May I start by saying how pleased I am to see you in the Chair, Mr. Conway, and thanking Mr. Speaker for selecting this important debate? I am aware that it is of significant concern to Members of all parties, particularly those who represent constituencies along the east coast of England.

As the much-talked-about Stern report confirms, the evidence for climate change is now overwhelming and global warming poses a serious risk. Stern has calculated that if action is not taken soon, the earth’s temperature will rise by 2° C by 2035. Not only could climate change shrink the global economy by 20 per cent., but it could reduce crop yields. North sea storm surges, increasingly unpredictable weather and dramatic sea-level rises will put millions of homes and businesses at risk of flooding on an unprecedented scale. We in Britain must take action not only to mitigate future climate change, but to adapt to the damage already done. That will require detailed planning and investment in Britain’s flood defences to safeguard our coastal areas.

I shall put some stark statistics on the record to provide an overarching context for this debate. A 40 cm rise in sea levels, which could happen by 2040, will put an extra 130,000 properties at risk of flooding. In total, 400,000 properties will be at risk, counting only those that exist today and not those constructed in the future. Some 2.5 million people, 82,000 businesses and 2 million acres of agricultural land are also at risk from coastal flooding and erosion. Without improvements to existing flood defences, the cost of a single major coastal flood could soar by 400 per cent. to as much as £16 billion.

In view of the statistics that my hon. Friend has given, would he agree that the Government are negligent in seeking to put so many thousands more houses on the Thames estuary flood plain?

My hon. Friend makes a good point, which I shall put in context. The reduction in resource allocation to coastal flood defences is significant. It could be detrimental to his constituency and mine. The Government’s new funding regime for the internal drainage boards that take precipitation off the land, particularly land below sea level—I shall come to it in some detail later—could also have a significant and damaging impact not only on coastal erosion but on the safety of the people with businesses, livelihoods and homes in the areas that we are discussing, especially on the east coast of Lincolnshire.

It is not just the extra construction that my hon. Friend highlighted but essential services that are at risk: 15 per cent. of fire and ambulance stations and 12 per cent. of hospitals and schools are in areas likely to be flooded. As many as one in five could be affected following sea level rises. The elderly will be particularly affected, as the number of those over 75 living on or moving to the coast is expected to double by 2028.

To exacerbate the problem, the Department for Environment, Food and Rural Affairs has recently announced that it is cutting £15 million of the £428 million flood defence budget. The budget constraints are partly a result of the Government’s mismanagement of single farm payments but also, I accept, of the unexpected expenditure of preparing for avian flu. The Government also have yet to agree the Environment Agency’s budget for 2007-08. We must ensure that they do not reduce any further the funding for coastal flood protection and therefore the security of livelihoods in the United Kingdom.

The statistics paint a bleak picture for many coastal communities in Britain that rely completely upon coastal flood defences for their survival. That is particularly true in my constituency, which lies entirely on a flood plain, much of it below sea level. The Environment Agency produced for every Member of Parliament a map demonstrating the impact of flooding on their constituency. I know that we are not allowed to use props, Mr. Conway, but has the Minister has seen the map and the effect that flooding would have on my constituency? It will be completely underwater unless sufficient resources are given to both coastal flood defences and internal drainage boards. The flood risk in Lincolnshire extends as far as Woodhall Spa, which is 25 miles inland. Much of the high-quality agricultural land making up my constituency was reclaimed from the sea in the past 400 years or so, but with the North sea continuing to rise by about 6 mm per year, it is once again at severe risk. Indeed, one report indicated a net sea level rise on the east coast of up to 34 cm by the middle of this century.

I pay tribute to the excellent work of numerous organisations that ensure that Lincolnshire is protected from flooding. Without their expertise, the majority of my constituency and some of the country’s finest agricultural land would be underwater. Given sufficient resource allocation and their skills and knowledge, it is difficult to envisage any circumstances in which inland flooding would occur as a result of precipitation alone. The internal drainage boards, in particular, play a vital role in monitoring and controlling water flow in Lincolnshire and the fenlands. I recognise the importance of the Boston combined strategy, which will manage the risk to Boston of tidal flooding. I also recognise that although this debate is on coastal flooding, inland and sea flood defences in east Lincolnshire are inextricably linked and must be considered together.

Extreme coastal flooding has occurred. In 1953, numerous people were killed when flood waters reached many kilometres inland, destroying homes, businesses and infrastructure and salinating many square miles of high-quality agricultural land. It was the worst natural disaster to hit northern Europe in 200 years.

We do not want that to recur. If it did, the situation would be far worse and far more serious. On the east Lincolnshire coast between Skegness and Mablethorpe, there are 26,000 mobile homes, most of which would be seriously affected by any breach of the sea defences. The economic impact would also be substantial, as the tourist industry so vital to the coast would be devastated. Most of the areas that would be affected are areas of socio-economic deprivation, with a working population of 56 per cent. compared with the national average of 62 per cent. More than 40 per cent. of employment on the coast is part-time, compared with 32 per cent. nationally; 26 per cent. of residents are aged 65 or over, compared with 16 per cent. nationally; and 19 per cent. of residents have no qualifications, compared with 14.3 per cent. nationally. The area requires investment, but investment is unlikely without sound flood defences financed in the long term and with adequate maintenance budgets, as 40 per cent. of all flood defences currently require maintenance.

Flooding would submerge acres of high-quality agricultural land, destroying crops and having a long-term impact on soil productivity. Lincolnshire produces 20 per cent. of our national food supply, saving billions of pounds of imports and incalculable food miles. Loss of that important agricultural land would devastate the local economy and community, but would also have a wider impact on the national economy and national food security as well as carbon emissions.

My constituency has two very different types of coast—the Wash and the open coast—which require different solutions. The Wash is recognised as a site of special scientific interest and a special area of conservation for its international importance for wildlife. It is mainly natural salt marsh, which provides an effective buffer to wave action. Steps are being taken to create more natural salt marsh, which will increase the area’s ability to absorb water, but future schemes are highly dependent on funding from the Department for Environment, Food and Rural Affairs through the Environment Agency or the new higher-level environmental stewardship scheme. However, both funding instruments have been cut, and I would like the Minister’s assurance that all higher-level schemes protecting the shoreline will be adequately funded.

I welcome shoreline management plans, which are a useful tool for co-ordinating the various groups responsible for protecting our coast from flooding. I understand that they are currently being revised and urge the Minister to ensure that organisations involved with the second generation of shoreline management plans take into account local concerns and provide a robust and detailed assessment of economic, environmental and social factors. I also urge him to consider managed retreat—the example in my constituency is Freiston Shore—and the expansion of flood defences.

Would my hon. Friend agree that, in considering the form of flood defences that are to be taken forward, it is also vital to consider the amenity value of the area that is to be protected? Whether a coastal area is an area of natural beauty and environmental importance or a built environment, such as in my constituency, we must find a solution that is not just an engineering solution, but one that preserves the character and the amenity value of the place that we are trying to conserve.

My hon. Friend makes a good point and he is absolutely right. The solution will be different in each local circumstance in our coastal regions in different parts of the country.

My hon. Friend is most generous in giving way a second time. Does he accept that building a barrier to defend one community from flooding may affect another community on the other side of that barrier? That is particularly important in the Thames estuary. Placing a barrier downstream of Canvey Island would have a massive impact on the island, yet putting one upstream of the island could cost £5 billion.

I am not an expert on the flood defences for Canvey Island, but my hon. Friend makes a good point that I am sure the Minister and his officials will note.

The first generation of shoreline management plans were 50-year plans. I urge the organisations that are now drafting them to take a longer-term view and to take account of the likely impact of climate change going into the next century. It would be helpful if the Minister could provide more detail about the improvements that are expected in the second generation of shoreline management plans, when they are expected to be completed and when they will be put into the public domain.

The other part of the coastline in my constituency is the open sea coast around Skegness, which is eroding naturally, thereby putting property and infrastructure at increased risk. The Lincolnshire project of dredging sand from offshore to recharge the beaches as a line of defence will cost more than £8 million this financial year, and future funding is not secure. It would be helpful if the Minister could provide an assurance, either this morning or in writing, that the Environment Agency will continue that dredging to protect the east Lincolnshire coast.

I am also deeply concerned by the recent announcement from the Department for Environment, Food and Rural Affairs that it is to cut £15 million from the flood defence budget. I accept that that comes in the context of increases in funding since the Government came to power. However, the cut could have a detrimental impact on flood defences around the country, as funding may not be available for important capital projects. Additionally, the Government have yet to agree the Environment Agency’s budget, so it would be helpful if the Minister could provide an assurance that there will be no further reduction in funding for flood protection. The Association of British Insurers has calculated that an extra £8 billion needs to be spent over the next 25 to 30 years to improve coastal defences along the east coast alone, and that spending on flood defences needs to rise from the current level of £570 million a year to £750 million by 2011, which is an increase of around 10 per cent. a year.

The reductions in the revenue support grant for the flood defence service hit the areas that can least afford it. The demands of the service bear heavily on some councils, which have to meet the special levies payable to internal drainage boards, which in turn play a vital role in managing local water levels. The scaling factor within the revenue support grant system has fallen from 1.032 in 2000-01 to 0.870 in 2005-06. For some councils, particularly along the Lincolnshire coast, that outcome is severe and reduces their capacity to provide other services.

The revenue support grant funds revenue expenditure, special levies paid to the internal drainage boards and levies paid to the Environment Agency. However, those services have been increasingly underfunded through the scaling factor, with a shortfall of around £4 million in 2005-06. I do not want to get too technical, but that will be carried forward into the new four block model from 2006-07. Following the review of the formula grant in 2005, the four block grant model was introduced from 2006-07. The previous underfunding has effectively been embodied in the new funding system. The scaling factor for flood defence expenditure is the most severe under the new grant arrangements.

People might ask what the impact of that is. The result for local authorities is that they are obliged to pass the cost of flood defence expenditure on to the council tax payer. In 2005-06, East Lindsey district council, which is responsible for the Skegness and, further north, Mablethorpe parts of the east Lincolnshire coast, was expected to spend nearly £2.6 million on flood defences, yet received only £2.1 million in revenue support grant, which leaves a shortfall of just over £400,000 to be met by the taxpayer. Similarly, the flood defences in Boston will cost £1,579,000, yet the revenue support grant provided only £1,321,000, leaving a shortfall of £258,000. The impact of that on council tax is an increase of £14.19 in band D, which is a significant percentage in an area of socio-economic deprivation in a low-wage, low-skill part of the country.

The problem is exacerbated by the Government’s policy of capping council tax increases at 5 per cent. As expenditure on flood defences rises more rapidly, local councils face a stark choice: cut expenditure in other areas of service provision or leave the area vulnerable to flooding. Such cuts or tax rises could have a devastating impact in an area that already suffers from socio-economic deprivation and in which people already struggle to pay ever-increasing council tax bills. Yet spending pressures continue to rise. Inflationary pressures, additional demands to maintain current waterways, riparian recharges and the need for adequately serviced land for housing and economic development all demand additional resources.

My hon. Friend makes his case extremely eloquently. I should like to add one more point to his list, which is that the consequences of coastal flooding are not limited to the areas to which the sea level may rise. Above that level, the consequences are erosion, rotational slip in my constituency, and damage to housing, infrastructure, roads, sewers and so on. They need to be added to the list of problems with which local authorities have to deal.

I am grateful for my hon. Friend’s intervention. As always, he is an assiduous Member of the House, with the interests of his constituency at the forefront of his mind. I am sure that the Minister and his officials will take on board what he has said.

I should like an assurance from the Minister today that the revenue support grant for both Boston borough council and East Lindsey district council will be increased in the next financial year to ensure that they receive sufficient resources for coastal flood defences and the internal drainage boards, and are not forced to make the terrible choice of raising council taxes, cutting public services or increasing the likelihood of flooding.

In addition, there is a moratorium on the approval of capital schemes for both internal drainage boards and local authorities, because the funding demand is greater than the funding available. It would be helpful if the Minister could provide further information on when the moratorium is likely to be lifted and about the backlog of applications for funding capital schemes. Internal drainage boards play a vital role in protecting Lincolnshire from flooding, but they will require significant capital investment in the near future, as many still operate with technology from the 1930s and 1940s that is reaching the end of its usable life. In the long run, that capital investment will result in efficiencies, but discussions need to be had now about how those funds are found.

I am also keen to ensure that the internal drainage boards retain their local control. In the past, it has been suggested that the Environment Agency should take control of the management of the boards. I am strongly opposed to that idea, as are the internal drainage boards, as they need to retain their detailed local knowledge and expertise. I should welcome a reassurance from the Minister that that suggestion is completely off the agenda.

Many of my constituents have contacted me concerning their nervousness about obtaining insurance for domestic properties and businesses in areas at risk of flooding. An excellent recent report by the Association of British Insurers raises concerns, of which I am sure the Minister is aware, about its statement of principles with DEFRA. The statement is an agreement between the Government and insurers to ensure that, in the long term, as the former continues to invest in flood protection, the latter will continueto provide cover to homeowners and small businesses. However, many members of the ABI will not insure any new building unless it has only a 0.5 per cent. chance of flooding or less, and the statement of principles covers only the majority of properties. The Government must work further with the ABI and its members to ensure that flood insurance is provided at a reasonable cost to as many homes and businesses as possible, particularly in areas of socio-economic deprivation, such as coastal Lincolnshire, where, for many businesses and individuals, the net financial cost of getting insurance constitutes a significant part of their outlays. Unavailable and expensive insurance could have a negative impact on the economy of the east Lincolnshire coast. The local authorities are keen to diversify the economy away from its traditional agricultural base, but without guaranteed insurance and the long-term protection of land, developers will struggle to attract new investment and new businesses into the area. The Government and the Environment Agency must do more to ensure that such security can be offered, so that new businesses feel confident in developing and investing in east Lincolnshire and other coastal strips across the country, providing sustainable, non-seasonal employment and stimulating economic regeneration and wealth creation.

The Government must ensure that flood defences—both hard, such as sea walls, and soft, such as salt marshes—are fully funded and maintained. That will require sufficient funding for the Environment Agency in the comprehensive spending review, and the revenue support grant to each council must be sufficient and appropriate for the financing of flood defences without cuts in public services.

The Environment Agency must give a clear commitment to maintaining the defences and, if necessary, when sea-level rise occurs, improving and increasing the defences to protect communities and valuable farm land in Lincolnshire and elsewhere. Currently, the ambiguity on the part of the Environment Agency is a major barrier to inward investment and is leading to a confused policy area, as other Government Departments push to improve economic growth, make social and educational improvements and make the quality of life better for residents in the area.

The Stern report provides evidence that global warming presents a serious threat and the Government must match not only taxation but expenditure to the threat of climate change. Nowhere is that more important and appropriate than in south and east Lincolnshire. I conclude by quoting Professor Sir David King, chief scientific adviser to Her Majesty’s Government and head of the Office of Science and Technology:

“Continuing with existing policies is not an option. We must either invest more in sustainable approaches to flood and coastal management or live with increased flooding.”

I assure the Minister that this is not the time for cuts.

First, I congratulate the hon. Member for Boston and Skegness (Mark Simmonds) on securing this debate on flooding, one of many in which I have participated in the past few years. I am sure that there will be many more in future. I concur with many of the points that he made.

I shall be relatively brief, because I do not want to go over again what has been discussed before. I want to relay the views held in my constituency of Great Yarmouth as a result of recent flooding. Although it was not to do with coastal flooding, we must be aware that such events will increase because of climate change. For four or five weeks, we had such heavy rainfall that some places in town were flooded on three separate occasions. One particular instance was regarded as a one-in-100-year event, although for the residents who suffered from that flood, that is no excuse. Many are still suffering from its effects.

Given the onslaught of climate change, had that event happened at the same time as the high tides and high winds that we experienced two or three weeks later, the borough of Great Yarmouth would, I suggest, have been severely flooded. We need to look clearly at the question of flood defences around the entirety of the east coast in particular—certainly my part of the region.

Three or four separate consultations are going on at the moment, including the shoreline management plan, which has proved controversial in my part of the region and in north Norfolk. The hon. Member for North Norfolk (Norman Lamb) is not here, but I know that he is sincerely worried about the effects of coastal erosion in the area. The broadland rivers catchment flood management plan or CFMP mentions that any breaches in sea defences at Winterton or further north could flood and have a severe effect on the Norfolk broads; obviously the River Thurne would be covered by that as well. The CFNP relies on the shoreline management plan to put sea defences in place to prevent that happening, yet the shoreline management plan does not suggest further improvements to that shoreline. Two consultative documents are considering their own areas, but do not seem to be working together to find a solution. There was also the broadlands flood alleviation project.

My constituency is surrounded by water: the sea to the east and the broads to the west. Great Yarmouth itself has the River Yare as well. We are really up against the problems associated with coastal flooding. Part of the shoreline management plan is about managed retreat. Although I accept that there is concern about the agricultural land that may well be destined to be flooded, I am sure—or, at least, I hope—that a part of that plan will take the relevant effects into account.

My concern is really for my communities, which range from Winterton in the north to Hopton in the south. The northern part of the parishes—Winterton, California, Hemsby, Scratby—are seriously under threat, and action teams are trying to raise the profile of the problem of coastal erosion.

I accept that we cannot stop the force of nature. Unfortunately, climate change has gone so far that it will be very difficult to reverse the trend. However, there are things that we can do. It is significant that the Association of British Insurers, representatives of which I met recently for discussions after the flooding in Great Yarmouth, is calling clearly for a 10 per cent. increase in funding year on year for the next 15 or 20 years, to take into account the necessity of improving our flood defences.

The human and financial costs are clear from the statistics of a number of years. The ABI report says that claims for storm and flood damage in the UK in 1998 to 2003 were £6.2 billion, double the figure for the previous five years, and it estimates that the figures could triple by 2050. That is a real problem. In January and February 1990, storms and coastal flooding led to £2.1 billion in insurance claims alone. In 1998, floods cost the insurance industry £500 million, and in 2000—the wettest autumn for almost 300 years—they led to insurance claims of almost £1 billion. We can see some of the issues that are coming forward. We should not take such issues lightly, but take on board the effects on communities.

I am sure that my hon. Friend is aware that successive reports of the Agriculture, Fisheries and Food Committee and its successor, the Environment, Food and Rural Affairs Committee, have talked about managed retreat, but also about the need to pay farmers to allow their fields to flood when flood water needs to be removed. I do not know how far we have got with that; to me, it seems a very sensible use of the single farm payment. It would add certainty. Like my hon. Friend, I have talked to the ABI. Bringing that idea forward would be an appropriate way of using the single farm payment and protecting the land that we want to protect. Does he agree?

Absolutely; my hon. Friend makes a valid point, which I am sure the National Farmers Union, many of my constituents and others throughout Norfolk would welcome as an initiative. I hope that the Minister will respond directly to the point and take the issue forward.

It would be remiss of me if I did not say that although there will be criticism of the fact that we do not spend enough on coastal flooding, the Government clearly have a feather in their cap: since 1997, they have taken the issue seriously. Just recently, there was an increase.

I am interested in the hon. Gentleman’s points about his area. Will he clarify something? There is a fundamental difference, particularly for agriculture, between coastal flooding from the sea and inland flooding. Obviously, the flooding of productive land by salt water, as opposed to seasonal water, has horrific long-term consequences. Was he suggesting that farmers in his area should welcome seawater on their land as a part of the new arrangement?

No, absolutely not. What I am suggesting is that, if we accept that there has to be managed retreat and farmers accept that there will be a negotiated settlement with suitable compensation for agricultural and other land, I do not see why we should not go forward on that basis. What I do not accept is the premise that we should accept that we will have flooding—it may well be inland flooding, which occurs when river levels rise over a number of years—and that landowners will, unfortunately, probably be flooded inadvertently. Following the recent heavy rains, the ingress of salt water into the fresh water riverways did a huge amount of environmental damage and destroyed an awful lot of fish in the rivers in the Norfolk broads. There are therefore concerns about the issue, and I accept that there is possibly a need for managed retreat, but I also suggest that there must be relevant compensation. If the single payment fund is used following negotiations—and provisions have to be accepted on that basis—I see no problem with going ahead in that way.

Is the hon. Gentleman aware that the World Wide Fund for Nature, to give it its new title, has suggested that there might be environmental benefits to carefully managed retreat, such as increasing the potential for fish nurseries and new wetlands?

Absolutely. I agree that that is perhaps another avenue that needs to be looked at. Indeed, one of the proposals for urban regeneration in my constituency is to form a new wetland just outside the town. The proposal has certainly received positive comments, and I see it as a positive way forward. If we can have a dialogue with all the interested parties, I see no problem with accepting that as the way forward. However, I disagree with people—whether the Government or any of the other agencies—who come along and say, “This is what is going to happen, whether you like it or not.” That is not the attitude that we need. We need to put clearly in place the funding strategy that is needed to protect areas with large communities and, indeed, many valuable environmental areas, such as the Norfolk broads, from an ingress of water; that must be the priority.

I welcomed the Government’s increase in funding for flood defences against coastal and inland flooding, but I am a bit perturbed that there is an element of cuts when we should be moving forward year on year. The ABI’s recommendation of a 10 per cent. increase should not be considered as too far out of the way—there is too much for us to lose.

While we are talking about flooding, I want to return to one of my pet subjects, which I have been going on about in such debates for many years. Part of the coastal erosion that we are seeing is really down to some of the dredging activities in the North sea. My area of the coastline has certainly seen significant licences awarded in recent months and years, which seems a bit perverse. To use an analogy, I used to go on to Yarmouth beach as a lad to dig holes in the sand near the sea, but as soon as the water came in, the sand at the side of the hole filled it in. If we dredge millions of tonnes of aggregate and sand from the sea, something has to fill the hole, and, over the years, that material will come from the edges. It seems a bit perverse to talk about replenishing beaches with sand that we have dredged from the North sea, when that sand will presumably go back into the hole and when we are paying significant sums in the process. Once again, I call on the Government to at least consider stopping the export of aggregate and sand. That would prevent the dredging activities in the North sea or at least cut back a significant part of them. I know that the scientists will argue among themselves and say, “Yes, dredging has an effect” or “No, it doesn’t have an effect.” However, we really should have a significant report on the issue, because I still consider that dredging has an effect on coastal erosion. The problem is that when we find out that it has had an effect, it will be too late.

Before I finish, I have one question that I really want to ask the Minister. Has any authority in my constituency put in any capital applications in the past 12 months in relation to looking at coastal defences? Thank you.

I am grateful that we are having this debate, because coastal flooding is a major issue for people in my constituency.

In some way, the ABI’s report “Coastal Flood Risk—Thinking for tomorrow, acting today” precipitated this debate, and it is a useful contribution to the overall debate on coastal flooding. It was particularly useful for me, because Southend was pinpointed as one of the areas that would be under increased risk of flooding in the coming years.

Let us get things straight: this is not a hypothetical issue, but a real concern, which is faced by all our constituents. The great storm in 1953, which was mentioned in the report and by my hon. Friend the Member for Boston and Skegness (Mark Simmonds), killed nine individuals from around Southend, Great Wakering and Foulness. The total death toll around the UK was 309. There is a vivid living memory of that event in my constituency, and no one wants to see it repeated.

The ABI predicts that, with the existing defences in my constituency, 1,400 residential and commercial properties would face significant flooding if the 1953 storms were repeated, causing losses of anything up to £86 million. Let us look at what would happen if, as the ABI predicts, sea levels rose by 40 cm. With the current levels of protection, the same storm would significantly increase the number of properties flooded to more than 24,000—a huge increase. The financial cost would go up to more than £330 million.

On top of all that, the Government are planning to develop the Thames Gateway, with 160,000 houses planned by 2016—the 120,000 originally planned are not sufficient. Some 35 per cent. of the developments are planned for the flood plain in south Essex, which makes absolutely no sense to me. A very worrying picture is building up.

We also need to look at communication. Charles Beardall, the eastern region manager at the Environment Agency, has been making a lot of effort to keep me and the local community informed and updated about the projects that the agency is running. Indeed, the agency ran a public consultation, as part of which it held a successful event in the village hall at Great Wakering. Local people could come along and talk to the experts about what was happening, and I look forward to the outcome of that consultation.

However, there is no real money to deliver the projects; indeed, there was none even before the cuts at the Department for Environment, Food and Rural Affairs. Flood risk management at DEFRA has seen funding cuts to the tune of £14.9 million, and there is no doubt that the Environment Agency will suffer and that individuals will suffer as a result. As the Minister will know, I am a member of the Select Committee on Environment, Food and Rural Affairs. As recently as Monday we took oral evidence in public from Helen Ghosh, the permanent secretary at DEFRA, as part of our inquiry into its annual report. We talked about the impact of the cuts, and it would be fair to say that it might be as follows: there will be reductions in the rate of repairs on flood defences; in channel clearing and maintenance; in asset management plans and structural asset services, which are so important; in risk-based assessments; in flood warnings; in flood mapping; and in studies and the collection of data, which is essential. There will also be a reduction in the number of pre-feasibility studies, or else existing feasibility studies will be slowed down. In many cases, catchment flood management plans will be delayed. Action on water level management plans, where they affect sites of special scientific interest, will be reduced and delayed.

I do not think there is any doubt that the Environment Agency’s services will be harmed, and it is vital that the agency should be given necessary funding. It is also important that it should be made a statutory consultee on proposed developments. Planning policy statement 25 on development and flood risk still has not been published. There was a consultation on it a year ago, which indeed proposed that the Environment Agency should be a statutory consultee, but the promised statement has yet to be delivered.

Would the hon. Gentleman be interested to know that my latest information is that the Select Committee on Communities and Local Government is currently consulting on whether that consultation should take place?

I thank the hon. Gentleman for that information, which I am sure the Minister will note with interest.

In the Select Committee inquiry the agency noted that it already lacked the appropriate resources to carry out basic planning applications, so this year’s budget cuts do not bode well, especially if the consultee status is indeed delivered.

The ABI has made it clear that insurers do not want to insure new developments on flood plain lands in high risk areas. That will put off the private sector, which will not want to go into the development of projects and properties that it will not be able to sell. Perhaps we will be saved, after all, in the Thames Gateway, as the plan falls flat on its face because the Government have not done their homework on flooding, and consequently have scared off investors. That issue has not escaped the academic world. Writing in Regeneration and Renewal, Professor Sir Peter Hall of University college London noted that according to the interim plan published last week, most of the Thames Gateway jobs will be at the London end:

“But beyond that there was little indication, because of one key problem dogging the project: flood risk.”

He goes on to say:

“The report casually mentions that the Environment Agency will complete a draft assessment by 2008—a year after the plan is to be finalised. This is crucial because many sites proposed for large-scale development, especially in Essex, are at risk.”

The whole Thames Gateway development faces a very watery grave—I hope that the Minister will forgive the pun. We in south Essex are deeply concerned about the Government’s plans and would like the Government to reconsider the position before hard-working families move into properties that will ultimately be flooded.

As to infrastructure, the bulk of flooding that the ABI has predicted in applying its catastrophic model will take place at the eastern end of Southend and Shoeburyness. For hon. Members who are not entirely au fait with the constituency map, Shoeburyness is literally at the end of the line, following the Thames on the northern banks. If a major storm occurs there will be a disruption in rail links between Southend and Shoeburyness, and flooding on the main roads linking those two areas. That would have a severe impact on local residents at the very time when infrastructure links would be vital. The floods in New Orleans following hurricane Katrina showed dramatically what happens when the right infrastructure is not there. In particular it showed the human impact of flooding and the disproportionate impact on vulnerable groups, which my hon. Friend has already highlighted. In Shoeburyness not only would residents be cut off, but a large proportion of those residents would be elderly and frail, and there would be a lower proportion of young and able-bodied people to assist them.

In summary, I shudder when I think of the ABI catastrophic impact scenario playing out in my area. People in Kenya, Somalia and Ethiopia face such floods today. This debate is not the place for a plea for assistance for them; but what is happening in those places is evidence that climate change is happening now. When it reaches us it will not be pretty. I am very grateful for the opportunity to take part in this debate.

My remarks will be brief, as time is getting on. First, I congratulate the hon. Member for Boston and Skegness (Mark Simmonds) on securing this timely debate. So far it has necessarily, and perhaps rightly, focused on the east coast of the country, but I want to say a few words about the other side, the west coast.

Our country has one of the longest coastlines in Europe. Wales, with about 6 per cent. of the UK population, has about 10 per cent. of its coastline. My constituency of Ceredigion has 50 miles of that coastline, with towns such as Aberystwyth, Aberaeron, New Quay and Borth, to name a few, lying within the sea’s reach. In my brief speech I hope to develop the theme of how funding decisions taken in recent months by the Department for Environment, Food and Rural Affairs will impinge on the capacity of the Environment Agency Wales to provide the coastal protection that we seek. The Environment Agency Wales is funded by the National Assembly, but is still part of the larger Environment Agency of England and Wales.

The natural strength and unpredictability of the seas and seasonal changes have always meant that living by the sea is a risk. The sandbags have been out in my communities for the past few months. Year in, year out, that risk is always present. However, the realities of climate change and the resulting rises in sea level have made the threat even more potent. The Government-funded UK climate impacts programme predicts that sea levels on the Welsh coast could rise by as much as 74 cm by 2080, and the Stern report, which was hailed by the Prime Minister as the great wake-up call, alerts us all to the need to adapt and to prepare for the impact of climate change. That message has not been lost on my constituents or other people in Wales: there has been a 28 per cent. increase in registrations—that is 15,000 new customers—for the Environment Agency’s flood warning service in Wales.

Constituents of mine have for years faced the rough edge of nature’s sword. In November 2005 the river harbour wall in the town of Aberaeron collapsed under the weight of flood waters. Other areas of my community are under threat, and three priority projects still await funding. Other hon. Members have alluded to the funding shortfall; it is estimated that the total spend required on capital projects is £69.7 million, yet I am told that the Environment Agency Wales has £6 million in its coastal defence budget. I appreciate that the funding of flood and coastal defences is a devolved matter, but by my calculations the proposed £15 million cuts to the Environment Agency’s flood defence maintenance budget may mean—I seek clarification from the Minister—a corresponding cut in the Assembly’s block grant of anything up to £900,000. That would be lamentable. The Minister shakes his head; I seek reassurance that that will not happen.

Clearly, any cuts in the Assembly’s budget would have to result in savings elsewhere. We are told that the cuts are for one year only, and that may be so; nevertheless, they go completely against the grain of the Government’s commitments on the effects of climate change. I congratulate the Government on their 35 per cent. increase in spending since 1997—it would be churlish to do otherwise—but this year is not the time to reverse that trend. That was borne out by the report of the Association of British Insurers last month, which made it crystal clear, as other hon. Members including the hon. Member for Great Yarmouth (Mr. Wright) have said, that we should be hoping to increase spending by 10 per cent. a year, to £750 million by 2011, to combat flood risk. The Environment Agency Wales has similarly called for increases in resources to take account of the risk.

It is particularly galling to my constituents and others that the cuts seem to have been forced on DEFRA by the cost of the mismanagement of the single farm payment. As a result, the Welsh block grant and other DEFRA services provided to England and Wales at UK-wide level, such as the state veterinary service, will lose funding. As a point of principle it is wrong that we in Wales and people elsewhere should face serious shortfalls in budgets because of those decisions. So far the effect of DEFRA’s summer budget review in respect of Wales and the Welsh block grant has yet to be fully identified, but I ask the Minister to prove me wrong—I sincerely hope that he can—and to make a clear statement on how cuts to the flood maintenance budget, and the savings more generally, will affect us on the west coast, in Wales, and, of course, people on the east coast as well.

I am grateful to you, Mr. Conway, for calling me to speak near the end of the debate. I represent an urban constituency that is8 miles from the sea, but it is on a tidal river and anything that happens at the coast could have an impact on urban areas upriver. Indeed, a barrier had to be constructed across the River Colne a few years ago to prevent surge tides from coming up and flooding the lower areas of Colchester. A mini-Thames barrier is the best way that I can describe it.

On the one hand, I congratulate the Government, but on the other, I strongly criticise them. I congratulate them on their work on managed retreats in coastal areas, where that can be achieved. At Abbotts Hall, the Essex Wildlife Trust has developed just such a policy by allowing the tide to breach the sea wall and come in and create new salt-meadow marshes. That is something to be praised. The hon. Member for Scunthorpe (Mr. Morley), when he was a Minister, came to Abbotts Hall for the formal opening. It was quite an occasion to watch the tide come through the breached sea wall to engulf what only the week before had been a ploughed field; the corn crop had been harvested for the last time. Such developments are how coastal flooding can be dealt with in some places, certainly for a generation or two.

However, I echo the sentiments of the hon. Member for Rochford and Southend, East (James Duddridge), because there are potential flooding problems in the north of the county that have been caused by Government decisions to allow housing to be built on areas prone to flooding that I can only describe as stark staring bonkers. Only three weeks ago, on appeal, a Government inspector allowed a housing development right next to the River Colne in an area that is known to be prone to flooding. Just as in the Thames Gateway area, it is not fair to build houses in such areas—it is not fair to the people who will be obliged to live there. I suspect that in many cases social housing will be put on such land, because the private sector may well take the view that such areas are not the place to build.

Therefore, although we can praise the Government for their work on managed retreat, as illustrated by the Essex Wildlife Trust at Abbotts Hall, I urge the Minister and his colleagues to take very seriously the point made by the hon. Gentleman and Southend, East, by me and, I am sure, by hon. Members up and down the country who represent not only coastal areas, but areas where tidal and other rivers have a habit of flooding on to surrounding land. Building houses on such land is not acceptable, and I hope that the Minister will work with his colleagues to stop such nonsense.

I hope also that the Minister will be able to stop the development on the flood plain in my town. The borough council, knowing the area, unanimously refused the application, but then an inspector was persuaded to allow it by experts who, it seems, will prostitute themselves and give evidence either for or against something, depending on who is paying. It is the community that ends up paying the ultimate price. The experts, planning inspectors and highly paid legal executives leave, having given their evidence. I ask the Minister, please, to work for common sense and to stop the building of houses on flood plains.

I congratulate the hon. Member for Boston and Skegness (Mark Simmonds) on securing the debate on an important but extremely sensitive issue. It demands honesty and political courage and, even more challenging, it sometimes demands support for the Government if they do the right thing and act realistically. However, realism also is demanded of the Government, and sometimes they must admit that some of the policies that they have espoused in the past may not be viable in the light of what we now know about flood plains. The remarks made by my hon. Friend the Member for Colchester (Bob Russell) reinforce that.

The context is clear. We all know the statistics on climate change, so I shall not go over them again. However, as well as considering shorter-term rises in sea level, it may be worth our while to look at the longer-term scenarios. The most apocalyptic version that I know of involves the complete melting of the Antarctic ice cap, which would lead to a truly biblical rise in sea levels of some 60 m, but thankfully that is unlikely. However, a long-term scenario in which the Greenland ice cap melts over a century or so and leads to a rise of some 7 m is not beyond the realms of possibility if we do not take sufficient action on climate change worldwide. I am happy to say that Cheltenham, being on the edge of the Cotswolds, would be safe even in those circumstances, but I suspect that the constituencies of many current Members would be under water.

I do have one question for the Minister about the situation in Gloucestershire. In the scenario that I have outlined, the area containing Berkeley nuclear power station would be surrounded by water, which has two implications. The proposed time scale for decommissioning nuclear power station sites is some 100 years—the so-called deferred site clearance strategy. Have the Government taken climate change into account in planning the decommissioning of nuclear power stations?

The other obvious implication is for the next generation of nuclear power stations that the Government are planning. I cannot know the future, but I suspect that planning permission for many of those stations will be requested for sites that already have clearance for nuclear power stations. That is clearly where public opposition will be most limited because, in one sense, the planning arguments have already have been won. However, those sites are often in coastal positions or on flood plains. In the long term, which is what we have to think of with nuclear power stations, stations such as Berkeley would be threatened by the type of sea level rises that I have described. I would therefore be grateful for the Minister’s reassurance that he is discussing those implications with the Department of Trade and Industry.

The shorter-term scenarios offer various predictions for rises in sea level—for example, a 40 cm rise by 2040 from the Association of British Insurers, and a range of 20 to 80 cm in the Stern report. In evidence to the Communities and Local Government Committee, of which I am a member, the Environment Agency warned of a 30 cm rise by the 2080s, but said that that equated to an increase in the storm surge from the North sea of more than 1 m. Even though the absolute level of rise may not be very great, sometimes the storm surge amount may be much greater and have greater implications than is at first apparent. The Environment Agency admits that even that is a conservative estimate. In its evidence to the Select Committee, it stated:

“At present the Environment Agency does not plan for the worst case scenario when allowing for future climate change, as this would make most costs prohibitive.”

In a sense, the agency is ruling out the worst answers before it has even asked the questions.

In a brief that it gave to hon. Members, the Environment Agency stated that the foresight future flooding report, which was published in April 2004, estimated that the risk of flooding from rivers and the sea will at least double by the 2080s and could increase by up to 20 times. There is a huge range of uncertainty. At the same time, the number of people at a high risk from flooding could increase from 1.5 million to between 2.3 million and 3.5 million. An enormous number of people could be affected. In its evidence to the Select Committee, the Environment Agency said that even those figures may be underestimates. It stated:

“Recent research by a number of establishments indicates that the sea level predictions used within the Foresight report…and the last United Kingdom Climate Impacts Programme (UKCIP) reports (2002) were underestimated.

In addition the impacts of such factors as polar and glacial melt on storminess and risk of tidal surge were not well understood and probably underestimated.”

Yet again, our discussions about scenarios may well prove to be over-optimistic.

The warning bells that have been rung have been well expanded on by various hon. Members and I will not go over them all again. They include the fact that the potential costs to which the ABI has alerted us are very high. In terms of the people on whom flooding is likely to impact, one of the most worrying things that the ABI said was that insurers cannot guarantee that they will maintain cover in areas where there is a greater than 1.3 per cent. annual probability of flooding, which equates to one major flood event in 75 years, yet the foresight report said that by 2080 the UK could be facing major flood events that once happened once in 100 years once every three years. That is clearly an enormously increased potential cost. The foresight report said, too, that the cost of the annual damage from flooding could rise from £1 billion a year to a range between £1.5 billion and £21 billion a year. The false economy of cutting back on flood defence budgets when all the experts are screaming for more resources and warning of the much greater potential costs of doing nothing should be obvious to everybody.

We are now talking about an adaptation scenario. David King of the Environment Agency made it clear in his evidence to the Select Committee that that was what we should be thinking about. We are moving from a strategy based purely on flood defence to a more holistic policy based, I hope, on three points: realistic and sustainable solutions, adequate funding, and fairness to affected communities. On realistic and sustainable solutions, we may complain about the way in which the making space for water plan was launched, complete with maps that instantly reduced people’s house prices—I think that my hon. Friend the Member for North Norfolk (Norman Lamb) complained vociferously at the time—but there is no doubt that an integrated approach that includes some acceptance of coastal realignment and the creation of new wetlands, carefully managed, must be right. The recent “Blueprint for Water”, published by an impressive range of non-governmental organisations, including the Royal Society for the Protection of Birds and other environmental groups, welcomes that holistic approach.

If the Government demand such realism from coastal communities, we need to demand realism from them. The evidence that hon. Members have referred to about the Thames Gateway is very clear. Again, I refer to the evidence given to the Communities and Local Government Committee by the Environment Agency, which stated that

“1.25 million people, £80bn of property and major infrastructure are already sited with the Thames Estuary floodplain. However the location, layout and design of the existing developments do not incorporate flood management measures, other than the reliance on estuary-side walls and barrier.”

The agency also pointed out:

“Over half of the area of the Thames Gateway lies within the floodplain of the Thames Estuary, the majority of the proposed development sites are on brownfield sites on the riverside. The area is currently protected to a high standard, often in excess of a 1:1000 year annual probability however, as a result of sea level rise and deteriorating assets the risk of flooding is likely to increase. By 2080 we expect the sea level in the Thames to rise by an average of 26cm to 86cm, with extreme surge conditions adding another 2 metres.”

The agency is trying to be tactful to the Government, but it could have said that the Thames Gateway development is a disaster in the making—

indicated dissent.

The Minister shakes his head, but he needs to read the evidence that came to the Select Committee. It is pretty clear. The agency highlighted the Thames Gateway as an area for concern, and the Department for Communities and Local Government needs urgently to rethink its policy. The fact that the Department is only consulting on whether the Environment Agency should be a statutory consultee, as I pointed out to the hon. Member for Rochford and Southend, East (James Duddridge), shows that it is fiddling while Rome burns—or perhaps floods.

Secondly, on the issue of adequate funding—time is short, so I will not go into it at length—the Environment Agency suggested that, based on the foresight report, funding should rise to £1 billion a year. It said,

“certainly we believe that there should be an upward trajectory in investment.”

But do we have an upward trajectory? No, we have a downward one.

Finally, in a changing policy environment when we are talking more about adaptation and flood risk management than about flood defence, it is important that we remember the human dimension—we must consider the families from Happisburgh to Skegness to Canvey Island whose homes, savings and livelihoods are at risk. Consideration should be given to all the various proposals that have been discussed—the community development approach, the buy out and leaseback schemes that might protect house values and investment in those houses, the insurance and assurance schemes, and the suggestion made by the hon. Member for Stroud (Mr. Drew) that single farm payments could be used imaginatively. Mr. Rothwell of the Environment Agency told the Select Committee that the agency was due to report back by the end of the year on how it would recommend that the approach be developed. The end of the year is fast approaching and I would like the Minister to say whether there is any sign of a scheme that represents fairness to individuals and will not place the entire burden on coastal communities and their council tax payers. We urgently need to see action from the Government that is based on sustainable and realistic policy, adequate funding and fairness. At present, they are scoring one out of three, at best.

It is a pleasure to follow the hon. Member for Cheltenham (Martin Horwood) after that extensive speech. He raised many sensible points with which I agree.

I congratulate my hon. Friend the Member for Boston and Skegness (Mark Simmonds) on securing the debate. He spoke powerfully about the threat of flooding and the issues that are converging to make the subject all the more urgent and topical at the end of 2006. I was struck during the debate by the intelligent way in which the representatives of coastal towns and communities are tackling the subject. We heard no Canute-like insistence that the tide must be turned, but a much more thoughtful analysis of the problems. The representatives and the communities on the coast are willing to engage with the Government in an intelligent way that acknowledges the force of rising sea levels, if, in turn, the Government are responsible in their actions.

We are starting to see that coastal communities accept some degree of incursion from the sea and are willing to adapt to it. However, they will not stick at any price ministerial incompetence and mismanagement that results in cuts to budgets at the Department for Environment, Food and Rural Affairs that are totally avoidable and unnecessary. That is the point of today’s debate. On the one hand, we have an intelligent thoughtful response from coastal communities, and on the other, we have unthoughtful, poor management at DEFRA that results in budget cuts to much needed services.

It is not only the budget cuts at DEFRA that make the debate pertinent, but climate change as a whole. The Stern review published a couple of weeks ago brings together both the economics and the science of climate change in an unprecedented fashion and serves as a stark warning to us as a nation of communities and as an economy that we have to take action and simply cannot ignore the effects of man-made climate change. Climate change is happening, sea level rises are inevitable, and no one needs to take that on board more than coastal communities. As public policy makers, we have a duty to act decisively to prevent the most extreme impacts of man-made climate change. That requires the whole nation—the whole global community—to act together, but we must also work to adapt in our coastal areas, which will be in the front line of the effects of climate change as sea levels start, not to begin to rise, but to rise more quickly.

My hon. Friend graphically outlined the dangers to coastal communities along the east coast of Lincolnshire. He proved himself a champion not only of Boston and Skegness but of the whole of the east coast of England, highlighting the fact that by 2040 400,000 properties in eastern England could be at risk from coastal flooding. What is more, 15 per cent. of ambulance stations and 12 per cent. of schools and hospitals are increasingly at risk, and that could rise to one in four. He made the important point that inland flooding and sea defences must be linked—they must be treated as part of the whole. He also made an extremely good point about the severe impact that flooding could have on the huge population of mobile home residents in his part of the world, for whom flooding would be catastrophic. The water would not simply come in and then recede; it would wipe out their homes. Sound defences are an absolute prerequisite to giving peace of mind to those living in such communities.

As well as engineered defences, there is growing acceptance of the need to work with nature, turning over parts of the land to natural incursion, creating natural wave breaks and using shoreline management plans. My hon. Friend the Member for Weston-super-Mare (John Penrose) emphasised the need to preserve the amenity value of our coastlands as well as using engineered solutions.

The hon. Member for Great Yarmouth (Mr. Wright) made a thoughtful speech. I was grateful for his clarification on managed retreat. He said that it would require a more flexible and imaginative use of agricultural subsidy. I have not heard of the subject being raised before—certainly not on the Floor of the House—but it will certainly bear a lot more discussion. Coastal wetlands can enhance the amenity value and ecological benefits of coastal areas, but such a policy would need to be carefully managed as part of a deliberate process rather than it being a knee-jerk reaction to the sudden flooding of productive farmland or freshwater inland waterways.

My hon. Friend the Member for Rochford and Southend, East (James Duddridge), who is a member of the Select Committee on Environment, Food and Rural Affairs, made a powerful speech. He spoke not only for his own constituency but for the many communities in Essex and the Thames Gateway. He drew attention to the Association of British Insurers report “Coastal Flood Risk—Thinking for tomorrow, acting today”, a welcome report that has greatly informed our debate. I was struck by its comprehensive analysis of the flood risks that we face. It is worth noting that that report states:

“Sea levels are already rising at a faster rate than was predicted—latest research shows a 3 cm rise in the last ten years. Latest estimates from the UK Climate Impacts Programme suggest that the East Coast could see further rises in relative sea levels of 40 cm by 2050 and 80 cm by 2080. At the same time, climate change is making it likely that storm surges will occur more frequently, and that they will be more destructive when they do.”

A number of Members referred to the flooding of 1953—the worst natural disaster in northern Europe for two centuries, when flood water broke through the coastal defences on the east coast in 1,200 places. That was this country’s glimpse of what happened in New Orleans, but the situation could get substantially worse. What the ABI report has to say on North sea storm surges is particularly worth noting. It states:

“Although sea level rise is an important influence on coastal flood risk, storm surges (i.e. abnormally high sea levels) pose the greatest threat. Storm surges are caused by low air pressure which raises the height of the sea, combined with onshore winds which push the sea. Shallow waters, as on the continental shelf, magnify these effects; the shape of the North Sea produces a funnelling effect, concentrating the surge in a decreasing area.”

We are all aware of what the Thames barrier does to protect London, but whole swathes of our eastern coast are unprotected by such great engineering works. It is crucial that the Government should not seem to be protecting only London; they should protect all who are vulnerable to sea flooding.

I hope that the Minister will reassure the House that the gross mismanagement by DEFRA of rural payments—the single farm payment fiasco—was a one-off and that the Department is now managing its budget.

The hon. Member has made some valid points about the ABI report and the cuts and I concur with his comments. Does he agree with me that the 10 per cent. per year growth suggested by the ABI should be forthcoming? What is his position, and does his party accept that commitment to year-on-growth?

I understand the ABI’s point of view, but because of where we are in our policy process I cannot give the hon. Gentleman a clear answer. The commitment may be more than 10 per cent. or it may be less, but we certainly understand the rationale for it. Well before the next general election, we will produce robust plans that will be fully funded. There will be no repeat under the next Conservative Government of the sort of fiasco that we saw at DEFRA, with knee-jerk cuts being made to vital services.

I hope that the Minister will reassure the House that DEFRA is back under control and that there will be no more robbing Peter to pay Paul. We cannot afford to ignore the risk of flooding.

It is a pleasure to serve under your chairmanship, Mr. Conway. I congratulate the hon. Member for Boston and Skegness (Mark Simmonds) on securing this debate. I appreciate the importance of coastal flood risk to his constituents and his concern that it should be managed effectively.

The hon. Gentleman was right to start and end his speech by referring to the Stern report on the need not only to mitigate greenhouse gas emissions but to adapt to climate change. I welcome the debate; it is timely in view of our current active policy development in that area, particularly in the context of climate change.

The problem of coastal flooding is serious and challenging. We estimate that £130 billion of assets and 1 million homes are at varying levels of risk from sea and tidal flooding; and events in other countries—for example, in New Orleans last year—have graphically demonstrated the potential for loss of life.

Ever more people are aware of the threat posed by climate change—and, I hope, of the Government’s success in reducing domestic greenhouse gas emissions from 1990 levels. We are one of the few countries to have met that Kyoto commitment; in fact, we have almost doubled it. However, no matter how successful we are in tackling climate change, we are locked into a certain amount of climate change by past emissions. That will increase the problem of flood risk over the coming century, both inland and on the coast.

Will the Minister give way?

Not in view of the time, as I need to answer the detailed comments made by the hon. Member for Boston and Skegness.

A number of hon. Members pointed out that, both on the coast and in tidal rivers, we have the key problem of the rising sea level. We recently revised our estimates of sea level rise, and we encourage operating authorities to factor it into their decisions on future defences. Those estimates recognise that relative sea level rise—including the effect of land tilt—is likely to accelerate from between 2.5 mm and 4 mm a year, depending on location, to between 13 mm and 15 mm a year by the end of the century. Clearly there are significant uncertainties, but current guidance is based on the best available science.

We need to manage and adapt to that increase in risk. The coastline has always changed over time, and it will not be sustainable to try to hold the line against flooding and erosion everywhere—something that hon. Members seem to accept. We are supporting a large capital improvement programme, with many projects to reduce flood risk on the coast.

I shall deal with hon. Members’ comments on budget matters in a moment, but I emphasise that current projections are that we will exceed our target of reducing the risk to 100,000 households both on the coast and inland between 2005-06 and 2007-08. However, we need to look at a range of options for managing flood risk in order to make the best use of public resources and to avoid burdening future generations with the cost of maintaining unsustainable defences.

The current review of shoreline management plans is intended to develop the sustainable strategic direction for each coastal length. The review also aims to look ahead over the next 100 years and to take into account climate change and the impact on sea level rise. Public consultation will be a key part of the review, which was a point raised by the hon. Gentleman. I can confirm that all shoreline management plans will be in the public domain and all plans should be completed by 2010—obviously some are at a more advanced stage than others.

In addition to the large investment increases of recent years, we are engaged in a thorough review of policy further to develop a broad range of responses to the cross-government “making space for water” programme. Operating authorities will have to take some difficult decisions in cases where defence against the sea may not be sustainable in the long term. I recognise that there can be social justice issues associated with the decision-making process and we are looking at ways in which such communities can be helped to adapt to a changing climate.

The Environment Agency is considering realignment possibilities and how we might promote the environmental benefits that would accrue from that—for example through our high level stewardship scheme. On the issue raised by my hon. Friend the Member for Great Yarmouth (Mr. Wright), I can inform him that agri-environment funding is available at the moment to landowners who make their land available. Realignment can produce some good habitat benefits in terms in salt marshes and improvements to biodiversity. I went to Aldbrough recently, just north of the Humber, which is a great example of a management alignment scheme. By allowing occasional flooding of a thousand acres of farmland, a high level of protection is provided for people in the Humber and the Humber estuary area. At the same time, a wonderful marine environment has been created.

We have just consulted on proposals for the Environment Agency to have a strategic overview of sea flooding and coastal erosion risk management. Whatever role we decide the agency should perform following that consultation, I expect it to work in close partnership with local authorities in relation to long-term planning strategies and in determining and delivering works programmes. I plan to announce conclusions on that in the spring.

The hon. Gentleman and a number of other hon. Members raised the issues in the recent ABI report. Clearly, we are well aware of the report and I would not want hon. Members to think that detailed work is not taking place on that. The Environment Agency is already looking at the key locations identified in the report. For example, as part of its Thames estuary 2100 project, the agency considered the management of flood risk in London and the Thames estuary over the next 100 years. On the Humber estuary, we are considering the agency’s strategy proposals for£1 billion of investment, again, over the next 100 years. I am aware of the ABI’s call for more funds to be made available and recently met ABI representatives to discuss Government commitments associated with its statement of principles. I can confirm that we are on target to exceed commitments that we made to the ABI as part of the statement of principles.

Will the Minister give way on that point?

I only have a short time left.

Including projects to reduce coastal erosion, many of which also protect against flooding, investment in coastal projects will be more than £110 million this year—some 40 per cent. of total capital investment. Further large sums will be spent on maintenance and operations. We recognise the need for investment along the east coast, but that must be prioritised in a national context.

The hon. Member for Boston and Skegness also raised the issue of internal drainage boards. I recognise the valuable contribution of IDBs to flood risk management in low-lying areas of the country. As part of our commitment to managing the flood risk management service as effectively as possible, we want to ensure that all boards, as public bodies, are efficient and accountable. We also wish to ensure that in delivering flood management and their other responsibilities, all boards are representative of the interests of the drainage rate payers and of wider interests. We engaged consultants last year to review those issues and their conclusions were published on the Department for Environment, Food and Rural Affairs website in March. We are working on an implementation plan that I expect to announce in the spring.

We have transferred responsibility, as the hon. Gentleman will know, for higher-risk water courses from local authorities and IDBs to the Environment Agency. We will consider arrangements for the agency to have an inland strategic overview of flood risk management as well as on the coast. For some IDBs that may not be viable and they will need to be amalgamated with other boards, but there are no plans for them to be subsumed into the Environment Agency. I can give the hon. Gentleman the assurance he seeks on that.

Local authority expenditure on flood and coastal erosion risk management, including the levies they pay to the Environment Agency and IDBs, is supported by a revenue support grant from the Department for Communities and Local Government. The hon. Gentleman raised that issue and I recognise that there are concerns that expenditure is not fully supported. We will consider that alongside other pressures as part of the forthcoming comprehensive spending review. However, when setting levies, we expect IDBs to engage with the levy-paying councils about the affordability of work programmes. Local authority representatives on boards should then communicate that affordability to their councils in relation to the IDB’s decisions.

Over the past 20 years, more than £100 million has been invested in sea defences along the Lincolnshire coast, which have provided protection for much of that coastline against tidal events with an annual probability of one in 200 or greater. An additional £17 million is planned to be invested over the next three years. I can also confirm that the Environment Agency intends to continue beach recharge using dredged material, which will help to protect the hon. Gentleman’s constituency at a cost of around £5 million a year. I recognise that further work is needed to improve protection in Boston as is set out in the Boston combined strategy. The work will be prioritised, but I understand the Environment Agency is hoping to start next year.

A number of hon. Members raised the issue of cuts to the Environment Agency budget and I have spoken about that before. We do not take delight in making cuts, but like other Departments, we have to live within our budget. It is not just the Rural Payments Agency that has created this problem; it is a result of other budgetary pressures. I can confirm that the capital budget has not been cut and that there will be a minimum impact on the agency’s ability to respond to serious flooding.

Development in the Thames Gateway was also mentioned by a number of hon. Members and I think that some of their comments were ill-judged—I hope on reflection they agree. Most of the Thames Gateway areas are afforded a level of risk protection higher than anywhere else in the country. The Environment Agency has worked closely with the Department for Communities and Local Government, the Greater London authority, the London Development Agency, the Thames Gateway London Partnership, other local delivery vehicles, local authorities, and developers to ensure that new developments in the Thames Gateway take account of flood risk. People need to recognise that substantial work is taking place.

The Environment Agency is already a statutory consultee—we are not simply in discussion with it. We hope that planning policy guidance note 25 will make further improvements to ensuring that developments take place only where flood risk is at a minimum level. The hon. Member for Colchester (Bob Russell) raised a point about development plans in his constituency. The Environment Agency objected to the development yet, as he said, the planning inspector allowed it to go ahead. I hope and expect PPG25 to allow for such cases to be raised with the Secretary of State for Communities and Local Government, which would provide additional powers to ensure that there is not inappropriate development in the future.

It is important to recognise that the Government are addressing the issue of coastal flood risk in a number of different ways. There have been substantial budget increases since 1997 for flood and coastal risk management—up by 35 per cent. in real terms. Of course, there are always pressures on the Government to do more, and we will endeavour to make further progress.

This debate was originally scheduled for the end of the previous parliamentary Session, but could not take place because of the Prorogation of Parliament. I am delighted and grateful that Mr. Speaker has selected the subject for debate today. In many ways, the issue is even more pressing now, these few weeks later, for Airbus and the many hundreds if not thousands of not only my constituents but those of my constituency neighbour, the hon. Member for Bristol, North-West (Dr. Naysmith), and other hon. Members present who represent other places where Airbus is based.

By way of preface, let me say that Airbus is a success story. When, as they do from time to time, aeroplane manufacturers go through turbulent times—if people will pardon the expression—it is easy for some of the bad news stories to gather momentum and for the context of what a success story Airbus is to be lost. It was a pleasure to see the Minister at the Airbus plant at Filton on Monday. I am grateful to her and to my constituency neighbour for enabling me to take a full part in that visit. She will have found that Airbus has a great deal of which to be proud. It might be worth saying one or two things about that, just to set the context for my remarks. Although I will be talking today mainly about civil aircraft manufacturing, the A400 military transporter is an important part of the work at Filton. The Minister saw for herself that manufacturing process in action, and I will ask her particularly detailed technical questions later about the manufacture of the wing, just to see whether she was listening carefully.

Joking apart, the order book for Airbus contains more than 2,000 aircraft. Again, it is important to have that context. Those 2,000 aircraft will fill the production lines at Filton for more than four years, so there is a good forward order book, which is a source of great encouragement to all of us who represent Airbus areas. This year alone, the company will have delivered 430 aircraft to the market, which is its highest number ever. In a sense, therefore, we are in a period of growth and the future looks very positive for the company. Indeed, more aircraft than that are planned to be delivered next year. The global market share varies from year to year, but even by the end of this year, which has not been the best of years, the market share for Airbus is expected to be more than 40 per cent. of the global market. Not many British or European companies can say that they have a 40 per cent. share of a very substantial global market.

I thank the hon. Gentleman for securing this debate on what is obviously a very important subject at what is a very important time for the company. He has painted a picture of how Airbus has done over the years and what a success story it is, but will he join me in saying that it has also been a success story for the Government and the investment that has gone in? Let us take the A320, for instance. For every £1 invested by the UK taxpayer, £2 has been paid back, and there have been royalty payments on top of that. If only we could say that about every Government investment over the years, it would be a great story.

The hon. Gentleman makes an important point, and I will come on to that issue, because there is sometimes the portrayal that when parliamentarians of all parties urge the Government to support the aerospace industry, there is somehow a request for a handout. As the hon. Gentleman suggests, the reality is different.

Let us consider the employment impact. The company says that it has 13,000 permanent and contract employees in the United Kingdom, of whom 5,000 permanent staff are based at the Filton plant in South Gloucestershire. Those 13,000 jobs indirectly generate probably 10 times as many—perhaps 135,000 UK jobs throughout the supply chain, including a large number in the south-west, which is a key centre of aerospace excellence.

The A380—I do not think we are allowed to call it the super-jumbo, but people will know what I mean—has attracted some troubling headlines recently, but it is worth remembering that more than £7.5 billion of work on the A380 has been placed with UK companies so far and that the first A380, despite the talk of delays, will be delivered within 12 months of today. Singapore Airlines will have an A380 by October next year, 13 will be delivered the following year, 25 the year after that, and at full production in 2010 we will be talking about four aircraft a month. That may not sound much, but when people see the size of these things, they realise that that is one huge output.

Putting a more positive perspective on some of the concerns about the A380, as recently as 26 October Qantas announced that it had placed firm orders for eight more A380s. The chief executive of Qantas said that that increased the airline’s commitment to 20 aircraft, to be delivered over the period from 2008 to 2015. He said:

“Our decision to increase our order has been made after an extensive review of the recent problems at Airbus and the delivery schedule delays of the A380.”

Despite some of the difficulties that there have been, there is still a lot of confidence among airlines in what is a unique product. The company is trying to tackle the problems caused by the delays, through what it calls its Power8 programme. That is a cost-saving programme aimed at reducing overheads and being more lean and efficient. Clearly, the company is trying to get its own house in order, and we must welcome that.

The question is where we go from here. I am sure that all hon. Members present visit their local Airbus plants regularly and regularly hear that they are always thinking not so much about next year, but about many years down the track and the next model. There is a constant process of looking ahead. Only last Friday, EADS, the parent company, announced the industrial launch of the long-range A350 Xtra Wide Body—XWB—family of aircraft. That is critical to the future of UK jobs. I will not claim to be an expert on the technology, but it is not possible to go into an Airbus factory without hearing talk about composites and one has to nod knowingly. That is critical cutting-edge technology as part of the wing, and it is vital to UK business that that technology is maintained and developed in the United Kingdom.

I congratulate the hon. Gentleman on securing the debate. A number of my constituents work at BAE Samlesbury on composite parts, metallic and carbon fibre, of aircraft from the A318 up to the A321, and work with sub-assembly parts as well. My fear when BAE Systems disposed of its 20 per cent. stake in Airbus was for the future and where Airbus manufacturing was going in this country. As the hon. Gentleman said, we are not talking only about BAE Systems, but about a number of other, smaller firms, which supply to BAE Systems because they have those orders. Does he agree with me that the one thing that we hope the Government will do is to be in constant dialogue with BAE to ensure that the jobs that are already involved in Airbus will be secured for the future?

I am grateful for that intervention. Obviously, the hon. Gentleman will know that the issue that he raises is a particular reason why, notwithstanding the fact that the short-term situation looks very positive, there is understandable uncertainty about the long term. I hope that the Minister will say more about that. I know that there has been dialogue between Ministers and Airbus at the highest level and I hope that she will say more about that.

There is a written answer on that point to a question tabled by the hon. Member for Newark (Patrick Mercer). It was about the impact of the sale of shares and it is quite interesting. I hope that the Minister can slightly clarify this; it was her own written answer. She said that the Secretary of State for Trade and Industry made this announcement at the press conference following the Airbus ministerial meeting at Farnborough in July:

“‘EADS, in principle, have agreed…that the original undertakings regarding UK industrial workshare given by EADS to the UK when Airbus was formed in 2000, will survive any shareholding sale’”.—[Official Report, 30 October 2006; Vol. 451, c. 82W.]

That is critical. My understanding is that it means that the UK, by value, would get 20 per cent. or thereabouts of the work on each succeeding generation, but there are two very important questions. First, how long has that promise been made for? Will it apply to the next generation of planes or the one after that? How firm a guarantee is it? How public a guarantee is it? What does it mean? That is a very important specific question.

Secondly, it might sound odd to say that there is a good 20 per cent. and a bad 20 per cent.—it is all money and it is all jobs—but for the UK aerospace industry it is very important that we are at the cutting edge of the technological developments. Some of the perhaps more routine manufacturing and assembly work could easily over time be outsourced. There is Chinese interest in the project. Therefore, it is vital that we are at the cutting edge and get the high-tech work. In the context of the A350 XWB, I understand that that involves the technology for the wing and the composite technology. Can the Minister give us any reassurance or encouragement that when that decision is announced, probably in a matter of weeks, it will be good news for Britain and for Filton? There is great uncertainty and anxiety, as she will have discovered when she talked to trade union representatives on Monday, and I hope that she can offer some reassurance today.

The subject of the debate is Government support for Airbus and the question is: what issues are we interested in? As the hon. Member for Alyn and Deeside (Mark Tami) pointed out, we are not talking about handouts. A written answer to my hon. Friend the Member for North Devon (Nick Harvey) stated that Airbus had received £1.23 billion in repayable launch aid and had paid back £1.24 billion over a 20-year period. Last year—2005-06—Airbus received no repayable launch investment because we are not at that point of the cycle, but paid back £110 million. In some years there is a net inflow and in others a net outflow, but I was staggered by the figures because they give a different impression. One assumes that the Government subsidise the industry, but this is undoubtedly a good investment for taxpayers.

What more can the Government do? First, they can ensure that when Government support is available for research and technology and so on—all Governments provide that and I am not talking about a bidding war between national Governments—it is easy for industry to access it. One concern that has been raised with me and, I am sure, with the Minister, is that the Spanish Government have a hard-nosed, deliberate strategy of encouraging such technology and have focused their technology support in a narrow area, whereas a company such as Airbus may have to dip into many different pots, to get consortiums of regional development agencies together, and to apply for six-monthly Department of Trade and Industry bidding rounds. There is huge cost, delay and uncertainty in that.

A concern that is expressed throughout the industry is that to some extent companies have to fit their technology programmes around the DTI’s requests for bidding, rather than the DTI’s request for bidding reflecting where the companies are commercially. It is a two-way street. I shall be interested to hear more from the Minister about how the DTI can ensure that when it invites bids for technology assistance it is on the button of where industry’s needs are and how far industry is involved in determining that strategy.

Secondly, Government support for environmentally friendly transport is welcome and we must think about environmental issues in the context of the aircraft industry. My impression is that the DTI’s environmentally friendly transport initiative does not have much of an aviation stream, if at all. It would be interesting to hear from the Minister whether more could be done under that initiative to ensure that when there is investment in cleaner, greener air travel and if the Government put more money up for more environmentally friendly transport, aviation is an important part of that and not a marginal part. The Minister knows that the new generation of Airbus aeroplanes are substantially more environmentally friendly than their predecessors, but with the huge growth in air travel that analysts are predicting there are big environmental issues, so the more that can be done to minimise the environmental damage the better.

The third area is the European Union dimension. On Monday, the Minister was briefed about the EU clean sky initiative—I am sure that she was already aware of it—to support the aeronautics industry’s work on environmental issues. My understanding is that with the number of different competing projects in the EU there is a risk that, without appropriate pressure from national Governments and our own Government, that could slip down the agenda and, again, manufacturers’ ability to prioritise environmental activities would be impeded.

I am well aware that the Government have taken an active interest in the future of Airbus, particularly since the sale of the 20 per cent. stake. I welcome the Minister’s visit and the Secretary of State’s interest in the matter, which are positive. Clearly, more can be done to persuade Airbus that the United Kingdom is the place to site its high-tech research, development, technology and manufacturing, and I hope that the Minister can tell us a little more about what she has been doing and what she believes the prospects are for the UK Government doing everything they can to make Airbus even more of a success in the future than in the past.

I join other hon. Members in congratulating the hon. Member for Northavon (Steve Webb) on securing this debate. I cannot let it pass without paying enormous tribute to my hon. Friends the Members for Bristol, North-West (Dr. Naysmith) and for Alyn and Deeside (Mark Tami) on their work in supporting the aerospace industry, particularly the Airbus capacity in their constituencies. I have endless conversations with both about the present and future Airbus presence in their constituencies, and I know that they spend a lot of time visiting the Filton and Broughton Airbus bases in their patches. I congratulate them.

I want to start by speaking about the aerospace industry to put the matter into context. It is a very successful industry and sales are up. The latest figures are in the annual survey covering 2005. Sales were up by 26 per cent. last year, at just under £30 billion. Export sales, importantly, were around £15 billion. New orders were up by 33 per cent. throughout the industry as a whole at more than £30 billion. Employment was up by 9 per cent. at just under 125,000. We are now the second largest employer of people working in the aerospace industry and second only to the USA. We also have the second largest turnover in the aerospace industry after the USA. Research and development is up by 31 per cent. year on year and is now £2.7 billion. The figures for productivity are good and up 15 per cent. The number of graduates now stands at 34 per cent. and wages in the UK aerospace industry are 44 per cent. above the national average at more than £33,600 per annum, the manufacturing average for the UK being about £25,600. It is a very healthy part of an important part of the manufacturing sector in the UK economy.

I entirely agree with the hon. Gentleman that Airbus is a success story. I did not recognise his figures and if I am wrong, I will write to him. The figures that I have for launch investment are in the region of £1.2 billion and the return has been around £1.3 billion, of which £530 million went into the A380 and £700 million into the A320, the A330 and the A340. The Government and taxpayers are getting a good return on that investment, which demonstrates the success of those Airbus projects. Airbus is now the ninth biggest company in the UK, so it is a substantial presence here. Not only have we invested money in launch investment, but we have recently put around £250 million into Rolls-Royce to develop its Trent 900 engine, which will be used in the A380. According to figures given to us by Airbus, about 40 per cent. of the total value of the A380 will be produced directly in the UK and around 400 UK companies will benefit directly or indirectly from the development of the new aeroplane. While we, like the hon. Gentleman, regret that that is being delayed, I agree that the long-term prospects for the plane look good. As he has done, I welcome the recent news that Qantas has added to its order for a number of A380s.

Like the hon. Gentleman, I also welcome last week’s announcement that Airbus intends to go ahead with the A350 Xtra Wide Body plane. Composite technology is being developed, particularly in relation to the wings, which are of special interest to the UK. That is crucial, not just for the aerospace industry or for ensuring that more environmentally friendly aeroplanes are built—composite technology, on the whole, ought to lead to lighter and therefore more environmentally friendly aircraft—but because composite technology, of itself, has huge repercussions across all sectors of manufacturing. We take it seriously, which is why we are investing, out of our technology strategy, the hefty sum of £30 million in a national composites network. We see that as a key element for future investment.

We welcome the announcement that I mentioned. Clearly, we are in discussions to ensure that the UK gets its fair share, particularly in respect of the development of the wing technology and the production of the wings. It makes sense for those two things to be developed together in the UK, as the technology cannot be divorced from the production. The long-term development of that technology has repercussions not just for civil aircraft, but for defence aerospace capacity in the UK. We are giving that extensive thought.

The hon. Gentleman asked me a number of questions, including what the Secretary of State had agreed with EADS on the position of Airbus following the sale by BAE Systems of its shares. An agreement was reached in principle in Farnborough on a number of issues.

The first such issue was whether a transfer of undertakings was given to BAE Systems by EADS when Airbus was first created. Those undertakings have now transferred to the UK Government. There is no time limit on them, and they will clearly be subject to commercial good sense over time, but a clear commitment was made by EADS to transfer those undertakings.

The other commitments in principle, which we are now discussing in detail with EADS, include a transparency mechanism in the decision making of EADS, so that we can ensure that everything that is done is fairly open. We also agreed in principle to establish a research and development centre in the UK for EADS, and we are pursuing the details of that. Another such agreement was for a UK national—not a Government appointee—to sit on the EADS board, which we thought was important, given the sale of the shares by BAE Systems. We also secured from EADS a commitment to consider giving secondary listing on the London stock exchange.

I know that the Minister has limited time to respond, but will she just clarify this business about the 20 per cent. share? I might have misunderstood the nature of what was agreed. Has EADS said that Britain will continue to get 20 per cent. of the work? Is there any such guarantee, and if so, for how long would it apply?

All the detailed negotiations are currently taking place. As soon as they have reached a conclusion, we will be able to talk about them more openly. Our aim is to secure Britain’s best interest in the development of the new A350 XWB, and we are engaged in close negotiations on those issues with EADS and with the other Governments who have a stake in its development and production. I understand the hon. Gentleman’s point that we want not only to secure the 20 per cent. but to ensure that we maintain our research and production capabilities in respect of the wings.

I hope that response deals with the questions that the hon. Gentleman asked about the 20 per cent. He talked a little about accessing technology. Aerospace has done pretty well out of Government technology funding over the past few years. I believe that about £370 million-worth of technology funding has been given over the past couple of years, although I might be wrong about that time frame, and if so, I shall write to him. Out of that sum, aerospace has secured £130 million, or about a third of the investment that we have given through the technology strategy. That is not bad, and reflects the importance that we place on the sector.

Between 2004 and 2006, Airbus itself has received £43.4 million-worth of technology funding for things such as the integrated wing and the electric landing gear, and as a contribution to the composites network. We are examining an offer for more than £10 million—nearly £11 million—some £8.8 million of which will come from the Department of Trade and Industry and a further £2 million from the regional development agencies, in respect of the centre for fluid mechanics simulation. That is a considerable sum. People always ask for more, and we are examining that in our discussions with EADS and Airbus. The company has done pretty well out of the available funding, which, as the hon. Gentleman will be aware, is new funding.

Let us consider the general funding on research and development, and investment in aerospace. The hon. Gentleman talked about investment in environmentally better projects, particularly in respect of civil aeroplanes. That is not marginal to us. It is pretty central to us, and I have no doubt that he will see that in the future allocation of technology resources. The environmentally friendly engine research project, to which he referred, is being led by Rolls-Royce. I believe that it involves £30 million from the DTI and a further £13 million from the regional development agency. That is a considerable sum to put into trying to develop a better engine with fewer emissions.

We are also putting £30 million into the national composites network, of which more than £15 million is coming from Government, and a further £32 million into the Autonomous Systems Technology Related Airborne Evaluation and Assessment programme, which is on unmanned aerial vehicles.

The hon. Gentleman concluded by asking what we are doing. He will know that we are clear that it is in the UK’s interest to maintain a strong aerospace capacity here and, as part of that, to maintain a strong Airbus presence, both in research and development, and in production, particularly in the production of wings using the new composite materials. That is what we are aiming to do.

We recognise that it is not just the industry itself that is crucial to the UK manufacturing infrastructure. It also brings other jobs to the UK. We reckon from Airbus itself that 60,000 jobs are dependent in some way or another on the 13,000 jobs in Filton and Broughton. Doing our utmost to ensure the continuation of that situation is of critical importance to our economic infrastructure.

We will have to negotiate our way forward with the company. It faces considerable challenges at present, but I agree with the hon. Gentleman that it has a good long-term future. If we can see it through its immediate problems, and work with it and the other countries that have an interest in ensuring that there is a good European aerospace capacity to compete with the American capacity, that will be of benefit to ourselves and to the company.

Order. Before I call Sir Peter to speak, I urge all those Members who want to take part in the debate, and a terrific number do, that we have a limited amount of time. May I ask the Minister and the Front-Bench spokesmen to bear that in mind, too? I shall try to call as many Members as possible, and I hope that they bear my request in mind when making interventions. An overlong intervention is not helpful, and if other Members are going to make a speech, it just uses up a lot of time.

Thank you, Mr. Hancock.

The Minister may not feel that he needs my sympathy yet, but I have considerable sympathy for him. He is standing in for his hon. Friend the Under-Secretary of State for Environment, Food and Rural Affairs, who would normally deal with these matters, and I thank him for doing so at such short notice. I had intended to express my sympathy to the Minister whom we might have expected to reply, because the budgetary problems of the Department for Environment, Food and Rural Affairs did not occur on his watch. However, the Minister of State who is to reply was on watch, and he may well be able to respond to some of the issues that predate the appointment of his colleague.

I have some sympathy for the Department, because it is under siege from farmers and people concerned about the Rural Payments Agency. We should have some sympathy for the Minister and his colleagues, too, because although the waterways, canals and rivers are a national asset of the highest profile, delivering valuable outputs, those outputs are for the most part not the direct responsibility of his Department. In brief, he and his colleagues must feel that they are taking the rap for problems that they did not cause and dealing with issues that are far more important to other Departments than their own. They also deserve our sympathy because they may well feel that DEFRA can do little about the situation when the Treasury is breathing down its neck. I intend to suggest what the Minister and his colleagues can do about it, and why it is vital that they take action.

The debate is not about how the Department got itself into that position, which is a matter for debate elsewhere, but about the impact of funding cuts on British Waterways and what needs to be done about that. Whatever the reasons for the cuts, they are absolutely nothing to do with British Waterways—indeed, they are nothing to do with any other bodies affected by the DEFRA budget crisis.

British Waterways is one of this Government’s major successes. [Laughter.] Opposition Members may laugh, but the Government have invested in British Waterways on an unprecedented scale. That has brought new confidence to all of us who care about the waterways, it has shown that the Government are prepared to invest, and that investment has been followed by the investment of many others who have seen renewed confidence and vigour in the waterways.

Although I represent an Opposition party, I acknowledge the Government’s proactive waterways development. Does not the hon. Gentleman accept, however, that after all the positive investment, the great tragedy is that we risk losing many waterways and restoration projects, including one in my area—the reconnection of Montgomery canal—because although the plans are in place, they need the funding previously anticipated, rather than the cuts threatened now?

I share that concern. That so many right hon. and hon. Members have turned up to join in this debate reflects the concern shared widely among Members who have canals and waterways in their constituencies.

I am grateful to my hon. Friend and constituency near neighbour for giving way. He will remember from visiting, in a previous capacity, the Ashby canal that it is a significant success. A £60 million grant in aid triggers and catalyses £6 billion of social and economic investment, particularly in areas such as north-west Leicestershire. Does my hon. Friend regret that the cuts will have a disproportionate effect on capital projects such as the £500,000 Shenton embankment project on the Ashby canal, which is close to my constituency, and the Long Horse bridge project over the River Trent, which is in it?

I agree with my hon. Friend. The work that has been done as a result of the investment in the Ashby canal is a good example of the way in which waterways investment brings regeneration to an area. However, there is much left to be done to re-link those sections of the Ashby canal to the remainder of the canal network and to bring further regeneration to that area and to many others.

I am grateful to the hon. Gentleman, my exact neighbour, for giving way. Although he represents an urban area, he is in Parliament and in Leicestershire an acknowledged expert on the canal system. Does he agree that in the British Waterways system, and particularly in Harborough, where we are proud to have the Foxton locks flight, which is one of the great wonders of the canal system, maintenance will be put at grave risk if the cut in grant in aid happens? I represent a farming constituency, which has benefited from single farm payments, but which has incurred from a different aspect of the public purse the penalty for the Government’s failure to deliver them adequately.

The hon. and learned Gentleman draws attention to what has been achieved through Government investment, in particular in the Harborough basin in his constituency. It is a prime example of a mixed-development partnership between British Waterways and the private sector, which has transformed a derelict canal basin into a visitor attraction that is of importance to the local economy. He mentioned the Foxton locks, a job that is also partly done. Although there has been significant investment in the locks, the inclined plane that once stood adjacent to them has enormous investment potential, if only British Waterways were able to catalyse it as it has in other areas.

My hon. Friend will have noted as I did that the hon. and learned Member for Harborough (Mr. Garnier) suggested a certain incongruity about an urban MP representing the interests of waterways and canals. Does my hon. Friend agree that canals have huge potential for urban regeneration? In my constituency, the Conservative leader of Swindon borough council has proposed an imaginative vision to regenerate the canal system in the centre of Swindon, which has enormous potential to bring new life to the town centre. Does my hon. Friend agree that that is desirable and valuable?

I agree entirely with my hon. Friend.

The Government, through British Waterways, have enabled waterways investment that has led to the reopening of canals, at times faster than they were built at the height of the canal construction era. Waterways have been at the heart of regeneration in many of our major towns and cities. One has to think only of Birmingham, Manchester, Leeds and other towns throughout Britain to realise what an impact British Waterways' investment has had on regeneration.

Government support also made it possible for British Waterways to attract the millennium lottery funding that restored the historic waterways link between Edinburgh and Glasgow. Its fantastic and innovative boat lift, the Falkirk wheel, is an iconic visitor attraction. Government support has made possible not only new developments like that, but the restoration of amazing and historic engineering structures, such as the Anderton boat lift, which has restored the link between the canal system and the Weaver navigation. Again, that is a visitor attraction and a major contributor to the area’s economy.

Does my hon. Friend agree that the short-term approach could backfire because it gives very little lead-in time for BW? In my own constituency, a bid has been put in to the Big Lottery Fund in respect of the Stroudwater canal. The approach could backfire and result in the fund being less inclined to provide the money. Does my hon. Friend agree that that is a problem?

I agree entirely. I shall come to it a little later, but one of my major concerns is not just the loss of funding, but the loss of confidence that could result from it and the number of regeneration schemes that could be put at risk.

Does my hon. Friend accept that there is an added difficulty? One must bear in mind that the loss of funding to British Waterways means that it must bear the risk on any renovation or new project. The classic example is found here in London. Hon. Members might have visited, as I have, the proposed site of the Prescott locks and the River Lee navigation. That project will cost £18 million. British Waterways only put in £1 million, but it will have to bear the risk of a bomb or something being found in the riverbed.

My hon. Friend gives another good example of the remaining potential for regeneration through investment in the waterways. That is as evident in the example that he referred to as in some of the examples that I have given.

The hon. Gentleman is being extremely generous in giving way. I acknowledge and am grateful for the Government’s support for BW during the past decade. However, does he accept the view of BW’s chief executive, Robin Evans, that during the three-year period covered by the comprehensive spending review, the actual loss to British Waterways will be about £60 million? Such a loss will be very significant indeed.

I thank the hon. Gentleman, but I think that he might have misunderstood the chief executive’s figures. As I understand it, British Waterways fears—reasonably, given what is being predicted—that the loss, if the new figure is carried forward into future years with up to 5 per cent. cuts, could equate to £50 million over five years. None the less, it is a very serious figure. As I said earlier, however, the problem is not just the figure for the loss, but the loss of confidence that goes with it.

The other aspect of investment that I wanted to discuss is the astonishing backlog of safety-related repairs that British Waterways has been able to deal with as a result of Government funding. Across its 2,000-mile network, British Waterways had an amazing number of structures, many of which are now more than 200 years old, that had fallen into a dangerous state of ill repair, threatening property damage and, in some cases, injury or death. As a result of Government investment, British Waterways has been able to deal with them.

British Waterways has been able to achieve that not only with Government support, encouragement and investment, but with entrepreneurial flair. Today it has a reputation as an effective organisation that delivers what it promises. Indeed, British Waterways has delivered everything that it has promised and much more. It has proved itself a dependable partner to local government, regional development agencies and voluntary groups of enthusiasts, and particularly in innovative partnerships with the private sector. Its status today is that of a public corporation established by the British Transport Commission in 1963. When it was established, its role was perceived to be one of managing decline. Through the 1950s into the ’60s and ’70s, much of the system became semi-derelict and continued to be closed and filled in and to have roads built over it so that it could never be navigable again. Only the pioneering work undertaken by what then seemed to be eccentric enthusiasts such as Tom Rolt and Robert Aickman established the Inland Waterways Association and began to change attitudes, drawing attention to the priceless assets and history being lost as a result of the decline.

Over the years, the biggest change has been in British Waterways. It has been transformed from an organisation that managed decline to one that today champions growth and renewal. However, it remains a public corporation, albeit a very successful one, and it is subject to the statutory constraints of a public corporation; specifically, as a public sector body, it has constrained borrowing powers.

The benefits that British Waterways delivers range widely across Departments and Government policies. Those cross-cutting benefits were recognised by the Government in 1999 in the document “Unlocking the Potential”, which was followed up in 2000 by “Waterways for Tomorrow”. Both were championed across Departments by the Deputy Prime Minister. It is almost by chance that British Waterways is in DEFRA’s charge; a case could be made for the Department for Culture, Media and Sport, the Department of Trade and Industry or the Department for Communities and Local Government to provide a home for it, because many of its outputs relate to theirs. It could equally easily be with the Department for Transport; there too, British Waterways delivers entirely relevant outputs.

Let us look in more detail at its outputs. Within its purview, British Waterways delivers heritage-related outputs. It cares for more than 2,700 historic listed buildings and structures. Through the Waterways Trust, it supports the waterways museums housing collections at Ellesmere Port, Gloucester and Stoke Bruerne. Across its network, it effectively maintains a 2,000-mile long linear park with some 300 million visitors a year. Only 20 per cent. of those visitors are boat users; the remaining 80 per cent. are anglers, canoeists, cyclists and those who simply enjoy the tranquillity of a riverside towpath in the country, or an oasis of calm in town or city.

To take up the point about the DTI and the Department for Communities and Local Government, British Waterways works with regional development agencies, local councillors and councils to deliver regeneration in towns and cities. As my hon. Friend the Member for North-West Leicestershire (David Taylor) pointed out, it is engaged directly in £6 billion-worth of regeneration projects that offer the potential for 6,000 new homes. Beyond that direct engagement, British Waterways facilitates regeneration and investment by working to renew the canal system and the rivers that connect it.

Not to be forgotten, as hon. Members have pointed out, is the potential—as yet only partly met—for the waterways to contribute to Department for Transport responsibilities for freight carriage. Although some freight is carried on waterways and there has been some growth as a result of British Waterways initiatives, there is undoubtedly untapped potential. One current example is the discussions about the potential for carriage of freight connected with the Olympic construction sites—how freight that otherwise would be carried by road could be diverted on to the waterways.

The many different assets that come from canals are well reflected in my constituency, where the Wilts and Berks canal is halfway through its fantastic restoration. A huge amount of wonderful work is being done on a great asset for the community. However, in his 20 minutes or so of speaking, the hon. Gentleman has not yet referred to the cuts that British Waterways faces. Surely the main point of this debate is the fact that all the work that he has described would be badly curtailed if those cuts were made. Boat charges would go up, restoration would be halted and canals might close. Will the hon. Gentleman expand a little on the shortcomings of DEFRA’s funding?

I shall happily move on to that topic immediately.

I remind hon. Members that the cuts are being made to a budget that British Waterways might have expected to be £62.6 million this year. Following the pattern of recent years, British Waterways would have expected the grant to remain at that level or to increase with inflation, but the reality is that British Waterways has had a cut of 12.5 per cent. this year, and is threatened with even further cuts. Most of the cuts were imposed well into the financial year, when a large part of the budget had already been committed. Because the cuts came so late, they probably represent about 20 per cent. of the available spend for British Waterways at this stage of the year.

DEFRA cannot say yet what the grant will be in the next financial year, but all the indications are that it will be reduced significantly from the new lower level of £55.4 million. We should therefore debate not just this year’s budget, but what it means for the future. If £55.4 million is the new base and if—as has been seriously suggested and not denied by the Department—there is a threat of a further 5 per cent. cut every year, that raises the prospect of cuts totalling £50 million over the next five years, which is the figure that I mentioned earlier.

I congratulate the hon. Gentleman on making that point, which means that the budget for British Waterways in 2010-11 might be only just above £50 million. That raises the prospect of the fees for boat licences increasing by 43 per cent. over the next three years, which would price many boat owners off the canals.

Indeed. I have not yet touched on the effect on boat owners, but that is undoubtedly likely. It is a mistake to believe that all boat owners can afford even the current licence fees, never mind the levels to which they would probably rise if British Waterways had to recover a significant proportion of what it is likely to lose from those owners.

The £50 million, if that is what is to be lost, is not only important in itself. That £50 million would have been used to lever in at least as much again from Europe, local and regional government, charitable organisations and the lottery. Just as that money provides leverage, so its loss is multiplied and the opportunities for leverage are lost.

British Waterways has immediately cut maintenance, cancelled engineering works worth £5 million and announced the loss of 180 jobs. Losing £50 million will inevitably require British Waterways to reduce the maintenance of structures that in many cases are 200 years old and which perform duties that could never have been imagined by those who designed and constructed them in the first place, and to look for massive increases in licence fees. If British Waterways is to find £50 million more to cover the cuts, much worse will have to follow than what we have already seen this year. Despite having dealt with the safety backlog with significant Government support, British Waterways still has £119 million of outstanding maintenance work to do. If that work is not done, the canal system will continue to deteriorate.

Does my hon. Friend accept that canals such as the Caldon, which is merely a tributary to the Trent and Mersey, are particularly vulnerable, because they do not have the status of the larger canals that are more used? The cuts could lead to the dereliction of the smaller canals, as happened in the early ’60s.

It is inevitable that those canals that are less used, as well as those that are in line for further investment and regeneration, will suffer first, as British Waterways prioritises where it will be able to make cuts with the least effect on its current users.

As promised, I shall say something about what the Minister could do about the situation. British Waterways will want to minimise the effect of cuts and to preserve as much as it can. We all remember the dereliction and disrepair of the mid and late 20th century. However, unless the Minister and his colleagues take some action, potential developers will inevitably be nervous, if they fear that the canal next to, say, a block of flats that they plan to build is likely to be drained and become a muddy ditch in the next five years. I expect that the Minister will remind us of the investment that has already been made and the support that the Government have given. He will undoubtedly want to make the case that there is little that his Department can do about the situation.

However, I hope that the Minister will say that he will talk to his ministerial colleagues, because the responsibility falls across Government, not just on one Department. I particularly hope that he will enlist the support of my right hon. Friend the Deputy Prime Minister, to whom I referred earlier as a champion of the waterways. I hope that the Minister will also enlist the support of the Treasury, which, with his Department, can find solutions to the funding problems of British Waterways. British Waterways is a national treasure. It has a unique importance in our history and plays an invaluable part in our life today. What is needed is a solution across Government, to preserve the place of that national treasure in our life. I hope that the Minister will agree to talk with the Deputy Prime Minister and the Treasury and work with them to deliver a review of the funding mechanisms for British Waterways that will secure a way out of the immediate crisis.

One approach would be to give British Waterways a status that permits it to make full use of its assets, without having to rely on the partnerships that are such an essential part of its current fundraising mechanisms and which it has used so creatively. I do not suggest for a moment that British Waterways should leave the public sector: it belongs in the public sector and it should remain there. However, it could certainly be permitted to use its expertise to invest in property beside waterways other than its own, or to borrow commercially using its own property. Above all else, British Waterways could benefit from a clear long-term contract across Departments, rather than being expected to meet the objectives of many Departments while its funding is dependent on a single Department that has short-term problems and of whose core business it is not really a part.

Whether we are waterside developers, walkers, canoeists, anglers, historians, ecologists or merely people who love our canals and rivers, we need to be reassured that the Government’s enormous achievements will not be lost. Whatever the cause of DEFRA’s immediate financial crisis, British Waterways—that priceless national asset—and the inland waterways that it has so ably and creatively cared for, nurtured and developed are far too important to be allowed to return to decline. Confidence in the future must not be lost. Our waterways must not be permitted to fall back into decay. The Government as a whole must find a solution.

rose—

Order. We have about 35 minutes and about a dozen or so Members want to take part in the debate. I intend to start the winding-up speeches at about 3.35 pm and to call everyone who wants to speak before then, so can we all play the same game and be fair to each other? I urge Members to give others a chance to have their say and not to intervene from now on, unless they want to intervene on the Minister or the Front-Bench spokesmen.

I will, indeed, try to be brief. I start by congratulating the hon. Member for Leicester, South (Sir Peter Soulsby) not only on securing the debate, but on the way in which he deployed his arguments. In very simple terms, he is saying that our canals are under threat of further decline—we had reversed that situation a few years ago—and that we are asking the Government to go away and think again about the consequences of their proposals for the grant to canals.

I have a particular reason for speaking today. The Kennet and Avon canal runs for 30 miles through my constituency, and although my hon. and learned Friend the Member for Harborough (Mr. Garnier) is not in his place at the moment, I must tell him that my flight—the Caen Hill flight in Devizes—is two and a half times the size of the flight in his constituency; indeed, it is one of the wonders of the world.

I also have, however, another canal in my constituency—the Wilts and Berks canal—which I share with my hon. Friend the Member for North Wiltshire (Mr. Gray). That canal is at a stage in its development at which it needs grant to be able to benefit the local community in the way that we all know canals can. I have in mind not only the people who work on them, but the downstream activities that flow from them. At one part of the canal, in Melksham, there are plans to make the canal a valuable local tourist asset, but they will probably have to be put on hold if the cuts go through. In addition, we have problems at the Caen Hill flight on the Kennet and Avon canal, and, again, there is a risk that we will not be able to proceed if the cuts go through.

Will my right hon. and learned Friend give way?

No. Perhaps my hon. Friend would like to intervene on one of the Front-Bench spokesmen. As I promised, I must be brief.

I want to make three points. One is that the canals are a local as well as a national asset. In my constituency, many people secure their employment one way or another from the canals. If the canals are allowed to decline again, that employment will once again be at risk. The Government must see the canals not only as a tourist question, but as an employment and economic question.

The second point is that the canals—particularly the Kennet and Avon canal—have been the recipients of enormous amounts of public money in one way or another. They received not only the direct grant from British Waterways, but, in the case of the Kennet and Avon canal, a lottery grant for £21 million, which was one of the largest lottery grants ever given. That public money has brought enormous benefit, but if the cuts go through, the Government will undermine the effect of spending that public money. The cuts will mean not only that the canals will not improve further, but that they will decline, and that money will have been wasted. I am sure that the Minister will not want to see the effect of public money undermined in that way.

I have a third and rather esoteric point, and I share an interest in it with the Deputy Prime Minister—he and I are among the few people in the House who occasionally mention it. We live in a time of climate change and global warming and we saw this summer the kind of drought that can occur in this country. At some moment in the future, our canal system may be essential to creating a working water grid throughout the country. If we undermine that system now, we may well live to regret it. Savings today may create unacceptable costs tomorrow, in terms not only of the money that will have to be spent to restore the canals that will have gone downhill, but of the essential assets that will have been lost in all our local communities.

I congratulate my hon. Friend the Member for Leicester, South (Sir Peter Soulsby) on securing this important and timely debate. I particularly want to draw attention to my local canal—the Caldon canal—which is a small, local canal that feeds into the Trent and Mersey canal. It does not have the same status as canals that create a route through to the national canal network, so it is far more vulnerable. It has already suffered because it has not had the same level of maintenance as other canals. The cuts this year, and, just as importantly, the long-term potential cuts to the funding of British Waterways, create a tremendous threat to the survival of such canals.

In the early 1960s, the canal was in a derelict state. Volunteers from the local Caldon Canal Society put in hours of work and lots of fundraising to put it back into operation, and it was reopened in 1974. Within living memory, therefore, we have seen the canal return from dereliction. That has brought huge economic, recreational, sporting and social benefits to my constituency, which has seen the decline of the textile industry, small engineering firms and farming, and where tourism is therefore a vital area of expansion. If more maintenance is denied to the Caldon, key structures, such as dams and embankments, could collapse. As a result, the canal could become derelict, which would have a devastating impact on the local economy.

During the outbreak of foot and mouth, many areas of my constituency were denied to walkers, and that had a real impact on the local economy. Understandably, a lot of people talk about the 29,000 boat owners, but I do not want to make a point about boaters, because, to some extent, they are the tip of the iceberg. Let us talk about the walkers, bird watchers, anglers, canoeists, cyclists and people who just enjoy living by the canal. Let us talk about the impact on local businesses, such as the public houses, restaurants and boating establishments that would be affected.

My local area in Leek does not make enough of the canal. There are no signs from the industrial estate where the canal comes to an end to demonstrate to boaters and others who use the canal that the lovely town of Leek is just down the road, offering supermarkets, pubs and restaurants. The Caldon and Uttoxeter canal group, however, has an ambitious plan to open up the whole Leek arm of the canal, which would bring huge benefits. Sometimes, the towpath can be impassable, because certain areas get very muddy. However, it is still regularly used, and if we want to cut some of the congestion locally around the Britannia building society in Leek—a big national mutual building society that is known to many people—the towpath should be used for cycling; that part of it should be opened up, not closed down.

The Leek canal, however, is now likely to turn into a stagnant, dirty ditch. It will not be something that people want to live beside, but something that they want to avoid. It is important that such canals are regularly dredged; otherwise, a canal as valuable as the Caldon could end up being deprived of traffic. The local Beatrice boat organisation puts on trips for special needs children in a specially adapted boat. Its members fear that if the dredging does not take place, they will no longer be able to operate the boat. That would be not only sad, but criminal, because the children look forward to those trips.

The Government’s agenda is all about regeneration, improving the environment and encouraging healthy lifestyles and exercise, and the waterways press all those buttons. As I said, the local canal society is investigating developing the local canal in Leek to ensure that it will be the sort of recreational hot spot that it should be. The canal runs alongside the local heritage railway through the beautiful Churnet valley.

I therefore want the Minister to tell us today that he will rethink the cuts for this year. Just as importantly, however, we must draw back from the brink of even more damaging cuts in the long term. To some extent, the canals could sustain cuts for one year, but a lower level of funding in future years would be absolutely disastrous; it would turn back the clock many decades and, in some cases, more than 50 years. I therefore hope that DEFRA and Ministers in other Departments will come to the aid of our canals.

I congratulate the hon. Member for Leicester, South (Sir Peter Soulsby) on securing the debate. The number of hon. Members here today shows how important the issue is felt to be. I want to concentrate on the Rochdale canal. I know that other hon. Members will concentrate on others.

The Rochdale canal was opened on 21 December 1804, and after a century and a half of use was closed to navigation in 1952. After many years’ campaigning, especially by the Rochdale Canal Society, the Millennium Commission agreed to support its recommissioning. The local authorities of Manchester, Oldham, Calderdale and Rochdale put forward a bid for lottery funding, as well as to the Northwest Regional Development Agency and other public bodies. They were successful in bringing the canal back into navigation, at a cost of more than £25 million, in 2002. In December that year, the canal was officially opened by Fred Dibnah. That investment has brought significant regeneration, as the hon. Member for Staffordshire, Moorlands (Charlotte Atkins) described in her speech, along the entire length of the Rochdale canal.

Since it opened, the Rochdale, which is 33 miles long and links the Aire and Calder navigation in Yorkshire with the Bridgwater canal and Huddersfield narrow canal in Manchester city centre, has been enthusiastically used by boaters and been managed and maintained by British Waterways. The four local authorities that I mentioned provide annual revenue funding to British Waterways via the Waterways Trust in excess of £500,000 a year. They are committed to doing so for the next 50 years to support the operation and maintenance of the canal.

All that has now been placed under threat. We have been told this year that £600,000 has been cut from the maintenance budget of the Rochdale canal. Since it opened, in addition to its leisure use, the canal has inspired social, environmental, community and economic regeneration along its length. The authorities have collaborated to produce a widely acclaimed canal strategy, which highlights the benefits and opportunities that the restored canal will bring. However, so that the work completed with lottery funding would be done in time, it was always envisaged that further significant expenditure on the regeneration of the canal would be needed. Indeed, there is still work outstanding, at a cost of more than £10 million; it needs to be done to bring the Rochdale canal back into use fully. Lock gates need to be replaced and embankments strengthened, and other key works are needed. That work has been programmed for the next 10 years.

As other hon. Members have said, a small amount of money is involved in overall Government terms. It is a small amount of money in DEFRA terms, but it is important for what the hon. Member for Leicester, South described as one of the jewels in the British crown. I hope that Ministers will reconsider whether they can, if not necessarily restore the grant, at least find other ways to enable British Waterways to fund its expenditure. Unless that happens, the Rochdale canal, like many others, faces an uncertain future.

British Waterways, along with the Government, the Waterways Trust and the other agencies, and a huge number of volunteers, has done a fantastic job in recent years. I am proud to represent a constituency that includes part of the National Waterways Museum, which has been defined as a nationally important collection in its context. Its context is not a sterile atmosphere, but the locks and basin where it belongs, alongside the sister museums mentioned by my hon. Friend the Member for Leicester, South (Sir Peter Soulsby). That collection is in jeopardy, for two reasons: first, because of the potential knock-on effects of the decision that we are discussing; secondly, because we are continually battling with the Department for Culture, Media and Sport to get the museum included in the list of free-entry museums.

The Prime Minister today responded to my hon. Friend the Member for Hendon (Mr. Dismore) about how successful free entry has been for museums. It has been enormously beneficial to the museum sector, but it has been detrimental to those smaller museums that have been left outside. Will my hon. Friend the Minister have a word with his friends in the Department for Culture, Media and Sport? There are important messages to get across.

As my hon. Friend the Member for Leicester, South said, the matter is one that crosses Departments. It concerns education, the economy, tourism, culture and heritage and the environment. Huge benefit spins out from the work that is undertaken on canals. One need only look at the centres of cities such as Birmingham and Manchester to see how urban regeneration has really worked around the canal sector. I was pleased during the summer to host a private visit by the Deputy Prime Minister, who opened one of the new sections of the museum. He, undoubtedly, is on board, and we need to exploit the support that exists in Government to minimise the risk to the archive in Ellesmere Port and to the historic vessels. The Government have done a fantastic job in leading the restoration of the waterways. Let us now make sure that the work carries on.

I agree with all that has been said, and do not intend to repeat any of it. I shall make a few quick points.

I was fortunate in an earlier incarnation to have ministerial responsibility for British Waterways. One thing to be remembered is that of the outgoings of British Waterways—its costs—a small part can be covered by licence fees for users, although that applies only to the boat users. As the hon. Member for Leicester, South (Sir Peter Soulsby) said, much of the use—80 per cent.—is by walkers, ramblers, canoeists, cyclists and anglers. They cannot be charged, so only a very small proportion of canal users are charged for use. Innovative ways of obtaining extra income can be found, such as by laying optical fibres along the route of the canal, as we managed to do, and some money can be raised by development, such as at Paddington basin; but British Waterways’ land bank is by definition finite and much of it has already been used. As has already been said, money for development will be levered in only if developers are confident that the overall environment will continue. Therefore, the cuts will have a real impact, because it simply will not be possible to cross the gap; work will not be done and parts of the canal system will fall into disrepair. There is no other way to deal with it.

DEFRA is in a hole. That is because of the single farm payment. We shall not go into that, because it is for another debate, but there have been all sorts of circumstances in the past that have put Ministers in difficulties. I was the Minister of State at the Ministry of Agriculture, Fisheries and Food during the BSE crisis. No one predicted that crisis, and we were for ever going to my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), who was then the Chancellor of the Exchequer, and asking for contingency payments. We got them. We said that we had not anticipated the situation—how on earth could anyone have anticipated it?—and we got a contingency payment from the Treasury. I urge the Minister, therefore, as well as the Secretary of State, seriously to consider going to the Treasury and saying, “It is ridiculous to have to make across-the-board cuts in all aspects of DEFRA spending, which have nothing to do with single farm payments, and where there will be long-term effects.”

There is also a matter of principle involved. Part of DEFRA’s problem is that it faces a fine from the European Union for failing properly to deliver on the single farm payment scheme. Is it right that a single Department should meet that fine? Is not it a contingency that should be paid by the Government collectively, out of the Contingencies Fund? Otherwise, as a consequence of one part of DEFRA’s budget going awry, all its departmental heads are likely to be put out of kilter for a long time to come. That does not have to be so. If we consider precedent, and if the Treasury is reasonable, it will be possible to get DEFRA out of the situation that it is in. It is a matter for Ministers to have the competence to form up and go to see their Treasury colleagues, and tell them, “These cuts are unsustainable and insupportable and we need Treasury help. This is not going to create some unhallowed precedent; indeed, it has happened within the machinery of government since time began.” By the way, surely it should be a principle of government that fines from the European Union should be paid collectively from Treasury contingency funds, rather than from individual departmental budgets.

I thank my hon. Friend the Member for Leicester, South (Sir Peter Soulsby) and congratulate him on securing this debate. Reference has already been made to the impact that the regeneration of the canals has had on our urban areas. If Birmingham and Manchester are held up as being among the greatest regeneration achievements of the 21st century, surely the clearest logic tells us that we should protect, maintain and improve our canal system for future generations. That is the crux of my argument.

After 40 years of inaction and abandonment, the canal system was in a dire condition. Yet after only a few years of an organised, well targeted and—crucially—funded approach, the change has been remarkable. Is it common sense to cut funding in spite of such progress? No, it is not. Cuts have already not only threatened but had an impact on the British Waterways winter programme of refurbishment and maintenance on Ashby canal, the Birmingham canal navigations, Birmingham and Fazeley canal, Grand Union canal, Kennet and Avon canal, Leeds and Liverpool canal, Peak Forest canal, Ribble link, Rochdale canal, the River Severn, which is close to my constituency and that of my hon. Friend the Member for North-West Leicestershire (David Taylor), the River Trent and the Weaver navigation. About £5.5 million has already been cut from the winter programme, and that will continue.

Is it common sense to cut the budget in the middle of the financial year? I liken that to a football manager being forced by his chairman to play the second half of the season with only seven or eight men. That is not common sense. Reference has been made to the status of British Waterways—whether it should be public or private, and whether it should review its status, which might enable it to borrow against its capital assets. I shall deal with that by referring to the report on British Waterways by what at the time was the Monopolies and Mergers Commission. It stated that British Waterways

“has to maintain a 200-year-old canal system in a safe condition. This outstanding heritage from the first industrial revolution has many fine listed structures which are expensive to keep in good repair. Indeed the whole canal network is part of the nation's heritage and many canals are themselves listed. British Waterways also has extensive environmental responsibilities, including over 60 sites of special scientific interest (SSSI) and hundreds of conservation areas and areas of special landscape character. Given the history of the system, it is unlikely that the Board can ever run its affairs on a wholly commercial basis. It is therefore inevitable that British Waterways will continue to rely on public funds for a significant proportion of its annual turnover.”

I guess that that view and judgment are supported by many hon. Members in this Chamber.

I can only add my views to those already expressed by hon. Members. I ask DEFRA to look again at the issue, please. Perhaps the cuts, having been imposed this year, are not going to be wound back. Some of us might not be happy about that, but we can understand it. But for God’s sake, do not let us get ourselves into a downward spiral in which the new reduced base budget of grant aid to British Waterways becomes the base for further cuts next year and in consecutive years. We would then end up with huge cuts in the totality of the British Waterways budget and that would be extremely detrimental. DEFRA, please think again on this one.

I congratulate the hon. Member for Leicester, South (Sir Peter Soulsby) on securing this debate, which has attracted huge interest. I shall try not to repeat points that have already been made.

There are three canals in my patch. The Llangollen canal runs across the north and has the Pontcysyllte aqueduct, built by Thomas Telford—a potential world heritage site so attractive that a couple of years ago Harrison Ford and Calista Flockhart went across it. It attracts large numbers of international tourists. There is the Ellesmere development around the wharf on the Llangollen canal, and it is very much centred around it.

I stress the economic impact of the canals. If the Llangollen canal could be extended into the centre of Whitchurch and the inclined plane developed, that would echo our success elsewhere. The Montgomery canal, for example, has been developed under Governments of both main parties—I stress that Frankton locks opened in 1997, and the stretch from Frankton to Queen’s Head opened in 1996. That dead end attracts 2,000 boats a year and has since been extended further south. A business such as Barry Tuffin’s at Maesbury exists entirely because what was a dry canal 15 to 20 years ago is now a live canal. Michael Limbrey, who has done such great work on the restoration, reckons that 100 to 120 long-term jobs will derive from phase 1 of the restoration of the Montgomery canal. With associated developments, that could increase to 250 or 300. The Shropshire Union canal runs north up to the Mersey, going through Market Drayton, and is a substantial and lively generator of economic activity there.

All that is at risk. The numbers are simple: last year, British Waterways’ turnover was £190 million—approximately £100 million from its own income, £60 million from subsidy and £30 million from the Heritage Lottery Fund and other sources.

Some £115 million is needed just to maintain the network and keep it safe. All that has been put in jeopardy. It is not just about the money, which, as my right hon. and learned Friend the Member for Devizes (Mr. Ancram) said, has been put through in previous years, but all the future development. Why? It is because of the staggering, cretinous incompetence of DEFRA in handling the single farm payment. I had better not dwell on that, because I shall not be able to keep my language temperate. DEFRA is facing £130 million in fines from the Commission and £40 million in compensation to farmers. Frankly, it is not acceptable that some of my farmers should not yet have been paid; by Christmas, Welsh, Scottish and French farmers will already have been paid for this year. My constituents are furious about that.

I should like the Minister to answer two quick questions. First, if there are breaches—there were two on Llangollen canal last year—will the Minister absolutely guarantee that they will be repaired? As my hon. Friend the Member for Banbury (Tony Baldry) said, there is a contingency fund. If there are breaches, we risk losing the huge economic activity, as well as suffering the environmental damage. I want a categorical guarantee from the Minister this afternoon that breaches will be repaired.

Secondly, if there are breaches, will the Minister also pay attention to the water supply? The Llangollen takes water from the River Dee to Hurleston for Chester. As my right hon. and learned Friend the Member for Devizes said, in future we shall need that network to transfer water from the west to the south-east of the country.

I shall be brief. Clearly, my constituency has more to lose than many other parts of the country, given that the Stroudwater canal is being reopened. Stage 1B has already taken about £20 million, which has come largely from the lottery. There is another bid to the Big Lottery Fund for more than £20 million for stage 1A. There are also all the opportunities in Gloucester around the docks themselves.

I shall concentrate on two important issues that have not been dwelt on. The first is the loss of jobs. The Gloucester-Sharpness canal reorganisation, which pre-empted this issue, will involve the loss of a number of bridge keepers. That has brought a lot of heartache, and although it has been possible to get redundancies and people taking early retirement, the process is not easy and we are losing an awful lot of expertise. Although it seems the easiest way—even, in a sense, although it sounds bizarre, the least painful—it is counter-productive. I put it on the record that we ignore it at all our perils.

The other issue has already been mentioned but I want to emphasise it: the role of volunteer back-up to the canal network. I hope that my hon. Friend the Member for Derby, North (Mr. Laxton) does not mind my mentioning Steve Davis and Paul Woollams, who gave him information. They are complete volunteers and spent hours putting things together. I am not saying that they wrote my hon. Friend’s speech, but such people put in an enormous effort as volunteers. It is matched by the physical effort that is put in on weekends and every day by the people who keep the waterways alive. I hope that the Minister understands that there is a wealth of good will out there but that if people are upset and good will is thrown away, it will not be replaced. I hope that that message will encourage the Department for Environment, Food and Rural Affairs to reconsider the cuts and work with everybody to restore the figures.

I can say what I have to say about the wonderful Wilts and Berks canal in my constituency in a minute or thereabouts if I cast away the substantial amount of information that I had planned to place before the House this afternoon.

There is an important point to be made about a potential canal such as the Wilts and Berks. It does not apply to mighty canals such as the Kennet and Avon in the constituency of my right hon. and learned Friend the Member for Devizes (Mr. Ancram). That canal is a fantastic asset that can be used in all sorts of ways, and people can be charged to use it. What I have in my constituency is a muddy ditch that needs to be made into a canal and which requires substantial investment.

The difficulty with the announcement that the Department for Environment, Food and Rural Affairs made, particularly the method used to make the announcement, is that it puts at risk the funding that we need from all sorts of bodies to restore the canal. Recently, an enormous amount of money was spent to open the gateway between the Kennet and Avon and the Thames. It was raised by private funding and by government funding of one sort or another. Those funders are now saying, “Hang on a minute; the whole thing is at risk.”

I would ask the Minister, irrespective of what he might think about existing canals, to spare a thought for the Kennet and Avon and the many other potential canals in England that need the support and confidence of the Government and of independent funders if they are to achieve the fantastic vision of linking the Kennet and Avon with the Cotswold canal system.

I, too, congratulate my hon. Friend the Member for Leicester, South (Sir Peter Soulsby) on securing the debate.

The canal network in the black country is a proud link to our industrial heritage, a vital part of our contemporary lifestyle and an essential resource for our future. The canals south of the Rowley-Dudley chain of hills are connected to the waterways north of the hills by a series of tunnels. That is the vital link that I want to ensure is kept open.

Only the Netherton tunnel is well used. It is of recent construction—in terms of canals, that is. The canal from Netherton tunnel runs through Dudley, North and Dudley, South, through the Delph and Stourbridge flights, and eventually joins the Staffordshire and Worcester canal at Stourton, where there is an arm that links Stourbridge to the canal network at the foot of the lock flight.

Like many canals in the industrial black country, the Stourbridge fell into disuse at the end of commercial carrying and became derelict, although it was never formally closed. At that time, various campaigners tried, mostly unsuccessfully, to get boats through, but eventually the locks fell into dereliction. Feelings about that ran so high that it was agreed to hold the annual national rally in Stourbridge to bring the canal’s plight to a wider audience. As a result, there was a campaign in the early 1960s to restore the canal to navigation, primarily the Stourbridge lock flight. Using volunteer labour—it was one of the first cases of volunteers turning out in their masses—the locks were restored, albeit with a few political confrontations along the way, and the rally was a great success.

Since then, the canal has been gradually upgraded and has become a joy and a benefit to the local community. It has been key to much of the regeneration in the past few years, and there is currently a scheme to use the canal as a basis of regeneration for a new development on the former Stuart Crystal site at Amblecote.

During the early part of that period, British Waterways was strapped for cash. Netherton tunnel was closed, as it was in a dangerous condition because the bottom was moving as a result of subsidence, which causes difficulties across my area. It was closed for more than five years. When it finally reopened, the whole of the canal was overgrown. It was not navigable, and the whole of Stourbridge was cut off. I am here today to ask the Minister to revisit the funding issue and to ensure that Stourbridge is not cut off from the rest of the navigable network.

I call Lynne Jones next. If you are very quick, we will be able to get everyone in.

Birmingham is said to have more canals than Venice, and very proud of them we are. I regularly cycle across my constituency along the Worcester and Birmingham canal out to Wast Hills tunnel, one of the longest and most ancient tunnels in the country, and from the other end into the city centre at Gas Street basin. My constituency also has the Stratford-on-Avon canal, which is a spur from the Worcester canal, and the Lapal canal, which, unfortunately, was filled in in the 1960s. There has been a campaign for several years to get it reopened, and the first phase of that work at Selly Oak is supposed to take place as part of the regeneration around a retail development.

Campaigners were very disappointed by the cuts in the budget—our hopes were immediately dashed. I believe that three people have mentioned Birmingham and the regeneration of the city centre, which has been a great success. Its renaissance is down in no small part to the restoration of the canals there. One can go there any day, seven days a week, and see lots of Brummies. It is a great visitor attraction.

The vibrancy and colour around Brindley Place and the Mailbox are determined by the number of narrow boats that are there. Very little waterway traffic originates in the Birmingham navigations. We depend on access from other parts of the network. My hon. Friend the Member for Stourbridge (Lynda Waltho) mentioned the Netherton tunnel. I understand that it recently was closed for investigation of the brickwork in the base of the canal, and we do not know whether there will be funding for it to be reopened. Both sides of the towpath have been closed.

Order. May I ask the hon. Lady to wind up?

The Rowington embankment and the Wast Hills tunnel are other access points. What would happen if major investment were needed there?

We in Birmingham are very concerned about the cuts. If we cannot restore the funding this year, I hope that at least there will not be declining budgets in the future but that we can go back to the good days when the Government saw the canal network as something in which to put more, not less, investment.

I call David Heyes. You must be brief.

I shall not abuse your generosity, Mr. Hancock. I have thrown away three of my four pages of notes.

Throughout the urban centres in my constituency—Ashton-under-Lyne, Droylsden and Failsworth—the waterways have been at the heart of regeneration activity and have been a key driver in making a success of such projects. I want to get on record the irony that it is urban regeneration work such as I have described in my constituency that should be put at risk because of the failure of the Rural Payments Agency. It is desperately unfair that the agreed funding to British Waterways is being retrospectively clawed back, through no fault of British Waterways, to be used to pay for failings elsewhere in the Department for Environment, Food and Rural Affairs.

I can only add to the urgings of so many Members to the Minister to do all that he can to ensure that British Waterways funding is restored to former levels, and to change the agenda so that its pot of money is not seen in the future as the one that can be regularly raided if difficulties arise elsewhere in DEFRA budgets. That is vital if the Government’s commitment to the benefits of inland waterways in terms of leisure, recreation, heritage, environment and the regeneration that is of such importance in my constituency is to be honoured.

I, too, congratulate the hon. Member for Leicester, South (Sir Peter Soulsby), not only on securing this debate but on the constructive manner in which he made his contribution. He set out the productive way in which British Waterways has used the public money that has been put at its disposal and also the fact that the benefits that come from canals and other waterways cross many Government Departments. I encourage the Minister to respond to his challenge to find a method of funding British Waterways, because it has a lot going for it.

The other advantage of such a debate is that it gives the opportunity for hon. Members, and the public, to demonstrate the huge support for canals and waterways. Sometimes we need such a challenge to do that. Indeed, the number of hon. Members that have turned up would almost have done justice to a debate on the Floor of the House. They would have given us a huge description of the beautiful countryside and towns that canals go through.

DEFRA is a serial offender in terms of budget mismanagement. Recently, it has been an under-spending Department and it has now run into terrible trouble with the single farm payment. However, I do not want to dwell on that.

Canals and waterways have a number of benefits that are valued by the public, first in terms of tourism and the local economy. There are 300 million visits to 2,000 miles of inland waterways. Not only that, but they encourage people in this country to take their holidays in this country, boosting the local economy and cutting back on carbon emissions. Regeneration has been dealt with, as well as conservation, biodiversity and heritage.

British Waterways is not a passive recipient of Government largesse, but generates increasing income. It has been said that 180 jobs will be lost, and that is a huge blow to those individuals, as the hon. Member for Stroud (Mr. Drew) said. Their expertise in building partnerships and getting match funding will be sorely missed by British Waterways. Although the cuts on the canal bank are not that great, the expertise is fundamental in maintaining the work done by British Waterways. It is not only about ensuring that the maintenance of canals is carried out but about encouraging tourism with new attractions, new developments and a sense of adventure when people go on the canals—they need to see something different and to have a new experience.

The cuts penalise a successful and well-run organisation. They are a setback to our tourist industry and put back progress on regeneration and extending biodiversity. Indeed, what is probably more worrying to the Minister is that they will probably affect those who, as Ratty said in “The Wind in the Willows”, like

“simply messing about in boats.”

They are an increasing constituency in this country. I urge the Minister to take on board the suggestion made by the hon. Member for Leicester, South and to investigate among his fellow Ministers to see whether support can come from other Departments for this worthwhile cause.

I congratulate the hon. Member for Leicester, South (Sir Peter Soulsby) on securing the debate and you, Mr. Hancock, on enabling everyone to speak on this important subject. I am sure that everybody agrees that British Waterways has done a tremendous job in regenerating our canal network and reinvigorating the surrounding economies. Along its 2,200 miles of canals and rivers, there are now a record 29,000 boats—more than during the height of the industrial revolution. I hope that all hon. Members have signed early-day motion 50, which my hon. Friend the Member for East Surrey (Mr. Ainsworth) tabled and I co-sponsored. For the record, it has so far attracted the support of 110 hon. Members.

We are here today because British Waterways has to save £7.2 million, although it could be as much as £9.1 million, in net expenditure from its budget this year to rebalance its books. In his response, I hope that the Minister will provide a thorough explanation, especially considering the very short notice that has been given of those budget cuts. Users of British waterways recognise the unfairness of the cuts and many have been driven to protest and demonstrate. On the weekend of 25 and 26 November, thousands came out in their boats across the country to show DEFRA their disappointment. The “Save our Waterways” campaign organised blockades and demonstrations in Banbury, London, Gloucester and Northampton to name but a few, and more are planned. Those waterways mean so much to them, but sadly so much less to DEFRA.

The Kennet and Avon Canal Trust has predicted that the canal will have to close because of the parlous state of lock gates and the impact that the cuts will have on their replacement. Does my hon. Friend agree that that will have an enormous impact not only on small businesses and users of the canal but on other businesses, such as pubs and village shops, that benefit from the burgeoning tourist trade on the canal?

I think that my hon. Friend would be very surprised if I did not agree with him. He is absolutely right and makes an important point.

If the Government still doubt the strong feeling against the cuts, I hope that they will pay particular attention to the flotilla that is planned to pass by Parliament in January. It is easy to think that the Government are completely out of touch with the public and canal users on this matter. While the Government seem to want to claim that the cuts will be harmless and will not have any dramatic or noticeable impacts, the truth seems somewhat different. When questioned about the cuts, Lord Rooker claimed:

“I don’t think it will lead to the cutting of British Waterway’s programme of work.”

However, a briefing note on the cuts provided by British Waterways states:

“The possible sources of funding to balance the budget are: cuts in revenue expenditure such as core waterway maintenance and administration expenses, cuts in major works expenditure, and increases in income.”

So, who told Lord Rooker that the programme of work would be unaffected?

Furthermore, Tony Hales, the chairman of British Waterways, has stated:

“Defra’s cuts, not just the amount but their suddenness for reasons that have nothing to do with the waterways, clearly cause us problems. They could threaten the long-term stability of the system and our vision to expand it, unless strong action is taken.”

What strong action is being taken? We have the Under-Secretary of State bravely stepping up to the plate and stating:

“The Government are working with British Waterways…to minimise the impact of the current restructuring.”

Perhaps when the Minister responds to the debate, he will be able to elaborate on what has been discussed and planned in the new budget that, as Lord Rooker claimed, will not lead to a cutting of British Waterway’s programme of work. The Under-Secretary has also claimed that one of the reasons for the cuts at British Waterways was that it was “good financial management.” He stated:

“As a matter of good financial management, DEFRA keeps its budgets and spending under regular review and challenge, and adjusts them as new pressures and demands arise.”—[Official Report, 7 November 2006; Vol. 451, c. 1067-68W.]

I am sure that hon. Members will disagree with him; good financial management does not involve cutting millions from budgets at short notice and creating difficult financial challenges for others to respond to. That is challenging, yes, perhaps testing, but hardly good financial management.

Moreover, a substantial proportion of DEFRA’s financial problems are the result of its incompetent handling of the Rural Payments Agency. That is frustrating for those affected, not least because it could have been avoided. I must draw to the attention of the Chamber that I received £49 in a single farm payment. If the then Secretary of State for Environment, Food and Rural Affairs, now the Foreign Secretary, had bothered to listen to and act on the criticism levelled at the RPA and DEFRA by people such as myself, we could have been debating British Waterways’ successes instead of budget cuts.

Is the hon. Gentleman aware that the budget problems in DEFRA that have led to the hole in the budget have little or nothing to do with the single farm payment and the Rural Payments Agency? In fact, any disallowance that might result from that will further increase its problems and lead to an exacerbation of the situation.

I am grateful for that intervention, but I am not sure that the hon. Gentleman is quite right. We will wait and see what the Minister has to say in his response. According to British Waterways’ spokesman:

“The network is in the best shape it has been for 150 years, but that is now at risk.”

He went on to state that British Waterways was being penalised for DEFRA’s incompetence, which is rather contrary to what the hon. Gentleman suggested.

I hope that when the Minister responds, he will be able to explain why British Waterways, the work that it does and the 180 workers who will be made redundant have to suffer because of DEFRA’s failings elsewhere. I would also be grateful if the Minister is any closer to explaining the reasons for the cuts. We understand that DEFRA needs to save £200 million from this year’s budget, but during oral questions the other week the Minister was able to account for only £33 million—DEFRA must save £10 million for bird flu, which we in the Conservative party understand is important, and £23 million on the RPA for the single farm payment fiasco. That leaves £167 million unaccounted for, and it would be helpful if the Minister could explain the reasons for the cut. The only explanation given at the time—he said it himself—was:

“The rest is needed for other reasons”.—[Official Report, 2 November 2006; Vol. 451, c. 455.]

On top of the cuts to British Waterways, the maintenance of our waterways and canals is also threatened by the £27.7 million cut to the Environment Agency’s budget. The network of waterways that was once built to support our industrial growth is now used to support our tourism and leisure industries and was fast becoming a valuable asset for communities, jobs and homes. However, while all those benefits are under threat, we discover that there has been a lack of joined-up government in trying to manage the situation, as has been mentioned. Last month, in a written answer, the Under-Secretary stated that he had had no discussions with his ministerial colleagues specifically about the funding reductions for British Waterways or their impact on the environment, the economy and regeneration. When we consider how much regeneration and investment is involved, it is improper that the impact of those cuts has not been discussed with ministerial colleagues in other Departments.

With so many potential benefits at stake, I am somewhat saddened. I wonder why the Government are jeopardising them by cutting British Waterways’ budget for this year and planning further cuts that will amount to between £50 million and £60 million over the next five years. Is it not odd that the Under-Secretary should have confirmed that he and his colleagues have not discussed the British Waterways cuts with the Chancellor? I hope that the Minister will take the opportunity to explain why. Should the cuts continue, waterways will have to be closed, vital maintenance postponed or cancelled, and regeneration projects halted. I am sad to close by reporting that the Rochdale, Peak Forest and Ashton canals now face cuts in their works programme and that, as a result, closure may be on the cards.

I congratulate my hon. Friend the Member for Leicester, South (Sir Peter Soulsby) on securing this debate. The high attendance—in my experience, it is exceptional—shows that it is a matter of great interest not only to those who use our inland waterways but to all who are involved in their restoration and heritage. I pay special tribute to my hon. Friend for the excellent progress that British Waterways made while he was a member of its board.

The Under-Secretary of State for Environment, Food and Rural Affairs is sorry not to be here to answer the debate. He is attending an event with the Prince of Wales and the Prime Minister in connection with his biodiversity responsibilities. If hon. Members will allow me, I shall ask him to respond in writing to the specific and individual constituency concerns raised during the debate. As Minister with responsibility for waterways, my hon. Friend has seen how much British Waterways has achieved in the last 10 years and the tremendous contribution it has made to stimulating regeneration and delivering benefits to the public in general. He and my right hon. Friend the Secretary of State have held a number of meetings with British Waterways’ chairman and chief executive in the past weeks and months to discuss the funding situation.

A number of hon. Members have fallen for the misapprehension that the funding challenges faced by DEFRA are all due to the single farm payment and the Rural Payments Agency. As my hon. Friend rightly said, it is only a small proportion of the £200 million—approximately 11 per cent.—that we have to save this year. It is not quite true to say that it is all the result of the single farm payment.

The in-year reduction for British Waterways was 7 per cent., not the figure suggested by the hon. Member for Leominster (Bill Wiggin), and considerably less than the reduction that we asked of the core Department and the other parts of the DEFRA family. Those reductions have averaged between 10 per cent. and 15 per cent, but we made efforts to protect British Waterways. It is also right, as my hon. Friend said, that the reductions should be seen in the overall context of British Waterways’ turnover of £190 million and the massively increased investment in British Waterways over the past 10 years. Its income has risen by 200 per cent. in that period; I doubt whether many organisations have seen such an increase.

Like hon. Members, however, the Government do not wish to see that wonderful track record and those improvements and achievements undermined. Indeed, that record was acknowledged by the hon. Member for Castle Point (Bob Spink), who is no longer in his place, and the right hon. and learned Member for Devizes (Mr. Ancram). Although I cannot give hon. Members the assurances that they seek on budgets for 2007-08 and beyond into the 2007 comprehensive spending review period, I assure the House that we are actively working with the management of British Waterways to ensure that its funding is sustainable. Some of the figures that my hon. Friend suggested for possible cuts are, as far as I know, pretty speculative and do not bear much relation to the figures that I have heard being discussed within the Department and with British Waterways.

Will the Minister say whether breaches will be mended and filled in—if necessary, out of the Contingencies Fund?

No; that is a matter for British Waterways. It is not for the Government or Ministers to dictate its priorities within its resource allocations. It is up to British Waterways to decide how best to apportion its budget in relation to its activities.

I welcome the fact that British Waterways is taking a positive approach to its funding and to putting its budget and finances on a firm footing. The Department is waiting for its proposals for a long-term agreement on funding. We hope that it will be based on a realistic assumption of the likely funding levels. Many hon. Members were in the Chamber earlier for the pre-Budget report. They will have heard that a number of Departments are going to face stringent spending restrictions and that some will face flat cash cuts in the next comprehensive spending review settlement. The massive growth in public spending of the past few years will therefore be maintained, but not to the same level as in the past few years. We hope that our agreement with British Waterways will give it greater financial security, provide it with funding certainty, allow it to plan with confidence, and make it less dependent on Government subsidy.

I shall respond to some of the constructive and positive points made by my hon. Friend and the hon. Member for Brecon and Radnorshire (Mr. Williams). Although we acknowledge that British Waterways has made tremendous progress in recent years by becoming more self-sufficient, it needs to continue along that path. I am mindful of what my hon. Friend said about the need to consider the statutory constraints. Last year, British Waterways earned slightly less than £100 million through trading. That was the highest ever figure, and it accounted for more than half of its total income. British Waterways’ income has tripled over the past seven years. The rest of its income derived from Government grants and third-party contributions. We think that it still has considerable potential to increase its income—for example, it still sits on considerable assets, and we believe that it can better exploit their potential.

With the suggestion of my hon. Friend in mind, I shall ask for the statutory constraints on British Waterways to be reconsidered. I can tell him that British Waterways is actively exploring with the Cabinet Office whether its development powers might be widened under the Legislative and Regulatory Reform Act 2006.

In the few minutes that remain, will the Minister answer my hon. Friend the Member for Banbury (Tony Baldry) and tell us whether British Waterways has approached the Chancellor for emergency contingency funds in the way he described?

I have not had such discussions, but Ministers in all Departments speak to their Treasury colleagues regularly on all funding matters. I cannot speak for my colleagues or for the Secretary of State on whether British Waterways has been mentioned.

My hon. Friend and other hon. Members also mentioned British Waterways’ place within Government. My hon. Friend was right to say that British Waterways, as part of our heritage, could fit into a number of Departments, but I ask him to be slightly cautious about assuming that, were it to come under another Department, everything would suddenly be much rosier—not least because of the spending restraints on other Departments as a result of the next comprehensive spending review settlement. I also point to DEFRA’s having delivered a record increase in funding for British Waterways while my hon. Friend was its vice-chairman. DEFRA’s record is honourable and people should not assume that if British Waterways were to come under the remit of another Department—assuming that another Department wanted it—it would fare any better.

My hon. Friend seems to have missed the point slightly, which is that British Waterways is an asset that has huge cross-Department benefits and that there ought to be a cross-Department solution, perhaps led by the Cabinet Office.

As I said, the Cabinet Office is actively involved in discussions with British Waterways. My hon. Friend is right to say that many areas of public life cross Departments, and it is always important that hon. Members should seek to ensure that Ministers and Departments work effectively together.

We have had a constructive debate. I hope that I have given my hon. Friend the Member for Leicester, South some reassurance about what the Government are doing to address the problem. I shall certainly pass on his comments and those of other right hon. and hon. Members to my hon. Friend the Under-Secretary. I put on record our gratitude for the excellent work that British Waterways is doing to maintain our wonderful waterways network. I hope that it will continue to do so in a sustainable way.

I would like to thank the three Front-Benchers for the courtesy they have shown during this debate. I think we have broken a record for a one and a half hour debate: 16 Members took part and six others intervened. I thank everyone for their courtesy. We will now move on to the next debate.

This is a story of a farmer from my constituency, his troubled relationship with a public agency and the lessons that I hope can be learned from his experience.

Rupert Burr farms 400 acres in Sevenhampton in Wiltshire and like many farmers he has found it difficult to make a living from agriculture alone. However, he has diligently, vigorously and imaginatively sought new sources of income. He was a pioneer of alternative sources of energy and grew biomass to supply power to local housing developments. He also made his farm into a popular local visitor attraction. Sadly, his enthusiasm and entrepreneurial vigour did not always have the support it should have had. His biomass supply was shackled by bureaucratic inertia in local and national Government and the visitor attraction was hit hard by the foot and mouth outbreak, which lost him a lot of business, but attracted no compensation. Nevertheless, Mr. Burr persisted indomitably in his endeavours, as do so many small business men, and has battled on to make a living.

Mr. Burr then attracted the attention of the Health and Safety Executive, which felt that his visitor attraction posed safety risks. Since 2003, the HSE has raised a number of concerns about matters such as the stability of a diesel tank, and restraints on a trailer. All safety issues are important and the Health and Safety Executive’s task of ensuring the safety of the public is vital. However, these matters were clearly not complex and they should not have been difficult to resolve.

I became involved when the HSE started to question the safety of a small maze that was constructed out of straw bales and located in a barn. Although the HSE felt that it was trying to protect the public and do its duty, Mr. Burr felt that it was overzealous and vindictive in trying to force him to make what he saw as unnecessary changes and placing unnecessary burdens on his business. A protracted and increasingly bitter dispute between the two sides began and became tangled up by allegations and counter-allegations. The HSE engaged very expensive lawyers and the matter ended up in front of a tribunal, which asked the parties to go away and find a way to resolve the dispute.

I will not take up hon. Members’ time by rehearsing all the twists and turns of this emotional drama, but I will highlight the salient points. Before doing so, I shall attach two important riders to what I will say. First, Rupert Burr would be the first to acknowledge that he could, at times, have reacted more temperately to the demands being made of him and to the way that he felt the HSE was not listening to his side of the case. However, that does not make him ineligible for the basic respect and consideration that I believe all institutions of the state should extend towards all citizens.

Secondly, despite my concerns about the HSE, which I will set out shortly, I pay tribute to its deputy chief executive, Justin McCracken, with whom I have conducted a lengthy correspondence and had many conversations while trying to resolve this case. Throughout the lengthy process, which I am sure at times has been extremely irksome to him and his officials, he has been exemplarily prompt in responding to my questions, correspondence and phone calls. He has also been consistently helpful and courteous in trying very constructively to find a way to resolve the dispute. Any criticism I make of the HSE must be tempered by the recognition that it has such a deputy chief executive.

The dispute has largely been resolved. Changes have been made to the maze, which have been accepted by the HSE, and Mr. Burr is making a contribution of £15,000 to the costs. The reason I have asked for this debate is not to resolve the issue, but because I have been struck by the extent to which the HSE seems, probably often unwittingly, to be driven by a culture that is unsupportive of small businesses and can be unnecessarily and destructively confrontational.

There was always a solution to the dispute available had the HSE taken a less dogmatic and more empathetic approach to Mr. Burr at the outset. Only when I became involved in trying to broker a solution, did the HSE begin to adopt a more flexible approach, which led eventually to a resolution. For example, it was originally insisted that the maze be on a single level instead of multi-tiered. Modifications have now been accepted that allow it to remain multi-tiered. That was very important to Mr. Burr, who felt a single tiered maze would not be of any interest to his visitors. Agreement has also been reached on other issues that, when I first became involved, seemed to be non-negotiable, such as interconnecting steps between the different levels of the maze; the type of alarm to be used; the ratio of staff to equipment; and the installation of fire exits, signs and alarms. I am pleased that I helped to create a situation in which those issues could be resolved, but it should not have needed the intervention of a Member of Parliament.

If the HSE had started out with a more helpful and constructive approach, it could have reached the same agreement with Mr. Burr from the start and avoided spending significant sums of public money and placing unnecessary stress on a hard-pressed small business. Instead, the HSE seemed to form the impression from early on that the only way that Mr. Burr could be made to comply was by issuing heavy warnings and going to the expense of a prohibition notice. Such a confrontational approach served only to intensify Mr. Burr’s mistrust of the HSE and a cycle of mutual suspicion and mistrust was created.

My personal experience of this case is that, when the HSE resorted to lawyers, far from making Mr. Burr more willing to accede to its demands, it made him more determined to resist, because he felt that the HSE was being unreasonable to the point of arrogance. Mr. Burr agrees that if I had not taken such an active interest in this case, the dispute might still be continuing, with ever escalating legal costs. The end result would have been the closure of his visitor attraction, which would have been a terrible loss to my constituency.

A public organisation should take more responsibility for avoiding such a destructive situation. The fact that it has been possible for the HSE to modify its demands in ways that Mr. Burr found acceptable suggests that there was always an alternative approach available. Instead, the HSE went to lawyers unnecessarily early because it was secure in the knowledge that the taxpayer was underwriting the costs. In a clear effort to pressure him into doing what he was told, Mr. Burr, who is not a rich man, was warned that he was likely to end up shouldering at least some of the costs.

Although the Minister will immediately recognise that this is not a complex area of law, or a complex case—although the safety dimensions are important—the HSE did not stint on the legal costs. It went to Bond Pearce, which is one of the top firms in the country. Its website describes it as

“a leading UK commercial law firm and one of the fastest growing”

The firm apparently earns £171,000 a year per lawyer. Having looked at the timesheets for what it charged the HSE, I am not surprised that Bond Pearce is growing so fast and earning so much per lawyer. The HSE sought to pass the costs on to my constituent, and I am sure that hon. Members will be interested to hear some of them. A £51 charge was made on 26 July 2005 for travelling to and from the HSE to collect papers—not much expensive legal knowledge required for that—and on the same day, £68 was charged for reviewing case law. Do people not go to lawyers precisely because they know the case law already? That is what lawyers are paid for, but in this case they charged £68 for reviewing it. Diarising a meeting on 2 August 2005 cost £17 and £34 was charged for checking the non-availability of dates on 22 February 2006—how long does that take? On 1 March 2006, £17 was charged for receiving a phone call from the tribunal changing a date. Reading an article in The Times and considering how to incorporate it into evidence cost £68 on 1 April 2006—a £68 charge for reading a newspaper. Leaving a voicemail message on 21 April 2006 cost £17 and so on. The solicitor then went on paternity leave, so the firm instructed counsel for a relatively straightforward case on which the solicitor had already clocked up hundreds and hundreds of pounds for reviewing the case law and reading the newspapers. Counsel would go over the same ground again, and thousands and thousands of pounds in further fees would be incurred.

Most of the costs that I have just cited were incurred after I had become involved in trying to broker a solution, when I would have hoped that the HSE would be prudent enough to allow me some scope to see whether I could succeed without it continuing to run up such costly fees. Apparently, the HSE is still clocking up fees, this time at taxpayers’ expense, by using the same external lawyer to conduct continuing correspondence with Mr. Burr, even though, as I understand it, most of the substantive issues relating to the case have now been resolved.

In passing, I should note that Bond Pearce is not exceptional; it is similar to most large firms in its charging practices. There is nothing surprising in the way in which it makes money, which is all the more reason for the HSE to have done more to avoid resorting to external law firms. According to its own calculations, the HSE is now thousands of pounds out of pocket, and so ultimately is the taxpayer. My constituent is certainly £15,000 worse off and suffering still from an unforgivable amount of stress, not least because once a public body resorts to expensive leading lawyers against a small business, the playing field becomes uneven. No small business such as Roves farm can afford the resources that a large corporation or, indeed, a wealthy individual can muster against the taxpayer-funded might of a body such as the HSE.

All that public money has been wasted and such a burden has been placed on a small business because the HSE chose to confront Mr. Burr. Throughout the affair, there seems to have been a cultural disposition on its part to avoid negotiation, to insist on Mr. Burr doing what he was told and then to threaten him with the consequences if he did not. The assessment of risk is clearly a crucial task, but it is also subjective and there ought always to be room for reasoned discussion. Instead, questioning of its judgment seems to have been regarded by the HSE from a very early stage not as a basis for discussion, but as an affront. That is symbolised by the fact that when I held a meeting at Mr. Burr’s farm to try to bring the sides together, the time spent by the HSE representatives at the meeting was added to the costs that it sought to recover from Mr. Burr. Only when I made the strongest representations that, in my view, such charging was an extraordinary interference with the democratic process—a constituent being charged when public officials met his Member of Parliament to try to resolve a dispute—did the HSE reconsider. However, the fact that the HSE could even think of doing such a thing suggests a culture in which any questioning of its decisions is regarded as unacceptable and to be resisted.

A small exchange at the end of the meeting exemplified the HSE’s adversarial approach. The aim of the meeting was specifically to address concerns about the maze. Some progress was made and I summed up with a list of further actions in the hope that a resolution would then be reached. However, instead of leaving at that point, one of the HSE team turned to Mr. Burr and said aggressively to him—I witnessed this—that they would be coming back to require changes to his preparations for a Christmas event. Those were minor issues and could easily have been left for another time. We could have parted following that meeting with a sense of some accommodation and the hope of resolution. Instead, with the HSE representative raising those issues in that way at that time, Mr. Burr felt that the HSE was retaliating for having been questioned by his MP and that it was vindictively undermining an event in which he and his family were investing large amounts of time to provide a treat for local children at Christmas. Further good will was sacrificed for no advantage to the public policy goals of the HSE. Whatever the technical issues involved, a less adversarial approach would have been more productive in resolving them more quickly and easily and therefore more efficiently, with less cost to the public purse and far less stress to my constituent.

My dealings with the deputy chief executive of the HSE and its response to the Hampton report on regulation suggest that the HSE is aware of the need to adapt and is already making welcome progress in its approach to some of the biggest and most complex issues that it encounters. However, Mr. Burr’s experience suggests that, at a more microcosmic level, the culture still requires change. Running a small business can be profoundly stressful and demanding, and most small businesses do not possess the resources to cope with statutory agencies whose approach all too often is geared to dealing with large public corporations.

I should be grateful if my hon. Friend the Minister confirmed that she will ask the HSE to pay more attention at all levels of the organisation to the particular problems of small companies, such as Roves farm, and to demonstrate more sensitivity to them. I should also be grateful if she let me know what changes the HSE is making to implement the recommendation of the Hampton report that

“Regulators should recognise that a key element of their activity will be to allow, or even encourage, economic progress and only to intervene when there is a clear case for protection.”

I should also be grateful if she let me know what further changes the HSE is making to implement the recommendation of the Hampton report that businesses should be supported by regulators to comply with regulations—in other words, avoiding the adversarial approach that has characterised the HSE’s dealings with Mr. Burr. Finally, I should be grateful if the Minister wrote to me outlining what action she has taken to pursue those objectives.

I congratulate my hon. Friend the Member for North Swindon (Mr. Wills) on securing the debate. In the customary way, he has raised an important issue. I certainly thank him for the opportunity to consider the HSE’s dealings with his constituent, Mr. Burr, in improving safety for the public and, in particular, children at Roves Farm visitor centre. I shall draw some general conclusions from that case and deal with each in turn. None the less, I regret that the issues have had to be raised in this Adjournment debate, as I believe that in the past months other routes could have been taken to reach a solution in this case.

My hon. Friend spent time highlighting the background to the Burr case. Perhaps I can add some information. As he said, Mr. Burr and his wife operate a visitor centre at the farm site. Many children attend the visitor centre every year, so it is important that health and safety is properly managed at the farm. The HSE aims to ensure that children can have maximum fun and learning at the farm in sensibly managed conditions. The HSE regulates many farms and visitor centres and uses a range of tools—such as verbal advice, a written report done on site or a letter sent after the visit—to ensure that an appropriate standard of health and safety is adhered to. When necessary, inspectors use their powers to require specific improvements or to stop activities until they are made safe through an improvement or prohibition notice. Appeals against such notices are rare.

Since Roves farm set up a visitor centre, the HSE, as my hon. Friend’s remarks suggested, has had to serve an unusually high number of notices to get work carried out to secure the health and safety of visitors and employees. I can assure my hon. Friend that that is not a typical regulatory response by the HSE when regulating a farm. I regret to add that the HSE’s experience since 2003 has been that inspectors have not always met with a positive response from Mr. Burr. They have given advice, usually written as well as verbal, but sadly their experience is that Mr. Burr does not deal well with issues when given informal advice and they have previously needed to serve three notices to make progress and get deficiencies remedied.

I think that my hon. Friend suggested that in some way the HSE rushed to a conclusion and rushed to a prohibition notice on the maze. I shall take hon. Members through the time scale. In December 2004, two inspectors became seriously concerned about the risk to visitors, especially children, to Roves Farm visitor centre using the straw bale maze. They spoke to Mr. Burr, suggesting that he should, as the law requires him to do, carry out a formal risk assessment, so that they could have a discussion about whether there was proper management of risks well before the summer season of 2005. They asked Mr. Burr to contact them to confirm when the work had been done.

By early summer 2005, Mr. Burr had not responded, and as far as the HSE was concerned he had not taken any action. Inspectors then sought the advice of experts from within the HSE and from the fire brigade. Those experts visited the farm in July 2005 and confirmed that, in their opinion, there were serious deficiencies in fire prevention, fire escape, fire alarm and fire fighting measures in connection with the maze—in essence, they said that there was a significant risk of a fire starting in the straw bale maze. The design of the maze, as my hon. Friend has said, was an interesting one. However, the design made it foreseeable that, in the event of a fire, a child could be trapped in a smoke-filled tunnel, unable to find an exit.

I want to put on record the issues that the prohibition notice was meant to address. The bale maze was constructed of compressed large straw-bales, which had been assembled to provide a three-dimensional complex of narrow tunnels. The tunnels were unlit, and extended over an area of more than19 m by 10 m. They were 3.75 m deep, and the floors were covered in a fine layer of crushed straw that varied in depth but was at least 2 cm deep. Some of the tunnels were 19 m long. At any one time there could be more than 25 children, from pre-school age upwards, using the maze. The notice indicated that there was poor control over sources of ignition within the maze area. Dry straw on the floors of the tunnels was likely to transmit fire and smoke rapidly. There were poor arrangements for detecting a fire and there was no means of raising an alarm inside the maze. Escape from the maze was only possible from one side via the pre-existing tunnels, and no provision was made for fire escape or recovery of casualties. The means of raising the alarm was by blowing a whistle, but at the time of the HSE's inspection the whistle was missing. The alarm was tested under silent conditions and was heard faintly from within the stack only after 18 soundings, which in the HSE's opinion was unsatisfactory. The evacuation system was inadequate. A test evacuation had been made and it took approximately 10 minutes.

As I said, it was foreseeable that in the event of a fire, a child could be trapped in a smoke-filled tunnel unable to find an exit and would not be likely to be rescued before he or she succumbed to fumes or flames. In fact, the experts—not only the HSE inspectors but the fire brigade as well—advised that there was a serious risk of multiple fatalities should a fire occur. I also want to put on record that the prohibition notice was affirmed by the tribunal without modification.

Before the Minister moves on from that point, does she accept that the HSE and Mr. Burr have now reached agreement on the measures that should be put in place to protect the public? Mr. Burr has always had the interests of the public at the front of his mind and agreement has now been reached on how those interests are best served. Given that, surely the issue is not the agreement, but why it could not have been reached earlier.

I have put on record the prohibition notice because my hon. Friend sought to draw some general conclusions from the way in which the matter relating to the farm was dealt with, and I do not think that those general conclusions are appropriate in this case. There was a serious health and safety issue. I hope also that by indicating the time scale in which Mr. Burr was given the opportunity to address some of the issues relating to the risk assessment, I might persuade my hon. Friend to agree that the HSE did not act precipitately, but gave ample opportunity to a small business person to make suitable arrangements to deal with the serious matters that were identified by both the fire service and the HSE.

My hon. Friend’s help was very much appreciated by the HSE. He acted as a mediator, because Mr. Burr at one point refused to have direct contact with HSE inspectors. I trust that my hon. Friend will agree that the seven-month period for carrying out the risk assessment does not suggest a heavy-handed approach by the HSE, and that the HSE did not unnecessarily push a small business person into making expensive modifications to the maze.

As my hon. Friend said, there was a prolonged exchange of letters and e-mails. The reason why the HSE had to continue to deal with its legal advisers was that Mr. and Mrs. Burr, although they accepted the modifications, did not withdraw their appeal until the tribunal hearing. By that stage the witnesses and HSE's legal advisers had already incurred significant preparation costs. My hon. Friend has highlighted the various costs and he will be aware that it is for the county court to consider the details of costs and their justification. If Mr. Burr considers them unreasonable, he can pursue that option.

My hon. Friend has made a number of criticisms of the HSE’s handling of the case. I recognise his irritation, annoyance and probable anger at the fact that the HSE was going to charge for the time that one of its inspectors had spent with him. That was a misunderstanding and, as my hon. Friend has indicated, those costs have been removed from the costs of the HSE’s action. I hope that he will accept the HSE’s apology.

The case could have been resolved easily and far more quickly than it was, but it takes two to tango, as they say. I do not judge Mr. Burr on his reasons for not liking the HSE, but it offered assistance and support to him and he failed for some reason to respond positively. I hope that my hon. Friend accepts that the HSE had a duty to ensure that the modifications were made to a structure that posed a serious fire risk for young children and, until they were made, to put a prohibition notice in place. As I said, the tribunal affirmed that prohibition notice without modification.

I should like gently to correct my hon. Friend’s comment about what the tribunal told Mr. Burr and the HSE. They were not told to go and sort out the fundamental issue of making the maze safe; they were advised to sort out the costs. I welcome, however, the positive comments that he made about the HSE’s deputy chief executive.

The Hampton report is about better regulation of small businesses and the burdens that health and safety issues appear to place on them. That report has been praised by the Better Regulation Commission because of the efforts that are being made to ensure that the burdens are balanced and proportionate. I hope that my hon. Friend recognises that the HSE did not take action because it wanted to impose additional burdens on Mr. Burr and the visitor centre, but that it had to take action based on the expert advice of its own people and of the fire service. A fire risk and a danger to children from my hon. Friend’s constituency and beyond had been identified. I regret the need for the debate, but I know that the HSE wants to reach a solution and a conclusion and I hope that the debate results in discussions continuing in a way that ensures Mr. Burr does not feel imposed upon.

I welcome you to the Chair, Mr. Hancock, for this short but important debate. I am grateful to be allowed to raise this important subject in the Chamber today and I am indebted to the Professional Contractors Group for bringing the matter to my attention and for its helpful briefings.

I want to start with an apology to the Minister for the confusion over the title of this debate. This is the first time that I have been successful in securing a Westminster Hall debate and I am still struggling to understand how my original title, “Contractual security and protection for people who work via a contract for services (freelancers, contractors, consultants)”, became transformed into “Security of short term employment contracts”. However it happened and whoever’s good intention it was to shorten and simplify the title, the error illustrates one of the key points that I want to make today.

The people for whom I am speaking today are literally the “little guys” of business. I emphasise that they are not employees; they are self-employed contractors. They are the people whom companies call in when they need expertise for a specific, short-term reason, and they become confused with employees by courts and legislators who misguidedly try to protect or hamper their activities. Today, I hope to achieve four objectives: first, recognition by the Minister that common law developments have created commercial uncertainty, and that that is economically damaging; secondly, an acknowledgment by the Minister that Government action is desirable to clarify common law uncertainty; thirdly, a comment from the Minister on the recent Green Paper and an indication of the Government's position; and finally, a commitment from the Government to maintain the UK's traditional freedoms and certainties, and not to allow employment rights to intrude into commercial relationships.

I shall begin by explaining why it is so important that the division between professional contractors and employees is properly clarified and enshrined in law. There are basically two types of contractual relationship: employment contracts and commercial contracts. The distinction is often expressed in terms of contracts “of service”, which cover employment, and contracts “for services”, which are commercial. In other words, “contractors” in this context operate via commercial contracts or contracts for services. If people enter into such a commercial relationship as a professional and career choice, it is enormously beneficial to the UK economy. Contracting works to the advantage of the company and the contractor. The company receives specialist expertise for as long as it needs it. If the contractor does not deliver the goods, they can be dispensed with without the worry of employment protection legislation.

The contractor, by taking on the economic risk—that is, by absolving the employer from employer risk and providing only what is needed when it is needed—can charge a premium for their services. They generally have more flexibility about when and where they work; they are contracted to complete a job and are generally left to get on with it. The relationship is also good for the organisation’s employees. It is much easier to extend employee rights when not all the work force will be utilising them. As soon as a professional contractor starts being treated as an employee, the benefits to all cease.

My first request is for a recognition from the Minister that common law developments have created commercial uncertainty, and that that may be commercially damaging. I want to bring two cases to his attention: Dacas v. Brook Street and Cable and Wireless v. Muscat.

In Dacas v. Brook Street, a Mrs. Dacas attempted to claim unfair dismissal by the agency that she worked for at the time. She failed, but the Court of Appeal judges said that she had almost certainly been employed not by Brook Street, the agency, but by the end client, Wandsworth borough council. In Cable and Wireless v. Muscat, a Mr. Muscat was found to be an employee of Cable and Wireless, despite the fact that he was providing services via a limited company. The judges decided that it was “necessary” to find an employment relationship to make sense of what was happening!

The logic behind those decisions was presumably that they were cases of “disguised employment”—that the person involved was working in the manner of an employee, although formally working via a commercial contract. Employment rights were therefore pinned on the end client. That logic is fair enough as far as it goes, but it is totally unclear how it applies to other working relationships. Mrs. Dacas was not an employee when she started working for Wandsworth borough council, so when and how did she become one, and when would that apply to other agency workers?

Mr. Muscat had previously been an employee of Cable and Wireless, but what exactly made it “necessary” to find an employment relationship? In what circumstances would other workers be found to be employees in a similar way? Your guess, Mr. Hancock, is as good as mine.

What is clear is that those cases have created great commercial uncertainty. Companies are hesitating to take on contractors, and many terminate their contracts after 48 weeks, despite the fact that the work is not completed. The damaging aspect for all parties does not need spelling out, and there are damaging knock-on effects for the economy.

My second request is for an acknowledgment that Government action is necessary to clarify common law uncertainty. The Government's strategy paper on success at work, which was published earlier this year, contained many sensible observations about the UK's labour market, and many in business were pleased that there were no recommendations to change the fundamentals of employment status and relations. However, the Government have perhaps been unlucky in their timing. The consultation exercise started in 2002, and the Muscat and Dacas cases have arisen since then.

We need to restore clarity in the law. How the Government do that is clearly up to them, but one option is to enshrine the key common law tests for employment in statute. I am hardly a fan of legislation and regulation, but that would be beneficial because it would require companies to use genuine commercial terms in their contracts or to hire an employee, whichever is the most appropriate in the circumstances. The tendency for a company to try to get the best of both worlds and to create a disguised employment relationship would be over.

I recognise that, if there is to be clarification, there is a balance to be struck between allowing individuals the continued freedom to choose to work through service contracts and ensuring that any changes that define their work as a service contract and not an employment contract are not detrimental to vulnerable, low-paid workers. Low-paid workers operating on service contracts rather than employment contracts may find themselves trapped in a revolving door of moving from one short-term, low-paid piece of work to another without any employment protection. That balance would remove the confusion and the opportunity for obfuscation, and would make redundant the iniquitous and unpopular IR35 and other measures, such as the proposals regarding managed service companies announced by the Chancellor earlier today. It would dispense with a deeply unpopular regulatory burden, which is something that we all want.

My third aim is to ask for a comment on the recent Green Paper, “Modernising labour law to meet the challenges of the 21st century”, which was published by the European Commission on 22 November. Not to mince words, Mr. Hancock, it is a pig’s breakfast. It fails to recognise the fundamental difference between the two types of contractual relationship—employment contracts and commercial contracts. As a result, it discusses some commercial freelance and self-employment relationships as if they were commercial relationships.

The Green Paper has a theme of “flexicurity”, but what it means by that is ill-defined. Of course there has to be a balance between flexibility and security, but surely that should be achieved by using commercial and employment contracts appropriately, not by trying to lump the two sets of law together. There is a worry among self-employed people that any law based on this muddled thinking could prevent them from going about their legitimate business. The Green Paper has other items of concern, as well as good aspects in the attempt to protect vulnerable workers, but for the independent contractor that is the main one.

Finally, I am seeking a commitment from the Minister that the UK’s traditional contractual freedoms and certainties will be maintained, and that employment rights will not be allowed to intrude into commercial relationships. In June, the International Labour Organisation passed a recommendation that labour law should not be allowed to interfere in commercial relationships. That represents a recognition that many of the newer ways of working rest on legitimate commercial relationships and should not be subject to law intended to regulate employment relationships. So, do the Government agree that that is a sensible approach to the issue? Do they regret that the Green Paper does not proceed on that basis?

None of this is suggesting that well-targeted measures of protection for vulnerable workers are a bad thing—of course it is right that such people should be protected—but all freelancers and self-employed professionals are asking is to be allowed to continue going about their business unimpeded, and to continue to provide the invaluable contribution that theymake to the companies and the economy of this country.

It is a pleasure to see you in the Chair this afternoon, Mr. Hancock. I congratulate the hon. Member for Solihull (Lorely Burt) on giving us the opportunity to debate this issue. The confusion over the title of her debate has put me at a slight disadvantage in that I am not able to answer all the points that she raised. I shall cover one or two of them, and I undertake to write to her in response to the others as soon as possible.

The hon. Lady referred to the Green Paper on labour law recently published by the European Commission. We hope that it will stimulate an open debate on how labour law impacts on labour market flexibility, and that it will promote employment and facilitate new ways of working. We need to encourage the widest possible participation in the labour market with a framework of fairness and openness. Unemployment remains one of Europe’s key social challenges, and there is a need to address labour market performance if Europe is to meet the Lisbon employment target of 70 per cent. by 2010. We believe that flexibility is needed to achieve that. Business needs flexibility to create jobs, and people need it to come into the work force on terms that allow them to balance work and family life.

I hear that the hon. Lady is not very happy with the document, but it is a Green Paper and we have four months to ensure that we put forward the UK’s position as effectively and forcefully as possible. We would be pleased to receive observations and contributions from her and her colleagues, because we want to ensure that we put forward as consensual and as strong a UK position as possible. We believe that we have a good message to tell in Europe and we want to ensure that the Commission hears it as clearly as possible.

We agree that genuinely self-employed people do not have a contract of employment with whoever they are working for; they usually charge a fee, pay their own tax and have their own business in their own right. In effect, such people are their own boss, but they are not without protections. They are covered by discrimination legislation and they are entitled by law to work in an appropriate health and safety environment.

The hon. Lady referred to “Success at Work: Protecting Vulnerable Workers, Supporting Good Employers”, in which we announced that we did not intend to change the current legal framework. Weare developing a tool to help people understandtheir employment status at present, including inrespect of common law. I will write to her more fully on that.

The foundation of the UK’s success has been a strong and stable economy, providing a platform for business to innovate, invest and grow. That has benefited individuals as well; some 2.5 million more people are in work now than in 1997. In common with all developed nations, the UK is facing a global economic challenge. Rising to that challenge does not mean a race to the bottom. The UK cannot compete on low-cost, low-skilled, unprotected labour.

Labour market flexibility is an essential part of our response to globalisation, and to be competitive we must pursue policies designed to promote jobs and growth. Our approach is based on the idea that social justice and a strong economy go hand in hand. To that end, we have improved the quality of work by establishing decent minimum standards and tackling unfairness. We made a clear policy statement about our future intentions in this area in “Success at Work”, which was published earlier this year.

Our focus is on protecting the most vulnerable workers—those who are most likely to suffer mistreatment and not get the rights to which they are entitled. However, this is also about striking the right balance between giving rights to individuals and allowing business to continue to operate productively and profitability. We will therefore continue our targeted approach to enforcement. A second campaign is under way targeting non-compliance with the national minimum wage, this time in the child care sector. I am sure that the hon. Lady heard the Chancellor announce increased resources for the enforcement regime in his pre-Budget report statement in the Chamber today.

Short-term contracts, which may be via a personal contract for services or a contract of employment, are by their nature for a fixed term. People on short-term contracts will range from the highly-skilled and highly-paid to those with lower levels of skills and pay. Working on short-term contracts may be a positive choice for some, although for others it might be their only option.

Temporary workers in the UK comprise an important but relatively small part of the work force. In total, around 5.5 per cent. of workers are in temporary work, accounting for a smaller share of total employment in the UK than such workers do in many other European countries. Temporary jobs remain a popular choice for some. The proportion of people in temporary jobs who said they could not find a permanent job has fallen from more than two fifths in the mid-1990s to one quarter now. Some 52 per cent. of temporary workers choose temping for positive reasons, such as increased flexibility, better pay or gaining valuable work experience.

The Minister is talking about temporary workers, such as the sort of workers who work for agencies. Specifically, the proposal attempts to address workers who are self-employed contractors, who come in to fulfil a specific contractual obligation. I understand that a temporary worker can also be like a temporary employee, so I am sure that the Government would not wish to mask the distinction between those two important categories.

I thank the hon. Lady for that clarification. We would certainly not want to mask that distinction. I think that the title of the debate has masked a distinction, and has not given me the opportunity to respond as fully as I would have liked to the specific points that she makes in respect of common law and the status of self-employed people. I will write to her specifically about that. She made reference to vulnerable workers, low-paid workers and temporary workers, and I am trying to respond to points on those groups.

As I was saying, an increasing number of highly-skilled and experienced workers choose to temp on a permanent basis as a lifestyle choice; this is not just for low-skilled workers. Other research shows that workers on temporary contracts reported being happier and healthier than those on permanent contracts in the UK, and there were similar results in other EU countries. Looking specifically at agency workers, about 40 per cent. of UK agency workers find non-agency jobs within a year of starting agency work, and 36 per cent. were previously not employed.

People working on short-term contracts are certainly not without protection. We have already taken action to protect employees on short-term contracts of employment from the constant extension of such contracts through the fixed-term contract regulations, limiting the time before such people become permanent employees. More generally, workers working via a personal contract for services, including agency workers, have access to a range of minimum standards including the national minimum wage, statutory social security provisions and working time entitlements, such as paid annual leave. In fact, we are increasing the statutory paid holiday entitlement so that those who currently receive only the minimum will in fact receive an enhanced entitlement that many, if not most, already enjoy.

Agency workers are also covered by specific regulations governing the conduct of agencies. We continue to support the underlying principles of the European agency workers directive, and we are committed to working with the European Commission to introduce appropriate rules to protect agency workers in relation to pay and working conditions. However, we believe that our current framework and coverage of employment rights reflects different levels of responsibilities in different employment relationships, and that it provides appropriate protection.

Britain’s labour market is characterised by its diversity and flexibility. That is its strength. Short-term contracts are an important and valuable part of our labour market. For many, short-term contracts are a positive choice or a way to enter or re-enter the job market. Our progress in the past eight years has been significant: there are more people in work today than ever before, and our earnings have never been higher. As we said in “Success at Work”, by supporting employers, unions and workers we can provide everyone with the confidence to navigate the challenges and opportunities that they will face over the coming years.

I once more apologise to the hon. Lady for being unable to respond to all the points that she raised during her contribution. We will study it from the written account and respond to her in writing as soon as possible.

Thank you very much, Mr. Fitzpatrick. I also apologise to the hon. Lady for the confusion over the title. The Clerk has assured me that he will write to the Table Office, asking how it happened. I advise the hon. Lady to send a copy of her speech to the private office, and I thank her and the Minister for the way in which they conducted the debate.

Question put and agreed to.

Adjourned accordingly at nine minutes to Five o’clock.