Skip to main content

Westminster Hall

Volume 458: debated on Wednesday 28 March 2007

Westminster Hall

Wednesday 28 March 2007

[Mr. Martin Caton in the Chair]

Small Business

Motion made, and Question proposed, That the sitting be now adjourned.—[Kevin Brennan .]

It is good to have your direction, guidance and help, Mr. Caton—I shall certainly need it. I am pleased that this debate was called for this morning because Britain’s future competitiveness and the problems relating to ensuring that we are competitive over the next 40 years are vital to all of us. I want to take a positive approach, because I know that my children and grandchildren will be dependent on how successful we are in the task of remaining competitive over that time.

In a way, this is a continuation of last night’s Budget debate, in which I was fortunate enough to speak. I spoke on the importance of small business and on the harmful effects of the increase to 22 per cent. of corporation tax for small business, which was contained in this year’s Budget. I also discussed the inability of small business to claw back that money through investment and an increased research and development allowance. Those measures will impact on the retained profit of small business, which in most instances—not all, but most—is used to finance growth in the first 10 years of the life of a small business. I feel that anything that inhibits such growth is not in Britain’s interest. However, that debate is over and the Budget is settled for another year. We now need to move on to address Britain’s long-term economic future, the possible impact on that of small business and how it can contribute to well-being.

I have to declare an interest. As I said yesterday, I am a small business man. In fact, one only needs to look at me to know that that is not the truth; however, I have started two small businesses that have grown, and I am most thankful for that. As I mentioned last night, I started my first small business in 1989. It builds databases for business—mostly for the business-to-business publishing industry—and now employs140 people. That is a measure of what small business can do to contribute to the nation’s well-being and to add to the coffers of the Treasury, which is vital. I was then foolish and tried to set up another business in 1993 with a mad South African—everybody has to come across a mad South African in their lives. It was a small publishing company, and by dint of hard work, sizeable risks and sleepless nights we managed to build that company up to the point where it employs more than 80 people. The contribution of those two small businesses is that they now employ more than 220 people, which underlines again the import of the small business sector for providing future job growth.

Although I wish that I were unique, the truth is that I am not. There are thousands and thousands of others like me who have made similar efforts. They did so, of course, first and foremost in their own interests—I do not deny that that is a major motivating factor. However, as part of that process they have created jobs and wealth for the nation and taxation for the Exchequer. In the UK, small and medium-sized enterprises now account for more than half of the employment—58.7 per cent.—of the working population. That is pretty much true for each region of the country. There are 4.3 million small businesses, and I recognise that that number has grown, but much of that growth is down to people incorporating as one-man businesses. I recognise the need to ensure that that loophole is closed because, frankly, it does not help anyone, but I am saddened that the Chancellor used such a large, all-encompassing hammer that impacted so much on many small businesses to close that loophole. I appealed to Ministers yesterday evening to review that position—not for this Budget because it has been passed, but perhaps for next year. There is a need to free small business and encourage small business creation, while closing the loophole that the Secretary of State for Trade and Industry said was the main reason for the Chancellor increasing corporation tax.

Some 97 per cent. of firms in this country employ fewer than 20 people. That is quite startling. Indeed, 95 per cent. of firms employ fewer than five people. Small businesses are a major part of the economic fabric of this country.

I congratulate my hon. Friend on securing this important debate. Does he agree that nowhere in the country is it more important for small business to be successful than in Northamptonshire, because around 100,000 new jobs must be created in that county’s economy over the next 15 years if the hundreds of thousands of people who are coming to Northamptonshire to live are to have gainful employment? The small business sector will be crucial in that respect.

I thank my hon. Friend and neighbour in Northamptonshire for that question. I assure hon. Members that the question was not planted—although I wish that I had planted it because my colleague makes a very important point. The sustainable communities project in Northamptonshire will bring 300,000 additional people into the county and add 50 per cent. to our population, so the jobs that he refers to will be required. One of the reasons why I wanted to have a debate on small enterprise is that it is one of the sectors where those numbers of jobs could be created. I thank my hon. Friend for the point that he makes.

The truth is that more than 500,000 people start up their own businesses every year. That is another remarkable fact that smacks people in the face when they see it in print—indeed, it did so to me, as I did not think that the number would be that high. Again, that underlines the import of business creation. Some12 million people work in small firms in this country. Such firms contribute more than 50 per cent. of UK turnover, which is around £1,200 billion—wow! I see my own little contribution to VAT and so on, but it is only when one sees a figure of that size that one recognises the contribution that small business makes.

The final but equally startling fact is that 64 per cent. of commercial innovations come from small firms. That is a massive contribution in total and one that I am proud to be part of. The importance of SMEs is further underlined by the forecast that in a 10-year cycle that began some five years ago, although UK plc will shed 1.5 million jobs, SMEs in the UK will add 2 million jobs. I have said before that the sector is rather important to our well-being.

We need to enhance the role of small business if we are to face the challenge of the future. It is worth recording what that challenge is. We know that emerging nations are emerging ever more quickly; it is a trend for globalisation that is impacting massively upon our ability to compete in the world at large. Indeed, the challenge will become increasingly important over the next 40 years. For instance, Office for National Statistics figures show that the United Kingdom’s deficit in trading goods with China grew in 2005 to £10 billion. That shows how the emerging nations are competing. The size of the global economy is set to increase by 40 per cent. by 2015, and India and China together will represent a quarter of the world’s output.

I know from running a business that long-term planning can be a pretty dodgy exercise; it is as much perception, guesswork and hope as it is defying science. However, we have to take the best figures that we can to understand the size of the challenge that faces us. It is expected that India and China alone will be responsible for 60 per cent. of global trade by 2050—to say nothing of Brazil, Mexico or the other emerging nations that are growing and challenging our trading position. To ensure that our businesses remain competitive, we need to assist them to create more jobs, as that will contribute to our well-being and make a better contribution to our trading competitiveness.

I have already spoken about job growth in the sector, and I have already mentioned innovation. The Government need to encourage an entrepreneurial rebirth in the sector. I believe that the Government recognise that. I have no wish to be churlish about it; statements have been made and there is a real desire to encourage and enhance the sector. I welcome that, and I am delighted that the Minister is a part of that process. I have heard her speak to entrepreneurs, and I know that they accepted her message and were encouraged by it. However, we are not doing so well at the moment. I have already said that the Budget is putting an increasing burden on small business. Indeed, I believe that it will restrict growth, as growth is financed from retained profits in that sector—certainly for the first 10 years of the life of a business.

Government support for small business adds up to a staggering £12 billion per annum. Tragically, however, it is not well directed. I am delighted that the Government accepted the National Audit Office report of 2005. It seems to me that the Government have no wish to hide from the fact that we need to do better; indeed, they said so when the report was published. However, the report was scathing. For instance, it said that there were 3,000 different schemes to enhance and help to create small business. Those schemes were falling over one another to get the audience to the marketplace, but they were not very successful. I welcome the Government’s promise—it is work under way—to have a much smaller number. Whether 100 is the right number is irrelevant. We need the most effective number to do the job in hand. I do not hold the Government to such figures, but I do hold them to their promise to improve, so that we become much more effective in our support of small business.

We all know that regional development agencies are variable in their success rate and in the work that they undertake. It is equally true to say that the Government recognise that. There is much common ground. That excites me and leads me believe that there is hope for the future. However, the overall tenor of the NAO report suggested that the organisation of our support for small business was ineffective, inefficient and wasteful. I am delighted that the Government have seen fit to do something about it.

The NAO claimed that we need to address a number of factors. Small businesses need better regulation and better access to finance, not only when one-man businesses become employing businesses but, equally important, when owner-managed businesses become board-managed businesses. Indeed, at the time of that leap, businesses have a massive problem with equity. Finding capital to finance change between £250,000 and £3 million is massively difficult.

The NAO says that we need more effective business support and less Government bureaucracy, and I agree. We need clear communication and information from the Government. Of course, we need a favourable tax regime, and I shall say more about that later. Above all, we need a skilled work force. Those are the areas that the NAO said needed attention, and it is generally accepted that it is so.

I turn to education and skills. The Leitch report said that one in six adults in the UK does not have the literacy skills expected of an 11-year-old. An Institute of Directors policy paper stated that only 14 per cent. of British employees have intermediate level vocational qualifications, compared with 46 per cent. in Germany. The British Chambers of Commerce says that the UK faces a skills crisis.

The Foster report said that 17 bodies have monitory or regulatory roles in further education, yet less than half the budget allocated by local skills councils goes to further education and 60 per cent. of it is spent on remedial training at level 1, leaving hardly any money to be spent on intermediate skills. We need to change that so badly it almost hurts. It certainly hurts our business success and our ability to compete.

The Ofsted report of 2005 is, I am sure, well known to the Minister, so I shall not go into detail. However, it said that the lack of skilled teachers

“is exacerbated by short-term and uncertain funding arrangements”

that hamper long-term planning. We are not well equipped to support business. We have a problem. We also have a social wage and regulatory burden that needs to be understood, and we need to do something about it.

I agree very much with the thrust of the hon. Gentleman’s argument, and I want to extend the discussion on how to build our skills base. It is a problem for small business in particular, because allowing employees time off to build on their skills can sometimes prove difficult if there are only four, five or six employees. How should small business be working with Government and educational institutions to overcome some of those real difficulties?

I thank the hon. Gentleman for raising a genuine—I know that we always use that word in response to interventions—and important point. I promise that I will speak later about what we might do collectively, as we are all in this together. Part of our task in this place is to ensure that people can create businesses not only to keep us going but to keep going all those services that live off the wealth-producing sector. I will revert to the subject later if the hon. Gentleman is content for me to do that.

We keep adding to the social wage, and although this is not the right debate in which to go into the areas of employment law, maternity rights and so forth, I want to mark that up as a factor of which we should be aware. The more we impose on small businesses by way of social wage element, the less easy it is for small businesses in particular to compete. That is not to say that we want to return to the 1890s, when workers’ rights were largely not what they should be—we would all be fighting for better workers’ rights in those circumstances. We need a balanced perspective, however, and we need to ensure that the social wage element burden on small business is in keeping with our ability to compete, by recognising global standards and taking them into account when framing regulation.

The burdens barometer of the British Chambers of Commerce shows that the cost of regulation and red tape for British business increased by £55.6 billion in the period from 1998 to 2006. More important, the Association of Chartered Certified Accountants has observed that the cost of complying with red tape can be proportionately 30 times higher for SMEs than for larger firms. That is a massive figure, which we all need to take into account.

Let me mention the national minimum wage, which is indeed a burden on business. Although I do not argue against it, I am against the rate of increase. An increase of 34.7 per cent. in the past five years has created problems—it is at least three times the rate of inflation. So I hope that the Government now feel that they have achieved their objective and can settle on increases that are related to inflation. That would be a great relief, particularly for small businesses. Those businesses want to employ people and to grow, but they dare not always take the risk, because of the responsibilities that are placed on them by employing people.

What else can we do collectively to ensure that our business sector works well and meets the challenges of the future? There are some big issues, and I shall try briefly to address them. The country’s national insurance system is badly in need of wholesale reform, and I believe that we should set about that reform—I was hoping that more would be done in the Budget. The present system costs businesses £760 million per annum—a figure that rises to £2 billion if all Government payroll demands are taken into account. Perversely, that has a considerably greater relative impact on small businesses than on plcs, and we need to consider that fact.

Regulation should be reduced. There was a period when the European Union felt that its only role was to increase regulation on businesses throughout Europe—as though that had no impact on the continent’s ability to compete in a globalised trading system. The cost of regulation to British business should also be reduced, because that too has dramatically increased. I recognise that the increase is not necessarily attributable to the present Government; much of it derives from Europe. However, we need to get a grip on it. I hate to say it, but if that means throwing some regulation back to Europe, let us have the courage to stand up and do that. Somebody needs to do it; somebody needs to stand up to the regulatory burden and say, “We as Europeans can’t accept it. Our future as Europeans is bound up with the size, rate and burden of inflation emanating from the EU.”

There is one area for which this country is responsible, however: gold-plating. The Foreign Policy Centre found, I believe, that 62.5 per cent. of the EU regulations that they reviewed had been gold-plated. Do we really need to add to the burden on business by imposing yet more regulation at our end? My belief is that we do not.

To get rid of the burden of regulation, or at least to increase awareness of its dangers, we should create a network of enterprise champions throughout the civil service. That is not a new concept; champions exist in many different areas of Government. There should be enterprise champions who are committed to the mantra that regulation costs money and reduces our ability to compete in the world.

The Public Accounts Committee has observed that there are no official statistics on the national cost of regulation on small businesses, although it acknowledged, as do I, that the Government have recently embarked on a costing exercise in that respect. That is a move forward and I welcome it.

I have already said that red tape has a heavier relative impact on small businesses, and I have referred to the need for better skills. I have a whole list of such skills. We need to ensure that skills packages derive from the shop floor and are not imposed downwards by the educational establishment. We need to reach out to businesses with skills and involve them in creating skills packages, and we need to take skills packages to the workplace. The hon. Member for Edmonton (Mr. Love) is right that a sizeable number of small businesses are not being reached because they are expected to seek assistance at a higher level than often is known to them. There should be much more involvement in reaching out to them with training packages that are created by business, as well as by educationists.

My own local learning and skills council has17 members, of whom only four are businessmen. I am not saying that that is the Government’s fault; business has a responsibility to help to work in partnership with the Government at all levels to ensure that skills training is much more effective. However, I want to see a change from control by educationists to a situation in which there is much more business input, and I want that to work on the shop floor, in factory sites, in offices and on the ground in business generally. Will that be expensive? Yes, it might be more expensive than at present, but an awful lot of waste in supporting business has been observed. That could be directed to the training activities that I want to happen, and I hope that that gives one possible answer to the point raised by the hon. Member for Edmonton.

I have already commented on how poorly equipped this country is in skills and vocational training, and we need better.

On vocational training, does my hon. Friend think that it might be a good idea for the Government, or any incoming Government, to consider how young people of 14 are streamed? Many such young people do not necessarily want to be learning French or academic subjects. They are turned off by school, but they would appreciate the chance of a vocational education that would begin to train them for work. That is done in Germany, where there are academic and vocational routes at 14.

Order. The hon. Gentleman is taking rather a long time for an intervention. I think that the hon. Member for Northampton, South (Mr. Binley) probably has the idea.

Thank you, Mr. Caton. I accept the point that my hon. Friend was making—it is an important one. The national target for 50 per cent. of the school population to go to university is not the most helpful target—I am sure of that. I would rather not have a specific target; I would rather enhance vocational skills, apprenticeships and school training for the world of work in a way that might obviate the need for such a 50 per cent. target. That is possible, provided that vocational attainments are worth while, important to the student and important to the world of work.

May I say how much I agree with the hon. Gentleman’s view that education or skills training should be a bottom-up process, rather than a top-down one, but is not the problem with comparing us with Germany that there is no parity of esteem in this country between the academic and the vocational? Until we create such a culture, separating people out will not work.

I thank the hon. Gentleman. He always speaks words of wisdom. I said yesterday that I had once had the privilege of going to Sri Lanka with him, and I had a very enjoyable week. I recognise what a wise and credible man he is and I am delighted to pay him that tribute. Of course, I agree with him. We must make the world of work a heroic place to be. We make heroes of pop stars and football players, but we look down on entrepreneurs in some respects. They are viewed with distaste, either as anoraks or as petty crooks trying to screw the whole world for their own ends, and of course, we know that neither view is accurate.

We must build up the esteem in which we hold entrepreneurs, who go out and create business. We must build up a view that good management is a good profession to be part of, and we must create the view that profit is an honourable thing to attain, because it is about growing jobs and businesses. I therefore accept totally what the hon. Member for Edmonton says and thank him for making the point.

Let me bring my speech to an end—you will be delighted, Mr. Caton, I am sure. I repeat that we face a massive challenge; we face a challenge particularly from emerging nations. I have spoken about the need to reduce the burden on our business, which includes regulation. Above all, we need to work together, because that is in all our interests. We share a common interest, as I am sure the Minister recognises. The reason why I wanted to have the debate was to establish that fact if we established nothing else. Unless we do our job now, we will fail our children and grandchildren, and in 40 years’ time, it will be much more difficult to compete, and it will be a very difficult world to live in if we are unable to compete on favourable terms.

Before I call the next speaker, I advise hon. Members that I intend the winding-up speeches to start at 10.30 am, and I have a list of several possible speakers. I call Mr. Andrew Smith.

I am sure that it will be the common currency of the debate to speak of the enormous contribution that small businesses and all who work in them make to our economy. That contribution comes in job generation, local services and innovation and creativity, and in how small businesses help to shape the fabric of our local communities, both physically and socially.

I congratulate the hon. Member for Northampton, South (Mr. Binley) on securing the debate and on the very positive spirit in which he advanced his analysis. We have had a double benefit: we have listened to him speak from his personal experience and insight twice in the past 12 hours. I can prove that I was listening last night: the hon. Gentleman gave us three very wise precepts for small business success, and they stuck in my mind, although he did not repeat them this morning. He told us that, first, volume is not everything; it is what someone is making out of the volume that is important. Secondly, cash flow is king. Thirdly, what really matters is not investment in plant, but investment in people. The hon. Gentleman might like to turn those three small business precepts into a small booklet to advise people—it was good stuff.

I take the debate as a welcome opportunity to praise the work of small businesses, especially in my own Oxford constituency, and the work put in by area and sectoral local business associations, the chamber of commerce and the Federation of Small Businesses. The hon. Gentleman was right when he said that small business needs to be exercising more purchase on the education and training system. It can do that only through business people giving up their time—time that they have to spare from the very demanding task of running their businesses—so we all owe them a debt of gratitude. The contribution that those people make benefits our communities, as well as the economy. Certainly, I find the comments and advice that they give to me locally invaluable.

We had a good example recently in the excellent conference put on by the Oxfordshire branch of the FSB. That conference centred on very interesting research that it had commissioned and a resulting report—I have it with me—that I think is of broader interest and would certainly be well worth replicating in other areas. It sought to take the sort of evidence-based approach that is applied in the well-known FSB “Lifting the Barriers” survey, but to do so on a local basis so as to analyse the impact of small businesses in the local community, thereby giving a picture that, by its nature, cannot be fully picked up in the national surveys.

Entitled “The Economic Ecology of Small Businesses in Oxfordshire”, the report was based on a representative sample survey of the 25,000 small businesses in the county produced by the Oxfordshire Economic Observatory, based in the Oxford Institute for Sustainable Development at Oxford Brookes university. The study produced a wealth of information, but I shall mention just a few highlights this morning. It underlined what the hon. Member for Northampton, South was speaking about: the crucial importance of the small business sector. In Oxfordshire, it accounts for 57 per cent. of the county’s private sector employment. Business growth has been relatively strong in recent years, as we might expect in a generally prosperous county in a generally prosperous region. The number of VAT-registered businesses increased by 9.4 per cent. in the five years to 2006, compared with 6.1 per cent. in the south-east and 6 per cent. in England as a whole.

With regard to size and type, 85 per cent. are micro-businesses, employing fewer than 10 staff; 21 per cent. have no employees at all; 65 per cent. are family owned; 35 per cent. are home-based; and 17 per cent. are female-led. Most small businesses were in services, with wholesale, retail, estate agency and other business activities accounting for about 45 per cent. of the total, but there was a very important, albeit minority, share of small manufacturing businesses as well.

With regard to the overall challenges and obstacles to business, regulation or red tape and taxation issues predictably topped the list. They were regarded as a major problem by 33 per cent. and 26 per cent. of respondents respectively. On more local issues, 13 per cent. identified housing supply and 10 per cent. transport infrastructure as the major problems. Nearly one third said that they experienced skill shortages when recruiting new staff, thus reinforcing points that have already been raised, and 16 per cent. identified planning restrictions as a major problem as well.

The recent survey showed significant optimism about business growth in the next few years, with 75 per cent. expecting to grow their business through a mix of existing activities, new products and services, and new markets. What the survey particularly brings out is what the report calls the small business economic eco-system—drawing an analogy with biology and the importance of micro-organisms in ecological systems. It analysed interaction with other local businesses, so it found, for example, that 50 per cent. of the businesses derive more than 50 per cent. of their annual turnover from local sales and that just over one third place half their expenditure with local suppliers. That is a vital reinforcement of the strength of the local economy. Most of the businesses made good use of local shops, local banking and local post offices, thereby helping to sustain those services for the wider community.

The study also shows the wider value of small business interaction with the local community. That involves things that all too often are taken for granted—for example, the extent of work experience opportunities for young people that are provided by many small businesses and the involvement with schools, charities and sponsorship of various kinds.

In this age of ever more commuting, with all the congestion and environmental costs that that imposes, it is particularly notable that small businesses also provide predominantly local employment, with 75 per cent. reporting that at least half their staff live within five miles of their business premises.

The survey reveals growing environmental awareness and attention to waste recycling, as well as the importance of reducing water and energy consumption. At the same time, however, it reveals concerns about the lack of information on environmentally beneficial options, the lack of time to weigh options up and fears that they might not be cost-effective or necessarily enhance business prospects.

There is a clear case for better promotion of environmental support and advice services locally. In Oxfordshire, we have the Oxford Brookes Environmental Information Exchange and the Oxfordshire Sustainable Business Partnership, but we also have national support and advice from bodies such as the Carbon Trust. At the conference that launched the report, the trust came in for particular praise from a local manufacturer that had used its advice service.

I therefore ask my good friend the Minister to look closely with our colleagues in the Department for Environment, Food and Rural Affairs at what more can be done to ensure that small businesses can readily access information, advice, support and, where appropriate, incentives to enable them to play their part in reducing waste and emissions and in combating climate change.

I commend this path-breaking Oxfordshire report as a whole to the Government and urge that similar studies would deepen understanding of the contribution and needs of small businesses in other parts of the country. If we are to sustain the impressive growth record and employment generation that the stable economy and other Government policies have helped to bring about over the past decade, we need to make even more of the entrepreneurial flair, hard work, innovation and local commitment that we are fortunate to have from the small businesses in all our communities.

I want to make a modest contribution to the debate. This is an important subject, and I congratulate my hon. Friend the Member for Northampton, South (Mr. Binley) on raising it. I follow him this morning, as I did yesterday evening in the Budget debate, and it is a great pleasure to do so, given his expertise on this issue.

In the Budget debate yesterday, many of my remarks focused on the importance of business—particularly small business—to the economy. I highlighted some of the measures in the Budget that will make life more difficult for entrepreneurs at the smaller business end and I shall not take up the Chamber’s time by repeating what I said then. Today, I shall focus on the two issues in respect of which we need to look most carefully at the Government’s role.

As my hon. Friend the Member for Northampton, South told us, the small business sector is the critical engine of growth for the economy, employing more than half the people in the country. In rural areas such as mine, small businesses essentially represent the whole economy; indeed, the largest employer in my constituency, which happens to be an international conglomerate, employs 400 people, but the vast majority of businesses employ fewer than 100, with most employing fewer than 25, and they are typically owner managed. Without the entrepreneurial flair of individuals who set up businesses in rural areas, there would be no employment, so the sector is vital for rural communities in particular.

Those who set up businesses are, by definition, entrepreneurs and risk takers. We have heard of my hon. Friend’s personal experience, and I echo his point that many Opposition Members have gone through such experiences. I do not wish to blow my own trumpet or to get into a competition with my hon. Friend, but I also set up a business from scratch, and it ended up employing slightly more people than his did; indeed, by the time I exited it last year, we had more than 2,500 employees. My point is that most people who go into business recognise that they need to take risks. To get their businesses off the ground, many people make significant personal sacrifices that affect their lifestyle, and there are many different reasons for doing that. However, such individuals are used to taking risks, and one of my concerns about the Government’s approach to business policy is that they often seek to restrict individuals’ ability to take risks. They seem obsessed with the idea not just that they know best, but that businesses cannot be left alone to get on with doing their job and need to be micro-managed in many different ways. I hope to be able to illustrate that in a couple of moments in the brief time that I have.

We hear from all the surveys, and we have heard it again in this debate, that business men’s two primary concerns about their relationship with the Government relate to tax and excessive regulation, and I shall focus mainly on those two issues. Many businesses, particularly under this Government, start paying tax before they start trading. I am thinking particularly of measures in the Chancellor’s 2004 Budget to reform the stamp duty land tax regime for businesses that open new premises and take on long leases. Such businesses must now pay a substantial amount, which is calculated on the duration of the lease, rather than on the first-year element, as was the case previously. That acts as a genuine barrier to business inception.

My business was in the retail sector, and the Chancellor’s measure could affect any retailer, because retail premises were typically let on 15-year leases. For a business that is starting from scratch, which does not know whether it will succeed, to be faced with a bill not of a few hundred or a few thousand pounds but, as in one case with which I am familiar, of £15,000 before it has opened its doors for trading and knows whether it will succeed, the Chancellor’s measure is a significant barrier to business inception and entrepreneurial risk taking. Of course, that applies not only to retail premises but to all premises, which are typically let on relatively long leases. I accept that the relevant period is coming down, partly as a result of the Chancellor’s measure, and that raises separate issues for business investors in property.

Of course, business fulfils a useful function not only as an employer but as a revenue raiser for the Government. The complaint that I frequently hear when I talk to business groups around the country is that entrepreneurs regard themselves as acting primarily in the Government’s interests as their tax collector. The degree to which new regulations and new taxes impose an obligation on companies to spend much of their time collecting tax in one form or another seems to increase from Budget to Budget. Clearly, pay-as-you-earn is a significant and efficient form of tax raising, and other obvious examples include national insurance, VAT, business rates and stamp duty land tax. However, there is a host of other measures, such as aggregates tax, which was increased in the most recent Budget, and the tax-collection duty that they impose is an administrative and revenue-raising burden on individual companies.

As regards the most recent Budget, we are of course focused on the increase in corporation tax on small business. That increase sends small business a serious signal that the Government are not particularly interested in it, and I hope that the Minister will pick that up when she winds up. The attempt to characterise the changed capital allowance arrangements as in some way offsetting that increase is a bit of a joke for small business. It might apply to a small number of sectors whose level of investment in capital will allow them to benefit from the changes, but in most cases, small businesses will be disproportionately affected by the increase in tax compared with what they can offset through capital allowances.

David Frost of the British Chambers of Commerce said:

“The rise in small companies corporation tax will have a particularly damaging effect”

on small business,

“with 71 per cent. of those surveyed saying it would harm their business. As a Chancellor who champions enterprise and acknowledges the importance of small business to the UK economy, many of our members feel let down and are dismayed by the measures taken, which will hit their competitiveness and increase their tax burden.”

That is not exactly a ringing endorsement of the Chancellor’s measures.

The Chancellor said in his speech that the extra revenue from the increased small companies corporation tax rate would be recycled to

“legitimate small businesses investing for the future”.

What an extraordinary way to characterise small businesses—to imply that a large number are somehow functioning illegitimately.

The Chancellor may have been referring to the measures taken by Her Majesty’s Revenue and Customs three weeks before the Budget, when HMRC decided to halt with a sledgehammer the sideways loss relief, an opportunity for investors to invest in high-risk businesses that allowed them, if the businesses failed, to offset losses incurred from those investments against their other income. It was a useful way for small companies with a significant equity gap in external investment to get it from wealthy individuals. That measure has been stopped. It was stopped in order to deal with abuse elsewhere, but the impact on many high-risk sectors will be keenly felt. I urge the Minister to enter into discussions with the Treasury and the Chancellor to modify that measure during the passage of the Finance Bill.

This is the first time that I have served under your chairmanship, Mr. Caton, and I hope not to stray too far and incur your wrath. It is a particular privilege to speak after two such experienced people involved in business, who have mentioned with undue modesty the number of people whom they each employed directly as well as the extended number of people employed and supported via the family.

I congratulate particularly my hon. Friend the Member for Northampton, South (Mr. Binley) on his early-day motion 928 highlighting the issue and his continuing work, and the right hon. Member for Oxford, East (Mr. Smith) on his excellent speech in the House yesterday. I heard someone say as they left the Chamber afterwards that he was running a master class in small business in the House of Commons. Having read Hansard this morning, I think that that is a fair reflection.

My first interaction with small business came when I was 18 or 19. I was asked as a Conservative to stand in for a Member of Parliament who was called away at the last minute. I thought that I was going to go along to a group of one or two shopkeepers, newsagents and so on. It was my first surprise at the size of small business and its importance, which has been highlighted today. On my desk, I still have the little chip of concrete from the Berlin wall that I was given. It says:

“The Federation of Small Businesses: chipping away at regulation and bureaucracy wherever it may be found.”

Small businesses are great advocates.

I was pleased to have received a note from my hon. Friend the Member for Northampton, South saying that the debate was happening. I looked down the list and saw that everybody to whom he had sent it except me had great business experience. Having spent10 years as a banker, I became frustrated with people who said, “Those who can, do—those who can, move away from assisting and teaching to set up or help set up very small businesses, but nothing of any size.”

Banking has given me an insight, and my work as a constituency Member of Parliament has perhaps given me a deeper insight, into businesses’ impact on communities. In Southend, the names of roads, parks and schools all reflect support from business people and entrepreneurs who moved from making money to being social entrepreneurs. Sadly, many of those names are names of 100 years ago. I question whether businesses, especially small businesses, with all the burdens on them, still have the time, energy and inclination to contribute. There are notable examples in Southend, but not of the magnitude of many years ago.

To get more in touch with businesses, I run an annual business survey. I am currently receiving and analysing the 2007 survey, but I shall mention the 2006 survey. This is not a party political point—I do not mean it as a criticism of the current Government—but I suspect that most businesses are not great friends of Government, be they Labour or Conservative. Nevertheless, I was quite shocked by the answer to the first question, which asked:

“Do you believe that the Government understand the concerns of the business community?”

In one way or another, 84 per cent. said no. That is quite a shockingly large number. I will certainly ask that question yearly to monitor the Government’s performance, and am particularly interested to see the results as and when there is a Conservative Government.

As a Back-Bench MP, I try to engage with my constituents. Sometimes it is not successful. I have a survey with a Post-It note attached:

“No further surveys. See overleaf!”

I thought that it was going to be a rant at my personal performance.

“Dear James”—

that sounds good so far—

“Please don’t include me in any further surveys”.

That does not sound so good.

“If that Gordon Brown taxes me or my car any more I am going to close my business and start claiming dole money! It will not be worth my working.”

The letter says “by the way” that the taxes and this Government are “a crock of”—well, it goes on further—and ends:

“Good luck with your survey. Hope there will be enough businesses left to fill it in.”

Clearly, that came from a very angry man, but a KPMG survey says that 70 per cent. of business regulation falls on businesses with fewer than10 employees. Calvin Coolidge famously said that the business of America was business. Without business and wealth generation, there is no national health service, no education system, no social security and no society as we know it. My hon. Friend said that we must make heroes and role models of people involved in business, and he was absolutely right. I am rather reassured to see “The Dragons’ Den”, a popular TV programme about entrepreneurs—I was surprised to see the Clerk of my Select Committee presenting a business idea—but not once have I heard anyone on that programme talk about the Government support and help that they have been given. Most people do not turn to Government agencies.

I mention “The Dragons’ Den” because of the excellent Richard report commissioned by my hon. Friend the Member for Hertford and Stortford (Mr. Prisk). I did not appreciate before reading the report a second time that Doug Richard was a dragon from “The Dragons’ Den”. The Richard report identified £12 billion in spending on support for small business. At the very best, there was no credible link between that expenditure and direct correlation. The Minister shakes her head. I have something from Southend that might in many ways support her point rather than mine—it speaks of the excellent work that Southend is doing at a micro level—and I am sure that she can reel off examples of individual cases that are doing very well, but that is an enormous sum. She might reflect that if that money were taken out of the taxation system, remaining with businesses for them to invest in themselves and the community, it might generate more tax revenue going forward.

I am concerned about the general direction of travel. The complexity of having two leaders is discussed a lot. In my patch, in the south-east, regeneration is a big issue. I become desperately concerned when Government bodies talk about their objectives of creating business, because regeneration organisations and councils do not generate business. That attitude pervades Parliament. A Member of Parliament once said to me, “Being an MP is rather like being a small business man, because we are running an office and we employ people.” That MP clearly does not understand business, because it is nothing like running a business. The main part of running a business is making a profit—that is healthy, and is a thing for heroes to do.

I begin by congratulating the hon. Member for Northampton, South (Mr. Binley) on securing the debate on this immensely important subject, particularly in the light of yesterday’s debate on the Budget. The hon. Gentleman still runs two businesses. I had several, but was unable to juggle my business and parliamentary interests, so I congratulate him on being able to do that.

I remain simply as chairman of the company that I founded in 1989, not as an executive officer. I hope that is clear.

I am grateful to the hon. Gentleman for that enlightenment. My point is that it is important that we have legislators who understand the challenges of business, particularly small business, from a practical standpoint.

The right hon. Member for Oxford, East (Mr. Smith) talked about a local study of small businesses, which was extremely interesting and useful. On average, 80 per cent. of small, local business revenue goes back into the community, so those businesses are absolutely vital to any community.

The right hon. Gentleman also talked about energy. It is regrettable that the Carbon Trust will not do free energy surveys for companies that spend less than £50,000 a year on energy bills. Will the Minister address that in her comments? Given that there are more than 1 million small businesses in Britain, would it not be sensible to give them more downward help with that? Such businesses are keen to play their part in conserving the environment and, of course, keen to cut their energy bills as much as possible.

I have a few things to say about the Budget. I do not have the depth of knowledge and understanding of these matters of some hon. Members who have spoken, but I think that it is extremely regrettable that £1 billion appears to have been taken away from small businesses to woo big businesses. That is the perception of many commentators. The idea is that there is balance and that the additional money that will be taken away in corporation tax will somehow be restored by the research and development tax credit and the new annual investment allowance of £50,000. However, many small businesses invest in people, not equipment.

During the Budget debate, I picked up the Liberal Democrat policy change about flexible working being extended to people below the age of 18. What assessment has the hon. Lady made of the likely impact of that on business?

That is slightly off the subject that I am currently pursuing. I think that the hon. Gentleman refers to my speech on my ten-minute Bill yesterday, when I said that there should be a full impact assessment and a pilot with pre and post-implementation assessment before the right to request flexible working could be extended to all employees. I said that it would be beneficial to extend to the parents of children between the ages of six and 18 the right to request flexible working. If he reads Hansard, he will find that I quoted a number of studies into the beneficial effects that have been observed and measured by the Department of Trade and Industry and other reputable bodies, and other research.

I want to touch on the issue of skills. According to a Federation of Small Businesses survey, 25 per cent. of the people who apply for employment in small businesses have problems with numeracy and literacy. The British Chambers of Commerce commented that 22 pieces of paper have to be completed for an individual to take part in “train to gain”. We have to make education in numeracy and literacy easily accessible for people who do not have time to fill in paperwork.

The FSB also discovered, in a survey of its members, that 35 per cent. of them do not employ anyone because of the perceived risks. The Government should simplify the work of employers and ensure that they are not burdened with being unpaid tax collectors and distributors of benefits or with other requirements. It is all too complicated. When I ran a business, I had to employ someone to do the wages because I could not cope with the complexity of having to do all that administration, which disproportionately increases the burden on small businesses.

Will the Minister comment on the fact that some management courses are not available to companies of fewer than 10 individuals? Embryonic, growing companies that seek to increase their expertise and competitiveness should be allowed to access that kind of help. I have a shopping list of things that the Government could do to help small businesses. They have done some work, with public procurement, to simplify and standardise the procurement process, but they could do more to encourage local authorities to use the expertise of local companies rather than continue the current, slightly lazy, approach of seeking to do all their business with a small number of larger companies. If local authorities offered smaller contracts to more local companies there would be a much greater benefit to their local areas, because of the benefits that local businesses pass on to the local community, which I mentioned earlier.

The hon. Member for Northampton, South talked about Government support. Some £12 billion is available, but small businesses have to know that it is there. An FSB survey found that 65 per cent. of small businesses were not aware of the R and D tax credit. Why are only incorporated businesses permitted to benefit from that tax credit?

Time is pressing, so I shall rattle through my final points, the first of which relates to the compliance burden. Is it possible to review the regime for compliance, because intervention should be proportionate to the degree of risk and cost? We could shave a lot from the regulations. On inspections, why cannot certificates with a definable period be issued, so that a company knows that it will not be inspected again for a long time? Can the roles of many of the inspectors be merged, because sometimes there is a long line of inspectors trotting along to a small business? Can we change the role of inspectors? Can we move them away from having a tick-box mentality towards a more supportive role that enables companies to comply, rather than one that catches them out when they do not? Can more people who have business experience be involved in undertaking things such as regulatory impact assessments?

The hon. Member for Northampton, South discussed the regulatory burden from Europe and gold-plating, and rightly acknowledged that we are doing this to ourselves, because although regulations are being handed down, we are making them worse. If people with real business experience, rather than Whitehall bureaucrats and lawyers, were undertaking the regulatory impact work, the Government would be in a better position to serve the interests of business.

I, too, commend my hon. Friend the Member for Northampton, South (Mr. Binley). As he often does, he spoke with passion and knowledge, giving us a comprehensive view of the issues to be addressed. He began by reminding us why small businesses matter. Economically speaking, they generate more than half our national income and employ 58 per cent. of the private work force, and so are crucial to the economy. As several hon. Members have said, they are often the key innovators—the ones who make crucial changes in technology and business development that help the economy move forward.

As the right hon. Member for Oxford, East (Mr. Smith) rightly said, small firms also make a social contribution. I, too, have read the excellent report by the Federation of Small Businesses team from Oxfordshire. I met the people involved last Friday and had the opportunity to examine what they have said. The right hon. Gentleman rightly said that it is often the local, small enterprise that makes a quiet, positive social contribution to the local community, and does so without wishing to seek publicity.

We have heard about how this Government have failed small businesses, and about the rise in the number of regulations. The equivalent of 15 new regulations are being made every working day. They have a disproportionate impact on the smallest employers. The FSB has shown that the burden of complying with red tape costs each small firm seven hours a week.

The tax system has become hideously complex under this Chancellor. Not only are businesses paying more than £50 billion extra, but the charge is made in a punitive way. As my hon. Friend the Member for Ludlow (Mr. Dunne) rightly pointed out, charges such as stamp duty land tax on long leases impact before a business even starts to trade.

While this Budget has welcome news for large companies, it has dismal news for many small businesses. Whatever Ministers may claim, the Chancellor is seeking an extra £820 million by 2009 from small companies. While it is true that the annual investment allowance will provide some support, it will be of no use to millions of small firms. The point is highlighted by a British Chambers of Commerce survey, which showed that 71 per cent. of small firms believed that.

I hope that the Minister will explain why only capital investment is regarded by the Treasury as legitimate. What about innovation? What about the investment in people that was mentioned by the right hon. Member for Oxford, East? Are those things not legitimate? What about shopkeepers, accountants and professional services? All of those small enterprises seek to innovate and change, but they will be completely excluded from any benefit under the allowance in question.

The Government’s attack on the self-employed is not limited to corporation tax. Their plans to limit managed service companies follows on from the clunking fist’s crude attempts with the IR35 legislation. No one is against preventing unreasonable tax evasion, but the crude way in which this Government seek to attack the self-employed damages legitimate enterprises, especially in fields such as IT, health care and professional services.

The Minister is meant to be the Minister for small business, so will she tell us what meetings she has held with the Chancellor in order to speak up for those businesses in this matter? Did she put their case? Did she ensure that their concerns were properly represented? We need to know the answers, as do they. As we have heard in this debate, small companies are affected by decisions made across Whitehall.

Let us consider the Department for Environment, Food and Rural Affairs, whose shameful incompetence over the single farm payment has severely damaged thousands of small family farms. Did the Minister for small business challenge DEFRA over its incompetence? Did she meet, question or hold to account that Department?

The Department for Culture, Media and Sport was responsible for a huge rise in bureaucracy when it introduced the Licensing Act 2003. Thousands of small pubs, clubs and bars have been severely affected, but did the Minister for small business meet her colleagues? Did she ask why they were introducing the measures? Did she seek reductions in the bureaucracy?

Let us consider the Department of Trade and Industry itself. It is seeking to oversee the closure of more than 2,000 sub-post offices. Many of those businesses tell us that they would dearly love the opportunity to widen the services that they offer, to be able to compete in the market and to offer new services, but Royal Mail and the Minister’s departmental colleagues are refusing to allow them to do so. Why is that the case? What has the Minister done to stand up for those enterprises? Has she put their case? She must tell us, and them, what she has done to deserve the title of Minister for small business.

Time prevents me from mentioning a number of issues, but I should mention start-ups. Most start-ups occur not in commercial premises but in a home. Home-based businesses offer many advantages, as the right hon. Member for Oxford, East mentioned. Will the Minister tell us what she has done specifically to help home-based businesses? Just as important, will she tell us which issues the Government are considering in this field? Such businesses are great for female entrepreneurs, given the particular opportunity that exists to get the right work-life balance. I should be interested to hear the Minister’s response.

Another part of the Department’s remit is business support, which has been mentioned. Sadly, although much money is spent, Ministers all too often have no idea whether their programmes have any effect. The CBI has stated:

“There is much anecdotal evidence about which schemes work and which ones are less successful. However, there has been no systematic assessment of the business support network to look at what schemes exist and which ones are most effective and add most value.”

My hon. Friend the Member for Rochford and Southend, East (James Duddridge) mentioned an interim report that was published last month. The work was done by a small business taskforce led by the entrepreneur Doug Richard, who is an American citizen. It found that overall the Government are spending roughly £12 billion on small business support, but that they cannot, or will not, say whether the money is working. Part of the problem is the fact that the system has got out of control. Roughly 3,000 schemes are being run by approximately 2,000 public bodies and their contractors. Just as concerning as that complex maze is the value that we are getting, because at best, a third of the money is disappearing in administration. In some cases, all of the money goes towards paying an individual, and there is no money left to be handed out.

Equally, business confidence in state advisory services is low. The FSB has shown that just 4 per cent. of small businesses use Government-funded support, whereas more than half consult people such as accountants and those in the private sector. Given the amount of money spent it is remarkable—although sadly, less surprising—that the Government can have so little to show for it.

As we have heard in this debate, small businesses matter, but sadly—I say this with no enthusiasm—all too often this Government have failed them. Ministers do not understand them, and are taxing and regulating them without recognising that those same enterprises generate the wealth that pays for the schools and hospitals on which the rest of us rely.

Last week’s Budget typifies what is wrong, because the Chancellor is increasing small company taxes and continuing to tie firms up in red tape, while DTI Ministers are silent on these issues. They have shown themselves to be either of no influence in the Government, or so fearful of the clunking fist at the Treasury that they are unwilling to stand up for small businesses. Conservative Members believe that it is time for a fairer deal for small firms. We want a simpler, fairer tax system, and we believe that it is time to reduce the regulatory burden, and that the Government have failed to provide either an effective or an efficient business support system.

In her reply, the Minister must explain herself. She must show us and small businesses what she has done to defend their interests, and why she is supporting the Budget tax hike on more than 1 million small companies.

I join other hon. Members in congratulating the hon. Member for Northampton, South (Mr. Binley) on securing this debate, and the way in which he made his contribution in the best tradition of the House.

I have only nine minutes, so I shall deal quickly with some of the issues that were raised. The most important contribution that any Government can make to ensure the well-being and prosperity of the small business sector is to manage the macro-economic environment responsibly and successfully, and that is what we have done. We have had 58 consecutive quarters of growth, and no stop-go, which we experienced under the previous Conservative Government. We have had low inflation and a huge increase of 2.6 million in employment. That good macro-environment has led to success in the small business sector. I could not disagree more with the hon. Member for Hertford and Stortford (Mr. Prisk), who does not represent the small business interest well in pretending that this is an environment in which it cannot prosper. I far preferred the contributions of some of his Back-Bench colleagues who celebrate the success of the small business sector in contributing to UK growth and prosperity.

To take a few figures, we have 600,000 more small businesses than 10 years ago, which is a cause for celebration for the many people who work hard in those businesses. The number of people working in small businesses has reached close to 1 million, and that, too, should be celebrated. Of those working in the private sector, 59 per cent. are employed in small and medium-sized enterprises. That is a cause for celebration. The SME sector now contributes as much as the large-business sector to UK output: 50 per cent. of gross value added and 51 per cent. in turnover. Start-ups have exceeded closures for 11 years running, which is good, and survival rates are much higher today than a decade ago. Small firms’ productivity growth has exceeded that of large firms over the past 10 years, and that is a cause for celebration. I agree with the hon. Member for Northampton, South that new businesses are the greatest single source of new jobs.

Unlike the hon. Member for Hertford and Stortford, I celebrate and congratulate the small business sector, and work with it to build on that good record rather than decrying it. I recognise that SMEs are the vital engine of growth in the UK economy; I recognise that they drive innovation; I recognise that they help to drive productivity growth by providing a competitive spur; and I recognise that they are the greatest single source of jobs.

I very much welcome the contribution of my right hon. Friend the Member for Oxford, East (Mr. Smith). I had the pleasure of meeting Sandy Lovatt at the Federation of Small Businesses annual conference and listened to his findings. Particularly important was the role that he recognises small businesses can make in their local community by contributing to employment growth and to economic growth through purchasing and selling within their local community.

The hon. Member for Solihull (Lorely Burt) referred to the Carbon Trust. In an interesting survey in the report, “The Economic Ecology of Small Businesses in Oxfordshire”, one of the respondents said of the Carbon Trust that they regarded it as

“the best organised Government scheme.”

Special mention was made of its website and the respondent said that in the future he intends to take

“a second interest-free loan from the Carbon Trust to replace old and inefficient machinery.”

That demonstrates the importance of the matter.

Turning to the Budget, I want to hit the nail on the head. Let me be clear again—we were trying to be clear last night—about what the Budget is about. We hear the same tedious narrative from the Opposition, full of misinformation and mistakes, which is not worthy of a responsible Opposition—an Opposition who, when they were in government, caused the two worst recessions since the second world war, allowed inflation to run at 10 per cent., let interest rates go up to 15 per cent. and oversaw an economy in which unemployment hit 1.3 million, and 1.5 million people had their lives destroyed by negative equity. That is not how we will run our Budget. The most important imperative in the Budget was to maintain a strong macro-economic environment and continued stability so that we could have continued growth. We will not return to the stop-go of the years of Tory mismanagement, which is why the Chancellor deliberately crafted his proposals in a fiscally neutral way. Let us see what those proposals achieve for the SME community.

There are 4.3 million SMEs, of which 3.4 million operate as sole traders. Those sole traders will not be affected by the changes in corporation tax for SMEs, but they will benefit from the 2p cut in income tax and will be better off. Two thirds of FSB members are self-employed businesses, and they will be better off. For small businesses, we have responded to exactly what the CBI and the FSB have told us and what we ourselves and I myself believe to be true: that Government support and fiscal policy should concentrate on supporting the growth of the SME sector. That is why, in a fiscally neutral way, we have transferred the resources to increase the tax credit for research and development to 175 per cent. for small businesses; that is why we introduced the annual investment allowance that will support that growth tax free; and that is why—the hon. Member for Hertford and Stortford chose not to mention this—we introduced the specific initiative asked for by the FSB to reduce business rate relief on empty industrial property.

My right hon. Friend the Secretary of State for Trade and Industry said last night that an SME must increase its investment only by £2,300 in 2009-10 to reduce its tax liability by £500 under the new regime. That will offset the tax increase through investment. Ninety per cent. of tax-paying companies would pay less tax if they invested less than a quarter of their profits back into the business, which is what we want them to do.

No. I am not interested, and I do not have time. I have heard the same speech from the hon. Gentleman three times in the past five days.

Mr. Martin Caton (in the Chair): Order. I have allowed a certain laxity to the hon. Gentleman who has made comments from a sedentary position, but I think the Minister should be allowed to finish now.

I want to deal with the Opposition’s absurd report on regulation. First, the research comes from a Tory activist working from his flat—the same Tory hopeful who identified the £21 billion cuts in public expenditure that the Leader of the Opposition is now denying he supports. Those cuts included, interestingly, the abolition of tax credit for films, which would have hit manufacturing hard. The hon. Gentleman asked me what I do for the Department for Culture, Media and Sport. I certainly do not support doing away with that tax credit.

That report demonstrates yet again the Opposition’s complete inability to face in the same direction and display consistency for more than two minutes at a time. They criticise publicly funded support schemes by saying that on one hand we spend too much on admin, and on the other hand we should spend more on admin to ensure that we properly evaluate schemes. Those statements are wrong. First, we do not spend too much on administration—less than 10 per cent. through the regional development agencies—and we evaluate schemes because our entire policy is built on what works.

Of course we want to rationalise. We were there a year ago, and we knew that we needed to reduce from 3,000 schemes, which is why the Department of Trade and Industry has reduced from 100 to 10—

Mr. Martin Caton (in the Chair): Order. We must now move on to the next debate.

Western Balkans

I am very grateful to Mr. Speaker for the opportunity to address once more the situation in the western Balkans. It is almost exactly eight years since NATO decided to intervene in the region with the bombardment of Kosovo, and of Yugoslavia, as it was then. We are entering a crucial period, with the Ahtisaari plan being put before the United Nations shortly. There is a meeting of the contact group today in London and, later this week, European Union Ministers will meet in Bremen, where Kosovo will be high on the agenda.

The Minister who is present visited the area recently, about a week before I and a cross-party delegation, sponsored by the Inter-Parliamentary Union, visited. All in the region very much welcomed the Minister’s visit. From what I heard, not only was it welcome, but very constructive discussions were held. Our group of four Members visited Serbia and Kosovo to find out what was going on. I thank the IPU for sponsoring our visit. I also thank the British embassy and our ambassador, Mr. Wordsworth; the British office in Pristina, and Mr. David Blunt and his staff; and the co-ordination centre for Kosovo and Metohia, and the person in charge there, Sanda Raškovic-Ivic.

It was interesting for me to visit Kosovo in particular, because I had not been there for some time. We went to see what had happened on the surface, and without making myself too unpopular in many quarters, I can say that most people—most people in Serbia, too—recognise that Kosovo has become de facto independent. All but the most extreme nationalists recognise that Serbia will not be in charge of administration or other such matters. We met a variety of politicians and members of civil society in Kosovo, and people acknowledge that there is a great deal of sincerity among the political class, the leaders of civil society, the law and the police force. There is a willingness to try to improve the situation, so that they come up to the standards that the west would like to see.

However, when one scratches the surface, people also acknowledge that there is still a huge challenge. What one sees in Pristina is not necessarily replicated in the countryside, and we can understand why. Many people in the city are educated, but the population is mainly rural. We all know—I shall not rerun history—that it is an area where there has been a great deal of conflict, and there are many scars.

People recognise more than ever before that Kosovo has become an autonomous—as I said, a de facto independent—area. It still has large enclaves of Serbs and other ethnic groups, and in Pristina we were impressed by the readiness of politicians to speak about their hopes. In Belgrade, all political parties bar one—the Liberal Democrats, which has very few members—want Kosovo to remain part of Serbia, in name at least. It goes back to United Nations resolution 1244, which stated that that would happen.

I am sure that the Minister is aware of one feeling that we experienced. We were in Pristina three days after a violent demonstration that ended in the deaths of two pro-independence demonstrators. Rubber bullets were fired into the crowd when it surged towards the Parliament building. We met Joachim Rücker, head of the United Nations Interim Administration in Kosovo, who told us that he was waiting for the outcome of an inquiry into the demonstration in order to determine whether there was anything to be done. He said that he certainly would not call for any resignations, although the Interior Minister in Kosovo had resigned. However, we discovered—literally as we left the meeting—that Joachim Rücker had called on the UN police commissioner, Mr. Stephen Curtis, to resign. It left ourselves, and many of the people whom we met subsequently, with the view that the UN was perhaps dancing to the tune of the Albanian politicians, and it concerned us. Mr. Curtis was treated very badly by that precipitate action.

While we were in Kosovo, we also visited some enclaves, particularly the area around Gracanica, and it was disturbing to see the centuries-old church having to be guarded by heavily armed Swedish soldiers. One of our party, which included two members of the Select Committee on Defence, is an expert on those matters, and he informed me that the sentries’ weaponry was very serious stuff indeed. It was not ceremonial or a warning; the sentries were prepared for serious problems.

Most worryingly, some of the people who were evicted from their homes during the events of March 2004 still live in what can be called small containers. Such container cities—there are several in Kosovo—are very concerning, and I am sure that the Minister agrees that there is no place for such cities in a modern Europe.

We met representatives of the Serb community, and in Belgrade we also met some of the internally displaced people who had to leave their homes, particularly in March 2004. We were surprised by their optimism, and their desire to return to their homes. They had left properties and farms, many of which had been in their families for generations, and they genuinely wanted to return. However, those people in the Serb community were very scared to return. That is something that I can understand. We had to change the number plates on our car as we crossed the border, because we had Belgrade plates on and we were told that it would be too dangerous for us to continue with them.

The incidents that are taking place in Kosovo indicate that, despite the best efforts of the international community, violence is sadly still prevalent. In fact, whether or not it was a personal statement, three days after we left our hotel in Pristina a hand grenade was launched into the said hotel’s car park. To judge from the websites of various news agencies in the region, grenade attacks seem to be quite common. Admittedly, such incidents take place on a small level—we are not talking about things of the sort that are regrettably going on in Afghanistan and Iraq. However, such incidents indicate that there are large amounts of munitions in the hands of people who would perhaps be better off without them.

That is why the Serbs feel so frightened. They said to us that, despite the assurances that the Kosovan Albanians had given them that they would be safe to return to an independent Kosovo, they genuinely felt that they would not be. Nothing that has happened in the past few years—not just since 1999, but since 2004, when there was quite a serious eruption of violence—has indicated to those Serbs that the assurances of those in authority that they were welcome and so on have been matched on the ground. Interestingly, some of the people we met had had personal experiences of the problems. For instance, we talked to an interpreter from the British office, who was a nice chap and very moderate. During our conversation he told us that his father had been kidnapped several years before and that no sign of him had ever been found. Of course there will be stories on the other side. Sadly, that is the nature of the place.

We are approaching the period when former President Ahtisaari’s plan is to be put to the United Nations. Over the past few years the Serbian Government appear to have put their head in the sand. They are rather like somebody with a debt who keeps hiding their bills in drawers, hoping that it will go away, but now the bailiff has arrived and they suddenly want to sort the situation out. There is pressure from those on the Kosovan side to try to get the situation resolved in the way that they want—in other words, independence.

We would of course all like the problem areas in the world to be solved, but we have waited years to get to where we happily are now in Northern Ireland. Cyprus is another example. However, we are still talking about trying to impose a solution if we cannot get both parties to agree. I cannot help feeling that that will just lead to further problems. I do not think that the two sides are so implacably opposed that we shall not achieve a solution. We might have said that about the political parties on either side in Northern Ireland a few years ago. However, this week we have seen two people who we never thought would be sharing power doing exactly that, and setting it up for May. I therefore urge the Government, along with other European Union countries, not to press ahead with haste.

There is of course another angle to the situation. I should be interested to hear what the Minister will say about the Russian influence. The Russians are talking about possibly vetoing the proposal at the United Nations Security Council, although my advice to the Serbian Government is not to necessarily rely on that possibility, which might not be what it appears. I should also be interested to hear from the Minister what other EU partners’ views on the issue are. Spain, Greece, Slovakia and other countries will have concerns. Those concerns are quite obvious—namely, that if we start effectively changing the borders of countries, whether as a result of military intervention or based on ethnicity, that will open the proverbial box of Pandora. There are areas throughout the world, including in Europe, where people will say, “If it’s good enough there, it could be good enough elsewhere”. Even within the Balkans, one only has to think of Republika Srpska, and the areas in Macedonia with a large Albanian population and the Presevo valley in Serbia, where those issues could become fundamental.

The British Government and the west say that what is proposed is a one-off, that the same would not happen elsewhere and that giving Kosovo independence would be a force for stability. The other side will say that the proposal is the very opposite and would bring instability. Therein lies the problem: nobody knows what the answer will be. We can make a guess at it—I have a different view from the Government on what will happen—but we are as one in saying that the situation must be resolved for the sake of Europe. The area is a fundamental part of Europe. In years to come the European Union will be part of the solution, but not yet.

There are lots of organisations doing work out there, such as the Westminster Foundation for Democracy from this country, trying to help the political process in Serbia and Kosovo. However, some of the things that we should be doing are not necessarily at the political level. One charity that I should like to mention that has worked throughout the region, but has been particularly active in Serbia, is called SOS Kit Aid. It provides rugby kits and helps rugby clubs in Belgrade. Rugby is not a big sport in Serbia at the moment, but the charity helps to bring teams over. I talked to a deputy in Pristina who said that he had been encouraging similar things in Kosovo. There must be a way of bringing people together not only at the political level of arguing over things, but through sport and culture, although that might not necessarily be rugby. However, that will take time.

As I am keen to hear what the Minister has to say, I shall wind up. I labelled this debate as being on the western Balkans, but I have concentrated entirely on Kosovo. I have another question, to which I do not expect the Minister to have an answer. There is still a pressing problem with Macedonia and the frontier area, particularly around the villages of Debelbe, which are disputed. The problem is that the Macedonians have been told that the problem is a result of the break-up of Yugoslavia and that they have to talk to Belgrade. Other people say that the Macedonians have to talk to Pristina and that it is not for Belgrade to decide the international frontiers. Finally on the Macedonian situation, there is still a strong grievance from that country, which is a candidate for the EU, that even its diplomats and business men have to go through visa controls. My final message to the Minister is, please do not try to impose a solution so urgently that we lay up more problems for ourselves in the future.

I congratulate the hon. Member for Uxbridge (Mr. Randall) on securing this debate and on his continuing expert interest in the western Balkans. We may not always agree on the detail, but I acknowledge his real expertise on the questions involved.

The hon. Gentleman is right to remind us of the work that still needs to be done in the western Balkans, but it is also right to recall how much has been achieved in the region. Progress has been made since the wars of the 1990s. All the countries of the western Balkans are now somewhere on the path to eventual membership of the European Union and NATO; I visited Croatia on Monday and saw for myself the transformative effect of the EU accession process. I am confident that that will be repeated across the western Balkans.

Like the hon. Gentleman, I want to focus on Kosovo today. I remember my first visit there in 1999, when I witnessed the destruction and misery on the faces of Kosovo’s people—a shocking sight in modern Europe. However, Kosovo has come a long way since 1999, as I witnessed on my most recent visit last November. An elected Kosovo Government were gradually taking over responsibility for their own administration from the United Nations. I saw new buildings and new businesses in Pristina. Perhaps most importantly, people appeared more optimistic about their future.

However, Kosovo’s economic and political development continues to be inhibited by the uncertainty over its status. The current situation—an unresolved status while Kosovo is administered by the United Nations—is fundamentally unsustainable, failing to provide the clarity needed for sustained economic investment or to fulfil the aspirations of the vast majority of Kosovo’s population. In recent months, we have seen the potential for instability: in Pristina on 10 February, two Kosovar Albanians tragically died when a demonstration organised by the self-determination movement turned violent.

However, after almost eight years of UN administration, the way forward is in sight; on 26 March, UN special envoy Martti Ahtisaari submitted his final settlement proposals to the UN Security Council. The recommendations reflect more than a year of negotiations and detailed discussion with Belgrade and Pristina. They strike a balance between meeting the aspirations of the majority in Kosovo and providing far-reaching guarantees to protect the rights of the non-Albanian communities, especially the Kosovo-Serbs.

We would all prefer a negotiated settlement that was mutually acceptable to the parties. However, it was clear from the special envoy’s consultation process in Vienna in February and March that the gap between the two sides is, at least for the moment, unbridgeable. The choice is therefore between prolonging the current unsustainable situation or grasping a clear opportunity to move forward.

Ahtisaari describes his proposals as representing independence for Kosovo, supervised by the international community. That is the outcome that Kosovo Albanians—90 per cent. of the population—want and expect, and it would give Kosovo the clarity that it needs to develop politically and economically. Furthermore, the proposals contain robust mechanisms to defend the rights, culture and heritage of Kosovo’s Serbs and other non-Albanian communities. Protecting multi-ethnic society in Kosovo is a fundamental element of the plan. In particular, the settlement provides for minority participation in central Government and for far-reaching decentralisation, including through the creation of new Serb-majority municipalities. Furthermore, the plan would create protection zones around more than 40 key Serb cultural and religious sites in Kosovo.

Kosovo will continue to require international supervision, assistance and support in the years to come. The UK will continue to play a role in supporting the implementation of the settlement. We look forward to contributing to both the NATO and European security and defence policy missions envisaged in the proposals. We shall also maintain an active diplomatic presence in Kosovo. Discussions on the proposals have now moved to New York. We are in touch with our Security Council partners and are underlining the need for the Security Council to act decisively to resolve the issue and secure the best possible future for all Kosovars.

The hon. Gentleman asked about Russia in particular. We work very closely with the Russians in the contact group. They, too, have a clear interest in resolving Kosovo’s status. Obviously, it is not for me as a UK Minister to go into detail on the Russian position, but I can say that, as the hon. Gentleman mentioned, Balkan directors from the contact group countries, including Russia, are meeting in London today. I spoke to all of them this morning, and made it very clear that we now need to bring the process to a successful conclusion.

The hon. Gentleman also referred in passing to the EU’s position. There has been some discussion. As the hon. Gentleman made clear, there are sensitivities in some states. However, the discussion has consistently led to clear messages in support of the work of the special envoy and congratulations on his efforts. On12 February, the General Affairs and External Relations Council

“expressed its full support for the UN Special Envoy Martti Ahtisaari and his efforts in conducting the political process to determine Kosovo’s future status.”

I accept that we will need to ensure that, in the short term, a settlement in Kosovo does not heighten tensions in the region. Keeping Serbia firmly on the path to the European Union will be a priority. As the hon. Gentleman mentioned, I visited Belgrade on 7 February. It is very important that Belgrade and Serbia seize the opportunity available to them. It is crucial that when they are formed, the next Serbian Government quickly make sufficient progress on co-operation with the International Criminal Tribunal for the Former Yugoslavia so that the EU restarts stabilisation and association talks. It is also important that Kosovo and Macedonia demarcate their border in an orderly manner; I accept that that is a continuing issue. Having also visited Macedonia relatively recently, I think it important that we find a sensible solution to the problem.

Ahtisaari's proposals provide for a joint technical commission physically to demarcate the border and address other outstanding issues in the next year; there is a mechanism for dealing with the issue. For the sake of completeness, I should say that we remain actively engaged in Bosnia, although the security situation there is now stable, allowing us to withdraw our troops, who have done such an excellent job in the past15 years. However, there is still further work to be done in taking forward the necessary reforms, particularly to the police and armed forces.

Kosovo is the last outstanding status issue subsequent to the break-up of the former Yugoslavia. Martti Ahtisaari's proposals offer the Balkans a chance to draw a line under the conflicts of the 1990s, take a decisive step to underpin multi-ethnic, democratic societies and move further down the path towards membership of the European Union. His proposals offer a better future for all in Kosovo, and the Government unequivocally support his recommendations.

Sitting suspended until half-past Two o’clock.

Theatre Funding

May I say what a pleasure it is to serve for the first time under your chairmanship, Mr. Caton? It is traditional in the House to offer thanks for the opportunity to introduce such a debate. In one sense I am thankful, but in another, I have an overwhelming sense of déjà vu. It seems to me that I, in concert with many others, have been making the case for a secure subsidy to British theatre for the whole of my adult life. Clearly, my arguments have proved remarkably unsuccessful, so let us hope that I will break that trend today.

I want to begin by paying tribute to our Government, who became an oasis in the financial desert of subsidy for British theatre. They listened to the arguments that had been put to them and, in 2000-01, made a subsidy to the theatre of £120 million. Equity—I am tempted to say the actors’ union, but it does not like that phrase and prefers to be called an association—made its case for investment in subsidised theatre in an extremely helpful document called “A Brighter Future”, and it made several important points about the benefits that accrue from subsidy to our theatre. The public, the theatre sector and the economy all benefit.

Equity made the point that, from the Government subsidy of some £120 million, the economy benefits by £2.6 billion annually. As Equity says, the theatre sector as a whole benefits, because subsidised theatre increases interest and attracts greater audiences by virtue of the high-quality and in some instances rather difficult work that it can produce. That has a knock-on effect of enormous benefit to commercial theatre. I am grateful to Visit London for an extremely helpful briefing, which makes precisely that point. Visit London would prefer that we did not use the word “subsidy” but “investment”.

The briefing from the Society of London Theatre and the Theatrical Management Association, which was furnished to me via Visit London, said that theatre is an enormous attraction for foreign visitors. The briefing gives figures that are exclusively for London, but I am sure that other hon. Members will be able to paint an equally rosy picture of the benefits that have been brought to all the United Kingdom’s regions by virtue of what is, in effect, a small amount of money.

Visit London made the point that

“theatre plays a major role in attracting foreign visitors to London—many of them would simply not have come”—

without the attraction of the theatre. It said that

“2006 was a record year for theatre in London. Ticket revenues rose”—

by almost 5 per cent.—

“and broke the £400m level for the first time, while attendances were at 12.4m. At the end of the year, advance ticket bookings of £57m were double those at the end of 2005.”

Visit London went on to make an interesting point, by saying that the massive revenues generated for the Exchequer would pay for

“the equivalent of 130,669 nurses, 92,690 police officers, 53,760 doctors or 108,387 primary school teachers. Increased investment would see an increase in this return. Tourism is already our fifth biggest industry—in London it generates £15bn of expenditure from visitors, or 10 per cent. of London’s GDP.”

I hope that I have managed to show that a comparatively small amount of national money produces enormous financial benefits for the country. That has undoubtedly been my experience in other parts of the world. For example, in America, I once did a tour of various cities whose indigenous economy had totally disappeared. Great amounts of money had been invested in those cities to try to re-attract business and to bring visitors. The areas in those cities that had created an endemic economy were sited around centres of cultural excellence—theatres, concert halls or art galleries. Those are venues to which people are prepared to go regularly, and other smaller businesses therefore grow up around them: cafés, restaurants, bookshops and art shops. They were the thriving centres.

The argument is virtually irrefutable that culture—certainly theatre—has strong economic drivers. That has never been the reason for my commitment to subsidised theatre. I am grateful for the fact that the theatre produces economic benefits, but it seems that a society that values its theatre and regards it as something for which there should be consistent support by the nation state is one that acknowledges that the spiritual health of the nation—I am tempted to say—benefits from such subsidy. The theatre is not merely entertainment or a place for spectator sport. People should not go to the theatre if their lives are ideally spent as couch potatoes. The theatre makes infinitely greater demands than that on those who participate and those who visit. Only the subsidised theatre can begin to explore such demands if the overwhelming and crushing burden of having to make a profit at the end of every week is lifted from it.

I am not arguing for any kind of feather-bedding for the theatre. My argument has always been that, when the country is doing well and if we genuinely value our theatre, it should have a proper share of the national cake. If the economy is not doing very well, the theatre, along with the other vital factors of a cultivated society, should consider cuts. The central crucial argument for me—it has still not been made, put away and accepted totally—is that theatre is as vital for our society in many ways as anything else that the state regards as a basic function that it should provide for its citizens.

It is entirely shocking and utterly disgraceful that the birthplace of the greatest dramatist that the world has ever and is ever likely to see—William Shakespeare—has still not accepted that argument. Shakespeare did not chose to express his genius by writing a book or a pamphlet, or by putting notices on the wall. He chose the very medium that can most directly and fundamentally express the exchange between what happens in the light and passes through to the dark.

It has always been my somewhat idealistic belief that theatre at its best is a model for an ideal society. What happens when people go to the theatre? It is quite remarkable. For no reason other than that they think, “Oh, I’d like to go and see that tonight”, a large group of strangers decide to go to one theatre on one night of the week. They sit there in the dark, and another group, who are strangers to them, come on into the light. When it is working well, an energy goes from the light into the dark, is reinforced and is sent back. On a really good night, a perfect circle is created. It is a unique and transforming experience. As an actor, it lasted no longer than the walk from the stage to the dressing room. For an audience, it might last no longer than the walk from the seat to the exit. However, it happens; it is real; and it happens nowhere else. It is a remarkably unique experience. It does not happen every time, but it happens often enough for people to have tasted it, to have felt it and to want to experience it again.

I have referred to Shakespeare, and he is not the only reason why theatre’s value in our society should be treasured and valued. We should not have to make the same old argument every decade or so that it must be invested in by the state. I have made the point that the amount of investment from the state can transform not only the theatre and those who practise in it, but attendant industries and businesses. There are other benefits, too.

The Government, to their credit, have acknowledged those benefits. They have supported, for example, programmes that invest in interesting young children in how the theatre can be part and parcel of their lives in the most practical sense. Such programmes work: young people do become interested, and they find that the disciplines that are an absolute requirement of any professional or theatrical performance can have a profound effect on how they view the world. They learn how to work in teams, and take on responsibility and carry it through to the end. I hope that hon. Members will not take this personally, but if this place had to run according to the disciplinary mores of the theatre, we would get through 10 times the amount of business in one quarter of the time and probably at a fraction of the cost.

We have also seen at the other end of the age scale how drama and the telling of a story in an exchange between human beings can have a profound effect—for example, in respect of elderly people who suffer from Alzheimer’s and are losing their memory. An interesting programme of work was carried out by an organisation called Age Exchange. Its director processed her experience in theatre and education into working with elderly people, initially in hospitals and residential homes over a wide area. The work that she did with people who are suffering the loss of memory has been taken on board by the medical profession not only in this country but in other European countries. It has immense potential for the exploration of whether there is some way to break through the barrier of forgetfulness, and it is drama—that exchange—that seems to do it.

We know also of the immensely valuable work that drama can do in assisting people who are in prison. I do not have the actual data on the tip of my tongue, but there is undoubtedly an improvement and a reduction in recidivism when people in prison are engaged in such programmes.

We have seen the enormous benefits of organisations and companies working with homeless people. They give back to people something that is easily lost but can be immensely difficult to restore: a sense of themselves as being human beings who, by virtue of their humanity, are valuable. That is, in essence, one of the most valuable things about theatre, and it is why we would be foolish as a nation to ignore the possibilities to maintain, retain and enlarge it.

To go back to the greatest dramatist that the world has ever seen or is ever likely to see, what are the questions that Shakespeare poses in a variety of guises in pretty much all of his plays? There are three of them, and I have always thought that they are very simple. All he ever asks is, “Who are we?” and “Why are we?” and “What are we?” No one has or ever will have the answers, but the pursuit of the questions and the possibility of answers are central and essential to our being human.

In my humble opinion, there is no better arena for examining and pursuing such quests than the theatre, which is why I hope that the Government, to whom I pay full credit for what they have done in the past, will think about the minute amount of money that is required to maintain British theatre in its excellent state and to give it possibilities of expansion. I understand that the amount is as minuscule as £3.5 million a year. To go from the sublime to the ridiculous, and having mentioned Shakespeare, that is surely a mere spit in the ocean. I have seen the odd nod here and there, so I am fairly certain that other Members will help to ensure that the argument about whether this country should put money into its theatre will never have to be made again.

Order. Before I call the next hon. Member to speak, perhaps I should advise Members that I intend to start the winding-up speeches as near to 3.30 as possible, votes in the House permitting. I already have a long list of possible speakers, so would hon. Members please bear that in mind?

Thank you, Mr. Caton. I shall be brief.

It is a great privilege to follow that very fine speech by the hon. Member for Hampstead and Highgate (Glenda Jackson). I agree with every word that she said. As I cannot begin to match her eloquence, I shall make a much more pragmatic and mundane contribution to the debate.

I want to speak about one thing. Although I agreed with every word that the hon. Lady said, we must remember that this debate is not just about London, although it is tremendously important. I declare an interest: I am a passionate theatre-goer, and a strong supporter of the Royal Shakespeare Company in particular. I was privileged to see Patrick Stewart’s extraordinary performance as Prospero in “The Tempest” only the week before last. That company gets 43.4 per cent. of its income in grants of one kind or another. For the sake of propriety, I should declare that my son is currently at drama school training to be a stage manager or technical theatre expert.

Theatre, like all art, has always been subsidised. I sometimes hear the argument that art should stand on its own two feet, but great art has almost never done that. There have been patrons of the arts down the centuries: princes, kings, counts, dukes and rich people of one kind or another sought to immortalise themselves through their patronage. The leading patron now perforce must be the state.

I welcome the increase in funding that the Government have made available to the Arts Council over the years, but we must remember two things. First, theatre funding is 0.02 per cent. of all public expenditure, so it is hardly a great sum to maintain against all the other competing priorities. I hope that that will help the Minister in his negotiations with the Chancellor. Secondly, there have been net reductions in real-terms funding for the arts since 2005. I agree that they have been modest, but I hope that we can at least put the arts back into a period of stability again, after the welcome growth that they experienced earlier.

I am concerned about the financial pressures that the Department for Culture, Media and Sport and Arts Council England are likely to be under, as their core funding—and, therefore, the funding for individual theatres—is threatened. I am also worried about the lottery, which, since its inception under John Major, has made such a big contribution to theatre life. I do not want to be partisan in what should be a bipartisan debate, but I fear that the rising costs of the Olympics could have serious implications for many theatres the length and breadth of the United Kingdom. I look for reassurance from the Minister about how he hopes to maintain the funding streams to performing arts in general and the theatre in particular in the face of that real challenge.

I said that not just London is involved. There is a huge variety of theatre. Theatre companies that serve my constituency, broadly defined, include touring companies such as Shindig, and Collar and Tie, which go to schools and rural communities. We should not forget amateur theatre in this debate. There is a small amateur theatre in Droitwich Spa, the Norbury, which faces huge challenges to keep itself on the road. It would normally have looked to lottery funding to do that.

There is an absolutely fantastic arts centre called No. 8 in Pershore, which is just outside my constituency. We should pay tribute to the work done by many councils. For example, Wychavon district council provides No. 8 with its accommodation at a peppercorn rent, which enables it to do a fantastic job for the people of Pershore. The theatre works almost entirely with volunteer management and staff. It hopes to apply for core funding from the Arts Council, but it thinks that the funding taps are being turned off because of the Olympics and so on and that theatre groups and art centres that are not regularly funded organisations at present will find themselves left out in the cold. Its excellent managing director, Ray Steadman, is genuinely apprehensive that the tendency will be to concentrate money in strategic areas—mainly urban areas—leaving rural areas to suffer.

The financial pressures on Worcestershire county council mean that it no longer has an arts officer or assistant. It will be interesting to see how Arts Council England will negotiate an appropriate settlement for No. 8, should it be minded to pay it at all, because, historically, the advice of the county council has been of great importance to Arts Council England.

I think of Malvern Theatres, which has benefited hugely from lottery funding and modestly from continued funding from Arts Council England. It is privileged to get many west end try-outs. I saw Felicity Kendal in “Amy’s View” there a few weeks ago before its west end run. Again, the facility exists in its current fine form only because of the huge amount of money that it has had from the lottery. The Birmingham Rep is a fine repertory theatre, and the Hippodrome was a huge lottery winner. Millions of pounds were spent on refurbishing that theatre, and many of the companies that perform in it are subsidised by Arts Council England or other parts of the Arts Council budget.

On other parts of the Arts Council, I particularly wish to highlight the threat to funding in Northern Ireland. Those of us in the performing arts alliance group were very disturbed indeed to hear a presentation from the Arts Council of Northern Ireland about the significant real-terms cuts in funding for theatre there. At a time of great hope for peace in Northern Ireland, it would be tragic if the arts, which can make such a major contribution to building a sense of social cohesion, spirit and harmony, were to suffer a significant reduction in their budget. All the evidence points to that happening, and on 21 March “The Stage” website said:

“Northern Ireland’s theatre companies are facing a third successive year of cutbacks after the arts council announced standstill funding allocations for 2007/8.”

Such matters are of real concern, and I want to reinforce everything of a philosophical and powerful nature that the hon. Member for Hampstead and Highgate said. I issue a strong plea from the provinces at all levels for Arts Council of England funding, for adequate funding for councils to do their job and for the lottery, which has done such fantastic work in my constituency and county over the past years. Of course, I also issue a plea on behalf of the Royal Shakespeare Company at Stratford, whose fine new theatre is shortly to be developed. The last performance in the old theatre will take place some time this week—on Saturday, I think—after which the old auditorium will close for major refurbishment.

I wish to draw the Minister’s attention to one other thing, if he is not already aware of it. Not only does the theatre face significant cuts in funding in real terms, but it may face an increased bill from the Government if Ofcom proceeds with its auction of spectrum, as it currently intends. I have heard hopeful indications that Ofcom is rethinking its position and promising a new consultation paper after the first consultation ends on the programme-making and special events sector, which covers drama, news gathering, sports and all kinds of other sectors, too. If the auction of spectrum proceeds on its current basis and is released for the digital dividend, there is a real risk that the radio microphone frequencies might be no longer available. If theatres cannot get that spectrum, it would mean the end for large swathes of theatre, and if they get it at a high price, it would mean a huge new bill for large sections of the performing arts in the UK. So I plead with the Minister to keep a careful eye not only on the Arts Council of England to negotiate sharply with the Chancellor, but to watch what Ofcom is doing, too. If the Government do not do that, we could land a massive new bill on our theatres with serious consequences for all of them.

I congratulate my hon. Friend the Member for Hampstead and Highgate (Glenda Jackson) on securing this important debate—it was not before time. It is a privilege to follow my hon. Friend, who is not only a fine friend and parliamentary colleague, but one of our most distinguished actors with whom we cannot hope to compete in terms of speaking ability. I wish to declare an interest as my son is a member of Equity and I love the theatre. Beyond that, theatre is important for all of us—for our culture and our future. That is not just because the greatest playwright of all time is one of our past countrymen, but because it is important to how we develop as human beings.

We are fortunate that we have the English language, which means that we have a thriving commercial theatre in London that serves a massive worldwide English-speaking audience. Many countries do not have that and subsidise their theatres to a much greater extent to sustain their own languages and cultures. We have the benefit of English, but that is not enough. We boast about our wonderful theatres in London but neglect the base from which our performers and domestic audiences come. We must spend more locally and regionally and redevelop a professional theatre at that level.

The hon. Member for Mid-Worcestershire (Peter Luff) said that the arts in general and theatre in particular have always been subsidised. There has been some mass popular theatre, but of course that took a big knock in the 20th century from radio, television and film, which provide a very different experience from a live performance that is life-enhancing and stimulates the imagination. We learn to suspend disbelief when we see a live play on a stage and two or three people pretending to be someone else. That is different from watching soap operas on television that attempt to look like reality. Theatre provides wonderful exercise for the mind, but also looks in a very intense way at the human condition—fear, love, war and all the things that we debate in this Chamber and, indeed, in Parliament can be found in theatre. I sometimes think that we have been half expecting what I would call a “Julius Caesar” moment in our own party—although it will not actually happen as I think that the relevant person is retiring from the scene. Nevertheless, something in Shakespeare will always fit with what we are doing at a particular time in politics. Shakespeare had a wonderful understanding of politics and the things that drive human beings in politics and elsewhere.

My own children both love the theatre and performed when they were young. However, nothing was as great as when the Royal Shakespeare Company once came to Luton about 23 years ago with a travelling theatre—they set up their own stands and seats. Both my children saw Fiona Shaw in “Much Ado About Nothing” and “The Merchant of Venice” and went behind the scenes and met the actors. It was an experience that they never forgot, but the Royal Shakespeare Company has never been back. Why not? Why do we not say that the Royal Shakespeare Company should visit every town regularly? That would make a real difference but would require money and subsidy.

I love the familiarity of the magical world of performance and have seen young people transformed by performing at school. However, nothing compares with seeing professionals performing brilliantly, which also provides something to aspire to. Amateur theatre is fine and we all have local amateur theatres that do a great job, but it is not the same as seeing professionals. The same can be said for music, which is another passion of mine. The experience of seeing the great orchestras of the world and musicians play is very different from going to see the local town band—although that is both welcome and enjoyable. It is important for everybody to see the arts at their best and in their locality.

The issue of local theatres is my main theme. Some 40 years ago there were two theatres in Luton, but they were knocked down to make room for a large shopping centre and various car parks, which were considered more important. I consider that an act of barbarism. Since then, we have tried to build a new theatre in Luton, but there has never been enough money. We have a bowling alley and various other enjoyable things that make money, but we do not have a theatre and young people from the schools in the town cannot see a professional performance. I would like to have a subsidised local theatre in all major cities so that every schoolchild would consider it normal to be taken to the theatre during school time to see professional acting, to be inspired and to feel a sense of wonder at proper theatre. Of course, initially some children may find theatres embarrassing because actors are a bit like politicians and when they speak they are rather intense and embarrass people. However, although we happen to be a naturally reserved people, we should perhaps break out of that and learn that intense experiences and understandings deserve to be expressed in an intense manner and there is nothing more intense and wonderful than the theatre. As I have said, theatre is about human relationships, an understanding of the human condition, and politics.

I want local theatres to be expanded and for the Government to spend a lot more on them. My hon. Friend talked about the figure of £3.5 million, but losses from VAT fraud alone amount to £1 billion every month—I want a bit of that. We should collect a bit more VAT with a few more VAT inspectors and spend it on theatre—that would be very good value for money. We still do not take the arts in general and the theatre in particular seriously in this country. On the continent of Europe they spend a lot more on such things.

I will finish with an anecdote. When Vaclav Havel and his new Government first came to Britain to meet Mrs. Thatcher after the fall of communism in Czechoslovakia, as it was then, he brought about12 people with him. They went to Downing street and Mrs. Thatcher was introduced to the spokesmen for foreign affairs and for energy and transport. There were also five other people there and when she asked who they were President Havel said that they were representatives for culture. It is unimaginable that Britain would take 12 people abroad, five of whom were representatives for culture. I know that he was a playwright and had an interest in such things, but nevertheless I believe that on the continent they take cultural issues more seriously than we do. We should imitate that. As my hon. Friend said, we believe that we have the greatest playwright in history. I certainly believe that, and it is about time that we celebrated it by having a properly funded theatre ourselves.

I congratulate the hon. Member for Hampstead and Highgate (Glenda Jackson) on obtaining this important debate. I recognise that time is short, so rather than covering the full range of topics I will focus on one issue—the relationship between spending on the 2012 Olympics and funding for the theatre through the lottery. When, in 2005, we heard that London had been awarded the Olympics, it was a moment of joy and celebration for me, as for many people. It meant even more to me when I heard that there was to be a cultural Olympiad. I do not wish to be a pessimist, but it is probably unlikely that in 2012 people will leave London talking about the extraordinary prowess of the British in sports and games. However, there is a good chance that they will go away imbued with admiration and feeling much enriched by the cultural life on offer in London and the United Kingdom. That is something to be valued and we must hold on to it.

In order for that cultural happening to flower, we have to ensure that the roots continue to be nourished. The roots of great theatre in London and of the great performances that we see in the big theatres are to be found in our local theatres, but they have been under pressure and are somewhat in decline. I look with great pain at some of the cuts in lottery funding; they go to the heart of the issue by threatening some of that regional and local theatre funding. I hope that we hear today an assurance that that will not happen, but I have seen the numbers. There is a cut in the Arts Council of England lottery funding of about £112.5 million; for Scotland the figure is £12.5 million; for Wales it is £8.1 million and for Northern Ireland it is £4.5 million. Those are terribly serious numbers for that sector of our communities.

I understand what the hon. Lady is saying, but will she not acknowledge that lottery funding for the theatre rose to £100 million in 2004-05 and then dropped back to £26 million in 2005-06? That shows that the theatre sector is robust and that a lot of grant money has been going to the theatre directly from the Government. Although we all have some concerns about the subject, the hon. Lady should not overplay it.

I thank the hon. Lady, but the community to which I speak expresses a great deal of concern and worry, and it is looking for reassurance.

In my community, we have the Orange Tree theatre. It calls itself a mini-National Theatre, but although it is only one small theatre, the talent that it nurtures stimulates the infrastructure of the commercial theatre in our area. We had a meeting in the House with actors, ranging from those who will be familiar to everyone in the House—many of them at the late end of their careers—and young schoolchildren. The children were incredibly excited and were invigorated by being able to share in that meeting. It struck me then that communities can be built upon the relationship that the theatre uses to bring people together across age groups and generations. In my community and in much of London, that kind of connection is sorely needed.

My community also has the Barton Green theatre. It is a small, amateur youth theatre in the heart of the community, yet virtually nothing else is on offer for the young. It will be applying for lottery funding; otherwise, the roof will fall in. The great fear is that, as all the various sources of funding disappear—a bite taken here and a large chunk taken there—those projects will be the ones to suffer. As the hon. Member for Luton, North (Kelvin Hopkins) so eloquently said, once we lose those theatres the chances of bringing them back are minimal. If the theatres are not there for the oncoming generation, that generation will be lost to the theatre. I am extremely concerned about that.

We have a unique opportunity to use the Olympics to express a great deal more than our sporting prowess; we can use them to build up the arts and culture, and to build up the theatre. As part of that, we must look back to the roots. I should like to hear how the Government intend to fund that sector, and how it is to be protected and nourished.

I have one niggle, but it is not a partisan point. The Olympics funding includes money being set aside for contingencies—in other words, money that people hope will never be spent. For that to be a reason for losing local theatres would be a tragedy. Money provided for the Olympics by the private sector has not yet been pulled together and does not yet seem to be available; that that should be a reason for taking funding from our theatres would be another tragedy. I hope to hear answers on those issues today.

I declare a very minor £1 interest in the National Youth Theatre, as an associate. I pay tribute to my hon. Friend the Member for Hampstead and Highgate (Glenda Jackson), not least because in her acting career she did more than many could aspire to do for British theatre, even making some shows commercially viable that many might have considered to be commercially impossible. For instance, productions such as “The White Devil”, “The House of Bernarda Alba” and “Hedda Gabler” are all doing extraordinarily well in this country, and “Hedda Gabler” is also doing very well abroad.

There are many utilitarian reasons why the theatre is vital. Its importance to the economy has been cited. Stratford says that the Royal Shakespeare Company brings to the region about £58 million a year. That simply would not happen if it were not for the theatre. In London, three times more people go to the theatre than attend football matches. Theatre plays a key role in London’s economy.

Theatre also has an important role in education. We will have no great teachers of drama in schools without a strong theatre tradition throughout the United Kingdom. Theatre in schools can make a dramatic difference, enabling some of the kids who have had a difficult family background to achieve self-confidence and the ability to communicate that they would otherwise never achieve. As my hon. Friend the Member for Hampstead and Highgate said, that is true also in many prisons. It applies also to youth clubs. The ability to communicate is sought by most employers. Those who do not have the personal confidence that acting on a stage can give—even if only in a small part—will not have such good opportunities at work.

Acting also gives individuals the skill of working in a team and the understanding that it is not enough for them to shine on their own if the entire cast are not performing together, and that if one does not turn up on time, the rehearsals cannot happen. All those disciplines are essential to the skills that people need—in life and in work.

As my hon. Friend the Member for Hampstead and Highgate said, theatre is important also to the British tourism industry. When questionnaires are put to tourists asking what were their main reasons for coming here, an extraordinary number cite the British theatre; it is either first or second on the list of priorities for the majority of international tourists.

The theatre is vital for training people in the television and film industries. Apart from the United States, Britain is the only country that has a positive balance of trade in television shows. In large measure, that is because of the training that people have had, both backstage and on stage, and the skills that they have acquired through their experience of theatre and of performing before live audiences. The UK can be proud of our Oscar winners; not a single one of them would have risen to prominence without experience in the subsidised theatre. The spin-offs for all sorts of creative industries are dramatic.

The last of the utilitarian reasons why it is important to have a strong theatre industry, but the most important to the Treasury, is the VAT that the theatre pumps into the Treasury—to the tune of £100 million a year. That is only £20 million short of the state’s subsidy for the theatre. The truth is that British theatre receives only £20 million from the state. It is a pretty poor show.

However, there are less tangible reasons why we should be passionate about supporting the theatre. We have referred to Shakespeare, but his understanding of holding a mirror up to nature is vital. Politicians should be forced to go to the theatre more often, especially when it shows us at our worst.

Is it not disappointing that several of our later Prime Ministers appeared to have no interest in the arts, and would it not have done them a lot of good to have been to the theatre?

Funnily enough, apart from in the House, the last time I saw the Prime Minister was in a theatre. I would not go quite as far as my hon. Friend.

In the theatre, the sense of being able to peer into the heart of humanity can be achieved, both to laugh out loud and to enjoy oneself but sometimes to cry with pity at what has been seen. I think of those classic moments of Shakespeare, such as when Cordelia is found dead or when Leontes finds that Hermione is alive despite what he had done to her years before. All those are reasons why we should be passionate about theatre.

However, there are real problems. I hope that my hon. Friend the Member for Hampstead and Highgate will not mind my mentioning this, but I wrote a rather poor biography of her a few years ago. In the process of doing so, I had to visit an awful lot of people with whom she had worked in the theatre. In their day, many of them had been famous performers, but many were living in abject poverty in retirement. That may have been because of the feast-and-famine nature of many performers’ salaries, but it is also a fact that the theatre’s biggest subsidisers are the actors and performers themselves. In that respect, it is a disgrace that the minimum that can be paid in the west end is as low as £366.82 a week for eight performances, and that should be dramatically higher. Nearly half of all performers earn less than £6,000 a year, and such poverty should not exist when we take so much pride in the theatre.

There is also a problem with west end theatres. Although they are very beautiful—Frank Matcham did a wonderful job in his time—many are now dilapidated and clapped out, and the seats in many of them are too small for modern posteriors. Despite the fact that many are commercial theatres, it is time that the state made an investment in them. The theatre management has no interest in limiting the number of seats, and it is important that we make a contribution. A report in 2003 urged the Government to take action, but there has been none so far, although I note from the DCMS website that discussions are ongoing.

My final point is that the commercial theatre, the subsidised theatre and the amateur dramatic world are one, and we cannot put money into just one of them—they are all part of a whole, which is why we must make a dramatic contribution. In that respect, let me mention another production in which my hon. Friend took part—“Hedda Gabler”. She gave a very fine performance as Hedda, and many hon. Members may have seen it. What is interesting, however, is what the other performers in that production have done since. Pam St. Clement has gone on, most notably, to be in “Eastenders”, which is a very successful television programme. Patrick Stewart has continued to do a great deal of subsidised theatre and is in the subsidised theatre at the moment. Incidentally, he is also a great supporter of the Labour party. He has also done a great deal in television and was in “Star Trek”. Celia Imrie is another television performer, but she is also frequently on the stage. Oz Clarke was also in the production, but he is now better known for his contributions on the subject of wine.

If the Minister has not yet wrestled with the Chancellor over the funding for theatres in the comprehensive spending review, I very much hope that he will wrestle ferociously until he manages to get at least another £20 million out of him.

I shall be brief because I know that other hon. Members want to speak. I welcome the debate and the contributions that have been made so far—particularly the opening speech by my hon. Friend the Member for Hampstead and Highgate (Glenda Jackson).

As my hon. Friend said, a look at the finances and at what has happened over the past few years reveals that the Government were responsible for some massive increases in theatre funding in 2000. There is no question about that—it was absolutely unprecedented. If we compare where we are now with where we were in 1997, we see that Arts Council funding to subsidised theatres has more than doubled in the intervening time. There is therefore no question but that there has been an enormous improvement. However, that improvement has been slowing down, particularly since 2005.

Since 2000, there has also been an increase in private funding to those same theatres, and it is no coincidence that that increase has happened at the same time as the increase in public subsidy, because private investors will put money in when they have some confidence in where the sector is going. In itself, therefore, that increase in private funding illustrates the importance of public funding.

If we look at the consequences of that investment between 2000 and 2005, we see that there has been a dramatic improvement in the financial status of many theatres and that collective deficits have been wiped away. There has also been an increase in the number of performances. In addition, it was striking that the Arts Council submission to the comprehensive spending review, which looked at the effects of the spending that I described, noted that there had been a significant increase in the number of new works that had been commissioned. I shall return to that later, but the number of such new works is a key indicator of the health of the theatre. Between 2000 and 2005, there was a more than 20 per cent. increase in the number of such works.

There have also been increases in the work force and big increases in the levels of educational activity delivered through theatres. In some of the major regional theatres, furthermore, there have been significant increases in attendance. One survey showed that 40 per cent. more people had visited such theatres over the period that I mentioned.

I spent 10 years on the board of the Theatre Royal Stratford East, although I am no longer a board member. The theatre is one of the really important producing theatres in the country and has prided itself on innovation over the years, going back to the time of Joan Littlewood and the Theatre Workshop. It relies on developing new work, not on touring performances or on going back to well-known plays. In particular, it has an outstanding record on developing new work by black and minority ethnic writers and performers.

From my time on the board, I know how important public sector funding is for the theatre, and that includes the funding that it got from the Arts Council and the local authority in Newham, which was a generous supporter of the theatre. Without that funding, the theatre would not have been able to do the work that it did. Nor would it have been able to take the risks that are inherent in being a producing theatre that develops new work. When a theatre does such work, it is inevitable that things will not always come off and that there will be a flop. That is just part of the business of developing new work, but it is difficult for a theatre to take such risks if it feels that it is in the business of having to turn in a profit at the end of every week and every month.

We want to have innovation in the theatre and to encourage new writers, new performers and audiences, particularly among the black and minority ethnic communities in places such as Stratford. We would never have seen such people in the theatre some years ago, but they are now taking part in significant numbers on the stage and in the audience. However, we will not achieve that without the public subsidy to enable theatres to work. If nobody is there doing that work and taking the risks, theatre as a whole will be poorer as a result.

Public subsidy is essential for core funding. It is possible to ask sponsors to sponsor a show, and although they might be interested in big events to which they can attach their name, they are never interested in the core, day-to-day funding that keeps a theatre running. My experience from serving on the board of the Theatre Royal Stratford East, which is, as I said, one of the most important developmental theatres in this country, was that its projects would never have worked without public subsidy. I therefore hope that we shall not go down the road of cutting back. We put in enormous investment in 2000 and we have seen developments, but I hope that we will not see them start to slip away.

Let me just add to the point about the Olympics. I represent one of the five Olympic boroughs, so I shall see some development in my area, but I do not want that to happen at the expense of the arts and the theatre.

Time is short, so I shall not go into detail on some of the issues that have already been raised by other hon. Members. Instead I turn directly to the issue of investment in audience development and diversity. I mention en route that theatre grants between 2001-02 and 2005-06 rose from £58 million to £96 million in addition to the lottery funding for theatre, and in the period from 2002-03 to 2007-08 arts funding as a whole in London has risen nearly fourfold, from £11.6 million to £43 million.

We must still guard against the cumulative effects of funding changes, however. There are issues about how the Arts Council of England puts Government decisions into action, and other parts of Government policy have an impact as well. I hope that the Minister will address those matters if he has time.

I am privileged to represent a borough with a strong reputation for supporting and fostering creativity, including theatre. We have the Arcola theatre, which promotes Turkish and Kurdish theatre in particular and was founded in 2000. There is also Hoxton Hall, the Quicksilver Theatre Company, which I shall mention later, and the physical jewel in the crown of Hackney, the Hackney Empire. The Hackney Empire is a Frank Matcham building and was massively restored between 2001 and 2004, thanks to £17 million of lottery funding and a huge investment by Sir Alan Sugar—a local boy made good, and a benefactor.

The Hackney Empire has put its Arts Council funding of more than £250,000 to good use, but I want to talk mostly about what it is doing to reach new audiences. Hackney has a very diverse population, and it is important to remember that theatre should not be just about art for art’s sake but about audiences and reaching everyone. Hackney Empire has succeeded because diversity is intrinsic to its programming, which includes a range of performances that meet the interests and aspirations of the different groups in Hackney and London. It is not a matter of having token shows written perhaps by a black writer, or of meeting the cultural interests of a Turkish group. The theatre’s audiences number 140,000 a year in total, and 40 per cent. of that number comes from Hackney and reflects the borough’s true diversity. That applies whatever is showing, whether it be opera, ballet, drama, music or comedy.

Ticket prices are always low. The pantomime is now lauded across London as one of the best. I highly recommend it, as do my children. Tickets for it cost from just £15 and are widely popular. That price is significantly lower than at the Old Vic, which I do not patronise as it is not in my constituency. I think that it is important to patronise the Hackney Empire and I enjoy doing so.

I have no doubt of that, but I recommend the Hackney Empire’s performances.

Crucially, the theatre works with schools.

Sitting suspended for a Division in the House.

On resuming—

As I was saying before I was interrupted, crucially the Hackney Empire works with schools on workshops both in the theatre and by going out to schools. It is a fair bet that the 22 per cent. of Hackney’s population who are under 16 make up a lot of its regular audience as well.

In addition to what is happening at the Hackney Empire, there are projects throughout London. One that particularly impresses me is Arts Inform, a project that works to develop theatre-going habits among secondary school children. In a project that it has been leading, 180 pupils aged 11 to 14 from six London comprehensives have been learning to go to the theatre. Each term, they choose a type of theatre. Two of the pupils go on a fact-finding mission and come back and teach the class. Then all the pupils go to the theatre to see a musical, a ballet or even an opera and they write reviews about it. That is doing a great deal to change the habits of a generation and to demystify theatre and performance art. Given the diversity of London schools, the project will, if it can continue to obtain funding, do a great deal to diversify theatre audiences in the long term.

I came across the Arts Inform project when I was investigating the Mayor of London’s plan to subsidise ticket prices in the commercial west end, which was originally a response to the bombings in New York on 11 September 2001. He introduced that the following January. His aim then was to reinvigorate the London economy. A secondary aim was to diversify theatre audiences. The latter aim was highly criticised by the London assembly in a report that we published—I was then an assembly member—in March 2003. Happily, though, these things work out, including my relationship with the Mayor on some issues, and he took on board the criticisms and reshaped the subsidy that he offered, recognising that getting bums on seats in the west end as a form of subsidy to commercial theatre and diversifying audiences require different skills.

I am delighted that in 2006 the Mayor launched a £240,000 drive to increase the number of theatregoers with sensory disabilities, including a guide to assisted performances in London theatres called Access London Theatre. It is part of a three-year programme to increase theatre access for those people as well as for families and young people. The project also includes a kids’ week in the west end for under-fives.

That brings me to the marvellous Quicksilver Theatre, a company of 30 years’ standing based in my constituency that not only writes and performs plays for younger audiences but works to develop young people’s understanding of the theatre. Its artistic director and chief executive Guy Holland says:

“The first 20 years was a story of survival. The last 10 is one of flowering”.

He pays testament to the money that this Labour Government have put into theatre funding in the past 10 years.

Quicksilver Theatre’s most recent project, which I had the chance to visit, was Primary Voices. It involved 600 schoolchildren aged 8 to 10 from 10 Hackney and Islington schools. The children wrote a play that was produced and performed by professional actors. Guy sums up the challenge:

“What I do know, of course, is that all of this is costing money. Much more than is currently provided through traditional channels. This is because of the nature and manner of engagement by children, moving us away from an occasional mass provision of art events towards specific targeting of individuals and groups of individuals who may reap disproportionately large benefits in relation to the investment. Frequently, these are people who do not have the economic resource to meet such engagement and participation objectives from their own purse.”

That theatre company managed to get funding from Anne Currell of Currell Residential, a local estate agent personally committed to its work, but all of them struggle.

I do not have time for the schools’ and pupils’ comments about what they achieved, but as my hon. Friend the Member for Hampstead and Highgate (Glenda Jackson) said, it is a mark of a prosperous nation to invest in the arts—particularly for people who do not get the chance to go to the theatre—and to make them available to all. We see the benefits in Hackney—the multicultural challenges that we have managed to address, the help that theatregoing and creativity give in dealing with the huge issues of confidence and self-esteem, creative learning for our children and language development. For all of those we need investment, not just reliance on lottery money.

By way of preface, I pay public penance for missing the performance of “42nd Street” by the Hayes and Harlington Operatic Society, now the Hayes and Harlington Musical Theatre Company. I place on record my grovelling apology. In mitigation, though, as the chair of the Barra hall regeneration committee I announce that last year, as a result of eight years’ work, we renovated our derelict open-air theatre. We reopened it last season with a series of performances—children’s plays and professional productions—and it is a thriving success. I congratulate my hon. Friend the Member for Hampstead and Highgate (Glenda Jackson). She proves again that she can work with and without a script on every occasion.

To return to the issue raised by my hon. Friend the Member for Rhondda (Chris Bryant), I am a member of the performers’ alliance parliamentary group, which was formed recently by three unions—Equity, the Musicians Union and the Writers Guild. They have raised with us the issue of poverty wages in the sector. My hon. Friend mentioned that actors are subsidising our theatres, but I did not realise until I received the details of the unions’ briefings just how low the levels of pay are. If the conditions in which such people are having to live as a result of poverty pay were occurring in other sectors of our economy, we would be marching in the streets.

The true picture of actors’ earnings is that in regional subsidised theatre the minimum wage is about £327 for a 36-hour week. That is just £9.08 an hour, which would not be that much even if it were earned for 52 weeks—it would come to just £17,000. But the reality is that most actors do not work for 52 weeks of the year. Most spend significant amounts of time between jobs. In subsidised repertory, the average wage is now only £383 a week. Due to limited work opportunities, the average annual earnings of a British actor are as little as £10,500. Only a tiny fraction of performers, 13 per cent., earn more than £20,000.

In 2004, the Select Committee on Culture, Media and Sport made its own statement about low pay in subsidised theatres:

“It is a scandal that one of the nation’s key cultural activities is in such a state that, at least in part, it relies on professional performers and technicians to pay such a high price by earning such low wages.”

Those are my sentiments entirely. Of course actors undertake the work because it is the work that they love, but as a result of their commitment they are exploited. Research by Equity and the Arts Council of England in the late 1990s discovered that about half of UK actors are now choosing not to work in regional subsidised theatres. An out-of-London allowance is given to subsidise them, amounting to about £114 a week, but by working outside London they lose opportunities for a wide range of work that could be done elsewhere. We have discovered that even in west end theatres, 55 per cent. of actors do casual work during the day to supplement their earnings.

Much has been said about the Government’s investment so far, and I agree. I congratulate the Government on what they did following the theatre review. My hon. Friend the Member for Walthamstow (Mr. Gerrard) mentioned the increase in the number attending performances, the number of young people participating and the number of plays being produced, but we are finding that as a result of low pay in the sector, many actors cannot travel out of London to work in regional theatre. If they do, they incur significant debts from other responsibilities and are unable to afford a decent standard of living.

I do not believe that we should rely on the exploitation of workers to subsidise the theatre. That is why, like others, I urge the Government to maintain the momentum of the funding that they have achieved and that has been so successful. I share some of the anxieties that the Olympics might draw away theatre funding, but I think that they can be addressed in discussions at the London and national level. However, we need stable and consistent funding, not only so that we can enjoy the theatre but so that actors can enjoy working in it again.

I join hon. Members in congratulating the hon. Member for Hampstead and Highgate (Glenda Jackson). During the opening remarks, I was looking at my notes, hearing what was being said rather than listening to the individual words. It reminded me of something that I realised to be the many impassioned passages that I heard the hon. Lady deliver in her previous career as an actress, for which I admired her greatly at the time.

We have heard eloquent accounts from all Members who have spoken of the value of the theatre to education and society, to the economy and to them personally because of how it moves people. We heard from the hon. Member for Hayes and Harlington (John McDonnell) about the appallingly low wages that are all too often the norm in the industry.

As we have heard, public subsidy to the theatre is £120 million, but £100 million of it comes back in VAT, so we are talking about not 0.02 per cent. of public spending but less—£20 million net, once the VAT return from the sale of theatre tickets is taken into account. It is a very small sum. What do we get for that small investment? We get a contribution to the UK economy of about £2.6 billion, 19 million theatre visits and the social, not just economic, enrichment of theatre activity.

Public funding is less in this country than in Europe but more than in the USA, where reliance on sponsors puts a dead hand on innovation and the theatre’s ability to experiment. The balance in the UK might be seen as quite a good one. It is enough to encourage innovation and creativity and promote healthy, cutting-edge theatre without creating a complacent, overfunded public sector or imposing the dead hand of commercial sponsorship.

Public investment also enables the development of creative and technical skills on and off stage. It helps subsidised theatre to provide a training ground for many performers and technical staff who then go on to work in commercial theatre. Subsidised theatre is often the breeding ground for performances such as “The History Boys” and “Jerry Springer: The Opera” that go on later to the commercial world. It is the same sort of argument that we often hear, and that I have certainly made, for the BBC and funding through the licence fee, because of the knock-on value to the rest of the sector, although the theatre is much less well funded than the BBC.

The effect in not only felt in London and the west end theatre; there is council investment. Examples include the Sage in Gateshead or the Lowry in Salford Quays. At the other extreme we find groups such as the Kneehigh Theatre in Cornwall, which has developed over 20 years with Arts Council funding and has increased its audiences by 30 per cent. It tours extensively domestically and abroad and has an international reputation. It works with young people and helps local festivals, bringing a range of benefits.

Some local theatres such as the Pomegranate theatre in Chesterfield simply would not exist without the help of small authorities such as our local borough council. Without them, people who are interested in theatre would have almost no local access to theatre but for an excellent amateur group, the Hasland theatre company, which runs its own small theatre, and various other amateur groups that need venues at which to perform. Instead, people would have to drive some distance to places such as Sheffield or Nottingham.

There are problems across the board. The Arts Council does good work: it is putting £1.8 million into youth theatre and is increasing diversity with the Eclipse theatre that it supports. The fact that it is an arm’s length body is valued, but there is a professional perception that that arm’s length status is being eroded a little and that it has lost some expertise and has scrapped the peer review process when awarding grants. There is also a problem with having to choose between giving organisations some stability of funding and switching funding into new and innovative theatre groups, but that choice has to be made because public funds are so small.

Local authorities are also under pressure. As a result, Battersea arts centre and Northampton’s theatres are under threat. Even in Chesterfield, the Labour Opposition group is arguing, in the local election campaign, that if Labour wins control of the council on 3 May, it will cut funding to the council theatre.

Touring theatre has had difficulty accessing Arts Council funding since the council cut its touring department, and there is a constant tension between funding core costs and funding performances. As we have heard, many theatres are historic, listed buildings that are expensive to maintain, but they are a crucial part of our culture and built heritage. However, there is no point in funding the buildings without enabling performances to take place within them.

Private funding and philanthropy will support a thriving sector that is stimulated by public investment, but, as we saw in the 1980s and 1990s, if public funding is cut, the private sector will not replace that funding. Since the heavy funding cuts of those decades, there has been a welcome reintroduction of funding back to pre-1980 levels. In the 2005-08 spending review, Arts Council grants were frozen by £34 million in real terms, and there is a threat of further cuts or freezes in the next round, up to 2011. Those dangers are made much worse by the threat of a smash-and-grab raid from the lottery, which will further undermine efforts.

In conclusion, the Government must maintain theatre investment. In surveys, 79 per cent. of the public say that they support the concept of public subsidy to the arts. The current subsidy is 0.02 per cent. or less of public spending, for which we get thriving, subsidised theatres that help to stimulate the rest of the sector and make an invaluable contribution to the economy. They also make an invaluable and immeasurable contribution to the social and cultural capital of our nation.

I get the impression that the hon. Member for Hampstead and Highgate (Glenda Jackson) does not like being complimented, so I shall merely congratulate her on securing the debate. I shall not detain colleagues by praising the elegance, eloquence and passion of her wonderful speech. I was privileged to force a contribution from her in our December debate on British films, which was well worth hearing, as was her contribution today. At that time, I said on my blog that I hoped that the next Prime Minister, who is present in the Chamber, would include her in his ministerial team at the Department for Culture, Media and Sport, alongside my good friend the Minister with responsibility for the arts.

I thank the various organisations that have provided important briefings for today’s debate: Equity, the actors association; the Theatrical Management Association; the National Campaign for the Arts; and the Society of London Theatre. The other day, my sister’s neighbour, the theatre producer Matthew Byam Shaw, told her that I am not interested in the theatre, because I have not been to see “Frost/Nixon.” In fact, I have been to see it, but my wife and I paid for our tickets—unlike other hon. Members, perhaps. I suspect that that is why I did not appear on his radar screen.

I saw that play a week before the birth of our first child Joseph, six months ago, and I have not been able to go the theatre since. When I was preparing for the debate, I made a list of the plays that I am desperate to see: “The Seagull”, “Rock’n’Roll”, “Whipping it Up”, “Boeing-Boeing”, “The Entertainer” and “A Midsummer Night’s Dream” at the Roundhouse. That list gives a flavour of the cultural vibrancy in our theatres in London and around the country.

We keep talking about theatre being subsidised, which almost gives the impression that it is somehow a bit-part of our culture and society. The theatre is a mass market. There were 35,000 theatrical performances in the country last year, which is about 100 a day. Almost 20 million tickets were sold, bringing in nearly £500 million in ticket sales alone. The theatre is at the heart of British cultural life and, as many hon. Members have pointed out, boy, do we get bang for our investment buck. For the price of £120 million a year, we get back not only £100 million in VAT, but, it has been argued, almost a £2.6 billion contribution to the economy. On any argument, that is an investment worth making.

I am a friend of the arts lobby, and it upsets me that it seems to be forced on to the ground of its detractors and that it has to respond to the fatuous arguments against subsidising theatre. I expect that the £120 million subsidy is extremely well spent. Some newspapers will alight on a performance that did not work or to which only three people turned up and cite it as an example of waste in the arts, but we should compare that investment with the £1 billion spent on the dome, the tripling of the Olympics budget or the money that might be wasted on an NHS computer system. Compared with all the money spent on public sector organisations—I emphasise that I do not regard the theatre as a public sector organisation—we probably get extremely good value from the theatre.

When I was given the post of shadow Minister with responsibility for the arts, a Labour Member said to me, “Ah, you are representing entertainment that cannot pay its way.” Why do we assume that sport, for example, is not subsidised? Of course it is at its grass roots. The premiership is subsidised by talented footballers who get subsidies as they start their careers, so why on earth is it wrong to subsidise the arts and theatre?

Now that I have got all that off my chest, I shall address some of the key arguments that hon. Members made in what I thought was an important outbreak of consensus. I hope that the consensus will continue to the next election and beyond. First, there is no room for complacency. The comprehensive spending review is of huge concern to the arts world and the theatre world. There are two main elements of concern, one of which is the date of the review. It sounds relatively unimportant—when the Chancellor will come to the House to announce the details of the review—but people who work in arts organisations rely on the ability to plan for the long term, and we do not even know the date of the review yet. A hint was given that it might be in the autumn, but arts organisations need to know so that they can plan for the long term.

The second concern about the comprehensive spending review, which is at the heart of the matter, concerns funding. We know that arts and theatre organisations are being told to plan for a 5 per cent. cut or a freeze. We do not know what will emerge, but I tell the House that freezing the arts budget now, after the freeze that began in 2005, will cause immense damage.

I hate to inject a partisan note into the consensus, but I want to quote the comments of Michael Lynch, the chief executive of the Southbank centre. He said of the Government’s funding:

“The money has been a real achievement. The Government has played a pretty substantial role in these past seven or eight years.”

Many others from the theatre world have congratulated the Government on their investment in theatre. We must guard against future problems, but will the hon. Gentleman acknowledge that this Government have put a lot more money into theatre than the Conservative Government took out?

I do not regard that comment from the hon. Lady, who is one of my oldest friends and who was a companion at university, as partisan. I agree with her, and I am happy to give the Government praise where praise is due. How nice it is to have a member of the Garrick club join our proceedings as we debate the theatre. I am happy to acknowledge praise where it is due, just as I hope that she will acknowledge criticism where it is due.

That situation explains why there is such concern about the comprehensive spending review. As was mentioned, increasing the arts budget in line with inflation would require a sum in the region of £3.5 million, which these days is the cost of about half a house in some of London’s more affluent parts. Those of us who have read today’s Evening Standard will know that houses in Kensington and Chelsea are now going for about £11 million, so we are talking about a tiny sum—[Interruption.] I am glad that I have stimulated some reaction from the hon. Member for Rhondda (Chris Bryant).

We are concerned about not only the comprehensive spending review but the continuing raid on the lottery. The hon. Member for Richmond Park (Susan Kramer), among others, pointed out that the Arts Council is to lose £112.5 million. The Heritage Lottery Fund, to which theatres can turn for some of their capital requirements, will also lose a substantial sum. I apologise for banging on about this, but the point of the lottery was to protect our cultural institutions from the rounds of cuts stimulated by political expediency. The lottery was supposed to be separate from all that. That is why it was created and why it is so galling that the lottery is continually raided for political purposes—that must stop.

I should make a couple of quick points before I conclude. I have had only a few minutes to speak; it is testament to the commitment of Members of this House to the theatre that so many hon. Members have spoken in this debate. The point made by the hon. Member for Chesterfield (Paul Holmes) about touring theatres was brought to my attention by the Theatrical Management Association too. There is real concern that the Arts Council has cut its touring unit, because touring theatres are a crucial aspect of the theatrical world.

My hon. Friend the Member for Mid-Worcestershire (Peter Luff), who is the co-chair of the all-party group on theatre and a great and passionate supporter in this House of the theatre, discussed the widespread concern among performing companies of all kinds about the digital dividend review and the potential loss of channel 69, on which so many of them rely.

The final issue that I shall raise was brought to my attention by the National Campaign for the Arts, and it relates to changes in immigration law. I would welcome the Minister’s comments on this area. Many of our theatres rely on intercultural exchange and on visiting actors and actresses, so we must consider the rise in the cost of visas. There is also some concern in the arts world about the new points-based system.

I should leave hon. Members in no doubt about the commitment of Conservatives to our subsidised arts and subsidised theatre. In the great scheme of things, we are talking about small sums that are efficiently spent, and which generate an enormous amount of artistic and economic return. Theatre forms an essential part of our civilised society.

I join in the congratulations given to my hon. Friend the Member for Hampstead and Highgate (Glenda Jackson) on securing this debate on public funding for theatre. The way in which she delivered her speech demonstrated what an asset she has been in her career both to this country and to this House. As an arts Minister, I am grateful to have her on my side. The breadth of her contribution indicated what it means to be a cultured and civilised society.

Culture is at the centre of so many of the issues that come before the House at this point in time. Whether we are considering antisocial behaviour, social cohesion, race, faith or environmental stewardship, culture—how we relate to one another—is central. It is obviously my great privilege to attend many of our theatre performances. There is no doubt that across their breadth they deal with some of the essential issues of our time.

Theatre in this country has an outstanding record of achievement. It is easy to forget that just 10 years ago, many of our theatres were struggling to survive and were caught in a downward spiral of deficits and underfunding. As of March 1999, English regional producing theatres carried forward a gross accumulated deficit of £4.4 million. Some 30 out of the top 50 such theatres were in deficit. Many were technically insolvent and there was no sign that that trend would be reversed. The debilitating impact of the financial fragility placed major artistic constraints on theatres across the country.

So much of what has been achieved would not have been possible without additional investment by the Government, as my hon. Friend so rightly says. The Government are proud that they have doubled their investment in the arts since 1997—there has been a real terms increase of 73 per cent.—to £412 million this year.

It has been widely acknowledged in the debate that subsidised theatre in this country had been in crisis and that, in large part, the benefit that we have seen over the past few years has come because the Arts Council conducted a theatre review in response to the situation in 2000. Following the review, the Arts Council doubled its funding to theatre to £97.9 million in the past financial year; there are more than 230 regularly funded theatre organisations. That amounts to approximately 24 per cent. of the total grant in aid that the Arts Council funds.

The additional investment has produced results. Research from seven of England’s biggest regional producing theatres compared the situations in 2000 and 2005. It found that in the latter year nearly 3 million people attended performances, which was an increase of almost 40 per cent.; 85 per cent. more new plays were produced in English theatres; nearly 6,000 performances were given at home and on tour; and more than 36,000 young people were involved in education programmes run by theatres, which is an increase of almost 60 per cent.

We are seeing a revival, not only in London, but at the Birmingham Rep, and in Chichester and Sheffield. Right across the country audiences are coming back, attendances have increased, there are quality productions and new work is being performed. Most importantly of all, young people are coming through and a new generation of young people is being exposed to theatre, providing the audiences, the technicians behind the theatre and the actors of the future.

Theatre is popular and people value it. The Department’s taking part survey showed that nearly a quarter of the adult population in England attended a theatre performance in 2005. As I said, we are not just talking about London, because out of the top 10 regularly funded theatre organisations, two are in London and eight are in the regions.

My hon. Friends the Members for Luton, North (Kelvin Hopkins) and for Hackney, South and Shoreditch (Meg Hillier) wanted to illustrate the broader social role of theatre. It is able to reach out to children and young people and to contribute to education objectives. I am pleased to say that the Unicorn children’s centre in Southwark is a great example of how that can be done if an organisation dedicates itself specifically to young people. Theatre is also reaching out in other areas. My hon. Friend the Member for Walthamstow (Mr. Gerrard) mentioned the Theatre Royal Stratford East.

Has my hon. Friend had discussions with his colleagues at the Department for Education and Skills about encouraging schools to use those good, professional children’s theatre companies? If not, will he consider doing so?

I am pleased that I have been able to continue discussions with Ministers in the Department for Education and Skills, specifically in relation to creative partnerships—they are, as my hon. Friend knows, joint projects with schools—and also in relation to the music manifesto. There are dimensions to the music manifesto and more recently, the dance review that affect theatre. Dance, and its impact on theatre, has been incredibly important.

The point that my hon. Friend the Member for Walthamstow makes about diversity is hugely important. In some of our central debates in society, we can connect with and reach out to some of the Muslim youth in this country and the sort of communities that occupy my constituency to enable them to tell their stories to a wider audience. That is hugely important. My hon. Friend the Member for Hampstead and Highgate has the Hampstead theatre in her constituency and will know that it is doing that through many of its productions in new facilities.

We have heard about the economic impact of theatre. Last year, total ticket revenues for the west end theatre broke through the £400 million mark for the first time. The total value of the west end theatre to the economy has been estimated at £1.5 billion, and of theatre beyond the west end an additional £1.1 million.

It is right to acknowledge local authorities’ role—that came up in the debate—and the major contribution that success brings to this country. “The History Boys” is an outstanding example. It began at the National Theatre, won six Tony awards in New York, including best play and, for Nicholas Hytner, best director. It has brought earnings of £1 million to the National Theatre, which will be invested back into programming. The film director, Stephen Frears, said:

“Many of us currently earning money for British cinema have spent our lives working within some form of the subsidized arts, and have benefited from the wise decision of the government to support the arts properly.”

Our funding for the arts in this country is based on a mixed economy. We want institutions that can produce revenue, and we want to attract private and commercial investment, but public subsidy is vital to inspire innovation, and to produce core funding to encourage organisations to move forward, and we are committed to that. We are having this debate largely because hon. Members know that we are in a spending review period and they can be assured that we continue to have these discussions with colleagues in the Treasury.

Hon. Members referred to the national lottery. It is important that during its first 10 years more than £441 million of lottery funds were invested by the Arts Council in theatre and drama. We have seen real growth and success from lottery capital funds invested in the sector, with most of the capital projects now completed; for example, the Unicorn and the Young Vic. Throughout the country many of those capital projects have come through.

Existing lottery commitments will not be affected by the recent announcement of lottery contributions towards the Olympics. There will still be almost £500 million of new lottery money for the Arts Council between 2009 and 2012. The total contribution from lottery funds to the arts for the Olympics will be worth £28 million a year if taken over the four years, as we expect, notwithstanding the outcome of the spending review. The total combined Government and lottery investment for this year equates to just 5 per cent. The Olympics are exactly the sort of one-off national event that the lottery was intended to support and the arts will benefit as a result post-2012.

Asylum Seekers

I am pleased to have this debate on the treatment of asylum seekers. The atmosphere in which asylum is normally discussed in this country has become deeply poisonous because of the role of much of the media in misreporting the plight of many asylum seekers. That in turn encourages politicians often to ignore their plight, and our feeling of humanity towards people less fortunate than ourselves is hardened and, to some extent, almost disappears. In this country, we are very good at exaggerating our role in history concerning people who are seeking asylum and a place of safety in this country, but when we consider how they are currently treated in this country and the delays and horrors that they go through, not just in this country but throughout Europe, we should take a slightly different view.

At the moment large numbers of people try to escape from poverty, oppression, difficulties and sheer misery in many very poor countries, mainly in Africa but also in parts of the middle east and south Asia. The reports one reads of the plight of people trying to get from the coast of west Africa to the Canary Islands from which they can gain entry to the European Union are horrific. An eye-witness account of what happened in October last year off the coast of the Canary Islands states that 20 migrants were missing after their inflatable boat sank off the Canary Islands on 5 October. Another report states that 17 people died after their boat went adrift off Sicily channel, among them five women and three children, on 7 September.

The reports go on. For example:

“Nineteen people died on August 11, after a gas cylinder exploded aboard a boat directed to Canary Islands”,


“Twelve died and 22 were missing after a pirogue heading for the Canary Islands sank”.

So it goes on.

In March last year, a representative of the Red Crescent was asked to describe the situation, and said,

“they are prepared to commit suicide. For them it is like the Russian roulette game; I arrive or I die.”

It was then believed that between 700 and 800 people, the majority from Mali, Gambia and Senegal, attempted to cross each day.

I mention that, not because it is the direct responsibility of the British Government or the House, but because it is a Europe-wide phenomenon and we are part of a Europe-wide border arrangement. The horrors of what is happening to many desperate and very poor people who are trying to get to the Canary Islands, Sicily and other southern European countries are very serious, and for the sake of humanity we should have some respect for the lives of those people and see what we can do to assist them.

The reports that are eventually published show the shocking desperation that some asylum seekers face. For example, on 19 March last week, the BBC website stated, and it was widely reported in the media, that:

“Uddhav Bhandari, 40, set himself alight in the Eagle Street Building, Bothwell Street, Glasgow, which is home to the Asylum and Immigration Tribunal.”

He was clearly desperate. The report continued:

“The father-of-two had been living in Edinburgh for six years and worked as a volunteer, helping to recycle bicycles.”

He set himself alight and died. Robina Qureshi, director of Positive Action in Housing, said:

“Uddhav Bhandari spent six years trying to seek refuge here and bring his wife and two kids over to this country…Forbidden to find paid work, he worked as a volunteer…Last night, he died alone in hospital a few days after setting fire to himself…He was a victim of an asylum policy that persecutes and tortures the victims of persecution and torture.”

Tragically, that is not the only time that somebody has taken their own life, either in that dramatic setting or alone in cells in various detention centres.

Will the Government, when formulating policies to deal with asylum, immigration and detention, have greater regard for people’s human feelings and sense of desperation? No Member in this room has ever had to seek asylum—that sense of having to give up everything to try to seek safety somewhere else.

My hon. Friend’s debate is timely, if a little premature, because on Friday, the Joint Committee on Human Rights, which I chair, will publish a full and detailed report on the treatment of asylum seekers. Although it remains confidential until it is published on Friday, the evidence that is already in the public domain clearly supports the horrific stories that we have heard about the way in which people are treated. It is a breach not only of the European convention on human rights and the Human Rights Act 1998, but of basic common humanity, which in far too many cases is not observed.

I am pleased to hear that intervention from my friend, who is the chair of the Joint Committee on Human Rights. I look forward to the report, and I hope that it receives the widest possible publicity and debate, encouraging the Government where necessary to amend not only legislation, but above all, policy on the treatment of asylum seekers.

Does my hon. Friend recall that in the Glasgow Herald, the report of that same tragic suicide included the story of a family for whom the white vans appeared in the night? They were dragged out, the father was handcuffed in front of the children, and his children were detained in the same van before they were taken to a detention centre. It was equally brutal treatment.

I thank my friend for drawing attention to that story; it is not, unfortunately, an isolated case. I assume from the remarks of the Chair of the Joint Committee, my hon. Friend the Member for Hendon (Mr. Dismore), that the Committee’s report will take up such issues. Such treatment is a disfigurement of any civilised society. Those people have not committed any crime other than to seek a place of safety for themselves, their partners and their children, and we must mend our ways.

I represent a constituency in which a large of number of people have sought asylum; it has traditionally been such an area. Much of my casework relates either to local issues—housing problems and the other normal problems that MPs receive—or to asylum seekers, who are often desperate simply to get answers from the Home Office to their letters. Sometimes, half the people whom I see at a Friday advice surgery come to me not with a problem, but with the question, “Why can’t the Home Office answer the question, answer the case and respond to letters?” They laugh wryly when they read the part saying that a reply will be sent within 13 weeks. I say, “It didn’t say the year in which the 13 weeks was up,” at which point my comment is laboriously translated, and the humour is often lost in translation.

People who come to this country to seek a place of safety want to do a number of things, such as learn English and contribute to society, and they are keen to do their best. If we take away the opportunity for English lessons that are paid for by the public purse, what are we doing? We are not saving ourselves any money; we are preventing a great many people from learning English, which is not a sensible policy.

Although I realise that the Minister responding to the debate is not responsible for that issue, he knows that I have entered into correspondence with the Minister for Higher Education and Lifelong Learning about concerns raised by City and Islington college in my constituency. I imagine that other Members from other constituencies would raise similar points about the need for English for speakers of other languages—ESOL—teaching.

The absence of any access to legal aid, and, when people are eligible for it, the shortage of legal aid solicitors to represent them, is also stressful for many people. Many strong cases are lost, forgotten or badly represented, because the applicant receives poor advice and poor representation. Once poor representations are made, it is hard to retrieve a case. I hope that the Minister present realises that justice means not only the provision of a judicial system, but the right to be represented within it. Legal aid is an important part of that system.

I have constituents who receive National Asylum Support Service vouchers and accommodation. The plethora of companies and agencies that are meant to be responsible for the administration of the vouchers and accommodation is quite bewildering. The administration is often inefficient, grossly incompetent and quite cruel to the individuals concerned. I shall not name them, because it would be embarrassing to them.

However, I can think of an elderly man in my constituency from west Africa who relies entirely on those vouchers for his existence. There is no way—I hope—that he would ever be deported, because of his age and condition. He does not find walking or getting around very easy, and the vouchers often do not arrive, or they are late, or they are for the wrong amount. However, what are his options? He cannot draw money out of a cash machine; he does not have any. We should think about the sort of lives that people have to endure.

NASS often changes the accommodation arrangements for people whom it has housed, moving them from an area where they have relations, the same community, and linguistic and community support. Such areas are important to them: if one comes from a war-torn society or a place of political oppression, having people from a similar background nearby is important for building up one’s self-esteem and sense of connections. Unfortunately, NASS has great difficulty in recognising that factor, and it looks around for yet another accommodation agency to place an applicant. They are shunted outside London, if they previously lived there, or to somewhere miles away. All that community support is lost, and a sense of isolation and depression takes over, or worse, they suffer racist attacks. I hope that those concerns will be understood when the Joint Committee’s report is considered—and indeed in the Minister’s response today.

The Government have been keen on getting tough on asylum seekers. I shall make two points about that issue. First, section 9 of the Asylum and Immigration (Treatment of Claimants, etc.) Act 2004 is used to withdraw benefits from people, which forces them into poverty. Kate Allen, director of Amnesty International, provided a strong quotation to The Guardian on 7 November 2006, when she said:

“Forcing people into destitution as an attempt to drive them out of the country is backfiring badly and vulnerable people are suffering. Refused asylum seekers are being reduced to penniless poverty—forced to sleep in parks, public toilets and phone boxes, to go without vital medicines even after suffering torture, and to rely on the charity of friends or drop-in shelters to survive.”

In my constituency, I know of situations in which a poor family—perhaps surviving on income support—have come from another country, gained status legally in this country, and then taken in another family who have no income whatever. The very poor are looking after the desperately poor. I am sure that my colleagues have similar stories. We must be far more reasonable about the issue. Around London, the people who one sees begging are, increasingly, asylum seekers who are exercising their legitimate right to appeal, but who are not allowed to gain any support in the meantime.

Secondly, there is the question of detention, which sits with that issue. My hon. Friend the Member for Hayes and Harlington (John McDonnell) will be well aware of the lack of safety in Harmondsworth detention centre. Anne Owers last year described the centre, which holds 500 men facing deportation at any time, as having slipped into

“a culture wholly at odds with its stated purpose”

since a riot took place there in 2004. She went on to describe the centre’s conditions, of which my friend will be well aware.

My hon. Friend will remember that in Anne Owers’s report, she undertook a survey of the residents at Harmondsworth detention centre. A high percentage were fearful for their very safety and extremely concerned by the bullying that was undertaken by the private company running the centre.

That is absolutely so, and I thank my friend for that intervention. The way in which that place has been run is a disgrace, and I assume that the Joint Committee report will deal with those issues.

The Joint Committee’s visit to Yarl’s Wood detention centre is also in the public domain. We were all disturbed when we saw the way in which children were detained, and the impact that it had on them. They are often very young children, and often they are not detained for a short period.

I, too, visited Yarl’s Wood with my hon. Friend the Member for Hackney, North and Stoke Newington (Ms Abbott) last year. There is something deeply shocking about children being locked up in prison conditions. I am not talking about the food, the play facilities or that sort of thing; the reality is that they are locked in a prison, as far as they are concerned, and no society should be imprisoning children. Neither those children nor their parents have committed any crime. All that those people have sought is a place of safety in this country, but they are threatened with deportation and, in the meantime, put in detention. That is simply not acceptable and that policy should be ended.

There is also the issue of deportation and removal from this country to countries that are not signatories to any of the appropriate conventions. I am talking about Somalia, Sudan, Iraq, Democratic Republic of the Congo and Algeria. Monitoring the people who are deported to those countries is impossible, and they are not safe when they return there. The first of the two countries that currently concern me a great deal is Algeria. I have a substantial Algerian community in my constituency. The Prime Minister apparently received an undertaking from the Algerian Government last year that they would not torture people who were removed to Algeria from this country. The Algerian authorities seem either not to have understood that undertaking or to have decided to take people into custody for offences other than those from which they had sought asylum. I understand that no removals to Algeria are taking place currently, but I should like the Minister to give a clear undertaking that no one will be removed to Algeria or any non-convention country. If we believe in the international conventions on torture and all the other conventions, we should not deport people to places where they would face such problems.

Does my hon. Friend not look on almost with incredulity, as every day we hear the numbers of deaths in Iraq—50 people have been bloodily murdered today as a result of terrorist activity—and yet we as a Government still forcibly deport large numbers of people to Iraq from Brize Norton?

I find it incredible, particularly when one hears daily of the carnage in Iraq. Indeed, I understand that two days ago 13 asylum seekers from Darfur in Sudan who had been refused asylum in this country were being held at Oakington removal centre. Three of them have removal directions through British Airways to Darfur, where they will face all the horrors of the conflict there.

The situation is desperate and a number of things must be considered. The Institute of Race Relations report, “They are Children Too” by Liz Fekete, is a newly published study of Europe’s deportation policies, and an excellent document it is too. The document describes how asylum seekers have been badly treated throughout Europe. It also gives chapter and verse on the details of what has happened to a number of families in Scotland, and what has happened in Yarl’s Wood detention centre and a number of other places. I hope that the Minister will read this newly published document and will take on board its points about the Europe-wide treatment of people. Although we are not responsible for every other country’s immigration or asylum policies, we are part of the European Union. We have a voice and we can influence what happens there. I hope that, instead of being the country most ramping up anti-asylum policy, we can become a force for good and inspire a more liberal approach to such matters there.

So that the Minister has sufficient time to reply, I should like to finish with two points that have been put to me. First, I have received a brief from a new group, the Just Fair campaign, which makes three simple proposals that would do a great deal to alleviate the problems from which many asylum-seeking families suffer. First, the group suggests that we

“Continue financial support and accommodation to refused asylum seekers as provided during the asylum process”.

In other words, asylum seekers should stay on benefits if they would be eligible for them throughout the asylum process. Secondly and importantly, the group says that we should

“grant permission to work until such a time as they have left the UK or have been granted leave to remain.”

It is absurd that skilled people such as doctors, nurses, teachers, engineers, carpenters, plumbers and gardeners are absolutely forbidden from working, even in a voluntary capacity, and it is frustrating for them. The situation is ludicrous. Who is it helping and who is it harming? The third proposal is:

“Continue to provide full access to health care and education throughout the same period.”

Denying health care to people is obviously cruel to the individual, but it is also counter-productive to the interests of public health.

Finally, I should like to quote from the memorandum that the Save the Children Fund submitted to the Joint Committee when it was investigating asylum seekers. The charity’s key recommendations were:

“The UK government should withdraw its reservation to article 22 of the UN Convention on the Rights of the Child…The government should address the particular situation of children in the reform of the immigration and asylum system to bring it into line with the principles and provisions of the UNCRC…We urge the JCHR to investigate the compliance of the draft Unaccompanied Asylum Seeking Children…Reform Programme with the Human Rights Act”.

Serious allegations have been made against this country in its treatment of asylum seekers. I hope that the publication of the Committee’s report will mark the beginnings of a greater understanding of the plight of asylum seekers, what they have faced, why they come here, and the positive contribution that they want to continue making to this country. I hope that that will be the start of a change of approach and a change of attitude. We do not need to enter an auction with the Daily Mail and the Daily Express about how we treat asylum seekers. We need to use humanity as the basis of our treatment of people.

It is a privilege, which I do not believe I have had before, to serve under your chairmanship, Mr. Caton. It is also a pleasure to respond to the debate that my hon. Friend the Member for Islington, North (Jeremy Corbyn) initiated. I am not sure whether he will remember this, but I was a constituent of his for some time. Indeed, I was a ward secretary in his constituency party for a brief period in the late 1990s, so it is a privilege to respond to this debate.

I should like to say how much I appreciated my hon. Friend’s starting point. Very often in debates about asylum, particularly in certain parts of the media, there is a conflation of the issues of humanitarian protection, the need to protect refugees, how we treat those seeking asylum and how we treat those who have failed in their asylum claims with those issues concerning people who come here to work, to study or, sometimes, to visit. There is a conflation of the whole issue of migration with that of those who are seeking asylum. That is extremely dangerous and has the potential to jeopardise this country’s proud tradition of offering humanitarian protection, refugee status and asylum to those fleeing persecution, torture or worse in different parts of the world.

In a sense, it is not an enormous surprise that we have run into that conflation. Since the 1960s, the pattern of global migration has transformed beyond all recognition. Migration has approximately doubled since the 1960s. There has been a marked increase in the annual rate of migration since the mid-1980s. There has also been a surge in the number of people seeking asylum, particularly since the mid to late 1990s, not just in this country but in different parts of Europe, too. The question that that left us with from 1997 onwards was: how do we create a system that can identify those who are in genuine need of asylum as opposed to those who are not? Asylum is an extremely important and time-honoured status, but the challenge that we have faced is that, as the statistics over the past seven or eight years show, some 70 per cent. of asylum claims have been deemed to be unfounded. That is problematic, because it has put an enormous amount of pressure on the system. The integrity of the system is important, because it must work effectively, in order to grant asylum to those who are genuinely in need of it.

The modernisation of the past few years is important, because we see the issue in even sharper relief when we think of what is still to come. World Bank and International Monetary Fund estimates show that the number of young people coming into the labour market in the developing world is projected to total some 1 billion extra between now and 2020. When we consider the difference between take-home pay in the developed world and that in the developing world, we see that there may well be strong economic incentives, mentioned by my hon. Friend at the start of his comments, for people to come to developed countries. There is therefore the risk that if the asylum system is not made to work effectively, it will be abused.

Obviously, the system that we inherited in 1997 was designed for a different era—it took not eight weeks, but about 22 months to make an initial decision. As a result of the time that it took to modernise that system, considerable backlogs of asylum claims built up. Last May, my right hon. Friend the Home Secretary was extremely honest, forthright and ambitious in his desire to get all the information about the backlogs looked after by the immigration and nationality directorate. In July, we said that there were about 465,000 cases—case files, not individuals—sitting with the IND. The director general of the IND is reporting regularly to the House on our progress. A large number of the cases have already been dealt with or relate to people who have left the country, passed away or regularised their status in different ways. None the less, my right hon. Friend estimates that it will take four or five years and considerable investment for the cases to be processed.

A number of changes have been made that address some of my hon. Friend’s points, particularly those about administrative reform. By next month, we will have achieved our target of setting up different kinds of asylum teams in different parts of the country. There will be a single case owner for an individual claiming asylum, rather than the bureaucratic run-around of cases being passed for different kinds of decisions to different sorts of people in different parts of the country. All that has now been swept away. Instead, single case owners will look after a single file and, most importantly, a single individual. They will make all the relevant decisions. That is an important step forward because it means that the case owner will be able to build up a much more sophisticated, nuanced understanding of the individual case. Frankly, that will unlock a great deal of the humanity that my hon. Friend seeks and ensure that decisions are made much faster than they are today. When decisions are long and drawn out, I fear that there is scope for injustice to creep in.

Is any priority given to long-standing cases in respect of which there has simply been a bureaucratic run-around and no answers have been given to anybody? Such cases lead to the most incredible tensions in families.

My hon. Friend is absolutely right. When my right hon. Friend the Home Secretary set out our proposals on the issue, he said that we would prioritise cases that we were concerned posed a risk of harm to the public. We were also clear that cases in which there has been mishandling or maladministration must be prioritised too.

I shall deal quickly with some of the points that my hon. Friend raised. The one point that I want to stress is that when the treatment of people who have failed in their asylum claims is debated, something is often forgotten—the work that we do to encourage people to go home voluntarily. We work closely with the International Organisation for Migration and are extremely grateful for its assistance in putting together what it says is a world-leading scheme, which helps people, with up to £3,500 of support, to build a life back in their home countries.

The issue of legal aid is extremely important; as my hon. Friend knows, different procedures have been put in place to make sure that resources are targeted at meritorious claims with the greatest chance of success. As the number of asylum seekers—now at its lowest since 1993—comes down, it is incumbent on the Legal Services Commission to make sure that there is no distortion in the market, or, if you like, drying-up of supply. It is vital that the commission should keep that under constant review.

We have also debated the question of detention. I am anxious to explore alternatives to detaining children. Sometimes, parents have a responsibility too; when I sign off cases of children who have been in detention for some time, I often find out that that has been because their parents have been disruptive or abusive or have exhibited dangerous behaviour towards staff—

Prisons (Crime Reduction)

I am grateful for the opportunity to debate the effectiveness of prisons in reducing crime, an issue of great importance in many areas. Indeed, in all the surveys that I carry out in my constituency of Shipley, crime always features as the issue about which my constituents are most concerned. I am also grateful to the Under-Secretary of State for the Home Department, the hon. Member for Bradford, South (Mr. Sutcliffe), for taking the time to respond to this debate.

For far too long in this country, the small band of trendy, left-wing, liberal, Guardian-reading, sandal-wearing, politically correct do-gooders has had a disproportionate sway over the debate on law and order. “Prison doesn’t work,” they say. “We lock up more people than any other civilised country,” they add, working on the basis that if they repeat such mantras often enough, people will start believing them.

Unfortunately, the age-old political tip about repeating a lie often enough and people believing it appears to have worked. I therefore wish to focus on and try to explode two myths in particular: that we have a high prison population and that prison does not work. I also wish to touch on the prison regime in this country.

I start with the familiar myth that we have a very high prison population. Only recently, the Minister himself was quoted in our local paper, the Bradford Telegraph and Argus, as saying that we lock up more people than any other country in Europe and that we have to look for alternatives.

Let us look at the facts. In terms of absolute numbers, we do have a relatively high prison population. However, we are a relatively highly populated country. If we consider the number of prisoners that we have for each 100,000 of population, we are nearer the average, but still quite high. However, those figures are meaningless; surely the only meaningful measure of the size of the prison population is how many prisoners there are in relation to the number of crimes committed. On that measure, the evidence is startling: we do not have the highest prison population in the western world, but the lowest. Compared with the US, Canada, Australia and the other EU countries as a whole, the UK has the lowest prison population of all. For every 1,000 crimes committed in the UK, we have approximately13 prisoners, compared with approximately 15 in Canada and Australia, well over 20 in the rest of the EU as a whole and a whopping 166 in the US. The Minister has recently been to the United States. I hope that he has been learning about its prison regime, which is much more effective than that in this country. Those figures clearly expose the myth that we have a high prison population. Will the Minister confirm that, on the measure that I have used, we have a low prison population? Will he clarify which measure of prison population he thinks the most relevant?

Then we are told that prison does not work. I am the first to concede that the prison regime is far too lax and cushy—something I will return to shortly—but even with such a soft regime, the evidence shows that prison does work in reducing crime. The fact is that the country with the lowest prison rate, the UK, has the highest crime rate—more than 10,000 crimes for every 100,000 of population. The country with the highest prison rate, the USA, has the lowest crime rate: about 4,400 crimes for every 100,000 of population. Canada, the country with the second lowest prison rate of the western countries that I looked at, has the second highest crime rate. The EU has the second highest prison rate and the second lowest crime rate. Is all that a coincidence? I do not believe so. Indeed, it seems blindingly obvious to me that the more criminals who are locked up in prison, the fewer there will be out on the streets to commit crimes. Does the Minister accept that blindingly obvious statement?

We should always beware of politicians who tell us that things are far more complicated than they really are. The issue is actually quite simple, but the simple fact appears not to have reached the Home Office. I hope that the Minister will clarify where he stands on the issue.

Then we are told that prison does not prevent people reoffending and actually makes it worse. However, just before Christmas, the Home Office sneaked out a report that blew that hypothesis apart. The report clearly demonstrated that the longer people stay in prison, the less likely they are to reoffend. It might be presumed that the people with the longest prison sentences are the most hardened criminals and are therefore the most likely to reoffend. However, a Home Office report showed that that was clearly not the case. The “Re-offending of adults” report, published in November 2006, concluded that

“re-offending rates are lower among offenders discharged from a custodial sentence of at least a year (49 per cent) than among those discharged from a shorter custodial sentence (70 per cent)…This suggests that custodial sentences of at least a year are more effective in reducing re-offending.”

It is worth repeating those figures. Sentences of up to one year had a reoffending rate of 70 per cent. while in cases of sentences of more than two years, the reoffending rate dropped to 49 per cent. The report showed that for people who had spent more than four years in prison, the reoffending rate was merely 35 per cent.

I do not want to stunt the hon. Gentleman’s speech, but I want to be clear about his argument. Is he arguing for longer sentencing? Is he saying that people who go to prison should be in prison for more than 12 months, and that that should be the starting point?

The Minister has looked accurately into his crystal ball. I certainly am saying that prison sentences should be longer, and I shall explore that in more detail in a few minutes.

The reason why prisoners reoffend has nothing to do with prison. The Minister has been very perceptive; it is largely due to the fact that people do not spend long enough in prison. As the Home Office report suggested, most prisoners go to jail via the magistrates courts, and many have a drug addiction, too. The maximum prison sentence that a magistrate can impose is six months. If a criminal pleads guilty, they are likely to get a third knocked off. That reduces the sentence to four months. They are then likely to serve only half of the remaining time. In effect, that means that in many cases magistrates can send people to prison for only two months. They go into prison as drug addicts, and we should not be surprised that they come out as drug addicts to start their crime spree all over again. They need to be in prison longer, not only to be punished properly for their crime—or crimes, as few are sent to prison for their first offence—but to have time to kick their addiction.

Given that since 1997 alone, more than 7,000 crimes were committed by people who were tagged or were released before the end of the jail sentences handed down by the courts, ensuring that prisoners served the full sentence handed down by the courts would help to reduce crime, too. The public have no faith in the criminal justice system, and honesty in sentencing would do a great deal to reassure them as well as to reduce reoffending. Prisoners should not be let out of prison early for good behaviour; they should be left in prison longer for bad behaviour. When I was at school, if I behaved properly that was what was expected of me and I was allowed to leave school on time. If I misbehaved, I was kept back for detention. Can the Minister explain to the British people why he thinks that that should not apply to prisoners, too, and why they should not serve the sentence handed down by the courts in full?

The public know that that all makes sense. Surveys that I have conducted in my constituency show that 84 per cent. of people believe that prisoners should serve the sentence handed down by the courts in full. The police know that that makes sense, too. In my time on the parliamentary police scheme, working with my local Keighley division of West Yorkshire police, many police officers told me that if their top 10 persistent criminals were in prison, crime would be reduced by about half. If the top 20 persistent offenders were in prison, crime would be reduced by about 90 per cent. Does the Minister agree with that analysis by the police?

The Government are at sixes and sevens. They started off knowing that to be tough on crime they needed to send more people to prison. However, because the Chancellor has consistently refused to invest in building more prisons, that has resulted in their being full. The Government now have to pretend that prison does not work after all, and that it is tougher not to send people to prison and to give them some so-called tough community sentence. We saw pictures in the papers this week of such sentences, with people lying on benches instead of doing any work. That seems a laughable position for the Government to hold. Will the Minister make clear whether he believes that prison works or not? If he does, will he commit to not letting dangerous criminals out early and to abandoning the plans that we have read about this week to avoid sending people to prison at all costs?

I want to touch on the prison regime in this country, which I believe is far too lax. The fact that more than 1,500 prisoners have Sky TV in their cells—not in a communal area but in their cells—will disgust most decent people. I am sure that many people in my constituency wish they had Sky TV and could watch premiership football, but they cannot afford it. Why should they have to pay through their taxes for a regime that allows prisoners to enjoy such a luxury? It has also recently emerged that roughly 60 per cent. of prisoners have keys to their own cells. Most people could be forgiven for believing that that is just typical of the Government’s determination to put the human rights of criminals and prisoners above the rights of victims and decent, hard-working, law-abiding people in this country.

Successive chief inspectors of prisons and judges are parts of the establishment with a lot to answer for in respect of prison life. Those people leave their luxury, idyllic homes to visit prisons and report back on what an awful place they are. They do not consider the environment from which many people in prison come: not luxury homes in idyllic locations, but drug and crime-ridden estates. During my time on the parliamentary police scheme, a custody sergeant said to me that in her experience the biggest deterrent to crime was the prospect of being sent to prison for the first time. People were genuinely afraid of that. However, she said that once they had been sent to prison, they found that many of their friends and associates were there, they got three square meals a day, they had access to a gym, which most of us would have to pay for, and other facilities, and their quality of life was higher in prison than on the outside. That cannot be right.

I congratulate my hon. Friend on securing the debate. I re-emphasise the point that he has just made. Like him, I took part in the parliamentary police scheme and officers in my constituency told me that, after having served time in jail, criminals saw further time in jail as a career break before they went out burgling, stealing and so on again.

As usual, my hon. Friend is absolutely right. That is an experience that police officers have across the country.

Once somebody has been sent to prison they should never want to go again. The fact that many people feel that it is not as bad as they expected is not only offensive but counter-productive. The Minister will no doubt use the word “rehabilitation” at some point in his speech—that is my crystal ball gazing for the afternoon. Of course we want people to be rehabilitated, but in my experience the word “rehabilitation” is simply used by the liberal left to excuse making life as luxurious as possible for prisoners. Can the Minister explain how giving prisoners Sky TV in their own cells rehabilitates them?

The Minister might wish to read about Sheriff Joe Arpaio in Phoenix, Arizona, who has introduced a tough regime in prisons in his state and has a public approval rating of 85 per cent. Oh, what Home Office Ministers would give for a public approval rating of 85 per cent. Prison does work. We just do not have enough prisoners, they do not spend enough time in prison and the prisons too often resemble hotels or holiday camps rather than prisons. The Home Office blueprint should be to double the number of prisoners, to ensure that they serve the sentence handed down by the courts in full, to make prison more austere and to halve the crime rate. Is that a vision that the Minister shares?

I am delighted to have the opportunity to respond to the hon. Member for Shipley (Philip Davies), and, like the hon. Member for Kettering (Mr. Hollobone), I congratulate him on securing the debate.

In his own unique way the hon. Member for Shipley has raised some interesting points about the importance of prison and, in his view, reducing crime. I notice that there is no one from the Opposition Front Bench in today’s debate. We have had many debates about prisons and what is going on with prison capacity, so perhaps he has to convince not only me but his Front-Bench colleagues of his views on prisons. I do not minimise the seriousness with which he has approached the issue. There is a need for a debate about what is going on in our prisons.

The hon. Gentleman has painted a picture of our prisons as almost like holiday camps. I was in Belmarsh yesterday, and if he went there he would not see the regime as anything like a holiday camp because of the high security aspect of that prison. Clearly, we need to strike a balance on the matter of punishment. That aspect needs to be there for dangerous and serious offenders, and it is quite right that we have prison places for those people. However, I take issue with the hon. Gentleman on some of the other points that he has raised, and I shall try to go through some of them in the time that we have. As usual, one can only set the scene in a half hour debate. I know that on several occasions the hon. Gentleman asked questions of the Home Office but was not able to get answers because of the time it takes to provide them. There was no deliberate move by me to make sure that we did not get to his questions.

This Government are proud of their record on tackling crime. It is a success story that has been independently commented on by bodies such as the British crime survey, which shows that, compared with 1997, all crime is down by 35 per cent., burglary is down by 55 per cent. and violence, as measured by the British crime survey, is down by 34 per cent. The survey estimates that there are 5.8 million fewer offences overall than in 1997. The crime rate, particularly for householders, is at a historically low level: 24 per cent., down from 35 per cent. in 1997.

We aim to build on that success. Hon. Members will know that yesterday we published “Building on progress: Security, crime and justice”, which sets out the vision for confronting crime and criminals over the next 10 years. It endorses the direction that we have been taking in rebalancing the criminal justice system, including putting more time and effort into dealing with serious and persistent crime and offenders, improving early intervention and mental health care, and strengthening both non-custodial sentences and prison programmes in order to cut reoffending. I believe that prisons play an essential part in that vision.

Yes, there must be punishment that protects the public. The hon. Gentleman is arguing for longer prison sentences and more prison capacity, but that comes at a cost. He will know that we have brought into play 19,000 extra spaces since 1997, and that we have announced a further 8,000 places. He talks about prison capacity. Clearly, there is a problem with prison capacity. The prison population, which is nearly 80,000, is at a record high.

I agree that building more prisons comes at a cost, but will the Minister clarify whether he accepts that the crime rate would be reduced if we had more prisons and more prisoners serving longer sentences, irrespective of the cost?

I understand the hon. Gentleman’s argument, but I do not accept it. One must think about the offenders and the types of crime that people are in prison for. It is clear that serious and dangerous criminals must be locked up in prison to protect the public, and that is why in 2003 the Government introduced the indeterminate sentence, under which the Parole Board must determine whether somebody is safe to release back into society. That is an appropriate sentence, and I am pleased that the figures are increasing.

Yes, prison has to be there for dangerous offenders, but we must consider how we deal with and view offenders. As the hon. Gentleman knows, I was a councillor in Bradford before I became an MP. The reality is that, as elected representatives—in my case, as a councillor and then as an MP—our view of people who enter the criminal justice system must be different from that of the rest of the community. Offenders come from our communities. Yes, the punishment must fit the crime, but we must try to find out why people are committing crimes and try to rehabilitate them back into society.

Prisons are austere places. The hon. Gentleman makes a point about televisions in prison cells. Prisoners do not get Sky TV. They have to pay £1 a week for television sets, and not everybody gets them. The hon. Gentleman raised the issue of keys. I am sure that he will have read this morning’s Daily Express, in which the right hon. Member for Maidstone and The Weald (Miss Widdecombe) sets out her view that it is appropriate for prisoners to have keys on the basis of protection of an individual’s property and, in some circumstances, because of some of the bullying that goes on in prison, on the basis of protection of individuals in dangerous situations. Keys are given out in an attempt to get people to become responsible, and to be part of society when they come out. The weakness in the hon. Gentleman’s argument is that people should be kept in prison longer and then they should be released, but we must consider that old process of offender management.

I do not wish to interrupt the Minister unnecessarily, but can he clarify what he said about prisoners having Sky TV in their cells? I asked a parliamentary question about the matter last year and was told that more than 1,500 prisoners had Sky TV in their cells. Is the Minister telling me that the answer to my question was wrong, or that the practice has now ceased? Or did I mishear him?

Let me read the briefing note that I have on the issue. I am sure that it is in line with the answer to the hon. Gentleman’s parliamentary question. If it is not, I shall be asking questions as well. Prisoners can have televisions in their cells as part of the incentives and earned privilege scheme. TVs must be earned and can be withdrawn if a prisoner fails to comply with the prison regime or breaches discipline. A small number of prisoners have access to freeview in their cell. Like the rest of the country, the Prison Service must prepare for the switchover to digital TV, and that will mean that prisoners who have earned the right to have a TV will have access to additional channels, because everybody will have that access with the move to digital TV. As I said, prisoners pay £1 per week to rent a TV from the Prison Service. That is a million miles away from the hon. Gentleman’s comments about watching Sky TV or Sky Sport on television in prison.

The hon. Gentleman’s argument trivialises the tremendous work that is being done in prison. There are different types of prisons. For example, there are local prisons, where people are sent immediately. There is one close to his constituency and mine—Armley prison in Leeds—which he may have visited. I do not know whether he has. If he has not, he should visit it. It may change his view about prisons being holiday camps. They are about making sure that offenders are managed properly.

I read out the figures for where we are nationally in trying to reduce reoffending. The rates are far too high, and the hon. Gentleman makes a serious point when he talks about drugs in prisons and people entering prison with a problem. They may enter detoxification, but the solution involves not just what prisons do but what society does. The Government have involved primary care trusts in health provision in prisons because we need to consider how to manage offenders from end to end.

From the minute someone is arrested, we try to find out what caused the offence—why have they offended? We must consider the different types of offenders. As I said, the prison population is at a record level of 80,000. Of those, fewer than 4,000 are women. We must try to find out what causes offenders to offend and do something about it, but something must be done by society, not just the prison regime. We must try to find education and work solutions so that people come out of prison not to reoffend but to find sustainable work or education. That is the way to stop reoffending.

That is why the National Offender Management Bill is important. The hon. Gentleman voted against it, as did the hon. Member for Kettering, and I am concerned about that. They must think through the issues. Yes, the public must be protected, and we must lock up dangerous and serious offenders, but not everybody in prison is a dangerous or serious offender. We must look at ways to reduce reoffending.

One way to deal with the problem is by involving a wider range of people. One of the problems is that when people are released from prison, there is no proper resettlement plan to help them avoid going back to what they were doing before. Offenders need housing and educational support. I believe that alternatives to custody are important, and that the public will understand and accept that they are not soft options.

I refer the hon. Member for Shipley to the north-west, where community justice is taking place. Communities identify projects that need to be carried out in their communities. Magistrates sentence against those projects and everybody wins: the communities see the work being done and that it is not a soft option, and they benefit from what is taking place, and the offender’s skills are developed.

We must consider alternatives to custody. I was pleased by the comments of Lord Phillips, the Lord Chief Justice, that we need to look at alternative custody as a way not of dampening down the prison population but of offering up an alternative to try to cut reoffending rates. We have been working with the youth justice scheme. I know that the hon. Gentleman was on the police scheme, so he will know how many youngsters are involved in crime. We must try to nip that in the bud by supporting those young people, and ensuring that that they do not end up in a warehouse situation in prison as that can lead to a vicious cycle. We have to consider those alternatives.

I have just received further information on Sky TV. The hon. Gentleman is right on the figures; there were 1,500 Sky sets in cells and the parliamentary answer was correct. As I said, we changed the system in relation to the digital position.

We have an ambitious target of reducing reoffending by 10 per cent. by the end of the decade. Adult prison places cost £40,000 a year, and young offender places cost £50,000. That cannot be the right way to progress. We need to consider the alternatives and find ways of ensuring that people understand what prison is about. Elements of punishment are quite right when the punishment fits the crime, but so is rehabilitation and trying to bring people back into society by using the expertise of a number of bodies that work with prisoners.

This is an important debate, because we need to understand that prison is only part of the solution. The hon. Gentleman was right to raise the subject of public confidence in the criminal justice system. That was one of the things that the Home Secretary brought about when we took over as a new ministerial team. We were concerned that people did not understand existing sentencing policies. It is important that we have an independent judiciary, and that judges base their decisions on what is before them. However, it is also important to ensure that the public understand and have confidence in sentencing. We are embarking on that through consultation to ensure that people understand that reductions in sentences can sometimes be about the witness and the victims not having to go through the court procedure, and that it can be a benefit if someone pleads guilty. Nevertheless, such a process must be carried out in a good spirit and should not become the norm; it has to be appropriate and proper.

We will ensure that prison places are provided for serious offenders, but we need to drill further to find out what motivates people to offend. We estimate that offending is often drugs-related, and we are trying to deal with it by a 974 per cent. increase in drugs spending in prisons. It is not about addressing that problem only in prison; it is about ensuring end-to-end offender management so that people are supported in the community when they come out. Whether it is an educational matter or a drugs issue that needs to be addressed, rehabilitation should be a continuous process. I believe that the public will accept that.

There was a recent poll on women in prison. The hon. Gentleman will know about the work that Baroness Corston has done on vulnerable women, which indicated that prison should be the last alternative for women. The impact on women prisoners who have families often means that those families then have problems with crime. There are other problems associated with dysfunctional families.

It is important that the people who offer alternatives to prison are not seen as left-wing liberals, as described by the hon. Gentleman. Such people have witnessed what has happened to the prison system over many years.

Before he winds up, I would like the Minister to touch on the report from November on the reoffending of adults, which shows that the reoffending rate for those serving sentences for up to a year was 70 per cent., for those serving over two years it was 49 per cent. and for those serving over four years it was 35 per cent. Does he agree that that demonstrates that the longer people spend in prison, the less likely they are to reoffend?

That is an easy set of figures, but we must consider the complexity of what takes place in terms of reoffending rates. That is why I asked the hon. Gentleman for his view on that. He is arguing for longer prison sentences after which, in his terms, people would magically turn into well-formed residents for whom, when they come out of prison, everything is okay. That is not how the system operates. The different reoffending rates are about the different types of sentences that are passed. My fundamental point is that there are people in prison who should not be there and should be offered alternatives. That is the complete opposite of what the hon. Gentleman is saying in the sense that he believes in longer sentences, more people in prison and therefore—

It being quarter past Five o’clock, the motion for the Adjournment of the sitting lapsed, without Question put.