a property worth £250,000 pays £2,500 in tax, but if they buy a house worth just £1 more, they pay over £7,500—three times as much. In recent years, the burden of stamp duty has increased on low and middle-income families trying to buy a new home as prices have risen. That makes it even more difficult to get together the cash deposits that buyers need. It is time that we fundamentally changed this badly designed tax on aspiration, so I am today abolishing the residential slab system altogether. In future, each rate will apply only to the part of the property price that falls within that band, like income tax.

Here are the new marginal rates: you will pay no tax on the first £125,000 paid; and then 2% on the portion up to £250,000; 5% up to £925,000; 10% up to £1.5 million; and 12% on everything over that. As a result, stamp duty will be cut for 98% of home buyers who pay it. Someone buying an averagely priced house of £275,000 will pay £4,500 less in tax. The average home in London will see a similar reduction. As I said, 98% will pay less, and the whole reform represents a tax cut of £800 million per year. Only homes that cost just over £937,000 will see their stamp duty bill go up under this system—gradually to start with, rising to more substantial sums for the most expensive homes. A £5 million house will see its stamp duty rise from £350,000 to £514,000, but, of course, this is a charge that is paid only once, when the property is bought.

I can tell the House that these changes to stamp duty become effective from midnight tonight. Anyone who has exchanged contracts but not completed by midnight will be able to choose whether to pay under the old system or the new, so no one in the middle of moving house will lose out. The changes will apply in Scotland until the Scottish Government’s new regime comes into effect next April. At the end of the statement, I will move a motion to introduce this. There will be a debate tomorrow and legislation will follow.

There has been a debate in this country about taxing houses. The system that I introduce today replaces a badly designed system that has distorted our housing market for decades. It reduces stamp taxes for 98% of people who pay them in this country. It increases the taxes on the most expensive 2% of homes, but asks people to pay that tax only when they buy the house and they have the money. It does not involve a revaluation of hundreds of thousands of homes in this country. Today I am cutting stamp duty for millions of home buyers in this country—98% will be better off. That is a fair, workable, lasting reform of the taxation of housing, and it is in stark contrast to the shambles of the anti-aspirational, unworkable homes tax that the Labour party wants to impose.

Four and a half years ago, our economy was in crisis. People questioned whether Britain could remain among the front-rank economic nations of the world, but we set a course to restore stability, to get on top of our debts and to show that Britain was not going to be counted out. Through the storm we have stayed the course. Now Britain is on course for surplus, on course for lower taxes, on course for more jobs, on course for higher growth and on course for a truly national recovery—a long-term economic plan on course to prosperity.

[Several hon. Members]

rose—

[Mr Speaker]

Order. Before I call the shadow Chancellor, may I inform hon. and right hon. Members that at the end of questions on the autumn statement, I shall call the Chancellor of the Exchequer to move a provisional collection of taxes resolution? Copies of the resolution are available in the Vote Office.

13:25

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

The House has not yet seen the detailed—[Interruption.]

[Mr Speaker]

Order. I made it clear that the Chancellor must be heard with courtesy and the same goes for the shadow Chancellor—[Interruption.] Order. I am grateful, Mr Robertson, for your intended helpful gesticulation. I am well aware of the old ruse of people sitting below the Gangway where they think I cannot see them and yelling their heads off, either on their own initiative or because they are rather stupidly following instructions. Either way, it does not work. They should pipe down, and if they will not pipe down, it is very simple—three words that are easily understood: “Leave the Chamber.”

[Ed Balls]

As I was saying, the House has not yet seen the detailed documents from the Treasury and the Office for Budget Responsibility tables—I am sure that they will arrive shortly—but I listened carefully to the Chancellor’s statement. To establish the facts, I want to start by asking him questions about issues that are vital to our country’s future: living standards and wages; tax receipts and borrowing; growth and immigration; taxation; and the national health service.

First, on living standards—[Interruption.] These questions about living standards, wages and tax receipts are important, so I advise Conservative Members to listen to them carefully, and then we will hear the answers.

Wages have not kept pace with prices for 52 of the past 53 months. Today’s OBR forecasts confirm that wage growth is once again weaker than expected. Working people are now £1,600 a year worse off than in 2010. Someone in full-time work is now £2,000 a year worse off. For working people, there is a cost of living crisis, and the squeeze on living standards not only is hitting family budgets, but has led to a shortfall in tax revenues. The OBR confirms that stagnant wages and low-paid employment have hit revenues, saying that

“weaker-than-expected wage growth so far in 2014-15”

is

“depressing PAYE and NIC receipts.”

Does the Chancellor agree with the OBR’s analysis? Will he tell us how much tax revenue has been lost this year because of stagnating wages and forced part-time employment?

The result of that shortfall in tax revenues is that, once again, the Chancellor has had to revise up his forecasts for Government borrowing. He told the House today that the deficit for this fiscal year is now expected to be £91.3 billion—[Interruption.]

[Mr Speaker]

Order. Mr Opperman, you are normally a well-behaved young boy. Try to be a good boy. If you can be a good boy, you can stay; if you cannot restrain yourself, leave the Chamber. Go and have a cup of tea; take a pill—whatever is necessary.

[Ed Balls]

I am trying to establish the facts about the deficit from the Chancellor. He told the House that the deficit for this fiscal year is now expected to be £91.3 billion, but he did not set out in detail how much worse things are since the Budget. Will he tell the House by how much borrowing this year has been revised up compared with his Budget forecast?

Back in 2010, the Chancellor and the Prime Minister pledged to balance the budget by the end of this Parliament and that we would see the national debt falling this year. The Prime Minister said in 2010:

“In five years’ time, we will have balanced the books.”

Today the Chancellor has, I believe, announced that the deficit next year is forecast to be £75.9 billion. Will he confirm that number and the fact that the national debt next year is forecast not to fall, but to rise? While he has clearly missed his targets, he did not tell us the scale by which he has missed them. How much more will he have borrowed in this Parliament than he planned back in 2010?

Wages, income and borrowing have been hit so hard because productivity growth has been so weak. Today the Chancellor announced that he is forecasting that growth will not accelerate but—[Interruption.] The Prime Minister’s Parliamentary Private Secretary will be interested to know that the Chancellor forecasts that growth next year will slow down. I know that the Chancellor wants to blame poor growth performance and poor productivity growth on the eurozone. I share the concerns about the eurozone—we need a plan for stronger growth in Germany and across the continent—but the weakness of the eurozone cannot explain why, despite the notable successes of a number of our companies, our export performance has been so poor, and so much worse than that of other eurozone countries. Since 2010, our export performance has been 16th in the G20. In the EU, we have been 22nd out of 28 countries; three quarters of EU countries have done better than us.

Business investment, which has also lagged behind that of our competitors, fell in the last quarter. Bank lending to small businesses is falling. The number of apprenticeships for young people is falling this year. House building under this Government is at its lowest level since the ’20s. On infrastructure, for all the Chancellor’s preheated re-announcements, barely a fifth of projects are in construction, and infrastructure output is down over 11% since 2010.

On business rates, the research and development tax credit and air passenger duty, we welcome the action that the Chancellor has taken. We will support what he has proposed on APD, but let me ask him—[Interruption.]

[Mr Speaker]

Order. There is far too much noise in the Chamber. Mr Opperman, I have told you three times, and I do not want to have to tell you again: be quiet, sit and listen. If you do not wish to do so, get out. The same goes for the Government’s Deputy Chief Whip, the right hon. Member for Chelsea and Fulham (Greg Hands); I have been looking at and listening to him. Let me make it clear to him that he ought to know better. Behave or get out, man.

[Ed Balls]

We’ll get him out next year, Mr Speaker.

I would like to ask the Chancellor about the air passenger duty proposal. We will support what he has proposed, but following the Smith commission proposal to devolve air passenger duty to Scotland, will the Chancellor urgently lead work across Government, with the Scottish Government, on a mechanism to ensure that English airports, particularly in the north of England, are not disadvantaged by that devolution?

On business rates, while the review is welcome, it will not report, I believe, until 2016. Why can the Chancellor not take immediate action and adopt our plan to cut business rates for small companies? Why will he not increase the bank levy now and increase free child care for working people? Why will he not properly capitalise the business investment bank? Why will he not raise, as a proportion of earnings, the national minimum wage? Why will he not repeat the bank bonus tax and guarantee a compulsory job for all people? On regional devolution, why will he not devolve full growth in business rates to all city and county regions, to give them real control? We need a real plan for good jobs and more balanced growth.

On the subject of growth, the figures that the Chancellor announced reveal that growth has been revised downwards in 2016 from 2.6% to 2.2%, in 2017 from 2.6% to 2.4%, and in 2018 from 2.7% to 2.3%. Why is growth being revised downwards year after year? This is an interesting fact from the OBR: if our economy grew by just 0.5% a year faster than forecast, Government borrowing would come in more than £32 billion lower in the next Parliament. Does the Chancellor not see that those downgrades to growth are bad news? Without decisive action to sustain growth and raise living standards, and without a recovery for the many, not the few, he will carry on missing his deficit targets year after year.

Let me ask the Chancellor about another missed target. Over the past 12 months, net migration to the United Kingdom has been 260,000 people. Can he tell the House—this will be an interesting question to many Back Benchers in all parts of the House—the OBR estimate for net migration over the next 12 months that underpins the growth and public finance forecasts? It seems highly unlikely that it will be anywhere near the Prime Minister’s forecast, which is for tens of thousands. Will it be over 100,000 next year? Over 150,000? Over 200,000? This time, did the Chancellor remember to tell the Prime Minister the facts?

Turning to spending and taxation, the Prime Minister claimed in The Times a month ago that 80% of the planned spending cuts had been made. The Institute for Fiscal Studies says that it is less than 50%. Can the Chancellor clarify who is right and who is wrong? He claims that in the next Parliament he can cut welfare spending by over £10 billion, but in this Parliament, spending on social security is over £20 billion higher than he planned in 2010 because of what happened to housing benefit in particular. He is planning a £3 billion real-terms cut in tax credits that will hit 3 million working people on middle and lower incomes, and once again he is hitting women harder than men.

The Prime Minister rather let the cat out of the bag earlier when he referred to “masosadism”. As I understand it, masosadism is when someone enjoys having pain inflicted on them and enjoys inflicting pain on other people. We know the Chancellor’s views on the first; it seems, from the way he smiled when he announced the tax credits cuts, that he is rather enjoying the second as well. How can it be fair to hit working people with a £3 billion cut to their tax credits when he has spent £3 billion giving a tax cut to people earning over £150,000?

When families are paying £450 more in higher VAT, does the Chancellor really think that people will fall for the Prime Minister’s latest promise of a £7 billion unfunded tax cut in the next Parliament, which even the Business Secretary has called a “fantasy”? Two months on, the Chancellor gave us no details at all of where he will get the money from—not a single penny. Is he planning to pay for that with a further rise in VAT? He said at the weekend that he has no plans to raise VAT. That is what he said before the last general election, and then he raised it after the election. He should stand at the Dispatch Box today and promise that he will not raise VAT again for families and pensioners.

On the national health service, we welcome the Chancellor’s belated recognition that there is a funding crisis. Everyone knows—other than the Prime Minister, it seems—that our health service is going backwards. Accident and emergency department waiting times and GP waiting times are going up, thanks to the Government’s £3 billion reckless reorganisation. The Chancellor announced £2 billion for, he said, every year into the future—paid, it seems, by an underspend every year into the future. I have never heard of a prospective forecast of an underspend being made in quite that way. Will he confirm that that is £2 billion a year for the national health service over a flat, real baseline? We need to know the answer to that one. It seems that the Chancellor has also confirmed that £700 million of the crisis cash is a re-announcement of a re-allocation from within the existing Department of Health budget.

In the Chancellor’s stamp duty reforms, he is accepting that high-value properties are under-taxed, which is welcome. But rather than taxing them only on sale, why does he not have the courage of his conviction? The average person pays 390 times more in annual council tax as a percentage of their property than the billionaire buyer of a £140 million penthouse in Hyde park. Why will the Chancellor not have an annual charge on the highest value properties and use that for a £2.5 billion a year investment in the NHS so that we can have 20,000 nurses and 8,000 GPs every year? Why will he not match that commitment? Our national health service deserves a proper funded long-term plan, not just more short-term sticking plaster.

We then heard the Chancellor’s diversionary stunt. He had to admit today that he has failed to balance the books in this Parliament. He is now trying to divert attention with a vote on balancing the books in the next Parliament. At the time of the Budget, he talked up a vote on the overall budget surplus, but I understand from reports in the Financial Times that he has done a U-turn and retreated to a vote on a current budget surplus in the next Parliament. Will he explain what is going on with that vote and the nature of the problem that he is dealing with? We want to get the current budget back into surplus as soon as possible in the next Parliament, and get the national debt falling, but the lesson of this autumn statement is that a plan to balance the books will work only if it puts good jobs, rising living standards and stronger growth at its heart.

The Chancellor’s diversionary tactics will not work. Since he sat down, I have received the Office for Budget Responsibility’s forecasts. Table 1.2 on page 15 sets out in detail how the latest forecast compares with the forecast at the time of the Budget. It gives us the numbers that the Chancellor failed to tell us in his autumn statement. I will give the country and the House those numbers. Compared with his Budget target—it is here on page 15 in table 1.2—borrowing this year has not gone down. It has been revised up by £4.9 billion. Next year it is revised up by £7.6 billion. Over two years the Chancellor has revised borrowing up by £12.5 billion.

The answer to my other question, which I did not have when I started, is that those figures mean that in this Parliament the Chancellor will have borrowed £219 billion more than he planned in 2010—£219 billion. It is all here in black and white—hard evidence from the Office for Budget Responsibility. The Chancellor’s borrowing targets are all in tatters. We all know that he has changed the way he styles his hair, but he cannot brush away the facts. People are worse off and he has failed to balance the books in this Parliament. For all his strutting, all his preening and all his claims to have fixed the economy—he promised to make people better off—working people are worse off. He promised that we were all in this together, then he cut taxes for millionaires. He promised to balance the books in this Parliament, and that commitment is now in tatters—every target missed, every test failed, every promise broken.

We need a recovery for the many, not just a few. We need to balance the books fairly. We need a long-term plan to save our NHS. That is the autumn statement that we needed. It will take a Labour Government to deliver it.

[Mr Osborne]

With that performance, we see why the right hon. Gentleman is totally unfit to be put in charge of the nation’s finances in six months’ time. We have had an object lesson in how not to plan an autumn statement reply before hearing the autumn statement. That was what he expected to hear, as we know because he went round the TV studios over the past few weeks predicting it. He said that the deficit would go up this year. He said it last month, he said it last week, he said it on Sunday. I have his words. He said that the Chancellor is going to have to make an autumn statement where he is

“going to have to say that the economy is weakening, the deficit is getting larger”.

I have just quoted independent forecasts which show that the economy is stronger, the deficit is falling and the debt is lower in every future year. The shadow Chancellor got it completely wrong.

It is hardly surprising that his party has such low economic credibility when the shadow Chancellor repeatedly makes predictions about the British economy that turn out to be completely wrong. No more boom and bust, he said—wrong. A double-dip recession, he predicted—completely wrong. He has spent the past three months betting the entire credibility of the Labour party’s response to the autumn statement on the prediction of a massive deterioration in the public finances and the deficit going up, and he got that completely wrong. People say there is a split in the leadership of the Labour party. They are right. It is between people who get the deficit figures completely wrong and people who forget about the deficit altogether.

The Opposition have no economic credibility and they have policies that show that they are not up to the job. The shadow Chancellor mentioned his homes tax. We still do not know what the Labour party’s view is of the stamp duty reforms. I guess we will find out in the next few days. We do not have a clue what its views are on the postgraduate changes or the infrastructure investments that we have announced. The right hon. Gentleman spoke about his homes tax. This is what the Labour party thinks about his homes tax. The Chair of the Public Accounts Committee says:

“I don’t think it’s the world’s most sensible idea.”

The former Housing Minister, the right hon. Member for Greenwich and Woolwich (Mr Raynsford), says that it hits the “cash poor”. The right hon. Member for Tottenham (Mr Lammy) says it is “a tax on London”, and the right hon. Member for Dulwich and West Norwood (Dame Tessa Jowell) says:

“Let’s stop calling it a ‘mansion tax’…these are family homes”.

One of Labour’s council group leaders summed it up best when they said it was “completely bonkers”. That is the housing policy—to put taxes on housing.

The shadow Chancellor asked about our tax cut on apprentices. His jobs tax policy is to increase national insurance. He talks about pensions. His pensions policy is to tax pensions. He asked me a couple of questions about savings in the public finances. I was hoping that he was going to give me some suggestions for savings that we can make in the public finances. I have had to do a bit of research myself about what his party’s policy is.

The Opposition have conducted what is called a zero-based review for the past year and identified two surplus assets that the Government should sell. The first is the Queen Elizabeth II conference centre. The shadow Chancellor first proposed selling that in 2001 and seems to have forgotten that it is the only bit of Government that pays us an income. The other thing they found to pay down the national debt—it is in the Labour party document—is a restaurant in St James’s park, estimated to be worth £6.7 million. That is 0.005% of the national debt, so their national economic policy is literally out to lunch.

That is the problem that we have seen in the right hon. Gentleman’s reply. He has absolutely no answers to the economic challenges that Britain faces. He has no credibility and no workable policies because Labour has no workable plan. We are five months away from a general election in which people will have to choose their Government. The most serious responsibility incumbent on anyone seeking office is to show that they can provide economic stability to the nation and protect the families who live here. The Opposition do not have a clue how to do that. They do not have a plan. Their whole response today shows that they would take Britain back to square one. Britain has pulled itself out of the economic crisis that the shadow Chancellor created, and we are not going to let him take us back there.

[Mr Kenneth Clarke (Rushcliffe) (Con)]

Does my right hon. Friend recall, as I do, that the shadow Chancellor was the right-hand man of the Chancellor who presided over the credit crunch, the banking collapse and the incurring of the biggest deficit in the G20, and does he not find his conversion to rigid fiscal discipline and the pursuit of fiscal surpluses absolutely quaint and ridiculous?

On a more serious note, my right hon. Friend is proposing to devolve considerable powers, in a very welcome way and to varying degrees, to the different nations and cities of the United Kingdom. Can he reassure us that he will combine that with firm and enforceable commitments to financial responsibility so that he and the UK Treasury can retain overall responsibility for the stability of sterling and our economy, because not every local government Labour leader can be trusted to follow the clear and effective path that he has followed in getting our debt back under control?

[Mr Osborne]

My right hon. and learned Friend makes a good observation about the shadow Chancellor’s career. I should pay tribute—probably for the first time—to the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), who this week announced his retirement: first, for his commitment to advancing international development and to British aid, which I fully support; and secondly, because when he was shadow Chancellor, as we all remember, he built up a really compelling case for fiscal discipline. That, in part, is why the Labour party won the 1997 general election. That stands in such marked contrast to the shambles we see from the pair sitting opposite me now, who subsequently advised him.

On my right hon. and learned Friend the former Chancellor’s good point about devolution, of course both local government and the different nations of the United Kingdom—the devolution arrangements apply to both—will have in place robust arrangements that protect taxpayers across the United Kingdom. That is certainly an important part of the Smith commission report and how we must take it forward. It is also at the heart of the devolution settlements that we have discussed with English local authorities.

[Mr Alistair Darling (Edinburgh South West) (Lab)]

I am sure that the House will want to return to that last point on the UK Government’s ability to control their finances. Did I hear the Chancellor correctly when he was claiming credit for having halved the deficit over the course of this Parliament, because his view used to be that that would not be a terribly good thing? We are still borrowing £90 billion this year, and the reduced growth forecasts for the next five years, which we see in the OBR report, show that it will slow down, so can he tell us what impact that will have on the likely tax revenues, which of course have a bearing on our ability to pay down the deficit?

[Mr Osborne]

Let me also pay tribute to the former Chancellor for his work on the Scottish referendum campaign. To be fair to him, what we did not know in the debate before the previous general election, but which has subsequently been revealed in the various memoires that have been written about the Government he was at the heart of, is that he was arguing internally for the Government to set out the spending cuts that they would make. Indeed, he argued that the Labour Government should commit to a VAT increase, which of course the Labour party, somewhat hypocritically, opposed several months later when we had to take that step. What we know about his role in the previous Government does him great credit.

On the right hon. Gentleman’s point, as I explained in my statement, although borrowing falls in each year, the OBR has revised up the borrowing for the first two years but then revised it down, compared with the Budget, in the years after that. The structural deficit continues to fall at the same pace as in the Budget. This is not the big deterioration in the public finances that everyone has been predicting—it was on the front pages of many newspapers, and indeed the shadow Chancellor went about repeating it. That has not happened. With regard to lower tax receipts, I gave the tax receipts forecast but pointed out that one of the reasons why there has not been that deterioration in the public finances is the big reduction in debt interest payments.

[Mr Andrew Tyrie (Chichester) (Con)]

The OBR forecasts that over the course of this Parliament the eurozone will grow at a little over 2% and the UK will grow at nearly 9%, which of course is a tribute to the capacity of UK businesses, particularly small businesses, to adapt to the huge economic shock of the euro crisis. However, just doing a bit better than the eurozone is not enough; our prosperity will depend on whether we can absorb the annual shock of increased global competition. Is not it therefore crucial, as we have seen with the pressure on Northern Ireland’s corporation tax rate, that we do much more to sustain a globally competitive tax system?

[Mr Osborne]

My hon. Friend is absolutely right. It is not enough just to do better than our neighbours, because of course they have their own problems and are stagnating. If one looks at all the various indexes of global tax competitiveness and global innovation, one sees that the UK is climbing up the ranks. We in the Treasury certainly seek to mark ourselves against the most competitive economies in the world, not just those on the continent of Europe. The steps I have outlined today, which probably will not make it on to the front pages of the newspapers, such as the increase in the small business research and development tax credit, the large company tax credit and changes to entrepreneurs’ relief and its relationship with the enterprise investment scheme, are all designed to support research and development and entrepreneurial business in this country.

[Margaret Hodge (Barking) (Lab)]

I sincerely welcome the Chancellor’s announcement of the new measures to crack down on tax avoidance, particularly by challenging the mismatch between the form of a company’s structure and the substance of its activities, which is a key recommendation from the Public Accounts Committee. This week, Starbucks announced that it will pay no corporation tax in the UK for the next three years. Can he tell the House when the measures that he has announced will be implemented and how they will prevent Starbucks from sticking two fingers up to the British people?

[Mr Osborne]

Of course, the legislation needs to pass through the House of Commons before the tax can be levied, so the diverted profits taxes are from April next year, and the hybrids taxes are from a little later, in 2017. It is complex tax legislation, but we aim to get it through. I suspect that, in order to get it through before the general election—the right hon. Lady might be helpful in this—we might need the co-operation of the Opposition in passing those clauses in the Finance Bill.

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

With several hundred job losses already announced in the north-east of Scotland, I certainly welcome the UK Government’s decision to send a signal that we want to maximise investment in the North sea. That would have been a necessary signal whether or not the price of oil was falling, and it will build the jobs base in the UK and a great export industry. Will the Chancellor confirm that such a move is possible because we are part of the United Kingdom’s diversified economy?

[Mr Osborne]

My hon. Friend makes a good point. Of course, what is very striking, if one looks at the receipts revenue forecasts from the OBR, is that they are wildly different from those produced by the Scottish Government before the recent referendum. As he will see tomorrow, when his colleague the Chief Secretary to the Treasury sets out in Aberdeen what we are doing, the tax cuts we announced today, which will come into effect in the coming weeks, will have an immediate effect, but we are also going to try to set out a longer road map for the direction we want to head in. As he well knows, industry investment decisions are made over long cycles and people need predictability about the future of the British oil and gas tax regimes so that we get the maximum amount of oil out of the basin.

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

With average wages still suffering the longest and biggest fall since Victorian times, productivity still one of the lowest in the OECD, business investment still flat and below pre-crisis levels, the deficit on traded goods now the biggest in British history and, to cap it all, the budget deficit is clearly beginning to rise because of the fall in tax receipts, how can the Chancellor, against that background, continue with austerity when its consequences are clearly now causing the deficit to rise?

[Mr Osborne]

I am afraid that the right hon. Gentleman is just wrong. Business investment is not flat; it is up 27% and is rising faster in the UK than in any other major advanced economy in the world. The deficit, according to the OBR document, was 10.2% under the previous Labour Government; it is now 5%. The idea that that is an increase is obviously nonsense. Indeed, it falls in every future year, just as it has fallen this year.

[Sir Tony Baldry (Banbury) (Con)]

Does not providing potentially up to £100 million in infrastructure investment to make Bicester an exemplar of a garden town for the 21st century, and ensuring that 13,000 new houses are built as speedily as possible, demonstrate that a key part of the Government’s long-term economic plan is building new homes and creating communities of which we can all be proud for generations to come?

[Mr Osborne]

My right hon. Friend is absolutely right. I commend him and the community leaders in Bicester for working with us to secure this extra investment in the town, to create the vision of a garden town, and to make sure that there are housing and jobs for the town’s population while preserving its beautiful character.

[Stewart Hosie (Dundee East) (SNP)]

I welcome some of the individual measures announced today, but they do not amount to a long-term economic plan. At its heart, what the Chancellor said was that the target to see debt fall as a share of GDP this year has not been met; that the current account will not be in the black next year, as he promised; and that borrowing then, far from being £20 billion, will be almost four times that, at £75 billion. Why should the public believe that if the Government do the same things over the next two or three years, that will be any different from their failure in doing them first time round?

[Mr Osborne]

At the moment, we see Britain as the fastest growing major economy in the world. We also see a record fall in unemployment, and the highest rate of job creation occurring in Scotland. That is the United Kingdom delivering for the people of Scotland. Now we have proposals from the Smith commission, jointly agreed between the different parties, whereby the Scottish Government, and the Scottish Parliament, can take more responsibility for raising their own taxes to pay for their own expenditure. Then we will have an even better debate in Scotland on how things are paid for.

[Margot James (Stourbridge) (Con)]

I was glad to hear my right hon. Friend confirm that there has been no new recession in the years since 2010. It would have been a strange recession that resulted in unemployment falling by 45% and average weekly pay being up by 12.5% in my constituency and in 4,000 new businesses opening in my borough. Will he join me in congratulating the thousands of people who have got into work and started new businesses in my constituency in the past four years?

[Mr Osborne]

My hon. Friend has been a real champion for small businesses and for exporters in her Stourbridge constituency, and for attracting investment into the black country. I pay tribute to the work she has done. The measures we have taken today to help high street stores by increasing the business rate discount to £1,500, to take the smallest businesses out of business rates, and to back exporters and to increase the research and development tax credit for firms in the west midlands are all tribute to the work she has done and the issues she has raised in Parliament.

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

The Chancellor presented things as being very rosy, but a survey that came out today says that 72% of the British public feel no sense of recovery whatsoever. Why is he so out of touch?

[Mr Osborne]

In the hon. Lady’s own constituency, unemployment is down. In her own constituency, economic security has increased as people can see that the country is not in the crisis it was in four or five years ago. She has to ask her constituents this: do they want to return to the economic instability and crisis that everyone remembers under the previous Labour Government, or do they want to stay on course to prosperity? I think the British public will conclude that they want to stay on course to prosperity.

[Mr David Willetts (Havant) (Con)]

May I warmly congratulate the Chancellor on extending the new loans to postgraduates? With increasing numbers of jobs requiring a postgraduate qualification, that really does remove a significant barrier to social mobility. Does he agree that if more people are able to stay on and do masters courses, that is an opportunity to look at broadening the range of subjects that they study at early stages of their education?

[Mr Osborne]

My right hon. Friend is absolutely right. Of course, he knows that we embarked on this work on how to extend support to postgraduates when he was Minister for Universities and Science—it might have been him who first proposed the idea to me—and I am absolutely delighted that it has come to fruition. This is one of the biggest reforms I have announced today. It will provide real support for postgrads, who do not currently get any support. In almost all the reports that one reads on social mobility, including the report by Alan Milburn, that has been identified as a barrier to entry for people from low-income backgrounds into the professions. It is a really important step forward. Again, I suspect that it will not be the headline in tomorrow’s newspapers, but that does not mean that it is not going to change lots of people’s lives.

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

Yesterday, the right hon. and learned Member for Rushcliffe (Mr Clarke), a former Chancellor, gave an extended interview to the BBC in which he said, among other things, that the Government should keep tax increases in the locker in case they are needed. Does the Chancellor intend to consult former Chancellors on his long-term economic plan? If not, will he now deny that a VAT rise will be imminent after the next election?

[Mr Osborne]

I have set out today how our plans to bring the deficit down and bring borrowing down can be achieved through spending reductions in Departments and through welfare savings, and therefore do not require tax increases. I also explained that if we were to achieve over the next period the same as we have achieved during this Parliament in dealing with tax avoidance, tax planning and aggressive tax evasion, we could achieve £5 billion of savings, or extra revenue, in that space of time as well. That is a better way to proceed, and that is the course we have set.

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

The Chancellor will be aware that I, and many colleagues in this House, have been working with the CLA, which is actively campaigning for reform of compulsory purchase to deliver fairer compensation for landowners who are affected by infrastructure projects such as HS2. I greatly welcome his announcements on stamp duty. Will he go a bit further and consider abolishing stamp duty land tax on the purchase of replacement property by landowners who are so badly affected by infrastructure projects?

[Mr Osborne]

Like my right hon. Friend, I too have the challenge of HS2 going through my constituency, although of course she is further along in the process because her constituency is affected by the first phase of the route. I know, from my experience and from talking to her, that this has a big impact on communities. We have tried to make the compensation generous and to make the process for accessing it easier. It is certainly a lot easier than when I, as a constituency MP, had to deal with the compensation relating to the second runway at Manchester airport. Of course, I will look at any ideas that she puts forward, but any measure has to be affordable. I should also point out that in today’s document we set out further reforms that we intend to make to the compulsory purchase regime.

[Fiona O’Donnell (East Lothian) (Lab)]

The Chancellor talked tough on tax evasion today, but so far none of the Crown dependencies or overseas territories has committed to a public register of beneficial ownership. I know that my right hon. Friend the shadow Chancellor will act tough on this issue. Why will not this Chancellor and his Government make some progress on it?

[Mr Osborne]

Frankly, the hon. Lady is not being fair to the Government or to those territories and dependencies. There had been no progress at all when we came into office. They have all now committed to the automatic exchange of information; they all attended the conference in Berlin where they made the international commitment to do that; and they are all consulting, right now, on the creation of these registries. They are doing that because my right hon. Friend the Prime Minister put this issue centre stage on the G8 agenda in Lough Erne.

[Sir Bob Russell (Colchester) (LD)]

The Chancellor said that the end of our operations in Afghanistan will allow this country to save an additional £200 million this year from the special military reserve. There is also the sale of surplus Ministry of Defence radio frequencies, which he did not mention. Will he agree to ring-fence both sums to pay to modernise the family homes of the brave men and women of our armed services, whom he says he salutes?

[Mr Osborne]

We do have a programme, which we have extended, to renovate the accommodation of service families. We are all aware of the challenges that many families face with that accommodation. The special military reserve was created to fund overseas military operations—that is what it exists for. When we came into office, this country was spending £4 billion a year on operations in Afghanistan. The special military reserve is now down to about £1 billion; I have been able to reduce it a little today. Despite what the reserve is for, I am always willing to consider specific requests for support. I did not have time in my speech to set out the very many military good causes that we are supporting with the LIBOR money.

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

New analysis shows that an ambitious energy efficiency programme would create up to 108,000 new jobs, generate £1.27 in tax revenues for every £1 invested by the Government and end fuel poverty. Will the Chancellor explain why this statement fails to direct one penny of the infrastructure budget towards tackling the cold homes crisis in places such as Brighton?

[Mr Osborne]

We have proposals to help, for example, off-grid consumers with energy efficiency, and we also have the energy companies obligation programme to help with energy efficiency. We have announced this week a commitment to look at the idea of the Swansea bay tidal lagoon project, which could be a very interesting project for renewable energy generation in the future.

[Mr Peter Bone (Wellingborough) (Con)]

Under 13 years of Labour, unemployment went up in east Northamptonshire, there were no road improvements and shops closed. That is why Tom Pursglove, our excellent candidate for Corby, and I launched a joint listening campaign to improve things in east Northamptonshire. Unemployment is now 30% lower, and we now have the Rushden Lakes retail development on line and, thanks to the Chancellor this week, the Chowns Mill and the A45 dualling improvements. Will the Chancellor visit east Northamptonshire so that Tom Pursglove and I can carry him shoulder-high through the streets of Rushden, Higham Ferrers, Stanwick, Raunds and Irthlingborough to cheering crowds?

[Mr Osborne]

That is quite an offer. I met Tom Pursglove and my hon. Friend to discuss the infrastructure improvements that they wanted in the east midlands. We have been able to deliver what they have so successfully campaigned on and attracted so much local support for. That is a good combination of two strong local campaigners working for their local area to deliver improvements that, frankly, were never delivered under a Labour Government and that Labour MPs have never asked me for.

[Stephen Timms (East Ham) (Lab)]

The Chancellor has recognised that he will not deliver on his commitment to eradicate the deficit in this Parliament. Will he also recognise that a large part of the reason for the failure is that, as the OBR has acknowledged, tax receipts have been hard hit by the fall in real wages since the general election?

[Mr Osborne]

I acknowledged in my statement that tax receipts are £24 billion below what we forecast for 2017-18, but I pointed out that people have focused only on the tax side, not the spending side of the equation: lower unemployment and lower inflation have an impact on welfare payments and debt interest payments—we are paying £18 billion less in debt interest than was forecast—which is of course why we have not seen the big deterioration in the public finances that he and others predicted.

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

If we are to have a shale gas industry, I welcome the idea of a sovereign wealth fund. Does the Chancellor agree that northern money for northern investment could be a real game changer? When he sets up the fund, will he take into account the fact that it looks as though the majority of the gas will come from Lancashire, not Yorkshire? [Interruption.]

[Mr Osborne]

My right hon. Friend the Leader of the House, who is sitting next to me, said, “Oh, really”. I said that the sovereign wealth fund should be for across the north of England so that I did not get into any trans-Pennine, war of the roses dispute.

My hon. Friend is absolutely right that many of the immediate opportunities are in Lancashire, in or near the area he represents. I have spoken to him about what more we can do to make sure that local communities see the benefit of the jobs, investment and resources that we will get as a result of this important energy exploration and extraction. Of course, we now have the new college in the area—that has just been announced—so local people will have the right skills to get those jobs.

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

If the economy is doing as well as the Chancellor says, why are we borrowing more than France, Italy, Spain and Greece?

[Mr Osborne]

The reason is that we started with a 10.5% budget deficit, which we have had to reduce. Interestingly, the International Monetary Fund assesses that we have had the longest and most sustained reduction in the structural deficit, and that we are forecast to have the strongest reduction in the headline and the structural deficit in the future. The IMF assessment of how we have done shows that we are restoring economic stability to this country.

[Anne Marie Morris (Newton Abbot) (Con)]

May I again congratulate the Chancellor on being a friend to small and micro-businesses? His autumn statement is first class. His extension of national insurance and business rate reliefs is much appreciated, and it is inspirational that he is going to have a full review of business rates, the most-hated tax for all small businesses. While he is feeling inspired in the demolition business—getting rid of the slabs in stamp duty—will he look at the cliff in VAT? It is a real barrier to growth, despite the fact that it is a European tax.

[Mr Osborne]

As my hon. Friend knows—this is the problem of previous Governments having handed over various powers and rights of this country to Brussels—we are constrained by the VAT threshold that we can levy in this country. I think that it is already the highest in Europe, so we are restricted in what we can do. That is why we are seeking to help small businesses in her west country constituency both through the measures on business rates, and through investment in infrastructure, such as the A303, the Dawlish rail line and the Kingskerswell bypass. As I saw a few weeks ago, the bypass is proceeding very well in her constituency.

[Chris Bryant (Rhondda) (Lab)]

Instead of wasting his time in Northamptonshire with a dead-beat candidate, may I suggest that the Chancellor comes to the Rhondda, particularly to visit the Conservative club in Tylorstown? I say the Conservative club, but it has closed and, ironically enough, is now a food bank. If he came to that food bank, he would learn from those who run it that the vast majority of people that they are helping with 2.5 tonnes of food every year are in work. That is because of the sanctions regime, low hours, zero-hours contracts and, most importantly, the bedroom tax. Why does he not deal with any of those facts?

[Mr Osborne]

First, what the hon. Gentleman’s question reveals is, of course, that when the Labour party says it is committed to fiscal discipline, it does not mean that at all. It opposes welfare changes that bring the welfare budget down, and it opposes all the difficult decisions required to bring public expenditure under control. Because we are able to take those difficult decisions on day-to-day spending, we are able to make investments in infrastructure that will really help all parts of the United Kingdom. A shining example of that is the electrification of the valley lines, which the Prime Minister went to south Wales to talk about. That never happened in all the years that the hon. Gentleman was a Labour Minister and represented the seat as a Labour MP.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

May I, on behalf of the Orchestra of the Swan, thank the Chancellor for the tax relief, which of course comes on top of the tax relief for the Royal Shakespeare Company? Savers were among the hardest hit under Labour’s great recession. Does not today’s autumn statement and the help that we are providing to savers demonstrate that this Government and the Conservative party are on the side of savers, who would be put at risk if Labour ever got anywhere near his position?

[Mr Osborne]

First, may I say that I know the Royal Shakespeare Company does a brilliant job? We were able to help it earlier this year with support for touring around the world. Such people are looking at the theatre tax break and at what they can do to use it. I hope that the orchestra tax break is of help to the Orchestra of the Swan, which my hon. Friend mentioned.

On savers, I have announced today that people can pass on their ISAs to their spouse tax free. That major step forward in the ISAs regime comes on top of the increase to £15,000 for the new ISA and, of course, the new freedoms on pensions.

[Ian Lucas (Wrexham) (Lab)]

One thing the Chancellor did deliver in 2010 was an increase in VAT. Can he explain the difference between his statement in 2010 that he had no plans to increase VAT and his statement last weekend that he has no plans to increase VAT?

[Mr Osborne]

The plans that I have set out involve spending reductions and welfare reductions. By the way, the Labour party is the first to attack me for them. People have seen the decisions and the approach that we have taken on spending. We will go on reducing spending and reducing welfare, and we do not need tax increases.

As I remarked in my exchange with the right hon. Member for Edinburgh South West (Mr Darling), the previous Labour Chancellor planned to increase VAT after the general election—he put that in his memoirs—and those of us who were in that Parliament will remember that the Labour Treasury produced, by mistake, a document that said VAT would go up, which caused the Government great embarrassment at the time. As I say, our plans involve spending reductions and welfare reductions, and that is what we are committed to do.

[Dr Sarah Wollaston (Totnes) (Con)]

I warmly thank the Chancellor for investing the extra billions of pounds in our NHS. There is not only extra revenue, but a transformation fund that will transform the NHS into the service that we need for the future. Does he share my concern, however, that our endorsement of the NHS’s forward view—our long-term plan for the NHS—would be put at risk if we handed it over to a Government who had no long-term economic plan to fund it?

[Mr Osborne]

My hon. Friend is right. The transformation fund is an important part of the NHS’s forward view, which has been looked at and endorsed by the Health Committee, which she chairs, the various health charities and the royal colleges. The head of the NHS, Simon Stevens, who drew up that plan, welcomed what we announced at the weekend and travelled with me to Homerton university hospital to explain how the transformation can take place. My hon. Friend is right that it is impossible to have a strong NHS unless we have a strong economy: we are delivering both.

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

Does the Chancellor agree with the Deputy Prime Minister that:

“There is not a single developed economy anywhere in the world that has balanced the books and only done so on the backs of the working-age poor, which Osborne has now confirmed several times he wants to do”?

Does the Chancellor realise how damaging those policies are to constituencies such as mine?

[Mr Osborne]

In constituencies such as the right hon. Gentleman’s and, indeed, in constituencies right across the country, unemployment has come down and people have come off the claimant count. That is a big positive development. The distributional analysis that we have published today, which was examined by the Treasury Committee, shows that the richest 20% in our society have made the biggest contribution to deficit reduction—bigger than the other 80% put together. Then there is the stamp—

[Mr Clarke]

So why is the Deputy Prime Minister unhappy?

[Mr Osborne]

The Deputy Prime Minister is unhappy because the Conservative party is trying to win his seats off him.

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

I thank the Chancellor for announcing the review of the structure of business rates. That has been called for by the Chiswick traders’ group, the Federation of Small Businesses, the British Retail Consortium and others. Will he reassure small businesses in my area that the review will start as soon as possible?

[Mr Osborne]

Yes, the review will start as soon as possible. I urge businesses and business organisations to engage with it. It has to be fiscally responsible, but it is appropriate to look at the structure of the modern economy to see how it has changed and how the business rates regime can reflect that.

[Sammy Wilson (East Antrim) (DUP)]

I welcome the additional resources that will come to the Northern Ireland Executive as a result of the Barnett consequentials of the additional spending, and the Chancellor’s commitment to devolve corporation tax to Northern Ireland, albeit on the basis that we show that we can manage the financial implications in our budget. Given that my party has defended fiscal responsibility, we have no fear of that. Will he confirm that the implication of what he has said is that the Northern Ireland Executive must make a decision on the implementation of welfare reform? Is that how he defines being

“able to manage the financial implications”

of the devolution of corporation tax?

[Mr Osborne]

I do not want to go into too much of the detail that will be on the table in the important cross-party talks, but clearly one challenge that the Northern Ireland Executive face is that they have not implemented some of the welfare reforms, which has led to a hole in their budget. There are not currently credible proposals on the table from all the parties—I use the term “all” in the collective sense. There is not yet collective agreement on how to address the challenges that the lack of welfare reform has created. That is why I phrased my statement as I did. We have the cross-party talks and we have an important couple of weeks ahead, as Members from Northern Ireland know. Let us hope that we make real progress in those talks.

[Ian Swales (Redcar) (LD)]

I warmly welcome the new £28 million national formulation centre, which I believe is heading for Sedgefield in the north-east. That was one of the key asks of the chemistry growth partnership and is listed in the green book. Will the Chancellor continue to support the chemical industry, which is the UK’s biggest manufacturing exporter and is helping to make the north-east one of the fastest growing regions of the UK?

[Mr Osborne]

My hon. Friend is right that the new catapults that we have set out—the formulation centre and the investment in the high-value manufacturing catapult—will help the north of England, particularly around the area that he represents. Support for the chemical industry is important. The changes to energy taxation in the Budget will help the chemical industry. There might be an opportunity to look at specific things that we could do to help the chemical industry further, rather than all energy-intensive industries. I am happy to have that discussion with him and other Members who represent constituencies with chemical manufacturers.

[Mr Ronnie Campbell (Blyth Valley) (Lab)]

If the Chancellor is right that the UK is the leading world economy, why does he not give health service workers their 1% increase?

[Mr Osborne]

Of course, our pay settlement does give health service workers 1%. For those on progression pay, we are saying that there should be a 1% pay rise in total. We are able to afford a strong national health service, to put the money into the national health service that we have announced over the past few days and to support the NHS’s forward plan about its bright future only because we have a strong economy. In the north-east of England, as the hon. Gentleman knows, we are investing in jobs and roads. I would have hoped that he would welcome the news this week on the A1 Gateshead bypass and the A1 north to Ellingham.

[Mr Mark Hoban (Fareham) (Con)]

Stamp duty has often been a barrier to families in my constituency owning a home of their own or moving house. The reforms that the Chancellor announced today will save £1,300 on the cost of an average house in Fareham. Does that not demonstrate that it is the Conservative party that is on the side of the home owner and aspiration, in stark contrast to the Labour party?

[Mr Osborne]

My hon. Friend is absolutely right. It is a major reform of stamp duty that gets rid of the very distorting slab system. The current stamp duty system has attracted huge criticism from all sorts of groups, including property websites, those who help people to move home and, of course, home buyers. [Interruption.] The hon. Ladies on the Opposition Front Bench say, “Do it in the Budget.” I am doing it now so that people can benefit from it now.

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

The Chancellor did not pay significant attention to productivity in the south-west in his speech. Our devastated rail line is just getting crumbs from the table, and those are buried in the national infrastructure plan. We have a feasibility study that is semi-permanent, with no guarantee of investment until 2019-20. The Prime Minister said that money was no object when we had the storm damage, but he clearly did not mean it. People in the south-west will not forget and will be angry.

[Mr Osborne]

What the hon. Lady says does not bear a resemblance to what has been announced this week. The south-west is one of the biggest winners from the infrastructure plan that we have announced, with a massive upgrade of the A303 and the A358. In all the years of the Labour Government, nothing happened to those roads. The Dawlish rail line had problems when the storms came, which I guess says something about the investment that the Labour Government put into it, but I will move on from that. Not only have we repaired the rail line; we are looking at an alternative route to increase resilience to the south-west. We have also provided new trains on the sleeper route and made local road improvements, such as the—

[Alison Seabeck]

They’re crumbs!

[Mr Osborne]

This is billions of pounds of investment into the south-west of England that never happened under the Labour Government. The Labour Government completely neglected the south-west of England, and the Labour MPs who represented those constituencies got absolutely nothing from them. Conservative candidates and Members of Parliament are delivering for the south-west.

[Chloe Smith (Norwich North) (Con)]

Rail passengers in East Anglia deserve a fair deal, and my hon. Friends the Members for Ipswich (Ben Gummer) and for Witham (Priti Patel), my right hon. Friend the Member for Chelmsford (Mr Burns) and I have worked hard for our constituents. I welcome the Chancellor’s commitment to the East Anglian economy, not just the road improvements but specifically his backing for two key recommendations of the Great Eastern main line taskforce and the work of its thousands of supporters, including the new Anglia local enterprise partnership. I also welcome his commitment to track improvements and new trains.

[Mr Osborne]

I pay tribute to my hon. Friend, who has done a brilliant job in bringing to my attention, and that of Parliament, the needs of Norfolk, Norwich and East Anglia. Because of her campaigning, and that of my hon. Friend the Member for Ipswich (Ben Gummer), we have the Norwich in 90 and Ipswich in 60 campaigns, and the report. We are committing new trains to speed up those journeys, as well as a massive road investment on the A47, A11, A12 and A14. None of those things happened under a Labour Government, and East Anglia was completely neglected in terms of infrastructure for the future. That is not the case any more and my hon. Friend has put East Anglia on the map.

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

When I was a teacher of children with learning difficulties, some of the children did not finish the race but were still given a prize. The Chancellor is different: he has run only half the distance he promised by the next election. Instead of apologising for not getting rid of the deficit as he promised, he wants us to applaud him. He says we are all in it together, but for the people I represent, yes, the claimant count has gone down, but the real value of their income has gone down by £2,000 per household. Last weekend, at Tesco, the warm-hearted people of my constituency had a massive collection for food banks. When will the Chancellor deliver for those people, instead of the millionaires who he claims are all in it together with them?

[Mr Osborne]

I have taken measures to reform stamp duty in a progressive way and introduced a tax, which could have been introduced in any Budget by a Labour Chancellor, to deal with multinational companies that divert their profits overseas. I have ensured that profits cannot be written off against losses incurred during the financial crisis—again, any Labour Chancellor could have done that but they did not. I am determined to ensure that the richest in our society make a contribution and that businesses pay our low taxes. More generally, the result of a pro-business policy is that in the hon. Gentleman’s constituency alone—I think he just dismissed this out of hand—unemployment has fallen by 20% in the last year. I would have thought he would welcome that.

[Mr Robin Walker (Worcester) (Con)]

In our nation of shopkeepers there will be relief at the decision to extend small business rates relief and increase the benefit for small shops and cafés to £1,500. In his review of business rates, may I urge the Chancellor to take account of the Business, Innovation and Skills Committee report that urged a fundamental reform? The Conservative party believes in low taxation, and it needs to reform fundamentally a tax that can only ever go up.

[Mr Osborne]

My hon. Friend is a champion of small businesses in Worcester and infrastructure investment in Worcestershire and that part of England, and I thank him for his representations. In part because of those representations, we have been able to help with business rates and high street shops in the statement. We now want a review of business rates, but it must be done in a way that is consistent with stable public finances. It is appropriate to consider how the modern economy has changed and the impact of things such as the internet, and that is why we are undertaking that big review.

[Barry Gardiner (Brent North) (Lab)]

Will the Chancellor confirm that the £2.3 billion identified for flood defences was originally announced last year, and that of the 1,400 schemes he says are going forward, 1,119 are not fully funded but rely on 80% partnership funding and a 10% efficiency saving that has yet to be made? Will he also confirm that the 300,000 households he says will have a reduced flood risk are going from “low” to “very low” risk, and that households at “significant” or “high” risk will rise from 490,000 to 800,000 in the next six years?

[Mr Osborne]

I know the hon. Gentleman represents a constituency named after a river, but he has not been fair about our flood defence policy. Did we set out the money last year? Yes, we did. We then said, “Let’s have a plan for how to spend that money”, and this week we have announced all the different schemes that show how it can best be used. That is an increase on the capital funding that the previous Labour Government provided. Flood defence schemes have always involved a contribution from businesses, and today I announced—the hon. Gentleman did not mention this—that we are expanding the tax relief available for those contributions.

[Martin Vickers (Cleethorpes) (Con)]

Unlike the hon. Member for Brent North (Barry Gardiner), my constituents welcome the Chancellor’s announcement on flood defences, particularly this week which marks the first anniversary of the tidal surge that flooded so many homes and businesses in my constituency. Cleethorpes has enormous potential for growth, as the Chancellor and Government have recognised, and to maximise that growth and support the rail franchises that my right hon. Friend referred to—particularly the south trans-Pennine route—it is essential to maintain coast-to-coast, east-to-west connections. Will the Chancellor do all he can to ensure that?

[Mr Osborne]

I certainly give my hon. Friend that assurance. He is a doughty champion for Cleethorpes and its strong road and rail links. He has raised train services with me and I am looking at that, as is the Transport Secretary. We are determined to provide a great service to the people he represents, and ensure that they travel in comfort. Today’s announcement about replacing outdated Pacer trains with new, modern trains will be welcomed across the north of England.

[Teresa Pearce (Erith and Thamesmead) (Lab)]

The Chancellor spoke about fiscal discipline and welfare reduction, yet it seems that the Office for Budget Responsibility might not agree. Its “Blue Book” shows that the bill for housing benefit for people not on jobseeker’s alliance will rise year on year. More worryingly, despite repeated assurances from the Work and Pensions Secretary in this House that universal credit is on time and on budget, the OBR has reviewed all the evidence and states that there remains “considerable uncertainty” around its delivery, and “broader uncertainties” over the eventual cost. In whom does the Chancellor have more faith: the OBR or the Secretary of State for Work and Pensions?

[Mr Osborne]

Universal credit is a change to our welfare system that makes sure that it always pays to work. I pay tribute to my right hon. Friend the Work and Pensions Secretary because he is pioneering what I think are important far-reaching changes to the incentives in our country that encourage work and support people in work. We have introduced a welfare cap. That is a brand new mechanism for controlling welfare spending, including identifying pressures such as rising housing benefit bills that were completely ignored in the past by the Labour Government. If a Government are not prepared to address increases in one benefit with reductions or measures on other benefits, they are required to come before the House and ask for a vote because they have reached the cap. We have not done that because we are within the cap, as the OBR report confirms.

[Ben Gummer (Ipswich) (Con)]

Last October, youth unemployment in Ipswich fell to the lowest point since records began—a fall directly attributable to the Chancellor’s policies. The future of young people in Ipswich is now much brighter because of his commitment to the Great Eastern main line and I thank him for that. Will he comment on the fact that the only way that scheme will not happen is if the Labour party stops the franchising process, which is precisely what it has promised to do?

[Mr Osborne]

I pay tribute to my hon. Friend. I have been to Ipswich and seen what he has done to attract businesses and jobs, and to champion big infrastructure improvements, such as in relation to the A14 and the Ipswich in 60 campaign. Those things would be under threat under a Labour Government. The Labour party’s rail franchising policy would prevent the improvement in train services to East Anglia. Big infrastructure projects that never happened under a previous Labour Government would almost certainly never happen under a future Labour Government.

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

After another broken promise made in 2010 that front-line policing would be protected, 16,000 police officers have gone, including 8,000 from the front line. The Association of Chief Police Officers has said that, based on the Chancellor’s plans for the future, at least another 16,000 police officers will go, the majority from the front line, threatening its ability to discharge its statutory duties and protect the vulnerable. Is ACPO right?

[Mr Osborne]

Because of the hard work of the police and the reform that has been undertaken, crime is down and there is more policing on the front line. That shows that savings can be made to the Home Office budget while achieving reform. The hon. Gentleman’s question again reveals the default position of the Labour party. The shadow Chancellor attempts to say that it has newly converted to fiscal discipline and that it would take the difficult decisions. Every single Labour MP then gets up and complains about future spending and welfare decisions. That just shows that they are totally unreformed and unreconstructed.

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

I thank my right hon. Friend for the additional help he has given to hospices. Will he join me in paying tribute to the staff and volunteers at Willen hospice in Milton Keynes, which provides patients and their families from my constituency, the constituency of my hon. Friend the Member for Milton Keynes North (Mark Lancaster) and indeed your constituency, Mr Speaker, with incredible support?

[Mr Osborne]

I think everyone in this House knows what an incredible job the hospice movement and hospice charities do. I am a patron of the East Cheshire hospice. From the conversations I have had with my hon. Friend and his colleagues, I know what a brilliant job the hospice in his area does. This measure is something that hospices have long asked for. They have been unfairly discriminated against, in comparison with the NHS, when it comes to VAT. We are going to refund that VAT and give the hospice movement the support it deserves in recognition of the brilliant job it does.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

The Chancellor has made a number of statements today on infrastructure, but of course developing our infrastructure requires a thriving UK steel industry and supply chain. Will he explain why he and the Secretary of State for Business, Innovation and Skills have chosen not to bring forward the energy-intensive industries compensation package that he announced in the Budget earlier this year? Does he believe that the UK steel industry faces a level playing field, and if not, what is he going to do about it?

[Mr Osborne]

I have long thought that there is a challenge in ensuring that commitments to reduce carbon are consistent with having a vibrant and successful steel industry and other energy-intensive industries. What we hear when we go to Port Talbot and elsewhere is a real concern that UK energy prices could be higher than they are on the rest of the continent of Europe if we adopt measures such as a decarbonisation target. That is why the Conservative party is not in favour of a decarbonisation target. Unfortunately, the Labour party is in favour of it and the steel industry might be one of the industries that will bear the cost.

[Gordon Birtwistle (Burnley) (LD)]

I congratulate the Chancellor on his plan to reduce the job tax on apprentices up to the age of 25. The country is obviously on the rise and manufacturing industry is booming, but we have a big problem with skills shortages. I am sure this measure will go a long, long way towards training young people to do the jobs of the future that this country will desperately need.

[Mr Osborne]

My hon. Friend has been a consistent champion of apprentices in Burnley and of the apprenticeship policy. He sends me and other colleagues in the Government a regular report of what is going on in Burnley and what more we can do to support apprentices. I am careful to make sure that I read that report each time it comes in. It is partly because people like him have been raising this issue with us that we have taken the big decision today to abolish the job tax when it comes to employing young apprentices. It is a major step forward in supporting apprentices and I think it will open the path to having 3 million apprentices in the next Parliament.

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

It is very encouraging that the Chancellor recognises the importance of transport investment for creating the powerhouse of the north, but he has not committed to a funded programme to implement the changes that are required right across the north. Why did he single out the Manchester-Leeds link, which is just a part of what is required?

[Mr Osborne]

First, we have announced this week important changes to support infrastructure in and around Liverpool, including to the port of Liverpool, which is a very exciting source of economic development on Merseyside. Secondly, the trans-Pennine link supports journeys from Liverpool all the way over to Leeds and Hull, but we also want investment in the rail services in and around Merseyside. That is why we are electrifying the lines in that part of the north-west and why we are looking for major investment in HS2, so that journeys from Liverpool to Birmingham and London will be much quicker once the train joins the track at Crewe. Those are all measures that we are taking to support Liverpool.

I also announced major investment in science in the north, and Liverpool will be one of the beneficiaries of that. This is all about trying to work together. I am very happy to do that on a cross-party basis, with Members of Parliament representing Liverpool, Joe Anderson—the mayor of Liverpool—and the Government, to see what more we can do to increase the economic potential on Merseyside.

[Mr David Burrowes (Enfield, Southgate) (Con)]

As we approach small business Saturday, I, on behalf of my high streets, welcome the package of measures to reduce the impact of business rates. What should I tell my businesses about the impact of following the shadow Chancellor’s proposal to increase corporation tax?

[Mr Osborne]

The shadow Chancellor and the Labour party want to increase corporation tax. That is their stated policy on the legislation this House has passed. They make it pretty clear that they would increase national insurance if they ever came to office. That would be devastating for the small businesses of Enfield, and indeed of the whole country. We know what happens when there is a Labour Government. We know the impact on businesses: the high unemployment and the business closures they would create, because that is exactly what happened five years ago.

[Ms Margaret Ritchie (South Down) (SDLP)]

I welcome the commitment to the devolution of corporation tax to Northern Ireland, but there remains uncertainty on the cost to the block grant. Will the Chancellor outline the possible cost to the block grant over an estimated period, and will he outline the timeline for devolution, predicated on the outcome of cross-party talks?

[Mr Osborne]

The costs of Northern Ireland reducing, for example, corporation tax rates to the level seen in the Irish Republic have been set out and are the subject of discussions that we have had over the past year with the Northern Ireland Executive. We need to be sure—this is about the taxpayers across the whole of the UK—that if we go ahead with this step, which we are very well disposed towards, the Northern Ireland Executive will be able to manage the pressure on their resources. That will be one of the topics for discussion in the cross-party talks. If the cross-party talks are successful we could, as I said in the statement, introduce legislation in this Parliament.

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

In the past four-and-a-half years, my constituency has benefited from the Chancellor’s policies. Some £700 million has been invested in my constituency, and I thank him for that. The greatest gift of all is the Government’s absorption of VAT on hospices. Does he agree that that will help St John’s hospice, and that the policy is long overdue? I thank him for listening.

[Mr Osborne]

My hon. Friend is a great champion of his constituency in Lancashire. He has raised with me and the rest of the Government the great work that St John’s hospice does and the unfair treatment, in comparison with the NHS, that it and other hospices have endured because of VAT. We have listened to him and to other hon. Members and have taken this step forward. We wish the staff at St John’s well with all the great work they do.

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

I welcome the belated recognition from the Chancellor of the importance of investment in the regions, but may I remind him that the west midlands has the second highest number of unemployed and the second lowest growth in employment in the country? What provisions are there in the Budget to respond to the proposals in the joint submission by the Black Country and Greater Birmingham and Solihull local enterprise partnerships? Those proposals are designed to expand the black country enterprise zone and the transport infrastructure between the two areas to ensure that Birmingham and the black country become the powerhouse of the west midlands.

[Mr Osborne]

I am absolutely ready to engage with authorities, including of course Labour authorities, in Birmingham and in the rest of the west midlands on what more we can do to invest in the west midlands. We have had a good and productive cross-party relationship with the Labour leaders in Manchester, and I would like to see that replicated in Birmingham, with Albert Bore, and with the Conservative, Labour and Liberal Democrat authorities in the black country. We are willing to do that and to hear their good ideas.

A number of proposals have been made on enterprise zones. We will make an announcement in the Budget. A lot of good ideas have come in. We were not ready to assess all the different bids to make a decision in time for the autumn statement, but we will do that in time for the Budget.

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

I welcome the Chancellor’s statement, particularly his commitment to new spending on the NHS. Does he agree that we can invest in things such as the new Midland Metropolitan hospital in Sandwell and improved services at Rowley Regis hospital only if we stick to our long-term plan and have strong economic growth?

[Mr Osborne]

I have visited with my hon. Friend the great local NHS that he does so much to support and have seen his commitment to major capital investment in new hospital services. I hope his area will also benefit from the new £1 billion fund for improving primary care facilities so that we can deliver secondary care-style services in our communities, working with our GPs. That will be a huge investment, on top of the big investment he has already secured for his area.

[Lilian Greenwood (Nottingham South) (Lab)]

Given that one in five workers are earning less than the living wage, that wages have fallen further in this Parliament than in any Parliament since Victorian times, and that the Chancellor is spending billions of pounds more on tax credits and housing benefit for working people, is it any wonder that tax receipts are lower than expected and borrowing is higher? Does he finally understand that the cost of living crisis he has created for my constituents is self-defeating and the very reason he has had to break his promise on the deficit?

[Mr Osborne]

The hon. Lady neglected to say that in her constituency unemployment has fallen by 17%—[Interruption.] That seems to be a source of disappointment to the local Labour MP. It should be a source of encouragement to people living in Nottingham South that jobs are being created and that people can get them. However, we have to ensure that people have the right skills to get those jobs, which is why we are supporting apprentices in her constituency. Of course, people in Nottingham would see themselves returned to the economic instability and crisis of the past if there were another Labour Government.

[Oliver Colvile (Plymouth, Sutton and Devonport) (Con)]

I thank my right hon. Friend for his comments about postgraduates and science investment and for the billions of pounds he is proposing to invest in south-west transport infrastructure. Does he recognise that Plymouth’s priority is a sustainable railway line that delivers more three-hour train journeys between London and Plymouth and ensures that we get trains into Plymouth before 9 am in order to deliver the city deal?

[Mr Osborne]

My hon. Friend has been a great champion for Plymouth—I have visited some of the economic developments taking place there with him—including for better rail services, and the work on how to improve those services is under way because of his interventions. In addition, there are now major improvements on roads into the south-west. There was never any investment into the south-west when there was a Labour MP representing his constituency. This is all proof that Conservatives in the area are champions for the south-west and are delivering for the region.

[Jonathan Ashworth (Leicester South) (Lab)]

The Chancellor asked in 2010 that we judge him on whether he balanced the books by 2015, and he is set to fail that test. Will he explain why, compared with March, he has had to revise up borrowing for this year and next by £12.5 billion?

[Mr Osborne]

The hon. Gentleman, like the shadow Chancellor, neglects to say that borrowing has been revised down for the following three years of the forecast and that the structural deficit continues to fall at the same rate. The problem for Labour is that it has been parading around the television studios for the past two weeks saying, “Wait for the autumn statement and the big deterioration in the public finances.” Unfortunately for them, it has not happened. That is the problem with a shadow Chancellor who keeps staking the credibility of the Labour party on his terrible economic predictions.

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

In the Humber before the last election, youth unemployment was rising, unemployment was rising, there was no real rail investment—which is hard to say with our accent—there were no significant road improvements and we were becoming worse off compared with the south of England, but now our bridge tolls have been halved and there is massive investment in our flood defences. I thank the Chancellor for his announcements. Will he assure me that our joint bid to him and the Prime Minister will be considered seriously and that the £1 billion funding over the next 15 to 20 years will be considered quickly so that we can get certainty as soon as possible?

[Mr Osborne]

As we said this week, we are giving serious consideration to the bid that my hon. Friend, his colleagues and others in the Humber estuary area put forward for major improvements in flood defences. We are already investing in flood defences this week, which was welcome news, and his proposal is a big and well-argued one to which we are giving serious consideration. As he rightly said, on top of that we have seen major improvements into the Humber and, thanks partly to his campaigning, the Humber bridge tolls came down and traffic has increased.

[Phil Wilson (Sedgefield) (Lab)]

I welcome the news that the national formulation centre will be based in Sedgefield at the North East technology park in my constituency, which was opened 10 years ago by my predecessor. Is the Chancellor aware that the chemical and other industries in the Tees valley use Durham Tees Valley airport to reach global markets and that this could be affected by the devolution of air passenger duty to Scotland? What plans does he have to ensure that small regional airports, such as Durham Tees Valley airport, in the north of England are not disadvantaged by these changes?

[Mr Osborne]

I am pleased to say that the current Member for Sedgefield probably gets a better hearing at the Treasury than the last Member for Sedgefield ever did. The formulation centre is great news for the north-east and Sedgefield, but the hon. Gentleman raises a serious point that we will have to look at. The Smith commission—and, to be fair, the Calman commission before it —recommended the devolution of air passenger duty, and we absolutely accept that recommendation. However, we will have to consider the impact, particularly on the airports in the north-east of England, which are geographically close to some of the Scottish airports. The shadow Chancellor raised the same point. I am happy to work with the hon. Gentleman and the Labour Front-Bench team, on a cross-party basis—we worked together like that on the Smith process—to see what we can do to support airports in the north-east.

[Charlie Elphicke (Dover) (Con)]

The Chancellor used to receive representations that he was doing too much, too fast, but now Labour Members think he did not go quickly enough. Given their muddled and confused position, if we were to adopt a plan from these people, what would be the implication for interest rates in particular and economic policy and growth in general?

[Mr Osborne]

Of course, Labour economic policy would increase unemployment, reduce GDP and potentially put Britain back into recession. We know that its feeble commitments on borrowing would allow at least £26 billion of extra borrowing every single year, and as has been demonstrated over the past hour or so, every Labour MP actually wants to spend more money and increase welfare bills. That is the real Labour party, and of course it would bankrupt the country again.

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

The Chancellor made just one passing reference to wages in his statement, some 42 minutes in, and small wonder. Will he confirm that the OBR has this afternoon revised down its forecast for income tax and national insurance contribution receipts through to 2018-19 by a further £11.8 billion, with £9 billion of that down to lower than forecast growth in wages? How can the worst Chancellor on wages for 140 years ever be the answer to higher living standards in the next Parliament?

[Mr Osborne]

I actually talked about tax receipts and earnings early on in the statement. I pointed out that although tax receipts were lower, crucially they were offset by lower debt interest payments, which is why we have not seen the big deterioration in the public finances that was forecast. Borrowing was lower towards the end of the period than was forecast at the last Budget; the surplus is higher than predicted; and the structural deficit is on course for the reductions we set out. That is because although tax receipts were lower, debt interest payments were also lower.

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

I very much welcome the Chancellor’s statement, and I would like to thank him for the previous measures he introduced, which have led to youth unemployment going down and overall unemployment going down in Gillingham and Rainham, with businesses and jobs going up there. Linked to that, I thank the Chancellor for the £30 million previously given to Medway through the growth deal to support the infrastructure. Linked to that, I thank him today for the specific support given to small businesses, which are at the heart of my constituency, in creating jobs and prosperity. Linked to that, I thank him for his visit to MEMS Power Generation in my constituency, which was very much appreciated.

[Mr Speaker]

The hon. Gentleman can also thank me for my indulgence.

[Mr Osborne]

I fondly remember my visit to Gillingham and the Gillingham town strip I was given when I was there. My hon. Friend is a great champion of Gillingham’s businesses and transport links in the town. Many of the small business rate decisions we have taken today are in no small part due to the campaigning my hon. Friend has done on behalf of Gillingham’s businesses.

[Gemma Doyle (West Dunbartonshire) (Lab/Co-op)]

As the Chancellor’s Parliamentary Private Secretary passes him whatever fact is useful in answering my question, let me tell the right hon. Gentleman that earlier this year, long-term youth unemployment in West Dunbartonshire had rocketed by 625% on his watch. That is nothing to be proud of. He has driven down the living standards of my constituents and he has driven down the value of their wages. When is he going to admit that he has failed on the economy? Will he apologise to people in West Dunbartonshire for the misery he has caused them?

[Mr Osborne]

The Labour Chancellors in the last Government who came from Scotland in the end gave this country the highest budget deficit in its peacetime history. They left a country with high unemployment, and questions were being asked about Britain’s ability to pay its way in the world. We have turned that around: unemployment has fallen across the United Kingdom and in Scotland, and the part of our UK that is seeing the fastest rate of job creation at the moment is Scotland.

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

The Chancellor’s northern powerhouse vision is seeing the greatest transfer of powers and money south to north for generations. Will he confirm that in doing more to devolve powers to northern cities, rural and county areas will not lose out?

[Mr Osborne]

I can give my hon. Friend that assurance. This is a policy not just for cities, but for the shire counties that surround them. Rather like him, I represent a shire country seat outside a great northern city. This is about strengthening the transport links between the shire counties and the cities; it is about making sure that superfast broadband is available in our rural areas; it is about supporting towns and not just cities in the north of England. It is about ensuring that the whole thing is connected up in a way that it has not been before, so that the north of England has the economic clout of a great global city. I think we are well on the way to developing that.

[Sheila Gilmore (Edinburgh East) (Lab)]

Before the Chancellor of the Exchequer tells me the unemployment figures in my constituency, I of course welcome the fact that the claimant count is down—but that is not necessarily the same as unemployment, as the right hon. Gentleman knows. We are now getting closer to the point where we were through the whole of the first 10 years of the last Labour Government, so we have only gone back to where we were. However, a £6 billion increase on overall housing benefit spending over the course of this Parliament has contributed to the Chancellor’s failure to meet his deficit reduction targets. When will his Government actually tackle the underlying causes, which are high rents and low wages?

[Mr Osborne]

First, it is no good saying that the first 10 years of that Labour Government were great and that we should forget about the last three, which brought about the greatest recession since the 1920s. It is a bit like Mrs Lincoln being asked about that play.

We have taken a number of steps to try to cap housing benefit, rent increases and the housing benefit associated with them; we have introduced a cap on housing benefit payments. When we came to office, there were examples of some people receiving over £100,000 a year from taxpayers in housing benefit, which is of course totally unacceptable. We have taken those steps, and now we have the welfare cap as well. All I can say is that every time Labour Members stand up, we hear about a proposal to add to the housing welfare benefit bill, and that it would be good to hear some proposals from them to reduce it.

[Jason McCartney (Colne Valley) (Con)]

rose—

[Mr Speaker]

Gosh. The hon. Gentleman appears to be experiencing some discomfort, which I do not like to see. We must hear from Mr Jason McCartney.

[Jason McCartney]

Thank you, Mr Speaker. It is my marathon training, and in that vein, I ran the London marathon for the Forget Me Not children’s hospice this year. Along with it and my local Kirkwood hospice I would therefore like to thank the Chancellor for the measures he has taken in refunding VAT. The Forget Me Not children’s hospice is recruiting two apprentices at the moment, so will my right hon. Friend continue to support apprenticeships, 4,200 of which have been created in my constituency since 2010?

[Mr Osborne]

It seems like the autumn statement is a tailor-made package for the marathon run that my hon. Friend is undertaking. In view of the brilliant work that he does in his community and the brilliant work of the Forget Me Not hospice, I am pleased that the VAT refund, along with the abolition of the jobs tax on apprenticeships, will be so welcome. My hon. Friend must send me a sponsorship form. Every year I sponsor the shadow Chancellor, so the least I can do is to sponsor my hon. Friend.

[Mr David Lammy (Tottenham) (Lab)]

As a former universities Minister, I welcome the loan scheme for masters students in the statement. However, could not the Chancellor say more about the structure of the economy? The reason why the tax receipts are so low is partly because Britain has lost 1.2 million jobs in the skilled middle section of the economy—the plumbers and the mechanics, for example. Many of those jobs have been replaced by customer services, which certainly forms the increase in London. Will the Chancellor say something about how to restructure the economy, as we have heard nothing about that today?

[Mr Osborne]

I think the right hon. Gentleman is being a little unfair about the autumn statement, but I agree with the challenge he presented to us—how to improve the productivity of the United Kingdom. The measures we take to support postgraduate loans and to support apprenticeships, alongside the education reforms at primary and secondary level that my right hon. Friends the Education Secretary and her predecessor have implemented, are all designed to try to improve the skills in the country. We are all working together to try to address the productivity challenge that we face. Frankly, we faced it for a long time in the past, as our productivity lagged behind some of our European competitors, let alone that of the rest of the world. We need to do more. That can be achieved in London partly by investments in infrastructure, including those in the Tottenham area.

[John Stevenson (Carlisle) (Con)]

For the people of Carlisle, average wages and house prices are lower than the national average. The announcements on the raising of the personal allowance and the stamp duty reforms will be extremely welcome. I fully support them. Does the Chancellor agree that when it comes to discussions about the northern powerhouse, and particularly about local government and civic reform, it is also vital that Carlisle and Cumbria are not forgotten?

[Mr Osborne]

My hon. Friend is, of course, absolutely right. He came to No. 11 Downing street with representatives of businesses from the whole of the north-west, and particularly with those businesses that create and support jobs in Carlisle and across Cumbria. My hon. Friend, of course, has been instrumental in getting the Government to look at the A69 and the A66 to see what more can be done to support those east-west links across the very north of England. Without him as MP for Carlisle, that study would not have happened.

[Diana Johnson (Kingston upon Hull North) (Lab)]

Why does the Chancellor consistently forget to mention Hull when he is talking about the northern powerhouse, particularly when people in Hull seem to think that the northern powerhouse is a new electrical store that is opening and not the joined-up plan for the whole of the north that it is? He can redeem himself, however, by announcing today the privately financed initiative to electrify the line to Hull, for which we are all waiting.

[Mr Osborne]

Of course, we are waiting for it partly because under 13 years of the Labour Government, it never happened. We are looking at improving rail connections to Hull. I was there fairly recently and talked to Lord Haskins, the head of the local enterprise partnership. I go out of my way to say that Hull should be part of the northern powerhouse, and I have talked about the links between Liverpool, Manchester, Leeds and Hull across the east-west link of the north of England. I think there are real opportunities, alongside the flood defence programme in the Humber estuary that we have talked about. The investment in the enterprise zones there and the Siemens investment in Humberside are important. There are lots of great things happening in Hull, and the “Hook up Hull” campaign is yet another example of a great campaign that we are looking to support.

[Bill Wiggin (North Herefordshire) (Con)]

Can the Chancellor explain why he wants to introduce his stamp duty changes at midnight rather than a little further down the road?

[Mr Speaker]

Order. I am sure that the hon. Gentleman was here all along. He did not leave the Chamber—or did he?

[Bill Wiggin]

He might have done.

[Mr Speaker]

He might have left the Chamber? In that case, we cannot take his question.

[Mr Osborne]

It was quite a good question.

[Mr Speaker]

It might be. Go on, get in there.

[Mr Osborne]

The stamp duty changes must be introduced with immediate effect today because otherwise transactions in the housing market would stop as people waited for them. Given that 98% of home buyers will see a tax reduction, that would freeze quite a large part of the market. [Interruption.] I am told that the figure in Herefordshire is 99%.

May I take this opportunity to thank you, Mr Speaker, and the Clerks for the discussions that we have had over the last few days to make this possible.

[Mr Speaker]

I am glad that the hon. Member for North Herefordshire (Bill Wiggin) has received his answer, but I must say that to toddle out of the Chamber and then beetle back in and expect to take part, in defiance of the conventions of the House, renders the hon. Gentleman a cheeky little boy.

[Bill Wiggin]

There is nothing little about me, Mr Speaker.

[Mr Speaker]

I use the term with some poetic licence, it must be admitted.

[Nia Griffith (Llanelli) (Lab)]

The Chancellor is quick to blame the eurozone. However, the UK now languishes as 22nd out of the 28 EU countries in terms of export growth. What specific measures will he take to improve it?

[Mr Osborne]

As I said in my statement, we face a major challenge when it comes to increasing our exports. As the Office for Budget Responsibility made clear, it has been a challenge for the British economy for the past 20 years. If anything, however, the decline in our exports has slowed down slightly in recent years, compared to what was happening under the last Government. Today I have committed myself to a £45 million fund, which will be available both to UK Trade & Investment and to the Foreign Office, to increase our trade links with the new emerging economies of the world, and to support first-time exporters in particular. Lord Livingston is doing a great job as Trade Minister, and I want to back him.

[Dr Julian Huppert (Cambridge) (LD)]

There is much to welcome in the autumn statement, including investment in the NHS and, in particular, investment in mental health. Strangely, that has not been mentioned in any of the questions so far.

I especially welcome the excellent news about the introduction of income-contingent postgraduate loans. I agree with what was said earlier by the right hon. Member for Havant (Mr Willetts). Indeed, when he was a Minister I worked with the National Union of Students and CentreForum to persuade him to do exactly this, so it is great to see it happening. More people from disadvantaged backgrounds obtain undergraduate degrees, but then find that they cannot afford to engage in postgraduate study. This welcome and long-awaited change will lower a barrier to social mobility.

[Mr Osborne]

I thank my hon. Friend for what he has said. I should have been extremely disappointed if my announcement of a big improvement in our support for postgraduate students had not been welcomed by the Member of Parliament for Cambridge. He is absolutely right: the lack of financial support available to people doing post-grads is indeed a barrier, which falls particularly on those from low-income backgrounds, and which has been identified as a real problem in a number of reports on social mobility. I am glad that we have been able to work together to bring about this change.

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

The OBR’s analysis clearly states that borrowing over the forecast period will increase above and beyond what was forecast back in March, predominantly as a result of the reduction in tax receipts. Far from rebalancing the economy, and failing to meet his own deficit reduction targets, the Chancellor is presiding over a low-pay, zero-hours-contract economy in which one in five people—one in three in my constituency—are paid below the living wage. Is it not an insult to the 3 million people on the lowest incomes, and an insult to the value of British fair play, that the Government will be hammering them yet again with a potential cut in tax credits?

[Mr Osborne]

Today we have increased the personal allowance, which increases the number of low-paid people taken out of income tax to 3.5 million.

It is interesting to look at the caricature of what is happening in this country that Labour Members have tried to present. They said that all the jobs were part-time; it turns out that 85% of them are full-time. They talked about the gender pay gap; of course that remains a challenge, but it is at its lowest level in British history, and has fallen since the period of the last Labour Government. They complained about the abuse of zero-hours contracts; I had to sit there for 13 years listening to Labour Chancellors, and never once did they introduce a reform of zero-hours contracts. That reform is now taking place, and we are ending the abuse that comes with the exclusive contracts.

Ultimately, the people who suffer most when the economy fails—when economic stability is destroyed and unemployment rises—are the poorest people in the country. That, sadly, was their experience under a Labour Government, but under this Government, employment is growing and economic security is returning.

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

I warmly welcome the statement. I welcome, for instance, the support for small businesses, apprenticeships and the NHS, but the news that the Pacer trains will go from the northern franchise will be particularly welcome in my constituency. Will my right hon. Friend continue to prioritise infrastructure investment as a driver of economic growth?

[Mr Osborne]

Yes, I will. When it comes to these Pacer trains—[Interruption.] Labour Front-Benchers had all those years in which they could have got rid of the Pacer trains. They complain about them now, but what about all the endless Labour Transport Secretaries who did nothing about them? This is happening now, with a Conservative Chancellor, a Conservative Transport Secretary, and a Conservative Member of Parliament for Harrogate and Knaresborough.

[Guy Opperman (Hexham) (Con)]

People in the north-east will welcome the news about the NHS, hospices—including those in my constituency—carers, who will set great store by the Chancellor’s announcement, and home buyers. I also welcome the Chancellor’s comments about northern airports and air passenger duty. May I urge him to revisit the north-east in the spring, when we will introduce him to a region that has the most technology start-ups outside London, and has experienced the fastest rate of growth in private sector businesses over the last quarter?

[Mr Osborne]

Of course I am always very happy to visit the north-east. I was there quite recently, and will be going again very shortly.

There have been a number of great pieces of news for the north-east this week. There are the improvements to the A1 around Newcastle and Gateshead and up to Ellingham, and the commitment to look at dualling beyond that. There are the improvements that we are looking at for the A69 and the A66, which is something that my hon. Friend has raised with me personally. There is also the big investment in science in the north-east. I am particularly pleased to support investment in the brilliant work that Newcastle university does on ageing.

[Mr Speaker]

I will shortly call the Chancellor of the Exchequer to move a provisional collection of taxes motion. Copies of the motion are available in the Vote Office.

In accordance with our Standing Order No. 51 on ways and means motions,

“A Minister of the Crown may without notice make a motion for giving provisional statutory effect to any proposals in pursuance of section 5 of the Provisional Collection of Taxes Act 1968; and the question on such a motion shall be put forthwith.”

I call Mr Chancellor of the Exchequer to move the provisional collection of taxes motion formally.

Provisional Collection of Taxes

Wednesday 3rd December 2014 Commons Chamber

Motion made, and Question put forthwith (Standing Order 51(2),

That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motion:

Stamp duty land tax (residential property transactions)

That—

(1) Part 4 of the Finance Act 2003 (stamp duty land tax) is amended as follows.

(2) Section 55 (general rules on calculating the amount of stamp duty land tax chargeable) is amended as follows.

(3) In subsection (1) for “a percentage of the chargeable consideration for the transaction” substitute “determined in accordance with subsections (IB), (1C) and (2)”.

(4) After subsection (1A) insert—

“(IB) If the relevant land consists entirely of residential property and the transaction is not one of a number of linked transactions, the amount of tax chargeable is determined as follows—

Step 1

Apply the rates specified in the second column of Table A below to the parts of the relevant consideration specified in the first column of that Table.

Step 2

Add together the amounts calculated at Step 1 (if there are two or more such amounts).

Table A: Residential
Part of relevant consideration	Rate
So much as does not exceed £125,000	0%
So much as exceeds £125,000 but does not exceed £250,000	2%
So much as exceeds £250,000 but does not exceed £925,000	5%
So much as exceeds £925,000 but does not exceed £1,500,000	10%
The remainder (if any)	12%

(1C) If the relevant land consists entirely of residential property and the transaction is one of a number of linked transactions, the amount of tax chargeable in respect of the particular transaction under consideration is determined as follows—

Step 1

Apply the rates specified in the second column of Table A in subsection (IB) to the parts of the relevant consideration specified in the first column of that Table.

Step 2

Add together the amounts calculated at Step 1 (if there are two or more such amounts).

Step 3

Multiply the amount given by Step 1 or Step 2, as the case may be, by—

where—

C is the chargeable consideration for the transaction, and

R is the relevant consideration.”

(5) In subsection (2) for the words from the beginning of that subsection to the end of Table A substitute—

“If the relevant land consists of or includes land that is not residential property, the amount of tax chargeable is the percentage of the chargeable consideration for the transaction determined in accordance with Table B below by reference to the amount of the relevant consideration.”

(6) In subsection (3) for “subsection (2)” substitute “subsections (IB) and (2)”.

(7) In subsection (4) at the beginning insert “For the purposes of subsections (1C) and (2),”.

(8) Omit subsection (7).

(9) Section 74 (exercise of collective rights by tenants of flats) is amended as follows.

(10) In subsection (1A)—

(a) in the opening words, for “rate” substitute “amount”,

(b) in Step 2—

(i) for “rate of tax and the” substitute “amount of', and

(ii) for “subsections (2) and (3)” substitute “subsection (IB)”,

(c) in Step 3—

(i) for “rate of tax and the” substitute “amount of”, and

(ii) for “subsections (2) and (3)” substitute “subsection (IB)”, and

(d) in Step 4 for “subsections (2) and (3) do” substitute “subsection (IB) does”.

(11) For subsections (2) and (3) substitute—

“(IB) Where step 2 or 3 of subsection (1A) requires the amount of tax chargeable to be determined in accordance with this subsection, it is determined as follows.

Step 1

Determine the amount of tax chargeable under section 55 as if the relevant consideration for the chargeable transaction were the fraction of the relevant consideration calculated under step 1 of subsection (1A).

Step 2

Multiply the amount determined at step 1 by the number of qualifying flats contained in the premises.”

(12) In section 75 (crofting community right to buy) for subsections (2) and (3) substitute—

“(1A) In that case, the amount of tax is determined as follows—

Step 1

Determine the amount of tax chargeable under section 55 as if the relevant consideration for the chargeable transaction were the fraction of the relevant consideration produced by dividing the total amount of that consideration by the number of crofts being bought.

Step 2

Multiply the amount determined at step 1 by the number of crofts being bought under that transaction.”

(13) In section 77(l)(b) (notifiable transactions) for “which tax is chargeable at a rate of 1 % or higher” substitute “any part of which tax is chargeable at a rate of more than 0%”.

(14) In section 77A(2)(a) (notifiable transactions: exception of certain acquisitions of major interests in land: interpretation) for “1% or higher” substitute “more than 0%”.

(15) In section 80(2) (requirement to make return where contingency ceases, or consideration is ascertained, and tax or additional tax is payable etc)—

(a) in the opening words, after “before” insert “(calculated in either case according to the effective date of the transaction)”, and

(b) omit paragraph (c), but not the “and” at the end.

(16) In section 80(4) (cases where less tax payable) after “in respect of a transaction” insert “(calculated according to its effective date)”.

(17) In section 81ZA(l)(c) (alternative finance arrangements: additional tax where reliefs withdrawn to be calculated by reference to effective date) for “by reference to the rates in force at” substitute “according to”.

(18) In section 81A(1) (requirement to make return in consequence of later linked transactions where tax or additional tax is payable etc)—

(a) in the opening words, after “before” insert “(calculated in either case according to the effective date of the earlier transaction)”, and

(b) omit paragraph (c), but not the “and” at the end.

(19) In section 109(2)(b) (general power to vary Part 4 of the 2003 Act: power to alter descriptions of transaction chargeable at any existing rate or amount) after “amount” insert “, or in respect of which tax is calculated in accordance with any particular provision”.

(20) In section 122 omit the entry for “rate of tax”.

(21) In paragraph 3(l)(b) of Schedule 4A (certain high-value transactions not linked to other transactions for purposes of section 55(4)) for “55(4)” substitute “55(1B), (1C) and (4)”.

(22) Schedule 6B (transfers involving multiple dwellings) is amended as follows.

(23) For paragraph 4(1) substitute—

“(1) If relief under this Schedule is claimed for a relevant transaction, the amount of tax chargeable in respect of the transaction is the sum of—

(a) the tax related to the consideration attributable to dwellings (see paragraph 5(1) and (2)), and

(b) the tax related to the remaining consideration (if any) (see paragraph 5(7)).”

(24) Omit paragraph 4(4).

(25) For the italic heading before paragraph 5 substitute “The amount of tax chargeable”.

(26) For paragraph 5(1) and (2) substitute—

“(1) For the purposes of paragraph 4(l)(a), “the tax related to the consideration attributable to dwellings” is determined as follows—

Step 1

Determine the amount of tax that would be chargeable under section 55 on the assumption that—

(a) the relevant land consisted entirely of residential property, and

(b) the relevant consideration were the fraction produced by dividing total dwellings consideration by total dwellings.

Step 2

Multiply the amount determined at Step 1 by total dwellings.

Step 3

If the relevant transaction is one of a number of linked transactions, go to Step 4.

Otherwise, the amount found at Step 2 is the tax related to the consideration attributable to dwellings.

Step 4

Multiply the amount found at Step 2 by—

where—

“CD” is the consideration attributable to dwellings for the relevant transaction, and “TDC” is total dwellings consideration.

(2) But if the amount found at Step 2 of sub-paragraph (1) is less than 1% of total dwellings consideration, for the purposes of paragraph 4(l)(a) “the tax related to the consideration attributable to dwellings” is an amount equal to 1% of the consideration attributable to dwellings.”

(27) For paragraph 5(7) substitute—

“(7) For the purposes of paragraph 4(l)(b), “the tax related to the remaining consideration” is the appropriate fraction of the amount of tax which (but for this Schedule) would be due in respect of the relevant transaction.

(8) In subsection (7) “the appropriate fraction” means—

where—

“RC” is the remaining consideration for the relevant transaction,

“TDC” is total dwellings consideration, and

“TRC” is total remaining consideration.

(9) For a transaction that is not one of a number of linked transactions, “total remaining consideration” is the remaining consideration for that transaction (see paragraph 4(3)).

(10) For one of a number of linked transactions, “total remaining consideration” is—

(a) the total of the chargeable consideration for all those transactions, less

(b) total dwellings consideration.”

(28) In paragraph 6(1) (change of circumstances after relief given) for paragraph (c) substitute—

“(c) had the event occurred immediately before the effective date of the transaction, more tax (calculated according to the effective date of the transaction) would have been payable, whether because the transaction would not have been a relevant transaction or otherwise.”

(29) In paragraph 6(3) (requirement to make return where more tax payable than was paid) omit paragraph (c), but not the “and” at the end.

(30) In paragraph 8(1) of Schedule 7 (acquisition relief)—

(a) for “rate” substitute “amount”, and

(b) for “0.5%” substitute “an amount equal to 0.5% of the chargeable consideration for the transaction”.

(31) In paragraph 4B(1) of Schedule 9 (shared ownership transactions) for “rate” substitute “amount”.

(32) In paragraph 12 of Schedule 9 (shared ownership trusts) for “rate” substitute “amount”.

(33) In paragraph 30(2) of Schedule 15 (partnerships) in paragraph (a) for “rate of tax chargeable under that section is 1% or higher” substitute “amount of tax chargeable under that section is not zero”.

(34) In paragraph 3(3) of Schedule 17A (leases that continue after a fixed term: additional tax to be calculated by reference to effective date)—

(a) in the opening words, after “before” insert “(calculated in either case according to the effective date of the transaction)”, and

(b) omit paragraph (c), but not the “and” at the end.

(35) In paragraph 4(3) of Schedule 17A (treatment of leases for indefinite term: additional tax to be calculated by reference to effective date)—

(a) in the opening words, after “before” insert “(calculated in either case according to the effective date of the transaction)”, and

(b) omit paragraph (c), but not the “and” at the end.

(36) In paragraph 7(1) of Schedule 19 (old linked transactions relevant to rate of tax) for “rate” substitute “amount”.

(37) In paragraph 9(4) of Schedule 19 (exercise of option or right of pre-emption acquired before implementation date) for “rate” substitute “amount”.

(38) In consequence of amendments made by preceding provisions of this Resolution—

(a) in the Finance Act 2006, omit section 162(1),

(b) in the Finance Act 2010, omit section 7(1), and

(c) in the Finance Act 2012—

(d) omit section 213(1), and

(e) in Schedule 35, omit paragraphs 2(4) and (6) and 5(3).

(39) The amendments made by this Resolution have effect in relation to any land transaction of which the effective date is, or is after, 4 December 2014.

(40) But those amendments do not have effect in relation to a transaction if the purchaser so elects and either—

(a) the transaction is effected in pursuance of a contract entered into and substantially performed before 4 December 2014, or

(b) the transaction is effected in pursuance of a contract entered into before that date and is not excluded by paragraph (42).

(41) An election under paragraph (40)—

(a) must be included in the land transaction return made in respect of the transaction or in an amendment of that return, and

(b) must comply with any requirements specified by the Commissioners for Her Majesty's Revenue and Customs as to its form or the manner of its inclusion.

(42) A transaction effected in pursuance of a contract entered into before 4 December 2014 is excluded by this paragraph if—

(a) there is any variation of the contract, or assignment (or assignation) of rights under the contract, on or after 4 December 2014,

(b) the transaction is effected in consequence of the exercise on or after that date of any option, right of pre-emption or similar right, or

(c) on or after that date there is an assignment (or assignation), subsale or other transaction relating to the whole or part of the subject-matter of the contract as a result of which a person other than the purchaser under the contract becomes entitled to call for a conveyance.

(43) In paragraphs (40) to (42)—

“land transaction return”, in relation to a transaction, means the return under section 76 of the Finance Act 2003 in respect of that transaction;

“purchaser” has the same meaning as in Part 4 of that Act (see section 43(4) of that Act);

“substantially performed”, in relation to a contract, has the same meaning as in that Part (see section 44(5) of that Act).

And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—(Mr George Osborne.)

Business of the House

Wednesday 3rd December 2014 Commons Chamber

15:19

[The First Secretary of State and Leader of the House of Commons (Mr William Hague)]

With permission, Mr Speaker, following the announcement regarding the reform of residential rates of stamp duty land tax, made by my right hon. Friend the Chancellor of the Exchequer, I should like to make a short business statement regarding tomorrow’s business.

The business for tomorrow will now be:

Thursday 4 December—Motion to approve a financial resolution for the purposes of the Provisional Collection of Taxes Act 1968, followed by the business as previously announced: a debate on a motion relating to the Financial Conduct Authority redress scheme, and a general debate on availability and pricing of branded medicines on the NHS. The subjects for both debates were recommended by the Backbench Business Committee.

I will make my usual business statement tomorrow.

[Ms Angela Eagle (Wallasey) (Lab)]

I thank the Leader of the House for finally deigning to inform us about the content of the unidentified Government business, which he was so coy about last Thursday. We have been waiting all week with bated breath, wondering what on earth it might be about. We dreamed that it might be about action to tackle low pay or under-employment, which is now rife in the country, hitting living standards and tax receipts. We thought that he might announce an intention to reverse the millionaires’ tax cut, or promise that the Government will not raise VAT. However, with the sudden legislation on stamp duty, are not the Government trying to hide the fact that the Chancellor’s promise to eliminate the deficit in five years is running four years late, borrowing is up by £12.5 billion compared with the March Budget, and he has had to borrow £219 billion more than he forecast he would in 2010? Is not he attempting to disguise the fact that the Government’s incompetence has wasted over £100 billion, which is £4,000 for every taxpayer in the country? The Chancellor may think he has a cunning plan, but every day he is looking less like the Machiavelli he models himself on, and more like Baldrick.

[Mr Hague]

I will take that as a welcome for the resolution tomorrow. I think that the hon. Lady made a better presentation of the Labour party’s case than the shadow Chancellor did a couple of hours ago. We look forward to her elevation to that position. She would be a dramatic improvement on the Opposition Front Bench.

It is apparent why I was coy about the business last week. It would have caused considerable mayhem had I announced the business for tomorrow last week, both to the Chancellor’s autumn statement and to the housing market. Therefore, I am sure that the House understands the reason why that business has been nominated today, just as I hope that it will understand the tremendous progress announced by the Chancellor in bringing down unemployment and addressing all the other issues that she mentioned.

[Several hon. Members]

rose—

[Mr Speaker]

Order. This is a very narrow statement. I know that, given the spirit and requirement of narrowness, hon. Members will comply.

[Mr Peter Bone (Wellingborough) (Con)]

Can the Leader of the House say how long this debate will be —what is the maximum length of the debate—and whether the House will then divide on whether to support or oppose the reduction in stamp duty?

[Mr Hague]

It is certainly possible for the House to divide on such a measure. Hon. Members will have to decide where they stand on it, although the provisional resolution was approved by the House a few minutes ago. There is no time limit on the debate. It is not limited in any way. Indeed it is exempt even from the moment of interruption, but I hope that it will be possible to have the debate on the resolution and maintain a good length of debate for the Backbench Business Committee business, too.

[Mr Marcus Jones (Nuneaton) (Con)]

I welcome the move that my right hon. Friend has made to table the business so quickly. In 2009, when the Labour party was in government, it brought in a stamp duty holiday but it took the party six or seven weeks to bring that in, which depressed the property market even further. Therefore, I am grateful to my right hon. Friend. Can he say when the measure will be enacted?

[Mr Hague]

As the Chancellor announced in his statement, the measure takes effect from midnight tonight —provided that the resolution was passed, which it was a few minutes ago. A second debate is necessary, as is customary, for the House to be able to look at the provisions in more detail and to debate them, since it has not yet had the opportunity to do so. However, the Chancellor is extremely mindful of any effect on the housing market or forestalling. That is why the measure takes effect at midnight and why we move on speedily to debate it tomorrow.

Bill Presented

United Kingdom Parliament (Sovereignty and Jurisdiction over Borders) Bill

Presentation and First Reading (Standing Order No. 57)

Sir William Cash, supported by Mr John Redwood, Mr Bernard Jenkin, Sir Edward Leigh, Sir Gerald Howarth, Steve Baker, Mr John Baron, Jacob Rees-Mogg, Mr Peter Bone, Chris Heaton-Harris, Mr Christopher Chope and Richard Drax, presented a Bill make provision for the supremacy of the sovereignty of the United Kingdom Parliament in relation to the United Kingdom’s membership of the European Union, including matters in respect of borders and immigration; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 23 January 2015, and to be printed (Bill 130).

Buses (Audio Announcements)

Wednesday 3rd December 2014 Commons Chamber

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

15:24

[Jim Shannon (Strangford) (DUP)]

I beg to move,

That leave be given to bring in a Bill to require the provision of audio announcements on public buses; and for connected purposes.

I am delighted to have the opportunity to raise this issue on behalf of Guide Dogs, which is vitally important to each of us in the United Kingdom of Great Britain and Northern Ireland. I hope that it will at least help to raise awareness of the issue and the need for “talking buses”. I also hope that this is something that we can start at Westminster today and follow through in Northern Ireland, Scotland and Wales. The evidence from across the United Kingdom is overwhelming in support of introducing audio announcements on all UK buses, rather than just those in London. That is why I wanted to raise the issue, which affects all of us. I hope to see this brought in to every part of the United Kingdom in the coming months and years.

The Public Service Vehicles Accessibility Regulations 2000 and the related Northern Ireland regulations stated that new buses had to include certain features to make them accessible to people in wheelchairs, such as low floors and ramps. We want the same legislation for all the UK, starting in England, and going to Scotland, Wales and elsewhere. Unfortunately, that legislation did not go far enough. It did not include requirements to make buses accessible to people with sight loss. That is what this motion is about.

Unlike rail, where audio-visual announcements are required on all new trains, only 19% of buses—the vast majority of them in London—provide next stop information for passengers. The Department for Transport reported that 97% of buses with audio announcements were in the capital, which leaves only 3% across the rest of the UK. That imbalance has to be addressed.

That means that the majority of blind passengers outside London have to rely on bus drivers to tell them when to get off. A visually impaired passenger in Glasgow claimed that the

“common response to the request to let me off at a particular stop is ‘if I remember’ and a common outcome is that they do forget”.

Of course we cannot blame the bus drivers or hold them to account because it is not really their job to do that and, like all of us, they do sometimes forget. Guide Dogs’ 2014 “Destination Unknown” report shows that, without audio announcements, seven in 10 blind and partially sighted passengers have been forgotten on the bus. For a sighted person, missing a bus stop can be an annoyance and an inconvenience, but for a person with sight loss, that can be extremely distressing and even dangerous. The experience can put people off using buses as a form of public transport; in fact 63% of blind and partially sighted people stay at home at least twice a month instead of relying on the bus. That has to be addressed.

There are 360,000 people registered as blind or partially sighted in the UK, and there are over 2 million people living with sight loss. That is roughly one in 30 people we meet. With an ageing population and the increasing incidence of diabetes—something which, as a sufferer of type 2 diabetes, I can understand—it is predicted that the blind or partially sighted population will reach 4 million by 2050. That is a vast number of people and we need to address those issues today.

Audio announcements are not just supported by those who are blind or visually impaired. For example, Paula, a bus passenger in my own constituency of Strangford noted:

“as a nurse working a long stint of night duty, I asked the bus driver to give me a shout when it was my stop. I fell asleep, he forgot and I had a huge hike home in horrible weather.”

She is not visually impaired but she believes, as many others do, that talking buses are a no-brainer for everyone. A simple easy technique, it is on trains, so why not buses?

According to the Chair of the Select Committee on Transport:

“there are 11.5 million disabled people in the UK, one fifth of whom report difficulty with transport.”

A Government survey showed that 37% of disabled respondents found transport accessibility a significant barrier to work. Guide Dogs’ data reinforce those findings, which show that the lack of audio announcements led to people with sight loss missing job interviews, turning down jobs, being late for work or even losing a job. Given the current economic climate, no one can afford to lose their job, or miss out on securing a job because of their difficulties with public transport.

The benefits of talking buses are not just confined to the blind or visually impaired. They can help to support older people, they can reinvigorate the bus industry by increasing the numbers of passengers, and they can bring environmental benefits with more people swapping the car for the bus. They can also attract tourists from both inside and outside the UK to use the buses. We cannot deny that audio announcements will help the tourist industry. There is a spin-off in that regard: many tourists use the metro buses in our capital, and when stops are announced, that helps them. The metro services which serve the cities are great, but I believe we must aim to get talking buses on to every route, rather than just metro lines. Of course this varies all over the United Kingdom, but Northern Ireland is a particularly rural community, as are some of the areas represented by the supporters of this Bill. People are extremely reliant on both rural and urban buses, but unfortunately at present the new talking buses on the metro lines will only serve those living in the urban centres, and relatively few of those outside it.

A YouGov survey showed that 85% of UK adults who already use buses fitted with audio announcements find them useful. Another finding from the survey was that 19% of 25 to 34-year-old motorists said they would be more likely to use the bus if it had an audio system installed. A 19% reduction in cars would see congestion levels well reduced and of course this would be a more environmentally friendly approach. That proves that the installation of an audio system would benefit all travellers, rather than just one specific group.

Last September, the Select Committee on Transport gave its support to talking buses. However, the Government’s response to its report was not quite so positive. They claimed there were three reasons why they could not make audio announcements mandatory; first, that they planned to increase voluntary uptake of these systems among bus operators; secondly, and perhaps unsurprisingly, that there was a fear of a financial burden on the industry; and, finally, that there was the possibility that smartphones might be an alternative.

In terms of voluntary uptake, a previous Transport Minister wrote to bus operators encouraging them to take up audio-visual, or AV, on a voluntary basis. Despite some good examples, the uptake was very limited, as the earlier figure of 19% would suggest. This might have been a good idea, but unfortunately the reality is that bus operators are not rolling out these AV systems, and some bus drivers are not assisting their visually impaired passengers. In fact, 54% of blind and partially sighted people have missed their bus stop because drivers did not inform them when they had reached it.

In terms of costs, leading passenger transport specialists the TAS Partnership found that it costs just £2,100 to install AV on a single-decker bus or £2,550 on a double-decker bus. To put that into perspective, a new double-decker bus costs around £190,000, so to fit all new buses in the UK with AV would cost very little in each year, and the ongoing costs are fairly minimal so there is no ongoing charge after the initial hardware has been purchased.

We are all aware of the financial constraints Governments are facing now, but any economic costs are repaid by the benefits that audio announcements would bring. It has been revealed that for every £1 of public money spent on transport, there are £3 of benefits. This means that the installation of AV would actually return over £15 million each year extra, so this appears to be a financial solution with short-term costs bringing about long-term gains.

I have some issues with smartphones, which have been suggested as an alternative to AV, with “apps” that can be downloaded and used. There are clear limitations with these. First, not only the apps, but the phones themselves, can be extremely expensive and so are not always practical, and they are not particularly reliable due to varied network coverage and battery life issues. It has been noted:

“19% of families with at least one disabled member live in relative income poverty. For them, smartphones may be too expensive or difficult to use.”

In conclusion, I am pleased to see some progress being made at home in Northern Ireland and here on the mainland, but we must do more. Every single person should have the freedom and ability to move unaided throughout this great nation, and this is one way of ensuring that that happens.

It has been a privilege to be able to speak on such an important subject, and I must thank Guide Dogs for their help in providing useful information and statistics for me. This is something which really is of the utmost importance, not just for the blind and partially sighted, as I have mentioned, but for all of us throughout all of the United Kingdom of Great Britain and Northern Ireland.

This Bill would benefit every single bus passenger in the UK and would ensure that the public service vehicles accessibility regulations are up to date, and include all those with disabilities, rather than just wheelchair-users, as at present. I commend it to the House.

Question put and agreed to.

Ordered,

That Jim Shannon, Henry Smith, Dame Anne Begg, Kate Green, Sir Bob Russell, Mr Jeffrey M. Donaldson, Mr Nigel Dodds, Ian Paisley, Ms Margaret Ritchie, Jim Fitzpatrick, Mr Mike Weir and Dr Eilidh Whiteford present the Bill.

Jim Shannon accordingly presented the Bill.

Bill read the First time, to be read a Second time on Friday 9 January 2015, and to be printed (Bill 131).

Taxation of Pensions Bill (Programme) (No. 2)

Wednesday 3rd December 2014 Commons Chamber

Ordered,

That the Order of 29 October 2014 (Taxation of Pensions Bill (Programme)) be varied as follows:

(1) Paragraphs (4) and (5) of the Order shall be omitted.

(2) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion, at today’s sitting, two hours after the commencement of proceedings on the motion for this order.

(3) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion, at today’s sitting, three hours after the commencement of proceedings on the motion for this order.—(Mr. Gauke.)

Taxation of Pensions Bill

Wednesday 3rd December 2014 Commons Chamber

Consideration of Bill, as amended in the Public Bill Committee.

New Clause 1

Impact on Government revenues

‘(1) The Chancellor of the Exchequer shall, within a period of no more than two years from 6 April 2015, publish and lay before the House of Commons a review of the impact of the changes made by this Act to the Finance Act 2004 and the Income Tax (Earnings and Pensions) Act 2003 on Government revenue, with particular reference to opportunities for tax and national insurance contributions avoidance.

(2) The information published under subsection (1) should include an assessment of the impact of this Act on—

(a) the use of salary sacrifice arrangements;

(b) income tax receipts; and

(c) national insurance contributions.’—(Cathy Jamieson.)

Brought up, and read the First time.

15:36

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

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

[Madam Deputy Speaker (Mrs Eleanor Laing)]

With this it will be convenient to discuss the following:

New clause 2—Pension flexibility: Treasury review—

‘(1) The Chancellor of the Exchequer shall, within a period of no more than 18 months from 6 April 2015, publish and lay before the House of Commons a comprehensive review of the impact of the changes made by this Act to the Finance Act 2004 and the Income Tax (Earnings and Pensions) Act 2003.

(2) The information published under subsection (1) must include—

(a) the distributional impact, by income decile of the population, of changes made by this Act to the Finance Act 2004 and Income Tax (Earnings and Pensions) Act 2003;

(b) the impact on Exchequer revenues of measures contained within Schedule 2: Death of a Pension Scheme Member, related to changes to the taxation of pensions at death;

(c) a behavioural analysis;

(d) an analysis of the cumulative impact of this Act on Exchequer revenues;

(e) an analysis of the impact of this Act on the purchase of annuities.”

Amendment (a) to new clause 2, line 13 at end insert—

“() an analysis of the impact of the changes introduced by this Act on the housing market;”

[Cathy Jamieson]

It is a pleasure to be here this afternoon for Report stage and Third Reading, and I do not think I can quite do justice to the excitement and delight that I felt when I saw that the final stages were indeed to be taken straight after the autumn statement. I am sure that is a view shared by the Minister, who will also be grateful for this miraculous feat of scheduling. Given the vast numbers who have turned out to hear us this afternoon, the excitement is obviously broadly shared across the House.

This is a serious Bill, however, and we have serious matters to discuss this afternoon, so I will now turn to the content of new clauses 1 and 2. There is a certain symmetry to the scheduling of today’s proceedings, because the reforms in the Bill were first announced in the Budget statement and we are now discussing the Bill’s final stages alongside the autumn statement. We should be impressed—if that is the right word—by the speed with which the Government have rushed through these very significant pension reforms, although, given that we will now rush through something else even more quickly as a result of the autumn statement, perhaps I should have waited to hear that statement before writing that line in my script for this debate.

[Toby Perkins (Chesterfield) (Lab)]

My hon. Friend has congratulated the Government on the speed with which they have brought in these measures. She will be aware that I have secured an Adjournment debate later today on the unintended consequences that have been visited on some of my constituents as a result of previous hastily introduced pension legislation. The Government have attempted to undo that legislation but, unfortunately, without any great success. Will my hon. Friend therefore temper her praise and reflect on the fact that hastily introduced pension legislation can often have unintended consequences?

[Cathy Jamieson]

I thank my hon. Friend for his intervention. If I had continued my speech for another couple of lines, he would have understood that my praise was somewhat tongue in cheek, given what I am about to say about the haste with which the measures have been introduced, about the impact that that has had, and about the concerns expressed by the industry. I know that my hon. Friend is taking up these issues on behalf of his constituents and putting them forward very seriously. We still do not know all the unintended consequences that will result from this Bill and the Pension Schemes Bill, which has now gone through the House, and that is one reason why I want to speak to the new clauses today.

At least one of the new clauses will seem familiar to those who had the pleasure, as I did, of serving on the Bill Committee. We have been consistent in our approach to the reforms. We have always said that we supported the principles of greater freedom and choice, but only when that leads to better outcomes for consumers. That is why we have consistently called on the Government to give us evidence that they have undertaken the appropriate assessment and analysis of the impact and potential consequences of the reforms. This also relates to what my hon. Friend has just said. For as long as we have pressed the Financial Secretary to the Treasury to provide that information, he has politely but firmly refused to do so. We on this side of the House are nothing if not persistent, however, and it would be remiss of us not to make one final attempt to bring the Government round to our way of thinking and to persuade them to accept our new clauses.

In a moment, I shall ask the Minister some questions on the figures that have been published today, but first I want to refer to some of the points that have been made about the speed with which the Bill has been taken through Parliament. Comments have been made in briefings and submitted in evidence as we have approached Third Reading. For example, the Association of British Insurers has stated that

“it is becoming increasingly clear that the first phase of the introduction of these reforms will be delivered in a period of regulatory uncertainty.”

The impact of that will be felt by the constituents of my hon. Friend the Member for Chesterfield (Toby Perkins). The ABI goes on to say:

“There is still a lack of clarity about what is expected of anyone offering retirement products from next April.”

I will come back to those points in a moment. The Bill has had thorough scrutiny, but a number of issues remain that we wish to pursue.

New clause 1 calls for a Treasury review within two years of the reforms coming into force on 6 April 2015, detailing the impact of the Bill on Government revenues, with particular reference to opportunities for tax avoidance and national insurance contributions avoidance. In Committee, we tried to get more details and figures, and the comments of John Greenwood and others were often quoted, particularly those relating to concerns that the Bill could allow individuals to divert large sums into their pensions through salary sacrifice. Those individuals would then be able to take as much as they wished from that pension in the following year, as 25% would be tax- free and the rest would be charged at their marginal rate, with no money deducted through national insurance contributions. Although the introduction of the money purchase annual allowance rules is supposed to prevent that, the reduced £10,000 limit is activated only after the pension has been flexibly accessed for the first time.

The Association of Accounting Technicians has raised concerns about this, saying:

“In the first year, before the £40,000 allowance is lost, individuals over the age of 55 will still have the scope to save tax and NI on the full £40,000, provided they have the necessary earnings, less their existing pension contributions. Where an individual flushes (passes) an extra £30,000 through pension rather than drawing salary they will achieve a saving of £3,600 in employee NI, more than £1,500 in income tax and, also, £4,140 in employer NI (13.8%) in the first year. A total loss to the public purse of £9,240. The “Freedom and choice in pensions” rules mean this money can be withdrawn immediately if an individual is over 55. This fact means that there will not be clear distinction between salary and pension for this age group.”

I have some questions for the Minister about that. Does he agree that the Bill, as it stands, would afford additional scope for tax avoidance of the type outlined? I know we have discussed this matter in Committee, but it is important to probe it until the last possible moment.

15:45

[Ian Swales (Redcar) (LD)]

The hon. Lady has obviously done a lot of research on this. As I understand it, once a flexible draw-down is started, the tax relief is then limited beyond that, so cascading £40,000 of tax relief year after year is not possible. That is my reading of the Bill.

[Cathy Jamieson]

I thank the hon. Gentleman for that intervention, as those are exactly the kind of detailed points that I hope the Minister will respond to when he gives his views on the provisions. These are exactly the sort of questions to ask: is that the type of tax avoidance that we have described and the AAT has suggested would be an issue? Is it possible? Is it an intended consequence of the Bill? During the Public Bill Committee he explicitly told us that allowing individuals to avoid income tax and national insurance contributions is “not the intention” of the reforms, and I had no doubt that he was genuine on that. However, people are still coming to us and repeatedly outlining concerns about the scale of tax avoidance that could be facilitated by the Bill. Therefore, it is important that we continue to pursue the matter, even at this late stage, and be given assurances on it.

Towers Watson has said that Ministers seem “sanguine” on this matter. I am sure that the Minister is not sanguine in any shape or form about the potential for tax avoidance, that he would want to close any loopholes and that he would want to send a clear message that it was not his intention that the Bill be used for any attempt at tax avoidance. That is particularly the case because, as has been repeated again today, tax revenues and the take into the Exchequer are falling, because of some of the Government’s other economic policies, particularly on wages and the impact on income tax and national insurance. It is not as though the Exchequer is going to be able to afford to lose hundreds of millions of pounds of tax income.

Interestingly, the written evidence from Towers Watson cited the Minister’s assurance that

“the government will be closely monitoring behaviour under the new system”,

and will take action “if loss accelerates” Towers Watson’s evidence suggests that it is very likely that action will be required. Complementing the AAT estimates of how much tax could be lost if individuals use salary sacrifice before they have accessed their pensions flexibly, Towers Watson provides an estimate of how much tax could be lost after a pension has been accessed flexibly and the money purchase annual allowance imposed. Towers Watson’s projection returns us to the point made by the hon. Member for Redcar (Ian Swales) and shows why we have pursued this matter vigorously. Towers Watson states that

“if £10,000 of salary is given up in exchange for an employer pension contribution, the employer could pay £1,380 less National Insurance while the employee would pay between £200 and £1,200 less”.

Although the annual allowance does not altogether remove the scope for tax avoidance, it does have a limiting effect, which of course we welcome. The crucial point made by Towers Watson, however, is that this is not a potential tax avoidance opportunity that has been “dreamt up by accountants”, but one that could be “created by legislation” before us today.

Taxpayers and employers need to know whether the Government will regard the diversion of salary through pensions as legitimate. Some people have suggested that the Government drafted the legislation oblivious to the loophole they were creating and that when they realised the consequences, they came up with the money purchase annual allowance rules as a partial stop-gap. I am inclined to be slightly more generous, because I am sure that the Government were very conscientious in drafting the Bill and gave consideration to all its component parts. I am sure that the Minister will reassure us on that point in his response. I know that he is concerned about the potential for tax avoidance, because he has repeatedly told us that he will “closely monitor behaviour” under the new system and that he will work with the industry to ensure that the system remains “fair and proportionate”.

[Ian Swales]

I am following the hon. Lady’s argument closely. Is she suggesting that this Bill creates new avenues for employer contributions to pension schemes? As I understand it, what she describes is available in the current system.

[Cathy Jamieson]

I thank the hon. Gentleman for his intervention. I hope the Minister will provide a clear steer to people about what would be acceptable both to employers and employees. I would also be interested to learn what he plans to do if the system turns out not to be fair and proportionate, and what form the monitoring will take. That is why we have proposed new clause 1. We did debate the matter in Committee, but we are still concerned that we have not heard exactly how the monitoring will take place and what the Minister intends to do.

Essentially, new clause 1 asks the Government to commit to doing something that the Minister has already said that they would do—to monitor and review the reforms to ensure that they are not used for the purpose of tax avoidance. We simply want that commitment in the Bill, to ensure that there are reports back to the House.

When we first debated the issue, concerns were raised about the time scale in which we were asking for the review. We had not, at that stage, fully anticipated how long it would be before patterns were established and problems had manifested themselves, which is why the new clause includes a two-year-time frame.

[Mr Geoffrey Robinson (Coventry North West) (Lab)]

Did I hear my hon. Friend correctly when she said that the Minister was minded to carry out a review of precisely the areas that we have suggested in new clauses 1 and 2? If so, will the Minister make that clear in his reply to my hon. Friend, because then we could avoid a vote on the new clause?

[Cathy Jamieson]

My hon. Friend makes an important point. As I have said, we did have some of this debate in Committee. I know that the Minister, at various stages, has said that everything is under review and that all things are reviewed. What we seek to do is to put some structure around that so that all reports are brought back before the House.

I think I have made my point in previous Bill Committees and probably at the Dispatch Box as well. Even in my relatively short time in this place and on the Front Bench, I have seen Ministers come and go before my very eyes. I have no doubt that the Minister is concerned to ensure that he does the right thing and monitors what is happening, but it is important to have that commitment on behalf of the Government, which is why I have tabled the new clause.

New clause 2 would provide for a Treasury review of the Bill’s operation within 18 months of 6 April 2015. Such a review would include an analysis of its distributional impact by income decile, an analysis of the impact on Government revenues of changes to the taxation of pensions on death, a behavioural analysis and an analysis of the impact on the purchase of annuities. Any Bill that will have a significant impact on not only people’s lives, but the broader industry and the economy, must be based on evidence, engagement and analysis. We know from our probing in Committee why the Government announced the reforms without consultation, and the Minister explained his position on concerns about the impact on the market. However, it would be helpful to have some idea of whether the Government had carried out the behavioural analysis and impact assessment that we are requesting, and indeed of not only the extent to which that had been done, but what information they could set out. Those points have also been pursued by my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont), who worked tirelessly on the Pension Schemes Bill. That Bill includes provisions on the guidance guarantee, which is crucial to the Bill.

[David Mowat (Warrington South) (Con)]

Surely the purpose of such a review would be to drive action. We have an expectation of the Bill’s effect on the annuities market, so will the hon. Lady tell us how the results of the annuities aspect of her proposed review would affect a future Government’s actions? Does she think that it would make any difference to Government policy if there was a 10% or a 90% change in the purchase of annuities, because it seems to me that it would not?

[Cathy Jamieson]

The purpose of the monitoring is to determine whether the Bill has unintended consequences. We would want the process to deal with our concerns of whether the market responds to the changes and if the products that people have envisaged will be available. There is the oft-quoted example of what happened in Australia: people drew down money, but many found that they had not properly planned for the future.

The hon. Gentleman asks what the Government would do, but I think that the Government have a responsibility to keep all legislation under review by looking at its effects and examining whether measures are fit for purpose and if they do what they say on the tin. If changes need to be made, the Government of the day will bring forward appropriate provisions. They have a responsibility to make themselves aware of any unintended consequences that might arise from the Bill and they should tell us how they will close any loopholes.

[Hywel Williams (Arfon) (PC)]

I am sure that the hon. Lady agrees with the TUC when it says that it believes that

“greater emphasis should be placed on developing strong default options at retirement. These may include a combination of drawdown and annuitisation.”

[Cathy Jamieson]

The hon. Gentleman makes a valuable point. The Public Bill Committee examined what options will be available to people and how we can ensure that the balance is right so that they are encouraged not only to take up pensions at the earliest possible stage, such as through auto-enrolment, but to think about planning for their long-term future. The aim was to ensure that people would not think that there was a windfall at age 55, perhaps make wrong decisions about it, and find by their 75th birthday that they had not done the correct planning. The new clause is very much about trying to see how the provisions will impact on real people when the time comes for them to make these decisions. That is why we were talking about behavioural analysis; we want to ensure that lessons are learned from it.

16:00

[David Mowat]

Surely we know the answer to the question prompted by new clause 2(2)(e), more or less; it is that dramatically fewer annuities will be purchased. Okay, a review might show that the figure is 12% as opposed to 90%, but what action would be taken pursuant to that answer?

[Cathy Jamieson]

It is a bit chicken-and-egg: until we do the analysis, we do not really know the extent of the problem. The solution would come once the problems were identified. The hon. Gentleman makes an important point about annuities; that takes me back to the issue that I raised about the opportunity for new products. There is a relatively short period of time in which to develop them. The industry, of course, says that it will try to meet the “challenges”—it consistently uses that word—and ensure that there are options and products. None the less, I find it difficult to understand why the Government seem resistant to the new clauses.

I think it was Ernest Hemingway who said that his novels were like icebergs:

“There is seven-eighths of it under water for every part that shows.”

Sometimes the same can be said of legislation, because the devil is in the detail. One has to see the detail, and be on top of it over a period, to find out what the ongoing impact is. That is why, throughout the passage of the Bill, we have tried to identify and probe any fault-lines on the surface of the legislation.

The guidance guarantee has been the subject of considerable debate, although it essentially formed part of the Pension Schemes Bill. Although we have now seen information on the overarching standards and the apportioning of the levy, published on Friday by the Financial Conduct Authority, we have yet to see all the content of that guarantee. Of course, that is the responsibility of the Government, in tandem with delivery partners. It is vital that the guidance is up and running, and is equal to consumer needs, come April next year. The FCA policy statement published on Friday confirmed that, at least initially, there will be no “second line of defence”, as it was described, which makes it even more important that the guidance is fit for purpose.

In the Public Bill Committee, I talked about the potential impact of the reforms on eligibility for social care. We identified two separate but related points on social care that we believe the Government have not yet adequately addressed. The first is the impact that drawing down money under flexi-access may have on an individual’s entitlement to means-tested benefits and eligibility for social care. The second is a point that I raised earlier: the danger that too much emphasis has been placed on early access to funds. That may result in people taking too much, too quickly, and being left with insufficient funds to cover the cost of care later in life. That is why our review calls for a distributional impact of the reforms by income decile. That is also why we need behavioural analysis. Signs may emerge that consumers are accessing their pensions earlier, which increases the chance that they may be left short of money in later life.

As we heard in Committee, many individuals who access their pension flexibly risk being hit with an unexpected tax bill—a point that the Association of British Insurers highlighted:

“Many people will struggle to understand the tax consequences of these reforms. Apart from tax free lump sums, withdrawals from pension pots are taxable pension income…Not only may people find themselves unexpectedly paying higher rate tax, it is possible that some will be unaware that their tax may not be settled for a year after they have accessed their funds through a self-assessment process that they may be unfamiliar with.”

These risks have to be monitored and reviewed, so that any unintended consequences can be picked up and dealt with.

We also need to see—this comes back to the point raised earlier—whether the Bill results in a proliferation of new products. The impact of such products on consumer behaviour should be monitored. In its 2014 risk outlook the Financial Conduct Authority expressed concern that

“retirement income products and distribution may deliver poor customer outcomes”.

It said:

“While recent proposals for pension reform plan to allow consumers to access any amount of their pension pot at age 55, the need for consumers to understand the options available to them at retirement is still paramount. Any future innovation in decumulation products will compound these risks.”

The FCA was, again, trying to look to the future. We share those concerns. We do not want poor outcomes for consumers, and I am sure the Minister does not want that either.

A further issue is that new products may carry additional charges that eat away at an individual’s pension. Research from the House of Commons Library found that current income drawdown products could see 27% of an average pension pot of £30,000 eaten up in fees and charges. If the reforms lead to continued abuse of charges, the Government may have to consider the introduction of a charge cap.

The changes made in schedule 2 abolish the 55% tax on pension funds on the death of the member. We can see the Government’s reasons for doing this, but it would be worth monitoring the impact on consumer behaviour and Government revenue.

I said that I wanted to ask the Minister some particular questions in relation to the autumn statement and the figures that had been published. Throughout the Committee stage, when we were pressing for information and numbers, the Minister said that those would be published in due course. True to his word, that information is now available to us. What effect will the revisions have on the initial costings of the impact of these reforms? Has he had cause to reconsider the impact of the reforms? Can he explain why the tax take increases because of the annual allowance in 2015-16, but falls in subsequent years? What is the basis for those figures?

Can the Minister give us any more detail about the costing of the salary sacrifice and welfare forecast provisions? The numbers are there, but we do not have further information in the autumn statement policy costing document. In comparison to some of the figures provided in Committee, the estimates still seem low. Given that the Minister has revised his forecast to take into account salary sacrifice and welfare at such short notice that it is not included in the autumn statement documents, had the Government fully considered those factors when they initially drew up these reforms, or did they only later recognise the significance of those factors?

We have asked for a review, as set out in new clause 1, to show whether the Bill increases the scope for tax avoidance and the avoidance of national insurance contributions. In the light of the figures that have been published, is the Minister confident that all his projections will prove to be accurate?

I have had a fair opportunity to set out the case for new clauses 1 and 2, which will allow the Minister to keep his word and monitor, review and report information as appropriate. It is important that the clauses are added to the Bill to ensure that that happens. We need to keep a close watch on the progress of the reforms to make sure that they do not lead to adverse outcomes for consumers or place increased costs on the state. The Government have consistently assured us that they will closely monitor the impact of the Bill, so we see no reason why, even at this late stage, they cannot commit to make good on that assurance and accept the new clauses.

[Hywel Williams]

I rise to speak on behalf of Plaid Cymru and in support of amendment (a), which stands in my name, to Labour’s new clause 2. I agree with much of that new clause, but I wish to add that the Government should bring forward a report on the impact of the changes introduced by the Bill specifically on the housing market and introduce measures to rectify any problems, should it become apparent that there are negative consequences. I sincerely hope that my concerns are entirely unfounded.

Although we welcome the Government’s desire to reform the private pensions system, we in Plaid Cymru have concerns about the consequences of behavioural changes in the pensions industry, particularly in relation to individual pensioners taking large draw-downs of money. We are not against pension savers being able to access their pension pots as a lump sum. If that is how people wish to access their money, it is up to them to do as they see fit. Given the rates of return achieved these days, it is not surprising that many people will wish to take that route.

Our concern is that the effect might not be quite what the Government intend. Aside from consumer protection issues and stopping people being targeted by sharks and cowboys seeking to exploit those who are newly able to access comparatively large amounts of money, attention needs to be given to the longer-term possibility that those who draw down large amounts and whose subsequent investments fail, for whatever reason, will be left with little or no money on which to see out their final years, despite having contributed to a pension scheme for most of their lives, and that they will then become a burden on the public purse. It is fair enough to say that the buyer should beware, but we are not talking about purchasing a new television; a wrong decision in this case might have grave, long-term effects on people’s basic incomes.

As has already been mentioned, in Australia, where the Government have introduced changes similar to those intended here, many people took large draw-downs and invested the money in buy-to-let properties. As the TUC has noted, much evidence indicates that the same will happen here, despite Ministers’ talk of people making home improvements, buying new kitchens or going out and buying cars and other consumer goods that will boost the productive economy.

Research by the Australian investment management firm Challenger has found that one third of savers used their pension cash to buy a home, pay off an outstanding mortgage or make home improvements; one in five splashed out on a new car; and one in seven spent at least some of their pension on a holiday. The evidence from Australia is that, when given the choice, only one in 25 Australians now buy an annuity. In the US, another country where annuities are not mandatory, most people take their pension money as cash, rather than buying an annuity. Indeed, a buy-to-let property might appear to be one of the better options for many people, rather than keeping their money in their pension scheme or making other, more conservative investments.

Some large accountancy firms, such as PricewaterhouseCoopers, have said that the changes to the annuities system will be a net positive for the Treasury. They perhaps foresee the revenue raised through stamp duty and other associated taxes. But it is not the Treasury’s coffers that will suffer, at least not in the short term. It is the potential bubble in house prices that concerns me, particularly at a local level, and the potentially growing number of people who would then be unable to buy their own home, the strengthening of the historical over-reliance of the British economy on a buoyant housing market, and the potential effects on investors’ incomes should, or rather when, the bubble bursts.

I need hardly remind the House of the dangers of an over-inflated property market, of which buy-to-let is a significant factor, and indeed one of the significant causes of the financial crash in 2008. Even prior to the crash, in August 2007, Oxford Economics noted that buy to let

“is undoubtedly contributing to the overvaluation of housing.”

Were I cynical, I might even characterise inflation of the housing market as some sort of giant Ponzi scheme, helping to keep the economy afloat while doing little to contribute to productive capital, the epitome of the rentier society—if I were cynical.

Of more significance to my constituents, and to people throughout Wales and the more picturesque areas of the UK, is the potential that those taking large draw-downs would decide to buy holiday homes. I need not rehearse in any detail the arguments about the problems associated with an over-preponderance of holiday homes. Hon. Members who represent constituencies where that is a problem will be only too aware of the negative effects. Anyone who really wants to know about it might read my maiden speech from 2001, which addressed housing matters and this problem, in particular. To put it briefly, having too many holiday homes in an area has a negative, deadweight effect on the local economy. Local people, especially young people, are unable to afford homes because of price inflation and are forced to leave. In my constituency, and in much of rural Wales, there is the added dimension of the damaging effect that has on the Welsh language. We have been largely spared some of those effects over the years of economic difficulty, but now, if the Chancellor is to be believed, we are moving towards a new golden age of plenty, possibly financed in part by pension lump sums, with a consequent revival of these risks.

16:15

I do not wish to over-egg the pudding, but I draw the Minister’s attention to the previous Labour Government’s proposal to allow tax relief on self-invested pension plans for any investment, including old master paintings, fine wines, and, indeed, holiday homes. I argued at the time that this might allow potential holiday home investors to benefit from up to 40% tax relief on such an investment, and price local people out of the market. I well remember two initially slightly frosty, and then rather stormy, meetings with the then Treasury Minister, Ruth Kelly. I was aided in the first by Simon Thomas, the then MP for Ceredigion, and joined in the second by the hon. Member for St Ives (Andrew George). Ruth Kelly assured us that we need not bother our heads with such concerns because any tax advantage would be mopped up by other means. A few short weeks before the provision was to be brought in, it was withdrawn.

I make no claims about that, but I would not wish the current Minister to suffer such a post-legislative fate this time. That is the reason for this probing amendment calling for an analysis of the effects on the housing market. I look forward to the Minister’s response.

[Mr Robinson]

I am pleased to take part in the Report stage of a Bill that we discussed at some length in Committee, as my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) will know. She has led for us throughout with such conscientiousness and command of detail that we probably do not need to labour further the points that we have pressed on the Minister. I am pleased that the hon. Member for Arfon (Hywel Williams) has added to our thinking on new clause 2 by suggesting that the effect on the housing market, in particular, should be kept under strict review.

I fear that the Minister is not going to accept either new clause, so I ask him to make a clear statement on the areas where the Bill is likely to have an impact, with potentially severe economic consequences. In the light of the Chancellor’s autumn statement earlier today, we see just how severe the problems on the deficit and Government borrowing are. If the Bill is going to have a further major impact in terms of tax receipts—which are already disappointingly low, as the Minister himself must recognise, being very well acquainted with that area of the Treasury’s affairs—it needs to be regularly reviewed.

In pushing for the changes we propose, we are merely doing what any responsible Opposition may do. I am surprised that the Minister is so reticent about sharing these important matters with the House. As the hon. Member for Arfon said, the consequences in the housing market could be quite severe, particularly in the buy-to-rent sector. In Committee, I mentioned to him anecdotal information that I had received from the housing market in strongly Conservative areas such as Buckinghamshire. House prices are already rising, and this aspect needs to be reviewed.

The point that we made very strongly throughout the Committee stage is that this is an unknown area where there is a fear of scams and abuses emerging—mis-selling and such things that have characterised so much of the industry in the past. Even now, we are still clearing up some of the mess from those previous schemes that went so horribly wrong. Not only that, but looking at this from the point of view of economic management, big sums are involved. I have talked to pension fund and investment fund managers, and they are looking forward to it.

As my hon. Friend the Member for Kilmarnock and Loudoun has made clear, we welcome the Bill. We are not opposed to it in principle, but we want to make sure that it has the effects that are foreseen as regards flexibility and making greater independence available to very many people throughout the country. It is in the spirit of not just avoiding abuses, but ensuring that the Bill does not become counter-productive or have exactly the detrimental consequences that other Bills of this kind have had that we urge the Minister to accept, even at this late stage, both new clause 1 and new clause 2. I am grateful to have had the opportunity to repeat that point on Report.

[Toby Perkins]

I do not intend to detain the House unduly, but I want to speak briefly in support of new clause 1, tabled by my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson). I also do not intend to give too much advance notice of my Adjournment debate, which I will have the pleasure of holding later and to which I know that the House is looking forward with considerable interest.

My hon. Friend made an important point about the haste with which some of the changes have been introduced and the impact that that can have. The Government may be entirely well meaning, but such changes can have unintended consequences, and I shall refer to some of them in more detail later.

If I had been contacted by my constituents and had a response from the Minister a few weeks or months earlier, there might have been an appropriate opportunity to propose that the issue was looked into in relation to the Bill, but perhaps there will be an opportunity to consider such issues in the other place.

It is a great pleasure to follow my hon. Friend the Member for Coventry North West (Mr Robinson), who speaks with tremendous knowledge on these issues. He was absolutely right to focus on the way in which some industries operated in the past, and the extent to which the financial services industry had some very negative selling practices back in the deregulatory period of the 1980s. I am pleased that the industry, with Government assistance, has very much got its house in order.

We would be well advised to think about the impact of the changes on the professionalism of very important industries such as financial services. If decisions are not taken in professional enough a way, they can have massive effects on people at the time in their life when they take their pension. Back in the 1980s, there was a huge explosion of private pensions, with people—mineworkers or teachers—advised to give up their pensions. They were told, “No, if you give up your pension, you can opt in to one of these private schemes, with 15% growth every year.” There was a huge mis-selling scandal.

I previously worked—briefly, and largely unheralded—in the financial services industry. I was not necessarily particularly suited for the job, which highlights a point about people being invited into the industry. They were dragged into it on the basis of knowing friends that they could go and sell pensions to. People with very little knowledge came into the industry. Their business plan was based on phoning all their friends and relatives to encourage them to give up their pensions in reliable public sector or other schemes and to go in to private schemes. There was of course a huge explosion, and many of the people in the schemes were seen to have been given very poor advice.

We recognise what the Government are attempting to achieve, and we support their aims of having greater flexibility for the industry, allowing people to be put back in charge of their investment and ensuring that they have the freedom to decide what to do with the money that they have saved. However, we are also aware of why the annuities method of accessing pensions that people had invested in was introduced. We as a society decided that, in an age when people were living longer and longer, we wanted people to make provision for themselves and, having done so, to buy something that provided a regular income that they could rely on.

If we have a scheme in which people decide what to invest their pension funds in, but, with the best of intentions, those investments go wrong, the people who we thought had provided for themselves in later life will come back to the state and say, “Unfortunately, the investments that I made with my pension pot have gone wrong and I have run out of money.” That will have an impact on the Government. We recognise what the Government are attempting to achieve, but it would be sensible to have a review of how it is working, the impact of the changes on the behaviour of investors, the impact on Government revenues, the impact on the broader economy, and what behaviours are being encouraged and introduced by the changes.

[Hywel Williams]

I am sure that the hon. Gentleman will accept that there is also a reputational danger for the industry in general and for the entire system of retirement pensions if people who make honest and sincere investments find that the returns are non-existent or that the investment itself disappears, and find themselves not being at leisure in their 70s, but working, like people I know.

[Toby Perkins]

Absolutely; the hon. Gentleman is right. There was a huge rush of those issues coming to light at the back end of the last century, when people who believed that they had saved into corporate pensions found that the company had disappeared and so had their pension.

When we are debating these issues and supporting the Government in this important initiative, we must be conscious that it must not end up with people effectively gambling with the income that they will rely on, without being aware of the risks. It is important that protections are in place to ensure that when people make such decisions, they have the information and know what they are letting themselves in for. It must be clear not only what impact it will have on them and their future, but what impact it will have on Government resources and revenues.

The FCA risk outlook of 2014 stated:

“Retirement income products and distribution may deliver poor consumer outcomes”.

That means that the Government recognise the dangers that we are highlighting, which adds more weight to the call of my hon. Friend the Member for Kilmarnock and Loudoun for a review of the impact on Government revenue and a review of who is affected, with a

“distributional impact, by income decile of the population”.

The other thing that we must all be conscious of is that this change must not result in an industry that services only the very rich. Financial advice is important. If it becomes the preserve of the very rich, many people will be left out of the market, especially the self-employed, who often see their business as their pension and so never go down the route of choosing financial services products.

In supporting my hon. Friend’s call for a review of the impact of the changes, I wanted to flag up the debate that we will be having later and to put it in the context of the taxation of pensions. I have secured today’s Adjournment debate on the impact of such measures on public sector workers who transferred to the private sector when their public sector job was transferred. They are protected under transfer of undertakings protocols. However, as many staff at CSC in Chesterfield who previously worked for Royal Mail discovered, when they were made redundant, the changes hastily introduced by the Government in 2012-13 meant that although they left their pension with Royal Mail when they were transferred and opened a new pension with CSC, that new pension was treated as a second pension. As far as they were concerned, they sat in the same desks and did the same job. The name above the door may have changed from Royal Mail to CSC—although in this case it did not in practical terms—but those staff were classed as having two different jobs and therefore two different pensions.

16:30

Taxation on those schemes was set up to recognise a fair balance and provide Government support for people to invest in pensions. At the same time, people were investing huge amounts and receiving a fair amount of rebate, although not an excessive amount. Many employees in my constituency—and, I suspect, other public sector employees across the country—are being taxed because they were made redundant, and they will get a pension for a short period until their original pension kicks in at the age of 60. In practical terms they are receiving an annuity over several years, but the Treasury judges that as a one-off lump sum payment. People are taxed as though they have received a huge amount of money, when in practical terms a huge amount of money has been put aside for the next 10, 15, 20 or however many years it may be. In some cases people have paid as much as £200,000 tax on a payment that is not in their pocket at that time.

I do not want to preview the Adjournment debate too widely, although we do want to generate interest in it, but my case is that although the Government have attempted to introduce steps to alleviate such impacts, they are actually mitigating the unfairness rather than dealing with its cause, which is the way the Treasury taxes pensions that are effectively a second pension on the same job because of changes made by someone’s employer, rather than any decision by the employee.

I hope that the Minister will consider whether those issues might wisely be investigated within the rules on taxation of pension, although I recognise that we will not debate that today. New clause 2 is important to ensure a review of what is being proposed. Although that review will be conducted by my right hon. Friend the Member for Morley and Outwood (Ed Balls), because he will be Chancellor by the time the new clause is implemented in 2017, we must ensure that our pensions policy has no unintended consequences such as we have seen before on occasion.

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

This may not be the most prominent Treasury matter gripping the nation today, but as the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) said, it is none the less an important Bill and I am grateful for the opportunity to make further progress and respond to this debate.

New clauses 1 and 2, tabled by the hon. Member for Kilmarnock and Loudoun, require the Treasury to publish two reviews of the impact of the Bill. The first review would focus on Exchequer revenues, including the use of salary sacrifice arrangements, income tax receipts and national insurance contributions. The second review would include the distributional impacts by income decile of the population of the pensions flexibility measures; the impact on Exchequer revenue of measures contained within schedule 2, which makes various changes to the taxation of pensions at death; a behavioural analysis; an analysis of the cumulative impact on Exchequer revenues; and an analysis of the impact on the purchase of annuities. An amendment has been tabled by the hon. Member for Arfon (Hywel Williams), which would, as we have heard, require the Government to undertake an analysis of the impact of the changes introduced in the Bill on the housing market.

I would like to explain—I suspect this will not come as a huge shock to hon. Members—why the new clauses are unnecessary. There are a number of reasons. First, on considering new clause 1 and the parts of new clause 2 that relate to Exchequer revenues, it is important to note that the Government have today published estimates of the Exchequer impacts of the policy as a whole. These costings, which have been certified by the independent Office for Budget Responsibility, cover all the changes we have made to the policy since Budget as a result of consultation. I know hon. Members have been concerned about the potential consequences for the Exchequer of the new freedoms. The Government published costings at Budget. I have been clear that we would update the costings to reflect the policy decisions that have been taken since then. A great deal of the debate has rightly focused on that issue.

The Government have taken a number of policy decisions since pension flexibility was announced in March. Those decisions are: introducing a £10,000 annual allowance for those who have flexibly accessed a pension pot of more than £10,000; changing the rules on the taxation of pensions at death; and continuing to allow transfers out of funded defined benefit schemes. Today, as part of the autumn statement, the Government have also confirmed that the notional income rules for assessing eligibility for means-tested benefits will be more generous by assuming that unspent pension savings generate the same income as an annuity, rather than 150% of an annuity as at present. Of course, not all of these measures are contained within the Bill, but I believe that they are relevant to any debate on the fiscal impacts of flexibility. To ensure the Government are being sufficiently transparent, I have today taken the step of writing to members of the former Public Bill Committee to set out further details of the costings. I will now outline those costings to the House.

At Budget 2014, the Government published costings that stated that freedom of choice would cost the Exchequer minus £5 million in 2014-15, and from then on would raise money: £320 million in 2015-16, £600 million in 2016-17, £910 million in 2017-18, £1.22 billion in 2018-19, and £810 million in 2019-20. The overall impact of decisions taken since the policy was announced in March does not significantly alter the numbers published at Budget. As set out in my letter to the Committee and in table 2.1 of the autumn statement document, the decisions I have just described will have the following Exchequer impacts: they will raise £60 million in 2015-16, cost £25 million in both 2016-17 and 2017-18, raise £30 million in 2018-19, and cost £10 million in 2019-20. Further detail on how those costs have been calculated is set out in the policy costings document, which has been published today alongside the autumn statement.

In my letter to Committee members, I explained that the costings published today as part of the autumn statement were based on the same central assumptions that underpinned the costings published at the Budget. Since the Budget, the Government have explored in more detail two aspects of the policy affecting the costing: the increased costs of salary sacrifice and welfare as a result of the reforms—two points that the hon. Member for Kilmarnock and Loudoun dwelt on. The Government have produced these costings and they have been scrutinised by the OBR.

In line with standard practice, these are accounted for as changes to the forecast and so are not outlined in table 2.1 of the autumn statement document. In recognition of the concern raised by Members about the likely impact on the Exchequer, I included the Government’s estimate of the costs in my letter to the Committee, but I will set them out again to the House. The revisions to the forecast to account for salary sacrifice are: minus £5 million in 2014-15; minus £35 million in 2015-16; minus £30 million in 2016-17; and minus £25 million in 2017-18, 2018-19 and 2019-20. The revisions to the forecast to account for the increased cost of welfare are: minus £10 million in 2015-16; minus £15 million in 2016-17; minus £20 million in 2017-18; and minus £25 million in 2018-19 and 2019-20.

The Government have, therefore, already published the information the two new clauses seek on the Exchequer impacts of the various aspects of flexibility, and all that information has been certified by the independent OBR. In addition, the Government have already committed to keeping the policy under review, through the monitoring of information collected on tax returns and tax records, and HMRC regularly publishes data on tax receipts reflecting any impact on the Exchequer. Any such impacts will be reflected in forecasts at fiscal events.

The Government keep tax policy under continual review. There is no need for further reviews of the Exchequer impacts of the policy, because the Government have already committed to keeping them under review through usual processes, and I hope that this will reassure hon. Members regarding the fiscal impacts of measures in the Bill and related policies. At the very least, I hope hon. Members will appreciate that, given this debate has occurred after the autumn statement, I have been able to provide some of the answers the hon. Member for Kilmarnock and Loudoun was seeking in Committee.

New clause 2 would also require the Government to review the distributional impact of the measures in the Bill no less than 18 months after the Bill takes effect. As I set out in Committee, the measures in the Bill do not have a direct consequential impact on household incomes. Distributional effects will be driven by the choices individuals make about how and when to take their pension. In addition, household income is not necessarily a reliable measure of pension wealth, particularly in the years immediately prior to retirement. The impacts of the policy could be misrepresented were we to review them only against the distribution of household income. I appreciate I made that argument in Committee, but it was a good argument then, and it is a good argument now.

In addition, new clause 2 would require the Government to publish behavioural analysis. As discussed in Committee, the costing of tax policies often involves an assessment of the behavioural impacts of the measure and, in some cases, the capacity for additional tax planning and avoidance behaviour. These assumptions and methodologies are certified by the independent OBR, but the Treasury considers that making these detailed behavioural assumptions public might affect the behaviour they relate to and so could be detrimental to policy making.

As I mentioned in relation to the Exchequer impact of the changes to the taxation of pensions at death, a policy costing note published alongside the autumn statement explains how the costings have been calculated. This is in line with the principles outlined in the Government document, “Tax policy making: a new approach”, published alongside the June 2010 Budget.

New clause 2 would require the Government to review any impact the measures in the Bill might have on the volume of annuity purchases. Considering the policy intent of the changes, this would be unnecessary and inappropriate. These measures are not intended to encourage savers towards or away from any particular product over another. They are intended to offer savers greater choice and flexibility about how they use their hard-earned savings to fund their retirement.

16:45

The Government have always said that they believe annuities will continue to be the right choice for many people at some point in their retirement, as many people will value the security of the guaranteed income. However, the Government do not believe it appropriate to mandate that individuals should use their lifetime savings to purchase any one specific financial product. As I set out in Committee, data on the sale of annuities will continue to be available through other channels—the data published by trade bodies and publications by individual firms, for example—and there is no need for the Government to duplicate this.

A further amendment has been tabled by the hon. Member for Arfon, which would require the Government to undertake

“an analysis of the impact of the changes introduced by this Act on the housing market”.

This appears to stem from a concern that the Government’s changes will have an adverse impact on the housing market. With greater choice and flexibility at the point of retirement, people will be allowed to make a decision about their finances that is right for them. This Government are committed to making the aspiration of home ownership a reality for as many people as possible. That is why they have introduced policies such as Help to Buy and further measures announced in the Budget to support the supply of housing. As part of the new regulatory framework for financial services, the Government have introduced the Financial Policy Committee to ensure that risks stemming from the housing market are identified and early mitigating action taken, if required.

[Ian Swales]

Does the Minister recognise that the point at which many people draw their pensions, particularly the lump sum element, is the very point at which they might wish to help their children get into the housing market, and that we should not do anything to prevent that?

[Mr Gauke]

My hon. Friend makes an important and relevant point. We are putting power in the hands of individuals to decide what they do with their retirement pension pot. We are also ensuring—I shall touch on this in a moment—that guidance is available. It may well be that after careful consideration, people conclude that they do want to assist a family member to get into the housing market. That is a choice for them, and I do not think that we here should necessarily condemn such a choice: it might be precisely the right thing for people to do for them and their family.

As part of the new regulatory framework for financial services, we have introduced the Financial Policy Committee, as I was saying, and we have given the FPC strong powers to tackle any threat to financial stability, including a broad power of recommendation, which it used in June 2014 to address risks stemming from mortgage lending and sectoral capital requirements that apply to residential mortgage lending. The Government have consulted on granting the FPC powers of direction over macro-prudential tools for the housing market and aim to legislate for these new powers next year. In line with the new regulatory framework, the FPC is best placed to monitor the housing market and take action, if required.

Let me pick some other points raised in the debate, most of which it would be fair to say were familiar. I was asked whether people would understand the tax consequences involved. The guidance will help consumers to understand the tax implications of their choice of pension, and in addition, the Financial Conduct Authority has published near final rules that will require providers to supply their customers with a description of the possible tax implications when they apply to access their pension funds.

On extortionate draw-down charges, the FCA’s retirement income market study will be published shortly. In June, the FCA expanded the scope of this study to include consideration of products in the new flexible landscape and to identify any competition risks and potential consumer detriment. The guidance guarantee will be relevant here.

It was suggested that people might be charged too much tax without realising it. As with all PAYE income, the tax position will be reconciled at the end of the tax year. All the income received by an individual that was taxed under PAYE will be brought together, and the correct tax will then be calculated. If there was an overpayment, the extra amount will be repaid, and if there was an underpayment, HMRC will contact the individual. People will not be subject to self-assessment solely because they have flexibly accessed their pensions, nor will they have to claim a refund in order to receive it.

I have already touched on the matter of how the new flexibilities will affect entitlements to benefits, but let me say now that the Government want to ensure that the choice that people make between taking their pensions as income—that is, purchasing an annuity and keeping more of their pension as capital—and drawing it down periodically, for example through a drawdown product, will not have a significant impact on how they are assessed for social care support and how their means are assessed for social security purposes. New regulations and statutory guidance on the Care Act 2014, which were published on 23 October, include details about the charging rules for care and support.

Today we announced a change in the rules for people above pension credit qualifying age who claim means-tested benefits. The notional income amount applied to pension pots that have not been used to purchase an annuity will be reduced from 150% to 100% of the income of an equivalent annuity—or the actual income taken, if that is higher—in line with the rules for care and support.

Let me now deal with an issue that was raised by the hon. Members for Kilmarnock and Loudoun and for Chesterfield (Toby Perkins). I shall not try to anticipate the response that my hon. Friend the Economic Secretary to the Treasury will make to the Adjournment debate that the hon. Gentleman will initiate later, but I can say that these matters are not being rushed. We have consulted extensively on the implementation of the policy, and there is widespread support for the changes. We are working closely with industry to ensure that it is ready for April 2015, and have been doing so since the announcement was made. We are making good progress in delivering the changes that are needed through both our Bills.

[Toby Perkins]

I realise that the Minister does not want to predict the outcome of a debate to which we all look forward with such interest, but will he tell us whether the taxation of pensions element of that debate could be considered during further stages of the Bill’s progress?

[Mr Gauke]

We are reaching the end of the Commons process, or at least I hope we are. We believe that the Bill delivers the reforms that are necessary to implement the policy announcement that the Chancellor made in the last Budget. We believe that these are good reforms, and we believe that the new flexibility in the pensions system is to be welcomed and will encourage greater savings. Let me add that some perceive Opposition Members’ desire for a review as the precursor of a possible reversal of these changes by the Opposition, were they to be in government. I would not like that to happen, and their proposals create a degree of uncertainty.

I hope that, in the light of the explanations that I have given to the hon. Member for Kilmarnock and Loudoun, she will not press her new clause to a Division, but if she does, I will certainly oppose it.

[Cathy Jamieson]

The new clauses ask for reviews and monitoring, and that is exactly what we want. As we have said repeatedly during the Bill’s passage so far, our proposals should not be interpreted in any other way. When a Bill is put before us, it is important for us to scrutinise it and try to improve it, and that was my reason for tabling the new clauses.

I am grateful to my hon. Friends the Members for Coventry North West (Mr Robinson), and for Chesterfield (Toby Perkins) and the hon. Member for Arfon (Hywel Williams) for their contributions. All of them have contributed additional information and raised additional issues which need to be considered, particularly my hon. Friend the Member for Chesterfield, who will initiate an Adjournment debate later. He did not want to reveal too much about that debate, lest we decide to miss his exciting speech. None the less, he did an excellent job in laying out some of the issues that he will refer to later on behalf of his constituents.

I have listened to the Minister. I am disappointed—as always—that he has not chosen to accept new clause 1 and new clause 2. On reflection, having listened to the debate, I am minded to press new clause 1 to the vote, but not to press new clause 2 at this stage.

Question put, That the clause be read a Second time.

16:55

Division 105

Ayes: 209

---

Labour: 198
Scottish National Party: 5
Plaid Cymru: 3
Social Democratic & Labour Party: 1
Green Party: 1
Democratic Unionist Party: 1

Noes: 292

---

Conservative: 248
Liberal Democrat: 39
UK Independence Party: 2
Democratic Unionist Party: 2

Schedule 1

Pension flexibility etc

[Mr Gauke]

I beg to move amendment 1, page 37, line 37, after “arrangement”,”, insert

““nominee’s flexi-access drawdown fund”,”.

This Amendment, and Amendments 2, 3, 4, 5 and 6, insert two missing definitions into the amendments made by the Bill in each of the two subsisting versions of section 576A of the Income Tax (Earnings and Pensions) Act 2003.

[Madam Deputy Speaker (Dame Dawn Primarolo)]

With this it will be convenient to discuss Government amendments 2 to 39.

[Mr Gauke]

Amendments 1 to 8 are all of a minor and technical nature, amending various definitions and removing unnecessary sections. I would be happy to explain those in more detail if hon. Members are interested, but if they are not, I will move on to amendments 9 to 39.

As hon. Members will recall, we had a very useful debate in Committee about the new information requirements for individuals that are set out in part 6 of schedule 1 to the Bill. I said at the time that the Government were keen to work with industry and consumer groups to ensure that the requirements are proportionate, and that we would consider the issue further. We have therefore continued to have constructive discussions with the pensions industry about the impacts of the Bill. As a result of this ongoing consultation, we have tabled a number of amendments that we believe are a proportionate response to the concerns raised. These changes will make the reporting requirements that individuals need to meet easier to comply with, while still ensuring that they have access to the right information to help them pay the right amount of tax. Government amendments 9 to 39 therefore make a number of changes to the information requirements in the Bill to provide that individuals have to tell schemes that they have flexibly accessed their pension savings only if they are an active member of that scheme, and to increase the time they have to comply from 31 days to 91 days.

It might be helpful if I start by setting out why these information requirements are required. As we have discussed many times during the course of this Bill’s passage through the House, when an individual accesses their pension flexibly, their annual allowance for tax-relieved defined contribution pension contributions will reduce from £40,000 to £10,000. That will protect the Exchequer and ensure that the new system cannot be exploited to achieve unintended tax advantages by individuals’ diverting their salary into their pension and withdrawing it immediately with tax relief. It is therefore important that individuals understand the tax consequences of saving into a pension after accessing their savings flexibly. For that reason, the Bill placed a new requirement on individuals to tell all their pension providers once they had flexibly accessed a pension. This was intended to ensure that individuals do not use the new system to gain a tax advantage that is not intended. However, the Government have always been clear that they are keen to ensure these requirements are proportionate. Having considered the issue carefully, we are amending the Bill to provide that people need to tell only the schemes to which they are contributing or that they contribute to in the future. They will also have an extended period of 91 days in which to do so. These changes will make the new system easier for individuals and schemes to comply with, while also ensuring that the new annual allowance is implemented effectively. Again, I would be happy to explain these amendments in more detail if hon. Members are interested.

[Ian Swales]

I am certainly not asking the Minister to explain all this in a lot more detail and detain the House in doing so. One specific point raised in Committee was that people contributing to a workplace defined benefit scheme will not know how much of their annual allowance is being used in that scheme at the time when they are able to make contributions to a defined contribution scheme. Has he considered the possibility that such people could be treated—I think the Bill tends to do this—as though they are deliberately trying to avoid tax, whereas they may just have a lack of knowledge at the time they do this?

[Mr Gauke]

My hon. Friend makes an important point. There will be particular issues with defined benefit schemes. It may be that individuals do not know when contributions are paid by their employer. Where the scheme provides defined benefits only, the information requirement does not apply, and individuals will never need to notify it. If the scheme also provides money purchase benefits—for example, if it has a separate AVC section—the requirement can only apply where contributions are made to the AVC section. Defined benefit schemes are excluded as they will not have to send pension saving statements to the individual based on the £10,000 money purchase annual allowance. I hope that helps my hon. Friend.

17:15

As I have set out, we have tabled a small number of minor and technical amendments to ensure that the Bill works as intended. We have also tabled amendments to make the reporting requirements easier to comply with while still achieving their purpose of ensuring that individuals have access to the right information to help them pay the right amount of tax. I hope that these changes will be welcomed by the House and that amendments 1 to 39 will be made to schedule 1.

[Cathy Jamieson]

I thank the Minister for bringing forward these amendments. We had a fair amount of debate and discussion in Committee on some of the issues, so I am not intending to ask him to go through each amendment, especially the minor and technical ones, in great detail.

I recognise that Government amendments 9 to 39 were brought forward as a result of the comments and concerns that we and the industry raised on the reporting requirements. The Bill as introduced placed a requirement on individuals who access their pension flexibly to inform all schemes of which they are a member that they are subject to the new £10,000 allowance. They would have been required to do that within 31 days of receiving a statement from their pension scheme and, as we said in Committee, failure to comply could lead to them being fined.

We pointed out in Committee that it was unreasonable to expect individuals to dig up information on schemes that they might not have paid into for many years and to which the annual allowance rules were therefore unlikely to apply. We also pointed out, with reference to evidence from both Ros Altmann and the Association of Taxation Technicians, that the 31-day time frame was a short and unreasonable deadline. The Government amendments change that, so that individuals will be required only to tell schemes to which they are currently contributing, or subsequently contribute to, that they are subject to the £10,000 annual allowance. They also change the length of time that individuals have to comply with this requirement to 91 days.

We welcome the Government amendments. Although we may not have persuaded the Minister to take on all our concerns, we are glad to have played some small part in persuading him to make those changes and to bring forward those amendments today. As I have said, we welcome and support them.

Amendment 1 agreed to.

Amendments made: 2, page 37, line 38, after “annuity””, insert “, “successor’s flexi-access drawdown fund””.

See the explanatory statement for Amendment 1.

Amendment 3, page 37, line 41, leave out “and 22A” and insert “, 22A, 27E and 27K”.

See the explanatory statement for Amendment 1.

Amendment 4, page 39, line 35, after “arrangement”,”, insert ““nominee’s flexi-access drawdown fund”,”.

See the explanatory statement for Amendment 1.

Amendment 5, page 39, line 36, after “annuity””, insert “, “successor’s flexi-access drawdown fund””.

See the explanatory statement for Amendment 1.

Amendment 6, page 39, line 39, leave out “and 22A” and insert “, 22A, 27E and 27K”.

See the explanatory statement to Amendment 1.

Amendment 7, page 42, leave out lines 1 to 3.

This Amendment, and Amendment 8, each remove a subsection inserted by the Bill into a version of section 576A of the Income Tax (Earnings and Pensions) Act 2003 because the subsections relate to payments not included in the lists of “relevant withdrawals” inserted by the Bill as introduced.

Amendment 8, page 44, leave out lines 28 to 30.

See the explanatory statement for Amendment 7.

Amendment 9, page 46, line 8, at end insert—

“() if the member is entitled to payment of a lifetime annuity under a flexible annuity contract as defined by section 227G(8), a relevant event occurs when the first payment of the annuity is made,

() if—

(i) the member is entitled to payment of a scheme pension under a money purchase arrangement under the scheme,

(ii) the member became entitled to the scheme pension on or after 6 April 2015,

(iii) the member became entitled to the scheme pension at a time when fewer than 11 other individuals were entitled to the present payment of a scheme pension, or dependants’ scheme pension, under the scheme, and

(iv) the scheme pension is not payable under an annuity contract treated under section 153(8) or (8A) as having become a registered pension scheme,

a relevant event occurs when the first payment of the scheme pension is made, and”.

This Amendment inserts, in a list that sets out the events that give rise to an individual first flexibly accessing pension rights, missing entries corresponding to the new section 227G(7) and (9) inserted by paragraph 65 of Schedule 1 to the Bill.

Amendment 10, page 46, leave out lines 26 to 41 and insert

“and

(c) the duties under regulation 14ZB and the circumstances in which the member will have to comply with them.”.

This Amendment condenses the text currently in the Bill of new regulation 14ZA(3)(c) and (d). New regulation 14ZA(3) lists matters that are to be explained in statements under new regulation 14ZA that are provided by scheme administrators to members.

Amendment 11, page 47, line 12, at end insert

“if active or contributing etc”.

This Amendment adds words to the title of the new regulation 14ZB to reflect changes to be made in that new regulation by, in particular, Amendment 12.

Amendment 12, page 47, leave out lines 13 to 35 and insert—

‘(1) Paragraphs (2) and (3) apply if—

(a) an individual receives a statement under regulation 14ZA from the scheme administrator of a registered pension scheme (the “flexed” registered pension scheme), and

(b) on the date of the relevant event concerned, or at any later time, the individual is an accruing member (see paragraph (6)) of the flexed or any other registered pension scheme.

(1A) In this regulation—

“the relevant 13-week period” means the period of 91 days beginning with—

(a) the date of receipt if the individual is an accruing member of any registered pension scheme on any day in the period—

(b) if not, the first day after the date of receipt when the individual is an accruing member of a registered pension scheme, and

“the intervening period” means the period—

(a) beginning with the date of the relevant event concerned, and

(b) ending with the first day of the relevant 13-week period.

(2) The individual must before the end of the relevant 13-week period—

(a) pass on a copy of the statement, or

(b) otherwise give notice—

(i) of receipt of the statement, and

(ii) of the date of the relevant event concerned or (if applicable) of its having occurred more than 2 years before the start of the relevant 13-week period,

to the scheme administrator of each other registered pension scheme of which the individual is an accruing member on any day in the intervening period; but this is subject to paragraph (5).

(3) Where, in the case of a particular registered pension scheme other than the flexed scheme, the individual is not an accruing member of that other scheme on any day in the intervening period but becomes an accruing member of that other scheme on a day (“the activation day”) after the last day of that period, the individual must before the end of the 91 days beginning with the activation day—

(a) pass on a copy of the statement, or

(b) otherwise give notice—

(i) of receipt of the statement, and

(ii) of the date of the relevant event concerned or (if applicable) of its having occurred more than 2 years before the activation day,

to the scheme administrator of that other scheme; but this is subject to paragraphs (4) and (5).”.

This Amendment makes a change in new regulation 14ZB to simplify the obligations for individuals who have flexibly accessed their pension savings. Information will need to be provided to a scheme only when the individual is an accruing member of that scheme and within a 91 day period.

Amendment 13, page 47, line 37, leave out “a” and insert “an accruing”.

This Amendment, and Amendments 14 and 15, are consequential on Amendment 12 and make changes in new regulation 14ZB to ensure that an individual does not have to tell the scheme administrator if they become an accruing member of the scheme as a result of a recognised transfer.

Amendment 14, page 47, line 38, after “becomes”, insert

“an accruing member of that scheme upon or after becoming”.

See the explanatory statement for Amendment 13.

Amendment 15, page 47, line 38, at end insert

“after the date of the relevant event concerned.”

See the explanatory statement for Amendment 13.

Amendment 16, page 47, line 42, after second “(3)”, insert

“, or has previously complied with paragraph (2) or (3),”.

This Amendment ensures that a member of a pension scheme does not have to provide information under new regulation 14ZB more than once to the same pension scheme.

Amendment 17, page 47, line 43, at end insert—

‘(6) For the purposes of this regulation, the individual is an accruing member of a registered pension scheme on any particular day if—

(a) the individual is an active member of the scheme on that day as a result of there presently being arrangements for the accrual of benefits to or in respect of the individual under a cash balance arrangement or hybrid arrangement, or

(b) a relevant contribution is made under the scheme on that day.

(7) For the purposes of this regulation, a relevant contribution is made under a registered pension scheme if—

(a) a relievable pension contribution is paid by or on behalf of the individual under a non-cash-balance money purchase arrangement relating to the individual under the scheme,

(b) a contribution is paid in respect of the individual by an employer of the individual under a non-cash-balance money purchase arrangement relating to the individual under the scheme, or

(c) a contribution—

(i) paid under the scheme by an employer of the individual, and

(ii) paid otherwise than in respect of any individual,

becomes held for the purposes of a non-cash-balance money purchase arrangement relating to the individual under the scheme;

and in this paragraph “non-cash-balance money purchase arrangement” means a money purchase arrangement other than a cash balance arrangement.”

This Amendment defines terms used in the provisions inserted by Amendment 12. The definitions are largely based on the text currently in the Bill of new regulation 14ZD(1)(b) and (8).

Amendment 18, page 48, line 33, leave out “active member” and insert

“accruing member (see paragraph (7A))”.

This Amendment makes a change in new regulation 14ZD to bring that new regulation into line with the changes made by Amendment 12 in new regulation 14ZB.

Amendment 19, page 48, line 34, leave out from “scheme” to end of line 38.

This Amendment makes a change in new regulation 14ZD to bring that new regulation into line with the changes made by Amendment 12 in new regulation 14ZB. The text left out is replaced by the new regulation 14ZD(7A) inserted by Amendment 27.

Amendment 20, page 48, line 38, at end insert—

‘(1A) In this regulation “the relevant 13-week period” means the period of 91 days beginning with—

(a) 6 April 2015 if on that date the individual is an accruing member of any registered pension scheme, or

(b) if not, the first day after 6 April 2015 when the individual is an accruing member of a registered pension scheme.”

This Amendment makes a change in new regulation 14ZD to bring that new regulation into line with the changes made by Amendment 12 in new regulation 14ZB.

Amendment 21, page 48, line 39, leave out from second “the” to end of line 44 and insert “relevant 13-week period,”.

This Amendment makes a change in new regulation 14ZD to bring that new regulation into line with the changes made by Amendment 12 in new regulation 14ZB.

Amendment 22, page 48, line 47, leave out

“a member on the first day of that”

and insert

“an accruing member on the first day of the relevant 13-week”.

This Amendment makes a change in new regulation 14ZD to bring that new regulation into line with the changes made by Amendment 12 in new regulation 14ZB.

Amendment 23, page 49, line 1, leave out from “Where” to “provide” in line 4 and insert

“, in the case of a particular registered pension scheme other than the flexed scheme, the individual is not an accruing member of that other scheme on the first day of the relevant 13-week period but becomes an accruing member of that other scheme on a day (“the activation day”) after the first day of that period, the individual must, before the end of the 91 days beginning with the activation day,”.

This Amendment makes a change in new regulation 14ZD to bring that new regulation into line with the changes made by Amendment 12 in new regulation 14ZB.

Amendment 24, page 49, line 16, after “becomes”, insert

“an accruing member of that scheme upon or after becoming”.

This Amendment, and Amendment 25, are consequential on Amendments changing earlier provisions of new regulation 14ZD and further change that regulation to ensure that an individual does not have to tell the scheme administrator if they become an accruing member of the scheme as a result of a recognised transfer.

Amendment 25, page 49, line 17, at end insert “after 6 April 2015.”

See the explanatory statement for Amendment 24.

Amendment 26, page 49, line 21, after second “(3)”, insert

“, or has previously complied with paragraph (2) or (3),”.

This Amendment ensures that a member of a pension scheme does not have to provide information under new regulation 14ZD more than once to the same pension scheme.

Amendment 27, page 49, line 22, at end insert—

‘(7A) For the purposes of this regulation, the individual is an accruing member of a registered pension scheme on any particular day if—

(a) the individual is an active member of the scheme on that day as a result of there presently being arrangements for the accrual of benefits to or in respect of the individual under a cash balance arrangement or hybrid arrangement, or

(b) a relevant contribution is made under the scheme on that day.”

This Amendment inserts a definition of a phrase used in the text inserted by the Amendments making changes in the earlier provisions of new regulation 14ZD. It replaces the text left out by Amendment 19.

Amendment 28, page 49, line 23, leave out “paid” and insert

“made under a registered pension scheme”.

This Amendment adjusts the definition of “relevant contribution” in new regulation 14ZD to bring it into line with the definition inserted into new regulation 14ZB by Amendment 17.

Amendment 29, page 49, line 27, leave out

“flexed or any other registered pension”.

This Amendment is consequential on Amendment 28 and further adjusts the definition of “relevant contribution” in new regulation 14ZD to bring it into line with the definition inserted into new regulation 14ZB by Amendment 17.

Amendment 30, page 49, line 32, leave out

“flexed or any other registered pension”.

This Amendment is consequential on Amendment 28 and further adjusts the definition of “relevant contribution” in new regulation 14ZD to bring it into line with the definition inserted into new regulation 14ZB by Amendment 17.

Amendment 31, page 49, line 34, leave out

“flexed or any other registered pension”.

This Amendment is consequential on Amendment 28 and further adjusts the definition of “relevant contribution” in new regulation 14ZD to bring it into line with the definition inserted into new regulation 14ZB by Amendment 17.

Amendment 32, page 49, line 39, leave out

“under which the contribution was paid”.

This Amendment is consequential on Amendment 28 and further adjusts the definition of “relevant contribution” in new regulation 14ZD to bring it into line with the definition inserted into new regulation 14ZB by Amendment 17.

Amendment 33, page 49, line 43, after “if”, insert

“active or contributing etc and”.

This Amendment adds words to the title of the new regulation 14ZE to reflect changes to be made in that new regulation by, in particular, Amendment 34.

Amendment 34, page 49, line 45, leave out from beginning to end of line 13 on page 50 and insert—

‘(1) Paragraphs (2) and (3) apply if—

(a) under paragraph 8C of Schedule 28, the drawdown pension fund in respect of an arrangement relating to an individual under a registered pension scheme (the “flexed” registered pension scheme) becomes the individual’s flexi-access drawdown fund in respect of the arrangement, and

(b) on the conversion date, or at any later time, the individual is an accruing member (see paragraph (6)) of the flexed or any other registered pension scheme.

(1A) In this regulation “the relevant 13-week period” means the period of 91 days beginning with—

(a) the conversion date if on that date the individual is an accruing member of any registered pension scheme, or

(b) if not, the first day after that date when the individual is an accruing member of a registered pension scheme.

(2) The individual must, before the end of the relevant 13-week period, inform the scheme administrator of each other registered pension scheme of which the individual is an accruing member on the first day of the relevant 13-week period—

(a) of the conversion, and

(b) of the conversion date or (if applicable) of the conversion’s having occurred more than 2 years before the start of the relevant 13-week period;

but this is subject to paragraph (5).

(3) Where, in the case of a particular registered pension scheme other than the flexed scheme, the individual is not an accruing member of that other scheme on the first day of the relevant 13-week period but becomes an accruing member of that other scheme on a day (“the activation day”) after the first day of that period, the individual must, before the end of the 91 days beginning with the activation day, inform the scheme administrator of that other scheme—

(a) of the conversion, and

(b) of the conversion date or (if applicable) of the conversion’s having occurred more than 2 years before the activation day;

but this is subject to paragraphs (4) and (5).”.

This amendment makes a change in new regulation 14ZE to simplify the obligations for individuals who have converted their existing drawdown fund to a flexi-access drawdown fund, bringing that regulation into line with new regulation 14ZB as amended by Amendment 12.

Amendment 35, page 50, line 15, leave out “a” and insert “an accruing”.

This Amendment, and Amendments 36 and 37, are consequential on Amendment 34 and make changes in new regulation 14ZE to ensure that an individual does not have to tell the scheme administrator if they become an accruing member of the scheme as a result of a recognised transfer.

Amendment 36, page 50, line 16, after “becomes”, insert

“an accruing member of that scheme upon or after becoming”.

See the explanatory statement for Amendment 35.

Amendment 37, page 50, line 16, at end insert “after the conversion date.”

See the explanatory statement for Amendment 35.

Amendment 38, page 50, line 20, after second “(3)”, insert

“, or has previously complied with paragraph (2) or (3),”.

This Amendment ensures that a member of a pension scheme does not have to provide information under new regulation 14ZE more than once to the same pension scheme.

Amendment 39, page 50, line 21, at end insert—

‘(6) For the purposes of this regulation, the individual is an accruing member of a registered pension scheme on any particular day if—

(a) the individual is an active member of the scheme on that day as a result of there presently being arrangements for the accrual of benefits to or in respect of the individual under a cash balance arrangement or hybrid arrangement, or

(b) a relevant contribution is made under the scheme on that day.

(7) For the purposes of this regulation, a relevant contribution is made under a registered pension scheme if—

(a) a relievable pension contribution is paid by or on behalf of the individual under a non-cash-balance money purchase arrangement relating to the individual under the scheme,

(b) a contribution is paid in respect of the individual by an employer of the individual under a non-cash-balance money purchase arrangement relating to the individual under the scheme, or

(c) a contribution—

(i) paid under the scheme by an employer of the individual, and

(ii) paid otherwise than in respect of any individual,

becomes held for the purposes of a non-cash-balance money purchase arrangement relating to the individual under the scheme;

and in this paragraph “non-cash-balance money purchase arrangement” means a money purchase arrangement other than a cash balance arrangement.”” —(Mr Gauke.)

This Amendment defines terms used in the provisions inserted by Amendment 34. The definitions are largely based on the text currently in the Bill of new regulation 14ZD(1)(b) and (8).



Third Reading

17:18

[Mr Gauke]

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

The House has reached the final stage of its consideration of the Bill, which will give individuals more choice about how they access their savings in retirement. I have been pleased by our wide-ranging and informed debates.

I would like to remind hon. Members of the measures in the Bill and their aims. While the Bill makes the tax system fairer by ensuring that people have more choice about how they access their savings, it contains measures to prevent individuals from exploiting that new flexibility to gain an unintended tax advantage, and to ensure that the taxation of pensions savings on death remains fair and appropriate under the new system.

At Budget 2014, the Chancellor announced the most radical reform to how people take their private pensions for nearly 100 years. The current system restricts choice at the point of retirement. Those with the smallest and largest amounts of pension savings are allowed flexibility, but those with a medium amount of savings have very limited options. The Bill will change that by extending flexibility to everyone with a defined contribution pension, regardless of their total pension savings.

The Bill also introduces a new method to allow people to access their pension flexibly. At present, people taking their pension as cash have to take all their tax-free lump sum—25% of their fund—and then place the other 75% in a draw-down fund. Any money they then take out of that fund will be taxed at their marginal rate.

The uncrystallised funds pension lump sum—UFPLUS —is a new option that will give individuals the flexibility to take one or more lump sums from their pension fund without having to enter into draw-down or to take all their tax-free lump sum in one go. When using that option, 25% of each payment will be tax-free, with the other 75% taxed at the individual’s marginal rate. We are also increasing choice by introducing changes to encourage innovation in the retirement income market. Following extensive consultation with the industry, the Bill will give providers scope to make annuities much more flexible products in line with consumers’ needs. I have already discussed the fiscal impacts of those measures and related ones today, but I reiterate that the Government have now published Office for Budget Responsibility-certified costings for the policy overall alongside the autumn statement.

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

My hon. Friend will remember, as I do, that one of the first acts of the previous Labour Government on coming to power was to put a tax on pensions that helped to destroy the healthiest, strongest and most successful pension system in Europe. This Government, however, in much less promising economic times, have managed to bring flexibility and hope to all those who save for a secure retirement.

[Mr Gauke]

I am grateful to my hon. Friend for helpfully reminding the House of that important point. It is a significant achievement of the Government that we have been able to undertake such a fundamental reform—perhaps the biggest for nearly 100 years—in this area. Our record compares favourably with that of our predecessor. Of course, the Bill is part of a wider set of Government reforms, including the single-tier pension, the rolling out of auto-enrolment and the triple-lock guarantee.

[Stephen McPartland (Stevenage) (Con)]

Will my hon. Friend give way?

[Mr Gauke]

The floodgates have opened.

[Stephen McPartland]

How many people will benefit from this pensions revolution?

[Mr Gauke]

Some 320,000 people retire each year with defined contribution schemes, and those people will now have far more choice. Of course, people who are saving for their pensions will know that at the end of their working life, or at various points after the age of 55, they will have more flexibility with regard to their pension pot.

I am grateful for the interesting debates that we have had during the Bill’s passage through the House and I would like to reflect briefly on how it has changed since its introduction. The Government's recently tabled amendment regarding how individuals inform schemes if the £10,000 annual allowance applies to them will provide that people only need to tell schemes to which they are contributing, or contribute to in the future, when they access a pension flexibly. They will also have an extended time period of 91 days in which to do so. These changes will make the new system easier for individuals and schemes to comply with, while ensuring that the annual allowance is implemented effectively.

The Government have made a number of minor and technical amendments to the Bill to ensure that it works as intended. The most substantive changes have been to the taxation of pensions at death, to ensure that that taxation remains fair and appropriate under the new system. The changes will allow individuals who die with pension funds remaining to pass those funds on to anyone they choose. The funds can be paid tax-free if the individual dies before the age of 75; if they die having reached that age, and the funds are paid out as a pension, they will be taxed at the beneficiary’s marginal rate—or at 45%, if the funds are paid as a lump sum. The aim of the changes is to ensure that individuals who have made sacrifices to save over the course of their life can pass on their pension savings without worrying about excessive tax charges after they die. They also preserve the incentive for people to keep money in their pension, as there will not be the fear of their beneficiaries being hit by a 55% tax charge.

Members may be interested to note that today, in the autumn statement, the Chancellor announced that the changes will extend to annuities. Death benefit payments from joint life and guaranteed term annuities will also be tax-free when the policyholder dies before the age of 75; such death benefits can be paid to any beneficiary. That will also apply when an individual uses uncrystallised or draw-down funds inherited from someone who dies before the age of 75 to buy a dependant’s annuity. Those changes will be legislated for in due course, although not through this Bill. In conclusion, the Bill is important. It will increase choice at retirement for individuals who have saved all their lives. It contains measures to prevent individuals from using the new flexibilities to gain unintended tax consequences, and ensures that the tax treatment of pensions on death remains fair.

Finally, I thank hon. Members who participated in debates on the Bill, both in the Chamber and in Committee. In particular, I would like to mention the diligence of the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), who has, I think, accounted for significantly more than 50% of the time taken to scrutinise the Bill. As I said, the Bill increases choice for the 320,000 people retiring each year, and I commend it to the House.

17:27

[Cathy Jamieson]

It is with a heavy heart that I rise to speak for the last time on the Taxation of Pensions Bill. It has been such an enjoyable experience. I am not quite sure how I will fill my days in the next few weeks, given that I will no longer be poring over absolutely every detail of the legislation. It does not seem long ago that I spoke on Second Reading—in fact, it was only two short months ago.

I should like to start where the Minister ended—by thanking everyone who has been involved in the process. I particularly thank right hon. and hon. Friends who have supported me in scrutinising the Bill, including in Committee, not least my hon. Friend the Member for Scunthorpe (Nic Dakin), who kept us all in line. Whenever I was about to take perhaps more than my fair share of time, he would keep me on track. I thank the Clerks in the Public Bill Office for their drafting advice and the role they played in ensuring that amendments were tabled in the appropriate manner. I also thank Library staff, who were excellent as always; they efficiently answered all my questions and responded to all my additional requests for information.

I thank the Minister—[Interruption.] I was going to say that he has, at all times, been polite and courteous; I hope he hears that I am saying something reasonably nice about him. That is not always how things happen. Throughout proceedings on the Bill, he has said no to pretty much all our requests and new clauses, in the nicest possible way. As I have said when speaking to our new clauses and amendments, we have been very consistent in our approach to the reforms; we have been clear that we support the principle of the Bill. We support increased flexibility and choice for savers, and that is why we have long advocated reform to the annuities market to help people to shop around and get a better deal. But we have had concerns about the speed at which the reforms have been pushed through. There was no consultation prior to the Budget statement and it has been difficult at times to get to grips with all the figures and the behavioural impacts relating to the Bill because the Government were not able to publish that analysis.

Nevertheless, we have endeavoured to identify the potential problems that the Bill presents, and we have judged everything against the three tests that we set at the outset—the advice test to ensure that savers get the right guidance, the fairness test to ensure that there are decent products for low and middle income savers, and the cost test to ensure that the reforms do not result in extra pressures on the state. It will be difficult to measure the Bill’s performance against those tests until the reforms take effect. We therefore reserve judgment on how it will work.

The Minister recapped the key issues that we debated. We made our views on the guidance guarantee abundantly clear. There is not a great deal more that we can say about that until we see how it works in practice. Ensuring that guidance meets customer expectation and requirements is a responsibility that now resides firmly with the Government. Our new clauses, which the Minister rejected, were concerned with measuring and reviewing the impact of the Bill because we wanted to gauge the degree to which the reforms produce additional opportunities for tax avoidance and to ensure that the Minister continues to monitor the impact of the Bill carefully as it is implemented.

We did not press new clause 2 to the vote. It called for a comprehensive review of the impact of the reforms, to be published 18 months after they take effect. We were keen to ensure that the Minister had every opportunity to give us the facts and figures. With the autumn statement today and the publication of the OBR policy costings, we now have some of that information and some of the numbers that we did not have previously.

There is one issue that I wish to raise even at this late stage. The Minister mentioned earlier that the OBR has run the rule over the figures, but it is important to note that the OBR policy costings document refers on page 87 to seven measures in the policy decisions table that are judged to have high or very high uncertainty around the central costing. Interestingly, one of those seven measures is pensions flexibility. The document refers to decisions since Budget 2014 and goes on to say:

“This costing receives a ‘very high’ uncertainty rating. The yield over the scorecard period—and the resulting costs in the longer term—depends on take-up and on other behavioural responses. Some people will temporarily increase pension saving in order to benefit from tax-free lump sum withdrawals. It is possible that funds will be redirected from annuities and into other assets, such as other financial products or housing. It is also possible that such funds could be used to finance consumer spending”.

That is exactly what we have been highlighting throughout the Bill proceedings, and exactly why we felt it was important that a review was built into the process. I hope that if the Minister does not take my word for it, although he often did so graciously, he will take account of the OBR’s comments.

We are clear that the success of the Bill will depend on the tests of fairness and cost that we set out. If the reforms have adverse consequences for those on middle or lower incomes or those who cannot afford the expensive regulated advice, they will not have succeeded. If the reforms lead to higher costs for the state because people have accessed their pensions too early and need additional state support, they will, again, not have succeeded. We hope the Government have factored in all the potential consequences, as they have assured us. I am pleased that they listened to us on the reporting requirements.

Does the Bill not look much better since the Government showed some flexibility in their approach? The word “flexibility” was frequently used in our discussions because that is what the Bill is all about. Had the Government taken their own advice and been a little more flexible in their approach from the outset, and perhaps a little less hasty, we might have arrived at a position where the Bill had been significantly improved and some of the outstanding questions could have been answered.

However, we have had a relatively short period to consider the Bill, notwithstanding the fact that, as the Minister pointed out, I seem to have taken up in excess of 50% of the time available to make the points. It is the Opposition’s duty to scrutinise thoroughly, raise the issues, ensure that the Government have thought things through, press them on those points and lay out those areas where we think they need to continue to monitor and evaluate in future.

With those few words, the time has run out for those of us in this place. I would like to close by reiterating my thanks to everyone who has worked on the Bill. I have found this an interesting and enjoyable process—perhaps not everyone involved would agree—and I must say that I never thought I would say that about a Bill on pensions taxation.

17:35

[Ian Swales]

I will not detain the House for long, but, as the Liberal Democrat representative here, I feel that it is important to say something. The Bill supports the pensions revolution being driven by the Minister for Pensions, my right hon. Friend the Member for Thornbury and Yate (Steve Webb), who has done a terrific job. We are well aware, of course, that the main pension aspects of the regulations are in the Department for Work and Pensions Bill, not in this Treasury Bill.

Like the shadow Minister, I enjoyed serving on the Bill Committee. In this place we are often very adversarial, but I think that proceedings on the Bill have been conducted in absolutely the right spirit. When it comes to pensions, it is extremely important to have cross-party support for the arrangements agreed, because pensions, by definition, involve long-term decisions. Were we to keep trying to change the pensions system every year or two, we would not be giving people certainty on what to do about their future. It has been a real pleasure to serve on a Bill on which, although we have sparred over various details, there has been strong agreement on the need to pass it. It has the full support of the Liberal Democrats.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Business without Debate

Wednesday 3rd December 2014 Commons Chamber

European Union Documents

Wednesday 3rd December 2014 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 119(11)),

European Energy Security

That this House takes note of European Union Document No. 10409/14 and Addenda 1 to 5, a Commission Communication on the European Energy Security Strategy; welcomes the Government’s support for the Commission’s energy security strategy, in particular the recognition in the Communication that energy security is central to the EU’s prosperity; and supports the Government’s efforts to work to ensure that in the implementation of the strategy, the existing balance of competence between the Member States and the Commission is not altered.—(John Penrose.)

Question agreed to.

Delegated Legislation

Wednesday 3rd December 2014 Commons Chamber

[Madam Deputy Speaker (Dame Dawn Primarolo)]

With the leave of the House, we shall take motions 5 to 12 together.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Legal Services

That the draft Legal Services Act 2007 (the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys) (Modification of Functions) Order 2014, which was laid before this House on 20 October, be approved.

Constitutional Law

That the draft Marriage and Civil Partnership (Scotland) Act 2014 and Civil Partnership Act 2004 (Consequential Provisions and Modifications) Order 2014, which was laid before this House on 27 October, be approved.

Fish

That the draft Keeping and Introduction of Fish (England and River Esk Catchment Area) Regulations 2015, which were laid before this House on 7 November, be approved.

Social Security

That the draft Pensions Act 2014 (Consequential Amendments) (Units of Additional Pension) Order 2014, which was laid before this House on 13 October, be approved.

That the draft Social Security Class 3A Contributions (Units of Additional Pension) Regulations 2014, which were laid before this House on 13 October, be approved.

Children and Young Persons

That the draft Child Poverty Act 2010 (Persistent Poverty Target) Regulations 2014, which were laid before this House on 16 October, be approved.

Legal Services

That the draft Legal Services Act 2007 (Claims Management Complaints) (Fees) Regulations 2014, which were laid before this House on 3 November, be approved.

Consumer Protection

That the draft Compensation (Claims Management Services) (Amendment) Regulations 2015, which were laid before this House on 3 November, be approved.—(John Penrose.)

Question agreed to.

Annual Pension Allowance (Transferred Workers)

Wednesday 3rd December 2014 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(John Penrose.)

17:38

[Toby Perkins (Chesterfield) (Lab)]

I am pleased to have this opportunity to bring to the House’s attention a matter of significant importance to employees in my constituency who were transferred out of Royal Mail to the IT services provider Computer Sciences Corporation and, I suspect, to many other employees who were transferred out of the public sector. Changes to lump sum pension allowances introduced by the Chancellor in his 2013 Budget have had a catastrophic impact on my constituents’ pension pots and created an accidental discrimination that fits neither the principles nor the spirit of the transfer of undertakings protocol, otherwise known as TUPE.

The aim of this debate is to follow up letters I have exchanged with the Financial Secretary to the Treasury. I feel that his replies thus far have failed to grasp the full unfairness of the situation or to offer appropriate remedy. I aim to show the House that, as the mechanism currently stands, there is gross unfairness towards workers who have been transferred out of public sector pension schemes. I hope that the Minister, when she responds, can explain to my constituents why they have been hit with such a significant tax bill, often on revenues that they have not even yet received, and what further steps the Government can take to ensure that former public sector workers are not unfairly disadvantaged by an arbitrary decision they made several years ago.

Royal Mail has had a long tradition in my constituency. Back in the 1960s, as part of a move to get Government organisations out into the provinces, Royal Mail moved thousands of head office staff up to Chesterfield. It brought with it a Barbara Hepworth statue and a welcome number of high-skilled and pretty well-paid jobs. Royal Mail has been a key employer in the town ever since. The Loundsley Green housing estate was built specifically to house the influx of new workers. However, while it remains an important employer today, many staff have subsequently been transferred out and do the same or similar jobs working on the Royal Mail account on behalf of private outsourcing companies.

The workers whose case I am raising today were transferred from Royal Mail to the IT firm Computer Sciences Corporation Ltd—CSC—in 2003 as part of a contract to outsource all Royal Mail’s IT to the company and retain all the 1,713 staff under the TUPE protocol. At that time, employees had a choice either to leave pension contributions that they had already paid within the Royal Mail pension and start a new separate corporate pension with future contributions with their new employer, or to transfer all their contributions to a new CSC pension and subsequently pay into that. The only choice that appeared to face workers was whether their pension contributions would be safer in one scheme or another and where they would be most likely to get a decent return on the pension contributions to which they were entitled.

Many workers—it is not clear how many—elected to keep their pre-2003 contributions within the Royal Mail scheme and open a new CSC pension with future contributions. However, a combination of the changes to the allowance regime—which was dramatically reduced in October 2010 and further reduced in subsequent Budgets—enforcement of TUPE rights, previous changes made to the allowances on what are perceived to be temporary pensions, and Treasury guidance on what constitutes a temporary pension has led to huge costs being applied to workers made redundant from CSC in recent years.

Revelations in Computerweekly.com about the efforts that CSC has made to stem losses on its involvement with the Royal Mail account suggest that 63% of the staff who originally transferred from Royal Mail into CSC have now been cut. Although exact numbers are not known, it is believed that the majority have left the business completely. That suggests that some 1,082 employees could be affected in this case alone. Some of those will have chosen to move into the CSC pension scheme and will not be affected in the same way.

There appear to be two different ways in which workers have been disadvantaged. First, I would like to raise the case of Michael Randell. Michael had worked for Royal Mail Group for well over 25 years, during which he had saved for his retirement by contributing into the pension scheme. Mr Randell is now 53. Under the terms of his employment, had he remained a Royal Mail employee he would have been entitled to take his pension under early retirement provision if he had left the firm over the age of 50. Therefore, in order to comply with TUPE, CSC arranged to make a notional payment to source an equivalent pension value until he is 60, when he will move on to the Royal Mail pension. Mr Randell’s usual pension contributions are less than £5,000 per year, but when he is made redundant, this one-off notional payment—which would effectively buy an annuity for the next seven years to comply with TUPE regulations, from CSC’s perspective—is classed by the Treasury as a one-year contribution to a second, in this case temporary, pension. In practical terms, it is not a second pension—it is a continuation of the first pension that he has from doing the same job with two separate employers.

At a time when the Government rightly ask employees to put money aside to save for themselves in retirement and to plan ahead, this group of workers, who did precisely that, are being caused huge problems because, back in 2003, they made a decision about which pension scheme they should choose to contribute to, yet they could not possibly be expected to have had foresight as to the implications of that choice.

The intention of the Government’s proposals was to target richer pensioners. In 2010, the hon. Member for Fareham (Mr Hoban) announced:

“It will be targeted at those who make the most significant pension savings. An annual allowance of £50,000 will affect 100,000 pension savers—80% of those will have incomes over £100,000.”

Unfortunately, as Mr Randell’s case has shown, the policy has also hit those on lower incomes with reasonable pensions. The Government have accepted the possibility that individuals on lower incomes could in exceptional circumstances face a sharp increase in the tax charged on their pension, but as I have demonstrated, such moderate language does not reflect the significant numbers that might be affected or the size of the impact on their pension planning.

The second example involves the group of CSC workers who were made redundant in 2012. That was part of a global redundancy programme in which CSC laid off 640 workers. The workers had their CSC pensions taxed as second pensions, whereas if, back in 2003, they had decided to transfer their pensions into the CSC pension scheme, it would all have been seen as the same scheme.

CSC attempted to honour its commitments to its employees by ensuring that they still received as employees of CSC what they would have been entitled to if they had remained with Royal Mail, but that led to those individuals being treated as though they had two separate pensions, although in practice they have been employed in the same job throughout that period. The issue is about how public sector workers whose employer changes, even though their job does not change, are seen as having two different jobs. Although TUPE should protect them from being worse off as a result, in practice they are not protected.

The Treasury viewed the money as having been paid all at once, even though it was received by the workers annually over many years, and the way in which workers’ pensions are taxed by the Treasury meant that people on decent but not in any sense exceptional salaries faced huge tax bills—more than £200,000 in one case that I have heard of—on income that they had not necessarily received.

It is too early to know the total number of people who will be sucked into this unfortunate state of affairs, but taking into account how many have moved from the public sector to the private sector, it might be very high. That raises important questions about the extent to which the Government fully understood the impact of the changes they made to the annual pension allowance when they made them.

The Treasury document, “Restricting pensions tax relief through existing allowances: a summary of the discussion document responses”, revealed:

“The nature of DB schemes means that some individuals on moderate incomes could exceed the AA—particularly where they are in final salary DB schemes and see spikes in pension accrual… The Government is committed to managing impacts on these individuals as far as possible.”

One of these solutions was to allow individuals

“to carry-forward unused annual allowance from up to three previous years, to offset against contributions in excess of the AA in a single year.”

However, the Government recognised that in exceptional cases such mitigation would not be sufficient. The Financial Secretary made that clear in correspondence with me. He said at the time that the Government had consulted on options to give individuals and schemes more flexibility over the payment of charges. On 3 March 2011, the Government announced that individuals with annual allowance charges of more than £2,000 would be able to elect for the full liability to be met from their pension benefit. That obviously made it easier in the short term, but in practice it still means that individuals will lose out, as they receive a lower pension than they otherwise would have done. The fact that they are still taking money out of their future earnings to pay a bill does not seem to fit with the principle of the Government’s measures.

It is ironic that this debate is taking place on the day that the House has again debated the Taxation of Pensions Bill, because the Bill was a missed opportunity to address the plight of TUPE-ed public sector workers who face the unfairness that I have highlighted. The Government have thus far fallen short of the action that is required. The measures that have been put in place are compensatory, but they do not compensate fully. They mean that the workers of CSC and probably many other former public sector workers will lose out on the pension to which they should have been entitled.

The further stages of the Taxation of Pensions Bill provide an opportunity to establish cross-party support for further analysing the effect that pension changes have had on CSC workers, and for setting out a framework in which the unfair nature of the situation can be tackled. I hope that that might happen in another place, as I suggested on Report. The Government’s approach to reforming pensions tax relief was supposed to be based on ensuring that fairness was maintained, but it appears that a loophole has developed that could, in some cases, lead to people losing thousands from their pension.

I would be grateful if the Minister recognised that the measures to alleviate the problem are sticking plasters that aim to provide compensation or to reduce the damage of the proposals, and that what is required is for people who are perceived to have had two jobs, when in reality they had one, not to have to choose to pay a tax bill, which they would not have faced if they were still in the public sector, either all at once or from their future pension income. I look forward to hearing her response on this important issue. I recognise, in bringing this matter to the House, that the Government’s intentions were positive. However, when unintended consequences arise, it is our responsibility to evaluate them and, hopefully, to work together to deliver a fairer outcome for our constituents.

17:50

[The Economic Secretary to the Treasury (Andrea Leadsom)]

I congratulate the hon. Member for Chesterfield (Toby Perkins) on securing this debate. It is a complicated subject and he explained it very well. I am sympathetic to the issues that he raised. He will know that the Government greatly value the important work that is carried out by public sector workers and by those who were previously in the public sector.

The hon. Gentleman discussed the effect of the annual allowance rules for tax-relieved pension savings. He will, of course, be aware that we live in difficult economic times and that few households in this country have not been affected in some way by the economic crash of 2008-09. As part of our deficit reduction plans, the Government had to make difficult decisions in 2010 and 2013 to restrict the cost of pensions tax relief by reducing the annual allowance from £255,000 to £50,000 from 2011-12 onwards and to £40,000 from 2014-15 onwards. We put those restrictions in place to ensure that the cost of pensions tax relief remained affordable and sustainable.

The hon. Gentleman raised a number of concerns about the way in which the annual allowance rules work for defined benefit pension schemes in the context of bridging pensions, which can affect individuals who are transferred from the public sector under TUPE. Although I cannot comment on the particular circumstances that he raised, it might be helpful if I give some background to those rules.

The annual allowance rules provide a limit on the amount of tax-advantaged pension savings that can be made for individuals each year in registered pension schemes. Savings in excess of the limit are subject to the annual allowance income tax charge. For individuals in defined contribution schemes, it is straightforward to determine the level of contributions paid into a scheme to be assessed against the annual allowance limit. However, the position is more complex for defined benefit schemes because individuals accrue a right to an amount of annual pension from a set pension age, and the level of contributions made by the individual and the employer does not reflect the increase in the value of the member’s pension rights. We therefore needed a method to calculate the deemed level of contributions to test against the annual allowance. That method would have to be actuarially equivalent to the amount required to fund a similar promise in a defined contribution scheme.

Detailed consultations were held with the pensions sector before the rules were introduced in 2006, and in 2010, when the Government consulted on the reduction in the annual allowance. As a result of the consultations and with support from the pensions sector, the amount of defined benefit pension savings in a year, when measured against the annual allowance limit, is broadly equivalent to the increase in the capital value of a promised pension over that period.

To achieve the method of valuing pension savings under defined benefit schemes, special rules were developed so that for each £1 a year of pension that will be payable, the present capital value of that annual pension benefit is £16. The use of the 16:1 factor to value defined benefit pensions promises was adopted from April 2011 when the annual allowance was reduced, following recommendations by the Government Actuary. Before that, the factor was 10:1. The rules are intended to strike a balance between providing a system that is reasonably simple for individuals to understand and for pension schemes and HMRC to administer, and meeting the Government’s fiscal objectives.

The hon. Gentleman raised concerns about the treatment of bridging pensions under annual allowance rules. Tax relief is provided for pension savings under defined benefit schemes on the understanding that the funds are used to provide an income throughout retirement. To support that aim, scheme pensions must normally be payable for life, and must not decrease except in prescribed circumstances. One such circumstance is where a bridging pension is paid and the reduction occurs between age 60 and state pension age. A bridging pension is a temporary increase to a private pension. Typically, it is provided where individuals retire before reaching state pension age, and where the level of the bridging pension is broadly similar to the expected state pension. When the state pension starts to be paid, the bridging pension is reduced or comes to an end.

Where the bridging pension is offered as a discretionary award, or is a benefit to which the individual becomes entitled only if they choose to retire early, the award of the additional pension may give rise to pension savings in excess of the annual allowance limit. That is because the temporary nature of the increase to an individual’s pension is not recognised in the same way that increases to the pension’s capital value is calculated for annual allowance purposes.

The Government have considered whether special annual allowance provisions should apply for bridging pensions, and that can be found in our response to consultations on the reduction of the annual allowance limit from 2011-12. We recognise that the restriction of relief may create particular challenges for members of defined benefit schemes because of the way promised benefits in those schemes are valued, but we concluded that it would not be desirable to complicate the pensions tax regime by including special provisions for bridging pensions. Instead, we introduced special rules intended to mitigate “hard cases”. Those rules allow individuals to carry forward unused annual allowances from the three preceding tax years, and set them off against pension savings above the annual allowance limit in a single year, providing that the individual was a member of a registered pension scheme during those three years. They also allow individuals to meet annual allowance charges of more than £2,000 from their pension scheme. That is known as the “scheme pays” facility.

The hon. Gentleman raised concerns that when a bridging pension paid to an individual from one scheme comes to an end, future pension payments to that individual from that scheme are treated as unauthorised payments and liable to tax at a rate of up to 55%. As I have set out, scheme pensions can reduce only in certain prescribed circumstances. Where they are reduced in any other circumstances, unauthorised payments will arise and be subject to certain tax charges. The legislation for that is clear, has applied since April 2006, and is set out in schedule 28 to the Finance Act 2004. Those rules support the aim for defined benefit schemes to provide an income throughout retirement while protecting against manipulation of the tax-free lump sum.

This is not a simple area. Although annual allowance rules for defined benefit schemes may appear difficult to understand, they are a necessary part of meeting the Government’s fiscal and policy objectives of targeting tax relief effectively. The rules are intended, as far as possible, to provide a straightforward structure for individuals and schemes, but I recognise that there may be particular cases where the rules do not work as intended. I am grateful that the hon. Gentleman has raised these issues today; he should rest assured that they will be kept under review and that the specific cases he has discussed will be taken into account.

Question put and agreed to.

17:58

House adjourned.

Ministerial Correction

Wednesday 3rd December 2014 Ministerial Corrections

Wednesday 3 December 2014

Justice

Wednesday 3rd December 2014 Ministerial Corrections

Prison Transfers (Assessments)

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

1. What steps he is taking to ensure that prisoners who have been convicted of a crime of violence are assessed before being transferred from secure accommodation to an open prison.

[The Parliamentary Under-Secretary of State for Justice (Andrew Selous)]

Progression to an open prison is never automatic; all prisoners undergo regular, mandatory assessments of their risk of escape or abscond, and the risk of harm to the public, and only those assessed as having an acceptable level of risk for lower security conditions can be allocated to an open prison.

[Gordon Henderson]

I thank the Minister for that response, but there is another thing that I am concerned about. Sabul Miah recently absconded from Stanford Hill open prison in my constituency, causing a great deal of upset to the family of the man he was imprisoned for viciously attacking, particularly given that the first they heard of it was when they were contacted by a national newspaper. Would it not be possible for the families of victims of violent crime to be notified immediately by the Prison Service when the perpetrator of the crime either is released from prison or absconds?

[Andrew Selous]

I recognise the seriousness of the issue that my hon. Friend correctly raises. The offender absconded on 23 October. The victim liaison unit was informed of the abscond the next day and tried to contact the one victim who was on the victim contact scheme. They tried her mobile phone number several times but were unable to leave a voicemail. They had not been provided with an e-mail address so sent a letter at the end of that day. The offender was recaptured a week later and sentenced. However, I recognise the seriousness of what my hon. Friend says, and we will make every effort to ensure that victims are informed as soon as possible.

[Official Report, 11 November 2014, Vol. 587, c. 1281.]

Letter of correction from Andrew Selous:

An error has been identified in the supplementary answer I gave the hon. Member for Sittingbourne and Sheppey (Gordon Henderson) during Questions to the Secretary of State for Justice.

The correct response should have been:

[Andrew Selous]

I recognise the seriousness of the issue that my hon. Friend correctly raises. The offender absconded on 23 October. The victim liaison unit was informed of the abscond the next day and tried to contact the one victim who was on the victim contact scheme. They tried her mobile phone number several times but were unable to leave a voicemail. They were unable to contact the victim via e-mail, as that information had not been stored correctly, so sent a letter at the end of the day. The offender was recaptured a week later and sentenced. However, I recognise the seriousness of what my hon. Friend says, and we will make every effort to ensure that victims are informed as soon as possible.

Westminster Hall

Wednesday 3rd December 2014 Westminster Hall

Wednesday 3 December 2014

[Mr David Crausby in the Chair]

UK Sea Bass Stocks

Wednesday 3rd December 2014 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Harriett Baldwin.)

09:30

[George Hollingbery (Meon Valley) (Con)]

I am grateful to serve under your chairmanship, Mr Crausby. It is a pleasure to be here debating the important subject of the management of sea bass in the UK.

For many years, those involved in sea bass fishing in the UK have warned that the stock has been left increasingly vulnerable by weak management tools and practices. Now, almost too late and certainly with far too little, the European Union and others have woken up to the potential for a total collapse in the sea bass population in our domestic waters. Some may say that I am being overdramatic, and some may say that we have all been here before and that it will all get better in due course. I say they are wrong. This is happening now, it is happening to us and it needs to be dealt with.

In 2013, the International Council for the Exploration of the Sea, which advises the European Union on the strategies needed to exploit our fishing resources safely, proposed a 36% reduction in the catch of sea bass. That proposal was not acted upon. Now, less than a year later, ICES advises an 80% reduction. We only have to look at the Irish experience of the early 1990s to know what comes next if we hesitate: a total failure of the stock and a total ban on all forms of bass fishing. The tragedy is that we do not need to go there. We need only grip the problem here and now, to a scale and design that will make a real difference.

The question is: how on earth did we end up here in the first place? By any reckoning, we now pursue bass much more actively and much more successfully than in the past. The exploitation of sea bass has increased hugely across all areas, and current landings run at a level roughly four times that of the early 1990s. In addition, fishing activity is now often targeted at spawning aggregations. Studies show that bass spawn offshore in the English channel and the eastern Celtic sea from February to May, and as they do so they become sitting ducks for pair trawlers, which ruthlessly exploit them. New spawning aggregations in the English channel are being discovered and targeted, including some inside the 12-mile limit off the Kent and Sussex coasts.

On top of all that, nothing like the number of fish that should be reaching breeding size actually do so because of a farcically low minimum landing size. Bass are a slow-growing species, and female bass do not become sexually mature, in UK waters at least, until they are at least 42 cm in length, and some estimates put the figure as high as 46 cm. The current minimum landing size is an absolutely ludicrous 36 cm. That was set back in 1989, when even the Department’s own estimate said that the maximum sustainable yield for sea bass would be reached if the minimum landing size was 50 cm, yet still we sit here with the level at 36 cm.

An increased minimum landing size for bass, coupled with a corresponding increase in mesh sizes, would be a huge positive for the UK bass fishery. Over the years much time has been spent on trying to convince those in charge to increase the UK MLS. The right hon. Member for Exeter (Mr Bradshaw), who is here today, nearly managed to implement the reforms when he was Fisheries Minister in 2007, but alas, just before he could pull the lever, he was replaced and the whole thing dropped through the floor before it could reach the statute book. Unfortunately, his successor did not carry on with the implementation, which is a tragedy. We are now living with the consequences of that change.

In 2012, the then Fisheries Minister, my hon. Friend the Member for Newbury (Richard Benyon), who is also with us today, initiated a further review. That the study is still in train was confirmed by the current Minister in 2013, although it has yet to be published; hopefully we will hear a little more about that later. Technical papers suggest that the main benefit, at least in terms of yield, of management aimed at protecting juvenile sea bass, which increasing the MLS would do, chiefly accrues to fisheries operating within the six-mile zone. The implication is that there is every reason to increase the MLS here in the UK unilaterally, whatever happens at EU level. We will benefit, whatever the rest of Europe decides to do.

[Tim Loughton (East Worthing and Shoreham) (Con)]

I am pleased that my hon. Friend has secured this debate, because this is a big issue in my constituency. Does he agree that enormous damage is done to the feeding and spawning beds of sea bass by pair trawlers, which drag the bottom of the oceans and take away all the seaweed? Does he acknowledge that one solution might be to restrict sea bass to sea anglers? It has been calculated that in Sussex the value of sea angling is more than £31 million, including tackle, accommodation and boats. That is more than three times the value of commercially landed fish stocks. Such a measure would go a long way towards conservation, too.

[George Hollingbery]

I agree with my hon. Friend. I will allude to the study that he is referencing a little later in my remarks. On the ecological damage done by pair trawling and indeed by other sorts of trawling, including otter trawling, there is no doubt that it is very destructive to the environment. Although it is effective and useful for commercial fishermen, all of us interested in sea angling should look to do something about it more generally than just with specific reference to sea bass. That is an important issue.

Finally in the sorry tale that I was outlining, the average recruitment—the number of sub-one-year-old fish being added to the fishery—between 2008 to 2012 was less than a quarter of the long-term average. We are fishing more, we are increasingly targeting sea bass, we are specifically fishing out breeding shoals and we are not allowing the young stock to reach spawning age. How much more is there to say other than that, in an ecosystem that is supposed to be carefully managed, such practices are, to use an American phrase, as dumb as dirt? I do not know how else to describe the situation. There could not be a worse way of managing a fishery that we apparently want to keep for the longer term.

Before looking more closely at the current policy proposals for managing the problem, it is worth spending a bit longer talking about the economics, to which my hon. Friend just referred. There is a crucial difference between the returns in the commercial and recreational sectors. If we are to reach a sustainable, long-term solution, it is critical that we understand that well. The best data we have on the catches of the commercial and recreational bass fishing sectors in the UK are in the “Sea Angling 2012” report published by the Department for Environment, Food and Rural Affairs. That study modelled the recreational share of the total as being somewhere between 20% and 33% of the retained catch landed in the UK, but it is clear about the lack of statistical certainty in the data on recreational catches and angling activity:

“Respondents were self-selecting and unlikely to be representative of all sea anglers. On average they were more avid and successful anglers than those interviewed in the other more statistically designed Sea Angling 2012 surveys, reporting higher catch rates, more days fished, and higher membership of clubs and national angling bodies.”

In short, there are good reasons to believe that the likely level of recreational landings is much lower than the report suggests, or is, at the very least, at the bottom end of the report’s estimate.

It is also clear that the economic activity generated by recreational angling dwarfs that of the commercial sector. “Sea Angling 2012” shows that there are 884,000 sea anglers in England. They directly pump £1.23 billion into the economy, and 10,500 full-time jobs depend on that spending. Indirect spend is equivalent to £2.1 billion and 23,600 jobs. Those figures are direct from the Department.

[Guy Opperman (Hexham) (Con)]

I congratulate my hon. Friend on securing this debate. On a day when we are celebrating our long-term economic plan, does he agree that we need to support individual anglers and the economic activity he describes? If we need evidence of the difference he proposes, we can look to our hon. Friend the Member for Newbury (Richard Benyon), whose actions in government have directly caused an increase in economic output off the north-east coast by reason of the salmon that is now seen in the Tyne.

[George Hollingbery]

I agree completely. It is always difficult to quantify exactly the economic benefit of fishing done for fun, but all the evidence points inescapably towards it being an extremely important stream of revenue, in particular for less economically advantaged areas, of which there are a great many in the south-west and the part of the world that my hon. Friend represents.

It is also worth noting that the VAT alone that is collected from sea anglers dwarfs the entire first sale value of all commercial fish landings in the UK. That demonstrates the scale of the economic benefit of recreational angling. That was further reaffirmed by a detailed study released last Friday, to which my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) referred, by the highly respected Marine Resources Assessment Group on behalf of the Blue Marine Foundation. The study took a detailed look at sea bass fishing in the Sussex Inshore Fisheries and Conservation Authority—a control area for fishing—and its conclusions are nothing short of startling. Its low-end estimate was that the economic and employment benefit per tonne of fish removed by recreational bass angling was more than 40 times that of commercial fishing—a pretty extraordinary statistic in anybody’s book. Despite the much smaller weight of fish removed by recreational anglers in the Sussex IFCA, the total benefit to the local economy of recreational angling was still, as my hon. Friend said, more than three times that of commercial fishing.

We know for a fact that recreational bass fishing is worth far more to the economy than commercial fishing, and is a great deal more sustainable. That is one of many reasons why the current EU proposals are puzzling to the point of bewilderment. As the Minister knows only too well, they propose limiting recreational anglers to only one fish per day, despite the fact that, as far as I understand it, the EU has no competence over people who go fishing for recreation, and, indeed, the pretty skimpy evidence that recreational anglers are the problem. For one spawning area, area IVc—I will happily share the map of the areas with colleagues who wish to see it—the EU makes an as yet incomplete proposal to limit the daily amount of fish taken during the spawning period by a certain number of vessels. We genuinely know no more than that. How that is supposed to make a meaningful difference to the current situation is, frankly, anybody’s guess. In my view, it is the political equivalent of trying to stop your house falling down by painting it a different colour.

We all know what needs to be done. The French know it, the Dutch know it, we know it—everybody knows it, so for goodness’ sake, let us get on and actually do it, finally, for once. We have to drastically reduce the amount of fish taken. We have to allow fish to reach sexual maturity. We have to stop most, if not all, fishing in the spawning season. We have to do a better job of protecting and enhancing nursery areas. Finally, we have to grasp the undeniable reality that converting the fishery to one dominated by recreational fishing is the only long-term solution that will protect our economic interests and give the fish a future. Any solution that markets itself as long-term but does not deal with all those issues will fail; of that there can be little or no doubt.

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

I congratulate my hon. Friend not only on securing the debate but on making such a powerful case. Does he agree that the Government must also ensure that the IFCAs properly engage with recreational anglers? When I go to IFCA meetings, I see that the commercial fishermen have a far greater influence in the workings of the IFCA than the recreational anglers. That problem must be addressed if we are to get the changes that my hon. Friend rightly identified.

[George Hollingbery]

My hon. Friend is absolutely right, but that will only happen when the IFCAs and others understand and accept the importance of recreational angling and see the Government outline a direction of travel. Only then will the recreational anglers get a proper bite of the cherry, and only then will the IFCAs and others follow that course. The Government must lead from the front.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

I congratulate my hon. Friend on the quality of his opening speech and on raising this subject. In Essex, we have a lot of recreational anglers who provide a great deal of employment and generate a lot of tourism, but we also have very small-scale inshore fishermen who catch sea bass. Do they have a future in my hon. Friend’s scheme, or will they be squeezed out by the ban on commercial fishing?

[George Hollingbery]

I am grateful to my hon. Friend for that intervention. It is a vexed issue. There are people who make a very small-scale living out of bass fishing. My belief is that it is likely that in the near term, as has happened in Ireland, the north-east coast of the United States and a great many fisheries where proper regulation has been put in place, people who run sub- 10-metre boats will find that they make a much better living from taking out and guiding recreational fishing than from trawling for a few vulnerable sea bass out in the ocean. Although I would not condone any policy that forced people who fish at that scale from one to the other, particularly in inshore waters, I think that reality will dawn and that most of them will end up in the recreational sector.

In concluding my remarks, I hope you will excuse me, Mr Crausby, for asking the Minister a series of detailed questions. I have given him notice of some of them because they are quite complex, but I would appreciate answers to as many of them as possible.

To protect breeding fish, will the Minister follow the proposals made by the Angling Trust and others and seek a ban on targeted fishing based on catch composition or sufficiently restrictive vessel catch limits to make the fishery unviable from January to May inclusive, to apply to areas VIId, e, f and h and IVc in offshore fisheries beyond member states’ six-mile zones? For the benefit of other hon. Members present, I am simply asking for proper fishing restrictions to be put in place in pretty much all the coastal waters where we find sea bass, and certainly where they breed.

Will the Minister take on board another of the Angling Trust’s proposals and pursue catch limits for all registered EU vessels fishing for bass in areas VII and IV to cap effort, with limits set at a level that reduces fishing mortality by at least 40% across all member state fleets? I have apologised to the Minister for not giving him notice of that question.

To allow fish to reach breeding age, will the Minister work to ensure that a minimum landing size of 46 cm or over is adopted for sea bass at European level? Will he undertake to impose such a limit unilaterally on UK landings in any event? At the very least, will he confirm that the review of the minimum landing size for bass started by his Department in 2012 is still progressing, and will he undertake to publish the results as soon as possible? To help protect the recruitment stocks, will he undertake to look again at the extension of bass nursery areas?

Finally, does the Minister agree that the development of sea bass fishing as a recreational activity is the best long-term solution to both the ecological and the economic sustainability of the fishery, as proved by the Irish sea bass experience, the striped bass fishery of the north-east coast of the US and many other examples?

With the right measures in the right place at the right time and in the necessary proportion, we can make our fisheries policy work for us and for future generations. I hope the Minister will offer us all hope that such a prospect can be realised.

[Several hon. Members]

rose—

[Mr David Crausby (in the Chair)]

There are six Members who wish to speak. I would appreciate it if Members could keep their remarks below 10 minutes, so we can get everyone in. I intend to call the Front Benchers at 10.40 am.

09:48

[Mr Ben Bradshaw (Exeter) (Lab)]

I warmly congratulate the hon. Member for Meon Valley (George Hollingbery) on securing this debate and on his excellent speech, in which he outlined his case.

I do not intend to repeat the detail of much of what the hon. Gentleman said. I see my role, as a former Fisheries Minister, as being to stiffen the Minister’s resolve when he negotiates in Brussels in a couple of weeks’ time and with the self-appointed representatives of the commercial fishing sector. I warn him from my experience that if he and the Council do not make tough decisions now, he or his poor successor—perhaps my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith)—will have to make much worse decisions in a year or two’s time, as the hon. Member for Meon Valley outlined. It is far better to make tough decisions now. If the Minister caves in to the self-appointed representatives of the commercial sector, our bass fishery will be doomed. I therefore urge him to go to Brussels and negotiate hard on behalf of the fish stocks. In the end, it is the fish that matter for everyone, including the commercial sector if it is to have a future.

I also want the Minister to be aware that in the view, probably of most people in Westminster Hall today, and certainly of most people in the country who have an interest and knowledge in this area, the current proposals by the Commission are not only wholly inadequate but totally imbalanced in favour of the commercial sector and against the recreational sector. One of his first tasks, apart from ensuring that we get much more meaningful and drastic action, is to rebalance those proposals in the other direction.

The Minister will know the value of the recreational sea-angling sector, and not only because his hon. Friend the Member for Meon Valley reminded him of it, but because his own Department conducted research into it in 2012; I think I can recall earlier pieces of research into it, too. The Department’s research in 2012 found that the sector’s income for the country was £2.1 billion, it sustains 23,000 jobs, and as I think the hon. Member for Meon Valley said, the VAT receipts alone from the wealth and activity generated by sea angling dwarf the income from the commercial fishing sector. As I said, the Minister’s first task is to rebalance this inadequate plan from the Commission.

The Minister’s second task is to grasp the nettle on minimum landing size. I commend to him an Adjournment debate that was held in the main Chamber in 2007, between the then hon. Member for Reading West—Martin Salter, who was a great champion of sustainable fisheries and the sea-angling community—and my successor as Fisheries Minister, Jonathan Shaw. In that debate, all the arguments about minimum landing size were rehearsed. As the hon. Member for Meon Valley has reminded us, when I was the Minister I took the decision to increase the minimum landing size, to 40 cm as a first step, then to 45 cm after a period of review. Tragically, however, that decision was reversed by my successor who, as is often the case, came under pressure from the very powerful self-appointed commercial fisheries spokespeople.

That was a disastrous decision. If people look at that debate, they will see that the reasons given by my successor as Minister for not proceeding with the increase was that the bass stocks were in decent shape. Well, look at them now. All I can say to the current Minister is, “Please learn the lessons of that mistake and go for an increase in the minimum landing size.” It is absolutely insane that we allow people to catch the vast majority of bass before they even reach spawning size: that is my second message to the Minister.

My third message is to have a look at what I still consider to be the best Government strategy on fisheries published in the past 20 years—a document called “Net Benefits” that was published in 2004. It was commissioned by the then Prime Minister, Tony Blair, in 2002, because of the disaster facing the North sea cod industry and the repercussions, not only on cod stocks but on fishing communities around the North sea. It took two years to develop what I believe still stands as the best long-term fisheries strategy for this country. I commend that document to the Minister and to my hon. Friend the Member for Penistone and Stocksbridge, the Opposition spokesperson, if she has not read it already; I hope that she reads it before she gets the job of Fisheries Minister, because it is the best policy document that I can remember.

In that document, the Government at the time said:

“We should review the evidence supporting arguments for the designating of commercial caught species for wholly recreational sea angling, beginning with bass by the end of 2004.”

That document was published in 2004, 10 years ago. Here we are now, with the bass stocks at risk of collapse, and far too little has been done in the meantime.

Consequently, the third thing that the Minister can go away and do is a longer-term thing, which is to have another look at designating the bass fishery as solely recreational. That was a Labour policy 10 years ago; it has got nowhere, and we are now paying a very high price as a result. Incidentally, the “Net Benefits” report was endorsed shortly after its publication by the then Environment, Food and Rural Affairs Committee, which also supported re-designating bass fishing as a recreational fishery.

Those are my very short political messages to the Minister. The hon. Member for Meon Valley has done a great job in laying out the detailed case for change, and the challenge that we face. However, my simple message to the Minister is for him to go away, fight for bass and take some radical action, because if he does not do so, he—if he is still in the job—or his successor will have a much tougher job further down the line.

09:54

[Richard Benyon (Newbury) (Con)]

I am grateful for the opportunity to comment on the excellent speeches we have just heard. I compliment my hon. Friend the Member for Meon Valley (George Hollingbery) for calling this debate.

The story of the management of this stock has been a very bad one indeed. The high point was the decision by the right hon. Member for Exeter (Mr Bradshaw) to increase the minimum landing size, and all credit to him for taking it. If we had followed that decision through at the time, it would certainly have made a difference. Why his successor rescinded that decision is something that I could not really determine from reading the excellent Adjournment debate in 2007 to which the right hon. Gentleman referred.

When I was in the Minister’s position, I set about trying to reverse that change in policy, and I tried to increase the minimum landing size. I was persuaded that it was important to do everything to conserve bass at a European level, and I believe that it is right to get agreement among our European partners, because many vessels from other countries fish this stock in our waters. To go to the EU was a sensible piece of advice that I received.

However, if we just left matters to the sclerotic processes of the EU, this stock would crash before we could do anything about it. There is a lot that we can do unilaterally, and there is a lot that we can do in this House and beyond as a sort of club of ex-Fisheries Ministers; I do not know what the collective noun for ex-Fisheries Ministers is, but I think it is an “exhaustion” of ex-Fisheries Ministers. We would all say to my hon. Friend the Minister that he has a much more difficult task this December than the tasks that I faced in three or four years of December rounds of talks. He is a very good negotiator and takes his job very seriously. However, my advice to him would be to take precisely the advice of the right hon. Member for Exeter—that this stock will not exist unless tough decisions are taken.

We now face a collapse in stocks. At times, when we talk about minimum landing size, it seems slightly like fiddling while Rome burns, and that there are more important things that we could do. However, it is still necessary to increase minimum landing size and I hope that the Minister will consider doing that, and take forward the work that the Department for Environment, Food and Rural Affairs has already done on this issue and act unilaterally.

I take an old-fashioned view that fish should not be harvested until they have had a chance to breed. It is the spawning biomass that is crashing and it is on that issue that action needs to take place. This situation has arisen before; we can look beyond our borders and see where it has happened before. There is a fishery on the east coast of the United States called the striped bass stock fishery, which is now worth a lot of money. I have heard varying figures, including the figure that now, in its healthy state, it is worth $1 billion a year to the state of Massachusetts in terms of tourism and the added benefits that angling provides. I have also heard that nationally it is worth $2 billion a year to the US economy, and possibly more.

The stock spawns in the Chesapeake bay, but in the late 1970s it was overfished and crashed. Immediately, everyone was prevented from fishing it, whether they were recreational or commercial anglers. The stock has now recovered and it is a massive draw. British bass anglers spend all their savings to fly from the United Kingdom to the United States to exploit this exciting fish. It is branded; people wear T-shirts with the slogan, “I’m a striped bass fisherman.” However, British fishermen should not have to do that in US waters; they should be able to do it in UK waters. Similarly, they should not have to go to Ireland, where there is a very buoyant recreational fishery; I will come on to talk about that shortly.

I would love to portray the problem in the simplistic way that some do, which is to say that it is all about the pair trawlers. Well, I am afraid that it is not all about the pair trawlers. In the area from Felixstowe round to Sussex, the use of trammel and drift nets has increased by 20% or 30% in the past year. We need to look at all the activities in this sector. What is really interesting about the Marine Resources Assessment Group study that my hon. Friend the Member for Meon Valley mentioned is that it relates to a fishery in Sussex, where every way of exploiting this diminishing stock is used. There are pair trawlers coming over from the continent to exploit it; there are inshore fisheries that exploit it commercially; and there is also a very important recreational fishery. That is why MRAG chose Sussex to conduct this important piece of research.

As my hon. Friend the Member for Hexham (Guy Opperman) said earlier, I suspect that we will hear later today in this House the words, “long-term economic plan”. Well, let us just look at the economics of the issue that we are talking about. In Sussex alone, I calculate—from the figures in the MRAG report—that between 258 and 267 tonnes of fish were harvested commercially in 2012, and somewhere between 10 and 19 tonnes were harvested recreationally. Taking the median of those two, about 5.7% were landed from the recreational sector. However, what is really important is that the economic output per tonne in Sussex is 40 to 75 times higher for recreational than commercial. The employment that is generated, calculated per tonne, is 39 to 75 times higher for recreational bass fisheries than commercial.

The report states clearly that the final economic and employment impacts of recreational bass fisheries in Sussex are estimated at £31.3 million and 353 full-time equivalent jobs. The final economic employment impacts of commercial bass fisheries in Sussex were estimated as £9.25 million and 111.28 full-time equivalents. That is a staggering difference. As my hon. Friend the Member for Meon Valley said, if calculated across the piece it is more than three times as valuable as a recreational fishery than as a commercial one.

It would obviously be better if the EU had measures in place to put this stock back on track, but I urge the Minister to look at what has happened in Ireland, where there is a recreation-only fishery, a strict catch limit and a high minimum landing size, which I gather is about to be increased to 50 cm, on the basis of scientific advice received by the Irish Government. This is a highly valuable tourist attraction. In Ireland, angling, tourism and coastal communities are integrating in a much better way than in this country. We have a lot to learn in that regard. People who go there are welcomed and find charter boats linked to hotels and pubs. The whole package is there; it is part of a deal that attracts people. I want those fisherman to go to Devon, Sussex and Essex and exploit this exciting game fish.

[Mr Jenkin]

I am going to do something that should never be done in the House of Commons, which is to ask a question without knowing the answer. I do not intend to put my hon. Friend on the spot, but he was Fisheries Minister until quite recently, so why did he not do this? What was the obstacle? Where is the resistance? What were he and his successor having to fight to be able to implement this measure, not just in the EU, but domestically?

[Richard Benyon]

I did set about trying to increase the minimum landing size. I regret that we did not move faster when going through the process of consultation and further consultation, and trying to ensure that this was agreed at European level, because the evidence is all there. When you are a Minister, people tell you that someone cannot be prevented from doing something without enough evidence and judicial review, and that there are threats of infraction, and all the other things. However, I freely admit that if I had my time over again I would steamroller this through and take the consequences, because the consequence now is a crashing stock. The stock will disappear, along with the economic value.

To the fishermen in the constituency of my hon. Friend the Member for Harwich and North Essex (Mr Jenkin), I say this: I have met them many times and I have great respect for them, but they will not be fishing for bass, not because of any decision taken by any Minister of any party, but because there will be none. They have a great future ahead of them exploiting other stocks, such as thornback rays and other things that are prevalent in those waters, but they really will have an economic benefit if they can get the fishermen on their boats to catch recreational bass in future.

[Mr Bradshaw]

It might help the hon. Gentleman if I say a little bit about my experience. In this regard, it was one of those occasions as a Minister where I had to stand up to powerful and well-funded vested interests and to officials. Great as my officials were, I am afraid it was a Minister’s decision against the advice and the will of my officials, and sometimes that is the right thing to do.

[Richard Benyon]

I thank the right hon. Gentleman for making that position clear. It is important to listen to advice, but as I say we could still be fiddling when Rome burns. This stock will shortly be gone.

Other hon. Members want to speak. I shall conclude by saying that 80% of bass swim within 12 nautical miles of the coast, so action is needed now. We need action on minimum landing sizes; we need spatial and temporal closures; and we need better protection of nursery areas. Yes, we need a bag limit, but I do not believe that that is a massive issue—whether it is one, two or three—but other technical measures in the commercial fishery are needed. We also need better data so that we can face down the interests that say that this is the wrong decision.

The only way forward for bass is for them to be caught by hand line or rod. Any commercial activity at all should be based on its being a premium, hand-caught resource, in a similar way to mackerel in the south-west and other species: a virtue is made of the fact that those are local and high quality. My frank message to poncey restaurateurs who demand bass the size of the palm of my hand for their fussy customers is, “Get those from aquaculture, don’t get them from out of our seas, because that is destroying a stock.” Actually, their customers will probably mind more about not being able to eat bass in future. I want to see our waters criss-crossed with charter boats taking fat cats out to fish this really exciting stock, putting that money into coastal communities, and see a sustainable source working for this country, not crashing.

10:05

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Member for Meon Valley (George Hollingbery) for securing such an important debate, which could help shape the future of bass angling in the United Kingdom. As I have mentioned on numerous occasions in this Chamber, I represent an area of the UK that has a rich fishing industry; in fact, for many, fishing is the life blood of the village. In Portavogie in particular, it is a tradition that has been passed down many generations. Unsurprisingly, this is a subject of great interest to me.

We are focusing on commercial fishing and looking at recreational fishing. Many hon. Members have spoken about work done in the Republic of Ireland. I want to mention that and some work done in Northern Ireland. Recreational sea angling attracts some 1.45 million anglers per annum and is worth in excess of £500 million per annum to the economy of England and Wales. Bass are a highly sought-after fish and bass angling attracts some of Britain’s most committed anglers, due to the fighting qualities and high reputation of this striking-looking fish.

The development and unregulated use of inshore monofilament gill nets, which commenced in the mid-1970s, followed by the development of winter bass pair-trawl fishing in the 1980s, means that bass are relentlessly pursued commercially as soon as they leave the estuary nursery areas. Bass are a slow-growing, long-living species, and can live for up to 25 years. I reiterate what hon. Members have said: many are caught as pre-adults at six to seven years old. We need to control that. I am sure that the Minister will hit on that issue and mention what we have done in Northern Ireland and what has been done in the Republic as well.

In 2013, the UK media reported that bass numbers were at their lowest in 20 years and that the breeding stock of bass had reduced by almost a third since 2009. To complicate matters further, bass is a non-quota species and there is a minimum landing size, which makes controlling and limiting commercial catches even more difficult. However, in Ireland commercial bass fishing has been restricted and protected bass areas have been created, and the fishing there has improved dramatically. Many in the UK see the Irish model as a way to restore British bass stocks. There are examples close at hand that we can use to help in this regard.

Despite questions about the long-term stability of bass numbers, this species appears to be extending its range northwards, with bass now being caught with some regularity in areas such as the Yorkshire and north-east coasts, where they were previously fairly rare.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Before my hon. Friend leaves the issue of recreational fishing and the commercial benefits that can be derived from it, does he agree that the progress made in the Irish Republic can be replicated, not just in Northern Ireland but across the UK, if we take the right decision and if a third Minister does not also find the difficulties almost insurmountable in trying to address the problems that we all face?

[Jim Shannon]

I thank my hon. Friend and colleague for his intervention. Two previous Ministers have mentioned their experiences when they were in the position of power that the present Minister is now in, so perhaps their examples can be used to change the direction of the civil service roundabout, to push the matter through.

Many UK anglers fish for bass on a purely catch-and-release basis to help preserve stocks of the species and ensure that bass stocks return to a higher level, in turn preserving them for future generations. In 2010, new legislation was proposed in Northern Ireland to adopt the same protection measures for bass stocks as exist in the Republic of Ireland. The proposed legislation is going through the Northern Ireland Assembly, but a loophole has arisen. The legislation affects the crucial “Prohibition of the sale of bass” rule by introducing a clause that allows for bass caught accidentally by trawlers to be landed and marketed as allowable by-catch.

Case histories from the Republic of Ireland and the United States of America reveal how the sustainable management of fish species, such as the European sea bass and the striped bass, primarily for recreational benefit, can generate superior economic gains for local and national economies. We cannot ignore that money and how that helps villages and recreation. Undoubtedly the UK has lagged far behind other countries in realising the economic potential of proactive management of the marine species targeted by recreational anglers.

There are a number of fishing competitions and vessels around the coast of the United Kingdom, and I will mention two. The hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart) will probably mention the Terry Herman bass fishing competition, which takes place each summer in Pembrokeshire. It is also a great charity fundraiser. There are examples like that around the United Kingdom, and good comes from them.

The hon. Member for Newbury (Richard Benyon) mentioned the USA. The Big Bass Splash—the Americans sometimes describe things in a different way from the rest of us—has taken place in Kentucky since 1984, with prizes of up to $85,000 to be won. We have seen bass competitions televised in sports programmes. We are well aware of “Extreme Fishing with Robson Green”; those interested in fishing will enjoy that programme, which features all the fish we wish we could catch. I could never even catch one. The Jersey Open Shore Bass Festival takes place every October, with a competition for anglers of all levels of experience to encourage the sport. I hope that a strategy, a policy and legislation to help preserve recreational bass fishing will come from the debate, but will the Minister indicate what discussions he has had with Jersey, Guernsey and the Channel Islands on the rules that they will put in place? They see the benefit of recreational angling, and I hope we can do the same.

I have a picture of my son when he caught a 10 lb bass on holiday in the USA. I could not get a bite, but he got one almost right away. Those experiences make memories that last for ever and encourage an interest in fishing that will last for many years—probably a whole life.

Recreational and sporting angling can deliver money to local economies. I was a guest speaker at Irish Fest last year in Milwaukee, where a number of councils from the Republic of Ireland were represented in the tourism facility. Every one of those councils was advertising recreational fishing as one of the things people can do when they visit Ireland. Do not ever underestimate the amount of money that can be generated and how that can help the economy. I spoke to one hotelier at the festival and afterwards. He said that people come from the States specifically for the fishing. The Republic of Ireland has recognised the benefits and moved forward. It is time that we on the United Kingdom mainland did likewise.

I always underline the increasing number of returns from anglers, as do those who see angling tourism as a way forward. Tourism-based sea angling for bass generates millions per annum for local and national economies. As the examples of America and Ireland have shown—they are two good examples; one is close by and one is further afield—the UK needs to adopt a policy of conservation so that levels do not drop any further. Given the long life of sea bass, it is vital that we do not fish them at the prime ages of six or seven. Instead, their time in nurseries or protected areas needs to be longer. We also need to consider changing how bass are commercially pursued, which I hope the Minister will address by altering how and when they can be fished. That is the only way to safeguard them and ensure that they remain part of angling culture for future generations.

I again congratulate the hon. Member for Meon Valley on securing the debate. I am grateful for the opportunity to contribute. I ask the Minister in response to consider not only what Northern Ireland—fishing is a devolved matter—is doing, but what the Republic of Ireland is doing with legislation that is already creating benefits.

10:14

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

I start by referring to a letter from my constituent, Matt Powell, which was written in July 2014. He said:

“I run a small bass guiding business on the Pembrokeshire coast. This has given me the opportunity to observe the difficulties facing the future stocks of the bass…our most iconic marine sport fish. It is clear that the species is under the sort of pressure that is unsustainable in the medium to long term future. A combination of angling pressure…is taking its toll on our local bass stocks. I am obviously concerned about the future of my own business if things continue as they are, but of far more importance is the legacy we create for future generations.”

Mr Powell is not alone. There are plenty of people like him along the Pembrokeshire coast and elsewhere in Wales.

This is really a story of political will. We have extensive planning conditions to protect bats and amphibians, fences that keep deer off roads and tunnels for hedgehogs and toads to pass under roads. The Minister will know that there was a national outcry when he went through with a policy that would remove less than 1% of the UK badger population—a thriving and increasing population —so it is sadly ironic that, on our watch and under our noses, we are seeing the steady decline and eradication of an iconic species. Nobody, it seems, can find a solution to the problem. Even the populations of salmon and sea trout, which are of significance in my part of the world, seem to be receiving more column inches these days than the future of bass.

We have heard about the economic value, and I will not repeat all the statistics. In my part of the world, bass fishing by anglers is crucial. Its economic value and the number of jobs it provides outstrip commercial endeavours significantly. It has three times the numbers of employees and three times the money generated by those other methods of fishing, yet we put all that at risk.

I have a simple question for the Minister: can he be as bold about bass as he is about badgers? That is what we require. As we heard from the former Fisheries Minister, the right hon. Member for Exeter (Mr Bradshaw), it is about facing down interest groups and officials and doing what is right. It is within the Minister’s gift to do the right thing. It is not as though that is an impossible ask. It can be done, and it can be done now. If it is not done now, the Minister will sadly have it on his record that bass collapsed on his watch. I cannot believe that he or any other Minister, facing the evidence they face now, wants that to be the case.

An increase in the minimum landing size is crucial. Following the advice of the expert bodies—goodness me, there are enough of them—is crucial. The Minister also might take into account the thoughts of the chairman of the Blue Marine Foundation, who refers to the essential banning of netting, especially in nursery areas, and investing in the expansion of rod and line fishing around the UK coast.

This is not about stopping people from doing things; it is about investing in education and the huge benefits that would arise in our coastal regions—particularly in Wales—if we got the message across. It is about investment in something that will bring good fortune not only to the bass population around the UK shores, but to the residents of coastal areas whose livelihoods depend on the practice. It is also about the maximalisation of marketing, which has not been referred to in the debate but has been touched on once or twice in the media commentary around it.

The situation is pretty simple. Someone once said to me that Governments can do pretty much whatever they want, so long as they really want to. I think this is one of those occasions. Do the Government really want to help bass? If they do, they can; if they do not, bass stocks will collapse on our watch and take at least 20 years to recover, while the livelihoods of people such as my constituent, Matt Powell, will probably never recover at all.

10:19

[Jon Cruddas (Dagenham and Rainham) (Lab)]

This topic is important. Only this past weekend experts called for a ban on trawlermen catching sea bass, given the evidence that angling offers three times the benefit to the economy.

I, too, congratulate the hon. Member for Meon Valley (George Hollingbery) on securing such an important debate, and I want to repeat some facts that he pointed out in his opening address. DEFRA’s own “Sea Angling 2012” report shows that there are 884,000 sea anglers in England, who pump £1.23 billion per annum directly into the economy, with 10,400 full-time jobs dependent on the activity; and that the indirect spend is equivalent to £2.1 billion, with 23,600 jobs at stake. Bass are the most popular species for recreational angling and, according to figures given at the recent Dublin bass workshop, bass angling is worth more than £200 million in England alone.

I admit that I am not a bass fisherman—indeed, many of my colleagues in the all-party group might suggest that I am not a fisherman of any shape or size at all—but my youngest brother is a fanatical one, and many of my constituents are also bass fishermen. Indeed, angling is possibly the recreational sport with one of the highest participation rates in my east London constituency, as in the country at large. This obviously important debate is also about the nature of politics—about keeping our promises, which has been mentioned a number of times this morning.

For the past 13 years, recreational sea anglers have been led to believe that their most popular sporting fish would be managed sustainably and primarily as a recreational species, because Governments, including the previous Labour Government, kept telling them that that was what we were going to do. I want to focus on some of the recent history behind today’s debate, which was emphasised by my right hon. Friend the Member for Exeter (Mr Bradshaw) in his comments.

In 2007, we came close to a breakthrough based on a cross-party consensus, but a Fisheries Minister capitulated to pressure from the commercial sector and overturned the decision of his predecessor, my right hon. Friend the Member for Exeter, who had already signed off the order to increase the bass minimum landing size. Since then, arguably, we have witnessed seven wasted years in terms of sustainable management of the species, and that has been picked up time and again in the contributions this morning. Since 2007, as far as I can see, not a single measure introduced by Governments of either main party has halted the decline in bass stocks. We are still waiting for the publication of the 2012 bass minimum landing size review, instigated by the hon. Member for Newbury (Richard Benyon). There is some doubt as to whether any meaningful work has been done at all.

The core of the argument put by all our colleagues this morning is that politicians have promised that Britain’s most popular fish in sporting and eating potential should be managed sustainably. That has not happened and bass stocks are in deep trouble. The latest scientific advice issued by ICES in June 2014 recommended an 80% cut in catches of bass throughout the European Union by 2015—more than double the amount suggested in 2013, which we had not acted on. The Solent bass surveys also make dismal reading, but that is not new—the news has not fallen from the sky.

It is worth going back to some of the recent elements in the debate. As emphasised by my right hon. Friend the Member for Exeter, in 2002 the Prime Minister’s strategy unit commissioned a report on the benefits of recreational sea angling. “Net Benefits” was eventually published in 2004 and it stated:

“Fisheries management policy should recognise that sea angling may, in some circumstances, provide a better return on the use of some resources than commercial exploitation.”

That is exactly the point made by the Blue Marine Foundation report that was in the papers this weekend, as I mentioned at the beginning of my speech.

The 2002 report’s recommendations were:

“Fisheries departments should review the evidence supporting arguments for re-designating commercially caught species for wholly recreational sea angling, beginning with bass by the end of 2004.”

The Environment, Food and Rural Affairs Committee then looked at the issue when considering the “Net Benefits” report. According to the Committee’s all-party review:

“We strongly support the Strategy Unit recommendations to develop the recreational sea angling sector. We believe that the sector, which has considerable economic value, has been overlooked and under-represented for too long.”

It added:

“We support the re-designation of certain species for recreational use and recognise the benefits that this can bring from both a conservation and economic point of view.”

The same points about the economic case for recreational angling have been made consistently over the past 13 years.

I do not want to be party political in any way in this debate, but I want to emphasise the 2005 “Labour’s Charter for Angling”, which contained the following words in a foreword by my right hon. Friend the Member for Exeter:

“It was anglers concerns for the conservation status of sea bass that has persuaded me to agree to implement much of the excellent bass management plan put forward by the Bass Anglers Sport Fishing Society”,

including increases in the minimum landing size to strengthen the brood stock.

My right hon. Friend was true to his word, and in 2005 he launched the DEFRA consultation on increasing the minimum landing size for bass so as to produce a sustainable fishery with more and bigger bass for the commercial and recreational sectors. He took the long-term view in 2006 when he announced the conclusions of the consultation and his intention to increase the minimum landing size to 40 cm from 36 cm, and later to go on to 45 cm, beyond the optimum spawning size. According to his DEFRA press release:

“I have listened very carefully to the representations made and have not taken this decision lightly. I have accepted the arguments for a bigger minimum landing size to help increase the quantity and size of bass. This will also give better protection for the stocks. There may be short term costs from this measure before we see future gains but it is vital that fisheries management takes a long term view.”

My right hon. Friend went on:

“The recreational fishing sector makes a major contribution to our economy and it is important that their voice, as well as those of commercial fishermen, is taken into account in fisheries management.

In the future, I intend to increase the landing size further to 45 cm, but subject to the results of a review, in 2010”.

To justify that decision, DEFRA claimed at the time that the increase to 40 cm would bring the minimum landing size closer to the average spawning size for bass. As a result, more juvenile fish would be protected and there would be increased recruitment to the spawning stock. In turn, that would increase the number and size of bass available for capture to both the commercial and recreational sectors. My right hon. Friend concluded:

“I have taken on board the concerns expressed during the consultation by the commercial fishing sector about the impact of an immediate increase to 45 cm and the need for a reasonable implementation period to minimise the cost of net replacement.”

The next Fisheries Minister, however, made the decision to go back on the commitment made by his predecessor to increase the minimum landing size in the interests of conservation. On 25 October 2007 he made a statement on retaining the minimum landing size at 36 cm, rather than increasing it to 40 cm and then 45 cm by 2010. The decision was met with predictable anger and dismay by hundreds of thousands of sea anglers and many conservationists in the country. The Minister admitted at the time that his decision was based on looking after the short-term interests of the inshore fleet, rather than on the long-term interests of the species and the environment. We should obviously be concerned about any decision and its effect on jobs, but let us not forget the devastating impact that unsustainable fishing has on all sectors, whether commercial or recreational.

Bass is a highly sought after and valuable resource. It was recognised as worthy of protection by the Prime Minister’s strategy unit, by the whole Government and by cross-party Committees of the House. Unfortunately, the direction of travel was later unwound, and seven years have followed with little having happened. I hope that today we will start a new phase of the discussion, and I praise the hon. Member for Meon Valley for putting the issue on the agenda today. I hope that we can begin to rebuild a cross-party consensus about sustainable management of the bass stock.

[Several hon. Members]

rose—

[Mr David Crausby (in the Chair)]

Order. I intend to call the Front Benchers from 10.40 am, which leaves 12 minutes to be shared between two Members. We will then get everyone in. I call Charles Walker.

10:28

[Mr Charles Walker (Broxbourne) (Con)]

Thank you for calling me, Mr Crausby, to speak in the debate.

I will not rehash the figures given over the past hour, but I must say to the hon. Member for Dagenham and Rainham (Jon Cruddas), to paraphrase Napoleon, “better a lucky fisherman than a good fisherman”. I suspect that the hon. Gentleman is rather better than he gives himself credit for, although I know that he is a lucky fisherman, as I have landed both his double-figure barbel for him—or at least netted them; I think he takes responsibility for having landed them.

I was going to give a great exposition on the need to preserve bass stocks, but again that has been done eloquently by my colleagues. Instead, I want to say that I absolutely love fishing. Fishing bridges all walks of life, from the richest and most powerful people to those who simply enjoy a day on the beach. I spend a huge amount of time fishing with my sons and, before I had my sons, I spent an enormous amount of time fishing with my grandfather, so the activity bridges generations as well. One of the most exciting times that I have had in the past five or six years was when my middle son caught his first bass, on Islay. I was running up and down the seashore making a huge amount of noise, getting in a panic, and dropping the net and picking it up again, while he calmly landed a wonderful fish. As a family, we all then celebrated his success.

There has to be a fish species somewhere in the sea that does not belong to commercial fishermen. They have it all their own way. As the right hon. Member for Exeter (Mr Bradshaw) said, they are a powerful lobby. Sea bass are a resource that needs to be shared, and the balance in that sharing needs to be in favour of the recreational angler. As for commercial interests, the debate is not about the loss of jobs; it is about the creation of jobs—well-paid guiding jobs, and jobs in restaurants, hotels, pubs, the tackle trade and angling shops. It is a positive thing that we are doing here today.

The wonderful thing about sea angling is the way everyone gathers early in the morning, or when the tide is right, with great excitement. Tackle bags are thrown on to the shore, and people rootle through for their favourite lure. A great celebration takes place, with people enjoying their natural heritage and the natural history of this country.

It is all very well to come up with facts and figures, which are very important, but the most important fact is that we are currently taking fish that have not spawned. They have not reproduced. Any idiot, from whatever background, knows that that is unsustainable. One of the most depressing interventions in this discussion was by the European Union, which has drawn a moral equivalence between netting and pair trawlers, and recreational anglers, saying that if we are to make new rules and legislation about the taking of bass, recreational anglers should be limited to one fish. That is to confuse and conflate issues. Recreational anglers are not the problem—they are the solution to the problem.

10:31

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

I do not intend to detain Westminster Hall for more than a few minutes.

Do we not all share a feeling of rising anger and frustration, which almost brings tears to our eyes, as we listen to the debate? We have heard about the manifesto commitment on which the Labour party was elected, and my hon. Friend the Member for Newbury (Richard Benyon), the former Fisheries Minister, has said he wishes he had acted when he was in office—a candid response to my remark.

Like many of those present for the debate I am a fisherman, and like thousands of others I have caught sea bass off the Essex coast. I treasure the species from an emotional point of view, but also from the point of view of the coastal communities. It brings life to seaside towns such as Harwich and Brightlingsea that have become so dejected in some respects because they are out on a limb and are no longer the economic centres that they became when they built ships, when there were big fishing fleets and when they were the links to the continent.

[Richard Benyon]

As Fisheries Minister, aside from my personal interest in fishing and angling and what my fishing friends would have told me, I do not think I would have known about the problem until it reached its present stage if it had not been for the Angling Trust coming to see me with a group of people who really know what is going on. We could then put in train a process—which I wish had happened earlier—involving the Government working well with organisations that are informed and rational in how they work with Ministers.

[Mr Jenkin]

I am grateful to my hon. Friend for that, but as my hon. Friend the Member for Broxbourne (Mr Walker) said, the debate is not anti-commercial interests, anti-jobs or anti-employment. It is pro-economic, social and environmental development. It is about what all the political parties in the House believe in, yet we have had 10 years of debate and have achieved nothing.

As Chairman of the Select Committee on Public Administration, I have the word “accountability” in mind: that is the crunch. All the democratic pressure on successive Ministers was to get something done; my hon. Friend the Minister must ask himself why it has not been done. I invite him to consider what my hon. Friend the Member for Newbury—and indeed the right hon. Member for Exeter (Mr Bradshaw)—said about wishing they had been tougher with their officials. It is not right to blame officials, who give their best advice, but there is also the question of legal advice.

Legal advice is not an instruction on how to behave; it is something to be taken into account in making a decision. If the risk of being taken to court—to judicial review—is balanced against the risk of losing the fish stock, which is the bigger risk? The Minister must be accountable for the decision. He is not being accountable to this House if he just submits to the legal advice. Legal advice is to be listened to, but in many cases it is to be overridden. It is to be disregarded—well, not disregarded; it is to be taken into account. The judgment that the Minister then makes is not about blindly accepting the legal advice. Otherwise we do not have accountability; we might as well be ruled by lawyers.

We have seen European law, human rights law and fear of judicial review take over the whole of government in some Departments—DEFRA may be one of the worst instances—but we expect our Ministers to govern. I ask my hon. Friend the Minister please to exercise his best judgment. He will then be vindicated for what he does. If he submits to the legal advice, he will be condemned.

When we think about why our system of government feels so unaccountable with respect to so many Ministers, the question we should ask is how they respond to the advice that they are given and whether the House should empower them to act in the national interest rather than submit to the rather blind legal advice they are often given. That advice is given for the best of reasons; that is the job of the lawyers. However, in my experience, lawyers always advise doing the more cautious thing from their point of view—not necessarily from the point of view of the public interest.

10:37

[Angela Smith (Penistone and Stocksbridge) (Lab)]

I congratulate the hon. Member for Meon Valley (George Hollingbery) on securing the debate. We always say that debates are important, but this one really is; and it is very timely, given the meeting of the Council of the European Union in two week’s time.

The hon. Gentleman outlined perfectly the problems with sea bass stock. My right hon. Friend the Member for Exeter (Mr Bradshaw), and the hon. Member for Newbury (Richard Benyon)—both ex-Fisheries Ministers —made the important point that if we do not take tough decisions now we will be back in two years facing an even worse crisis in stock levels. That is an important backdrop to today’s debate.

I want to underline one of the debate’s key themes, and in doing so I must declare not quite an interest, but where I come from—literally. I am the daughter of a former commercial fisherman—a Grimsby fisherman. Grimsby was the biggest fishing port in the world at one point. He fished in the Arctic, which was probably the most difficult fishing ground to work in during the 1950s. I grew up in a village outside the town and fully realise the pride and feeling that coastal people have in their fishermen, which continues to this day. In my father’s youth it was common for the school day to start with the fisherman’s prayer because yet another tragedy had occurred at sea. It is important to remember that fishing was and still is the most dangerous occupation in the world.

Fishing is still an important source of economic activity, contributing many millions to the UK economy. In 2013, the commercial industry directly employed about 12,000 people, with a fleet of around 6,400 vessels, landing around 600,000 tonnes of fish at a value of over £700 million. Let us not forget, however—and I do not think that we can, after today’s debate—how important angling is, socially and economically. I am not going to rehearse the figures again—they have been reiterated more than once today—but to summarise, both directly and indirectly, angling contributes £1.2 billion and 23,600 jobs to the UK economy.

Fishing and angling matter, and sea bass is an important and iconic fish for those engaged in both commercial and recreational fishing. The latest figures suggest that across Europe some 5,600 tonnes of sea bass are landed annually, with the commercial side accounting for just over 4,000 tonnes, around 75% of the total, and recreational fishing accounting for the rest—around 25%. A breakdown of landings by EU state shows that French vessels are by far the biggest exploiters of the stock, accounting for around 66%; by contrast, UK vessels land around 20% of the total, with the Dutch and the Belgians landing the majority of the rest.

The fish itself—this next point is important when we are discussing sustainability—is a slow-growing one, and does not mature until four to seven years of age. Juveniles spend up to three years occupying nursery areas in estuaries and tend not to leave until they are around 36 cm in length.

The International Council for the Exploration of the Sea has advised that sea bass mortality is at a level well above that considered sustainable for the stock. As we all know, ICES has recommended that catches should be cut immediately by 80%, to restore stock levels. Furthermore, recruitment of young fish into the population has been in decline since the mid-2000s, and has been very poor since 2008. The decline in recruitment coupled with the increase in mortality has caused a rapid deterioration in stock levels. Another important point to bear in mind is that the species is completely unprotected by quotas.

It is against that backdrop that some EU countries have taken action to avoid a disastrous collapse of the stock in their waters. We have heard today what the Irish have done, with a complete ban on commercial bass fishing by Irish-registered vessels within Ireland’s 12-mile territorial limit. The Dutch Government are considering the introduction of a series of national measures, including the banning of pair trawling in certain areas from September to December, capping monthly landings, increasing the minimum landing size from 36 cm to 42 cm, setting a bag limit for recreational anglers and putting a cap on the small-scale commercial rod and line fleet.

The EU position is fluid, and is up for discussion and decision in two weeks’ time. It proposes that anglers be restricted to bagging one fish per person, per day, while commercial vessels would face some restrictions on catch—it is all very fluid—based on the assessment of the need for an immediate 80% reduction in catch and the reductions on stock exploitation required to keep the species sustainable.

As has been mentioned frequently, in the UK we recognised the need to protect sea bass stock—that history and the need to learn lessons from it have been well rehearsed today—with the plan in 2007 to raise the minimum landing size to 40 cm, and then again to 45 cm. In 2012, the then Fisheries Ministers, the hon. Member for Newbury, launched a review of the evidence supporting those measures, but to this day we have not seen its outcome. Will the Minister comment on where it has got to?

In the past few years, the UK Government—both the previous Government and the current one—have seemed unwilling to take action in UK waters to restore stock levels, arguing that they do not want to exceed or fall short of either the requirements set by the EU or, now, those of their own better regulation framework. However, I note from a recent letter sent by the Minister to the right hon. Member for Mid Dorset and North Poole (Annette Brooke) that although he believes that important progress can be made at the EU Council in two weeks’ time, he is of a mind to press for a more radical set of proposals from the Commission negotiations, with a focus on a balanced package of measures to reduce catches in the commercial sector, coupled with sensible measures for the recreational sector.

I wish to make it clear to the Minister that we support an approach that calls for stronger interim measures. The UK position in those negotiations needs to be firm and resolute. We need a better set of proposals from the EU than the one currently on the table. Although it is possible for member states to develop measures unilaterally, the impact of such measures is weakened by the grandfather rights on access to home waters that are enjoyed by some member states. That is why we need agreement at EU level. The ideal outcome would be a set of measures that all member states have to abide by, including short-term measures to halt the alarming decline in stocks while further research is undertaken and a long-term management plan is developed.

What do we do if we do not get agreement at the EU Council in two weeks’ time? The Opposition acknowledge the potential anomaly if we take unilateral action, but the UK Government would have to do something in the event of failure to find agreement at the EU Council. A number of measures have been proposed both today and in the recent past, including an increased minimum landing size. On that issue, I return to the review promised by one of the Minister’s predecessors and reiterate that we would be glad to hear both its findings and his view.

We all recognise that simply increasing the minimum landing size is not a complete answer. The International Council for the Exploration of the Sea has stated that it has serious concerns about the recruitment of fish into the sea bass population, which has been in decline for a long time. The debate about whether to extend the protection of sea bass nursery areas goes on and on. Will the Minister explain his plans to tackle that problem? We need resolution on that issue sooner rather than later—much sooner, in fact.

Has the Minister considered incentives to encourage commercial rod and line fishing, especially within the 6-mile limit, as an alternative to more damaging commercial fishing practices? Hon. Members have mentioned other measures such as catch limits and spatial closures. We need a response from him on those as well.

Finally, the Marine and Coastal Access Act 2009 set out the Government’s intention to create an ecologically coherent network of marine protected areas. One of the main aims of that network is conservation of the sea environment. Will the Minister explain his view on how that policy interacts with issues such as the one we are discussing, especially when one considers that around a third of commercial catches are based on demersal trawling, a type of fishing said to be extremely damaging to the sea environment?

The 2009 Act gives the Marine Management Organisation the powers to introduce byelaws in our protected areas in the 6-mile to 12-mile coastal limit. Those byelaws apply to the vessels of all EU member states, not just to the home fleet. That could be a valuable way to extend some of the protections we want to see. I am interested to hear what the Minister has to say about the potential use of marine conservation zones and the powers available to the MMO to deal with some of the problems we are facing.

I look forward to the Minister’s response on this critical issue. More than anything else, we want and need a European deal. We also want to see positive and constructive engagement with the EU, not just shouting from the sidelines. We hope he will commit to that and to outlining, in addition, any measures that the UK can apply successfully and fairly in the event of a decision failing to materialise at EU level.

10:48

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

I begin by congratulating my hon. Friend the Member for Meon Valley (George Hollingbery) on securing this timely and important debate. We have heard many good speeches and there is clearly a basis for quite a degree of cross-party consensus. We have certainly had our quota of former Fisheries Ministers contributing to the debate.

Sea bass is one of the most valuable species we have, both to recreational sea anglers, as many hon. Members have pointed out, and to some of our fleet of commercial fishing boats under 10 metres. We are at a pivotal moment for bass management. It is clear from the latest scientific advice from ICES that European bass stocks are in a very vulnerable state. In June 2014, ICES advised that, for us to be at maximum sustainable yield in 2015, total landings of bass in the Irish sea, Celtic sea, English channel and southern North sea for commercial and recreational fisheries should be no more than 1,155 tonnes, but last year the EU fleet commercial landings total was 4,132 tonnes, and estimated landings from the recreational sector were a further 1,500 tonnes—a total of more than 5,600 tonnes. To get to the ICES recommendation would require an 80% cut from 2013 landings.

Commercial bass fisheries in those areas include an offshore fishery on spawning fish in the channel and its approaches from January to April. That is conducted mainly by large mid-water pair trawlers, which take about a third of the total commercial landings. There is also an inshore fishery, which operates mainly between spring and autumn, using trawls, fixed and drift nets, and hooks and lines, and which involves a number of under-10-metre vessels.

Sadly, as many hon. Members have pointed out, the decline of bass is not new news, as ICES has made previous recommendations for reduction in mortality from fishing exploitation. The UK has been challenging the European Commission since 2012 to take urgent action to address that decline, and we have been at the forefront of promoting technical conservation measures for bass. It is worth reflecting on some of those proposals.

Initially, the European Commission suggested a total allowable catch for bass, but we firmly believe that that is not appropriate because a new TAC is established on track records of catches, so there is a real danger that that would simply lock in a continuation of the current exploitation pattern, which now needs to change radically. A further disadvantage of setting a TAC for bass is that it would take no account of the efforts a number of member states have already unilaterally taken to limit commercial catches, which would be unfair to those countries.

Bass is a migratory species. The ICES information clearly shows that a significant proportion—about 30%—of mortality occurs in spawning areas to which all member states have access. That is why, despite the frustrations of trying to get agreement at European level, the Government have consistently pressed, first and foremost, for technical conservation measures at EU level as the most effective way of ensuring that the bass stock recovers. Let me set out the position we have argued for in the last couple of years, because I think that will deal with many of the questions put by my hon. Friend the Member for Meon Valley.

We have consistently argued, for instance, that there should at the very least be restrictions on targeting bass from January to April and that those should apply in the key offshore spawning aggregation areas. We have also recommended the phasing out of pair trawling to target bass. In addition, we have argued for catch limits for all EU vessels fishing for bass, to cap total effort and to avoid displacement away from pair trawling to other types of commercial fishing. Finally, we have suggested further work on the identification and protection of bass nursery areas in all member states, which will build on the progress we have made in the UK.

As many hon. Members have pointed out, the current EU proposal is far from perfect, but I think we should welcome the fact that the European Commission has at least proposed interim measures for 2015 in advance of the development of a long-term management plan for bass. However, let me be absolutely clear: I do not believe that the current proposed measures are sufficiently ambitious, nor do they achieve the right balance between the measures required for the commercial and recreational sectors, as my hon. Friend the Member for Broxbourne (Mr Walker) pointed out.

When the proposals are discussed in a couple of weeks’ time at the December Fisheries Council, I will seek to agree a more effective package of measures to finally start the recovery of the bass stock. That will be challenging, as December Council negotiations always are, but it will be a UK priority for this Council to extend and strengthen the proposals to limit commercial fishing. We will also seek a two-fish bag limit for recreational anglers, rather than the one-fish limit that has been proposed. I have talked to anglers’ representatives, and they recognise they have a role to play. They completely recognise that there should be a bag limit, but it would be wrong to have a harsh one-fish bag limit for anglers while having relaxed restrictions on the commercial sector.

A number of hon. Members pointed out that there are things we could do nationally, and I want to reflect on some of those points. On minimum landing size, once we have seen the shape of any deal that comes out of the December Council, I will consider what supplementary measures we could introduce nationally. I understand the frustration of the right hon. Member for Exeter (Mr Bradshaw), whose successor not only did not bother seeing his proposal through, but actually got the knife out and cut it. Revoking an order that has already been signed is quite a big step. Listening to him and others, I was reminded of the episode of “Yes Minister” in which Jim Hacker goes to talk to his previous opposite number to try to get the lowdown on an issue. There could be a role for minimum landing size. In the first instance, I want the negotiating team to focus on getting the deal right at European level. We should also recognise that just increasing the minimum landing size without changing net gears, for instance, might be counter-productive, and we could end up with more discards, which is something we want to avoid. Finally, a minimum landing size does not deal with the problem of mortality caused by pair trawling taking place in spawning areas. That typically affects larger fish, but it can be particularly damaging.

A number of hon. Members mentioned the report the Centre for Environment, Fisheries and Aquaculture Science carried out in 2012, which was commissioned by my predecessor, my hon. Friend the Member for Newbury (Richard Benyon). Internally, it was dubbed the Benyon report. I can assure hon. Members that there is no conspiracy—it is not being hidden, and it has already been shared with the Angling Trust and other stakeholders. In the light of the comments made by a number of hon. Members, I will make sure we lodge the report in the House of Commons Library after the debate so that all hon. Members can see it.

[George Hollingbery]

May I just confirm that the Minister is talking not about the sea angling report, but about the report into the study of minimum landing size?

[George Eustice]

It was the CEFAS report of 2012, which was commissioned by my hon. Friend the Member for Newbury, which we will put in the Library. That report concluded that a minimum landing size increase applied at European level could have quite a big impact, but pointed out that, because a lot of fishing mortality is caused by foreign vessels in UK waters, a unilateral, UK-only minimum landing size would not necessarily have the desired effect.

[Mr Bradshaw]

I urge the Minister, in the last couple of minutes, to discuss the designation of bass as a recreational species.

[George Eustice]

I was going to try to cover some of the other points.

First, on the value of recreational angling, I should declare an interest, because my brother fishes bass in Cornwall and regularly lobbies me on bass stocks. Recreational angling has a significant economic value. At the end of last week, I met Charles Clover, the chairman of the Blue Marine Foundation, to discuss its latest report, and we recognise the value of that. What I am sceptical of, though, is having an outright ban on commercial fishing sectors, as has been trialled in Ireland. Anecdotally, there are quite a lot of reports of by-catch in Ireland and of bass having to be discarded because they are a by-catch of other fisheries. Ireland has found that, in the absence of a wider European agreement, just having a total ban on commercial fishing has not been effective.

My hon. Friend the Member for Harwich and North Essex (Mr Jenkin) talked about me facing down legal advice. I can say that, on this issue, unlike on many other issues in DEFRA, where there is frequently legal advice about European law, I have not come across any particular legal advice that is an obstacle. This issue is much more about the best way to deliver the outcome we want, and although there are difficulties and frustrations in negotiating such outcomes at a European level, we can start by having effective measures at that level, which we can then supplement with our own national measures, and I intend to do both those things.

In the 10 seconds I have left, let me say that we should recognise the role that IFCAs can play. Many already implement their own measures to protect bass. Finally, I will be going to Europe and to the Fisheries Council to get the best deal we can.

UK and Gibraltar Prosecuting Authorities

Wednesday 3rd December 2014 Westminster Hall

10:59

[Robert Neill (Bromley and Chislehurst) (Con)]

It is a pleasure to serve under your chairmanship today, Mr Crausby, and to have this important and very topical debate on the relationship between the UK and the British overseas territory of Gibraltar on prosecution and law enforcement matters. I refer at the outset to my relevant interests in the Register of Members’ Financial Interests.

As many Members will know, Gibraltar is a fully self-governing and self-funding British overseas territory. It adheres entirely to the British system and rule of law, and it is the contention of this debate and worth restating that it meets the highest United Kingdom and international standards in all respects. It is a small country, but it is proud to be British. Part of that British heritage is its strong legal system, entirely based upon our own common law.

[Bob Stewart (Beckenham) (Con)]

I thank my very hon. Friend for giving way. I want to reinforce his point by saying that not only is the legal system very good indeed, but the police and defence forces are outstanding. I speak from personal experience, having worked with them.

[Robert Neill]

I am most grateful to my hon. Friend for making that point, particularly given his experience in that sphere. It certainly coincides entirely with my own.

As well as having a strong economy with growth that most places would envy, Gibraltar has a robust and independent legal system, a thriving legal community, a strong and independent judiciary, as well as an excellent police force, organised and trained to the highest British standards, and associated law enforcement agencies. It has, in particular, a robust prosecution service presided over by the highly experienced and very well regarded Attorney General, Ricky Rhoda, and supported by a team of Crown Counsel who meet the same high standards as would be found in any prosecution department in the United Kingdom. I have had the pleasure on more than one occasion of meeting the senior Crown Counsel, the Attorney General and senior members of the judiciary.

It is against that background that on my last visit to Gibraltar, I was struck by the genuine sense of outrage felt by Gibraltarian citizens at every level that I met, from members of Government through to legal practitioners, down to shopkeepers and the taxi driver who took me up to the Rock hotel one evening—once he found out I was an MP—at comments made in this House, I regret to say, on 30 October by the right hon. Member for Leicester East (Keith Vaz). I am glad to see him in his place. I notified him of my intention to refer to his comments in this debate. They were ill-founded, they have done damage to Gibraltar wrongly and needlessly, and this is a chance to set the record straight.

[Dame Angela Watkinson (Hornchurch and Upminster) (Con)]

I should mention that I am a member of the parliamentary group on Gibraltar. As my hon. Friend will know, Gibraltar is already suffering from gratuitous harassment by the Spanish Government at its border. When this news became public, it gave the Spanish Government another excuse to attack Gibraltar, as it has done in its media. That is having a very serious effect on Gibraltar’s reputation. It is entirely unfair and as we all know, Gibraltar is fiercely loyal to the United Kingdom.

[Robert Neill]

Sadly, my hon. Friend is right. I have seen some of the coverage in the Spanish press. It is gratuitous. Unfortunately, the comments, whatever the intention in making them, have been used to fuel the antagonism that some in the Spanish governing party and other parts of the media feel towards Gibraltar. It is worth saying that, precisely because Gibraltar is a small country with a difficult neighbour, an insult to Gibraltar is felt very personally, even by everyday Gibraltarians. It is not just a matter of Government circles; Gibraltarians feel this individually because every one of them sees the consequence of what happens when misleading information is used against them by their neighbours. For that reason, this debate is important, and it is worth setting out why.

The remarks made by the right hon. Member for Leicester East were in the context of a comment about drugs policy and money laundering. I am grateful to the right hon. Gentleman for having shown me a letter that he subsequently sent to the Chief Minister, who raised his concerns with the right hon. Gentleman, and I place that on the record. However, the reality is this: the inevitable innuendo in the comments made was that there was a particular issue with Gibraltar and drugs money and money laundering. That is wholly unjustified and untrue, and it is unsupported by any evidence of any kind. In every jurisdiction, we all have to be alert to the issues arising from organised crime, drugs and money laundering. The UK is, and so is Gibraltar, to exactly the same standards as the United Kingdom.

It is worth setting out in some detail, as briefly as I may, the work that Gibraltar has done in this field.

[Keith Vaz (Leicester East) (Lab)]

I am grateful to the hon. Gentleman for giving way and for informing me that he was going to raise these comments. This debate seems to be all about the five words that I spoke in the Chamber. As he knows, I wrote to the Chief Minister and I accepted his assurances that Gibraltar’s financial services were absolutely robust. I pointed out that in my speech I made it very clear that there was no criticism of the people or Government of Gibraltar. If he is now reassuring me again in the House that there is no question of any impropriety of any kind, of course we accept that assurance.

[Robert Neill]

I am very grateful to the right hon. Gentleman for making those comments. More important, I hope the people of Gibraltar will be grateful, because unfortunately, once words are said, even perhaps in an uncharacteristically loose manner, much harm is done in this particular context. I not only want to put that on record in the House, but I know that my hon. and learned Friend the Solicitor-General will be able to state the position of the British Government in relation to those matters.

I think the position is this: unfortunately, the comments that the right hon. Gentleman referred to were made on the Floor of the Chamber of this House. They were recorded in Hansard and I am grateful to him for coming along today and withdrawing those comments, again, on the Floor of this House, sitting in Westminster Hall, and on the record in Hansard. That is hugely important to the people of Gibraltar and I am grateful to him for having done that.

Let me set out why that retraction is so important. Gibraltar, throughout recent times, has been fully compliant with all its international obligations. All relevant EU regulations that apply to Gibraltar and all EU directives are transposed into law by Gibraltar’s Parliament. That includes all EU measures on financial supervision and regulation, direct taxation and the fight against money laundering.

Gibraltar has been actively engaged with the OECD on exchange of information arrangements. The OECD and Council of Europe convention on mutual administrative assistance in tax matters has been extended to Gibraltar, and in consequence of a raft of measures, Gibraltar has now, pursuant to various agreements and the convention, exchange of information agreements to the OECD standard with some 77 countries and territories around the world. It has received a glowing review from the OECD on its record of exchange of information. Its overall compliance ratings are in exactly the same league as this country’s and Germany’s. I hope that gives a proper sense of perspective as to the seriousness with which Gibraltar takes these issues.

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

I congratulate the hon. Gentleman on securing this debate. With the comments of the right hon. Member for Leicester East (Keith Vaz), it will put on the record the truth of the situation concerning Gibraltar. Does my hon. Friend accept that there is no real evidence from the UK or other EU member states, apart from Spain, which raises its voice from time to time on various issues, of complaints about the way in which the regulatory regime operates in Gibraltar on money laundering or otherwise?

[Robert Neill]

The right hon. Gentleman is absolutely right. Independent monitoring reports state specifically that there have been no instances of failure by Gibraltar to co-operate with any requests by any member organisation. He is totally on the money as far as that is concerned. Gibraltar behaves to exactly the same standards as the United Kingdom. We should be proud of it and congratulate it on that.

It is worth pointing out that Gibraltar has signed the Foreign Account Tax Compliance Act intergovernmental agreement with the UK and the United States on a commitment to common reporting standards and automatic exchange of information. That now extends to 50 countries, with a further 30 in the process of joining it. Gibraltar has applied the EU savings directive since 2005. Its regulatory law enforcement and intelligence authorities, as my hon. Friend the hon. Member for Beckenham (Bob Stewart) pointed out, work hand in glove with the United Kingdom and other international counterparts in the detection and prevention of crime. Despite the tensions across the border, the Royal Gibraltar police work effectively and well with their counterparts in the Guardia Civil, notwithstanding political interference from time to time from Madrid, and they should be commended for that.

Gibraltar has draconian all-crimes anti-money laundering legislation, systems and administrative practices in place, all of which comply with EU legislation and operate in exactly the same way as in the UK. Its systems have been tested with independent reviews by the Financial Action Task Force, the International Monetary Fund and others, and have been found to comply, not just in theory, but in practice. The Financial Action Task Force recently revised its 40 anti-money laundering principles and Gibraltar is taking those on board and updating its arrangements in the fight against crime in the same way as the United Kingdom. In other words, it meets exactly the same standards in every regard.

[Keith Vaz]

The hon. Gentleman is giving the Chamber a robust account of the prosecution system. Can he confirm that there have been no prosecutions for money laundering in Gibraltar?

[Robert Neill]

That is my understanding, but my hon. and learned Friend the Solicitor-General will be able to deal specifically with that. The fact that we have been successful in such matters is precisely because of the very good arrangements and regulatory systems in place in Gibraltar. It is totally right that we should be alert to the risk of crime, but when good preventative mechanisms are in place and prevent crimes from coming to fruition that is a plus point and we should congratulate Gibraltar on that.

[Dame Angela Watkinson]

Was it not the late right hon. Robin Cook, when Foreign Secretary, who was quoted as saying that Gibraltar was

“the benchmark jurisdiction in terms of legislative and regulatory standards in the fight against money-laundering”?

[Robert Neill]

That is exactly what the then Foreign Secretary said, and I believe the right hon. Member for Leicester East may have been a member of the same Government. Robin Cook was right, and his comment summarises the matter.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

I regularly meet Gibraltar Ministers through the Commonwealth Parliamentary Association and other bodies, and they are always telling me about the robust steps that they have taken in partnership with the UK and Spain to ensure that Gibraltar has the highest standards. Is that the hon. Gentleman’s experience in his conversations with Ministers from Gibraltar?

[Robert Neill]

That is my experience of conversations with Ministers in Gibraltar. It is my experience of conversations with our embassy in Madrid. It is also my experience of conversations with police officers and the senior judiciary in Gibraltar and the senior Crown Counsel and his Department in Gibraltar. It is certainly my experience of conversations with the excellent Attorney General, Ricky Rhoda. All the evidence is clear in such matters. That is a further indication of the permanent and long-running co-operation with the Chief Minister of Gibraltar, the hon. Fabian Picardo QC, who is in London at the moment for a meeting of the Joint Ministerial Council of Overseas Territories. Gibraltar works closely with the UK at every level and to the highest standards, and it moves swiftly.

To allow my hon. and learned Friend the Solicitor-General to respond, I will make my final point. No sooner had this House opted back into some European justice issues, from which we had had an opt-out—the justice and home affairs area—on 1 December, the Government of Gibraltar published a series of regulations to give effect to the same principles and arrangements as those that the UK has now opted into. It could not have moved more swiftly to ensure that it met exactly the same standards as the UK on police, criminal and judicial co-operation, including important matters such as exchange of intelligence and information, mutual recognition of criminal freezing orders, asset recovery confiscation orders and financial penalties. I hope that my hon. and learned Friend the Solicitor-General, who I am delighted to see here today and who is highly experienced in such matters, will be able to confirm that.

I am grateful to the right hon. Member for Leicester East for accepting on the record in this House that any allegations and slurs against Gibraltar were utterly baseless. The people of Gibraltar are entitled to an apology and a correction, and I hope that we have been able to achieve that in this debate and that the Solicitor-General will be able to set out the Government’s position on the excellent co-operation between our two jurisdictions.

11:16

[The Solicitor-General (Mr Robert Buckland)]

It is a pleasure, Mr Crausby, to serve under your chairmanship. I thank my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) for securing this debate at a timely moment, when the Joint Ministerial Council is meeting here in London and the Chief Minister of Gibraltar and those of other British overseas territories are with us. It is timely indeed, because it gives all Members of this House and all parties in this House an opportunity to reaffirm our strong support and commitment to Gibraltar and its work, not just in co-operation with the United Kingdom but with other territories and countries, in helping to fight international crime.

[Ian Paisley (North Antrim) (DUP)]

Will the Solicitor-General take it upon himself at the end of the debate to let the Chief Minister know of the unwavering support throughout this House and that it stands shoulder to shoulder with the people of Gibraltar?

[The Solicitor-General]

I am happy to accept the hon. Gentleman’s exhortation. I hope to see the Chief Minister at the Foreign Office later today and I will convey the message of this House loud and clear that we support the work of our friends in Gibraltar and the prosecutorial authorities and indeed the Attorney General, Ricky Rhoda.

I can contribute to this debate by outlining the work of the Crown Prosecution Service and Serious Fraud Office, both of which the Attorney-General and I superintend in our role as Law Officers. Indeed, I am pleased to be able to tell my hon. Friend that the working relationship between the UK and Gibraltarian prosecuting authorities is strong and constructive.

As my hon. Friend recognises, the Government have set out to reinvigorate our relationship with the overseas territories, to increase the UK’s engagement with their Governments at all levels and to support them when required. I have just returned from a conference of Attorneys General of 10 of the UK’s overseas territories, including Gibraltar, with representatives from the United States and Canadian Departments of Justice. We met in Miami and discussed a range of topics relating to the rule of law and administration of justice in the overseas territories and sought to enhance our mutual co-operation on a range of matters. After three and a half days of discussion, my firm view is that the Attorneys General of each of our territories play a key role in helping to drive forward legal reform and to meet our wider ambitions.

Ensuring good governance and respect for the rule of law is a fundamental and vital platform for delivering security and prosperity for all our citizens. During the conference we discussed important topics including mutual legal assistance, extradition procedures, tackling bribery, fraud and corruption, improving legislative drafting processes, child safeguarding—a growing and important issue in many territories—and constitutional matters. A series of actions on those subjects was agreed, and I look forward to continuing our close liaison with the Attorney General of Gibraltar and the other overseas territories as we work to deliver them.

I turn to the work of the prosecuting authorities, starting with the Crown Prosecution Service. It is important to note that co-operation between the UK and Gibraltar is not confined to mutual legal assistance through the formal letter of request process. It also takes place, as my hon. Friend suggested, on a police-to-police basis. The appropriate avenue will depend on the nature of the request and the purpose for which the information or evidence is sought. Both the Crown Prosecution Service and the Serious Fraud Office work regularly with other judicial authorities using the established MLA channels. That is how countries request and provide assistance in obtaining evidence that is located in one country for use in criminal investigations and prosecutions in another. It is also used to obtain assistance in the tracing, restraint and confiscation of the proceeds of crime, which is particularly germane to the issues that have been raised today.

Letters of request from Gibraltar to the UK typically come via the United Kingdom central authority, which is based in the Home Office. The CPS will be involved in requests to restrain or confiscate assets here in the UK. The CPS and the SFO have worked with the Gibraltarian authorities in the past few years, and that has been of real benefit to both jurisdictions.

[Bob Stewart]

Is my hon. and learned Friend saying that to all intents and purposes, that which is legal in this country is legal in Gibraltar, and that which is illegal in Gibraltar is illegal in this country, too?

[The Solicitor-General]

That is a fair way of putting it. As my hon. Friend the Member for Bromley and Chislehurst has said, we will be entering into the justice and home affairs measures on 1 December, and Gibraltar has taken swift action to do likewise—to follow in lockstep with the UK. Those extra safeguards and means of mutual co-operation strengthen the ties that bind us.

I am sure that my hon. Friend will understand that it would not be appropriate for me to give specific examples because of the international expectation that MLA requests remain confidential. However, I can talk about some notable recent successes of the CPS, such as the securing of two convictions against individuals for fraudulently obtaining moneys from a vulnerable elderly relative. Assistance from Gibraltar helped to secure that conviction, and there was lawyer-to-lawyer contact to progress the case. I would like to mention some other examples of ongoing casework, ranging from organised crime—specifically drug trafficking—to fraud and identity theft. CPS lawyers have reported receiving exceptional assistance from Gibraltar, including a response to a request that was issued at very short notice following a change in position from the defence. In another case, a letter of request was sent to obtain banking evidence, and there were no problems with obtaining the material from Gibraltar.

[Keith Vaz]

That is very useful information, particularly in respect of the inquiries being undertaken by the Home Affairs Committee. Is the Solicitor-General telling the Chamber that there are no examples of people being prosecuted for money laundering in Gibraltar, either relating to drugs money—that is the main interest of the Select Committee—or otherwise?

[The Solicitor-General]

We are not aware of any prosecutions, but I will look into the matter further to give the right hon. Gentleman cast-iron information. I will write to him, if I may, on that point. I am grateful to him for helping to reinforce the consensus that exists in the House about the good criminal prosecution and investigation work that goes on in Gibraltar.

[Robert Neill]

Following on from that point, perhaps my hon. and learned Friend will confirm my own experience at the Bar, that very often jurisdiction as to where a prosecution takes place is but a small part of the bigger picture. Frequently, assistance given by authorities in one jurisdiction may lead to prosecutions elsewhere. The important test, with which Gibraltar completely complies, is the prevention of crime and the capture of criminals.

[The Solicitor-General]

My hon. Friend is absolutely right. The delicate network of interlocking mutual legal assistance is vital if we are to have a truly international approach to the fight against crime, which nowadays often exists in many jurisdictions and crosses many boundaries.

[Thomas Docherty]

Two specific allegations could be levelled against Gibraltar. The first is that it is a soft touch on the physical bringing of drugs into its ports; and the second is that it is a soft touch on the financial services-based introduction of laundered money. Will the Solicitor-General confirm, for the record, that Gibraltar’s ports are as safe as, if not safer than, UK ports and that its financial arrangements are as robust as those of the United Kingdom?

[The Solicitor-General]

I am grateful to the hon. Gentleman for giving me the opportunity, on behalf of Her Majesty’s Government, to provide those assurances and to send the message clearly to Madrid that it is wrong to seek opportunities to tarnish Gibraltar’s reputation, particularly in relation to money laundering and drug smuggling. Gibraltar works unceasingly and tirelessly to address those allegations. This debate is a great opportunity for us to set the record straight.

In the time that I have remaining, I would like to talk briefly about the SFO. Like the CPS, the SFO normally works through MLA channels, but it also uses informal liaison. The international assistance team in the SFO considers the execution of matters that have arisen from Gibraltar, and the SFO also regularly makes MLA requests. I am pleased to report that liaison between the SFO and the Gibraltarian authorities is very good. The SFO has worked with the Gibraltarian authorities on several occasions in the last few years. It is a matter of record that the First Minister of Gibraltar gave evidence for the prosecution in an SFO case relating to GP Noble in 2011 and 2012. The SFO has also provided expert assistance and support to the Gibraltarian authorities in respect of operational procedure and best practice. For example, the SFO graphics team met the Royal Gibraltar police to discuss a number of issues, including the presentation of evidence at court.

As my hon. Friend the Member for Bromley and Chislehurst set out, Gibraltar has signed up to several international obligations, which put it high in international standings. We are assured that the anti-money laundering legislation in Gibraltar is in full compliance with its EU obligations and that it has been independently reviewed by the Financial Action Task Force, the International Monetary Fund and others. Gibraltar is well advanced on meeting its Financial Action Task Force recommendations and preparing for the fourth money laundering directive. Notably, Gibraltar has entered into the equivalent of 125 tax information exchange agreements, and it is committed to automatic tax exchange with the UK, the USA and some 90 other countries via the common reporting standard, which my hon. Friend referred to. In addition, the Gibraltar Financial Intelligence Unit, which is responsible for, among other things, the receiving and actioning of suspicious transaction reports, is a member of the international Egmont group and shares information systematically with members of the group around the world. Those examples further demonstrate how Gibraltar’s regulatory, law enforcement and intelligence authorities work hand in glove with their UK and international counterparts in the detection and prevention of crime.

I hope that the debate has made it crystal clear, both to my hon. Friend and other hon. Members, and to the wider world, that there is a strong, constructive and ongoing working relationship between the prosecution authorities in this country and in Gibraltar. It should be obvious from the summary I have provided that that co-operation spans both formal and informal channels, and that it includes joint working on casework and promoting best practice. As I mentioned at the outset, the Attorney-General and I are clear in our support for our counterparts and their teams in all the overseas territories, which very much includes Gibraltar. They play a central role in driving legal reform and upholding the rule of law, and we are pleased to be able to offer them our full support in that regard.

11:29

Sitting suspended.

Youth Service Provision

Wednesday 3rd December 2014 Westminster Hall

[Mr Philip Davies in the Chair]

14:30

[Alex Cunningham (Stockton North) (Lab)]

It is a pleasure to serve under your chairmanship yet again, Mr Davies. I say in opening that I am rather disappointed; when I look round the Chamber, I see that we have Opposition Members who are interested in youth services, but we have only the Minister to reply on behalf of the Government. It is very disappointing, but even so, I am grateful to be granted the opportunity to raise some of these issues today.

As hon. Members know, there is a crisis in youth services, which have suffered cuts of around £260 million since 2010. There was nothing today in the Chancellor’s autumn statement to cheer up our young people at all. Link that to the ditching of the education maintenance allowance and the access to learning fund, the virtual collapse of careers advice delegated to schools without the necessary resources, and the pittance that local authorities have to pay out from the student opportunity fund, and we can see that young people are getting a very poor deal from this Government.

We are all aware of the spending cuts that local authorities are being forced to make as a result of reduced funding from central Government. That is being felt acutely in areas such as the north-east of England, where 11 out of 12 councils will experience higher than average reductions in spending power for 2014-15, along with a 5% funding reduction compared with 2013-14. To be clear, in pounds per dwelling, that is 10 times higher than cuts in the south-east, and almost four times higher in percentage terms. Across the country, this is devastating service provision and the ability of councils to meet the needs of residents, whether in the form of road maintenance, care and support services for the elderly or the provision of sporting and recreational facilities for the young. Nowhere has been left untouched.

One area particularly hard hit by the attacks on spending is youth services. Despite those services being among the most important that local authorities provide, and ignoring the long-term nature of the impact, levels of provision for young people across the UK have suffered horrendously under the coalition. To be clear from the outset, the Government’s policies have seen young people, just like women, shoulder a disproportionate share of austerity and its worst effects.

Youth services have been hit by funding cuts of £60 million since 2012. Some 73% of local authorities have reported being forced to reduce youth service spending during that time because of central Government cuts, resulting in the loss of hundreds of youth centres and thousands of youth workers across the country. I know that view is recognised by the former children’s Minister, the hon. Member for East Worthing and Shoreham (Tim Loughton), who said:

“Because they don’t have to statutorily provide youth services they”—

the councils—

“have too often been at the top of the queue when cuts come along”.

However, that is just part of a trend that started when the coalition came to power.

Over that longer term, 93% of respondents to a Unison survey said that their local authority had cut youth service spending since 2010, with youth service spending down by £62 million in 2010-11 and £137 million in 2011-12. Overall, that adds up to cuts of £259 million since 2010, with some local authorities having to slash spending by over half to meet their costs.

[Kate Green (Stretford and Urmston) (Lab)]

I congratulate my hon. Friend on securing this afternoon’s debate, and I apologise for the fact that I will not be able to stay for the entire debate. He paints a rather rosier picture, perhaps because he is talking about two or three years ago, than is the case today. My local authority of Trafford is now proposing that we would have no spending on the youth service at all from next year.

[Alex Cunningham]

I am grateful to my hon. Friend for that intervention. That is frightful, and as I develop my speech this afternoon, I will refer to some of the consequences of losing youth services altogether.

The Government have established a maze of inefficient and underperforming nationally controlled programmes that duplicate services locally. There are around 40 national schemes and services delivered by 10 different Departments and agencies, leaving councils little, if any, influence to co-ordinate, target and scrutinise the shifting market of publicly funded provision and hindering their ability to plan where best to invest their own support.

Over the summer, I visited one of the schemes, the National Citizen Service, and met some lovely young people. I was impressed by the efforts and intentions, but the fact remains that these schemes have failed to fill the gap that cuts to youth services have created. To make matters worse, the NCS costs £1,200 per head for a six-week volunteering programme, whereas a similar scheme in Germany is able to fund a whole year’s work-based volunteering for the same cost.

[Bill Esterson (Sefton Central) (Lab)]

Like my hon. Friend, I have met the people running the NCS, and I think the work that they do is very good. However, would he agree that one of the big problems with the NCS is that it does not happen week in, week out, all year round? What we really need are youth service workers working with young people every day of the year, because that is where the real difference is and where the real impact is made.

[Alex Cunningham]

My hon. Friend is correct. I will not take anything away from the NCS; I think it is a tremendous and very effective programme. The young people whom I spoke to were really enjoying it and they told me that they were learning tremendous things, but as my hon. Friend said, it does not address year-round provision. It is six weeks, then there is a cliff edge and the provision ends.

The loss of specialist staff and locally tailored services should worry us all in that context. Young people want and need to be able to socialise in a safe and secure environment, but they also need specific professional support in many areas of their life, yet the Government measures forced on local authorities will leave many young people with nowhere to go but street corners. What my hon. Friend the Member for Stretford and Urmston (Kate Green) mentioned is probably an example of that. It does not just risk encouraging antisocial behaviour; more importantly, it will leave young people in very vulnerable situations and potentially victims of who knows what as they spend their time on the streets.

[Paul Blomfield (Sheffield Central) (Lab)]

My hon. Friend is outlining some consequences for socialisation and for the benefits of engaging young people in constructive behaviour. Does he agree—this is on the basis of my discussion with youth workers in Sheffield—that there is an even more significant loss related to youth provision during school holidays, because youth workers have said to me, “Frankly, if people do not engage in these schemes and these schemes are threatened, they will not eat that day”? Is the provision of food within these activities not a serious dimension of this problem that we ought to consider?

[Alex Cunningham]

Most certainly, because a lot of these programmes are aimed specifically at young people from deprived backgrounds who may not have access to the theme parks and holiday experiences that are enjoyed by other young people. It is all the more important that the service provision is there—and that they can eat there. When I went to the NCS in Stockton, they were doing some cooking. I did not care for the famous Parmo pork, with cheese spread over the top, and the pizzas that they made, but they were actually doing something. People said, “It is not very healthy food,” but at least they were eating, and we need to make sure that young people can eat along the way as well.

In many poorer communities, youth clubs and similar facilities are the only service available to young people and provide opportunities to learn new skills and channel their energies productively, but youth centres are so much more than simply a hangout place for young people. Yes, that is one element of the function they serve, and a very welcome one, but well-managed youth centres serve a dual purpose that will now be missed.

That open-access provision is a gateway to early intervention, reaching out to vulnerable youngsters who might otherwise be missed by other services or whose needs might escalate before they are picked up by targeted services. These open-access services are often more appropriate than targeted interventions when it comes to improving outcomes for young people. However, the large numbers of young people at risk of falling through the cracks in provision will not become evident for perhaps five or 10 years, by which time it will be too late.

Stockton-on-Tees borough council, which is responsible for youth services within my constituency, has seen the number of youth centres halved to just 12. That said, through much hard work, I understand that they have succeeded in attracting greater numbers of young people and on a more frequent basis. I take my hat off to them; that is very positive. However, in outlying areas, where provision for young people is generally poorest, the loss of somewhere to go that is close to home is a real problem for communities.

Across the country, the remaining youth provision is provided by youth workers who are thinly spread, overworked and, consequently, less able to fulfil their roles effectively. There is an obvious detriment to the services that they provide and to the young people with whom they work. Although local authorities are limiting the extent of cuts in youth service spending as best they can, that has largely been achieved by reducing the numbers of professional youth workers with the important JNC—Joint Negotiating Committee for Youth and Community Workers—qualification and the skills that come with that.

Again, the context is crucial. In the same two-year period that has seen the number of youth centres dwindle, 2,000 valuable skilled youth workers have been lost from the system. The Unison report highlighted the fact that, as a result, 41,000 youth service places for young people have disappeared, meaning that 35,000 hours of outreach have vanished from youth service provision. That loss is particularly concerning because by building relationships of trust and support with young people, specialist youth workers can actively engage with their communities and help young people to make their own informed decisions about their lives and develop confidence and resilience. In short, youth workers play a central role in supporting young people, yet their years of hard work are being dispensed with and the successes that they have worked hard to achieve are being jeopardised by scything Government cutbacks.

As if that was not bad enough, it has emerged that, as has often been the case under this Government, the impact of the cuts has been felt particularly hard in some of our most deprived communities. In such areas, youth services play an even more significant role: helping young people into work, avoiding and preventing substance abuse and tackling problems of antisocial behaviour and gang violence, as well as boosting community cohesion. However, the effects of austerity have been concentrated in those very communities. The education maintenance allowance has been removed, while support from the access to learning fund and the student opportunity fund has been cut. Housing benefit for the under-25s has been cut, tuition fees have trebled, making higher education more expensive than ever before, and careers services have been slashed. Those cuts are severely short-sighted and will add up to even greater problems as we move forward.

Let us take, for example, the careers service. At a sitting of the Select Committee on Education last week, Lorna Fitzjohn, Ofsted’s national director for further education and skills, reminded MPs that their assessment of the quality of careers advice in schools was that it was less than good in four out of five. It is no wonder: the Government dumped the careers service on schools—I acknowledge that they have the National Careers Service—but did not provide them with the funding that went with the responsibility. They were relying on the national service to offer additional guidance, but few young people have even heard of it.

There are some examples of very good practice, but in most cases, it is left to ill-equipped teachers to cobble something together and, if they have the right contacts, encourage a few employers to come in and chat to the young people. Association of Colleges research indicates that less than half of all colleges have reported that schools in their area are delivering the requirement to provide independent careers advice and guidance. Largely gone are the professional people who had the breadth of knowledge of different opportunities that provided the young with options best suited to their needs.

The Unison survey found that the majority of schools had reduced their careers advice and had no place for careers experts. Research by the university of Derby found that out of 144 local authorities, only 15 would maintain a substantial careers service. Ofsted’s promised review of careers guidance—that particular area of youth services—in 2015-16 cannot come soon enough.

In the current economic climate, which has seen unprecedented levels of youth unemployment and witnessed 1 million young people being out of work, education or training, there can be no doubt about the need for qualified youth workers, who are able to guide our young people into making the right choices for their lives and provide the support necessary for them to enter the work force. We cannot ignore the fact that young people are far more likely to be unemployed than those in older age groups, who are more likely to have experience on their side.

I am fortunate that Stockton borough council is very much a forward-thinking local authority. Its Youth Direction service is therefore geared to provide to young people across the borough a range of resources, including careers advice, business support and an array of targeted youth support projects, but it is the innovation that comes with that proactive provision that is particularly impressive. Working alongside the council’s antisocial behaviour team to carry out joint patrols in Billingham, the Youth Direction service is assisting with the targeting of identified hot spot areas and is actively contributing to reduced instances of antisocial behaviour according to police statistics.

[Bill Esterson]

My hon. Friend uses reducing antisocial behaviour as one of the very good examples of how youth work really does help as an intervention. Youth workers in my area—or former youth workers, to be more accurate, given that they are not employed any more—make the point to me that they are very often the one person in a young person’s life who is trusted and who gives them some kind of contact with authorities through which to address issues, whether it is antisocial behaviour, routes into employment or dealing with life in general. That one person makes all the difference to a young person’s life. They make a fantastic difference between success and failure later on as well.

[Alex Cunningham]

I am sure that that is very much the case, but it is not just about being the one person who may be trusted. I understand that youth workers are trusted more than teachers. Many young people look to a teacher for that sort of daily support and that level of guidance. I also see youth workers as almost being between the young person and the establishment, because they can be a champion for the young person in their community and with the other agencies. The point my hon. Friend raises is very important.

In Stockton, we are also going to have a patrol co-ordinator. The post, which will be advertised on Friday, will build on the work already being undertaken in Stockton and Billingham and will be the first ever joint antisocial behaviour and youth worker post in the country, so at least we are recruiting some youth workers, albeit only the odd one here and there.

Although a report from the National Audit Office concluded that, overall, councils have managed reductions well, 50% are none the less now at financial risk, while cuts to local government funding and services are jeopardising the Government’s professed ambitions for young people. Such an outcome not only is objectionable, but threatens to run counter to the duty on local authorities to secure access to a local offer. Introduced by the last Labour Government, that duty required all local authorities

“so far as reasonably practicable”

to provide all qualifying young people with access to

“sufficient educational leisure-time activities which are for the improvement of their well-being”.

In March 2012, the coalition confirmed that it would retain the duty and published streamlined guidance to accompany it, but that new guidance does not make clear the Government’s expectations for what a “good” or “sufficient” offer should look like. Instead, the guidance notes that local authorities are responsible for securing, so far as reasonably practicable,

“equality of access for all young people to the positive, preventative and early help they need to improve their well-being.”

Local authorities, however, face an enormous challenge in providing youth services while adapting to the sizeable budget constraints applied from Westminster. The large reduction in overall grant from central Government to local authorities and the cuts to early intervention grants mean that the sector faces a number of challenges. Despite research prepared for the Cabinet Office indicating that cuts to youth services in London were a factor in the riots experienced in the capital and other large cities in August 2011, the Government have refused to protect youth service budgets. Indeed, that report clearly states:

“Where young people described their normal lives as boring and talked about ‘nothing happening around here’, the riots were seen as an exciting event, a day like no other.”

On top of that, numerous young people are quoted as identifying boredom as a key driver of their involvement. With the riots taking place during the school holidays and with many youngsters having literally nothing better to do by way of structured activities, many resorted to joining in. If that point needed driving home, the report also notes that being otherwise occupied, whether through education, work, an apprenticeship or some other activity, was identified as a significant “tug” factor against “nudges” such as boredom.

Despite that alarming connection, statistics from the Local Government Association show that at least eight out of 10 heads of young people’s services said that they had faced more budget cuts since 2012. At the same time, two thirds of voluntary and community organisations providing youth services reported that they, too, had seen their income reduced in the previous 12 months. Although Churches and other voluntary groups have attempted to step into the breach that has been left by Government cuts, many simply do not have the resources to do so sustainably. Perhaps we need to go back to the expression “so far as reasonably practicable”. At least local authorities would be able to say that it is not reasonably practicable to deliver those services because the resources to enable them to do so no longer exist.

Before I ask the Minister some questions, I want to return to my home area. The Stockton youth assembly, known locally as the SYA, has been established to ensure that young people are consulted and their voices heard, and to help the council to work directly with young people to shape local services. The assembly provides a voice for young people aged 11 to 19, or up to 25 if they have a learning difficulty or a disability, and is made up of representatives from a wide range of existing youth voice forums. It holds a formal meeting every other month with an action-packed agenda. In between the formal meetings, the group have opportunities to engage in team building, positive activities and development sessions, which are provided by Youth Direction’s targeted youth support.

I remember well, when I was the chair of the Stockton Children’s Trust board, those same young people putting politicians, council, health, police and other professionals through their paces. They asked difficult questions, tried to force us to justify some of the changes that we were making at the time and encouraged us to do different things. That is the best of practice by a council that has been nominated countless times for council of the year and has, of course, won that award as well. From what I hear from around the country, not every local authority has been able to adapt to that extent to serve their young people—the example from Trafford comes to mind—and it is young people who pay the price for that.

I ask the Minister to carry out his own assessment of the impact of his Government’s cuts to youth services, and to pledge to become a champion for our young people and fight the Treasury for the resources that are required to start healing our youth services. Will he work with the Local Government Association to understand better the pressures it faces in delivering, in many cases, the most basic services for our young people? Will he help to fulfil his role of champion—the one that I have just given him—by better understanding young people’s need for the right advice and services from professional people? Will he further fulfil that role by working across Government to influence, among others, the Education Secretary to sort out the careers service? Equally importantly, will he help to ensure that the whole of Government works for our young people?

This is a well-worn cliché, but I will use it anyway. The young people of today are our future. They are the taxpayers of tomorrow and the people who will look after us. We need to give them more, and we need to give them a better start to help them to prepare for that responsibility.

14:53

[Kate Green (Stretford and Urmston) (Lab)]

I am grateful for the opportunity to contribute to this debate about a matter that is of huge concern to my constituency following the Trafford council budget proposals made a few weeks ago, which would result in the closure of all of our youth centres around the borough, leaving only the central Talkshop available for young people in Trafford. In a borough that has, as my hon. Friend the Member for Stockton North (Alex Cunningham) highlighted, some outlying geographical areas and quite high transport costs, it is unlikely that many young people in my constituency would be able to access the central Talkshop.

The concern extends well beyond my constituents, although many of them have written to me about it over the past few weeks. There is considerable pressure on MPs from all over the country to sign a recently tabled early-day motion, and at a recent meeting of the all-party group on poverty, young people challenged MPs from all political parties about the importance of the youth service. They received favourable responses from MPs from all political parties about how we value the youth service, and they told us that, frankly, we do not put our money where our mouth is. It deeply discredits us as politicians when we proclaim our belief in a service but we are unwilling to ensure that it is sustainably maintained and funded. Young people become disillusioned when they see that our promises of investment in them are only words.

In Trafford, we are not only concerned about the loss of youth centres, important though that is—some of them are extremely effective and popular in reaching out to the young people in their neighbourhood; as my hon. Friend said, we are also concerned about the loss of trained youth workers. There will also be a reduction in volunteering opportunities in those youth centres, and I am surprised that a Government who are so keen on volunteering should remove such opportunities, which are much valued in my constituency.

In Trafford, as in other communities, the voluntary sector has traditionally supplied a good proportion of youth provision. I believe that our local authority hopes that that sector will now do much more. Like my hon. Friend, I greatly value the youth work that is done by a range of non-governmental, non-statutory organisations in my borough. The problem is that if we leave such work entirely to voluntary and self-organising youth provision, the offer across the borough will not be strategic. Some areas may be quite well served, but other areas where need is higher may be rather poorly served. There may be some activities that offer lots of opportunities for young people, but other activities that young people want to take part in may not be available in our borough.

My hon. Friend made an important point about sustainability. Voluntary organisations are keen to do what they can to fill the gap in Trafford, but it is a big challenge for them to raise sustainable funding to enable them to make commitments beyond one or two years. For example, Redeeming Our Communities, which has recently begun operating in Partington in my constituency, is keen to look at what more it can do as the youth service in Trafford is degraded, but it has already made the point to me that it can do only as much as it can raise funding for. We must be mindful of the fact that a voluntary sector solution is not sustainable unless there is sustainable funding to allow such organisations to operate.

[Alex Cunningham]

One of the questions that perhaps I should have asked the Minister is whether he will do something to ring-fence and protect youth budgets. Even if Trafford had only a small amount, at least it could work with the voluntary sector to improve its chances of delivering provision in some of the more difficult areas.

[Kate Green]

Certainty would be valuable to those who want to provide youth services. I also make the point to the Minister that the availability of statutory funding has drawn in additional voluntary funding on top of the statutory funding that has hitherto underpinned our service. Lostock youth centre, for example, has been able to raise hundreds of thousands of pounds of voluntary money to top up the statutory support that it receives. Although some of that voluntary money may continue to reach our youth centres, we will lose the basic infrastructure that enables a trained team of youth workers to go out and seek such additional voluntary funding support. Even if voluntary funding were widely available, provision cannot exist in a vacuum, without an underpinning of statutory financial support.

I am concerned that there is a real mismatch between the degrading of our youth services and the other strategic ambitions of local authorities and the Government for our young people: priorities such as reducing crime and antisocial behaviour, making young people feel safe, ensuring their emotional well-being and ensuring that they achieve, attain and have aspirations. In the context of considerable attention being given to the risk of sexual exploitation and abuse, there must be the highest provision in relation to safeguarding, and the youth service hitherto has been an important element of providing such protection to potentially vulnerable young people. As I am sure the Minister will understand, we are deeply concerned about that in the Greater Manchester area. The youth service in Trafford has been actively engaged in that area, and it is well informed about the young people who are at risk. I am concerned that such knowledge and intelligence may be lost.

Everyone recognises the financial pressures that our local authorities are under, but it is very short-sighted simply to slash youth provision. It is poor value for money because it will generate additional costs and pressures in other parts of the system in the years to come. I appreciate that the Minister will say that local authorities must exercise discretion locally and make their own decisions, but he has the opportunity today to offer certainty and stability so that we at least have the capacity for forward planning. I hope he will give us those assurances this afternoon.

15:00

[Julie Hilling (Bolton West) (Lab)]

I congratulate my hon. Friend the Member for Stockton North (Alex Cunningham) on securing this debate.

I must declare an interest: I am a youth worker. At least, when I had a proper job before I came to this place I spent almost all my professional life as a youth and community worker, working with young people in communities. A few of us in this place and a few more in the other place were youth and community workers, and we are all in absolute despair at what is happening to our services. I also chair the all-party group on youth affairs, so I try to keep my feet on the ground, although the situation is moving incredibly fast at the moment. Unfortunately, it is not changing for the better; services are being destroyed up and down the country—I will talk a little more about that later.

Let me start with something the Chancellor said in his autumn statement a few minutes ago:

“We have shown in this Parliament that we can deliver spending reductions without damaging front-line public services”.

I wish he were part of this debate so he could see how those budget cuts have totally destroyed front-line services —the youth service in particular.

Let me take hon. Members back to the start of the system. There was an early youth service at the end of the 19th century, when a number of voluntary organisations were set up to work with young people—in particular, those who faced difficulties in the streets and those who worked in the mills, in service and in other places. There were cuts to those services as the years went on, particularly in the 1950s. In 1958, Lady Albemarle produced a report that became the foundation of the modern youth service. The Education Act 1944 provided a statutory basis for the youth service. If hon. Members wonder why I am talking about 1958 and 1944, it is because we always link Acts backwards, and the Education and Inspections Act 2006 contains references to the 1944 Act—I was always confused about that. The 1944 Act set out that local authorities should procure a sufficient youth service.

Sadly, under the previous Tory Government in the 90s, our youth services started disappearing at a rate of knots. I always used to think that perhaps one day I would not be a youth worker, but I never thought that there would be an end of the youth service. In the 1990s, although I still wanted to be a youth worker, there were nearly no jobs left.

The previous Labour Government strengthened the legislation. Unfortunately, some of the first words in the 2006 Act are:

“must, so far as reasonably practicable”.

That is something I hope an incoming Labour Government will sort out. I plead with the Minister to talk to local authorities about what is “reasonably practicable”. If it is reasonably practicable for a local authority to provide library services, education and other services, surely it should still be providing youth services.

The 2006 Act called on local authorities to secure for qualifying young persons in the local authority area—13 to 19-year-olds and people with learning difficulties up to the age of 25—

“sufficient educational leisure-time activities which are for the improvement of their well-being, and sufficient facilities for such activities; and...sufficient recreational leisure-time activities which are for the improvement of their well-being, and sufficient facilities for such activities”.

It states that

“ ‘sufficient educational leisure-time activities’ which are for the improvement of the well-being of qualifying young persons in the authority’s area must include sufficient educational leisure-time activities which are for the improvement of their personal and social development.”

That was later defined to mean youth work.

The Act set out two forms of activity. Educational leisure-time activity aids young people’s social and personal development, and includes activities delivered by youth workers. Recreational leisure-time activities can include provision by youth workers, but it also includes sport, informal physical activities and cultural activities such as music, performing arts and visual arts.

The Government did not totally abandon that commitment. In a policy document on youth services, they reiterated:

“It is…local authorities’ duty to secure, so far as reasonably practicable, equality of access for all young people to the positive, preventative and early help they need to improve their well-being. This includes youth work and other services and activities that:…Connect young people with their communities, enabling them to belong and contribute to society, including through volunteering, and supporting them to have a voice in decisions which affect their lives;…offer young people opportunities in safe environments to take part in a wide range of sports, arts, music and other activities, through which they can develop a strong sense of belonging, socialise safely with their peers, enjoy social mixing, experience spending time with older people, and develop relationships with adults they trust;…support the personal and social development of young people through which they build the capabilities they need for learning, work, and the transition to adulthood…improve young people’s physical and mental health and emotional well-being;…help those young people at risk of dropping out…raise young people’s aspirations, build their resilience, and inform their decisions—and thereby reducing teenage pregnancy, risky behaviours such as substance misuse, and involvement in crime and anti-social behaviour.”

Sadly, the Government, through their devastating cuts, have failed absolutely to enable young people to access those services.

The previous Government’s document “Resourcing excellent youth services” states:

“the purpose of the work must be predominantly that of achieving outcomes related to young people’s personal and social development (as distinct from, say, their academic or vocational learning);…the methods of the work include the extensive use of experiential learning and of small groups (as distinct from, say, a prescribed curriculum and whole-class teaching or individual casework);…the values of the work include the voluntary engagement of young people with skilled adults. This relationship transforms what is possible for young people.”

[Alex Cunningham]

My hon. Friend is talking about how the youth service and youth workers have a very different role to play in supporting young people today. In schools today, there is tremendous pressure on young people. They have got to have their heads down, the curriculum is very tight and they must concentrate on academic subjects. That is all the more reason why they need somebody outside that environment to help them develop in other ways.

[Julie Hilling]

I agree. Anybody who has worked with young people knows that if their heads are not in the right place, they cannot learn. I used to manage a project for looked-after young people, who were put in small groups with qualitative professional workers to work through their issues. Sticking them in a classroom and trying to stuff their heads full of facts was not working. The facts were being kept out by the mess in their lives—they did not know what was going on in their lives and they did not have good relationships with adults. Providing that space did more than allow those young people to be themselves; it enabled them to learn, participate, take part, get ready for work and take up their role in the world. It fulfilled an important part of those young people’s development.

I shall quote from Choose Youth, an organisation that shows that the Government have done something right. They have brought together all the practitioners in the voluntary and statutory sectors in youth work—that was unknown in the past—in an organisation that seeks to defend and promote youth work. Choose Youth says:

“What is youth work and why is it important?...Youth work as a professional educational practice uniquely inspires, educates, empowers, takes the side of young people and amplifies their voice. Unlike other interventions with young people it combines these elements in a relationship that young people freely choose to make with their youth workers. From this relationship a curriculum of learning and activities is developed that build on the positive and enhance social and personal education.”

Youth work is sometimes a place, such as a centre. Sometimes it takes place on the streets, sometimes in projects—in arts or sports projects in a variety of settings. What is unique, however, is that it is, first, an informal relationship that young people can choose to be part of—they do not have to be part of it. Secondly, the relationship is based on their terms; the youth worker tries to find out what young people actually want and need, rather than what the youth worker, as an adult, thinks they want and need. There is, therefore, a voluntary relationship and the ability for young people to develop and to choose their own curriculum.

As a youth worker—I apologise to all the young people I worked with over the years for this—I never had a conversation that was truly about what they thought about “Brookside” the night before or what they did the weekend before, because all those conversations were fundamental starting points for exploring other issues. We would use soaps to talk about date rape, and we would use things that were going on to talk about drugs, sex or relationships. Yes, we would teach young people about condoms and how to have positive sexual relationships, but there was a whole mix when it came to working with young people.

[Lisa Nandy (Wigan) (Lab)]

I am listening with interest to what my hon. Friend is saying. In terms of the horrendous examples of child sexual exploitation we have seen across the country, with more surely to come over the next few years, does she agree that there is a reason why, in every serious case review we read, it is charities that have raised the alarm? They take the time and have the space to develop relationships with young people, exactly as she is outlining. That is why cutting these organisations, which are doing such important work, is so short-sighted.

[Julie Hilling]

I was going to talk about that issue, but I will pick it up now. If we look at the reports about Rotherham and Rochdale, we see it was youth workers who took the side of young people and started to raise issues. They said, “Things are not right here. These young people need to be listened to.” Indeed, they are perhaps the only professionals who come out well from those reports.

Youth work is also about challenging attitudes. It is not necessarily about taking the side of young people and deciding they are absolutely right, but about challenging their attitudes, their racism and their sexism. It is about challenging them to think about the world so that they do not just walk into the world and accept their place, but challenge the world as well. If they see injustice, they can challenge it by working together, not by rioting on the streets. Part of the legislation is that the voice of youth is central and that young people have a right to a voice.

[Bill Esterson]

I want to link what my hon. Friend the Member for Wigan (Lisa Nandy) said with something that my hon. Friend said earlier, based on her experience. Many of the young people involved in the trafficking were in children’s homes; my hon. Friend talked about her work with looked-after children. All too sadly, many children in care will end up in prison a few years on, costing £200,000 a year each, which is an horrendous sum. Given my hon. Friend’s experience, can she say how effective youth work has been over the years in keeping some of those young people from ending up in prison?

[Julie Hilling]

That is always hard to quantify, but the issue is important. Over the past few years, people have looked for integrated services, which is the right thing to do, but they have then tried to combine them in one role. Social workers working with young people in care have a vital role, but that adult who befriends young people and works with them on their terms, and who does not have to make sure that they are home by 9 o’clock at night, they have done their homework or they have eaten their greens, is also vital.

My hon. Friend is right that the cost of young people who enter the penal system is enormous, and I will come to the figures in a moment. We are spending about £100 per year per young person on youth work, compared with the hundreds of thousands of pounds we spend to keep people in the penal system because we could not spend a pittance on them before. It is estimated that if we spent £350 per year per young person, that would fund the proper youth service we are talking about.

Another issue the Government have led us to is working just with the young people who are most in need—those who are not in education, employment or training. Of course we need to work with those people, but the more cuts we make to the service that gathers most young people, the more people will fall to the bottom of the net and need a more specialist service to get them out. The youth service is a good vehicle for enabling all young people to have that same positive relationship.

Let us talk about some of the cuts. In 2010, Sheffield had 41 youth clubs; in 2013, that was down to 23. Since 2013, of course, there have been further cuts, and those cuts are continuing. In the north-west, Manchester disestablished its youth service. It is still putting £1.3 million into the voluntary sector, but that is now up for grabs, and it is likely to disappear. Oldham is getting rid of everything apart from one myplace centre. In Trafford, all provision is on the table to go completely, although a housing association might pick some up. In St Helens, there is a 77% cut, and it now has only 28 hours of delivery at the most.

In Lancashire, half the budget has gone, and it is now looking at further cuts. In Tameside, the budget is almost gone. In Stockport, it is gone. Sefton faces huge cuts. In Liverpool, the budget is gone. Bolton faces massive cuts. Wigan now faces an 80% cut. Cheshire West now has four professional youth workers—I am sure they know individually every one of the young people they are supposed to be working with. The one little bit of success is in Knowsley, where youth workers and young people have set up a project together and are running the services.

The picture across the country is devastating. The smallest cut is 50%. A lot of areas have cuts of 75%. Now, particularly in the period going forward, a lot of areas are cutting budgets completely. These authorities have a statutory duty to provide a service, and I will come back to that in a minute.

We are losing the professional expertise and the co-ordination across the piece. Even when there is money to go into the voluntary sector, there is nobody there to co-ordinate that spend. Indeed, I was told yesterday of a local authority that is now looking to the regional youth service unit to provide it with some infrastructure, because the local authority’s infrastructure has completely disappeared.

It is now difficult to ascertain what is left of many services. Some are youth and play, while some are just youth support services. The whole designated youth service budget has gone completely. What saved the Wigan youth service in the late ’80s was the fact that the local authority had to spend a percentage of its education budget on the youth service. We had a great influx of money, and we doubled the number of youth workers. Legislation is important, and it should be implemented.

If we ask people in a neighbourhood what they want, they say they want youth centres for young people to go to. They do not want young people hanging around on street corners with nothing to do; they want them to have positive relationships. In that respect, early-day motion 488 now has more than 100 signatures, and 38 Degrees—I agree with this 38 Degrees petition—is encouraging people to sign a petition.

One of the Minister’s predecessors did a survey of local authorities’ youth service spending. As far as I am aware, it has never come to light. Can the Minister enlighten us about what happened to it, or whether it exists? Certainly, Unison did freedom of information requests on some local authorities and discovered that at least 2,000 jobs had gone. Given that there were only 7,000 in the first place, that is an enormous percentage. Some 350 youth centres closed and 41,000 youth services places were lost. As has been mentioned, a place in the criminal justice system costs £200,000 per annum.

I quote again from the Choose Youth manifesto:

“Youth work contributes significantly to early intervention and preventative services thereby reducing the incidence of young people in need of highly targeted intensive and expensive services later on.

For example, the Audit Commission report into the benefits of sport and leisure activities in preventing anti-social behaviour by young people estimates that a young person in the criminal justice system costs the taxpayer over £200,000 by the age of 16. But one who is given support to stay out costs less than £50,000. Other comparative costs include: £1,300 per person for an electronically monitored curfew order. £35,000 per year to keep one young person in a young offender institution. £9,000 for the average resettlement package per young person after custody.”

Youth work is a cheap, efficient alternative to all those other intervention measures. The National Youth Agency used to be paid to collate a survey of spending on local authorities. It can no longer do that work because it is no longer paid to do it.

The youth service profession are qualified workers, not just people who turn up on a Friday night and decide that they will play with young people. A youth work qualification is equivalent to a teaching qualification. The qualification and training are as rigorous as those for other caring professions such as social work and teaching. Youth work is now a degree profession and youth workers are highly trained and qualified. They support volunteers in their work. For every pound spent, £8 comes back in action by volunteers. The work is cost-effective in all sorts of ways, but it is about professional service. Most of us would not want an unqualified teacher to be standing in front of a class and teaching. Most of us would not want an unqualified doctor to treat us or an unqualified nurse to deal with us. Why then should we accept unqualified youth workers working with young people?

[Alex Cunningham]

I am delighted that my hon. Friend is paying tribute to youth workers and their professionalism, in what is now a degree-entry profession. They do tremendous work, and for so little pay; it is not a well rewarded profession financially, although it is in other ways. Could my hon. Friend recommend it as a career choice in the current environment?

[Julie Hilling]

My hon. Friend makes an interesting point. I went to Huddersfield to talk to a group of students a couple of weeks ago, and asked them much the same question. They are still as dedicated and committed, and they may well get jobs, but not as youth workers, because the skills of youth workers and the methodology of youth work are wanted by many other professions. Really, however, we should hope that they can employ their core skills in working with young people.

Finally—I recognise I have gone on for rather a long time—it is a false economy to remove youth services, and to work with young people only when they are already in trouble or at risk of getting into trouble. The Minister needs to make local authorities live up to their statutory duties, and not just ignore the legislation that says there is a statutory basis for the youth service. Of course that needs strengthening and I hope that the next Labour Government will strengthen it. We have seen how easily an incoming Government can water down regulation. However, there is regulation and legislation. The Government should live up to their promise to young people and enforce the legislation to make sure that we have a sufficient youth service in every area of the country.

15:19

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

I apologise for being late for the debate. I was in the Chamber for the autumn statement, desperately bobbing up and down trying to be called, which took rather a long time. I am sorry to have missed the opening speech, and congratulate the hon. Member for Stockton North (Alex Cunningham) on securing the debate. It is a privilege and pleasure to follow the hon. Member for Bolton West (Julie Hilling), who knows an awful lot about the subject. I was interested in her speech, which was largely non-political, with the exception of some comments about cuts. I will say something about those in the context of my local authority.

I used to serve as a local councillor and I used to be—and still consider myself to be—a schoolteacher, so general issues to do with young people are of considerable interest to me. I am interested also because one of the local authorities in my constituency has made a significant change to youth services in recent years, from which I think we can learn a lot, and perhaps paint a slightly different picture from the doom and gloom scenario in many local authority areas. I was a councillor through a Labour Government, and year after year, youth services seemed to be cut or reduced, or become less significant. Even at a time of increasing local government expenditure, which happened in some years, it was a service that still seemed to come under the hammer for efficiency savings or cuts. Of course, there is variation in that from authority to authority.

We hear a lot about cuts to the youth service, and that was happening in North Lincolnshire until we came to office in 2011 when we took the council away from the control of the Labour group and made the political decision to increase the youth budget.

[Lisa Nandy]

Given the problems that the hon. Gentleman outlined about non-statutory services becoming poorer and less of a priority in times of trouble, does he support a statutory youth service?

[Andrew Percy]

I am open to debate on that. I do not have a particularly strong view one way or the other. Provision for young people is something that local authorities should just want to make, because it is part of their core function. If we have local democracy those decisions should be for local councillors, and if they do not choose to provide those services local people have the option of throwing them out. Young people can play an important role in that if more of them vote. I always say to young people that the reason they do not have a free bus pas when pensioners do can be seen from the turnout figures.

I have been painting a rosy picture up to now.

[Alex Cunningham]

rose—

[Andrew Percy]

I will give way to the hon. Gentleman. It is his debate, after all.

[Alex Cunningham]

If the hon. Gentleman is not in favour of youth services becoming a statutory responsibility of local authorities, does he accept that perhaps we need to make sure there is specific funding—an increase first, and then specific ring-fenced funding for the delivery of youth services in local authority areas?

[Andrew Percy]

I am always wary, Mr Davies—and as a fellow Yorkshireman I should have mentioned that it is a pleasure to serve under your chairmanship—of this place telling local authorities what they should or should not spend their budget on. I remember the Connexions budget, which was ring-fenced to local councils. It was ring-fenced funding for a couple of years, at which point it simply passed into the revenue budget of local authorities. The extra funding we got for Connexions, which we had to spend on it in the first year or two when it came from central Government, did not continue because it became part of our main revenue budget.

[Alex Cunningham]

I chaired a Connexions company across the whole of the Tees valley. That was not money vested in the local authority; it was vested in the Connexions company, which was there to deliver, and it had no other option but to spend the money on direct services.

[Andrew Percy]

I do not know what the situation was, but I remember in the city of Hull, when we had it, although there was pump-priming from central Government we eventually ended up picking up some of the expenditure on Connexions. [Interruption.] I will have to. If the hon. Gentleman wants to contact me afterwards we can try to sort it out. I was on the council for 10 years. There are many things I remember well and some I choose to forget. This is one that I remember; we debated it in the council chamber. I will happily be corrected afterwards.

On the hon. Gentleman’s broader point about whether we should be mandating how local councils spend their money, there are countless examples. Connexions may be an example of where that happened after funding was made available by the previous Government. Bus passes are another example of where local authorities got some money and were told that they had to provide something. The money from central Government disappears off and local authorities ended up having to absorb it in their revenue budget. My answer to his question is that I would be nervous. It is something that local authorities should choose to provide, and if they do not provide it, they can be held accountable at the next election.

[Bill Esterson]

Will the hon. Gentleman give way?

[Andrew Percy]

I came in late, so it would be rude of me not to give way.

[Bill Esterson]

The hon. Gentleman used the phrase “Government money disappears off,” which has certainly happened on a grand scale under this Government. Does he agree—this is the point Opposition Members have all been making—that investment in youth services prevents the costs of social failure, one way or another, especially preventing young people ending up in prison? Does he support the general principle of invest to save, quite apart from the benefits to young people?

[Andrew Percy]

I will not rehearse with the hon. Gentleman the reason why there are spending reductions for local government, which would have been implemented by whoever was in power. Let us not pretend that there is some sort of alternative nirvana in which local government budgets would be increasing. Regardless of who won the 2010 election, local government budgets would be reducing, so let us nail that myth.

I am rapidly trying to remember the hon. Gentleman’s question, which was on whether there is value in investment. I think there is value, but it can be provided in a number of ways. Indeed, who is providing such bespoke support, particularly to at-risk young people, varies between localities. There is no doubt, because the evidence is very clear, that if we intervene early on young people who are at risk of following certain pathways, we can prevent those outcomes—that is what we all want. I broadly agree with him, although how we provide it should not be mandated in one particular way.

That brings me neatly to North Lincolnshire council. We went through a painful process, because following the “Positive for Youth” Government guidance in July 2012, the local authority decided to consult young people on how it should provide its youth services. In so doing, the local authority spoke to 2,000 young people, who told us that the service they had been offered, which in many ways had not changed since the old Humberside youth service of 40 years earlier, was not necessarily delivering what they wanted it to deliver. That became controversial. Some youth workers did not like it, because different providers were brought in. Indeed, in the initial proposals there was a gap between what would happen to the core, traditional youth worker roles and the new provision. Questions were asked about whether we would lose something. Eventually, the local authority came to the sensible position of retaining a number of fully qualified youth workers in an outreach role across localities, and a range of other provisions was provided across various localities with an increased budget of £194,000, which is not insignificant for a small authority.

Young people told us that they did not necessarily want everything to be sport-related, which often happens with youth services and youth provision in the broader sense. People often think, “We’ll just put goalposts up and give kids a football, because that’s what they really want.” But that is not what a lot of young people want, so street dance is now being provided by a brilliant organisation called Street Beat. We have Grasp the Nettle, and we even have cooking classes. Of course, street sport is provided throughout the summer months, and indoor sports are provided in the winter months.

We have been able to base those activities in 20 centres across North Lincolnshire, including all the existing youth centres, which the council decided to retain and, in some cases, improve—the youth centre in Broughton in my constituency will shortly be moving. We now have new providers offering a range of services, including the Duke of Edinburgh award programme, in a number of new centres. There are new operators in places such as Winterton, Brigg, Epworth and Crowle. Attendance in Broughton has increased by 63% since youth services were provided in this different way, which was controversial in many respects, but the figures speak for themselves.

The local authority also talked to disabled young people about what they wanted. The responses were very interesting, because they wanted bespoke services for disabled young people to be part of the mix, but they wanted mainstream provision to apply to them, too. I pay tribute to Scunthorpe United, which does a great job of providing disabled youth services. I also pay tribute to Daisy Lincs, which is a great local charity headed by Julie Reed from Crowle. Daisy Lincs does a brilliant job with disabled young people.

I will now describe where we are at in my area and across North Lincolnshire. Before the changes, we used to have three sessions a week in Winterton; we now have five. We used to have eight sessions in Brigg; we now have nine. On the Isle of Axholme, which I represent, we used to have three sessions; we now have nine. The number of sessions increased by 49.5% between 2012-13 and 2013-14, and the attendances speak for themselves. There were 31,215 attendances in 2013-14 compared with 22,800 in 2012-13, so providing services in a different way and delivering them with extra funding has made a real difference. The biggest thing we found was that 85% to 90% of young people simply did not engage with the old youth service provision, which was working very well for a certain group of young people, but it was not working more broadly. It could be argued that some of the new provision, because it is based around themes such as street theatre, may not be picking up some of the important issues that the hon. Member for Bolton West so eloquently outlined. That is why outreach services are being retained.

We know that the picture is painful for many local authorities, but in North Lincolnshire, by putting in that extra money and providing services in a different way, based on what young people told us they want—there were some protests from youth workers—we have been able to deliver a positive change.

[Alex Cunningham]

The hon. Gentleman is giving the same message that Opposition Members would give. If more resources are put into the service, and if the service is modernised, better services can be delivered for more young people. Surely that is the message: we need more resources for youth work.

[Andrew Percy]

Local authorities may simply provide what they already spend, but we took the decision to reverse the cuts of the previous council administration. We put new money in, but we provided the services in a different way. If I had one criticism of my time as a local councillor and of my time working in this process, it is that some of those closest to the service do not necessarily always understand how society and young people have changed and how the provision needs to alter too. In my profession as a teacher, the pastoral support offered to young people now is very different from the support that was provided to young people even—when did I go to school?—10 or 20 years ago. The provision is very different, so schools pick up some of it, and there are other services, too. Nothing can exist in stasis. Money may be part of the answer, but we can do things differently. We can get positive outcomes even with a declining budget, which my other local authority faces because it made different decisions. The general message is that provision for young people is vital.

[Alex Cunningham]

It is not statutory.

[Andrew Percy]

I have already explained the answers to that one. I apologise once again for being late and will end there.

15:29

[Lisa Nandy (Wigan) (Lab)]

I congratulate my hon. Friend the Member for Stockton North (Alex Cunningham) on securing the debate and on his opening speech. He is right to situate what has happened to youth services in the context of what has happened to support for and the focus on young people over the past few years. Support has collapsed in some areas where it is most needed. He mentioned the education maintenance allowance and the careers service among other things. The speeches and interventions made by my hon. Friends show how strongly Labour feels about youth services and demonstrate our commitment to ensuring that all young people have access to a high-quality, open-access and appropriately funded youth service.

We believe that it is important to set that benchmark because of what we have seen happening in recent years, with huge pressures being placed on local authority budgets, but we are not prescriptive about how it should be delivered locally, or what it should look like. However, where we are clear and where we perhaps differ from this Government—unless the Minister is going to say something very exciting in his closing speech—is in our belief the Government have a clear role in ensuring that that offer to young people is made clear to local government and is delivered in every community around the country. I agreed with much of what the hon. Member for Brigg and Goole (Andrew Percy) said. The difficulty is that what we have seen over the years is that some local authorities absolutely get this issue and understand it, but not all. The key question for national Government is what to do when that commitment is not being delivered in some local areas where people simply do not get it.

My own local authority, Wigan, has had real challenges with this. We have had the third worst budget cuts in the entire country, but the fact that there are three MPs in Westminster Hall today who represent parts of that borough—my hon. Friends the Members for Makerfield (Yvonne Fovargue) and for Bolton West (Julie Hilling), and myself—shows that there is a strong commitment from us as elected politicians to try to protect those services.

One of the exciting things that has happened in Wigan in the past few years is the youth zone that we have managed to set up. It is an example of some of the things that Members have talked about today. It is a way of doing things differently, because it is a partnership between the OnSide charity, the local authority, local entrepreneurs and businesses, the community, and, most important of course, young people themselves, who have been involved from the outset in campaigning for this service, designing it and now running it, as well as using it. It is not the beginning and end of the whole story in terms of the youth services that we need in our borough, but it is a real achievement at a time when the local authority budget in particular and the community are under such strain.

[Yvonne Fovargue (Makerfield) (Lab)]

Will my hon. Friend join me in welcoming the free bus service that runs from my area, which is an outlying area of the borough? The authorities recognised that young people from the outlying areas of the borough were not using that service, and they have done something immediately to try to solve that problem.

[Lisa Nandy]

My hon. Friend is absolutely right to highlight that, and it is one of the reasons why I congratulated my hon. Friend the Member for Stockton North for situating this debate in the wider context of what is happening to young people. Transport costs are the key thing that young people always raise with me and, I am sure, many other Members, and it is important that we think about that when we consider services for young people.

There are some other startling examples of local authorities doing something really exciting. The hon. Member for Brigg and Goole is right to acknowledge the impact that the cuts have had but also to say that this is not just about funding. For example, I think that many Members will be aware of a project in Lambeth that I have heard about and seen for myself. Lambeth took the huge amounts that it was spending on young people through various budgets and put it into a trust, which anyone in the community over the age of 12 could join. It was weighted towards young people, so that they retained control, and it gave the community the power to take real decisions about how services were commissioned and delivered and what they looked like. My understanding is that that project has been a remarkable success. It points to a key feature of successful youth services; the most successful ones are those that involve young people in commissioning, designing and delivering them, where possible.

However, we know from our experience of looking at youth services that what works in Lambeth does not necessarily work in Liverpool. That is why I have said that there needs to be a clear minimum offer from this Government. Labour is clearly committed to that, but not to prescription about on how it should be delivered. Labour Members have previously said that we are open to strengthening the statutory duty to provide youth services, and I have listened carefully to the contributions by hon. Members on that point, but I think we must recognise that, on its own, a statutory duty is not enough. As my hon. Friend the Member for Bolton West said, we already have a statutory duty, limited though it is, and it is not being fulfilled around the country. Labour is very attracted by the possibility of introducing a duty to ensure that young people are involved from the outset in designing and commissioning youth services, and we wonder whether the Minister might share that aspiration; if he does, perhaps he will say something about it today.

There is also a clear need to ensure that young people can hold the people who make these decisions to account. That is one of the reasons why Labour is committed to introducing votes at 16. I hope that the Minister will listen to that argument and consider carefully how young people can hold their elected politicians to account for their decisions if they do not have the vote.

I should also mention briefly concerns about the work force. I want to be fair to the Minister, so I will say that some of the problems in the youth service work force predate the coalition. In 2008, a survey by the National Youth Agency found that a third of councils were not investing at all in the professional development of youth workers. That was really worrying then, but I dread to think what the figure is now, several years after the huge cuts that we have had. Can the Minister tell us? There is a real risk that we will run down the quality of our services and then turn around and say to young people that those services are not worth saving in any case.

There is no question that the last four years have been absolutely horrendous for this sector, and I do not want to lose sight of that. We have lost good, skilled staff, and many more are under significant strain, dealing with low pay, job insecurity and the prospect of redundancies. This really matters, because as my hon. Friends the Members for Sefton Central (Bill Esterson) and for Stockton North said, behind the loss of all those youth workers—2,000 of them during the last few years—is a story of broken relationships. I once worked with a young person who had grown up in and out of care. He was 18 when I first came across him and he told me that the only consistent adult in his life since he was 11 had been his youth worker. When we lose good, skilled staff, we break that link and that bond, and the damage is irreparable.

Regarding the National Citizen Service, I say to the Minister that although I support many of the things that my hon. Friends have said, and I myself have also had a parmo with some of the young people from Redcar who have taken part in NCS, it is no substitute for long-term, ongoing youth services provided all year round. It is a short-term intervention and it is very expensive. If we come to power in May next year, we are not planning to make the same mistake that this Government did with the v scheme, and simply tear something up because another party has established it, but we are very concerned about the cost of NCS. My hon. Friend the Member for Stockton North drew a parallel between the amount of money that the German Federal Government spend on year-round youth work and the money that this Government spend on short-term interventions.

The other thing to say is that young people spend 85% of their time out of school, yet each year local authorities spend 55 times more on formal education than they do on providing services for young people outside the school day. We need to get a bit of a grip on this, because when this Government agreed to protect ring-fencing for school funding they did not do the same for additional activities. They abolished ring-fenced grants for—

[Alex Cunningham]

Will my hon. Friend give way?

[Lisa Nandy]

If my hon. Friend does not mind, I will not give way, as I have only a couple of minutes left and I wanted to make some last points.

As I was saying, the Government abolished the ring-fenced grants for additional activities. They inherited spending of £350 million per year on those activities, which equated to about £77 per young person aged between 13 and 19. A previous Minister responsible for this area said that that equated to

“large slugs of public money”.

I hope that the current Minister will take the opportunity to reject that view and tell us that he thinks young people are worth at least £77 of our money per head.

Over the past four years, Ministers have passed on responsibility to the very same local authorities that they are hammering with budget cuts. Frankly there was only ever going to be one result, because at the same time the money that helped to sustain youth services was put into an early intervention grant, which was also used to fund Sure Starts and services dealing with teen pregnancy, substance misuse and mental health, before being cut again by up to 40%. I say to the Minister: what sort of message does that send to young people about our commitment to them? If my hon. Friend the former Member for Wythenshawe and Sale East were here, he would say that this approach is so short-sighted, particularly given all the issues about child protection and children in the criminal justice system that we have discussed.

I also wanted to say to the Minister that some local authorities have cut way beyond the average. Have he or any of his colleagues ever considered using the powers that they have under the Education Act 2006 to intervene where they see youth services being cut disproportionately and the statutory duty that exists in that Act not being met?

In 2011, the Minister’s predecessor as Minister for Civil Society said,

“we are working with our strategic partners to gather information about what is happening on the ground”.

Has that happened and has it been published? What discussions has he had with local authorities?

This is not simply a question of money; it is about priorities. My hon. Friend the Member for Bolton West said, quite rightly, that the emergence of a significant youth service can be traced back to post-world war two and “In the Service of Youth”. It was a time when the country was facing the most significant financial challenge in its history. This is not just a question of what we say to our young people; it is about what sort of country we want to be. Do we want to be forward-looking, confident, ambitious and invest in our young people, their talent and energy, or do we want to watch the sad disintegration of the services that they rely on over the next few years? I know what our answer is.

15:50

[The Minister for Civil Society (Mr Rob Wilson)]

With your toleration, Mr Davies, may I begin in a slightly unusual way by congratulating the hon. Member for Wigan (Lisa Nandy) on her recent news that she will be adding to the youth of the nation? I hope that she will be declaring a personal interest from now on. I also congratulate the hon. Member for Stockton North (Alex Cunningham) on securing an important debate and I thank all hon. Members who have contributed. It has been a useful airing of views.

My first response to the debate is that I know these have been tough times. On today of all days, I recognise that the funding situation remains tight across the public sector, even though this Government have successfully cut the deficit in half. Local councils have had some difficult decisions to make across all the services that they provide and this has had a knock-on effect on wider youth services. Having said that, I was slightly concerned during some contributions, because we should always remember to talk about young people in a positive way. We should be emphasising strengths among our young people, not negatives.

I was pleased to hear my hon. Friend the Member for Brigg and Goole (Andrew Percy) say that 20 centres are being established in his area and that those are doing things in a different, but very positive, way. The hon. Member for Stockton North mentioned some positive things that Stockton council is doing. I congratulate it on raising attendance at some of its centres and on its engagement in the youth services area.

I was sorry to hear that the council in the constituency of the hon. Member for Stretford and Urmston (Kate Green), who has had to leave, is taking the option of abandoning youth centres, but at the end of the day that is a choice, not a necessity.

[Alex Cunningham]

Will the Minister give way?

[Mr Wilson]

I will make some progress and then I will come back to the hon. Gentleman.

I have been Minister for Civil Society for just over two months and have seen the important and difficult work done by youth workers and so many others with young people. These individuals are making a vital contribution to realising the Government’s ambition to ensure that all young people have the opportunities needed to fulfil their potential—an ambition I am sure we all agree with.

Only last month on a visit to Stockton, I met Five Lamps, an organisation in the constituency neighbouring the hon. Gentleman’s. This award-winning social enterprise is working with young people in the town. Five Lamps works with nearly 25,000 people every year through programmes including youth services and work with those who are not in education, employment or training. It was inspiring to see how it transforms lives and raises aspirations in Stockton. Five Lamps is a fine example of the type of support that is available at the local level, and hon. Members would do well to commend such work in their own constituencies. I am a huge supporter of these types of local services. I am also committed to bringing national and local government together, along with civil society and businesses, to give young people the best possible opportunities to succeed, and I will set out the Government’s current work to achieve this.

At local level, this Government have retained the existing statutory duty for local authorities, which requires that they secure, as far as is practicable, sufficient services and activities to improve the well-being of young people, as outlined in section 507B of the Education and Inspections Act 2006. Not only did we retain the duty, but we updated the guidance on it in June 2012.

Hon. Members will have seen early-day motion 488, tabled by a Labour Member—some have mentioned it —in favour of a statutory funded service with ring-fenced funding from central Government. I have considered the issues, but do not support the EDM. I believe that effective local youth services are already supported by the existing statutory duty. I also believe that local authorities should be empowered to decide how to secure services that meet the needs of young people in their communities with the resources available to them. It cannot be the role of central Government to dictate to them what services to deliver or to ring-fence funding for this purpose. I am not clear from comments by the shadow Minister whether Labour now proposes to ring-fence these budgets.

[Julie Hilling]

I do not understand why we bother to legislate in this place if we are not going to ensure that local authorities or other bodies carry out the measures in legislation that we introduce.

[Mr Wilson]

The hon. Lady has to recognise that the principles of localism cannot simply be overridden the first time anyone disagrees with a decision that is made. If we are serious about localism—I am—we have to trust and respect local choices, and if necessary provide support to encourage new ways of thinking about how services are delivered.

[Alex Cunningham]

rose—

[Mr Wilson]

I will make a bit more progress, if I may.

I support transformational change that results in services that are more responsive to the needs of people using them and more efficient and resilient. We know that innovation is possible and that there are new models for delivering youth services that get the most out of the best of the voluntary and private sectors. Gloucestershire county council is one example. Its targeted youth support service is now provided through a partnership between a private sector organisation, Prospects, and the county council. It works with nearly 6,000 vulnerable young people in the county, more than 90% of whom say it has made a difference to their lives. Nationally, the Government want to provide practical support so that others can follow its lead. Through the “Delivering Differently for Young People” programme, we are supporting 10 local authorities to do so and to explore new models of delivery. I heard what the hon. Member for Stockton North said about his own local authority and its initiatives and I will look at those more closely.

If the hon. Gentleman would like an example of what is possible in his region, he could look north to North Tyneside, one of the councils we are supporting through the “Delivering Differently for Young People” programme. Its vision is to deliver joined-up services for young people that bring the public and voluntary sectors together to make the most of skills, buildings and resources. At every step, this will involve young people and will focus on tackling the needs of young people in a way that is co-ordinated and comprehensive. We will provide short-term specialist support to plan how they implement this vision. Gloucestershire and North Tyneside councils are just two of many positive examples of how councils are looking for new and creative opportunities to bring people together, create partnerships and look at new funding streams.

To answer the hon. Gentleman’s question, my officials are working closely with the Local Government Association, which is a co-sponsor of the “Delivering Differently for Young People” programme.

[Alex Cunningham]

The Minister is giving examples of good practice. We all love such examples and we know it is happening in parts of the country, but in other parts of the country the service is disappearing—we have heard an example today—so what is he going to do about that?

[Mr Wilson]

At a national level, the Government are going further. We are supporting leading youth organisations to develop the centre for youth impact. For the first time in this country there will be a central point for information, guidance and bespoke support, to demonstrate the value of youth services to others, particularly those who make funding decisions—something a Labour Government never did. Again, to answer another of the hon. Gentleman’s questions, the Cabinet Office did a survey of youth services in November 2013, which has informed the actions that I am talking about today.

Moving away from local youth services, I know that the hon. Gentleman has a particular interest in engaging young people in the democratic process. I share his commitment and will speak about the Government’s work in this area. Last month I had the privilege of speaking to the UK Youth Parliament and saw young people at their best: informed, articulate and passionate. They debated with eloquence and conviction about issues that matter to them, such as mental health and a living wage for all. We must make sure this same powerful voice shapes the services they use, locally and nationally. Engaging and listening is a way of ensuring our policies and services meet their actual needs. The Government are also ensuring social action opportunities exist outside school and college for young people to develop the skills and confidence they require to transition into adulthood.

Unfortunately, I am not going to make it to the end of my speech, so I will leave it there, Mr. Davies.

[Philip Davies (in the Chair)]

We come to the next debate, which is on Government strategy for the UK steel industry.

UK Steel Industry

Wednesday 3rd December 2014 Westminster Hall

16:00

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Davies, and to have the chance to raise an issue that is of concern not only to me and my constituency, but to many Members from all parts of the House. It is great to see a number of them here with me, as well as the shadow Minister for these issues in the shadow Business, Innovation and Skills team, my hon. Friend the Member for Hartlepool (Mr Wright).

The UK steel industry and the associated metals sectors comprise more than 24,000 enterprises, which directly employ more than 330,000 people and were worth more than £45.5 billion to the UK economy in 2012. Indirectly, two to three jobs in the broader economy are dependent on each job in the metals sector. Steel, as many of my colleagues will attest, is vital for many of the UK’s strategic supply chains, such as those in the automotive industries, construction and energy.

As many will know, Cardiff South and Penarth has a long and proud industrial history. It is just a stone’s throw from Tiger bay, where the coal hewed out of the valleys of south Wales was exported to the world and where the East Moors steelworks sprang, establishing Cardiff as a major player in the steel-making industry in the late 1800s. Although the original East Moors complex was closed in 1978, I am pleased to say that Cardiff remains a major centre for steel production, which is currently done by Celsa. It has one of the most carbon-efficient electric arc furnaces in Europe and the world and rolling mills that produce crucial products, such as reinforcing bar, for such UK infrastructure projects as Crossrail.

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

I am pleased that my hon. Friend has managed to secure a debate on this important topic. Shotton steelworks is in my constituency. It produces high-end, top quality coated products. Does he agree that the price of energy is harming this important industry, which could do so much better if it could compete with companies in Europe that have much lower costs?

[Stephen Doughty]

I absolutely agree. It is very much the case that from Shotton to Cardiff, from Skinningrove to Llanelli, from Scunthorpe to Middlesbrough and from Newport to Redcar, steel producers are being outflanked by significant challenges, including energy prices, which continue to increase unabated. The rules of the game appear to have changed. I want to focus on a number of strategic issues.

[Nic Dakin (Scunthorpe) (Lab)]

I congratulate my hon. Friend on securing this timely debate. Does he share my disappointment that in the autumn statement the Chancellor did not take the opportunity to bring forward mitigation on the renewables obligation for high energy users, such as the steel industry? That would have been a clear message today that the Government are on the side of steelmakers.

[Stephen Doughty]

I share my hon. Friend’s disappointment. I asked the Chancellor a question on that issue, and I was disappointed that he chose to make a political point, rather than engage with the serious issues being raised by many hon. Members.

I want to focus on a number of strategic issues. Whether it is energy prices, taxation, foreign dumping, uncertain future ownership or the lack of clarity in the UK’s industrial and infrastructure strategies, it is crucial for the sake of our future industrial and manufacturing capacity, as well as for jobs across the UK, that the steel industry has urgent, robust and bold action from the Government, not caution and bureaucratic handwringing alongside many warm words that make little difference in practice.

[Jessica Morden (Newport East) (Lab)]

Because of the challenges facing the steel industry, steelworkers have had to adapt, accepting changes to their terms and conditions and rising to the challenge of hitting the targets that companies have set them in difficult times. Does my hon. Friend agree that announcing some support for the steel industry is all very well, but delivering on it is crucial for steelworkers, who have worked so hard in difficult times in constituencies such as mine?

[Stephen Doughty]

That is absolutely the case. My hon. Friend speaks about her constituency; employers at Celsa in my constituency have taken some hard decisions to ensure that the company continues to thrive and go forward. We need that kind of commitment from the Government, too.

The steel industry does not need posturing or the erection of barriers to trade or unjustified protection from fair competition; it is simply asking for action to level the playing field and ensure that we do not offshore carbon emissions or contract out our potential domestic growth generation to such places as China and Turkey.

[Andy McDonald (Middlesbrough) (Lab)]

Does my hon. Friend agree that there is terrific knowledge, skill, innovation and expertise within the Community union? Tata Steel would be well served if it exploited that collective wisdom and experience, because that could be the solution to keeping its operation intact and thriving.

[Stephen Doughty]

I wholeheartedly agree. My hon. Friend mentions the Community union, which has many members in my constituency and those of other Members present. It provided a helpful briefing for this debate and continues to speak out with a strong voice on these issues. Community estimates that the energy prices faced by UK steel producers can be 50% higher than those faced by our main European competitors, such as Germany. The Minister might not be aware of this, but green levies in the UK are two to three times higher than those faced by European competitors.

I firmly believe that we need a responsible and supported transition to a low-carbon economy, but it would be absurd if ill-fitting policies for this and other energy-intensive industries resulted in carbon leakage that leads to higher global carbon emissions. The Celsa plant in my constituency uses recycled steel in a carbon-efficient process, and it would be a tragedy if some of that production was lost to China, where the same carbon emissions standards and local environment standards would not be followed.

Earlier this year, the Chancellor said that manufacturing continues to play a key role in the UK’s economic recovery, but that the cost of energy acutely impacts on the international competitiveness of the sector, particularly for energy-intensive industries. I agree, as I am sure do many of my colleagues and the French and German Governments, but actions speak louder than words. Where the UK Government has failed to act robustly and urgently to level the playing field, others around the world have been taking action, including Germany and France. Unfortunately, that is leaving the UK at a disadvantage. As a close observer of what happens on the continent, the Minister might know that the French Senate recently debated finding a mechanism to fix the electricity cost for energy-intensive users at a maximum of €30 per megawatt-hour, compared with the €73.50 per megawatt-hour in the UK. That is a stark contrast.

The Minister might be aware that there has been extensive correspondence between the Department for Business, Innovation and Skills and me and other Members on these issues. The announcements in the Budget earlier this year on an energy-intensive industries compensation package were welcome, but many of the measures will have no immediate impact, which presents a serious risk.

My hon. Friend the Member for Newport East (Jessica Morden) mentioned this issue. I was deeply disappointed by the Chancellor’s answer today. I simply asked whether he was content with the decision—I had been told that the Minister for Business and Enterprise, the right hon. Member for West Suffolk (Matthew Hancock), would be responding to the debate, and I am disappointed that he is not here—that he and that Minister made not to bring forward that package. That decision is deeply disappointing to many of the steel producers in this country.

I am sure that the Minister has received many bulging red boxes full of cautious and bureaucratic advice from officials on the issue, but it is ultimately a political decision for Ministers to interpret European guidelines and decide whether there is a possibility of retrospective exemption and renewable sources support compensation. The bottom line for our steel producers is that in practical terms many of them are paying more taxes than they paid three years ago. They are finding themselves at a growing competitive disadvantage. The Minister’s cautious approach stands in stark contrast to the proactive and decisive one taken by Ministers in other EU member states. I am sincerely asking whether he and his ministerial colleagues will take another look at this crucial issue.

[Nia Griffith (Llanelli) (Lab)]

Does my hon. Friend agree that it was the unilateral imposition of the carbon floor price at a particular rate that has caused the problems? The steel industry is not asking for charity; it is simply asking for a level playing field. We want the situation put right as soon as possible.

[Stephen Doughty]

I wholeheartedly agree with my hon. Friend’s points.

On another issue, the Minister here today will know that business rates are one of the few taxes that are non-cyclical and fixed at a level irrespective of economic or market conditions. As such, business rates are treated by industry as a fixed cost, which is given much greater prominence when making investment decisions. According to the industry, the fact that business rates are five to 10 times higher in the UK than in EU counterparts represents a significant comparative distortion that undermines the UK as a destination for investment.

Will the Minister say whether any consideration has been given to removing plant and machinery from the business rates valuations? What about alternative approaches for large-scale manufacturers, with a view to adopting a simplified model based on capital values rather than hypothetical rental values?

I come to foreign dumping, responsible sourcing and supply-chain access, huge issues for UK-based steel producers—and the environment is changing all the time. We have been shown some shocking statistics. I mentioned the reinforcing bar produced by Celsa in my constituency. Hopefully, the Minister has seen the data that show that imports from China now account for more than a third of overall UK market share, which is a dramatic increase in recent years; the figures for this year show an even greater increase. We also see problems with imports from Turkey.

There are also questions about traceability in the supply chain and the fact that the classification of such products often does not meet British standards. In the extreme, that has potentially serious implications for the future structural integrity of buildings or infrastructure projects in which non-compliant rebar or other steel products have been used.

The UK Certification Authority for Reinforcing Steels has been too slow and ineffective in its response to date. Quite frankly, the Government’s response has also been disappointingly slow, given that I understand that misclassification was raised at the steel contact group in October 2013 and again in June 2014.

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

My hon. Friend is making an excellent point about the importance of manufacturing to his constituency. We know that Celsa was built under the tenure of the previous Labour Government, much like the blast furnace at the Redcar steelworks near my constituency that was built under the Callaghan Labour Government. We are potentially on the verge of putting 46% of Britain’s steel making in limbo. We need strong opposition from the Government in relation to Celsa as well as Scunthorpe’s four-blast-furnace operation. We need clear direction and a clear message from the Government about what steel production will look like in the future.

[Stephen Doughty]

I thank my hon. Friend for those well made points; I wholeheartedly agree with them. On traceability and the quality of products used, the Government could do something right away: ensure that all Government or Government-backed projects have a robust, responsible sourcing requirement.

As I have said before, although the Government’s sector- by-sector approach is welcome, it must be dramatically accelerated. That would, without doubt, serve to stem some of the questions about safety and sustainability rightly coming from concerned people inside and outside the industry. Reports that Chinese rebar has been failing British standards tests coupled with the news that one third of rebar used on UK sites is Chinese should have red lights flashing on ministerial dashboards, not only in BIS but in other Departments.

[Nia Griffith]

Does my hon. Friend share my disappointment that Ministers, in their reply to the steel group, rather brushed aside any option to intervene in what CARES is doing? Will he reiterate to this Minister the need for them to look at that thoroughly?

[Stephen Doughty]

I wholeheartedly agree; I was disappointed by the Ministers’ response. Like many others here, I saw a glimmer of hope when the Secretary of State for Business, Innovation and Skills responded to a question on that from my hon. Friend the Member for Hartlepool, who is sitting here. The right hon. Gentleman said that there would potentially be an inquiry into the testing process of rebar steel. However, since then we have been told—not only publicly, but in answer to parliamentary questions and informally—that the Secretary of State misspoke, and the executive director of CARES has said that it has not been contacted by the Government.

I hope that the Secretary of State did not misspeak, but if he did, perhaps the Minister can clarify the situation. More importantly, will such an inquiry be considered? Ultimately, people want to see one because they want to know that the steel products being used are safe, sustainable and responsibly sourced.

[Lilian Greenwood (Nottingham South) (Lab)]

My hon. Friend is making a powerful case. Given that Network Rail is due to invest billions of pounds in track renewals and that major rail infrastructure such as Crossrail, High Speed 2 and possibly Crossrail 2 are coming up, is it not shocking that the future of Tata’s long products steelworks at Scunthorpe, which I have visited and produces much of the UK’s high quality rail, is so uncertain?

[Stephen Doughty]

My hon. Friend makes a crucial point about not just the industry, but the crucial infrastructure projects, especially in transport, that it supports. It is crucial that we get that right.

I mentioned Celsa’s contribution to the Crossrail project. The only responsible sourcing scheme in the UK that guarantees cradle-to-grave traceability for construction steel products is BS 6001, which was crucial to Crossrail. Will the Minister say whether the Government intend to ensure that all public projects apply the same standard in a timely fashion?

Ultimately, each of the issues and concerns that we have raised can be considered on its own, but there is an increasingly apparent need for a detailed, workable industrial strategy for metals, including steel. The Minister might jump to his feet in a moment and cite the development of a UK metals strategy as showing that the Government are on the case, but by all accounts, that is still in its early development stages and is not even guaranteed to receive official backing, despite being funded by BIS.

Indeed, we are more than four and a half years into a Government who chose not to include the metals industry among their sector-specific industrial strategy and who now, quite frankly, are playing catch-up. We have talked about procurement and other investment decisions, but the UK cannot afford to lose out on major public infrastructure projects, as Community made clear was the case with the £790 million contract to supply steel for the new Forth road bridge. Tata steel’s plant just down the road could have supplied more than one third of the required steel, but instead the contract went to producers in China, Poland and Spain.

[Tom Blenkinsop]

The Minister will probably also agree that that was primarily the responsibility of the Scottish Executive, who did not play their part in trying to support the local Scottish industry. It would be interesting to hear the Minister’s response on what the UK Government said to the Scottish Government at a time of trying to support UK steel rather than Chinese imports.

[Stephen Doughty]

My hon. Friend makes a strong point and I would be interested to know the answer to that question as well. Many steelworkers and those who work in related industries throughout the UK want to see the Government standing up and backing the steel and metals industries here—not seeing major projects that could be generating wealth, jobs and opportunities in this country all ending up with Chinese products. I have already raised concerns about the quality and traceability of some of those products.

In conclusion, I will ask the Minister a few questions on which I would appreciate answers. I mentioned dumping by China and Turkey. Will he outline what representations Ministers at BIS have made to other EU member states, the European Commission and the Council on support for an anti-dumping measure?

Will the Minister outline whether there have been discussions on a UK Government responsible-sourcing requirement? Would he be willing to facilitate a meeting between the Chancellor of the Exchequer and colleagues concerned about these issues to discuss the use of steel in UK infrastructure projects and how procurement can drive the future of the industry?

Will the Minister clarify what assessment the Department has made of reports that Chinese rebar has failed British standards tests, given that much of the steel used in the past year on UK sites has been Chinese? Has he had discussions with other Departments about any risks to the future structural integrity of building and other infrastructure projects?

As I said earlier, will the Minister, with his colleagues, be generous and look again at the decision not to bring forward compensation packages to January 2015? That is crucial. Will he detail what discussions there have been in BIS on that and why it was decided not, for example, to make an encouraging announcement on that today in the autumn statement?

We have mentioned China and Turkey. Will the Minister give an assessment of reports that India is now also looking at subsidising its steel industry to compete with cheaper Chinese imports? What assessment has been made of the US Department of Commerce’s decision to impose anti-dumping and anti-subsidy duties on imports of carbon and alloy steel wire rod from China in reaction to a massive increase in its shipment?

Any one of the issues that I have outlined, in addition to those that I have not had time to mention, is enough to put serious strain on any business, but the cumulative effect is a matter of grave concern to the British steel industry. The risks are real and the threats are intensifying, so urgent and robust action is required from the Government. If capacity is put at risk, that could have serious consequences not only for the jobs and communities that depend on those industries, but for UK infrastructure priorities. I hope that today the Minister will give some encouragement to UK steel producers and their employees.

16:19

[The Minister for Culture and the Digital Economy (Mr Edward Vaizey)]

It is a pleasure to see you in the Chair, Mr Davies, if a little disconcerting. I look forward to participating in the debate under your chairmanship.

I congratulate the hon. Member for Cardiff South and Penarth (Stephen Doughty) on securing the debate, which is the second one I have done on British steel. It is always reassuring to see the passion and knowledge of the Labour Members in the Chamber, who represent many different steel interests in their constituencies.

I hope that the House will not take it amiss if I also thank in person once again the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), who was kind enough in a previous debate to mention my late father’s work, “The History of British Steel”, because it is the 40th anniversary of the publication of that seminal work.

[Mr Iain Wright (Hartlepool) (Lab)]

Will it be reprinted?

[Mr Vaizey]

It will be if this level of interest in the House is maintained. This year is also the 30th anniversary of my father’s death, and it is nice that he can be mentioned in Hansard, because he was a Member of the other place, thanks to Harold Wilson.

[Stephen Doughty]

The Minister mentioned that this was the second time that he had had to respond to a steel debate. I appreciate that his family has a strong tradition in such matters—I enjoyed hearing about it in a previous debate—but where is the Minister responsible for the issue today and why has he not been present now at two such debates?

[Mr Vaizey]

Hansard has on the record the reason why my right hon. Friend the Minister for Business and Enterprise could not attend the previous debate. I gather that today he is assisting the Chancellor with the autumn statement, because his brief covers a wide range of issues. Indeed, Mr Davies, you are an expert on the working relationship between the Chancellor and the Minister for Business and Enterprise.

[Nic Dakin]

Are we to understand that the Minister is now the Minister for steel, because he has shown far more steel on the issue than the Minister to whom he was just referring?

[Mr Vaizey]

I do not wish to sound churlish, but it is said that one should be beware of Greeks bearing gifts, and one should also be beware of Labour Members, however much one admires them, bearing compliments.

The hon. Member for Cardiff South and Penarth is working hard to secure a long-term future for the steel industry in his constituency. He has been an assiduous champion for Celsa and has facilitated meetings between it and Ministers. I picked up on about nine points made by hon. Members during the course of the debate, but he left me with five or six specific questions, mostly focusing on efforts to mitigate the impact of high energy prices and of competition, which from his perspective is unfair—I hope that I am not speaking out of turn in putting it that way—and on what the Government are doing about things. He also asked about the future strategy for the steel industry.

I have quite a long speech, but the hon. Gentleman spoke rapidly, if clearly, and the time left to me is not long, especially given the level of interest in the debate. I will try to pack in as much in the short period available as he managed.

It is well known that the steel industry is cyclical, and we also know that it has faced particular difficulties in the past few years, especially with the economic downturn having a major impact on construction, leading to overcapacity and severe competition throughout the world. It is worth saying, as I did in the previous debate, that the UK remains a significant player in the global steel market. We have replaced France as Europe’s second largest producer of steel and we have overtaken Italy. It is worth remembering that we continue to manufacture to a high level in this country.

My right hon. Friends the Minister for Business and Enterprise and the Secretary of State for Wales met the hon. Member for Cardiff South and Penarth and representatives of Celsa to talk about the company’s concerns, in particular the policy issues, which it is important to note affect many other steel companies in the UK as well. The Minister for Business and Enterprise replied at the beginning of this week to the letter that was sent out by Celsa following that meeting.

The first major issue raised at the meeting and in the debate today was compensation for energy-intensive industries for the indirect costs of the European Union emissions trading scheme and the carbon price floor. The hon. Member for Cardiff South and Penarth knows that the Government are trying to compensate electricity-intensive industries for the indirect costs of the renewables obligation and the feed-in tariff. We are also seeking to exempt EIIs from the costs of the contract for difference.

The mitigation has not been brought forward, because we need to seek state aid clearance from the European Commission. It took 18 months to obtain Commission state aid clearance for the carbon price floor. The hon. Gentleman and Celsa would perhaps like to see the Government being what they might describe as more robust, but clear state aid clearance is important. As he knows, if aid is provided before state aid approval is given, technically that would be illegal and we run the risk, if approval is not given, that the company would have to pay back the state aid. That is the reason. I am sure that the Chancellor, if he could wave a magic wand, would wish to bring forward mitigation, but we have to go through the process.

The hon. Member for Cardiff South and Penarth also talked about procurement. We have greater transparency of opportunities through the publication of procurement pipelines, which now cover 19 sectors. We have a simpler public procurement system; we have abolished the pre-qualification questionnaires for low-value contracts; and we help suppliers to find contract opportunities via a single online portal. We are working with industry to map supplier capabilities. We want to quantify the opportunity that exists to maximise the economic benefit for the UK—of course we do. Where there are capability gaps, sectors will encourage domestic suppliers to expand to fill them, with support from the Manufacturing Advisory Service.

The hon. Member for Middlesbrough South and East Cleveland tried to tempt me to have a pop at the Scottish Executive over the Forth bridge. My understanding is that the approaches to the bridge are to use British Tata steel, but I cannot comment on the procurement process of the Scottish Executive—[Interruption.] Perhaps the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), commenting from a sedentary position, would like to say why the Scottish Executive procured from China, Poland and other markets.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

I only wanted to ensure that the Minister knew the difference between the Executive and the Government. “The Executive” is what Labour did not have the courage to call their Government in the past; “the Government” is what exists now.

[Mr Vaizey]

We are disappearing down a particular Scottish cul-de-sac. I will leave that as an argument between the Scottish National and Labour parties.

We are working to strengthen existing supply chains by encouraging primes to adopt a collaborative and long-term approach to their suppliers. The hon. Member for Cardiff South and Penarth discussed Chinese imports of rebar. The United Kingdom Accreditation Service looked at the complaint by UK Steel and concluded that CARES had responded in an appropriate way to the concerns expressed in line with the expectations and requirements of the accreditation standard. I can tell him, however, that there has been an increase in vigilance on the part of CARES, with increased sampling and more checks. We have also been advised that, as a result of ongoing discussions between CARES and UK Steel, and of the further testing of some non-compliant imports, CARES visited the Chinese steel mill concerned. CARES conducted further sampling and testing, but it did not find evidence of stock production being non-compliant. On that basis, we genuinely think that we are doing everything possible, although we may be able to do more if the industry provides us with additional evidence of what it thinks that we should investigate.

[Tom Blenkinsop]

The issue of whether it was a Scottish Government or an Executive who sold steelworkers in Motherwell and the rest of the UK down the Yangtse is irrelevant. The real issue is whether the Secretary of State for Business, Innovation and Skills has an ongoing inquiry. If so, is it looking at the steel products that are sitting on dockyards or in warehouses for more than 12 months at a time, rusting away and undermining any usage in a construction project, because of health and safety?

[Mr Vaizey]

I will take that specific point back to the Secretary of State. As I said, there have been discussions between UK Steel, UKAS and CARES. The Government take an interest in such issues. We will go back to those organisations if there is appropriate additional information.

Let me comment on anti-dumping quickly, because time is running out. We have been in contact with the European Commission on a number of occasions over the past year. We have had face-to-face meetings and we have asked the Commission to look at the case for launching an anti-dumping investigation into Chinese rebar imports. The problem is simply that Chinese rebar is only being exported, as I understand it, to the UK market and anti-dumping actions are taken at the European level, which presents serious legal difficulties for the Commission. We think, however, that the Commission is genuinely trying to find a way round the problems. We check regularly with it on progress and encourage it to take action, but at this stage a more aggressive approach might be unproductive.

Coastguard Centres (Staffing)

Wednesday 3rd December 2014 Westminster Hall

16:30

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Davies, in the last, but I hope by no means the least, debate of the day. I look forward to hearing the response from the Department for Transport on the issues I will raise.

It is now about three years since the coastguard went through the upheaval of reorganisation, changes and closures, onwards towards its new structure. Of course I mourn the loss to Scotland of the Clyde and Forth coastguard stations. Scotland has 66% of the UK’s coastline, but, alas, only 33% of the coastguard stations. I am glad that we managed to save Stornoway station, which is now a very important coastguard station. It has a search and rescue helicopter—at one point, it had an emergency towing vessel, a tugboat—and is located in an important sea area. I am glad that we also still have in Scotland the Shetland and Aberdeen stations.

Stornoway is located between Belfast to the south and Shetland to the north, and covers a large sea area, not least because the next station to the west—perhaps the one direction I have not yet mentioned—is in Canada. Stornoway station’s area of responsibility covers about 250,000 square miles of sea, and meets the Canadians’ area at 30° west, about a time zone and a half away; Stornoway lies about 7° west. I had thought that Shetland station’s area of responsibility would be larger, but the Faroe Islands lie to its west and Norway to the east and north.

Those are just a few facts that can be found out by your average MP when they visit the local coastguard station. I bring them to hon. Members’ attention because they emphasise the international aspect of maritime activity, which could doubtless be further underlined by the station to our south, Belfast, which no doubt deals with coastguard colleagues in other jurisdictions such as the Isle of Man and the Republic of Ireland.

As I said, it is now over three years since the announcement that, importantly for me, confirmed that the hard work had paid off and Stornoway coastguard station was saved. The date was 22 November 2011, and it was a Tuesday—one that brought great relief not just to me but to those working at the station and people round about. We kept our coastal maritime expertise in Stornoway, and with it the associated local knowledge and jobs, as well as the intimate interaction with our local fishing community.

[Bill Esterson (Sefton Central) (Lab)]

I do not want to take away from what the hon. Gentleman has said about the people of Stornoway, but on that same date the people of Crosby coastguard station had exactly the opposite reaction, because of the announcement of the closure of that station with the loss of jobs unless people were prepared to relocate to either Southampton or, in some cases, Holyhead. The subject he has chosen for his debate is the staffing of coastguard stations, and I am interested to hear what he has to say on that point. Many of the staff at Crosby have not been able to transfer, and grave concerns have been raised with me about the standard of recruitment and training of replacement staff. Have similar points been raised with him?

[Mr MacNeil]

I am grateful for the hon. Gentleman’s intervention. He will recall, I think, that the word I used about Stornoway was relief. To see that the stations in Forth, Clyde, Crosby and other areas were to close and the jobs of professionals with years of expertise under their belts were to be lost brought no pleasure at all—in fact, it brought great sadness. I am interested to hear what he said about staff, because I am coming on to that point. If there are surplus staff somewhere, the Maritime and Coastguard Agency might consider that fact when dealing with some of the problems I will be highlighting.

It has been three years since the reorganisation, so we would have thought that most of the changes would have been brought through by now and the organisation would be running as smoothly as it could and should be. Many people would expect the changes to have bedded down, yet reports have come to my ears—actually, to my eyes—of one coastguard officer saying to another, “Let’s hope the latest Minister does something, because the whole issue—the closure of stations, the loss of experienced staff, the undermanning—is a disaster waiting to happen.” Those are strong words—not my words, I stress, but words I feel need to be checked up on.

We must remember the value of our coastguard staff, as the hon. Member for Sefton Central (Bill Esterson) pointed out with regard to the staff in Crosby, who sadly lost their station. We know they are trained to a high standard and that their professionalism is exemplary. I know that not just from visiting coastguard stations as an MP but from an earlier life working on fishing boats, and travelling regularly on ferries as I do, I am aware of yet another aspect of the work of coastguard staff. Each time I have been in the wheelhouse of a fishing boat or on the bridge of a passenger ferry and the words “Stornoway coastguard” have come over the radio, that radio has been turned up and there has been silence from those assembled within earshot, because, nearly always, serious and important words are coming across the airwaves.

How are those in the stations—the people broadcasting into the wheelhouses of fishing boats and the bridges of passenger ferries—faring at the moment? No one would know it from the professionalism that I hear coming over the radio, but in reality, although they may not show the strain, it seems that the stresses are most certainly there. When I visited Stornoway coastguard recently, the watch was at 75% of its strength. That brings us back to the point about Crosby. There is a problem with staffing, and people are working overtime to cover a shortage of staff—it is a regular occurrence. Some retired coastguard officers are coming in to help out, if only for a limited time due to the restrictions on what they can earn, and their expertise is still looked to. The demands on present staff are high.

I have good news for the Minister. I am sure he will be pleased to know that fortunately there are many people waiting to join the coastguard service. Sadly, I have not got much more good news than that—that is where the good news ends. Perhaps, by extension, we could say that the fact that 60 or so people came to Stornoway coastguard station in May and June to apply to join the service is good news, but six months later there is still a shortage of staff, and none of those people has been appointed. I am told that that pattern is being repeated across the service; in fact, some at Stornoway would argue that their situation is better than that at many other stations.

The problem has lasted for six months and is set to go on until February. That means the MCA’s recruitment process for the coastguard will have taken eight months in total. And there is more: although three staff are in the pipeline for Stornoway—they are due to start in February—the reality is that eight more are needed and the glacial pace of recruitment could go on for ever.

Can anything be done? There are indeed things that can be done, which were identified quite quickly by the staff I have met—these ideas are not mine, but are emerging within the coastguard. The bottleneck seems to be the fact that new recruits cannot start until they go to training, which takes place in Fareham or perhaps Highcliffe. There are certain dates set aside in March and new recruits can start at their stations six weeks before, hence the eight-month delay. However, there will be a knock-on effect. When will the next opportunity be? Surely the Minister and the MCA either have to look to increase training so it starts at more regular intervals, in order to shorten the recruitment period, or else think of another solution so that stations are not left with such stresses on the shoulders of their watch staff—stresses that have obvious knock-on effects on morale.

The most obvious solution would be to let new recruits into the operations room once they have been through the application process and have been accepted, so that they can do most of their training in there. Coastguard officers—seasoned people with a wealth of knowledge under their belts—tell me that that is where most of the training occurs anyway. The training centre helps to top and tail those skills; it is a useful check on quality, and is useful, too, as a refresher course.

The current situation cannot be allowed to fester—that is how it feels to many at the moment. Some in the service feel that it could be a cack-handed way to save money, but I am not sure it is that sophisticated. I would not say it is incompetence. Perhaps it is mismanagement, or I might be a bit kinder and say that it is not mismanagement but people cleaving to a system and a model idealised for some time, which they think should be delivering for the coastguard. However, it is not—it is simply not cutting the mustard.

[Jim Shannon (Strangford) (DUP)]

The coastguard station at Bangor in Northern Ireland was saved when the last changes took place. I was aware earlier this year of issues similar to those outlined by the hon. Gentleman at Stornoway. Action was taken in Belfast and at Bangor coastguard station in regard to issues of sickness and overtime, and I understand that those matters have been addressed. When changes have taken place successfully, that might be a precedent for what to do in Stornoway.

[Mr MacNeil]

I thank the hon. Gentleman. I understand from what he says that, unfortunately, Stornoway is not the only place affected like this, but I am pleased to hear that Bangor had a successful localised approach.

The situation facing some of us is an eight-month delay, which has had an unfortunate result for at least one new recruit, who gave up her job when she accepted the coastguard job, only for it to become apparent later that she would have to wait many months, until February, without salaried employment while she waited to start the job with the coastguard.

[Bill Esterson]

The hon. Gentleman is raising some worrying examples, and I can add to them because information given to me suggests that existing coastguard staff have felt criticised by senior agency management—so much so that some of them have left, which perhaps explains some of the evidence he gave earlier. That concerns me not just in terms of what is going on with the closure at Liverpool, but what is happening at Fareham and elsewhere and the knock-on effect on the service’s ability to deliver. It does not bode well if quality and experienced staff are being criticised.

[Mr MacNeil]

I thank the hon. Gentleman for his intervention. I have some evidence that I was not going to use because I thought there was not enough support behind it. Essentially, it is an e-mail containing implied criticism of existing staff, saying that there were better, more highly trained, more experienced or higher quality staff—I cannot remember the exact words—and existing staff felt undermined by that. I will be charitable and say that that was unfortunate, but there seems to be more than one example, or it may be the same example in many places, but it is unfortunate that the situation arose.

I return to the new recruit at Stornoway. I cannot help but think that that person has been mucked about by the MCA system—I will be kind and say that it is the system. We cannot treat grown adults, whom we trust to run one of our most important emergency services, like that and expect them to go months without paid employment because of the MCA’s procedures not being clear during the recruitment.

I have outlined some of the problems of undermanning in the ops room and taking in retired people, but there are other knock-on effects. Coastguard volunteers around our coast are also affected. Some people are destined to leave the operations room to train volunteer coastguards and to give them the training they deserve and the professionalism that anyone who is ever in need of their services deserves, but they cannot leave the operations room because of the demands there, so one of the knock-on effects is that that training is not happening. Those who would oversee development of the volunteer teams cannot be in place due to the glacial recruitment issues. Courses that should be happening in rope rescue, water rescue, first aid, land search, and equipment control and maintenance, to name but a few of the 20 courses in the guide, are not happening and cannot happen. We are back at the root of the problem, which is getting people into the service in a timely, speedy, correct and clear manner. This is not good for morale.

I may have sounded critical of the MCA and operations within the coastguard, but I do not mean to. There has been a general pattern of events in the coastguard service over the last few years and I have been critical, but although I am still being critical today, I hope that the criticism is constructive. We would all like nothing better than to have a properly functioning coastguard service. It is important to get to grips with that goal, and it could be happening, but it is not.

I want to spend a few moments putting on the record the importance of another aspect of guarding the coasts: emergency tug vessels. I want the Minister to understand the seriousness with which we on the west coast of Scotland regard them. We have nuclear movements going through the Minch—the stretch of water between the Hebrides and the mainland. The Minch is used by boats carrying nuclear material from Scrabster near Dounreay to the reprocessing facility at Sellafield, and we certainly do not want to contemplate one of those boats with that cargo requiring assistance, but the possibility exists. We also have fuel tankers, and those of us who do a bit of maritime trainspotting with the automatic identification system online often see tankers transiting north and south of the Hebrides between Tranmere and Mongstad in Norway. They carry fuel into some of the roughest European waters. We also have cruise ships in ever-increasing numbers, and the coastguards tell me that these sometimes carry the same amount of fuel as a tanker, which surprised me. They also carry something else very important: passengers. There are many people’s lives at stake, and we do not want one of those ships losing power along the rocky coastline of Scotland’s west coast.

If there are problems on the west coast, we will not be ready to tackle them like other nations, which take their responsibilities seriously and have plans in place to deal with problems. We have been told that we could get a tug from the oilfields west of Shetland and north of the Hebrides, but to my knowledge no simulation of a tanker or cruise ship in trouble has been carried out at the drop of a hat so that we have some experience of what would happen in real time trying to source one of those boats. I ask that such an exercise should take place. I fear that it will not happen and that our first experience will be an emergency.

I have a couple of final points. I mentioned the Faroes, Norway, the Republic of Ireland, the Isle of Man and Canada—the internationalisation of the coastguard. I am disappointed that the Smith commission on Scottish devolution has left only a consultative role for the Scottish Government. The issues I have brought to the fore would be dealt with faster and better in Edinburgh. As we saw today in the autumn statement, some of the things that have happened in Edinburgh, such as on stamp duty, have been a good example and have been copied. We have nothing to fear from devolution and control by Government outside Westminster. Sometimes, it may be for the benefit of us all.

As I said at the start, Scotland has 60% of the UK’s coastline but only 33% of the coastguard stations. Those coastguard stations are undermanned. I hope that if anything comes out of this debate, it will be that the Minister looks at the system so that we do not have the same situation in a year, and after four years a new system will have bedded down and we will have the necessary manpower in the coastguard station at Stornoway so that people do not suffer stress, can do their job professionally, and are released from the operations room to train volunteer coastguards.

16:47

[The Minister of State, Department for Transport (Mr John Hayes)]

It is an immense joy, Mr Davies, to serve under your illustrious and benevolent chairmanship. I am pleased that the hon. Gentleman secured this debate on an important issue. It is important because coastguards are important. Their work is immensely valuable and I want to take this opportunity to thank and congratulate them on all they do to keep our shores and our people safe, not only the professionals, but the volunteers. They deserve a particular mention because in my constituency and in constituencies of other hon. Members here, volunteer coastguards do a superb job.

The provision of search and rescue is an obligation enshrined in international law and convention, including the UN convention on the law of the sea and the international convention on maritime search and rescue. The UK coastguard service’s area of operation extends as far west as the mid-Atlantic and in all other directions to internationally agreed meridians.

Picking up the hon. Gentleman’s last point, national coastguard services must operate across international boundaries to provide a search and rescue capability that is most appropriate in each incident at sea. The commitment from all professional coastguards is to protect and to save using whatever assets and resources are available, even those that may belong to other national authorities. Fear, risk, safety and rescue know no national boundaries and it is important to remember that that has always been the way and the habit of our coastguards.

From December 2010, this Government entered extensive consultations to find a way of addressing combined challenges: resilience, preventing skills-fade, improving the job offer for coastguard officers, and giving greater leadership and training support to community volunteers that make up the coastguard rescue service. Hon. Members, and particularly the Select Committee on Transport, were very much involved in those discussions and the consultation, and helped to shape the blueprint that we announced in November 2011. That was further refined in September 2013, because it took longer than we all hoped to agree new pay arrangements to reflect properly the different roles and responsibilities of coastguards working in co-ordination centres.

The unions were properly and heavily involved in that process, as they should be. I work closely, and always have as a Minister, with the trade unions that relate to the sector for which I am responsible.

[Bill Esterson]

The Minister is absolutely right to praise the volunteers, who do a fantastic job in my constituency, as in his. I am sure he is aware of a point that was made in arguing the case against the closures—I am looking at the 2011 report from Crosby. What assurances can he give about the relationships between officers in the MCA and those volunteers where coastguard stations have closed, as they have in my constituency?

[Mr Hayes]

I take that relationship very seriously indeed. I have already celebrated, in this all too short contribution, the work of those volunteers, and I see them as being critically important to the link between the coastguard service and the community. They are model examples of how voluntary involvement can not only enliven communities, but provide vital services. I take the relationship very seriously, and under this Minister, it will always be taken in that way.

Nevertheless, as the hon. Gentleman will know, the national network, made up of a new National Maritime Operations Centre in Hampshire and a series of geographically spread coastguard operation centres that, in effect, retain each of the existing paired sites, has been the product of the consultation that we described. The retained sites would move progressively into the national network over time until December 2015, whereas other centres would either close completely or would remain open but would no longer be responsible for search and rescue co-ordination.

The blueprint included new and exciting coastguard roles and responsibilities with improved pay and terms and conditions. As I said, the unions were involved in developing that package for coastguard roles, which, for example, would see shift patterns redesigned to reflect better seasonal demands, and with more weekends off over a year. In the union ballot, 79% of those who voted supported acceptance of the new terms and conditions.

The Maritime and Coastguard Agency has moved on a long way from the concept phase of this programme. We are now making real progress in establishing a joined-up national network for rescue co-ordination. The new National Maritime Operations Centre near Fareham became operational from 1 September this year, when it assumed responsibility for coastguard functions along the south coast that were previously handled by the Solent and Portland maritime rescue co-ordination centres.

Coastguards at Falmouth now operate in the first of the new breed of refurbished and refreshed coastguard operations centres, and in effect, joined the national network in October. Just as envisaged by the blueprint that we published in November 2011, any coastguard function, including search and rescue, in the areas covered by the network can be handled by anyone in that network, allowing the national commander at the National Maritime Operations Centre at Fareham to make decisions about the distribution of work loads, given the people, resources and experience available. It is that improved co-ordination, better use of resources and more efficient use of skills that lies at the heart of the blueprint and its implementation.

I believe that we can maintain and improve what we do as a result of the changes. If I did not believe that, I would not support them. It is as simple as that, because there is no way that this Minister or this Government would compromise safety or inhibit effectiveness. It is simply not our intention; it never would be and it never could be. It is important for hon. Members to accept that. As the national network evolves, the number of officers on duty at a particular site becomes less significant. Measurements of input, in the end, are bound to be less significant than measurements of effect. What matters is how the coastguard operation deals with need at the point of need.

Every month, the Maritime and Coastguard Agency is either moving an existing co-ordination centre into the evolving network or ending the search and rescue function in one of the centres that was earmarked for closure.

[Mr MacNeil]

Will the Minister give way?

[Mr Hayes]

I will not, because I am very short of time. I know the MCA is far from complacent and will continue to give the closures and transitions to come the same management, attention and care, so that people, their allegiances and emotions are handled with sympathy.

I appreciate that there are always issues with this kind of radical programme, but I want to assure the House that after each transitional closure, there is a period of review, to learn lessons and improve the process before moving on to the next transition. I can further reassure the House that I will continue my regular face-to-face meetings with Sir Alan Massey and HM Coastguard officers to scrutinise and challenge the agency’s progress against that blueprint, including monitoring any particular pressure points, so that we can all have confidence that Her Majesty’s Coastguard continues to deliver the first-class service that we have all come to expect. It is absolutely right to examine and review this process to ensure the effectiveness at the point of need that I have described, in line with some of the arguments that the hon. Member for Na h-Eileanan an Iar has made in this debate.

The new coastguard roles and responsibilities are more demanding, and I am delighted that we are taking large numbers of our existing coastguard officers into the new set-up, supplemented by many new recruits. The hon. Gentleman mentioned recruitment, and he acknowledged generously that lots of people want to join.

16:55

Sitting suspended for a Division in the House.

17:00

On resuming—

[Philip Davies (in the Chair)]

We have five minutes to go.

[Mr Hayes]

These five minutes will be exciting, because we have had a break and are waiting with anticipation for the culmination of this wonderful address.

I want to talk about recruitment, because for the operations centres the MCA has recruited against 78% of the roles, while for the roles to support the volunteer Coastguard Rescue Service the recruitment figure is 90%. Of the posts that have been filled, only 21% have been filled by new recruits; 79% of the vacancies have been filled by experienced coastguards taking up new opportunities. That is very important. The need to maintain continuity, to take advantage of experience and to ensure that the skills that people have developed over time play a key part in the new operation seems to me to be salient.

I do understand that there is particular concern about the adequacy of staffing at some centres that are transitioning into the growing national network. Many of the concerns expressed by hon. Members stem from the fact that the MCA has undoubtedly found it a challenge to staff existing maritime rescue co-ordination centres to the levels set out in historical watch-keeping risk assessments. Those levels were set several years ago and erred on the side of caution.

I can tell the House that I have had an assurance from Sir Alan Massey and the chief coastguard that there are sufficient officers with the right skills available across each existing pairing arrangement, backed up by additional cover, to sustain the comprehensive search and rescue service that we would expect. I have made the effort to challenge the service on that basis; I have asked those questions and asked to be regularly updated on recruitment and staffing. Hon. Members will understand that getting everyone in place for the new roles, both at co-ordination centres and on the coast to support our coastguard volunteers, is a complex jigsaw that must be carefully handled in terms of logistics and sequencing.

[Mr MacNeil]

I would like an undertaking from the Minister that he will seek to speed up what has been a glacial process. Eight months is too long. Can he look at shortening the period so that we do not see the undermanning in operations rooms that we have seen?

[Mr Hayes]

Senior managers closely monitor staffing on a daily basis and take action to ensure that safety is not jeopardised. That is certainly true for a lot of the west coast of Scotland and at Aberdeen. The essence of the plans that we have put in place is that they must have at their heart continuing operational effectiveness. I regard it as a key responsibility to ensure that that is the case.

I end by paying tribute to the professionalism and dedication of all those wearing the uniform of Her Majesty’s Coastguard. They should rightly continue to be proud of the job that they are doing and look forward to being part of a new and exciting future. Transitional arrangements are always challenging, and new ideas are sometimes regarded with suspicion, but we must move forward and we must get this right, because we owe it to the future to do so.

Question put and agreed to.

17:08

Sitting adjourned.

Written Statements

Wednesday 3rd December 2014 Written Statements

Wednesday 3 December 2014

Autumn Statement 2014: Measures with Immediate Effect

Wednesday 3rd December 2014 Written Statements

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

This Government are committed to delivering a tax system that is fair and promotes growth and competitiveness.

As part of the autumn statement 2014, the Government have announced a number of measures to reform stamp duty, land tax, help tackle tax avoidance, address unfair tax outcomes and support investment. The legislation for these measures will have immediate effect.

Stamp duty land tax: reform of structure, rates and bands

The Government are introducing legislation which reforms stamp duty land tax on purchases of residential property with effect on and after 4 December so that it will be payable at each rate on the portion of the purchase price which falls within each band, rather than at a single rate on the whole transaction value. The legislation also amends the rates and thresholds to ensure this change is introduced in a fairway.

Corporation tax: restricting relief for internally-generated goodwill transfers between related parties on incorporation

The Government are introducing legislation to restrict a company’s corporation tax relief where internally-generated goodwill and customer related intangible assets are acquired on the incorporation of a related party’s business. The change will be effective for all acquisitions occurring on or after 3 December 2014 to prevent forestalling.

Capital gains tax: restricting entrepreneurs’ relief for goodwill on incorporation

The Government are introducing legislation to prevent claims for entrepreneurs’ relief on disposals of the reputation and customer relationships associated with a business (the “goodwill”), to a close company to which the seller is related. The change will be effective for disposals of goodwill on or after 3 December 2014 to prevent forestalling.

Capital gains tax: entrepreneurs’ relief and deferred gains

With effect from 3 December, the Government will allow gains which are eligible for the 10% capital gains tax rate provided by entrepreneurs’ relief (ER), but which are instead deferred into investments which qualify for the enterprise investment scheme, or into investments eligible for social investment tax relief, to remain eligible for ER when the gain is realised. Draft legislation for this measure will be published on 10 December.

Income tax: miscellaneous loss relief

The Government are introducing legislation to counter avoidance of income tax involving losses from miscellaneous transactions. Legislation denying loss relief where a miscellaneous loss, or miscellaneous income, arises from relevant tax avoidance arrangements will have effect from 3 December 2014. Legislation will also be introduced with effect from tax year 2015-16 to limit relief to miscellaneous income of the same type as the loss.

Bank loss-relief restriction

The Government will introduce legislation in the Finance Bill 2015 to restrict the use of brought forward losses by banks. The legislation will have effect from 1 April 2015, except for anti-avoidance rules that come into effect from 3 December.

High pressure, high temperature cluster area allowance

The Government are introducing legislation to create a new cluster area allowance to support the development of high pressure, high temperature projects and encourage exploration and appraisal activity in the surrounding area or “cluster”. The allowance will exempt a portion of a company’s profits from the supplementary charge. The amount of profit exempt will equal 62.5% of the qualifying capital expenditure a company incurs in relation to a cluster area on or after 3 December 2014.

Inheritance tax exemption for medals and other awards

The Government are extending the existing inheritance tax exemption for medals and other decorations that are awarded for valour or gallantry. From 3 December 2014, it will apply to all decorations and medals awarded to the armed services or emergency services personnel, and to awards made by the Crown for achievements and service in public life. Draft legislation for this measure will be published on 10 December.

Corporate debt

The Government are introducing legislation to repeal rules concerning the tax treatment of deferred interest and discounts on debt issued to UK companies by a connected company in a non-qualifying territory. The repeal will have effect for loans entered into on or after 3 December 2014; for loans already existing at that date it will be effective in respect of interest accruing after 31 December 2015. If the creditor or the terms of an existing loan are changed between 3 December 2014 and 31 December 2015, the repeal will have effect for that loan in respect of interest accruing after the change.

Further details on the measures listed above can be found on the gov.uk website.

UN Peacekeeping Force Cyprus (Reservists)

Wednesday 3rd December 2014 Written Statements

[The Minister for the Armed Forces (Mr Mark Francois)]

A new call-out order has been made under section 56(1 B) of the Reserve Forces Act 1996 to enable reservists to continue to be called into permanent service in support of the United Kingdom’s contribution to the United Nations peacekeeping force in Cyprus (UNFICYP).

Over 100 reservists have been called out for UN operations in Cyprus over the last 12 months. Over the period this new order will be in force we anticipate calling out similar numbers, who will be fully integrated with their regular colleagues. The use of reserves in Cyprus is now considered routine business and is fully in line with our policy of having more capable, usable, integrated and relevant reserve forces.

Currently, we plan on calling out only willing and available reservists who have the support of their employer.

The order takes effect from 11 December 2014 and ceases to have effect on 10 December 2015.

Welfare

Wednesday 3rd December 2014 Written Statements

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

The Government have made significant progress in putting the welfare state on a sustainable footing—undertaking major reforms to benefits and pensions, in order to restore fairness and restore public finances at the same time.

As part of this decisive action, at Budget 2014, the Government took the unprecedented step of introducing a cap on welfare. Today, the independent Office for Budget Responsibility (OBR) has confirmed that the Government are on track to meet the welfare cap commitment.

What is more, the OBR now forecasts welfare spending outside the cap to be £2.3 billion a year lower on average over the next four years, compared to Budget 2014—contributing to a reduction in the overall welfare spending forecast in each and every year of the cap forecast.

This is a marked improvement in exercising discipline over welfare spending. Spending in scope of the welfare cap accounts for £1 in every £6 spent by the Government. Yet in spite of this, it had never previously been subject to firm controls and was allowed to increase by £48 billion under the last Government, up from £70 billion to £118 billion. This was within an overall welfare bill that increased by 60% in real terms, rising even before the recession.

This Government’s welfare reforms are set to save nearly £50 billion over this Parliament. But for these vital changes, welfare spending was set to be that much higher still.

Instead, by actively managing welfare spending, we have halted the damaging trend of welfare spending escalating out of control. Overall welfare spending has been falling as a proportion of GDP since 2012, and last year fell in real terms for the first time in 16 years —even while spending on pensioners rose. This year, working age welfare spending is forecast to be £3 billion lower in real terms than in 2009-10. Testament to the success of the Government’s long-term economic plan, there have been significant falls in spending on unemployment, down over £2 billion since the recession; and on out-of-work benefits, back to pre-recession levels by 2015-16.

Today, the OBR’s first assessment of the welfare cap shows that the Government are forecast to meet the welfare cap commitment, in each of the four years of the forecast period from 2015-16 to 2018-19. The Government are living within the rules of the cap and there has been no breach.

The detail of that assessment is set out in full in the OBR’s “Economic and Fiscal Outlook December 2014”. This explains that the use of the margin in 2015-16 and 2016-17 is due to forecast reasons, not policy changes— the margin exists to allow for such fluctuations in the forecast. As the OBR has set out in the economic and fiscal outlook, its forecast for the volume of work capability assessments for employment and support allowance has been adjusted downward, and the forecast of the number of people who are likely to receive PIP has been adjusted upward. These, alongside other changes to the incapacity and disability benefit forecasts, have increased the forecast and result in use of the margin in 2015-16 and 2016-17, then falling below the margin in 2017-18 and 2018-19. However, overall, compared to its forecasts at Budget 2014, the OBR has revised welfare spending down by £1.3 billion a year on average up to 2018-19.

Importantly, these reforms are set to save money and deliver efficiencies in the long term. That much is shown by excess spending continually falling over the four-year period, bringing spending below the level of the welfare cap in 2017-18 and 2018-19.

Above all, this reflects the full effect of the Government’s action to bring spending back under control, arresting the growth that was once left to escalate. In future years, the aim must be to continue to exercise discipline and rigour in managing welfare spending—as this Government have committed to do.