House of Commons
Tuesday 12 December 2006
The House met at half-past Two o’clock
[Mr. Speaker in the Chair]
Oral Answers to Questions
The Secretary of State was asked—
I have regular discussions with my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs on a range of issues.
My right hon. Friend will be aware of the comments made this week by the Secretary of State for Environment, Food and Rural Affairs on climate change, explaining that it is the major challenge facing the world today and that the United Kingdom has to play its part both domestically and internationally. Does he agree that, rather than pulling up the drawbridge and cold-shouldering the European Union, as the Conservatives wish to do, or spending many months fruitlessly renegotiating its way back into the European Union, as would happen if the Scottish National party were to lead us, Scotland should play its full part as an integral part of the United Kingdom in leading change in Europe that will make a real difference to climate change for our citizens?
I find myself in complete agreement with my hon. Friend. The European Union—now 25, soon to be 27, members—can make a significant contribution to tackling climate change. The Kyoto protocol and the process that was taken forward evidences the leadership role by the European Union. It is therefore incongruous that the principal Opposition party spends its time trying to disentangle itself from a principal party in the European Parliament, and that one of the main Opposition parties in the Scottish Parliament is so confused that it seems to support independence in the European Union, but wants to secede from the one Union that has been more successful than any other over the last 300 years: the United Kingdom.
Scotland is leading the way for the UK in tackling climate change: for example, by means of more ambitious targets for renewable energy generation of 40 per cent. by 2020, which we are on course to exceed. Does the Minister agree that the Department for Environment, Food and Rural Affairs, and other Departments, can learn from the Scottish example and that, in Scotland, we can and should go further and meet 100 per cent. of Scotland’s electricity needs from renewable sources by 2050?
The starting point is somewhat different. The foresight shown by predecessors in my office as Secretary of State for Scotland has resulted in a far greater element of hydro power being generated in Scotland than south of the border. I am proud that, historically, the Labour party has been supportive of those kinds of environmentally friendly power-generating initiatives in Scotland, and I am glad to say that the Scottish Executive, led by the Labour party, have once again shown a leadership role in showing that we can be a world centre for renewables in years to come.
Both England and Scotland should work together on the issue. Does my right hon. Friend agree that the proposal for a zero-carbon building target for new buildings within 10 years in England and Wales could usefully be adopted by the Scottish Executive, as well, and will he urge his colleagues in the Executive to follow that example?
My hon. Friend is absolutely right that we are stronger together and weaker apart when confronting the challenge of climate change and he is also right to recognise the visionary statement that was made last week about carbon-free homes. I am sure that the Scottish Executive will give the matter consideration, given their continued determination to lead on the issue in Scotland.
Is the Secretary of State aware of the report from the Marine Climate Change Impacts Partnership, which concludes that cod has moved northwards in the North sea as a result of sea warming changing the distribution of plankton, a point made by Scottish fishermen over several years? Given that the Fisheries Council is due to meet next week, will he for once stand up for this important Scottish industry and press his colleagues in DEFRA to oppose any further quota cuts until that new evidence is fully taken into account?
I am aware of the review of the cod recovery plan, but the approach taken by the hon. Gentleman’s party would prejudice the ability to get the outcome that is in the interests of Scottish fishermen. The nationalists simply cannot answer the question of how they would get into the European Union after independence, given their position on the common fisheries policy. That would leave Scottish fishermen high and dry.
Will my right hon. Friend congratulate Caledonian Paper in my constituency on the announcement that it made last week of an investment of some £58 million for a new power generation plant? Will he urge other industries in my constituency and elsewhere to do likewise so that what is happening with its carbon tonnage, which will be reduced from 90,000 tonnes per annum to 15,000 tonnes once the new plant is on stream, will be repeated elsewhere?
I am happy to join my hon. Friend in paying tribute to Caledonian Paper, which has shown real foresight with that innovative investment. I know from having visited his constituency with him that he takes a close interest not just in environmental issues, but in the economic development needs of that part of Scotland. I pay tribute to him for his tireless efforts on behalf of his constituents and local companies.
Highlands and Islands Enterprise
I met the chairman and chief executive of Highlands and Islands Enterprise on 29 November and, among other matters, discussed the strong economic performance of the region.
I thank the Minister for that reply. Will he take this opportunity to reaffirm the Government’s wholehearted commitment to seeing university status granted to the university of the Highlands and Islands Millennium institute? Will he also confirm that he and his colleagues are taking each and every opportunity to stress to all the UK bodies involved, especially the Quality Assurance Agency for Higher Education, the need to make as rapid and realistic progress as is achievable, according to the set timetable, given the overwhelming social, economic and cultural importance of such a development to not only the highlands and islands, but Scotland and, indeed, the UK as a whole?
I am well aware of the importance of the establishment of the university of the highlands and islands. The matter has been raised in discussions that I have had with Highlands and Islands Enterprise and conversations that I had when I visited the highlands and islands. I am aware of the exciting prospects for the university that were raised at the dinner that the right hon. Gentleman kindly hosted with the chief executive and chair of Highlands and Islands Enterprise—[Interruption.] I do not think that the right hon. Gentleman paid for the dinner; he just hosted it—another failed Lib Dem spending promise.
I am aware that the various institutions in the proposed university have received a good report on the quality of education that they are providing, although some governance matters need to be sorted out. I am convinced that they can be sorted and that we will see the establishment of a university in the highlands and islands that will not only play a tremendous part in the economic regeneration of the area, but encourage people to move to the area to study and then stay there.
I am sure that the Minister is aware that the Scottish Affairs Committee is in the highlands and islands as part of our inquiry into poverty. Yesterday, I met representatives of Highlands and Islands Enterprise, other stakeholders and members of the public. The overriding concern expressed by local communities is about the Government’s plans to butcher the rural post office network. Will the Minister and the Secretary of State, at this late hour, make representations to the Department of Trade and Industry to save this valued and essential service?
I am aware that the Scottish Affairs Committee is in the highlands and islands today, although I was not aware that the hon. Gentleman had mastered the art of bilocation by managing to be here at the same time. As I have said at the Dispatch Box almost every month for the past 18 months, the Government accept the need to continue to sustain a viable post office network throughout the country. That is why we are investing £2 billion to ensure that the post office can compete in the modern world. However, there are problems. When the rural network loses £150 million a year and there are 800 post offices throughout the UK with four or fewer customers a day, with each transaction costing the taxpayer £17, that is an unsustainable state of affairs. My right hon. Friend the Secretary of State for Trade and Industry will make a statement in due course and set out the way forward. We want to continue to have a viable and sustainable post office network, but some difficult decisions will have to be taken.
The Minister will doubtless be aware of the great commitment that Highlands and Islands Enterprise has demonstrated towards the development of marine renewables. In that regard, however, will the Minister speak to his colleagues in the Department of Trade and Industry about the way in which its marine renewable fund operates? The creation of the fund was welcome, but those who are involved in research and development tell me that because of the way in which it was set up, it is virtually impossible to get money out of it. Will the Minister take up that point in his discussions with his DTI colleagues?
I am happy to look into the matter on the hon. Gentleman’s behalf, although I do not accept the assertion that it is virtually impossible to get money out of the fund. However, it is important that organisations with good proposals are able to access that funding. I am sure that he would want to pay tribute to the funding that the UK has given to the maritime research centre that is based in his constituency, which has done a lot of work to ensure that we will be in a position very soon to get more of our energy from wave and tidal sources. We are not there yet, which is why the investment is needed, but I will examine the point that the hon. Gentleman makes.
My right hon. Friend the Secretary of State regularly meets the First Minister to discuss a wide range of issues. As I advised the hon. Gentleman during Scottish questions last month, however, cross-border health issues are primarily for the Department of Health and the Scottish Executive.
The hon. Gentleman is talking about cross-patient waiting—[Interruption.] They were very cross patients under the Conservatives, but waiting times have come down under Labour. Agreements are made between the Scottish health service and health authorities in England and Wales, primarily in the border areas. However, in Scotland, as in England, waiting times and waiting lists for operations are falling. Thanks to the investment that the Government have put in, the number of deaths from cancer, heart attacks and strokes—the main killer diseases in Scotland’s history—has come down in recent times. Unfortunately, the hon. Gentleman’s party opposed all that investment.
As my hon. Friend the Under-Secretary of State for Scotland has just made clear, I discuss a wide range of matters with the First Minister on a regular basis.
I am grateful to the Secretary of State for that full response, but given his current sabbatical to run the increasingly desperate and hysterical Labour campaign for the Holyrood elections, I wonder that he has any time to touch on what is supposed to be his real brief. Does he agree that, given the stagnation of the rail and road network, both cross-border and, more particularly, in England, the House deserves and requires a full-time Secretary of State, not one giving his orders in Bute house to the Scottish First Minister?
Where do I begin? First, on part-time attendance, I note the absence of the Scarlet Pimpernel from the Benches opposite. I resist absolutely any suggestion that I am obliged to make hysterical attacks—I simply tell the truth about the Scottish National party’s policies. I pointed out that the SNP leader was 51, but I supposed that if there was independence, under the SNP’s figures, he would be about 27. On the hon. Gentleman’s substantive point about whether the rail industry is stagnating, it may have passed his notice that we have the fastest growing passenger railway in Europe, that more than 1 billion passengers a year now use the railways, and that we are committing record and sustained levels of investment. Once again, the SNP needs to do its homework.
My right hon. Friend will be aware of the importance of the Glasgow airport rail link, not only to the local economy but to tourism. Has an assessment been carried out on what the effect would be of the SNP’s policy of opposing that investment?
The reinstatement of the ferry service between Campeltown and Ballycastle would be a great encouragement to tourism and would improve business links between Scotland and Northern Ireland. The Scottish Executive are prepared to back the ferry with hard cash, but the Government here in Westminster are not. Will the Secretary of State please have a word with his colleagues in the Northern Ireland Office, and convince them of the benefit that reinstating that ferry service would bring to both Scotland and Northern Ireland?
Senior businessmen in my constituency are concerned about the possible currency in an independent Scotland. It will not be the pound, and it will not be the euro. If the SNP lost a referendum on the euro, it would have to introduce the Scottish bawbee. At what part of the cross-border road will we have to change currency?
Thank you, Mr. Speaker. Is it not the case that Sir Rod Eddington has effectively ruled out a high-speed rail link between Scotland and London, saying that a high-speed rail link
“between two cities would not offer the economy…new”
“or trading opportunities, if those cities were already a day-trip away from each other by existing rail…links”?
Does the Secretary of State agree with that statement?
The Government have not yet reached a final view on high-speed rail links connecting the north and south of the country. We will of course give serious consideration to Sir Rod Eddington’s report. He has commented on the high-speed rail link, among other modes of transport, and that will inform my Department’s work as we move forward on the issue.
Can the Secretary of State comment on the absence of discussions between Northern Ireland Ministers, those in his Ministry, as Secretary of State for Scotland, and those in the Department for Transport, which is the other portfolio that he holds, to deal with the parlous state of the road between the English-Scottish border and the ports from which ferries go to Northern Ireland? Is it not important that there is discussion between the three Ministries about improving the road from Stranraer to Gretna, in the interests of the United Kingdom, and the important commercial life of Northern Ireland? May we have those discussions?
My hon. Friend the Under-Secretary was just reminding me of the scale of investment in the roads network in Northern Ireland. Of course, we maintain a dialogue with the Scottish Executive looking at issues such as the one that my hon. Friend described, which impacts on the locality and more widely. Those discussions would be infinitely more difficult if we were dealing with foreign Governments.
Local taxes, such as council tax and non-domestic rates, to fund local authority expenditure are matters for the Scottish Executive.
The Minister will know that many elderly people live on modest retirement incomes, but the value of their properties has increased substantially over the years. What discussions has he had with his colleagues in the Department for Work and Pensions about the likely impact of a property tax on people on limited or low incomes?
As I said in my main answer to the hon. Lady, any decision to change the basis of local taxation in Scotland is a matter for the Scottish Executive, but my colleagues in the Executive are not attracted to proposals for a local property tax. The best thing that we can do for pensioners and people on low and modest incomes is to ensure that they receive the help and support that they require through pension credit and above-inflation increases in the state pension. I urge the House to compare that with the 18 years of Conservative rule, when the basic state pension rose in value only once.
My hon. Friend will be aware that in discussions about local council funding, some people have proposed replacing property tax with local income tax. What assessment has he made of the impact that that would have on Scotland and on individuals who live there?
The impact on hard-working two-income families would be devastating if we adopted a local income tax. The Burt report, which was published recently, said that to make the same amount of money as the council tax, local income tax would have to be set at 6.9 per cent. I understand that the Scottish National party would cap it at 3 per cent., which would leave a black hole in local finances of £1 billion. That would mean massive Government tax hikes and borrowing or massive cuts in spending in local authority areas. Once again, it would be the hard-working families—
I think that it can be said that my party has learned from bitter experience that there is no easy answer to financing local government in Scotland. However, the answer is definitely not a local income tax or a property tax, which would result in working families paying thousands of pounds more in tax. As ever, the First Minister has prevaricated on the matter, but given the expectation that the Lyons report will recommend the introduction of a property tax for England and Wales—such a tax is to be introduced in Northern Ireland—is not the reality that a property tax is a fait accompli if Labour is returned to power in the Scottish Parliament elections?
The hon. Gentleman is quite right that the answer is not a property tax or a local income tax. However, neither is the answer introducing a poll tax, which was his party’s last attempt to solve the problem and which was overwhelmingly rejected by the people of Scotland. We have clearly said that we are not going to introduce a property tax nor will we introduce a local income tax, which would cost a fortune to fund, with 32 different rates across Scotland and all the administrative nightmares that that would involve. Most of all, it would clobber hard-working two-income families the length and breadth of Scotland who would be up to £1,000 worse off.
Scotland continues to benefit from the Government’s commitment to achieving full employment. The latest labour market data show the highest number of people employed in Scotland since records began. Total employment is up by more than 200,000 since 1997, and the employment rate in Scotland exceeds that of both the wider UK and almost all countries in the European Union.
I am very grateful to the Minister for his answer and, indeed, for the huge amount of work that has been done to achieve those figures and to tackle the reality of unemployment for the people whom it affects. Last Friday, my hon. Friend the Member for Central Ayrshire (Mr. Donohoe) and I attended the opening of offices in my constituency for the Irvine Bay Regeneration Company, which hopes to turn the tide. There has been a 25 per cent. increase in employment in my constituency since 1997, but a huge amount still needs to be done to regenerate the area. Does my right hon. Friend welcome—
I am well aware of the important work that the Irvine Bay company anticipates undertaking, given that that was an area of Scotland devastated by two recessions in as many decades under the Conservatives. As regards traditional manufacturing, I am sure my hon. Friend will welcome the comments of Dr. Peter Hughes, the chief executive of Scottish Engineering, who said on 1 December:
“Our industry is feeling a higher level of optimism than for some time”.
As my hon. Friend recognises, however, the challenge is not just in manufacturing, but in services, so I am sure she will also welcome the words of the RBS Group chief economist Andrew McLaughlin, who only yesterday noted that
“growth of Scottish private sector output remained robust and broad based across both manufacturing and service sectors in November.”
Those are welcome signs of continued and sustained economic growth not just in Ayrshire, but right across Scotland.
As the Secretary of State knows, a major employer in Scotland is the Scotch whisky industry. What discussions has he had with the Venezuelan Government about the new trade barriers that that Government have introduced, which are having a substantial impact on Scottish exports to Latin America?
I am sure all hon. Members will be interested in the fact that the Scotch Whisky Association is having its annual reception this week at which there will be an opportunity for us to meet its representatives. Since assuming the office of Secretary of State for Scotland, I have of course met the Scotch Whisky Association. With reference to the hon. Gentleman’s particular point about Venezuela, in a previous role as Trade Minister I made representations on behalf of the Scottish whisky industry to the Indian Government and to other Governments about the need for trade barriers to come down. That argues for the effective link-up between the Scotland Office and the Foreign and Commonwealth Office, which would be imperilled by a break-up of the United Kingdom and the loss of national influence that the United Kingdom brings.
I maintain regular contact with the oil and gas industry in Scotland, and met representatives as recently as last week.
When my right hon. Friend met representatives of the oil and gas industry, did he discuss with them their tax liability over the next 30 years? It is unlikely that he did, as neither he nor I nor the oil industry knows what the oil price is likely to be next week, never mind over the next 30 years, but I am told that there are some people who think that one can run a country on the basis of the oil income.
I find myself in agreement with my hon. Friend. I met the chairman of Shell in the UK last week and made it clear how inherently difficult it is to try to predict the oil price looking to the future. One need only look at the significant drop in the price of Brent crude in recent months to evidence the fact that it would be the height of irresponsibility to try to build an economic policy on as volatile a commodity as oil.
I draw the attention of the House to my entries in the Register of Members’ Interests related to the oil and gas industry. The price of oil into the future is obviously unknown, but what can be less unknown is Government policy. The Government can give a clear indication of the framework in which investors will operate—both the tax and regulatory regime. What message has the right hon. Gentleman given to the industry about his Government’s desire for a long-term strategy to ensure maximum recovery of oil and gas from the North sea?
The meeting that I had with Shell was the latest meeting that I have had with representatives of the oil interests in the United Kingdom. Of course we want to see a long-term productive future for the UK continental shelf, and for the North sea basin in particular. That is why, through the PILOT mechanism, my hon. Friend the Under-Secretary and I have been working week in, week out, month in, month out to ensure that there is a sustained engagement with our Department, the Department of Trade and Industry and the Treasury. On that basis, I believe we can look forward with real optimism to the years ahead for the North sea.
The figures confirm, as The Scotsman made clear on its front page today, that there is a black hole in the Scottish National party’s economics. Oil has a significant contribution to make, but it cannot fill the black hole created by the public expenditure commitments that the nationalists would be determined to make.
Act of Union
As I informed the House on 7 November, the Chancellor and I will launch a commemorative £2 coin. There will be exhibitions in both Houses of Parliament and in the Scottish Parliament, and other activities are in preparation.
Would not one way of celebrating the Act of Union effectively next year be for Scotland to join England in its World cup bid for 2018? That would allow the two countries to show joint sporting endeavour, and Scotland would finally be allowed by the Chancellor of the Exchequer to bid for the World cup with England.
The hon. Gentleman may be aware that FIFA does not encourage joint bids. I will disappoint him, if he wants to argue for a joint United Kingdom football team, because I have supported Scotland too often and with enough disappointment in the past to be deeply unconvinced by that particular argument.
Communities and Local Government
The Secretary of State was asked—
My hon. Friend the Minister for Local Government recently met my hon. Friend the Member for Loughborough (Mr. Reed) and representatives from the university, the local authority and community groups, of which the Storer action group was particularly impressive, to discuss the issue. As a result of that meeting, we are now examining a number of measures in the areas of planning, housing, finance and local area agreements to try to find a sustainable resolution to the problems. The problem can be more general, and as part of our work to create sustainable communities, we supported the publication of the Universities UK guide on studentification in partnership with the Department for Education and Skills earlier this year, which outlines good practice to integrate students into the community.
I thank the Minister for that reply and, through her, thank the Minister for Local Government for recently visiting Loughborough to talk to residents and those who are concerned. We have a genuine partnership in Loughborough, where university students and others are working together, and I am proud of that. We want to pursue use classes orders, which are prevalent in Northern Ireland in determining the change of use that turns a particular property into a house in multiple occupation. Will the Minister agree to meet me and other representatives at some stage to pursue that particular point, which may not change the problem that we have at the moment but could help with future studentification problems around the country?
I thank my hon. Friend for that contribution, and he has played an extremely valuable role. He has lobbied Ministers, including me, and the Minister for Local Government was particularly impressed by the group that he brought together and by his lobbying on the issue. There are differences between the situation in Northern Ireland and the situation in Great Britain. The circumstances here may mean that UCOs are not suitable, but we should discuss anything that could relieve the situation and are happy to meet him. He has made his arguments with some force, and a meeting could be helpful.
There is no doubt that studentification is a major and growing problem in towns such as Loughborough and in many cities in England. I welcome the fact that the Government are looking at proposals, because the Housing Act 2004 did not say very much about that growing problem. A recent UK Universities report stated that the key is joint working, which I welcome, but I hope that the Government examine proposals to strengthen the ability of housing authorities to protect local citizens. The offset to the growth of universities is that many local people find it difficult to get into the housing market.
I recognise that there are a number of problems. Students want decent housing and to maintain a community, and local residents often feel the effects of experiencing a different kind of community. We need to examine housing and planning, and there are some new planning regulations that address some of the issues that the hon. Gentleman has raised. We are keeping the matter under review and are aware of the problems. My hon. Friend the Member for Loughborough has been particularly vocal in highlighting the issues of concern that we need to address.
In roads in my constituency near the university, half the population turns over every year. When that happens, every other house has a “To Let” sign outside it, which is not a sustainable community. I know that the Minister is aware of the problem from her experience in Northern Ireland, but I wonder why the Government have set their face against imposing similar solutions not only to reduce the size of the population in an HMO at which point planning permission is required, but to require compulsory licensing for all small HMOs as well as large HMOs, which are included in the Housing Act 2004.
It would be wrong for my hon. Friend to assume that the Government have set their face against changes that improve the situation. The original purpose of the HMO legislation was to run fire safety and risk assessments. Different remedies are available in GB that are not available in Northern Ireland. For example, Northern Ireland does not have local area agreements. One of the approaches that we are pursuing, particularly in Loughborough, is that of using local area agreements, and if possible bringing in the universities as well. That is not an option in Northern Ireland. We must consider every possible way of trying to resolve the problem. I would be reluctant always to see students as part of the problem; I hope that they can be part of the solution. We do not want to demonise students. We need to ensure that we have sustainable communities in which everybody feels comfortable.
I am sure that the Minister agrees that sustainable communities, whether in student areas or elsewhere, can be created only if environmental sustainability is taken fully into account as well. She will know that buildings are responsible for more than half of all carbon emissions in this country. Will she come clean and publish the overdue first biennial report on the Sustainable and Secure Buildings Act 2004, which will set out what measures, if any, she has taken to reduce the carbon imprint of buildings?
Surely it is difficult to maintain sustainable communities in areas of high density student housing if students’ travel arrangements are undermined by the Department’s arrangements for funding passenger transport authorities. The problems in Tyne and Wear have been raised on the Floor of the House on several occasions. They have now been going on for more than a year. The Department has promised to do something about it, but so far has not. When will we hear what the solution is?
Prior to the local government White Paper, Ministers and officials had extensive discussions, including on overview and scrutiny, with local authorities and others. We are extending councillors’ scrutiny role so that they can more effectively hold to account those who provide public services to their communities.
I am pleased about the importance that my right hon. Friend attaches to scrutiny of matters internal and external to the council. Does she agree that there are many good examples of scrutiny in local authorities, some of which model their role on that of Westminster Select Committees? In other authorities, however, scrutiny is too lowly graded. It is not properly resourced, councillors are not properly trained, and in many cases the officers being scrutinised manage the officers who give advice to the scrutiny committees. Does she accept that there is a role for her Department and the Local Government Association to play together in disseminating examples of good practice and trying to pull the poorest performing authorities up to the levels of the best?
I agree with my hon. Friend. There are some fantastic examples of local councillors coming together and challenging the council and others in their local area, thereby raising the quality of scrutiny and ultimately of local public services. That depends partly on genuine interest from members and partly on the authority’s willingness to respond. Committees that are independently resourced can be very effective in ensuring high-quality scrutiny. We want to work with the LGA to ensure that best practice in our best councils is spread right across the country.
I hope that my right hon. Friend will be interested to know that on some occasions I have given evidence to scrutiny committees of my local authority, particularly on matters such as licensing and use of disorder zones. Just as when we serve on Select Committees we have good back-up from the teams that support us, scrutiny committees must, as my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) said, have the necessary resources to do their work. Will my right hon. Friend give an assurance that in the context of the White Paper she will consider how professional resources can be better supported in local government?
I certainly give my hon. Friend that commitment. As we move forward, we want to shift responsibility for target setting and scrutinising proposals from central Government to local government. That will free resources that are currently spent on looking upwards, filling in forms and central bureaucracy, thus allowing local overview and scrutiny decisions to be made at the right level. I hope that the money that will be saved through the complete change of one performance regime can be put into supporting overview and scrutiny committees to do an even better job than they do at the moment.
I bring news from Northamptonshire, where scrutiny is in good heart but under great pressure. It is under particular pressure because of the poor revenue support grants that we have had in the past few years. Given the Secretary of State’s remarks, will she give me encouragement by telling me how much money she intends to give my county to ensure that separate scrutiny support can exist, as she just advised?
I send my greetings to Northamptonshire and I am pleased that it has such excellent overview and scrutiny committees. Of course independent resourcing of scrutiny committees can make committees work better and raise the quality of local decision making. However, I am trying to move away from central prescription to allow local authorities to make the decisions that are right for them. I do not want to replace with one hand what I take away with the other. I am sure that the hon. Gentleman agrees with that sentiment.
Will the Secretary of State expand on the effectiveness of overview and scrutiny committees when calling in decisions by bodies such as primary care trusts, if they have to consider decisions such as that made by Devon PCT yesterday to close community hospital beds and reduce the hours for magnetic resonance imaging units without consulting anyone?
Overview and scrutiny committees can be incredibly effective. Indeed, 60 per cent. of executive councillors said that they had a policy decision changed because of overview and scrutiny. I do not know the details of the case that the hon. Gentleman cites, but it would be appropriate for local councillors and people to get involved and use overview and scrutiny committees to review decisions about local hospital reconfiguration or changes, raise the quality of debate, take evidence from different sources and make recommendations. I would expect that to happen in many places throughout the country.
May I inform my right hon. Friend of an example of bad practice by the overview and scrutiny committee in the London borough of Wandsworth? Often, it simply rubber-stamps decisions made behind closed doors. What carrots and/or sticks will the new Bill contain to ensure that boroughs such as Wandsworth follow best rather than bad practice for overview and scrutiny committees?
I completely sympathise with my hon. Friend’s predicament in Wandsworth. Of course, when local councillors are involved in actively scrutinising decisions on behalf of local people, those local people can have their voices heard and ultimately help shape services. In the coming months, we will work with local authorities and others, including my hon. Friend, if he has an interest, to draw up guidance that local authorities can use if they wish to ensure that decisions are made in the best possible way.
Might not the Secretary of State’s time be better spent in reading some of the many reports of overview and scrutiny committees about councils’ No. 1 problem—care of the elderly? The reports were summed up in a letter, which was published in The Guardian last week, from 45 leaders of authorities of all political persuasions. It said that services for the elderly were “teetering on the brink”. That is made worse by Labour cuts to the national health service. Instead of treating local government like her personal Lego set, will the Secretary of State tell hon. Members whether the Government have a plan to deal with the crisis, or is she content to abandon the elderly to the indignity of poor service and neglect?
Thank you, Mr. Speaker. Not only has real-terms funding for local services increased by almost 40 per cent. since 1997, following yearly cuts in investment in public services, but our commitment to social care cannot be questioned either, as we are investing in that as well. Rather than mouthing comments from a sedentary position, the hon. Gentleman should get real, look at the funding that has gone into local government and say whether or not he would match it.
Thurrock Development Corporation
Over the past few months, the Thurrock development corporation has been securing key sites for jobs and housing in Purfleet, West Thurrock and on the riverside, as well as making progress on major cultural and environmental projects.
I very much welcome that statement, but will the Minister assure me that the Thurrock development corporation will be facilitated by the Government in terms of capital spending, so that it can fulfil its seven-year business plan and strategy? Without the means, the Government’s policies will not be achieved, and I want them to be achieved.
My hon. Friend is right that capital investment is required across Thurrock to ensure the necessary infrastructure and progress. We will provide capital investment to support the development corporation. He will also welcome the fantastic proposal to relocate the Royal Opera house production facility and archives to Thurrock, which will build skills and create jobs as well as supporting new homes and cultural development in the area.
The Thames Gateway, of which Thurrock is a key part, was originally the vision of my noble Friend Lord Heseltine, and the Opposition strongly support it. The hon. Lady must therefore have been both brave and embarrassed, just a fortnight ago, to admit to her Government’s serious mistakes in carrying the project forward. Given that the design and quality problems and the mess of the 37 overlapping public bodies defusing accountability and leadership were identified long ago—not least by the Government’s own urban taskforce last November—why has it taken them so long to get round to sorting it out? How long will it be before a similar apology is due to those caught up in a series of questionable decisions and failed court actions associated with the Liverpool pathfinder scheme?
I am sorry that the hon. Gentleman has decided to talk such complete nonsense and has failed to welcome the new strategic plan for the Thames Gateway. That has been welcomed by local authorities and development agencies across the Thames Gateway, including Conservative local authorities, which agree that billions of pounds of new investment in infrastructure to support new jobs and homes, and raising the quality of design, is the right approach to making the Thames Gateway a fantastic place to live.
We have continued to support areas facing particular challenges. Since its launch in August, the Commission on Integration and Cohesion has been undertaking a programme of consultation and visits. It will make recommendations in June next year. The local government White Paper sets out a number of measures to improve cohesion.
I am grateful to my right hon. Friend for that answer. She will be aware that 2007 marks the 30th anniversary of the formation of the Community Development Foundation, the country’s foremost source of expertise on community development and social cohesion. In recent years, the CDF has delivered and administered the faith in the communities programme on behalf of her Department and its predecessors. In the light of the Prime Minister’s recent comments on cohesion, does my right hon. Friend agree that cohesion must start from the grass roots of communities, but that organisations such as CDF can contribute the expertise and knowledge that will help it to succeed?
Yes, I do. I pay tribute to the work of my hon. Friend as chair of the CDF and to community workers up and down the country who are striving to build cohesion and communities that get on well side by side, share values and understand what difference is, but understand what it is to be British. I understand the contribution of that particular organisation, which builds from the grass roots to make sure that our communities are good places in which to live and work.
I am grateful to Ministers at the Department for meeting me to discuss the challenges to community cohesion in Slough, but they still exist because of the huge changes faced by my community. Will my right hon. Friend look at a proposal submitted recently by Slough council to help with those challenges?
My hon. Friend has raised this issue with Ministers for some months, and we are well aware of the problems facing Slough and other councils throughout the country. Next week I shall meet a delegation of local authorities to discuss some of them. We will work with local authorities not just to identify particular local pressures and challenges, but to identify what will help authorities to manage such tensions and spread best practice across the country. I stand ready to consider those issues whenever new evidence emerges.
A crucial prerequisite for achieving and sustaining community cohesion is, of course, equality before the law. Given that no fewer than 100 right hon. and hon. Members signed an early-day motion tabled by the hon. Member for Brighton, Kemptown (Dr. Turner), by me and by others urging early and undiluted implementation of the regulations on sexual orientation, when will they be forthcoming?
I have already responded to the hon. Gentleman on this point. As he knows, respect for the rule of law is at the heart of British politics. The Government are prepared to legislate to prevent discrimination of any kind, so that people can take advantage of goods and services without the threat of such discrimination. As the hon. Gentleman also knows, however, there are strong views on precisely how that legislation should be implemented in practice. More than 3,000 responses were received to consultation, and we will respond to it in due course, but my main priority must be to establish effective regulations by April so that people with a particular sexual orientation can be protected from discrimination.
The Muslim Council of Britain has defended the Muslim Public Affairs Committee and its involvement in the politics of the far right, including holocaust denial. In view of that, does my right hon. Friend consider either organisation to be a suitable partner in contribution to community cohesion?
I find it surprising that any organisation in Britain today does not recognise the reality of the holocaust. I also find it surprising that members of leadership organisations in the Muslim community, or indeed other faith communities, should choose not to attend holocaust memorial day. I know that a debate on the issues is taking place in those organisations, and I would encourage its continuation.
I hope to see the organisations myself, along with my hon. Friend the Minister for Local Government—who is responsible for community cohesion—in Newcastle in January to remember the holocaust. I hope that we can work towards a society in which the contribution of all people, of all faiths and none, is fully recognised.
In England, 1.63 million households are on the waiting list for social housing. The number of households on the waiting list has been broadly unchanged between 1997 and 2001-02. There has been a significant increase in the last four years, which reflects the difficulty of affordability faced by those trying to get on to the housing ladder.
In Chesterfield the waiting list has risen from 1,774 to 6,170, while nationally it has risen by half a million. Yet Government policy has allowed the number of social houses to fall by 600,000 since 1997, and the Government steal £3 million of Chesterfield council tenants’ rent every year rather than allow Chesterfield to build new social housing. When will the Government change their disastrous, dogmatic and failed housing policies?
The hon. Gentleman will not be surprised to learn that I do not agree with his characterisation. It is enormously important for us to produce more houses in all sectors—the private sector, shared ownership and social housing—and we are on course to deliver our target of 30,000 social rented houses a year by 2008.
As the hon. Gentleman knows, housing revenue account money is seen as a national resource, allowing us to target the areas in most need. We are therefore providing more resources, including more resources for Chesterfield.
Does my hon. Friend recognise that the crisis in housing is now becoming as fierce in some northern towns and cities as it is in some southern towns and cities? Bolton has lost a third of its housing stock, largely through the right to buy, and its housing waiting list in the last few years has quadrupled from 5,000 to over 23,000, and it is rising steeply. A few days ago, the Minister for Housing and Planning met the northern housing forum. Will the Department look at its proposals for alleviating the housing crisis in northern areas?
My hon. Friend is right to recognise that housing issues affect not only the south of England, but the north as well. We need to build more houses throughout England. It is important that we look at proper local assessments, and we are of course very happy to consider any proposals and initiatives that are brought forward by local communities.
The Department plays a critical role, working effectively with local government and communities to tackle Islamist extremism. We continue to monitor our work at both local and national level, and to build on what we have learned from previous initiatives, such as the “Preventing Extremism Together” project, to inform our policy development.
Last month, the Secretary of State told the House that action had been agreed on all but three of the 27 recommendations of the “Preventing Extremism Together” taskforce that were addressed to Government. As action agreed is not the same as action taken, can the Minister tell the House howmany of the recommendations have so far been implemented?
Yes I can, and I am grateful to the hon. Gentleman for asking the question—it gives me an opportunity to put the record straight, because some misinformation has been perpetuated on this point by mischief makers. Action has been agreed on all but three of the 27 recommendations that were for Government to lead on. Three have been completed—the recommendation about consultation on the Department for Education and Skills Green Paper, expansion of the minority ethnic achievements project, and the extension of equal opportunities legislation to cover discrimination on the ground of faith—and 17 are in progress. The Government have accepted the recommendations and are working on implementing them. Three are under consideration and the Government are deciding whether to accept them. Of the four remaining, alternatives are in place for two, and two are not being taken forward.
A number of weeks ago, the Muslim Parents Association of Milton Keynes organised a highly successful meeting that was attended by about 200 members of the local Muslim community and people from other faith communities, at which two Imams launched a theological discussion about Islam and how it precisely did not explain the actions of certain extremists within the Muslim community. Will the Minister say what support his Department is giving to moderate Muslim organisations such as the Milton Keynes Muslim Parents Association?
My hon. Friend makes a very important point. It gives me the opportunity to re-emphasise on behalf of the Government what is of course the case: those who use the name of Islam to justify violence and criminal terrorism are to be condemned. The Government’s programme with the mainstream Muslim community, Imams and various organisations to make that point clear includes events to perpetuate the true nature of Islam and to put to bed the arguments of those who use it to justify their violent extremism, and more than 30,000 young British Muslims have attended those events.
The definition of previously developed land is based on the land use change statistics from 1985. It is a practical definition for statistical purposes and should most sensibly remain as set out in the new planning policy statement published 10 days ago.
I thank the Minister for her reply. Large gardens of houses in south Manchester such as the Rookery and Jessiefield are threatened with development. Does the Minister not accept that redesignating gardens as greenfield rather than brownfield sites would afford extra protection against such overdevelopment?
There are practical difficulties in changing the definition in the way that the hon. Gentleman suggests. There is not only the question of how one deals with patios; we do not want to make it harder for people to build extensions in their own gardens and to their own homes. There are ways for local councils to address the problems associated with unsustainable development on garden land. Several local authorities already have such policies, and I suggest that the hon. Gentleman take up the matter with his local council. The new planning policy statement on housing gives local authorities greater powers to have particular policies in this area, and he would be wise to look at that new planning guidance.
To ask the Defence Secretary what the implications of recent events are for British policy towards Iraq.
I have always said that lasting progress in Iraq cannot be achieved by military means alone, but will depend on a combination of security, politics and economics. Our security strategy is clear and has not changed. It is not driven by the American political calendar, nor will it be thrown off course by those who use violence and terrorism to provoke sectarian reaction and to stop progress in Iraq.
Our strategy has three main elements. First, we are helping the Iraqis to build up their own security forces—still with a long way to develop, but already with more than 300,000 recruited, trained and equipped. Secondly, as these forces develop we are handing them control, province by province, city by city, moving to the point where they have complete responsibility. Thirdly, we are underwriting that handover process by leaving in place quick-response forces not to do front-line security work, but ready to support the Iraqis if the situation gets out of control. We remain convinced that that remains the right strategy—indeed, the only one that could possibly work.
I welcome the constructive approach of the Iraq Study Group. As I made clear yesterday, its assessment of the security situation is largely in tune with our own. We recognise the gravity of that situation, but I also note the group’s conclusion that there is no magic formula to solve the problems. People should not confuse a difficult situation with a problem of strategy. Our strategy has long included many of the elements that the group has highlighted.
What is changing is the pace at which this strategy unfolds. Prime Minister Maliki and his Government want it to go faster. That is a natural response and, indeed, a welcome sign of increasing confidence, but it also crystallises the great challenge that Maliki faces. On the one hand, to keep up momentum—to reinforce a sense of progress and nationhood—he must show that Iraq is regaining control of its own destiny. At the same time, he must not ask too much too quickly of its developing security forces.
The Prime Minister made it clear during his visit to Washington last week that we have always been open to engagement with Iran and Syria, but it is absolutely vital that the basis for their engagement must be support for the democratically elected Government of Iraq, not support for sectarian or terrorist agendas. Those countries know what they have to do, and they must decide which path they want to follow.
There are some parts of Iraq, especially Baghdad, where the reality on the ground clearly is a long way from the point where the coalition can hand over. This morning’s suicide bombs were another reminder. Part of their motive, of course, is precisely to provoke an escalating sectarian reaction, but Baghdad is not Iraq, and I make no apology for reminding people that 14 of the 18 provinces are relatively peaceful. The security situation, and therefore progress along the security strategy, is different in each of these provinces.
In the area under British lead in the south, two provinces have been handed over to the Iraqis, and a third is soon to follow. The fourth, Basra, remains the most difficult challenge, but again, the security situation is a symptom: the underlying cause is rival Shi’a power blocs vying for power. Right now, this is too much for the Iraqi security forces to deal with on their own, and there are real weaknesses in the local police, so unlike in the other three provinces, British forces are still doing front-line work in the main city.
Operation Sinbad is working through Basra city area by area, re-establishing security, building confidence, rooting out corrupt and failing police, and putting Iraqi soldiers on street corners as a sign that the Government are determined to govern. Friday’s Operation Pisa—an impressive operation involving a number of bold “strikes” across the north of Basra city—shows that when we need to act, we do so and we do so decisively. But of course, the key is that these improvements in security are followed, quickly, by progress in governance and by economic regeneration, building momentum and winning over local people to a positive view of the future.
This is our strategy. We will continue to support the Iraqis in overcoming the violence and intimidation that disfigure their country. We will work with them to build a long-term relationship, including training and mentoring to help the security of both the country and the region, and to deal with the ongoing challenge of international terrorism. Both in security and in the parallel strands of politics and economic development we have to accept that how quickly things move will depend on many factors, not all of them directly under our control. In fact, it is a measure of success if the path of progress becomes increasingly an Iraqi one. As I said in a speech last month, we must get used to thinking in terms not just of our strategy but of our role in their strategy.
We continue to insist that we will not cut and run. This is not about political gestures or a trial of wills, but about recognising the challenges we face and also the commitment we have made. We will hand over when it is right so to do, driven not by arbitrary deadlines but by the reality on the ground. I have made clear several times why we will not be drawn into laying out a prescriptive timetable for draw-down, and I note that the hon. Member for Woodspring (Dr. Fox) supported that position yesterday. Our strategy will and must remain conditions-based. We will work to ensure that our plans remain clear and realistic, but we will also work to resist cynicism and defeatism as long as we still believe that we are making a difference—as long as we still believe that the presence of our forces is increasing the chance of a positive legacy for their work and their sacrifice in Iraq in the past three years.
I thank the Defence Secretary for that response. While we accept much of what he said, does he accept that as the Iraq Study Group described the situation in Iraq as “grave and deteriorating” and as 7,000 British troops are deployed there, the Government should not hesitate to report to the House when major developments arise? Was not the publication last week of the Iraq Study Group’s report one such event? As it was important enough for the Prime Minister to fly to Washington immediately, was it not also important enough to warrant a ministerial statement to Parliament in recent days?
To seek to question the Government on that is in no way to lack sympathy with the difficulty of the choices they face, but will the Secretary of State say how the Government were thinking of gauging parliamentary reaction to that major reassessment of American and coalition strategy while the decisions on it were being made? We appreciate that talks between the United Kingdom and the United States are going on, but in that case can the Secretary of State tell us when the Government will be in a position to describe definitively the response of the coalition Governments to the Iraq Study Group?
In the meantime, can the right hon. Gentleman give details about some matters about which it is not premature to ask, in the light of that report? For instance, did the Prime Minister reach an agreed view with the President in their talks on the ISG proposals last week? In particular, did he obtain a bankable assurance that the United States will now make a firm and sustained effort to revive the Israel-Palestinian peace process? Did the President agree to develop the “whole middle east strategy” of which the Prime Minister has spoken?
In addition, in Washington, the Prime Minister described the ISG report as “a strong way forward” and said that
“it is important now we concentrate on the elements that are necessary to make sure that we succeed”.
To which elements was he referring when he said that? What will be the objectives of the Prime Minister’s forthcoming visit to the middle east? Can the Defence Secretary tell us what was the result of sending an envoy to Syria a few weeks ago, and have any parallel exploratory talks taken place with Iran?
Is it not the case that the need for internal reconciliation in Iraq, the building up of the Iraqi army and the creation of an international support group—all proposed by the ISG—have already been proposed by many of us in the House? What has been the reaction of the Iraqi Government to the proposal to withdraw the bulk of American forces by early 2008? What assessment have the Government made of the reaction of the Iraqi Government to the report’s conclusions? Do they agree that any international contact group formed must have Iraqi involvement throughout?
Finally, on a defence matter, while those decisions are pending—as they clearly are—are contingency plans being made to provide for British forces to assist in the more rapid training of the Iraqi army called for by the ISG?
Given the myriad questions that legitimately arise from the situation and the apparent imminence before Christmas of an announcement by the President of the United States on the reassessment going on there, will the Secretary of State and his colleagues ensure that the House receives a further full report from the Government before the Christmas recess, so that a full debate on Iraq—the lessons and the prospects—can be held early in the new year?
I make no criticism of the right hon. Gentleman’s desire to have the issue addressed at the Dispatch Box and I cast no aspersions on his motives. I welcome his positive contribution to the debate in respect of these challenging issues. There is, however, a degree of prematurity about his questions, given that the US Administration are still deliberating on the report’s recommendations. It was, after all, a report to the US Administration. As I understand it, the President will respond some time in the near future.
We are considering the recommendations ourselves, as the right hon. Gentleman pointed out, in so far as they are directly relevant to the area for which we have responsibility and to the issues that I addressed in my remarks this afternoon. There has to be space to discuss the recommendations, as the Prime Minister did when he went to Washington with the principal ally in our coalition—the United States. We must also recognise that the Iraqi Government are, as the right hon. Gentleman said, important contributors to those discussions.
To deal with the specific question about the Iraqi Government’s response, the right hon. Gentleman knows as well as everyone else that President Talabani specifically referred to some of the report’s recommendations in his observation that they are inconsistent with the sovereign position of the Iraqi Government. He has specific concerns—I understand them—about interference with the sovereignty of the Iraqi Government, particularly if the strict letter of some of the recommendations on an international convention or the embedding of forces inside sovereign Iraqi forces were to be misunderstood. Discussions with the Iraqi Government will continue, and in the fullness of time they will come to a considered response, as we are duty bound to do with them.
We agree with the right hon. Gentleman that the approach to Iraq needs to be set firmly in the context of a broader middle east strategy that has to take account of the Palestinian-Israeli situation, which is at the heart of the motives for violence apparent in the region.
The right hon. Gentleman asks about the focus of the Prime Minister’s visit to the middle east. It will be a follow-up to his earlier visit, when he focused on energising the necessary momentum for talks that will hopefully lead to a stable peace in that part of the world. The Prime Minister has indicated his commitment to that and he is taking it forward.
As far as Syria is concerned, we said exactly what I reported—that it must make a constructive contribution to Iraq and must accept its responsibilities as a country that borders Iraq and as a country from which some of the violence and those who perpetrate it travel into Iraq. I have said nothing to the House that I have not said to Syria. To my knowledge, there have been no talks with Iran.
As far as our commitment to the training of Iraqi security forces is concerned, we are very pleased with the progress of the 10th division of the Iraqi army. One indication of how successful our training has been can be seen in the contribution of that division to Operation Sinbad.
My right hon. Friend will be aware that this morning one of the most important politicians in Iraq visited this House. His visit was advertised on the web and five Members of Parliament turned up, together with a large number of peers. If my colleagues are so interested in Iraq, I would have thought that they could have come to listen to al-Hakim, the leader of the Shi’a group in the Iraqi Parliament—the largest political group, representing the largest population group. He answered questions with great dignity and knowledge.
My right hon. Friend should not feel reluctant to come to the House, or guilty in any way, as he has been one of the most transparent Secretaries of State on the subject of Iraq since he took the job, and he is to be commended for that.
I pay tribute to my right hon. Friend for her contribution over many years—predating 2003, I might say—of fighting and campaigning for freedom for the Iraqi people, sometimes at significant personal risk. They have had no better champion for decades. She is right to point out the importance of talking to Iraqi politicians. Few of them get the opportunity to visit us in London and as parliamentarians we should take the opportunity to hear their views on the future of their country. His Eminence Abdul Aziz al-Hakim, whom I will meet later today, is the head of the United Iraqi Alliance and a very significant player in Iraqi politics. He personally has made a significant contribution to freedom in his country and his family suffered extensive violence at the hands of Saddam Hussein. He has lost more than 20 members of his immediate family to that violence, including his brother, who was also a leader of the same organisation. It would behove us to pay some respect to such people, who have views to which we should listen.
The House will be immensely grateful to the Secretary of State for coming here today, but as the shadow Foreign Secretary has said, most folk will find it extraordinary that nearly a week after the publication of the Iraq Study Group report in the United States the Prime Minister has still not come to the House to make a full statement. That is particularly true given—as has been pointed out—that he was quick enough to fly across the Atlantic to address the American media. I understand that he has also done a presentation for the British media this afternoon.
Like the Secretary of State, I pay tribute to our armed forces who have suffered a great deal in Iraq in the past few years. However, surely Secretary Baker’s report has stripped any remaining grounds for complacency about the situation in Iraq. We could ask why no similar exercise has been carried out on behalf of this country. As the report states, violence is increasing and the situation is worsening. The report states explicitly:
“Making no changes in policy would simply delay the day of reckoning at high cost”.
In the light of that report and the Prime Minister’s discussions, is the Secretary of State saying that there has been no change at all in the British strategy for Iraq?
Given President Bush’s obvious doubts about the need for a broader middle east peace process, in what ways are the Americans supporting the Prime Minister’s solo efforts in the region? When President Bush says that there will be a new statement on Iraq policy before Christmas, I—like the shadow Foreign Secretary—urge that we have a similar statement in the UK and a debate as early as possible. It is surely the case now that Britain has to have its own strategy for dealing with Iraq that will lead to a phased withdrawal of British armed forces sooner rather than later.
My right hon. Friend the Prime Minister will, of course, be here tomorrow to answer questions at the Dispatch Box. It will be interesting to see just how many questions relate to this pressing issue. The complexity of the Iraq Study Group report will no doubt emerge in the questions that I will be asked. The report makes more than 79 recommendations.
Many of the recommendations relating to the area in which we have particular security responsibility are entirely in line with the strategic approach that we have adopted for some years. The report recommends to the US Administration that there ought to be a change of policy, and the hon. Gentleman suggests that that means that it is recommending the same thing to the British Government. I have gone to some lengths, both here in the House and outside it, to set out our strategy and policy in Iraq. The hon. Gentleman thinks that policy changes need to be made because of the ISG report: I should be grateful if, in the questions that he puts to me as I stand at the Dispatch Box, he would outline what he thinks that they should be.
The hon. Gentleman asked about a debate on this matter. I understand that my right hon. Friend the Leader of the House will make an announcement about that on Thursday.
I also welcome today’s opportunity to discuss this report, and add my voice to the call for a full debate in this House in the near future. My right hon. Friend the Secretary of State was right to say that the situation in Iraq is difficult, but does he agree that it would be ridiculous of the British Government to change their policy just because a US study group has made certain recommendations? The US Government have not even given their response to those recommendations yet. In any case, surely it is this Government—and this Parliament—who should determine the policy of the British people in respect of Iraq. It should not be determined by people in any other country, however eminent they are.
We continue to study the report, which is complex and substantial. It is a welcome piece of work, because it adds to the debate and to our consideration of these matters at an important period. We had discussions with the study group before the report was published, and found that its members’ thinking was broadly in line with our own. Clearly, we need to read and digest the report’s formal recommendations, and we are doing so. However, as I said earlier, it is not obvious to me, in so far as they relate to the area for which we have specific responsibility, that those recommendations demand a change in strategy or policy on our part.
It is not for me to agree or disagree with assertions made by the author of the report. However, the report was not written by policy makers: it was written by people who make policy recommendations to the policy makers. The group must hold consultations and discussions with the US Administration and their advisers to determine what policy changes, if any, there need to be as a result of the ISG’s fresh look at the situation in Iraq.
Does my right hon. Friend accept that public support for the policy on Iraq is draining away simply because the elected Government there—and there is no question but that they are elected—seem totally impotent to stop the daily mass slaughter of totally innocent people? It is clear that the occupation troops in Baghdad cannot prevent that slaughter either, so does he agree that, in those circumstances, the loss of public support is hardly surprising?
If my hon. Friend is correct in what he says about the perception of what is happening in Iraq, the loss of public support is not surprising. An earlier question referred to the visit to the UK of a prominent Iraqi politician. That visit has given people here an opportunity to gauge the views of people in that country and to see whether the assessment given by my hon. Friend is correct. However, I remind him that the Iraqi Government have been in power for a few months only, in circumstances that are as difficult and demanding for a new Government as anyone could imagine. It is therefore very unfair to judge them against standards that we impose from many hundreds if not thousands of miles away.
There is compelling evidence in Iraq that, through central and local government, the country can run its own affairs. In 14 out of the 18 provinces, where 60 per cent. of the people live, there is relative stability and comparatively little violence. The murder rates in some of those areas are lower than those in many European countries.
We have to recognise that there is appalling violence in Baghdad and other parts of the country and that it has to be addressed, but rather than blaming the people who have to deal with that in a very difficult political situation, sometimes some people in this country should put the blame where it lies: on the internal insurgency and on the interference from other countries to stir up that insurgency.
Baghdad may not be the whole of Iraq, but 25 per cent. of the population live there. In the other four provinces, 40 per cent. of the population are in the area of the highest insurgency. Does the Secretary of State accept that there is something improper and insensitive about the Prime Minister’s enthusiasm to give evidence to an all-party congressional body appointed to make recommendations on the future of Iraq and his unwillingness to appoint any similar all-party group to advise the British Government or to seek any advice from outwith his own ranks on what is a disaster for British foreign policy?
The right hon. and learned Gentleman knows that I respect his forensic analysis. I do not think that the two points that he makes are connected in the way that he says they are. He is correct to point out that 40 per cent. of the people of Iraq live in the areas of the worst violence. However, he also has to recognise that there is another part to that equation: 60 per cent. of the people of Iraq do not live in those areas. They enjoy substantially the freedoms that we have won for them and are released from the tyranny of Saddam Hussein. That is a very important positive.
So far as my right hon. Friend the Prime Minister’s position is concerned, he stands at the Dispatch Box every week, and sometimes more frequently than that, and is able to be questioned by hon. Members. The fact that another Administration appointed a committee to advise them in relation to their policy does not necessarily mean that we have to do exactly the same, particularly when there is no evidence that our strategic approach or our policy in relation to Iraq—particularly the part that we have responsibility for—is failing.
Did I understand my right hon. Friend correctly? Does he regard the Iraq Study Group as having absolutely no recommendations that could apply to the areas of British responsibility in Iraq? If the President of the United States accepts those recommendations in total, does that mean that the British Government will oppose that change in the strategy in Iraq? Is it not infinitely easier for a leading Iraqi politician to travel half way across the world to speak to British politicians than it is for him or her to travel in their own country to speak to their own constituents?
I do not necessarily accept my hon. Friend’s last point, because I know of a number of Iraqi politicians who travel extensively—some of them, I accept, bravely—in their own country, consulting and discussing matters with their constituents so that they can properly represent them in the Parliament or house of representatives that they sit in. The meat of her contribution suggested that I was saying that there was nothing in the Iraq Study Group report for the British. That is entirely the opposite of what I was saying. I welcomed the report. Clearly, to the extent that it is consistent with the policy and the strategy that we already have, I welcome it even more. It makes some welcome recommendations and sets in the context of the broader middle east, in particular, the importance of the resolution of the challenges that we face in Iraq. When the US Administration get to the end of their process of considering the recommendations, I do not envisage being in a position where I think that their position has to be disowned or condemned. We will do this together, because we are both members of the same coalition, and we will also do it with the Iraqi Government.
In view of what the Secretary of State said about the contribution of the Iraqi 10th Division to Operation Sinbad, what does he think about the proposal to transfer control of the Iraqi police to the Ministry of Defence?
I greatly respect the right hon. Gentleman’s views on these matters because I know that he has studied them, not only in his capacity as Chair of the Select Committee but otherwise—and I have to say to him that that is superficially attractive because it appears to be a practical solution. However, transferring the police to the control of the Ministry of Defence, against the background of the repression that there has been in Iraq, might, in the long term, be the wrong thing to do. I would have to consider long and hard whether doing such a thing would serve the long-term interests of the Iraqi people’s democratic future.
In his response to the urgent question, the Secretary of State mentioned the region. Has he considered the impact that there would be on neighbouring friendly states such as Kuwait, Qatar, Saudi Arabia and the United Arab Emirates if there were an untimely withdrawal from southern Iraq before the four provinces and the cities had been handed over to a democratically elected Iraqi Government?
We keep in close touch with the Governments of all those countries, who are consistently a moderating influence on policy in the middle east. As my hon. Friend points out, they face their own challenges and have fears about the possible disintegration of Iraq and the effect that that would have on their security. Because we keep in touch with those Governments, we will ensure that when the broader middle east strategic approach to the resolution of Iraqi issues is determined, we will take their views into account.
Does the Minister accept that as there is no British equivalent of the Iraq Study Group, that the—[Hon. Members: “Prompt!”] Does he accept that his use of the word “premature” in reply to earlier questions, suggesting that it would be premature to consider this before the American Government have made their decision, rather reinforces the idea that it is not just the Prime Minister who looks like a glove puppet of President Bush, but the entire Cabinet?
It might have been better for the hon. Gentleman if he had continued to forget the question that he was about to ask—[Interruption.] My right hon. Friend the Leader of the House reminds me that the Iraq Study Group was commissioned in the first place by two independent non-governmental organisations, or think-tanks. If the House now thinks that that is the way in which policy ought to be developed in this country, one must wonder to whom accountability would be handed. I got lost in the hon. Gentleman’s question to some degree, as he did himself—but instinctively, I do not agree with him.
Will the Secretary of State explain quite simply to an increasingly sceptical public why he is opposed to the establishment of a parliamentary inquiry that could take wide-ranging evidence on the policies relating to Iraq, the aftermath of the invasion and what we are going to do about getting the troops out?
The view that I took when that request was made initially was reinforced by the decision of the House not to hold such an inquiry. I share the view of the House of Commons that there should not be such an inquiry. In my view, the House was persuaded that a retrospective inquiry would undermine our troops who are deployed at present—those in south-east Iraq, especially, and also those in other parts of Iraq, who are doing very good work. It would be entirely inappropriate to give instructions that there should be such an inquiry at this stage. There might be a time for inquiries, and we will cross that bridge when we come to it.
Does the right hon. Gentleman understand that those of us who opposed the war from the outset on the grounds that it was illegal, unnecessary, dangerous and contrary to our national interests find it deplorable that the Prime Minister has not yet come to the House to answer the searing indictment of his policies that is contained in the report of the Iraq Study Group? Will the Secretary of State tell his right hon. Friends the Prime Minister and the Chancellor of the Exchequer that they are responsible for having got us into this mess, and that it is their business to account to the House for that?
The right hon. and learned Gentleman makes himself clear. I do not agree with him, but I am sure that his consistent observations on the issue have been heard by the very people by whom he wishes them to be heard. In my view there is no searing indictment of our policy on Iraq, and certainly not in the ISG report, which does not come into that category.
Is the Secretary of State aware that I do not need any so-called parliamentary experts to tell me over and over again what my position is? I did not support the war at the beginning, and I do not support it now—and I do not need any high and mighty politicians to tell me that. Get the troops out as quickly as you can.
My hon. Friend has, on this issue, the merit of consistency—and not all people who comment on it can claim that. I have said on more than one occasion—I repeat it now at the Dispatch Box—that it is not my intention to keep one British serviceman in Iraq any longer than is necessary. However, we have a commitment not only to the Government of Iraq but to the people of Iraq. We will not keep our troops in Iraq any longer than is absolutely necessary, and we would not keep them there one moment longer if we believed that they were no longer making a positive contribution to a democratic Iraq, in which people have the opportunity to enjoy economic prospects, in a way that was denied to them by the tyranny of the regime that previously ran the country.
A principal conclusion of the Iraq Study Group is that
“If the Iraqi government does not make substantial progress toward the achievement of milestones on national reconciliation, security, and governance, the United States should reduce its political, military, or economic support for the Iraqi government.”
What is the British Government’s view of that recommendation?
The British Government’s view of that recommendation, at present, is that we should look at and consider it, together with a number of the other recommendations. I should just say to the hon. Gentleman that when we assess the performance of the Iraqi Government, we have to take into account the circumstances in which they currently operate, other countries’ interference in Iraq’s internal affairs—interference that is particularly designed to destabilise that Government—and the challenges that that Government face. We should also take into account the fact that in many aspects, the Iraqi Government are working well. There are Ministries that are working well; an example is the Ministry of Water Resources, which has made a massive contribution to improving the conditions for the people in Iraq. The recommendation is much more complex than would appear from a simple reading of two or three lines of it, but it is one that we will take into account.
My right hon. Friend mentioned that other countries were stirring up the insurgency. I do not know which countries he had in mind, but at a meeting this morning, Mr. al-Hakim said, if I understood him correctly, that the Iranian Government were helping the Iraqi Government in chasing the terrorists. He also said that the terrorists had better equipment than the Iraqi army, implying that something ought to be done to equip that army better. Would my right hon. Friend care to comment on those views?
I shall see Abdul Aziz al-Hakim later today, and no doubt I shall have the opportunity to explore those issues with him. I shall do that, rather than comment on an edited version of what he may have said, although I accept that my hon. Friend reports him accurately. I do not agree with his view that Iran is making a positive contribution in Iraq. I believe that Iran poses a strategic threat to the whole region, that it is interfering in the internal affairs of a number of countries in the region, including Lebanon, Palestine and Iraq, and that it is doing so in a way that is destructive and dangerous. That is a view, I have to say, that is shared by many of the moderate countries of the region.
Given the Minister’s extremely robust response to his hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones), and given that Iran has threatened to wipe another country from the face of the earth, will the Government rule out any deal with Iran that, in return for Iran helping to stop the violence in Iraq, would involve some sort of acceptance of the Iranian nuclear enrichment programme?
One of the observations or conclusions of the Iraq Study Group with which I agree is that those two issues are quite separate, and should not be traded, as the hon. Gentleman accepted—indeed, he suggested that that should be ruled out. Hon. Members will accept, however, that whatever our view of Iran, it will not go away. Iran and Iraq will be neighbours for ever, as they are locked together by geography and history, and that must be accommodated. At the end of the day, the ability of a sovereign Iraqi Government to reach an agreement with Iran will mean that Iran will not interfere and can play a positive role in the future of Iraq. That will ensure that Iran does what it needs to do in the region, and that is what we will focus on.
My right hon. Friend should be commended on his measured approach to this complex and difficult issue. He stated that the Israeli-Palestinian conflict was the motive for those perpetuating violence, but does he not agree that those very groups have been implacably opposed to a two-state solution to that conflict, and that those perpetuators of violence remain opposed to a solution of that difficulty?
I thank my hon. Friend for her support. I knew that there was a “but” coming, but it is not too difficult to deal with, as I agree with her analysis that the two-state solution is the way forward. It is only by accepting such a solution that we will achieve productive and progressive talks. That view is shared by both the United Kingdom and the US Government.
May I return to the role of the Prime Minister? The situation in Iraq is deteriorating, violence is increasing, the ISG is at odds with the Iraqi Government, and our own generals appear to contradict certain aspects of Government policy on Iraq. Given that the last time the House had a full proper debate on the future of Iraq was in 2004—although the Prime Minister appears willing to talk to everyone else—will the Minister explain precisely why his right hon. Friend seems unwilling to come to the Chamber and lead such a debate? It was the Prime Minister who led us to war, so why is he hiding?
My right hon. Friend the Prime Minister cannot be accused of hiding, as he has been willing to answer questions at the Dispatch Box on a range of policies more often than any of his predecessors. The issue on which the hon. Gentleman seeks a debate was recently debated in the context of the Queen’s Speech. In his preamble, he suggested why it may not be convenient to hold a debate at the drop of a hat every time something happens. Sometimes, mature reflection on developments rather than reacting to those developments leads to better debate. The hon. Gentleman said that the ISG was at odds with the Iraqi Government, but I do not think that that is the case. I entirely respect the observations of the Iraqi President, which were understandable, but the process of discussing recommendations and policy has not yet been gone through.
I welcome my right hon. Friend’s comments on the activities of the military forces in Iraq and the plans that affect their future, but will he briefly explain what the Government intend to do to support the Iraqi Government in the execution of their civic duty and those democratic initiatives that will require substantial support if they are to be maintained?
As I said at the beginning of my statement, I have always said that we can provide an important military component in the security of Iraq, but military means will not solve Iraq’s problems. We need to develop governance and exploit economic opportunities on the basis of the security that we can provide. I speak at the Dispatch Box on behalf of the Government, but principally as the Secretary of State for Defence. The Foreign Office, the Department for International Development, and, indeed, other Government Departments, have worked appropriately with elements of the Iraqi Government, at both national and regional level, to ensure that their capacity and capability are developed to do exactly what my hon. Friend knows is necessary to build up democratic and Government institutions.
To those who think that that country is disintegrating, may I say that its democratic institutions and its Government departments may not be perfect—they are working in very difficult circumstances—but they are all functioning. Some of them are not functioning very well and some are severely challenged, but they are all functioning. That is a long way away from, for example, challenges that we have faced in other areas where we have tried to bring countries out of conflict and have succeeded.
Many would argue that disbanding the Iraqi army and the police was one of the biggest mistakes of the post-Iraqi conflict and has led to sectarian violence and so many deaths, yet this weekend we learned that the former Defence Secretary tried to persuade the Americans to do exactly the opposite. Will the Secretary of State comment on that decision? Does he agree that it illustrates why we need a review of what happened in the Iraq war so that we can learn from what happened, both good and bad?
The hon. Gentleman knows that the disbanding of the Iraqi police was principally a function of the de-Ba’athification of Iraq. That was at the heart of the repression of the Iraqi people and is an issue that they will have to address because, like the geography of the area, the people who live in that country will not go away, and they will have to learn to co-exist. As for the Iraqi army, my recollection is that it disbanded itself.
Given the horrific situation in some parts of Iraq, is it not vital that we send out a clear message that we will not suddenly give up on the people of Iraq? In the light of that, is it not important not only to provide training in Iraq for Iraqi forces now, but to make a long-term British commitment to train a large number of Iraqi officers in the UK at Sandhurst or at Shrivenham, alongside British troops, so that there is a long-term investment in that country into the future?
At the end of the day, as the House will accept, we will respond appropriately to requests for such support, but those requests need to come from the Iraqis. Interestingly, there are at present Iraqi officers doing just what my hon. Friend suggests—training in our defence colleges and with our troops, here in the United Kingdom. He is right to suggest that there is a desire in the Iraqi army and among its senior officers for that training for their army. I can tell him that we are well placed to give them that support if they want it.
With permission, Mr. Speaker, I should like to make a statement on the Government’s proposals to make it easier for more people to save for their retirement.
Despite the welcome fact that people are living longer, millions of employees are either not saving at all or not saving enough for their retirement. As the Pensions Commission noted in its second report, we must take steps now to tackle the problem of under-saving or face serious problems in the future. We have already acted to make sure that the state pension provides a solid platform on which people can save. The Pensions Bill published last month will create a simpler and more generous state pension. The restoration of the link to earnings will result in a basic state pension that by 2050 will be worth twice as much in real terms as it is today.
More generous qualifying conditions will, for the first time, properly treat social contributions on an equal footing with cash contributions, delivering fairer outcomes, especially for women and carers. These and other changes will reduce the extent of means-testing in the future, making sure that pension credit continues to be targeted at the people who would otherwise have been poor in retirement or who have only small savings. But we must build on this foundation by giving more people greater incentives and opportunities to save for their retirement.
Overall participation in occupational schemes has been falling since the late 1960s, and disproportionately high charges are making the personal pensions market uneconomical for those on moderate to low incomes, who often stop contributing to private schemes after a short time. We will therefore be bringing forward legislation to create new low-cost personal accounts as the catalyst for a new savings culture in our country.
This White Paper sets out proposals to give every employee in Britain earning over £5,000 the statutory right for the first time to receive a contribution from their employer towards an occupational pension. Provided that they take responsibility in turn by contributing to their pension from their own wages, employees will be entitled to an employer contribution of 3 per cent. of their salary in a band between approximately £5,000 and £33,500. We will fix the level of employer contributions in primary legislation.
From 2012, employers will automatically enrol their employees into personal accounts or into their own existing occupational pension scheme, as long at it meets the specified minimum standards. That simple but radical step will affect around 10 million employees in Britain, and it will be vital in overcoming the barriers that prevent many people from making the decision to save. There will be a compliance regime to protect the right of employees to be automatically enrolled and to receive an employer contribution. We will consult on the detail of this approach, but expect it to build on the light-touch model of the national minimum wage.
We intend to establish personal accounts along the lines proposed by the Pensions Commission. The current Pensions Bill provides for the creation of a personal accounts delivery authority—an independent body with financial sector expertise that will, in the first instance, advise Government on the design of the operational structure of the accounts and prepare to get the necessary contractual arrangements with the private sector in place. It will then be responsible for commissioning the infrastructure to deliver the scheme from the private sector. The authority will eventually be replaced by a new personal accounts board, which will be responsible for the live running of the accounts. Its decisions will be independent of Government.
Evidence suggests that moderate to low earners prefer not to make a choice of pension scheme administrator. Our approach will offer greater simplicity for savers and maximise participation levels. There will be a choice of funds for those who want it, which we expect to include the option of social, environmental and ethical investments and branded products. For those who do not want a choice, there will be a default fund.
Low charges are critical to ensuring that people build up the maximum pension fund from their savings. The Government estimate that the long-term costs for personal accounts will be in line with those set out by the Pensions Commission of around 0.3 per cent. of funds under management, or even lower. Together with reduced marketing costs, this approach is expected to be 20 to 25 per cent. cheaper than a system based on direct competition between firms for individuals.
These reforms are designed to fill a gap in the existing market, and we want them to complement the existing market, not compete with it. So, alongside the creation of the new personal accounts, we will take action to support existing pension provision. There will be no transfers into or out of personal accounts from or to existing pension schemes, and an annual limit will restrict the level of contributions an individual can put into their account. The limit will be £10,000 in the first year, to allow individuals currently without access to a good-quality occupational pension to save in other non-pension products before 2012 and then to move them to personal accounts. We propose a limit of £5,000 for subsequent years, but we will consult on that.
There will be a simple and self-certifying exemption test for employers who operate schemes of broadly equal value to personal accounts. Additionally, we are consulting on whether companies that offer higher value schemes should be allowed to have a reasonable waiting period before employees join the schemes. We are also interested to learn more about the National Association of Pension Funds’ proposal of a “good pensions scheme” quality mark to help employees identify companies that offer such pensions.
The Government are committed to minimising the burden of personal accounts on employers. Mandatory employer contributions will be phased in over at least three years. The reforms have to be simple to run for a small employer. The central clearing house will mean that employers need only have one point of contact for transferring contributions, and the Government will make minimising the administrative burden on employers a key task for the delivery authority and subsequent personal accounts board.
The vast majority of people can expect to benefit in retirement from saving in personal accounts or an equivalent scheme. Of course, all forms of saving have some uncertainty, but thanks to our reforms those who work or care throughout their working lives can expect to be better off from having saved. Indeed, now someone need only work or care for 24 years to avoid pound-for-pound withdrawal; and under existing rules, even the tiny minority of pensioners who receive the guarantee credit only could still see a return from their saving by taking a lump sum.
Simple, low-cost, flexible and portable as people move between jobs, personal accounts may generate an additional £4 billion to £5 billion of net new saving each year, equivalent to around half a percentage point of gross domestic product. They will help millions of people take greater responsibility for building their retirement savings and embed a new pensions savings culture at the heart of a comprehensive and balanced pensions settlement.
I hope that these reforms set a sustainable and sensible course. They are in the long-term interests not only of this generation but of generations to come. I commend the White Paper to the House.
I thank the Secretary of State for his statement. We have already indicated our support for the state pension reform package and for the objective of providing workplace savings targeted at those who are least well served by the pensions industry—largely lower-paid people outside employer schemes. We have made it clear that we will support the auto-enrolment proposals and the compulsory employer contributions. There is a large measure of consensus around the state pension reform proposals, but there are still important issues to be resolved as regards personal accounts. I hope that the Secretary of State will be able to confirm that the White Paper is a further step in the process and that he is willing to engage in further constructive dialogue. We are broadly comfortable with his proposed structure of a low-cost default fund with the option, for the more adventurous, of opting into branded funds that are more actively managed.
However, I want to draw three major areas of concern to the Secretary of State’s attention. First, there is considerable concern in the industry and among commentators about the risk of levelling down, which he did not mention. Employers faced with the requirement to enrol the whole of their work force may seek to control increasing costs by reducing the level of contributions that they make. The right hon. Gentleman may say that that is a price worth paying for wider coverage, but that would be scant comfort to those who are already in more generous schemes.
Secondly, there is concern that with relatively high levels of residual means-testing, which is projected by the Pensions Policy Institute to affect up to 50 per cent. of pensioners by 2050, it may be difficult for many people who are on lower earnings and are likely to have broken work records to determine whether saving will pay for them. The last thing any of us want is to be here, or for our successors to be here, in 30 years’ time facing the equivalent of a pensions mis-selling scandal, with hundreds of thousands of people having saved but finding that they do not benefit from having done so.
Thirdly, the right hon. Gentleman spoke of personal accounts complementing rather than competing with the existing market. We support that targeted approach. However, in turning his back on Lord Turner’s recommendation of a £3,000 cap on contributions to personal accounts and setting it at £5,000, as he said today—or at least £5,000, as it says in the White Paper—he is hugely expanding the scope of personal accounts and reducing the focus on those who are being most failed by the existing marketplace. He will make it much more difficult to assess the extent to which he has succeeded in his principal objective of getting people on lower earnings into long-term savings, and he is running the risk of undermining the already battered private pension saving sector.
Will the right hon. Gentleman assure the House that he is alert to, and willing to address, all those issues? In particular, will he commit the Government to focusing over the next couple of years on the deregulatory review of occupational pensions, to ensure that the occupational pensions sector is as robust as possible before personal accounts are introduced so that the temptation for employers to level down is minimised? Will he look again at the need to focus the scheme on the lower paid and therefore review the proposed cap of at least £5,000?
When the Government damage pension provision or confidence in our pension system—for example, through their continuing £5 billion a year raid on pension funds, U-turns on the tax treatment of pension schemes and the continued unresolved suffering of the victims of pension scheme failures—we will continue to hold them to account.
Similarly, when the Government have got it right, as in the state pension reforms, we will say so and actively support their proposals. When the general direction is right, but problems remain, as with personal accounts, so long as the Government are genuinely willing to engage in a continuing dialogue, we will try to work with them to build an agreed model because we believe that, on a long-term issue such as savings, seeking that cross-party consensus is in the interests of Britain and the British people. I hope that the Secretary of State will confirm that he intends to continue to try to reach that consensus in the next nine months.
I welcome what I believe to be the overall support that the hon. Gentleman continues to signal for the proposals. A consensus behind them here and elsewhere is important because a sense that politicians say one thing here and another outside would undermine public confidence. I was therefore worried to read what the hon. Gentleman wrote inthe Financial Times about the proposals somehow being an attempt to nationalise Britain’s pensions savings industry. What a load of nonsense that criticism was.
I shall come to the cap shortly. We are not nationalising the occupational pensions savings scheme. No reasonable, fair-minded critic, who considered the proposals and Lord Turner’s recommendations, on which they are largely based, could reach that conclusion. The hon. Gentleman cited Lord Turner’s report earlier. He might like to know that, today, Lord Turner said of the proposals that he hoped that there would be widespread support for the way forward that the Government propose. If the hon. Gentleman wants to escape from the big tent that Lord Turner has been carefully constructing, he will find it difficult, given Lord Turner’s support for the proposals.
The hon. Gentleman has raised several important points and I shall try to deal with each of them. I hope that the White Paper will help sustain the consensus to which he has been a party because we want that to continue. The White Paper clearly signals that further consultation is required on several matters—the hon. Gentleman referred to one or two of them. One is determining the personal contributions cap, and we are consulting about that. If people believe that £5,000 is too high, they can present their arguments, to which we will listen.
There is further consultation to conduct about governance of the national pensions savings scheme. We shall do that in the open way in which we have set about the matter so far.
The hon. Gentleman raised three or four more specific points. On levelling down, personal accounts are designed to complement, not compete with, existing employer provision. We can do four simple things to try to ring-fence and ensure that personal accounts work as we intend. One is to prohibit transfers—I have dealt with that. The annual cap and contributions will help, too. The simple and straightforward employer exemption test will be helpful, and that also applies to the new quality mark proposal from the National Association of Pension Funds.
It was widely argued when we introduced the national minimum wage that it would level down wages. That did not happen and I do not believe that it will happen to occupational pensions. It is important to understand that employers are levelling down contributions now—there is currently no floor to the contributions that they offer. Personal accounts will, for the first time, set a minimum below which contributions cannot fall. Personal accounts will increase, not undermine, total levels of pension saving.
The hon. Gentleman asked whether it was safe to auto-enrol and prayed in aid the Pensions Policy Institute. The Department and the institute basically draw the same overall conclusions about personal accounts. The Pensions Policy Institute says that they will help most people and are a big improvement. We agree. Our figures are similar. We have different assumptions about annuity rates from the PPI, and its analysis does not take into account the fact that some people may choose to take some or all of their pension pot as a lump sum, but we both agree that auto-enrolment is a good idea and that most will gain from it. Some might have low returns but the vast majority will need good information and we have work to do to put together the generic information that will go out with personal accounts. However, people can decide to opt out. That is the ultimate safety mechanism to ensure that people gain when they are enrolled—it is a conscious choice.
In relation to the £5,000, the hon. Gentleman said that we were extending the scope of NPSS. We are not doing so.
Don’t be ridiculous. We are trying to have a serious debate. The scope of NPSS remains exactly as proposed by Lord Turner: on a band of earnings between £5,000 and £33,000. There is no suggestion of extending the scope of personal accounts.
I will make an announcement on the deregulatory review tomorrow; it is important that we make progress on that.
The hon. Gentleman’s final point was the cheekiest of all. He complained about the so-called tax raid on pensions and the £2.5 billion that we have put into the financial assistance scheme to help those who lost out when their schemes went into insolvency. My understanding of his proposals is that he will not spend a penny more on the financial assistance scheme, and that he will not reverse on tax cuts. The less that we hear from him about that, the better.
Will my right hon. Friend confirm that people cannot plan their retirement pension savings from the age of 65, and that they need to do that at the start of their working life, for which NPSS is the best thing that has happened post-war? In the light of that, will he comment further on what he will do to provide high-quality generic advice to prospective entrants into NPSS? Where will the consumer voice be in the delivery authority that he is establishing?
On my hon. Friend’s last point, the Government have more work to do on establishing the arrangements, on which the White Paper proposes a series of consultations. We must make sure that the voice and interests of scheme members are heard loud and clear on the personal accounts board. That will be important.
We will have to provide good information to all the groups covered by personal accounts, so that they can decide whether they need to opt out. Clearly, that does not mean that auto-enrolment as a principle is not appropriate; it definitely is. One of the striking features of the consensus generated by the Turner commission is the now universal support for the principle of auto-enrolment. I hope that no one in the House or outside would seek to undermine that.
I also thank the Secretary of State for advance sight of his statement. He knows that the Liberal Democrats agree with most of the details of his announcement today. He is also aware of our concern, however, that the proposals and the consensus that he has been trying to lock together might be undermined by the scheme’s fatal flaw: the extent of means testing. Is not there a real risk that, at best, many people will not opt into and stay in personal accounts, and that, at worst, there will be accusations of Government-sponsored mis-selling?
Will the Secretary of State respond to three points? First, will he indicate what proportion of the target market for personal accounts will be subject to means testing? Would I be right that the proportion is likely to be about 50 per cent., especially as those in the target audience for personal accounts are most likely to be on low incomes?
Secondly, when Lord Turner announced the proposals, he talked about a deal whereby for every £1 that people put in, they got £2 out. How much of the target audience does the Secretary of State estimate will get £2 out for every £1 put in? Does he agree that because of the extent of means testing, not just in the pensions system but in relation to housing benefit and council tax benefit, many people will not get that kind of return?
Thirdly, will the Secretary of State confirm that he has now had to abandon his original ambition that nobody should be worse off through personal accounts? Will he confirm that he acknowledges in paragraph 79 of the executive summary that a small group of people—probably about 10 per cent.—will not see any benefit at all from saving? Does not he agree with the PPI analysis that that group might be bigger than 10 per cent., and that women with caring responsibilities, older people, the self-employed and those on housing benefit might find that they lose money—in some cases, 85 per cent. of their savings—in personal accounts?
Is not there an enormous price to be paid for the consensus that the Government have secured, and the deal that the Secretary of State has done with the Chancellor of the Exchequer? Was the Secretary of State incorrect to say, in the early part of his statement, that he is building on a firm foundation in the basic state pension? Is not the flaw in all the proposals that he is building on too low a basic state pension with too much means testing and that, as a consequence, he might find it difficult to persuade many people on low incomes to save in personal accounts, and he or his successors might even be accused of state-sponsored mis-selling in future?
I was rather surprised by the hon. Gentleman’s final flourish. He began by saying that he supported our approach; by the end of his remarks, sadly, that did not seem to be the case.
The hon. Gentleman’s party clearly has a different view of how we should finance and structure the state pension system. I understand that he still supports the call for a universal state pension.
He confirms that. As Lord Turner himself said that that was unaffordable and not a sensible policy, I do not think we should adopt it.
The hon. Gentleman made some wider observations. Our reforms to the state pension will, for the first time, provide a genuinely robust platform on which people can save with confidence for the future. As for means testing, many people on income-related benefits in retirement can still expect to receive more than they contributed on the basis of personal accounts. As I made clear in my statement, even the very small minority of pensioners who could face a greater withdrawal of benefits during retirement might receive a positive payback from their saving by taking a lump sum, potentially reducing interaction with benefit entitlement. Certainly the large majority of people can expect to benefit from saving in personal accounts.
Yes, the vast majority can expect to benefit from that or an equivalent scheme. Even people on savings credit can expect to get back more than they contribute, even when account has been taken of any pension credit offsets—twice as much, in the case of long-term savers.
I hope the hon. Gentleman will want to reflect on what he has said today, and will not go about trying to undermine the personal accounts scheme as he has today. I think he is wrong in his basic analysis of the level and extent of means testing in the system. I have tried to respond to his points today, and I dare say I shall continue to do so; but I consider his proposed reform—the universal state pension, which I think he believes would deal with all those points—to be simply unaffordable. It would run up massive and unsustainable tax burdens for future generations, and that alone undermines his fundamental analysis.
I congratulate the Secretary of State on his scheme for low income earners who have been excluded from the savings market. He will recall the Treasury Committee report on the subject, which highlighted the need for low charges. The evidence that I have received from private companies to date suggests that they are thinking of management charges of 0.6 per cent. and above.
Low charges are critical. Turner’s comments are salutary. If we take the figure of 1.3 per cent. for stakeholder products, individuals’ income over the lifetime of a pension is 20 per cent. less. I want to hear a robust statement from the Secretary of State to indicate that the 0.3 per cent. management charges envisaged by Lord Turner and his colleagues will stick, for the sake of low income earners and their pension pot at the end of the day.
I am grateful to my right hon. Friend for the work that he and his Select Committee have done. They have been strong supporters of our approach.
Two things will make it possible for any Minister at the Dispatch Box to say with confidence in the future that the vast majority of people will gain from the new personal accounts system. One is the employer contribution, and the other is the low charges that will be associated with it. As I have said today, we believe that in the long term it will be possible to get down to 30 basis points for the delivery of personal accounts. It will, however, be the job and responsibility of, first, the delivery authority and then the personal accounts board to negotiate with pension providers and the industry to establish the right basis on which charges will be handled in the scheme. We are consulting on that, but let me repeat what we said when we responded to my noble Friend’s report, and what I have said today. We believe that this system can be run within the funding band that Turner set out, and if we can achieve that it will be a huge boost to the pension incomes of many middle and low earners in this country.
I welcome some of the changes in the White Paper. As the Secretary of State probably knows, I represent a number of Albert Fisher pension scheme victims, most of whom are in their fifties, and have lost 22 years’ worth of occupational scheme benefits. Is the Secretary of State aware that as matters stand, my constituents will receive some assistance from the financial assistance scheme, but that will give them only 50 per cent. of their original pension at retirement date? Is there anything in the White Paper that will help the Albert Fisher Group scheme victims, who feel very let down?
As the hon. Gentleman knows, we have put £2.5 billion into the financial assistance scheme to provide support for those closest to retirement. I also repeat what I pointed out earlier: his Front-Bench colleagues have no plans to increase investment in the FAS. Therefore, his principal concern is with his Front-Bench colleagues, rather than with Ministers.
I welcome the announcement, but may I press my right hon. Friend a little further on who will gain and whether anybody will ultimately lose out? As he knows, one of the commonest complaints among people on modest incomes with modest occupational pensions is that when they retire they find that they are worse off, or not much better off, than people on benefits. How will this new personal account address that problem?
The account is part of a suite of reforms that include significant changes to the state pension system. The reforms will make it more generous and extend its coverage, taking most people who have a lifetime’s worth of contributions and work well clear of the means-tested threshold, so they will be able to keep what they save in the national pension saving scheme. It is for that reason, and for others, that we are confident that the vast majority of savers will benefit from being a part of the personal account scheme.
I generally welcome the proposals in this paper—which are a step forward—not least because my party proposed something similar three years ago, but we do have some concerns. Given the recent problems with pension schemes and endowments—and even Farepak—there is widespread suspicion of private savings schemes, especially among the lower paid, and I was concerned about what the Secretary of State said about private involvement. Will he tell us a little more about how this scheme will be presented to the general public? Will they receive a personal account from the delivery authority or a private provider? For many people, the idea that the scheme has state backing will do much to establish it.
I also noted what the Secretary of State said about auto-enrolment and I support that principle, but will he be a bit more specific? Is there an opt out from auto-enrolment, and, if there is, is it restricted to those who opt out of the scheme into an equivalent scheme with an employer, or is there to be a general opt out?
Finally, although the scheme would be welcomed, does the Secretary of State not agree that it would work much better if—to borrow his own words—there was a firm foundation for pensions through the introduction of a citizens pension?
It was very generous of the hon. Gentleman to claim ownership of the idea behind the reforms, although I am unsure whether history will bear him out on that. I welcome his general support for the reforms; I thought that we were creating a big tent, but I did not think it would be that big. I cannot say with any confidence, however, that the hon. Gentleman’s proposals for Scottish independence—as I understand them—will help smooth the introduction of these reforms.
I think the hon. Gentleman says that that is irrelevant, but it is highly relevant to the future of personal accounts. It is impossible to imagine how Scottish independence will in any way advance the cause of introducing a proper, sensible and sustainable pension settlement in the United Kingdom.
The Secretary of State rightly talks about restoring confidence in the future, which started to be eroded about 20 years ago when the Conservatives introduced personal pensions, which were mis-sold. Although the proposals are welcome in helping to restore confidence in the future, two things are needed. We do not need financial advice alone; we also need far better financial education, because many people do not understand the advice that they are given. Secondly, I say in the friendliest of terms that we would further our cause more if we were seen to be accepting the ombudsman’s report as well.
I was going to say that I was grateful to my hon. Friend, and I very nearly was. In relation to pension schemes that have failed, we have introduced the financial assistance scheme, and we also have the Pension Protection Fund, looking at schemes that might run into difficulties in the future. Those two reforms are a major advance, and I hope that they will be seen as putting in place strong and effective protection.
I strongly agree with what my hon. Friend says about the need for financial literacy and education. Having, I hope, secured the general agreement of this House—although the details have still to be discussed—we now face a challenge. We must consider how we spend the next three or four years educating the public about these reforms and explaining them, so that, when they take effect in 2012, the public are aware of the product and understand the benefits to them of saving. It is of vital long-term interest to the pension system that millions of people who are not saving start to do so. They will not be able to do that successfully unless we, the personal accounts board and the delivery board put considerable time and effort into communicating the benefits of these reforms and of pension saving.
Given that the White Paper accepts that as many as one in 10 people will lose out as a result of membership of the scheme—according to the Pensions Policy Institute, the figure is one in five—will the Secretary of State guarantee that, from the outset, there will be a fully independent and generic system of financial advice to prevent such errors from being made?
Yes, that is our intention, and it is absolutely essential that proper education and information be available for people at the beginning. It is clear that some will not gain from being in personal accounts, which is precisely why we are not compelling people to join them. There is the opportunity to opt out, which is the ultimate safety mechanism, but the hon. Gentleman and his colleagues must not conclude that, because some will not get a sufficiently significant return to make it worth while, no one will. That would be a huge mistake.
The reforms that we are proposing for the state second pension will certainly aid simplicity and clarity and lead eventually, I hope, to a better understanding of pension entitlement. The state second pension is almost the most indecipherable part of the state pension system. A highly complicated formula is used to calculate eligibility and entitlement, and we are moving—as the system itself inevitably is—to a more flat-rate system by 2030. That will aid simplicity and clarity, help people to understand exactly what they have accrued as an entitlement, and help to inform a wider calculation of what is in their best interests to save.
I welcome the fact that the White Paper is aiming for the simplest scheme possible. In that connection, what is my right hon. Friend’s thinking on the choice of funds to be made available? Does he agree that although it is obviously important to have a choice of funds, it has to be relatively limited, else some of the benefits of simplicity will disappear from the scheme? What is his concept of, and thinking on, the range of risks available and the various options open when funds are selected by individual account holders?
I agree with my hon. Friend, but our research indicates that as many as one in five potential scheme members joining personal accounts have expressed a preference for some form of choice, and it is important that the scheme offers them that. However, such choice must not compromise the scheme’s simplicity, as he rightly emphasised, or—as I have been trying to stress today—the benefits of a low-cost system. The default fund that I mentioned will have an element of life-styling, so the risk will be spread for those who are in it. Alongside that, we envisage a number of bulk-bought funds that might, for example, cover low, medium and high risk for people who want to exercise such a choice, and some branded products. The precise menu available to those who join personal accounts obviously needs to be worked out in detail between now and 2012 by the personal accounts delivery authority and, eventually, the personal accounts board. As I said, it is right and proper that the board be independent of Ministers, so that it can take the right decisions in the best interests of scheme members.
Planning-gain Supplement (preparations)
Mr. Chancellor of the Exchequer, supported by Mr. Secretary Hain, Secretary Ruth Kelly, Mr. Stephen Timms, Dawn Primarolo, John Healey and Ed Balls, presented a Bill to permit expenditure in preparation for the imposition of a tax on the increase in the value of land resulting from the grant of permission for development: And the same was read the First time; and ordered to be read a Second time on Wednesday 13 December, and to be printed. Explanatory notes to be printed. [Bill 37].
Local Government and Public Involvement in Health Bill
Secretary Ruth Kelly, supported by The Prime Minister, Mr. Secretary Prescott, Mr. Chancellor of the Exchequer, Secretary John Reid, Ms Secretary Hewitt, Mr. Secretary Hain, Secretary Alan Johnson, Secretary David Miliband, Mr. Secretary Hutton, Mr. Phil Woolas and Angela E. Smith, presented a Bill to make provision with respect to local government and the functions and procedures of local authorities and certain other authorities; to make provision with respect to persons with functions of inspection and audit in relation to local government; to establish the Valuation Tribunal for England; to make provision in connection with local involvement networks; to abolish Patients’ Forums and the Commission for Patient and Public Involvement in Health; to make provision with respect to local consultation in connection with health services; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Wednesday 13 December, and to be printed. Explanatory notes to be printed. [Bill 16].
Orders of the Day
Greater London Authority Bill
Order for Second Reading read.
I beg to move, That the Bill be now read a Second time.
The Bill is about backing London, one of the greatest cities in the world. It is about devolution from the Government to London and also about helping Londoners to get things done.
London’s economy alone is larger than that of many European countries. It is the driver of the UK economy, has world-beating financial and business service sectors, with a business climate that makes it a natural magnet for foreign investors. The capital has thriving and innovative arts, culture and entertainment industries. It is one of the most vibrant cities on the planet. Its ethnically diverse communities have close links across the globe. However, London faces challenges, which often stem from its very strength, in terms of transport, housing, skills and inequalities across the city.
Already the restoration of city-wide government to the capital has made a powerful difference to London and to Londoners, but we need to go further and to build on the programme of reform so far. The Bill builds on the previous reforms introduced for London after 1997. Just as we delivered a Parliament in Scotland and an Assembly in Wales, so we introduced a directly elected Mayor and assembly in London. Londoners themselves wanted that change; every London borough voted overwhelmingly in favour of establishing the Greater London assembly in the referendum of 1998. The creation of the Mayor and the assembly restored democratic city-wide government, which the Conservatives had taken away in 1986 without asking the people of London. For 14 years, London was the only major city without city-wide government.