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Trade and Industry

Volume 459: debated on Thursday 3 May 2007

The Secretary of State was asked—

Regional Development Agencies

1. What assessment he has made of the efficiency and effectiveness of regional development agencies in supporting businesses. (135424)

The performance of the regional development agencies against their targets is laid before Parliament every six months. The RDAs have delivered tangible benefits to business. In 2005-06 they helped create or attract almost 19,000 new businesses, supported 800,000 businesses through Business Link, and assisted more than 166,000 businesses to improve their performance.

One of the concerns that many of us have is that beneath those headline figures there is a lack of hard evidence and real performance analysis of the RDAs. For example, in the north-west they are funding 21 schemes but there is no significant evidence of any hard outcomes in terms of business. In London, the lack of transparency in respect of the schemes operated by the London Development Agency is such that it has sometimes been referred to in the press as the slush fund for the Mayor’s pet projects. Is there not a need for a consistent national template of target setting and monitoring? Otherwise, we might as well just open a suitcase full of money and throw it at them.

There is a consistent way of monitoring and ensuring that RDAs meet their targets: through the reporting against their targets to Parliament. We have also ensured that the National Audit Office has undertaken an analysis of the performance of the RDAs, and it has classified all of them as performing either strongly or very well. I suggest that the hon. Gentleman take advantage of the opportunity to look at the data before Parliament and then come back and give us some real reasons why he thinks that the RDAs are not performing.

Against the background of the high administrative costs of the RDAs—which was most recently revealed in the Richard report—is the Minister confident that it will be possible to co-ordinate their activities better to ensure that they do not, for example, wastefully duplicate each other’s activities in overseas markets and that they are able to provide a proper national service to national industries such as aerospace?

As the hon. Gentleman will know, because I gave evidence before his Trade and Industry Committee, we are working to ensure that there is much better co-ordination between the RDAs, particularly in relation to some of the major industries in the country. In respect of aerospace for example, they now have a common application form, a common monitoring form and a common assessment form. Therefore, although the money might come from different RDAs, for the industry there will be one form, and one gateway through which it has to travel. We are working hard to ensure that in the work done overseas there is proper co-ordination between the RDAs and UK Trade and Investment—UKTI.

Despite the Minister’s claims, there is significant duplication. At least one third of funding for regional business support is lost in bureaucracy; the Minister managed to overlook that. However, it also now appears that some RDAs are misusing their money. In March, the Economic Secretary to the Treasury launched a political pamphlet called, “Redesigning Regionalism”. That pamphlet said that the RDAs are wonderful and marvellous and should have more powers—and, indeed, that they should have more money. [Interruption.] It turns out that three of the RDAs spent £15,000 of taxpayers’ money on self-serving paper, so can the Minister explain—[Interruption.]

Order. The Minister does not tell me my job; I tell her what to do. There should be a question. I think there was the hint of one somewhere.

You are absolutely right, Mr. Speaker, and it is a good one; the Minister must be patient. Will the Minister explain, not only to the House but, more importantly, to the thousands of small companies whose corporation tax bills are about to rise, why the RDAs are spending taxpayers’ money to promote themselves instead of doing what they should be doing: backing businesses?

This morning we are finally getting the old Tory agenda. The RDAs are probably up for grabs again, as it appears that they will be part of the £21 billion of cuts that the Opposition want to impose on the country as part of their tax-cutting efforts. Let me also retort to the hon. Gentleman that although he repeatedly says that one third of the expenditure on business support goes in administration, that is simply untrue. He will know from the work that we have done that the proportion is less than 10 per cent., and that we are constantly trying to cut that. Are the RDAs right to engage in a debate on how best to devolve government to areas where we can have the best intervention to achieve the most effective economic success? Of course the RDAs have a role to play in that debate, and the hon. Gentleman knows that we are currently considering which is the best level, below national level, for intervention to be effective and to help us to continue to achieve the great economic growth and prosperity that we have achieved over the past 10 years.

Fuel Technologies

The Department supports a range of measures to encourage biofuels and clean coal technologies. These are important mechanisms, given our ambition substantially to reduce carbon emissions. More generally, the Government have provided some £500 million since 2002 toward research in, and development and demonstration of, low-carbon technologies.

Obviously I am grateful to the Minister for that helpful and courteous reply, but does he not agree that it is better to develop forms of energy generation and other technologies that cause less or no carbon dioxide emissions, rather than caning with extra taxation those who are merely doing what has been legal and acceptable for many years? I am referring in particular to those who drive 4x4s, which are very advanced and safe vehicles. Given that we can develop new technologies, why should extra taxation always be the answer? We should also be investing more in the safe disposal of nuclear waste.

And indeed we are spending a great deal on the safe disposal of nuclear waste through the Nuclear Decommissioning Authority. We need a range of measures to tackle climate change, such as low or almost nil carbon emission technologies. We will consult on nuclear energy and its future when we publish our White Paper later this month, and we are developing renewable energies. Significantly, probably 40 per cent. of global power generation in the foreseeable future will come from coal. Given that we will be burning fossil fuels, we need to develop clean coal technologies and carbon capture and storage, as we seek to demonstrate. So there will be a range of ways in which we tackle our climate change and global warming objectives.

The Minister will be aware that the Stern report suggested that some $16 trillion of investment is needed in energy infrastructure over the next 25 years. Ironically, the innovation needed might yet be the major contribution from the United States. Does this country have enough capacity to produce sufficient home-grown biofuels, or will we have to rely on imports?

I am advised that in theory, given our current objectives—under the terms of the road transport fuel obligation, for example, 5 per cent. of such fuel should come from biofuels by 2010—we have enough capacity. I am also advised, however, that in practice—this is the serious point—there will be a mixture of home-grown biofuels and those that we need to import. That raises a critical question about making sure that the environmental impact of such imported fuels is on the right, not the wrong, side of the argument.

The Minister will be aware that developing marine renewables is crucial. The UK should be the leading player in this field, based on its sub-sea industry. He will also be aware, however, that many such projects are stuck in prototype stage because of lack of financing. What work is he doing with private investors and banks to free up investment for this critical industry?

It is indeed a very critical industry, and as we were reminded earlier, Nick Stern’s important report referred to the economic opportunity for Britain to be in the right place, in the context of much of the renewables industry. The hon. Lady is right: there are great industrial opportunities if we are a leading country in this field, as we mean to be. As I said, £500 million has been invested in low-carbon technologies since 2002, and we are investing heavily in marine technologies, so that we can examine the potential of wave and tidal power. The renewables obligation, which we will reform to make it more sensitive to the new technologies, is another powerful vehicle. We have a range of measures in place to ensure that we can be a world leader in these renewable technologies.

Given the Minister’s reply to an earlier question and his announcement of huge investment in biofuels technology, can he tell the House what discussions he or his Department have had with the Department for Environment, Food and Rural Affairs to encourage farmers to grow biofuels, and with the Chancellor to ensure that the taxation regime encourages the use of biofuels?

We received a report some time ago from Ben Gill, who obviously has a farming background, about the importance of biomass, and we will say more about it as part of the White Paper announcements. Of course we are discussing the issue all the time with DEFRA, and we are at one on this. It is an important mechanism to help us achieve our carbon emissions reductions. It is not the whole answer, but it is a new opportunity for the farming sector in the UK and elsewhere, and I recognise that.

Has the Minister seen today’s comments by the Renewable Energy Association that Britain is “a million miles away” from hitting the Government’s target on renewable energy by 2020? The REA says that the Government have “no credible plan” on how to achieve that target, and that for it to be met we would need a biofuel pump on every forecourt, a programme of major renewable energy projects and a massive energy efficiency programme in the housing stock. The Government have quietly dropped their earlier target of 10 per cent. from renewables by 2010. Is not the truth about the Government’s targets that although they are designed to sound ambitious, they will the end and not the means and are set so far in the future that the Minister and the Government will be out of office long before the target date—and someone else will have to pick up the pieces?

I certainly do not accept that last psephological point. We have long-term ambitions both to reduce carbon emissions and for the Labour party—[Hon. Members: “Where are they?”] It is not for me to answer that question. It is because we take our democratic politics and listening to people seriously that Labour Members are not here; they are where they should be.

I have seen some indications of the association’s report. It is a well-organised lobby group, but I am more interested in the facts, which are that this Government are taking renewable energy very seriously. It always helps if Conservative and Liberal MPs support wind farm projects, rather than opposing them. Big planning issues are also involved, and I hope that the Opposition will support us when we bring forward radical proposals for reform.

Salaries and Wages Insurance

4. Whether he has had discussions with (a) ministerial colleagues and (b) companies on the establishment of a national salaries and wages insurance scheme. (135430)

We are grateful for my hon. Friend’s question. No discussions about this issue have been held either between DTI Ministers and their colleagues or by DTI Ministers with companies.

I thank the Minister for that answer, but would he consider meeting the CBI and the trade unions to consider the situation? Many people have been made redundant in manufacturing industries—for example, from Rover, Peugeot in Coventry, and Jaguar—and they lose an average of £3,000 a year because they have to take lower-paid jobs. I hope that my hon. Friend will consider that point.

My hon. Friend raises an important point, but we do not have plans to consider the issue. It is our view that the UK economy is very healthy at present. Redundancies in 1997 were running at around 3 per cent., and that has fallen to some 2 per cent. on average. The Government’s arrangements to deal with people when redundancies occur—including Jobcentre Plus—are appropriate. The economy is healthy and we have more people in work than ever before. I am sorry that I cannot give my hon. Friend a more positive answer.

Business Support Schemes

5. When he expects to meet the Government’s target of reducing the number of business support schemes to 100. (135431)

About £2.5 billion of public money is spent every year on direct business support. Money is spent by central Government Departments, their agencies and local authorities. The DTI is leading the cross-Government programme to simplify the number of business support services from around 3,000 to no more than 100 by 2010. By reducing the number of schemes and the “back room costs” of providing business support, we will ensure that a greater proportion of the money spent helps business and will achieve more with the same spend.

I am grateful to the Minister for that answer. Is he not rather disappointed in it, and was he not upset when he learned from his officials that the simplification process would take so long? The array of available measures and schemes is so bewildering that, in my experience, it causes business men to go to their Members of Parliament to get help to find their way through it. Is it true that the administration of the schemes costs more than one third of the total made available for them? What is the compliance cost for businesses? Does the Minister have any quantitative evidence to suggest that the gains exceed the total costs borne by the taxpayer and, through compliance costs, by business?

I thank the right hon. Gentleman, in the same spirit as was evident in his opening words. When he was Secretary of State for Trade and Industry, he held a world record: of every three businesses set up, two went bust. In his first year in the post more than 24,000 businesses went bust, and by the time he left office more than 1,000 businesses a week were going bust, so he does not have a good record in supporting business. For every pound that UK Trade and Investment spends in business support, £17 of additional business is created. That is why this country has the largest inward investment and research and development portfolios outside the US. In every region of England, and in Scotland and Wales, the number of jobs is increasing, not decreasing—unlike in the Conservative years, when inward investment was at its lowest. Then, the UK was 24th out of the 24 OECD countries, and the Government of the day were prepared to close down British business instead of supporting it.

With 3,000 schemes administered by 2,000 public bodies, the Government spend an estimated £12 billion a year on business support, yet just 15 per cent. of small businesses have had any contact with the schemes. Does the Minister therefore agree with Martin Wyn Griffiths, the chief executive of the Small Business Service, that

“it is an incredibly complex system…an inaccessible business support system…that is inefficient and ineffective”

in all respects?

First, the Government spend £2.5 billion on these matters, and the money is welcomed by the business community. The reforms that we are making are successful, and the only scheme whose administration costs amounted to 30 per cent. has been closed down. The reforms will ensure that more money goes to front-line business, not less. This Government have a good record of investing in support for business. That support creates jobs, investment and trade for British business.

The absurdity of the schemes is illustrated by the fact that the Government want to reduce their number from 3,000 to a mere 100. Given that only 34 per cent. of locally run schemes have ever been assessed in any way for their effectiveness, and that most national schemes rely on customer satisfaction surveys alone, does he accept that the Government have no idea how to reduce the number of business support schemes, because they have no idea whether any of them were any good in the first place?

The hon. Gentleman’s question makes it clear that the Conservatives do not want to spend a single penny in support of British business. They do not support the continuation of the regional development agencies. The RDA covering Yorkshire and the Humber has rationalised 100 different support schemes into six, and as a result businesses in the area each day get support to help them export and retain employment opportunities. The hon. Gentleman should support that, not deride it.

Post Office

6. What assessment he has made of the effectiveness of the safeguards established to oversee the Post Office reorganisation process. (135432)

Post Office Ltd and Postwatch are discussing the role of the new National Consumer Council in developing area plan proposals for local consultation. We expect to set out the agreed role in our formal response to the Government’s consultation.

Thousands of post offices have closed under this Labour Government. Moreover, the disappearance of Postwatch is on the cards and coincides with 2,500 closures over 18 months. Given all that, what customer guarantee can be given to people who use post office services in rural England, Scotland and Wales that the future watchdog will be more effective? How will people be assured that the sort of nonsense that I saw the other day will not happen again? A post office in York had been closed, and a new one opened after a local community campaign—yet the business was clearly a viable commercial operation, which should never have been closed in the first place.

Clause 16 of the Consumers, Estate Agents and Redress Bill replicates the provisions in the Postal Services Act 2000 that apply to Postwatch, which will ensure that the National Consumer Council has a specific function to investigate matters relating to post offices, and there will be a redress scheme. The hon. Gentleman and his party supported the amalgamation of those services into the new National Consumer Council. We are working hard with Postwatch to make sure that public protection and the consultative arrangements when Post Office Ltd makes its restructuring plans are as robust as possible.

In 1997, my hon. Friend’s colleague, now the Minister for Trade, intervened to save Ilford Crown post office, which was under threat from the plans of the then Conservative Government. Will my hon. Friend look closely at the bad announcement made last week by the Post Office that it intends to close the Crown post office in Ilford, and 70 others, and hand them over to WH Smith? That will not be good for my constituents, who at present can get a bus to the Crown post office; elderly people will have to walk long distances to the Exchange shopping centre.

I am sorry to hear my hon. Friend’s reaction to the announcement from Post Office Ltd and WH Smith about the 70 franchise arrangements that will protect and save services for his constituents. Experience and the results of mystery shopper and MORI surveys on pilot schemes run by Post Office Ltd and WH Smith have been exceptionally high. I think that when my hon. Friend sees the arrangements in place, he and his constituents will also welcome the improvements in services. The vast majority of the 14,500 existing post offices and sub-post offices are run on a franchise or sub-postmaster basis, which ensures that the services can be protected for the future.

Conversely to what the hon. Member for Ilford, South (Mike Gapes) describes, the Crown post office in Daventry has not yet had an agent nominated for its forthcoming management, and there is a strong local rumour that it will shut altogether. Only this week, we have heard that rural sub-postmasters face similar pressures, being cut off at the knees and unable to deliver their services. Does the Minister at least agree that one of the great strengths of the Post Office is that it is a universal service? Long may it remain so.

Obviously, I am happy to agree. The Post Office provides an unrivalled service to our constituents right across the country, whether in urban or rural areas. That is why the Government have spent £2 billion since 1999 and why we intend to spend a further £1.7 billion between now and 2011 to make sure that the service, when it is restructured, will be on a sound financial basis for the future.

A postmaster in my constituency has told me that it would be rash to spend money on new stock or repairs while the office is under the threat of closure, and that he needs to know where he stands as soon as possible. Will the Minister report back at the earliest opportunity on the outcome of the Post Office consultation, and does he accept that rural post offices are finding it extremely difficult to conduct their business in the climate of uncertainty they face?

The hon. Gentleman makes an important point. The uncertainty needs to be dealt with as soon as possible, and my right hon. Friend the Secretary of State will make an announcement to the House fairly shortly, which will, I hope, put greater certainty into the arena. The hon. Member for Daventry (Mr. Boswell) referred to rumour and speculation about closures, which we can understand, and where we can, we kill off such speculation, about which a number of Members have written to us. We refer such matters to Post Office Ltd, which is able to give certainty in particular areas where there are clearly no plans affecting major centres. The important thing is for my right hon. Friend to make his announcement, and then for Post Office Ltd and Postwatch to get on with the implementation of restructuring. We know that sub-postmasters across the country have been waiting a considerable time for that, which is why we want to expedite it.

EU Business Regulation

7. What estimate he has made of the cost of EU regulation to British businesses; and if he will make a statement. (135433)

The Government estimate that the total administrative burden on businesses, charities and the voluntary sector in England derived from EU legislation is approximately £6.3 billion. This estimate excludes the costs of EU administrative burdens on financial services, which are not available in this format.

Gunter Verheugen, the EU Commissioner, has said that the cost of EU regulations on EU businesses amounts to €600 billion, but the European Commission has said that the benefits to EU businesses of the single market amount to less than €200 billion. With the regulations costing three times as much as the benefits and with 90 per cent. of British businesses not getting any real benefit from the single market but facing all the costs of the regulations, is it not increasingly clear that British businesses would be better off out of the European Union?

This is a welcome day: all sorts of Jekyll and Hyde Tory policies are being announced by Conservative Back Benchers. I am delighted to hear a confirmation of what we all believe to be the view of most Conservatives—that they want to withdraw from Europe, with a massive cost to jobs, prosperity and the growth of the UK economy.

The hon. Gentleman attributed a figure to Gunter Verheugen, but I think that that figure alluded to another set of figures. The figure of £6.3 billion is an estimate accepted both by ourselves and by the Commission. I am sure that the hon. Gentleman will be delighted to know that, as a result of the work being done by the UK together with the Netherlands and Denmark, we have encouraged the European Commission and the EU to look for a reduction of administrative burdens of 25 per cent. by 2012. That mirrors the ambition that we have in the UK, and it will mean more effective use of EU resources and regulations to support growth not just in the UK economy, but in Europe for the global economy.

Interdepartmental Co-operation

8. What recent discussions he has had with the Chancellor of the Exchequer on work undertaken jointly by his Department and the Treasury. (135436)

I think that we expected that response. What work has the DTI undertaken with the Treasury to address the problems with business taxation that were identified by the Tax Reform Commission last year when it said that

“the whole ‘tone’ of tax administration is becoming less friendly to business; and the system is increasingly complex, unstable and distorting”?

Does the Secretary of State think that this year’s Budget has made business taxation more complex or less?

No, I think that the Budget this year introduced a number of sensible reforms, particularly the decisions to reduce the mainstream corporation tax rate and the personal income tax rate. Those are very welcome reforms. The hon. Gentleman does have a good point about the administration of tax. That is why Sir David Varney, the former chairman of Her Majesty’s Revenue and Customs, has been working to introduce a new system that will provide more certainty for business taxpayers. When businesses, for example, decide on a course of action, an acquisition, a development or so on, they can seek advice and have clarity as to how Revenue and Customs will treat their tax position. I think that that has been widely welcomed.

Small Business

9. When he next expects to meet representatives of the small firms sector to discuss measures to reduce the level of regulatory burdens. (135437)

I chaired the inaugural meeting of the small business forum, which comprises representatives from small business bodies and small businesses, on Tuesday.

I am glad to hear that the Minister did that. Does she agree with the calculation from the British Chambers of Commerce that the average British company now has to spend nearly £14,000 a year on implementing Euro-regulations? Is that not a staggering figure and an appalling waste of management time, especially in the small firms sector? Management time should be creating wealth. Is it not also a dreadful indictment of this Government’s record on small business? Is it not any wonder that small business men and women are now deserting this Government and coming over to the Tories?

Yet another Conservative who is promoting the idea that Britain should withdraw from Europe—

Such a move would cost the UK economy 3 million jobs, would massively damage our export markets and—[Interruption.]

I am sorry that Conservative Members do not like to be held to account. As far as small business is concerned, I will put the hon. Member for North-West Norfolk (Mr. Bellingham) right. We now have 4.3 million small businesses in the UK. That is 600,000 more than we had when we came into government 10 years ago. The start-up rate is faster than ever, the growth rate is greater than ever, the sustainability is better than ever, and the productivity gap between small businesses in the UK and elsewhere in the world is reducing. That is a success story and he does ill to the small business sector by pretending otherwise. That is why most small businesses support Labour.

Rural Post Offices

I apologise, Mr. Speaker. As the House has no doubt gathered, I had hoped to answer several questions by this stage in the proceedings. I am glad that Question 11 has survived.

The consultation on the post office network finished on 8 March. I intend to make a statement to Parliament fairly shortly setting out the Government’s response.

I welcome the Secretary of State to the Dispatch Box and thank him for that reply. I was pleased when he made his statement to the House recognising the value of rural post offices and the contribution that they make to village life, particularly in rural areas such as the Vale of York. Does he share my concern at the widespread belief that the Government consultation process will lead to widespread closures of rural post offices? We have lost our banks, so the post office has a particular role to play in village life and is a lifeline. Will he therefore join me in encouraging people who live in rural areas to spend between £5 and £10 each week in their local post office and to use that post office, and will he back Conservative plans to allow more council work to be done through rural post offices?

On that last point, the hon. Lady will recall that when I made my statement to the House last December I said that one of the things that I wanted to do was to encourage more local authorities to use post offices if they could. Some local authorities are good at that; some are bad. The bad ones are spread across all political parties, so I do not think that she can enjoy any satisfaction in that respect.

In relation to the hon. Lady’s point about rural post offices, yes, they are important. I said in December that maintaining a national network is important, and we intend to do that. However, we must have regard to the fact that the Post Office was losing £2 million every week the year before last and that it is losing £4 million every week this year. We have to do something about that. I agree with her that the best way of saving any post office is to encourage people to use it. Sometimes there is a gap between the number of people who say they support the local post office and the number who actually go into it. I want to see a national network maintained and the proposals that I will make to the House shortly will, I hope, ensure that we do that.

I have about 120 villages in my constituency. Many of them are not at all looking forward to the statement, because they feel a great deal of trepidation about the small post offices in Somerset. The problem of settlement in my area is that we have a large number of villages that are geographically quite close, but quite distant by road and without any public transport. Will that be recognised in the Secretary of State’s proposals? The post offices are serving distinct communities and serving them very well indeed.

One of the things on which we consulted was the criteria for the location of post offices. I will be making a statement on that shortly. It is important to take account not only of natural barriers, such as mountains and rivers, but of the practical difficulties that sometimes arise. However, it would be wrong—I am quite sure that the hon. Gentleman has not done this regarding his constituency—to suggest that the present situation can continue without any change. We need to make changes. The National Federation of Sub-Postmasters itself has said that the present network is unsustainable and many postmasters say that changes that would maintain a smaller but perhaps more viable network could be the best possible future for the post office network.

Does the Secretary of State recall the grandiosely titled urban network reinvention programme of 2002, which was a long-winded euphemism for closing down about one in three urban post offices? This consultation is about closing down rural post offices. Why do not the Government get a real policy and set post offices and sub-postmasters free to work on their own without all the restrictions that are put on them? At the same time, they should give post offices proper Government business, as used to be the case—I recall that the Secretary of State had something to do with the Department for Work and Pensions at one stage—and allow individual post offices to flourish. At the moment, post offices are closing throughout the country, and many more will close after the statement.

Yes, it is the case that over a number of years—this process started under the Conservative Government—people have been choosing to have benefits, pensions, child benefit and so on paid into their bank accounts. People should have that choice and the hon. Gentleman’s suggestion that somehow all the changes can be reversed simply misleads people.

It is the case, too, that a number of urban post offices have closed over the past few years. I said in December that I thought that we needed to take a further 2,500 post offices out of the network through closure. However, they will not be exclusively rural post offices. We need to ensure that we have a national network with access criteria that guarantee that people have reasonable access to a post office. Most members of the public realise that the big problem facing post offices is the fact that over a number of years, fewer and fewer people have been going into them. The business level has thus fallen, so we need to address that. Unlike the Conservative party, we have public money available to support the network. The £1.7 billion that has been put into the post office network over the past few years has represented an important commitment, given that a national network is important to us all.

The Secretary of State is—I hope like me—often a very reasonable man. In that spirit of reasonableness, may I say that I was glad that the Government delayed their decision on the consultation on the future of the post office network until after Easter, and thus, perforce, after the local government elections, which has given the Department a proper opportunity to consider the large number of responses that it received? However, that has had the unintended consequence that the Government’s response to the Trade and Industry Committee’s report “Stamp of Approval?” is technically overdue. I commend the report to hon. Members and urge the Secretary of State to ensure that when he responds to the consultation—I presume that he will make a statement to the House next week or the week after—the response to the report is published at the same time, rather than a few weeks later, which I think is the Department’s intention.

I will have a look at that. As the House knows, the Government are not able to make an announcement in respect of the Post Office or anything else until the election period has finished. As I indicated earlier, I hope to make a statement fairly soon. I think that the Select Committee’s report was a good report. I hope that several of the hon. Gentleman’s colleagues who have asked questions today will have a good read of it before I make my statement, because it makes a lot of sensible points and recognises that we need to make changes. The present situation is unsustainable, so reform is absolutely necessary.

Does the right hon. Gentleman accept that given the social importance of rural post offices, especially to the elderly, the infirm, the handicapped and those without their own transport, the House should get together to determine a way in which the political parties, which are all interested in the matter, and the Post Office can agree a policy that would meet the concerns of most hon. Members, especially those who represent rural areas? Is this not an issue that might generate cross-party consultation and discussion?

I agree with the hon. Gentleman, but his words might fall on stony ground. I understand the temptation for Opposition parties to say, when there are post office closures, that it would not have happened if their party was in government, but most of us realise that successive Governments have wrestled with the difficult problem. There is less business going through the doors of post offices. We need to ensure that there is a national network. The hon. Gentleman makes a good point about the importance of post offices, particularly in rural areas, but also in urban areas; they provide a good service.

If I had accepted the advice that we should go for a commercial network, there would be only about 4,000 branches, and that would be ridiculous, because a large number of people, for one reason or another, cannot use banking services. That is why I want to maintain a national network. However, it is completely misleading for people to suggest that the present situation does not need change, and that we can carry on with mounting losses, which would have to be borne. It would be very nice if we could get consensus, but I suspect that on this issue, as with so many others, it is unlikely.

The Secretary of State rightly recognised that the best way to support local post offices is to encourage people to use them. Will he admit that before the Government started actively discouraging pensioners and others from drawing their pensions from the post offices, post offices benefited not just from the remuneration that they received from the Department for Work and Pensions for handling those transactions, but from increased use by pensioners and others? Consequently, it will cost the Government more to preserve the post office network by subsiding it than it would have done if the Government had continued to use them.

No, I do not agree with the right hon. Gentleman. He may recall that in the last year of the Conservative Government, when he was Secretary of State for Social Security, his Department was already considering how it could encourage more people to put money into their bank accounts. It was doing so partly because that would cost the Department less, but it was also concerned about the fact that the old giros were open to fraud—as he will recall, because he made lots of conference speeches about that. The only reason why he can say, “Well, that didn’t happen very much under my regime” is because he left office a few months later, but the process started when he was Secretary of State, and indeed before that, in relation to child benefit—so I do not agree with what he is saying.

All Conservative Members of Parliament must recall that they stood for election on the basis of a manifesto that endorsed the David James report, which called for an even greater transfer of money directly to people’s bank accounts. The right hon. Gentleman may not want to admit it publicly, but there is recognition that there have been profound changes to the way in which people do business and choose to receive their pensions or benefits. We need to respond to that, and we are prepared to back the Post Office financially, as well as in other ways.

UK Trade Balance

The UK deficit on trade in goods and services was £54.1 billion in 2006. Total UK exports, including goods and services, were £370 billion in 2006, up by more than 13 per cent. on 2005. The UK’s exports of services were £126 billion in 2006, up 10 per cent. on the previous year, and the UK’s surplus on trade in services increased by almost 22 per cent. between 2005 and 2006 to £29.6 billion. In 2005, the UK was second only to the United States in terms of both its inward and its outward foreign direct investment stocks, despite the fact that the UK accounts for only about 1 per cent. of the global population.

The Minister has given figures that show things being turned around, but has he noticed a trend, in that the UK trade deficit widened in 2007? In fact, in February, it stood at £4.3 billion. Furthermore, our trade deficit with the EU widened further to £2.7 billion, with exports falling by £100 million, and imports rising by £300 million. That is of extreme concern to the United Kingdom. Will the Minister tell us what the Government propose to do about that?

Actually, investment in manufacturing has increased. In terms of international comparisons, we stabilised this year at about 2.7 per cent. of gross domestic product; trade figures in the United States are over 6 per cent. of gross domestic product; in Spain, they are 8.8 per cent.; in Portugal, 9.4 per cent.; and in Greece, 9.6 per cent. Throughout the whole period of Conservative government, the deficit was over 5 per cent. of GDP, so we have brought that deficit down, turned it around, and we have the most successful economy in the G8.