House of Commons
Thursday 11 October 2007
The House met at half-past Ten o’clock
[Mr. Speaker in the Chair]
Oral Answers to Questions
Business, Enterprise and Regulatory Reform
The Secretary of State was asked—
In the past year, Ministers have regularly met coal industry representatives to discuss a range of issues under the auspices of the coal forum, and they will continue to do so.
The Minister might be aware that there has been discussion in the coal forum about an indicative figure for coal—a target figure for domestic coal of, say, 20 million tonnes per annum, split roughly between deep-mine coal and open-cast coal. What is his view on that? Does he support it?
My hon. Friend gives me the opportunity to pay tribute to the work of the coal forum. We welcome the engagement of all the different coal industry stakeholders through the forum. I am aware of the discussions that my hon. Friend describes. Let me say that we recognise the continuing importance of coal, particularly to electricity generation in the UK. He might be aware that last year coal generated an average of nearly 40 per cent. of the UK’s electricity, rising to 50 per cent. at peak prices. As he will know from the energy White Paper published last year, we continue to recognise the importance of coal. I am sure that my right hon. Friend the Minister for Energy will want to discuss my hon. Friend’s point with him when he visits.
Open and deep-cast coal production now barely meet a quarter of total UK demand, and the figure is dropping every year. Regardless of whether demand for coal increases or falls in the years ahead, the truth is that domestic production will continue to fall. Rather than getting caught up in discussions about how to slow the decline in domestic production, should not the Minister’s focus be on what will happen to our coal-fired power plants, and on whether the development of carbon capture technology can be accelerated in time to create a new generation of clean coal-fired power stations? Such stations will help to protect us against an over-reliance on gas-fired generation.
The hon. Gentleman rightly recognises the importance of carbon capture and storage. As a result, I am sure that he will welcome the announcement made in the pre-Budget report. We see considerable potential for carbon capture and storage and think that it has a significant contribution to make in helping us deal with the carbon dioxide issues that we face; it will also help our energy industry more generally.
Is the Minister aware that most remaining privatised coal companies own vast acres of land around their pits? Is he further aware that in recent times some pits have been closed and vast sums made out of them as property? Many of us believe that pits are being shut to make money as property developments. Will the Minister keep a wary eye on the few remaining companies involved in the production of coal? It is important to exploit the huge deposits of coal underground, rather than being concerned about the land on top.
I pay tribute to my hon. Friend’s long-standing championing of the coal industry. We certainly continue to keep a wary eye on the prospects for the coal industry in the UK. One of the reasons we established the coal forum was precisely to enable ongoing discussions with all the different stakeholders in the coal industry, to understand the pressures on businesses and the attitudes of those who work in the industry, and to make sure that they are properly taken into account in our assessments of its future needs.
My hon. Friend the Minister will be aware that the crisis in energy is likely to come between 2012 and 2015, when we will see the simultaneous decommissioning of coal-fired stations and of some nuclear stations. It is therefore important that we ensure that the investment in new technologies is continued; there are, for example, integrated gasification combined cycle and carbon capture and storage projects. The Government are going to help with a demonstration plant, but we need more such plants if we are to ensure that such technology will be available to tackle climate change. If we are to tackle that problem, the transference of such technology has to be involved. Will the Minister ensure that we will be likely to see more than one demonstration plant for carbon capture and storage?
My hon. Friend will know that we are working extremely hard not only on carbon capture and storage but on a variety of other low-carbon technologies. We are, for example, seeking a trebling of energy from renewable sources. We recognise coal’s contribution to the energy mix, and through a variety of forums, not least the coal forum, we will continue to discuss the UK’s future energy needs with all stakeholders.
Available funding includes a £15 million fund operated by my Department for hydrogen and fuel cell technology demonstrations. The Department also funded £6.5 million towards the establishment of a fuel cell and low-carbon vehicle technology centre of excellence based in Loughborough.
I am sure that the Minister is aware that the Governor of California visited this country recently, and that California has been a champion of the use of hydrogen fuel technology. Hydrogen is being used as a fuel throughout the state of California. What steps is the Minister taking to adopt some of its widespread availability?
I heard something about the Governor of California coming to the UK, and I welcome the fact that he has championed not only the potential of hydrogen but further investment to reduce carbon dioxide emissions. We recognise the potential, which is why we set up the fund. I also welcome the initiatives such as those taken by the Mayor of London, who has committed to having 70 public transport vehicles powered by hydrogen sources. I know that the hon. Gentleman has an interest in this matter, and I am sure there will be many exchanges about the future of hydrogen. We recognise its potential, but it is still some way from fulfilling it because of research needs. I hope that the funding that we have committed will help to move the technology forward.
My hon. Friend the Minister rightly mentions the institute at Loughborough, and we welcome the announcement of the energy technology institute and the £1 billion that it will bring, which will be focused on Loughborough. He talks about potential, but will he visit Intelligent Energy, a company that has a hydrogen fuel cell motorbike ready for production? We talk about potential, but what can his Department do to assist companies that are ready to produce the vehicles and fuel cell technology that will drive this country forward? We must not just talk about potential but ensure a marketplace for such vehicles.
In principle, I am happy to come to Loughborough to meet my hon. Friend and see the company that he describes. In my original answer to the question of the hon. Member for Rochdale (Paul Rowen), I gave two examples of support that is available to move this new technology forward. There are a range of other sources to help us take it forward and I—or perhaps my right hon. Friend the Minister for Energy—look forward to meeting him to discuss those options.
In Havering, BP conducted a very successful experiment in the use of liquid hydrogen fuel for single-decker buses that ended last year. The only trouble was that the buses had to come down from the east end of London to Havering, because that is where the fuel was. Does the Minister agree that it is not just a question of the viability of using a different fuel, but of its availability, in order to make experiments environmentally friendly and to encourage businesses to try them?
I accept the hon. Lady’s point. We need to get to a point where we expand the pilots, which is why I hope she will join me in welcoming the initiative of the Mayor of London to commit to 70 hydrogen-powered public transport vehicles by 2010. Such initiatives will help to move the technology from demonstration projects to reality.
The public consultation on the future of nuclear power in the United Kingdom closed yesterday.
Over the past five months, we have consulted widely, seeking views from a broad range of interested parties on the information and arguments set out in our consultation document. We are now giving careful consideration to all the responses.
We need to make a quick decision; I can certainly agree with the hon. Gentleman to that extent.
The latest figures from the Nuclear Decommissioning Authority reveal a 16 per cent. increase in the cost of decommissioning legacy waste, to £73 billion. Is my right hon. Friend confident that he can honour the Government’s guarantee that there will be no future subsidy from the taxpayer for any new nuclear build, given that no one has the slightest idea about what the future decommissioning and waste management costs will be?
Yes, we are clear about that, and the arguments that support it were clearly set out in the nuclear consultation document. My hon. Friend raises a fundamentally important aspect that has come up repeatedly during the public consultation, but I believe that we have set out the right way forward. There will be no taxpayer subsidy and no hidden subsidies for new nuclear if Her Majesty’s Government reach that decision. That is the right and sensible way to proceed.
As the hon. Member for Barnsley, West and Penistone (Mr. Clapham) said earlier, crunch time for domestically generated power in the United Kingdom is only five years away. Bearing in mind how long the Government have taken to make a decision about nuclear power and that it has to form part of the mix in future if we are to meet our climate change targets, how soon will there be a recommissioned nuclear power station that produces new nuclear energy in the UK?
I respect the hon. Lady’s concerns, which are shared by all parties. She should, however, be careful about saying that her party has a monopoly of wisdom. I have been carefully studying the words of the hon. Member for Rutland and Melton (Alan Duncan), who appears to take three different positions on nuclear power. He was opposed to it, then it was a last resort and now he is apparently in favour of it. However, we shall shortly discover the position of the official Opposition.
My hon. Friend the Under-Secretary set out in previous answers some of the measures that we are taking to deal with the hon. Lady’s point. We are aware of the importance of getting on with the matter, and the Government are determined to do that.
The Secretary of State wills the end but not the means. Will he confirm that the Nuclear Decommissioning Authority has not been able to appoint contractors to decommission the old Magnox power stations because they are not interested in doing the work at the price that the Treasury is prepared to pay? Is it surprising that companies such as E.ON and EDF say that the window for new build nuclear is closing in this country, when the Government’s dithering means that old stations are not being decommissioned, there is no clarity about the price of carbon and the Government cannot even set out the regime for nuclear waste disposal? Does not the greatest threat to our energy security come not from the Russians or the middle east, but from the Government’s delays and inability to make the big decisions?
No. Again, I have a lot of respect for the hon. Gentleman, but his remarks are ridiculous. His point would be much more valid if there was any consistency or coherence behind his party’s energy policy. When he supports our reforms to the planning arrangements, others will take his comments a little more seriously.
On 17 May, following public consultation, my right hon. Friend the Secretary of State confirmed, subject to European state aid clearance, funding of up to £1.7 billion until 2011 to support the post office network and place it on a more stable footing.
That Government funding includes a network subsidy of £150 million a year to support the network. Despite that subsidy, because of continued losses of around £4 million a week and a reduction of approximately 4 million a week in the number of people who use post offices, it is necessary, as the Secretary of State announced, to reduce the size of the network while maintaining national coverage. That process began last week and will continue in the next 15 months or so.
Notwithstanding the subsidy of public money involved, that answer reveals a paucity of long-term policy and intellectual thought about how we can use that much-loved and much-needed facility, which all our constituents want. Will the Minister confirm that the 77 closures that were announced in the east midlands recently would not have been announced—the announcement would have been held back—if a general election had been called? Will he also confirm whether, when he announces the closures in Leicestershire and Rutland in November, there is any genuine chance of a consultation period that allows some of the closures not to happen? Or will they be enforced?
The timing of the programme has nothing to do with general election timing.
There is a balance to be struck between finishing the programme and the uncertainty that hangs over sub-postmasters and mistresses while it continues. We have set out our timetable to try to achieve that balance.
I thank my hon. Friend for visiting my constituency last Thursday to see for himself exactly how rural services are being delivered through what was initially a pilot scheme two years ago. Would he care to share the experiences that he had last Thursday with the rest of the House?
My hon. Friend is absolutely right. Alongside the difficult closures that are taking place, the Post Office is developing valuable outreach services. I had the pleasure of seeing them in his constituency last week, in the village of Twynholm, for example, where a member of staff from the neighbouring post office visits several days a week for several hours. The hours are well known to local people and the service has been up and running for two years. From talking to members of staff and the customers who use the service, I found that it was extremely popular. There are imaginative and creative ways in which the Post Office can provide services, particularly in rural areas where it might no longer be possible to sustain a full-time permanent post office.
One of the Post Office’s outreach services, to which the Minister just referred, is the possibility of home visits. When I suggested to the Post Office that it might like to make 3,500 home visits in my constituency, it seemed reluctant to do so. The loss of footfall arises largely from Government policy, which has removed business. Having closed rural post offices, we are now proposing to close urban post offices in some of the most deprived areas of the country, which will do immense social damage. Instead of ramming that proposal through, would the Government care to take it back and consider the proposals that the National Federation of Sub-Postmasters has made to develop proper businesses, so that instead of killing those small businesses we can allow them to grow?
The hon. Gentleman refers to the National Federation of Sub-Postmasters, whose general secretary has said:
“Although regrettable we believe that these closures are necessary to ensure the remaining post offices are able to thrive in the future.”
If the Opposition’s policy is to reverse making available the payment of benefits into bank accounts, I should remind the hon. Gentleman of the cost. It costs the taxpayer 1p for a benefit or pension to be paid into a bank account. It costs 80p to make that payment through the Post Office card account and £1.80 to do so by girocheque. If the Opposition’s policy is to reverse that, the cost would be about £200 million a year, which I am afraid we would have to add to the list of other uncosted spending promises that they have already compiled.
I declare an interest as a member of a multi-generation sub-post office family in the village where I live. Has the Minister had a chance to read the National Consumer Council report, “Post office closures 2002 to 2006”, which was critical of the closures in that period? The post office closures that were announced then did not produce a strategic reshaping of the network; rather, they hit the poorest and most vulnerable members of society. The NCC does not believe that the 95 per cent. requirement for people in rural areas to be within three miles of a post office will be adequate to prevent that from happening again. Would the Minister care to comment on that?
I have indeed read the report to which my hon. Friend refers. He is right that there are lessons to be learned from post office closures. The access criteria are important to ensure national coverage even after the change, which is why we are compensating the hard-working sub-postmasters and sub-postmistresses for their efforts. The process does the right thing by them, but also ensures that closures do not happen in an ad hoc way, on a first come, first serve basis that leaves holes in the network without trying to ensure national coverage.
Does the Minister not recognise that, once closed, a post office is lost for ever to the community? Those vital services, which are so valued by the community, require the community’s input, to ensure that no unnecessary closures are made and that decisions are not made that do the same damage as the urban reinvention programme did to the post office network in urban areas. Will he therefore extend the consultation period, once the Post Office has made its proposals, so that it can be meaningful for local communities and so that any mistakes made by the Post Office can be corrected?
The hon. Gentleman asks about extending the consultation period. As I said a few moments ago, there is a balance to be struck in doing that and lifting the uncertainty from sub-postmasters around the country. That is why we have tried to strike the balance in the way we have.
I have certainly encouraged Post Office Ltd to engage properly with local communities. Postwatch, the consumer voice, has a critical role to play in the consultations. Local authorities, too, have a critical role in engaging with Post Office Ltd and informing it of future regeneration plans and so on, so that plans can be made as best as possible. However, we cannot escape the fact that 4 million fewer people a week are using post offices, compared with a couple of years ago, and that the network is losing £4 million a week. We are committed to social network subsidy for the Post Office, and if that subsidy were not available, many more post offices would close. That is why we have committed £150 million a year to support the network.
Post Office Network
The Government are committed to securing a long-term viable future for Royal Mail and the post office network. To this end we have made substantial investment available both to support the modernisation of Royal Mail and to provide a comprehensive and accessible national network of post offices.
How come it took until yesterday for the Prime Minister and the Secretary of State to condemn the Royal Mail strike? Could it have anything to do with the fact that, until the Prime Minister bottled at the weekend, he was expecting lots of funds from the Communication Workers Union to fight the election?
That is untrue. I have made it clear repeatedly since I have been in this job that the strikes should end. There has to be a sensible solution to this industrial dispute. My interest is to safeguard the investment that the taxpayer has made in this business and to ensure that the business can operate effectively in the liberalised market in which it operates. It is completely untrue to say that Ministers have been silent. We have made our views known on this matter repeatedly since the summer.
The Secretary of State rubbishes the point made by my right hon. Friend, but over the past four years the CWU has made political contributions of £4.5 million, half of which has gone directly to the Labour party, with the rest being used for campaigning in the Government’s favour. This presents the Secretary of State with a huge conflict of interest, given that the Government are the sole shareholder in Royal Mail and a recipient of funds from the principal union involved.
There is absolutely no conflict of interest of any kind whatsoever. I have made it clear repeatedly, as has my right hon. Friend the Prime Minister, that we will always speak up for the public and the taxpayer when it comes to the future of Royal Mail and the Post Office.
Yes, I am a member, and I am proud to be one.
May I ask the Secretary of State why the Government are refusing to intervene in this dispute, which is costing Royal Mail millions of pounds and inflicting countless damage on hundreds, if not thousands, of other businesses across the country?
Let me explain to my hon. Friend that our role in this regard is to speak up for the public and for the taxpayer. We are not going to take sides in this dispute. That is our perspective, and I think that it is entirely proper that the management and the unions negotiate the terms and conditions for people in Royal Mail. I am not, for example, going to intervene to provide further funding to support a different offer to Royal Mail staff. We have given Royal Mail substantial investment, and it must operate within those investments and ensure that the taxpayer gets a return on them. I believe that the offer that has been made to Royal Mail staff is a decent and fair one, and I hope that this industrial dispute ends as quickly as possible.
Given that the Government intervened strongly and energetically to sort out the affairs of a private company, Northern Rock, is there not a case for following that example and adopting a more even-handed approach and acting as an honest broker in this dispute? Should not the Government intervene before breakfast, intervene before lunch and intervene before dinner—in the words of a former Secretary of State for Trade and Industry—to get a fair, just, negotiated settlement, not least in the interests of all the businesses that are suffering at the moment?
I agree that there must be a fair, just and negotiated settlement, which is what we believe should happen. I remind him and other hon. Members that in 2001 Parliament—with general consensus and with the agreement of both Royal Mail management and the trade unions—agreed that Royal Mail should operate with commercial freedom. I am not going to get involved in individual discussions on terms and conditions because I do not believe that it is appropriate for Ministers to do so. What I believe is appropriate is that this industrial action should end, as I agree that it is damaging businesses and inconveniencing the public.
Is the Secretary of State aware of the real anger felt by people in my constituency, particularly in Walton, Kirby and Clacton, about the news that their post offices and sub-post offices might be closed? Is he aware that under these proposals post offices that are paying their way, on which many older people depend, could be shut?
As the Minister for Employment Relations and Postal Affairs has made clear, there is an obvious case for pressing ahead with these changes. The post office network must find a long-term and sustainable basis for going forward and it has to reflect changing customer preferences, which are visible to all of us in our constituencies. It is inconceivable that any sensible Government could follow the advice of the hon. Member for Rutland and Melton (Alan Duncan) and find up to another £1 billion to subsidise the post office network, which I understand is now his policy. That is simply not economically credible. It is a deep disappointment to me to see the Conservative party, which always used to clothe itself in respectability when it came to financial matters, now displaying utterly hopeless economics.
Will my right hon. Friend confirm whether the current management of Royal Mail has his full confidence in searching for a solution to the present dispute on how it delivers a secure and solid future for Royal Mail, its customers and its employees?
Does the Secretary of State understand that the questions that he has heard from his hon. Friends today only reinforce the growing view in the country that the Government need to use their authority—as the Government and sole shareholder in the Royal Mail Group—to intervene decisively in the dispute and bring it to an end? The dispute is causing huge damage not just to the Royal Mail Group, but to the whole social and economic fabric of the country. I therefore welcome the Secretary of State’s preparedness to come before the Trade and Industry Committee next week—I hope that a date can be organised shortly—to answer questions on the dispute.
I always look forward to appearing before the hon. Gentleman’s Select Committee and I am sure that this occasion will be no exception. We should bear one important fact in mind: fortunately, we live in a country where no Minister has the power to compel people to work or not to work. I therefore have limited powers in this case, which is obvious to everyone. Our job, I think, is to make it clear to the management and the unions where we believe the public interest lies in this matter. We have done that very clearly indeed.
I hear what my right hon. Friend says, but it cannot be helpful when the chief executive of Royal Mail makes the comments that he has about his own work force. Postal workers are greatly depressed about the dispute and its possible outcome. It is outrageous that people who have given their lives to the organisation are now having imposed on them changes in terms and conditions of their work that would be completely unacceptable in other sectors. Is it not about time that the Secretary of State understood what postal workers are suffering and intervened?
I have had the very good fortune to discuss these issues with some of my own constituents who work for Royal Mail. I understand their concern about the future, which we all share. However, as I said in an earlier reply, it is important that we have a sensible, negotiated solution to the dispute, which I believe is perfectly possible. I have the greatest respect for staff who work in Royal Mail—we all do; we know what an important and highly valued job they do in our constituencies—but we must not lose sight of the important fact that if Royal Mail is going to succeed in the liberalised marketplace in which it now works, change is inevitable. We must facilitate a process of change, as the status quo is not sustainable. There will have to be changes inside Royal Mail if it is going to have the successful future that we all want it to have. I strongly believe that the best way to progress that is through a sensible agreement.
The Secretary of State will appreciate that an area such as mine has been particularly hammered by the dispute, because of the absolute reliance on Royal Mail not just by individuals but businesses. In welcoming what the Prime Minister said yesterday, may I draw to the Secretary of State’s attention the fact that the GP who administers the Small Isles medical practice has told me that people on those islands who have had blood tests cannot now get the results because the method of communication between the regional hospital and those islands is no longer in place? That is a desperately serious state of affairs. Even if the Government cannot intervene in the negotiations over the dispute, could they at least, in concert with the Scottish Executive, consider emergency provisions for people who are medically dependent on that service?
I am very grateful to the right hon. Gentleman for bringing that point to the attention of the House, and I will pursue it. We should not forget that in some cases, one of which he has highlighted, the industrial action could compromise a person’s life. That is simply unacceptable.
The letters that MPs get from Royal Mail and the union all say that they want a modernised and more competitive business. If the management and the work force agree about where they want to be, cannot the Government, as the owner of the business, help them to agree how to get there?
That is very much what I want to do, and I want to try to make sure that that happens. I hope that there is still sufficient good will for the process to reach a sensible conclusion. Management and the trade unions are talking as we speak, and I hope that a way is found quickly—it must be quickly—to end this damaging dispute, which is compromising the investment that taxpayers have made in the Royal Mail, compromising businesses, inconveniencing the public and, in the worst case scenario, as the right hon. Member for Ross, Skye and Lochaber (Mr. Kennedy) said, threatening the health and well-being of individual citizens, which is unacceptable.
Is it not the case that 43 Labour Members have signed an early-day motion expressing implicit dismay at the Secretary of State’s apparent indifference to the growing severity of the dispute? At last, today, we have heard rather more from him, which is welcome. The Government are the sole owner, the company must modernise or decay, and businesses up and down the country are being hurt. Given his answer to his hon. Friend the Member for Stafford (Mr. Kidney) that that is the way he wants to go, what further steps will he take to make it clear that union leaders are not acting in the interests of postal workers and that an immediate settlement is in everyone’s interests?
We will continue to make that point. We have made the point clearly again to Royal Mail management, and this morning I had the opportunity to do so again to the general secretary of the Communication Workers Union. We do understand the severity and seriousness of the situation, we are behaving responsibly as the shareholder in Royal Mail, and we will do all that we can to bring the matter to a sensible conclusion. That must be done on the basis of terms that are acceptable to us as taxpayers and investors in Royal Mail. The Prime Minister set out clearly yesterday the terms on which the dispute should be settled.
Is not the cruel truth that in their weekly pay packet tomorrow 130,000 postal workers will receive only one day’s pay? Will not their understandable fury at the sacrifice that they are making illustrate harshly that they are being seriously misled by backward-looking union leaders and that their future is best protected by supporting positive negotiations and a constructive plan for modernisation?
The dispute must have a sensible outcome, as I have made clear repeatedly. I will not get involved in the blame game as the hon. Gentleman has tried to do. It is essential that the dispute be now brought to an end, and the best and only sustainable way in which that can happen is a return to work on the basis of the offer that Royal Mail has made. If there are still points of detail that need to be discussed and debated—I understand that there are—those should be debated in a sensible fashion and not in a way that inconveniences the public as the industrial action is doing.
During my recent visit to Watford sorting office, organised by my colleague Sal Brinton, comments by management and staff indicated that structural restrictions prevent Royal Mail from competing on a level playing field within its own sector. Is the Secretary of State willing to meet me to discuss the underlying structural issues concerning employees and management of the Royal Mail, which may be contributing to the current industrial difficulties?
I should be happy to meet the hon. Gentleman, and any other Member who wants to raise those issues with me.
The European Union has now agreed on a long-term framework for the future liberalisation of postal services, which is very welcome. There can be no turning back of the clock in relation to liberalisation in the United Kingdom—that would be a hugely retrograde step—but we are always willing and ready to discuss with the Royal Mail unions, the hon. Gentleman and other Members any points of detail or concern that they may wish to raise, and I look forward to that.
My Department's annual small business survey showed that small and medium-sized enterprises typically spent three hours per week dealing with paperwork in compliance with Government regulations in 2005, down from four hours in the previous year.
As an active supporter of the east Northamptonshire branch of the Federation of Small Businesses, may I draw the Minister’s attention to a recent national FSB report which disputes the Government’s findings? A survey of its members found that, on average, small businesses nationally are spending as much as seven hours a week filling in forms and complying with the needs of regulators. Will the Minister agree to meet representatives of the FSB and outline ways in which he can address their concerns?
I meet representatives of the FSB regularly, and I pay tribute to their work. The survey to which the hon. Gentleman referred involved a sample of 100 businesses; the one that I cited involved a sample of 8,000. FSB surveys conducted between 2000 and 2006 show quite a large reduction in the proportion of FSB members dissatisfied with the volume of legislation, and other evidence shows a fall in the number of businesses citing regulations as an obstacle to success. Nevertheless, there is no room for complacency. We need to go further. That is why we are committed to reducing the burden of regulation on businesses by 25 per cent. by 2010, and why the second round of departmental simplification plans will be published in December.
May I remind my right hon. Friend that when I asked the hon. Member for Rutland and Melton (Alan Duncan) in the Chamber what regulations the Opposition would abolish he referred to only one—the provision for no smoking signs outside buildings? That was the only one that he could cite.
The question of regulation is, however, a huge one. Will my right hon. Friend assure me that the thrust of the Government’s approach to it will focus not on some bonfire of regulations, but on simplification of the regulations that we have? We have overlapping regulations that are excessively complicated. We need simplification, but we still need regulation.
My hon. Friend is absolutely right. There is, of course, a divergence of views among Conservative Members. The right hon. Member for Wokingham (Mr. Redwood) proposes a bonfire of regulations, apparently with the support of the shadow Chancellor, while the party leader calls for mandatory pay audits of companies.
I hope that the Minister will reflect on the incorrect statement that he has just made.
Small firms are fed up with the loose words and empty promises of Ministers. Let me take the Minister back to six years ago, when the Government introduced regulatory reform orders. We were told then that they would reverse the regulatory tide, but what happened? In six years, Ministers have issued just 33 reform orders and enacted 18,000 more regulations. That is the truth about the effects of RROs.
Given the dismal record of Ministers and their colleagues, may I ask the Minister for regulatory reform one straightforward question? How many regulations has his department scrapped in the last 12 months?
Let me remind the hon. Gentleman of the point that I made earlier. There is clear evidence that the proportion of businesses citing regulation as an obstacle to success has fallen significantly, from 21 per cent. in 2002 to 13 per cent. in 2005. Concern on the part of small businesses has fallen very sharply, reflecting the progress that we have made. However, we undoubtedly need to do more, which is why we are committed to a 25 per cent. reduction by 2010. Further details will be published in December. We have made very good progress, but there is more to come.
Following publication of the energy White Paper, we are working closely with Ofgem and energy suppliers to consider the right way forward.
My right hon. Friend will be aware that the recent Ofgem report on social tariffs shows that energy suppliers’ take-up of social tariffs varies widely. As he knows, there is widespread consensus among non-governmental organisations working on fuel poverty issues that there needs to be much wider use of social tariffs by energy suppliers. He may be aware that the all-party group that I chair recently produced a report on the issue. Will he agree to meet me and some of the organisations involved in the sector to discuss the way forward and to ensure that the consumer interest is represented in the discussions?
I would, of course, be willing to meet my hon. Friend and all hon. Members who were involved in what I thought was a very useful report. It is worth reminding ourselves that there are 2.5 million fewer households in fuel poverty today than there were 10 years ago. I assure him that we are looking closely at how we can deal with the price gap between direct debit and pre-payment meters. We are also looking at easier ways to help pre-payment customers to switch to cheaper supplies. A number of Britain’s power companies are doing some excellent work in that area and we need to see how much more we can do.
The Department is in regular contact with the small firms sector. The sector is represented on the employment law simplification practitioner panel, which will meet my right hon. Friend the Secretary of State on 31 October. The Department's ministerial challenge panel, chaired by the Minister with responsibility for better regulation, which critically appraises the Department's regulatory and policy proposals, also has representation from the Federation of Small Businesses and the Small Business Forum.
I am pleased to hear that, but does the Minister agree that the two biggest challenges facing small businesses are employment regulations and tax? Has he had a chance to look at yesterday's remarks by Lord Bilimoria, the founder of Cobra Beer and a key Labour supporter? He said that investment in small businesses and entrepreneurship has been penalised by the proposed 80 per cent. increase in capital gains tax, and that it sends all the wrong signals for Government support for small firms. What representations will the Minister make to the Chancellor about that anti-business measure?
My advice to the Chancellor would be not to return to the days when the hon. Gentleman’s party was in power and the tax was 40 per cent. Britain is still one of the best countries in the world in which to do business. That is backed up by the World Bank, and it is shown by our economic record over the past 10 years. I remind him that there are 500,000 more businesses in existence now than when his party was in power.
What consideration has been given to the risk management element with regard to removing regulations for small businesses: for example, no smoking signs that are required in one’s own home when it is used for business purposes, and even in one’s own car when it is used for business purposes?
The hon. Lady makes the good point that we must always be alive to making regulations as simple as possible. I remind her that the Government have a very active programme on that. That is why we set a target to reduce administration burdens on business by 25 per cent. by 2010. It is why, around a year ago, a list was published which set out 500 simplification measures, saving businesses some £2 billion in administrative burdens costs. As my right hon. Friend the Minister for Competitiveness said, those simplification plans will be revisited shortly so that even more progress can be made on that agenda.
The key to continued long-term improvements in UK competitiveness and productivity will be maintaining the remarkable new stability that has characterised the British economy over the past decade. We will need to continue to build on that foundation, for example, as the Chancellor announced on Tuesday, with continued investment in higher education and skills, in infrastructure and in the science base.
The most recent ranking that I have seen is the one referred to by the Minister for Employment Relations and Postal Affairs, my hon. Friend the Member for Wolverhampton, South-East (Mr. McFadden), from the World Bank. It ranks the UK sixth out of 178 countries. The latest global competition review ranks the Competition Commission joint first in the world. The new stability that we have secured is the key to that. We used to be the least stable country in the G7 on the inflation measure. Since 1997, we have been the most stable. That is the key to Britain’s new prosperity and to the huge improvements in the economy over the past decade—we are determined to maintain that.
Women and Equality
The Minister for Women and Equality was asked—
The Government have looked carefully at the implications for both men and women when developing our pensions reform proposals. An extensive gender impact assessment was published late last year alongside the Pensions Bill, now the Pensions Act 2007, which mainly focused on state pension reforms. Later this year the Government will present a further Bill with an emphasis on private pension reforms. We will be conducting a gender impact assessment for these proposals, which will be published alongside that Bill.
I am particularly concerned about the many women in my constituency and across the country who have been carers for elderly relatives or for children for many years. They find it unfair that their pension is reduced through this service that they have given not just to their families, but to the whole country. What reassurance can she give these women that they will not face a retirement of poverty?
It is a scandal that, despite the fact that women are caring for children and elderly relatives as well as going out to work, there is a 20 per cent. gap between their income in retirement and that of men. That is unfair, bearing in mind the fact that women are often older pensioners and live much longer. That is why we have taken action to deal with pensioner poverty, as most poor pensioners have been women. We are increasing access to the basic state pension and improving access to occupational pensions.
I would welcome any proposals that would encourage more women to save for pensions. Does the right hon. and learned Lady think it is helpful for the Chancellor to do a smash and grab on the state second pension as this will discourage more women from investing in such a pension?
The important thing is for women to have the opportunity to work, as well as having enough time to care for their families. That is why the right to request flexible working and the right to maternity pay and leave have been important, allowing women to stay in the labour market and therefore still earn. When they are in the labour market, it is important that they have decent rates of pay, which is why we are determined to take further action to tackle unequal pay and the gender pay gap. We also need a pensions system that ensures that everybody has a decent income in retirement. The hon. Lady will know that our pension reforms must not only be simple, affordable and sustainable, but fair. We must tackle unfairness against women in terms of their income in retirement.
Has the right hon. and learned Lady assessed the impact on women of the latest £2 billion raid on pensions as a result of the Chancellor’s pre-Budget report? As she said, fair wages and equal pay are important factors if we are to overcome female pensioner poverty. When the Leader of the Opposition and I launched our policy to combat the gender pay gap, the right hon. and learned Lady said that it was “very interesting”. As that pay gap is widening, has not the time come for action rather than just warm words? Given that the Government have taken our lead on inheritance tax, aviation tax and non-doms, will she now take our lead in this area and adopt our policy on equal pay?
As someone who has campaigned to push equal pay up the agenda for many years—I have done so for decades—I think that it is important that we all work together to challenge the fact that women are not paid as much as men. The pay gap between women part-time workers and men full-time workers is 40 per cent. None of us can possibly accept that they are worth 40 per cent. less. I will look at any proposals the right hon. Lady brings forward. What is important is not whose idea a proposal is, but whether it is a good proposal that is fair and helps people.
More than 500,000 women over the age of 60 are missing out on a state pension unnecessarily. Paying just a few hundred pounds to fill in the gaps in their national insurance record could entitle them to thousands of pounds in backdated pension payments. What have the Government done to make sure that such women are aware that they could claim that money, and what more will the right hon. and learned Lady undertake to do to ensure that they do not miss out?
It is important that women who have not qualified for basic state pension contributions, either because they took time out of the world of work to care for their families or because they have been in low paid work below the national insurance threshold, know that if they have the money they can make up up to six years with additional voluntary contributions. We are concerned about the low take-up of that provision, and we intend to take further action on it. That provision is an attempt to remedy a past unfairness. What is important is that we have put in place structures that ensure that the unfairness that marked the old system is not in the current system. We need to make sure that people are rewarded for going out to work, but also that they are rewarded for staying at home and caring for their families.
I sit on the ministerial group that overseas the United Kingdom’s action plan on human trafficking. That includes measures to inform women and girls about the dangers of this modern form of slavery. The messages contained in those measures have recently been reinforced by the public awareness campaign for Pentameter 2. As the problem also requires an international response, I raised it last week at a ministerial meeting with my European counterparts, and we will continue to support information projects in both source and transit countries.
I am pleased that the Minister agrees that this is a form of modern-day slave trade, which often forces women into prostitution. Does she have any plans to reform the prostitution laws by placing the burden of criminality on the demand side of this vile trade?
It is necessary for us to look at the demand side. Our prostitution strategy challenges the attitude that this trade in human bodies is inevitable and here to stay. The growth in human trafficking is fuelling this market, so we must look at the demand side of the problem. Ministers—including Home Office Ministers—are committed to doing what we can to ensure that the law is right in this respect and to considering how to make further progress on whether, and how, to criminalise such exploitation of vulnerable people.
I welcome what the Minister said in her opening remarks, but does she agree that a more practical measure to stop this vile slavery would be to have better immigration controls for young women and children coming in from the European Union?
I congratulate the hon. Gentleman on the valuable work that he and his group do in this area, and I would welcome the chance to meet it to discuss the matter further. Identification is vital at this point, and we are working on that as part of the steps towards our ratification of the Council of Europe convention.
Will the Minister convene discussions before the Criminal Justice and Immigration Bill completes its passage through the House to examine whether changes to it are necessary to tackle the extent to which prostitution is rife and is using trafficked women?
Although I understand what my hon. Friend is saying, we need to have a bit more debate and discussion. My right hon. and learned Friend the Minister and I held a round-table discussion on human trafficking this month, where we discussed with stakeholders the problems that they are facing. After we have had the debate and discussion, we can look at amendments, but we cannot do so at this stage.
Locally based primary care trusts are responsible for deciding what services best meet the needs of their communities. However the Government are investing in mental health helplines through a consortium of more than 50 organisations, many of them voluntary. These provide information and advice to all callers.
In addition, the Department of Health’s gender equality programme is helping to develop mental health care that is better suited to the needs of women service users. Yesterday, as my hon. Friend knows, my right hon. Friend the Secretary of State for Health announced additional investment to build a new psychological therapy service, and a great deal of that will be targeted towards women.
I thank my hon. Friend for her reply. As she may know, Sussex has Threshold, a women-only counselling service and national information line. Unfortunately, it is due to close next month because of a lack of funds. This service for women with mental health problems is very popular, so how soon will Sussex see the benefits of this new Government investment?
I commend my hon. Friend on the hard work that she has done in this respect in her area. The Brighton and Hove City primary care trust assures me that it is very supportive of women-only mental health services. The issue in this case is not about the lack of national health service funding, but about how mental health services are delivered to women in the area. That is why the trust is now working in partnership with Threshold to find another organisation to deliver these services, including the helpline.
Business of the House
The business for the week commencing 15 October will be:
Monday 15 October—Remaining stages of the Legal Services Bill [Lords].
Tuesday 16 October—A debate on defence policy on a motion for the Adjournment of the House.
Wednesday 17 October—Opposition Day [20th Allotted Day] (First part). There will be a debate entitled “Incompetent Government Handling of the Outbreaks of Foot and Mouth and Bluetongue Disease”, followed by a debate on dealing with bullying in schools on a motion for the Adjournment of the House.
Thursday 18 October—If necessary, consideration of Lords amendments, followed by a debate on the review of the third sector on a motion for the Adjournment of the House.
Friday 19 October—Private Members’ Bills.
The provisional business for the week commencing 22 October will include:
Monday 22 October—Remaining stages of the Serious Crime Bill [Lords]. Straight after the business statement, the Chancellor will come to the House to make a statement about Northern Rock.
I look forward to answering hon. Members’ questions today, but I just want to remind them that I am always available to talk to them in my room at the back of the Speaker’s Chair.
I thank the right hon. and learned Lady for giving us the future business. Yesterday, the permanent secretary to the Ministry of Justice published an update of the Department’s organisational review, in which the National Offender Management Service could be abolished, on the Ministry’s website. Why is that important announcement being made by a civil servant and not by a Minister, and on the internet rather than to the House of Commons?
On Monday the Leader of House said that she was the “policewoman in the Cabinet”, enforcing the “Parliament first” rule, whereby statements are made first to Parliament, not to the media. Will she make a statement to the House about why the Prime Minister went to Basra for a photo call, announced a troop withdrawal to the media before he came to Parliament and shamefully double-counted the number of troops coming home?
The Prime Minister keeps boasting that he has dealt with the outbreak of foot and mouth, but as he crows, the livestock industry has lost £135 million, the EU export ban remains for much of the country and the official inquiry is reported to blame a Government facility for the outbreak. We will, as the Leader of the House has just announced, have a debate on this in Opposition time next week, but when the inquiries currently under way report, can we have full debates in Government time on the lessons to be learnt?
On Tuesday the Chancellor of the Exchequer in his pre-Budget report proposed action on inheritance tax, on non-domiciles, on aviation tax and on the simplification of national insurance and PAYE. Where the Conservatives lead, this Government follow. Can we have, therefore, a debate on the protection of intellectual property rights?
With this Chancellor, as with his predecessor, we always have to look at the small print. The new Chancellor said that his PBR included an “affordable tax cut”, but far from cutting taxes he is increasing taxes on families by £2,600 a year and there is a £2 billion raid on pensions. The inheritance tax threshold has not been doubled; the Chancellor is just taking credit for what half a million families already do. The Prime Minister’s last Budget was a tax con, the Chancellor’s first PBR is a tax con, so can we have a debate on the Government’s tax cons?
Incompetent, lacking in vision, with the same old spin—the Prime Minister is running scared of the people’s verdict. Yesterday in Prime Minister’s questions his excuse for not calling an election was that only 26 people had signed a Downing street petition calling for one. I checked the website this morning and there are now 4,408 signatures and rising. Can the Leader of the House arrange for the Prime Minister to give us an update on the petition every week in Prime Minister’s questions?
The Prime Minister is running scared of a general election and he is also running scared of a referendum on the renamed European constitution. That is despite the fact that the Labour Chairman of the Labour-dominated European Scrutiny Committee says:
“the red lines will not be sustainable…eventually all of the treaty will apply to the UK.”
Can we have a debate in Government time on the report of the European Scrutiny Committee?
Finally, if the Prime Minister wants to prove that he is not a bottler, why does he not keep his word and give us the referendum that he promised?
We had the party political point scoring at Prime Minister’s questions yesterday. Having had the Punch and Judy then, we can spare the House the Judy and Judy show today. This is a statement on the business of the House, and it will be business as usual.
Turning to the points of business that the right hon. Lady raised, on the Ministry of Justice, there is an ongoing review. There has been no announcement. [Interruption.] The announcement was of an ongoing review and it was notified on the website. If there are any proposals for change, we rightly would expect them to be notified to the House by the Secretary of State for Justice. There are no such proposals at present; the matter is simply under review.
The right hon. Lady mentioned the “Parliament first” rule. We in this House all think it is very important indeed that if there is information that the House should hear first, that is exactly what happens. When the House is not sitting, obviously there is not the option of a statement to the House first. I agree with all hon. Members who think that information should be given to the House first. Indeed the Prime Minister came to the House and made a statement of further information about Iraq.
In relation to foot and mouth and bluetongue, I agree with the right hon. Lady that farmers have had a difficult summer. The Secretary of State for Environment, Food and Rural Affairs came to the House on Monday and announced a package of support for hill farmers who are the most seriously affected. I note that the hon. Lady has made this the subject of her Opposition day debate. If there is any further information, it will be brought to the House. This is a serious problem. We need to identify the problems, contain them and eradicate the diseases which are so damaging.
The right hon. Lady talked about the protection of intellectual property rights. I am sure that she can raise that subject with my right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform.
The right hon. Lady asked about tax. As she knows, my right hon. Friend the Chancellor will be answering Treasury questions next Thursday, and no doubt her hon. Friends can raise those questions then.
The right hon. Lady mentioned issues relating to the EU reform treaty and European scrutiny. There will be public confidence in how we deal with issues proposed by Europe only if there are processes in the House that we all agree are working properly, and I do not think that that is the case. The point has been raised by a number of hon. Members on many occasions, including members of the Modernisation Committee, and we shall have to look into it further to make sure that we are doing the best we can in the House to scrutinise proposals from Europe.
The right hon. Lady referred to how the House is dealing with the European reform treaty. She will know that if the Government reach an agreement on intergovernmental issues relating to Europe it will come to the House for ratification— [Hon. Members: “That’s not a referendum.”] Perhaps hon. Members will let me finish. It will come to the House. It is for hon. Members to decide the amendments that they want to table and it is for the Speaker to decide which amendments he accepts.
Given the growth in the number of agency workers, will my right hon. and learned Friend find time for a debate on how the law protects agency workers? The welcome improvements that the Government have made through the minimum wage and employment rights need to apply fully to agency workers, not only so that some of the lowest paid people in our economy get all the benefits from their work but so that good agencies, which do the right thing, are not undercut by their less scrupulous competitors.
My hon. Friend raises an important issue that was also the subject of a private Member’s Bill—the Gangmasters (Licensing) Act 2004—promoted by my hon. Friend the Member for Paisley and Renfrewshire, North (Jim Sheridan). We all agree that we need to do more to protect vulnerable migrant workers from exploitation, as well as those who have been working hard in this country for a long time, to ensure that their terms and conditions are not undermined and undercut by unscrupulous agencies. Consideration of what more we can do in relation to vulnerable workers will be raised with my hon. Friends at Question Time, but I will bring my hon. Friend’s point to their attention.
I return to the Prime Minister’s welcome statement in July that his new intention would be always to make statements on important issues to the House whenever appropriate, yet within three months we saw him go back to the bad old habit of making a statement that could absolutely have waited until Parliament came back this week. Will the Leader of the House go back to the Prime Minister and Ministers and make it clear that it is not acceptable that statements are made in the recess, willy-nilly, whatever the subject, when they could wait to be made in Parliament. That completely undermines what the Prime Minister said to the House after his election in the summer.
On a similar issue, the Prime Minister indicated the intention to be open-minded—as the Leader of the House has always been—about constitutional reform, which is very welcome. Given the little local difficulty that the Prime Minister got into last weekend, will the right hon. and learned Lady encourage him to let the House discuss the merits of fixed-term Parliaments, with a guarantee that people are on electoral registers and not off them, and possibly the idea that we hold elections on both days of the weekend to maximise turnout? I am sure that people throughout the country would welcome an unwhipped debate on that subject to test the view of the House.
We heard a welcome statement from the Chancellor earlier this week on public sector borrowing and the comprehensive spending review, but there is to be no extended debate about that, as there usually is after the Budget. Will the Leader of the House suggest that in future we have a full, proper economic debate twice yearly, because then we could ask whether Labour was about to adopt our policy on long-term care funding for the elderly and test whether the flood defence moneys would be adequate or, as all the independent experts suggest, inadequate to meet the damage of recent months.
Finally, rather than having to respond on Opposition days when subjects affecting agriculture and rural communities are put on the agenda or as a matter of urgency when there is a crisis, will the right hon. Lady provide regular opportunities to debate agriculture and the rural economy, not just after the latest outbreak of BSE or bluetongue disease? We must understand that unless we have a healthy agricultural industry which feels supported, the UK will face severe economic and financial difficulties?
We can all agree that when the House is sitting and a Minister has an announcement to make, that should be heard first in the House, not read about in the newspapers or heard on the “Today” programme. That is what is important. However, it is perfectly acceptable for the Prime Minister, as he did, to go to Basra and, when he is there, to answer questions about troop numbers.
The hon. Member for North Southwark and Bermondsey (Simon Hughes) asked about the recall and dissolution of Parliament. The Modernisation Committee, which met yesterday, agreed that under the “Governance of Britain” proposals, we should examine the recall and dissolution of Parliament. Indeed, there will a Speaker’s conference on a number of aspects of building public confidence in our democratic system. It is already possible under the law for voting to take place at weekends. That has been piloted in some areas and it is important that we continue to consider it.
The hon. Gentleman spoke about the opportunities for discussing flood defences. I draw his attention to what the Chancellor said in the pre-Budget report about the increase in money for flood defences. We must not only tackle climate change and reduce carbon emissions—the climate change Bill will be important for that—but invest in adaptation to extreme weather conditions and protect people from floods. That was proposed in the pre-Budget report.
The hon. Gentleman mentioned the importance of the House having topical debates. He is aware that the Modernisation Committee has made substantial proposals for topical questions to be asked without notice at Question Time, as in Prime Minister’s Question Time, and for topical debates. I shall shortly present those proposals to the House.
Will my right hon. and learned Friend allow for an early debate on the disgraceful decision by the Liberal Democrat and Scottish nationalist-run council in Edinburgh to deprive thousands of senior citizens of essential home help services from January—services such as ironing, cleaning and even fetching essential messages?
I know that my hon. Friend is extremely concerned about care and support for older people. Despite his criticisms of the provision of services by the local Liberal Democrat-Scottish National party council, he may be aware that the Government are undertaking a review of the support that we give to carers. I invite him to contribute to that review.
Today’s shaming report from the Healthcare Commission shows that 90 people died of c. difficile in Maidstone and Tunbridge Wells, and I am sure that the thoughts of all of us are with the families and friends of those who died in such tragic circumstances. Will the Secretary of State for Health come to the House to debate the lessons to be learnt from this tragedy? In particular, will he reassure my constituents and those of my hon. Friends that patient care will not be sacrificed to Government targets, be they financial or clinical, and specifically that nursing numbers will not be held back because of targets, and also that the new hospital, which will be 100 per cent. single-bedded rooms and therefore a bulwark against such infections in future, will not be jeopardised by any financial consequences from meeting the recommendations of the report?
Hospital-acquired infections, the subject of the report published this morning, have been an absolute tragedy and a scandal. Lessons must be learnt, not only in the three hospitals involved but more widely in the NHS. That is why yesterday the Secretary of State for Health said that he was announcing more investment in provision for isolation, so that when the disease is identified, the relevant patients can be isolated. He also said that there should be an annual deep clean in every hospital, improved cleaning throughout the year and extra screening. Currently, there is screening for planned admissions, but no comprehensive screening for such infectious diseases when people are brought in as a matter of emergency. Our health and social care Bill will strengthen the inspection regime; as the hon. Gentleman will know, that Bill is in the draft legislative programme.
I want to mention a point about targets and patient care. I remember when we did not have targets on waiting lists, and constituents of mine used to die waiting for their heart operations. The targets are to ensure that patients get the health care that they need. The hon. Gentleman asked about new hospitals. He will have noticed that the pre-Budget report included additional investment in new hospital buildings. I conclude by saying that the Secretary of State for Health will give a further written statement on hospital-acquired infections early next week.
When will my right hon. and learned Friend make time available for a debate on the use of the House of Commons communications allowance during any election period? I ask that in the light of the Electoral Commission’s ruling that Plaid Cymru must declare as election expenses the double-page adverts paid for out of its communications allowance. One was placed a week before the Assembly elections by the hon. Member for Carmarthen, East and Dinefwr (Adam Price) in the Llanelli Star, a newspaper read by my constituents.
If the Leader of the House had been here earlier, she would have heard a protracted exchange about the problems of our postal services and the current industrial action. I should say that, as a Conservative, I am sympathetic to the postal workers’ position, albeit perhaps not to their leadership. I believe in the universal daily service and that the postal service is essential to the social fabric of this country. Given that there is such protracted industrial action in a national service, should there not be a debate in this House, so that every Member can express a view? Although I believe that managers of postal services need to make their own decisions, this House and the Government should take an interest in matters that in some cases can affect the lives of individuals.
I am aware that the House had an opportunity for protracted discussion during Business, Enterprise and Regulatory Reform questions this morning. I strongly agree that we all respect the work done by the Post Office work force. We all support the universal daily service. We recognise the huge challenges that have faced the Post Office, first, with the advent of the fax and then with the advent of e-mail, which have transformed the situation in which the Post Office works.
I agree that the strike has been damaging, not only to the Post Office but to businesses that depend on it and ordinary members of the public wanting to use postal services. The Prime Minister has made it absolutely clear, as did the Secretary of State this morning, that in view of the fact that a perfectly decent offer has been made, we want the dispute to end. The industrial action is not justified, as the Secretary of State said.
May we have a debate—or, better still, a Bill in the Queen’s Speech—to close the loophole that allows candidates to spend unlimited amounts of money until four weeks before an election? I am sure that my right hon. and learned Friend is as alarmed as I am by the sight of Lord Ashcroft roaming the country signing cheques for £25,000 at the drop of a business plan, for the few candidates who win his approval. Does that not smell of the Victorian era, when landowners controlled strings of rotten boroughs and could spend money to ensure that their candidates were elected?
My hon. Friend raises an important point. All in the House are concerned that there should be full confidence in the House and in our democracy. We should all be concerned that people do not like the idea that big money comes in and assists people in buying seats. That has been pervasive in the United States and has undermined public confidence. This “arms race”, in which all sides have been spending more and more on elections, has simply been correlated with a fall in turnout. The public are turned off—[Interruption.]
Will the Leader of the House arrange for the Department of Health to carry out an urgent inquiry and make a statement next week about how it sometimes answers priority written questions? Can the Department please look into the fact that when I asked an unhelpful question in September about how many scouts at the world jamboree attended Broomfield hospital to be treated and how many were asked to pay for their treatment, the Minister concerned responded by hiding behind the fact that the Department does not collect such information centrally? When I rang up the Minister’s private office to complain that that response seemed to be blocking, people there helpfully considered the issue again. Ten days later, they sent me an e-mail saying that they had checked with the East of England strategic health authority and Mid-Essex hospital trust and that they were unaware that anybody from the jamboree had been treated. Last night, I received a response to my freedom of information application, which told me that 107 scouts had been treated for 173 medical complaints and that 53 of them were not eligible for free NHS treatment. I also learnt that not one had yet been sent an invoice, even though they have all returned to different parts of the world—
The hon. Gentleman raises an important point about questions. Questions tabled by hon. Members to Government Ministers about issues of public concern or of concern in their constituencies are all helpful, so we should back Members up in asking them.
All answers should be prompt, full and completely accurate. Members should not have to resort to freedom of information requests. If a mistake is made—honest mistakes will sometimes be made and misinformation given in a parliamentary answer—the Department itself should ensure that the answer is corrected and sent directly to the Member concerned. We also need to make arrangements to ensure that corrections are printed in Hansard. At the moment, the relevant Member can be invited to retable the question, but that is a bit clumsy. We are thinking about whether to have a corrections page at the end of Hansard, so that people can see when information has been wrong. I do not want us to seem like The Guardian, but when Government Departments get things wrong, they should correct them; it should not be necessary to make freedom of information requests. As soon as an hon. Member has tabled a question, they should be confident that it will be answered accurately.
On Monday, the House debated the Second Reading of the Criminal Justice and Immigration Bill. As two Government statements were made beforehand, the main debate did not start until 5.39 pm. Back Benchers did not have a chance to make their speeches until two hours later; that meant that some of us got to speak for only five minutes or less. What does my right hon. and learned Friend plan to do to take forward the Modernisation Committee’s recommendation that there should be limits on Front-Bench contributions during such debates?
That is a matter of concern to Back Benchers in all parties and, if I might be so bold, it has been a matter of concern to you, Mr. Speaker, as well. As my hon. Friend said, the Modernisation Committee has introduced proposals that the Government will bring forward for debate shortly. Front-Bench spokesmen need long enough to get their argument across, but not so long that Back Benchers do not have an opportunity to intervene or to make their own speeches.
I urge the Leader of the House to allow time for a debate on the report of the European Scrutiny Committee. I draw her attention to the fact that just last week the Northern Ireland Executive and the Northern Ireland Assembly agreed unanimously that there should be a referendum on the European treaty. I urge her to accede to the growing clamour and demand throughout the country for a referendum. Does she accept that the Government have lost the argument on that, and will the Government allow the people finally to have their say, as they promised they would?
All of us who believe that our membership of the European Union is vital for the health of our economy, our work tackling climate change, our commitment to international development and the tackling of crime, which of course knows no boundaries, think that we could make the argument in favour of Europe much more strongly.
As for the European Scrutiny Committee, and how we deal with the ratification of the treaty, the hon. Gentleman is a Member of this House, and if the Government introduce proposals for the House to ratify the treaty, it will be down to hon. Members whether they table amendments or not. The selection of amendments will be a matter for Mr. Speaker, and it will be a matter for this House to vote on them. The point is that the British people should be reassured that no legislation is simply imposed on this country; it is a matter for this House.
Following on from the point of the hon. Member for Macclesfield (Sir Nicholas Winterton), does the Leader of the House not think that the public will find it absolutely disgraceful that we are not having a debate on the Royal Mail dispute, so that we can put forward some of the views that are not being put forward by Adam Crozier, on his £1.3 million salary, about the deterioration of services for the public that will take place as a result of the planned changes, such as later deliveries, no Sunday collections and a cut in the pensions of our hard working postmen and women? That case has to be put in the House because our loyal postmen and women are being done down very badly by the fact that the Government are not directly intervening.
Although the Post Office runs along commercial lines, this is a matter of public interest. My hon. Friend has raised some very important points and I will bring them and those made by the hon. Member for Macclesfield (Sir Nicholas Winterton) to the attention of my right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform.
On Monday, the Secretary of State for Environment, Food and Rural Affairs came to the House and made a statement on compensation for foot and mouth. Yesterday, my hon. Friend the Member for Ceredigion (Mark Williams) asked the Under-Secretary of State for Wales whether the Assembly in Cardiff was going to be fully refunded for any cost. Overnight, there has been some discussion as to whether that contribution by the Department for Environment, Food and Rural Affairs was withdrawn when it became clear that a general election was not going to go ahead. This is a terrible state to be in. Will the Leader of the House ensure that the Secretary of State for Environment, Food and Rural Affairs comes to the House and clarifies the situation?
The Secretary of State is well aware of the terrible difficulties that foot and mouth and bluetongue have caused, particularly the effect on hill farmers, of whom there are many in Wales. Of course, the hon. Gentleman will know that this is a devolved matter—[Hon. Members: “No, it is not. It is reserved.”] The devolved Assemblies have formed their own package of compensation—[Hon. Members: “It is reserved.”] I will undertake to look into that matter.
May we have an early debate into the running of price-comparison websites for goods and services? There is a growing concern that those sites for consumers do not always offer the best deal because they hide the payments that they are making to various companies, and they do not necessarily include the whole range of goods and services available. Some people have called for a code of conduct; I am not sure whether that is the right way forward, but I feel that regulation of some kind is needed to ensure the best possible deal for consumers on the web.
My hon. Friend makes an important point. Consumers need to know whether the information that they are looking at is genuinely impartial and fair advice that will help them when they spend their money on goods and services. I will bring his comments to the attention of my right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform.
As my party is now setting the agenda for Parliament, would it not save time if the business statement were made by my right hon. Friend the Member for Maidenhead (Mrs. May)? In the meantime, if that is not possible, may I press the Leader of the House for a reply to a question she was asked but did not answer? On Tuesday, the Chancellor of the Exchequer made a statement on the pre-Budget report and the comprehensive spending review, setting the financial and political priorities of the Government for the next three years. Surely that statement should be tested in the House of Commons, in an early debate in Government time.
Will my right hon. and learned Friend give time for a debate on the proper implementation of the Electoral Administration Act 2006? As the Minister responsible for piloting that Act during the first half of its journey through Parliament, she will be aware that one of its key elements was door-to-door canvassing to increase voter registration. Advice given by the Electoral Commission to electoral registration officers in June said that that was not necessary. This matter needs to be fully discussed in Parliament.
My hon. Friend raises an extremely important point. He has been a champion of ensuring that everyone who is entitled to vote is on the electoral register, so that they get their vote. It is of particular concern to him that those least likely to be on the electoral register are those who live in inner cities, poorer people, younger people, those in rented accommodation and black and Asian people. We cannot have an unequal democracy and, therefore, the electoral register is an important part of democracy, which underpins this House and its legitimacy. I will raise the point about the recommendation against door-to-door canvassing; that was not the intention of the House when we passed the Act. I will get my right hon. Friend the Secretary of State for Justice to write to him, and place a copy of the letter in the House of Commons Library.
May we have a debate on the effective use of resources in the health service? I have been trying to discover what lies behind proposals to close Brookfields hospital in my constituency and I have found out that vast amounts of public money are lying unspent in the accounts of strategic health authorities: £960 million last year and a predicted £660 million this year. Surely it makes no sense whatsoever to close hospitals in one part of the country while vast amounts of public money are unspent in other parts.
May we have a debate in Government time about the lessons learned from the collapse of Farepak, the Christmas saving company, which happened this week last year? We now know that the Halifax Bank of Scotland and Farepak management met in February of last year because the company was in dire financial straits, but it kept taking money off agents until last October. Does my right hon. and learned Friend agree that the minutes of that meeting should be put into the public domain so that the hundreds of thousands of decent, hard-working families can finally learn where their money went?
First, I pay tribute to the work that my hon. Friend has done on exposing the scandal of Farepak, alongside that of my hon. Friend the Member for South Swindon (Anne Snelgrove). It is a very important issue, and it has led to a tougher regulatory regime to ensure that something similar does not happen in the future. As he says, there are still lessons for those individuals to learn from what happened to Farepak. As he knows, an investigation is being carried out under the powers of the Companies Act. When such an investigation is being carried out, there are technical and complex rules about what is available for publication and what has to remain confidential. We want to be sure that everything that can be published is published, because it is a matter of public interest. I will ask the relevant Minister to ensure that that does happen, and that he writes to hon. Members concerned and places a copy of the letter in the House of Commons Library.
Many people in other parts of the country will be worried about the hospital infection stories emerging from Tunbridge Wells today. I am therefore pleased that there will be a statement. However, will my right hon. and learned Friend encourage her colleagues in the Department of Health to go further and seek positive opportunities to debate what works in controlling hospital infections? For example, Plymouth Hospitals NHS Trust, based in Derriford hospital, has one of the lowest infection rates in the country and also manages to fulfil other targets.
I join my hon. Friend in paying tribute to her local hospital. It is important to listen to clinicians and others who work in the health service about the way in which we tackle hospital-acquired infection. It is important that we understand the science of hospital-acquired infection and that we listen to patients, who, with their visitors, are the first to complain about dirty facilities in hospitals. The additional use of antibiotics has meant a growing difficulty with tackling hospital-acquired infection once it has taken root. However, I remember complaining that I was not allowed to spend long enough in hospital when I was having my first baby—one was tipped out after a week; it is now 24 hours—and my father, as a doctor, said, “You want to spend as little time as possible in hospital because hospitals always carry a risk of infection.” We are not considering anything new, but the position has become much graver.
As the Leader of the House knows, I had a debate on the EU constitutional treaty referendum in Westminster Hall, where I received a pretty inadequate response from the Minister for Europe. Perhaps we could have a full day’s debate on the subject. One of the reasons that the Prime Minister gave for bottling out of a general election was that polls showed that few people required one. However, poll after poll shows that the vast majority—three quarters of the people of this country—want a referendum on the EU constitutional treaty. May we please have a debate on that?
I have friends and relatives who work for Royal Mail as postal workers and on the management side. I am therefore under no illusions about the complexity of the issues involved or the difficulty of the negotiations. Although we had a brief discussion of the matter on a single question earlier this morning, my right hon. and learned Friend must know that it is potentially the most serious industrial dispute of the past 10 years and possibly the past 22 years. On next week’s agenda, we have three Adjournment debates on issues that cannot be considered remotely topical. In view of my right hon. and learned Friend’s express support earlier for more topical questions and debates, will she reconsider the future business so that we can have a debate on the dispute at Royal Mail on the Floor of the House?
Returning to the Leader of the House’s welcome to the “Parliament first” initiative, and given that she inadvertently misled the House when she answered a question from the hon. Member for North Southwark and Bermondsey (Simon Hughes), may I invite her to confirm that the Prime Minister was not answering casual questions in Basra, but holding a formal press conference to announce troop reductions? Will she also confirm the number of days that elapsed between that press conference and the return of the House on Monday?
I would simply confirm to hon. Members that I agree that announcements should be made to the House first. However, I also expect hon. Members to understand that, if the House is not sitting, that does not mean that Ministers cannot make announcements, and that they will continue to be made in the recess. I shall focus on ensuring that, when the House is sitting, information is given to the House first.
Regardless of the way in which the statement was made, thousands of service personnel—men and women—will return to their families from Iraq in the near future. May I ask my right hon. and learned Friend to use her good offices to encourage local authorities and communities to recognise the work of the service personnel when they return, not jingoistically but in a way that acknowledges their valuable contribution to the safety and security of this country?
Will the Leader of the House consider making time available for an urgent debate on the worryingly high levels of personal debt, especially among students and graduates, which threatens to undermine future economic stability? Does she agree that such a debate would be especially pertinent in view of the widely differing predictions in the Government’s pre-Budget spending review, which the independent assessors published this week?
The Government are concerned to protect people against unwise borrowing, which they are at risk of being unable to repay. However, I refer the hon. Gentleman to the statements of my right hon. Friend the Chancellor about his confidence in future economic stability.
There are persistent rumours in this place about an early prorogation, so there must be plenty of vacant slots into which debates can be inserted. Will the Leader of the House arrange a debate on a topic of concern to 15,000 people in my constituency, and, indeed, people in every constituency: the 9 million people who suffer from some form of arthritis, such as rheumatoid arthritis or osteoarthritis? Tomorrow is world arthritis day and it would be appropriate for a Minister in this place to make a statement next week on the steps that the Government are taking to tackle the problems that are associated with the distressing condition, which affects not only elderly people but those across the spectrum of society.
May we have a clear, unequivocal statement next week on what is and is not allowed in Parliament square? The right hon. and learned Lady knows that her predecessor, the right hon. Member for Neath (Mr. Hain), informed the House and the Commission—as you will remember, Mr. Speaker—that the legislation that was passed would deal with the eyesores in Parliament square. Yet we now have more of an eyesore than ever.
What is or is not allowed in Parliament square is a matter for the law that has been passed by the House and its independent enforcement by the police and the Crown Prosecution Service. If the hon. Gentleman believes that we should change the law, he should present proposals. The issue is raised in the Green Paper entitled “The Governance of Britain”, to which he could respond.
If the Leader of the House is having difficulty with the constitutional position on foot and mouth compensation, may I commend to her a concise—some might say elegant—statement of the law contained in my point of order at column 416 of yesterday’s Hansard?
Will the Leader of the House ensure that, when we have the debate in Opposition time, the Secretary of State for Environment, Food and Rural Affairs will lead for the Government? On Monday, he gave the House the impression that he had no responsibility for Scotland. That is wrong and an error that is making the important topic a political football for the Scottish National party in Edinburgh. The farmers and crofters in my constituency and throughout Scotland need answers before the economic and animal welfare crisis reaches a peak.
We would all agree that all Departments, Government agencies, local government and the devolved Administrations should work to get the best possible deal to support farmers in that difficult situation and avoid its becoming what the hon. Gentleman describes as a party political football. He is right that there will be a debate next week. I am sure that the Secretary of State will be able to respond in the necessary way.
Does the Leader of the House think that it gives a good impression of this place if all the good ideas for debates and statements from Back Benchers in all parts of the House are turned down, so that the House can plan another holiday, shortly after a 10-week recess? Is the image of the House further enhanced by the proposal that MPs should be able to take precedence over other people in queues?
The right hon. Gentleman raises two points. The first is about the availability of time for hon. Members to get topical debates. As he will know, members of the Modernisation Committee under the previous Leader of the House made some proposals, which will be brought forward, that will enable Back Benchers to have more topical questions and topical debates.
The right hon. Gentleman also raised the question of hon. Members and others who use the Palace of Westminster’s facilities. I understand that it was the existing rules that were reissued. We would all agree that when it comes to running for a vote it is important that the lifts should be available to hon. Members. However, in the 21st century, if two human beings are standing next to each other queuing for a sandwich or cup of coffee, it cannot possibly be right that because one of those people is a Member of Parliament, they go first.
Financial Market Instability
With permission, Mr. Speaker, I should like to make a statement on Northern Rock plc. Before I start, however, I draw the House’s attention to the fact that I have informed both the Register of Members’ Interests and the Treasury’s permanent secretary that, like many others, my wife and I have a mortgage with Northern Rock, but no savings or deposits.
As I said in my written statement on Monday, Northern Rock got into difficulty following the problems triggered in the US mortgage market, which have gone on to affect the financial markets in countries all around the world. In early August, when the markets realised the extent of the problems in the US sub-prime market, they also began to have doubts about the value of other asset-backed securities. Uncertainty over which institutions were exposed and to what extent meant that institutions lent to each other at much higher rates, and in some cases stopped lending to each other altogether. The result was a large reduction of money in the market generally and an increase in the cost of borrowing, not just for those with exposure to the sub-prime market, but for all institutions.
Those developments have had a global impact, affecting major US mortgage lenders, a major French bank and banks in Germany. The availability of credit has increased over the past few weeks, so we can be more confident, but we cannot be certain when the current instability will end. Britain entered the global turbulence with a stable economy and a strong banking sector, which has experienced rapid growth, with well capitalised balance sheets. British institutions have less direct exposure to sub-prime assets and our sub-prime market share—5 per cent.—is much lower than that of the US. However, because of its business model, Northern Rock faced a particular problem. It has a large share of Britain’s mortgages, but they are primarily financed through the wholesale markets, including a significant proportion from securitisation. That meant that Northern Rock was particularly vulnerable to the virtual closing of that market over the summer.
On 14 August, the Financial Services Authority told the Bank of England and the Treasury about its concerns about Northern Rock and its vulnerability in the current market circumstances. During August it became increasingly clear that Northern Rock was having difficulty getting access to the financing that it needed and that the cost of doing so was increasing. The general situation and Northern Rock’s position in particular were monitored on a daily basis. On 5 September, the Bank announced £4 billion of extra support to provide increased liquidity to the wider market. As Northern Rock’s position deteriorated, it became clear that specific support was likely to be needed for it. On 13 September the Governor and the chairman of the FSA recommended that I authorise the Bank to provide special liquidity support. I agreed because I believed that that was justified.
There are clear principles governing such support, which are set out in the memorandum of understanding between the Treasury, the Bank and the FSA that was first signed in 1997. Such support should be undertaken only when there is a genuine threat to the stability of the financial system and in order to avoid a serious disturbance in the wider economy. That was the case here. The provision of support was announced on 14 September. Although the FSA had assured the public that Northern Rock was solvent and that if depositors wanted to get their money out, they could do so, it became clear that further assurance was needed. Therefore, on 17 September, again on the advice and with the agreement of the FSA and the Bank of England, I announced that during the current instability in the financial markets, and should it prove necessary, I would put in place arrangements that would guarantee all the existing deposits in Northern Rock. That undertaking was extended on 20 and 21 September.
The Treasury, the Bank and the FSA continue to work intensively with Northern Rock with a view to helping it to resolve the situation. Any future solution must lie with the company, but the Government have provided appropriate help and will continue to do so. As I reported to the House on Tuesday, I have extended the Government’s guarantee arrangements to all new retail deposits for which Northern Rock will pay a fee, while the Bank has provided an additional loan facility, which has replaced that of lender of last resort. I have today written to the Chairman of the Select Committee on the Treasury and the Select Committee on Public Accounts setting out more details. I am also publishing that letter and placing a copy in the Library of the House.
There are clearly lessons to be learned from what happened to Northern Rock and the wider instability across the world. The responsibility to minimise risks and prevent problems from happening in a particular bank lies first and foremost with the directors acting on behalf of its shareholders. That is their clear duty. It is the job of the financial authorities to set the policy and the regulatory framework in which institutions and markets work. Let me remind the House of those responsibilities. As the House knows, the Bank of England has complete independence in monetary policy. Its second core purpose is financial stability, a role that it discharges on a daily basis. The FSA, also independent, is responsible for the supervision of individual firms such as Northern Rock. Because of the importance of the financial system for the stability of the economy as a whole and because of the potential impact on the Exchequer in ensuring stability, the Government are rightly also involved. The Treasury is responsible for the overall legislative framework and I am accountable to Parliament.
It is right that the Bank and FSA should continue with those responsibilities. The model is one that others around the world are now following, but we need to review how the framework has operated and put in place whatever practical improvements are needed. As the FSA has said, it is reviewing its own lessons for itself. I look forward to its conclusions early next year. We need to make more reforms to prevent problems from happening internationally and in Britain. First, when the Financial Stability Forum reports to Finance Ministers at the G7 in Washington next week, I will urge faster rapid implementation of international agreements on solvency, accelerated work on international standards for regulating liquidity, more transparent information on credit ratings and action to improve the transparency of off-balance sheet vehicles. Secondly, I will propose an International Monetary Fund and Financial Stability Forum early warning system to strengthen financial sector surveillance and to identify risks to stability and co-ordinated regulatory responses to them. Thirdly, I can report a European agreement this week to strengthen arrangements for ensuring financial stability in Europe and increase cross-border management.
It is important that regulators focus on liquidity as well solvency. Here at home, the FSA will shortly set out proposals for a review of the UK liquidity regime. As the Governor has said, all central banks face problems in providing support to banks in difficulty in a world where markets rightly expect high levels of disclosure and transparency. I can therefore confirm that if it proves necessary to clarify in Europe the legal and practical issues surrounding the way in which such support is provided and disclosed to protect financial stability, we will work with other European countries to provide that certainty. We will now review whether rules about swift takeovers of banks need to be changed.
When problems occur, however, we need to have a system in place that is clear and which reassures depositors. We will introduce legislation in the next Session to establish a new regime. With the FSA and the Bank, I am proposing the principles for the new regime in a discussion document published today. The new regime would mean that depositors would be insulated from a bank that had failed and would provide them with both greater compensation and certainty that their compensation could be paid out quickly. As a first stage, the FSA has decided that the financial services compensation scheme covers 100 per cent. of deposits up to £35,000, but I have made it clear that that is just an initial step towards a more comprehensive change.
We will continue to work closely with the banking industry, consumer groups and others to agree the new regime, and I hope that there will be cross-party consensus on it. We must all, internationally and domestically, consider what lessons there are to be learned from the summer’s events, and if needed I will take action. The changes that we will make will strengthen our reputation as the world’s leading international financial centre, and will be founded on our commitment to maintain a strong and stable economy. I commend this statement to the House.
Let us be clear why the Chancellor is making this statement today. This country has seen its first run on a bank for 140 years, and while as he has pointed out the credit problems have been global, it is only in Britain that we have seen people queuing to withdraw their savings. That is because the system set up by the Prime Minister to prevent precisely such a crisis has failed its first serious test.
There are three accusations facing the Chancellor. The first is that he knew for more than a month that Northern Rock was in trouble and still failed to prevent the crisis. He said in his statement today that the company’s business model had made it particularly vulnerable, but he was praising that model earlier this year when he was Secretary of State at the Department of Trade and Industry. The Bank Governor told the Select Committee that a combination of four different pieces of legislation meant that the tripartite committee was powerless. Why did not the Government, with all the contingency planning that they have done over the past 10 years, realise that there was a gaping problem in their new financial oversight system? The director general of the CBI pointed out that
“you don’t wait for the cinema to catch fire before you check out whether the fire precautions are going to work”.
Why did the Chancellor choose to give an interview to the press on 12 September—the day before it emerged that Northern Rock was seeking emergency help—in which he attacked the banks and said that they should be more honest? Did he know that, within 48 hours, he would be trying to reassure the public about the honesty of the banking system? Was he not undermined by his own spin?
Will the Chancellor release the letters that he received from the Bank and the FSA? The Bank Governor has told the Select Committee that he is happy for them to be released, and I am surprised that they have not been released today. When the Chancellor was forced to offer the general guarantee to existing Northern Rock savers, he said that it would be “unfair to other banks” to extend it to new savers. Why has he changed his mind this week and done just that?
The second accusation facing the Chancellor is that, when the crunch came, no one knew who was in charge. The Bank Governor confirmed this in an answer to the Select Committee, which I praise for the work that it has done on this matter. When the Bank Governor was asked who was in charge, he answered:
“What do you mean by ‘in charge’? Would you like to define that?”
Is not the fundamental flaw in the tripartite system set up by the Prime Minister 10 years ago a flaw that the then Chancellor was warned about when the measures passed through the House—namely that no one would know who was in charge?
For example, the FSA says that it saw its job as simply reporting Northern Rock’s liquidity problems to the Bank. However, the Bank says that it sees its job as looking at the liquidity of the whole financial system rather than that of individual institutions. Frankly, it is a bit late for the Chancellor to stand at the Dispatch Box and say that we need to review the liquidity regime. Who is in charge? The answer is that the Chancellor of the Exchequer was supposed to be in charge, but he was not.
The third and final accusation against the Chancellor is that he does not yet seem prepared to take strong and decisive action to prevent such a disaster happening again. He says that he wants cross-party consensus. I wrote to him on 20 September offering the full co-operation of the Opposition in making the legislative changes necessary to protect depositors and to allow the Bank to do its job. He has not bothered to reply to me, but I can tell him that we will work with the Treasury on this to create an oversight system that works.
The proposals that the Chancellor has set out today, and those that he is consulting on, need to meet certain tests. We need to be clear about who is responsible for monitoring liquidity and to ensure that regulation does not prevent us from dealing with a liquidity crisis when it arises. We need to be clear whether the regulation is European or has been gold-plated by the British Government. We need to reinforce the independence of the Bank so that there can never again be any suspicion of political pressure. We also need to insist that any new system, while protecting savers, does not stifle financial innovation or protect investors when that innovation goes wrong.
Will the Chancellor explain why he failed to mention the £100,000 figure that he gave to a newspaper in an interview three weeks ago as the sum that was likely to be covered by deposit insurance? It was not mentioned in his statement or in the consultation document, yet he chose to mention it to a newspaper. We also need to take steps now to tackle the growing personal and public debt that leaves Britain’s economy more exposed than others to financial turbulence, and we need to be clear about who is ultimately in charge.
It will take many years for the memory of the queues of panicked savers on our high streets to fade. The Government’s boasts about stability and financial competence will now ring hollow. We will work with the Government on the changes that are needed, but the first thing that the Chancellor needs to do is to take responsibility for this mess. It is about time he provided the leadership and the decisive action that his high office demands.
I am grateful to the hon. Gentleman for what I take it was meant to be helpful advice, at least in respect of some of his comments. Let me deal with the points that he has raised.
As I told the House in my statement, it first became apparent to the FSA and the Bank in the middle of August that Northern Rock had difficulties. Between then and Northern Rock formally asking the Bank for facilities, a great deal of effort was made to try to help Northern Rock to resolve the position. The position was monitored on a daily basis, and Northern Rock was in close contact with the FSA, the Bank and the Treasury. During that period, a number of alternative courses of action were looked at, but unfortunately they did not work.
The problem that Northern Rock faced was that, because it had to get new financing facilities on a pretty regular basis and because the market could spot that fairly quickly, it became apparent that it was in difficulties. It could not therefore get access to funds, and the price that it was being charged was going up. I can tell the hon. Gentleman, however, that we did everything that we could to try to resolve the situation without special support becoming necessary. Eventually, however, it became obvious that unless special facilities were made available, the bank would be in very great difficulty indeed.
That brings me to the second point that the hon. Gentleman raised, on help for banks. The Governor did not say that the Bank was unable to help Northern Rock because of current legislation. What he was talking about was whether that help could be given in a covert way as opposed to being completely open about it. I am bound to say to the House that this is a real problem. In this country—and perhaps right across the world—we have been moving towards more transparency and openness, which is generally a pretty good thing. The difficulty was that, because Northern Rock’s trading position had deteriorated so rapidly, it was advised by its own legal advisers—for perfectly understandable reasons—that it would have to issue a profits warning. It was also coming to the view that, because of its listing requirements, the fact that it was about to get facilities from the Bank of England would probably have to be disclosed. The Governor was also saying that the current legislation might require that disclosure. In addition, he made the point that, if it had been possible to arrange for another bank to come in, part of the takeover code might make that difficult over a weekend. I am looking at all these things, and if we need to change the legislation, we certainly will.
When we were discussing these matters prior to the Bank’s support being made available, I was pretty sure that it would get leaked, and I was absolutely right. The House will know that the story was broadcast by the BBC the night before the formal announcement was made, which is what led to the difficulties over the next few days. We need to look at that, because it is in the interests of the financial system not only in this country but across the world that, if central banks need to intervene, they should be able to do so in a way that is sensible.
The hon. Gentleman raised a number of other points. The Chairman of the Treasury Committee has written to me asking about the letters that I have received from the Governor and the FSA, and I will respond to my right hon. Friend before I appear before the Select Committee later this month. Yes, we have extended the guarantee, because I believe that it is right to help Northern Rock to have a period in which it can explore the options available to it, with a view to resolving these difficulties.
On arrangements between the Bank, the FSA and the Treasury, ultimately I am responsible to this House for whatever they do; that is part of being Chancellor. I hesitate to agree, however, if the hon. Gentleman is suggesting that we should move towards a situation in which the Bank or the FSA were merged, which would not be the right thing to do, as the institution would become unmanageable. If the question is whether I think that improvements should be made and that we should look further into the arrangements between the Treasury, the Bank and the FSA, of course that is the case. We do need to learn the lessons.
Finally, I am consulting on the protection of consumers. Having had some experience with courts in relation to consultation, I put out some general principles because the law appears to be that, if Ministers consult and then go on to close off or close down some of the options, we have to start all over again—and I do not want to get myself into that position.
In conclusion, there are clearly lessons to be learned from what happened with Northern Rock, but as I have said on many occasions over the past few weeks, we benefit from having a strong economy and a generally strong banking sector, which I believe will enable us to get through these difficulties and maintain our reputation as the world’s leading financial centre.
I thank the Chancellor for his statement. He knows that the Treasury Committee is looking into the issue and doing so in a wider context. The point that he raised about covert operations brings into question the concept of the lender of last resort, which is an issue that the Treasury Committee will be looking into. The real issue is how we help to protect depositors. Is the £35,000 figure correct? I would suggest that the key is consumer confidence. If consumers do not have confidence, the figure will be incorrect and it is important that we have the widest consultation on that. Another lesson is that depositors need easy and immediate access to their savings. Given that more than a quarter of global assets are now internationally owned, we need to address these problems in an international context. Will the Chancellor tell us exactly what he intends to do in that particular area?
I am grateful to my right hon. Friend. As I said a few moments ago, I am due to appear before the Treasury Committee later this month.
My right hon. Friend is absolutely right that this matter needs to be addressed internationally as well as here at home. I said in my statement that I thought that a number of steps were necessary internationally. We have to ensure that regulators look not just into the solvency of institutions but into any liquidity problems that they might have. That also means ensuring that current rules as they apply internationally as well as domestically allow regulators and institutions to focus on that.
My right hon. Friend is quite right too about the deposit protection scheme. A number of steps are necessary to reassure people. If a bank fails, it should be possible immediately to remove the depositors’ money from it and run it separately, and ensure that it can be paid out as quickly as is reasonably possible. I have made it clear that the £35,000 is a first step; that is all that the FSA can do at the moment. I think that we need to go beyond that. That is precisely why I am consulting, because, of course, the scheme is financed by banks and other financial institutions. International action, as well as action to protect depositors, is absolutely essential.
I thank the Chancellor for making his statement. He could have hidden behind his Tuesday written statement and the pre-Budget report, but he has come before the House now, which is good. I am afraid that that is the only positive thing that I want to say, because this statement reeks of complacency. Frankly, the Government have become complicit in large-scale irresponsible lending by the same management—and it continues even today—in what amounts to little short of a banking scam.
It has already been said that financial turbulence has existed in the financial community internationally throughout history, but this is the first time since the collapse of Overend, Gurney and Co. in 1866 that we have had a run on the system. The Chancellor talked about the business model, so does he agree with the FSA that that model was, in its words, “extreme”? This was a bank that was doubling its mortgage lending in six months and taking 20 per cent. of the market, on the back not of depositors but of large-scale rapid securitisation into markets, which became discriminating and pulled the plug on it.
The Chancellor said in his Tuesday statement that the bank had “very little exposure” to the sub-prime market directly, but is he aware that, indirectly, it was forced to issue a statement on 14 September acknowledging that £600 million of its assets—30 per cent. of its shareholders’ funds—were of questionable provenance? I know that there has been a postal strike, but why was that information not communicated to the Treasury, which seemed to be unaware of it?
Worse, is the Chancellor aware that the same lending practices are continuing today? A member of my Treasury team, Lord Oakeshott, rang the bank yesterday and made inquiries about its mortgage opportunities. As we would expect, he is someone of good credit standing, but the terms that he was offered were quite extraordinary. He was offered 127 per cent. of the value of the house, including the roll-up of the arrangement fee—five to six times his income—and 30 per cent. of the loan was to be unsecured. I do not know whether that is what the Chancellor meant when he talked about a return to old-fashioned lending practices. In the current economic circumstances and given the warnings about house prices from the Royal Institution of Chartered Surveyors, most reasonably cautious bankers would say that that borders on the insane. It is happening because the Government are underwriting the bank. That is precisely what the Governor of the Bank of England warned of when he talked about moral hazard.
Will the Chancellor tell us how much taxpayers’ money is exposed to this bank? I believe that there is £11 billion in lending and £23 billion in guarantees, so we are talking about a sum of money in one bank that is roughly equivalent to annual spending on the armed forces. When the Chancellor agreed to the effective nationalisation of the liabilities of this bank, why was the management—including the chief executive, who has been paid £10 million in five years for taking his bank on to the rocks, and the directors, including the ubiquitous Wanless—not sacked? I would include the FSA, which has admitted that in 18 months it did nothing to check the bank.
We all understand that once the run had started, the Chancellor had no alternative but to guarantee deposits, as opposed to the institution and the shareholders, and I am sure that that was right, but why is he now extending that guarantee to new depositors? Does that not encourage irresponsible lending and is it not unfair on other banks that are acting responsibly? Is it not even more unfair on pensions institutions, which, as the hon. Member for Wolverhampton, South-West (Rob Marris) reminded us yesterday, do not have such a guarantee?
My concluding point is that this is not just a passing embarrassment. It is potentially a tragedy for the 5,000 or more people in Newcastle whose livelihoods depend on the bank, but it is also a scandal in which substantial numbers of people in the financial community are heavily involved. When the Chancellor has taken the necessary prudential action, will he have a full independent—
First, the hon. Gentleman suggested that I should have sacked all the directors of the Northern Rock bank, but I do not have the power to go around sacking the directors of any company. The company is owned by its shareholders and the directors are responsible for the running of it. The decisions taken by Northern Rock in respect of its business model and its lending—whether generally or to the noble Lord Oakeshott in particular—are a matter for the bank and not for any Minister. The hon. Gentleman seems to be confused about that. The bank belongs to its shareholders and is run by the directors. If the directors are to be changed, it is a matter for the shareholders.
The FSA is responsible for the regulation of Northern Rock. The chairman of the FSA, Sir Callum McCarthy, said before the Select Committee earlier this week that it clearly has lessons to learn about the supervision of not just this bank but others. The hon. Gentleman seemed to suggest that Northern Rock’s problems were because of the sub-prime market, but according to the FSA the bank has a good quality loan book. That has been fairly well established over the last few years.
I was not clear whether the hon. Gentleman was for or against the guarantee that was given: he seemed to shift his position two or three times. It was necessary to provide the guarantee for the stability of the financial system as a whole. The present arrangements are also necessary to give the bank time to make whatever adjustment is appropriate and whatever arrangements are appropriate for the future.
My right hon. Friend will know that Northern Rock employs 4,000 people at its headquarters in my constituency. Contrary to the attitude and tone adopted by the official Opposition, and the lack of support given to Northern Rock and the people who work there by the Liberal Democrats, depositors around the country very much welcomed the action taken by the Government and the Bank of England in September, and again this week, to protect deposits. People who work at Northern Rock in my constituency have made the point to me that the business is viable, and if it is kept together as an entity it will continue to be viable and the jobs of 4,000 people in my constituency and 1,500 people in the constituency of my hon. Friend the Member for Sunderland, South (Mr. Mullin) will be protected. That is the priority. Will my right hon. Friend use his good offices to do what he can, even in an unpredictable situation, to retain that entity?
My hon. Friend makes a good point. The Northern Rock bank is of great importance to his constituents and to the north-east of England. It enjoys a good reputation and employs more than 6,000 people nationally. I very much hope that a solution can be found in the next few weeks and months that will enable the bank to continue. Ultimately, that will be a matter for the bank, but I very much recognise the point that my hon. Friend makes and the importance of the Northern Rock bank to Newcastle in particular.
The Chancellor will accept, however, that there is widespread concern and anger in the north-east at the way in which the affair was handled. In particular, what provoked the Bank of England to announce that Northern Rock was looking for help? The European Central Bank managed to rescue—I think—two German banks and a French bank without a similar panic. I am at least grateful that the Chancellor appreciates the importance of the bank to the north-east economy and to many of my constituents, who, like those of the hon. Member for Newcastle upon Tyne, North (Mr. Henderson), want to see the bank rise again. As the Chancellor said, the order book is strong. We will note the complete lack of support from the Liberal Democrat spokesman for the bank and the people who work in it in the north-east.
As I said in reply to the shadow Chancellor, the difficulty with the announcement that the Northern Rock bank would get specific help from the Bank of England was that, as I always suspected, somebody told the BBC about it. In the light of that, the information could not have been kept private. That is a problem not just in this country but across the world. We want to be as open and transparent as possible, but there will be circumstances in which support may be necessary for one or a group of institutions, and if someone chooses to go and tell the BBC or another outlet about it, the whole thing becomes public. That is the reason why the decision was ultimately taken to make an announcement. Unfortunately, just a few hours before that announcement was made, a highly damaging story appeared on the BBC that caused huge problems for the Northern Rock bank. That is a problem, and we will have to consider how to resolve such problems in future. I agree with the hon. Gentleman, who represents a constituency just outside Newcastle and will know the importance of the bank to the north-east. The more that we can do collectively to help the situation, and not make sometimes irresponsible statements, the better.
As a long-standing customer of Northern Rock—I suppose that I should declare an interest in the usual way in that regard—I assure my right hon. Friend that savers are very grateful to the Government for the support afforded at a difficult time. Our concern, however, has now turned to the future. What can the Government do to help to ensure the continuation of Northern Rock as an independent north-east based company? Will he take on board the comments of my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) and assure the House that the Government will help to protect the security of employment of thousands of Northern Rock staff in the north-east, and to protect the Northern Rock Foundation, which supports arts and culture, young people, children in need and other disadvantaged groups across our region?
On that last point, as my hon. Friend knows, the Northern Rock Foundation has given grants of more than £28 million, and that is one of the reasons why the Northern Rock bank has much popular support in the north-east, along with the fact that it is a major source of good-quality employment. The most significant thing that the Government can do is to continue to provide the support that we have offered to Northern Rock, and to give it time to consider its strategic options. We stand ready to do whatever is appropriate as and when the bank decides what the best option is.
Which of the two regulators has primary responsibility for ensuring that banks are sufficiently liquid as well as solvent? Why did Ministers choose to implement the EU market abuse directive in such a way as to take out the exemption of situations of grave and imminent danger, thus making a rescue more difficult?
On that latter point, as I said a few moments ago, the EU directive was not the stumbling block. We looked at many considerations. As I said in reply to the shadow Chancellor, given that the bank was going to have to issue a profits warning, that it had to have regard to the listing requirements and the impact of getting facilities from the Bank of England, and that the news would almost certainly get leaked, which turned out to be the case, we believed that it was better to make an announcement than not to do so. If we need to look at the current law, we will do that. In relation to the hon. Gentleman’s first point, the primary responsibility for supervision of individual institutions lies with the Financial Services Authority.
May I underline the points made by my hon. Friends the Members for Newcastle upon Tyne, North (Mr. Henderson) and for Tyne Bridge (Mr. Clelland)? Despite all that has happened, Northern Rock is a respected institution, and remains so, in the north-east. It also employs a large number of my constituents. No one wants to see it taken over by some predator and asset-stripped. Will my right hon. Friend do all in his power to prevent that from happening?
I know that my hon. Friend also represents a constituency where many people work for Northern Rock. As I said, I am happy, on the part of the Government, to do everything that we can to bring about a satisfactory conclusion to this matter. Obviously, it is for the company to decide what the best option is. If the Government can help in an appropriate way, I will certainly consider any proposal put to us.
Does the Chancellor deny that ultimate responsibility for the crisis in Northern Rock, which has done such worldwide damage to the reputation of British banking, lies with our present Prime Minister for removing banking supervision from the lender of last resort? May I put it to the Chancellor that no amount of tinkering about improved liaison between the Financial Services Authority—which has never commanded much confidence in the City—and the Bank of England will overcome that fundamental problem? That was one of the reasons why the then Governor, Lord Eddie George, nearly resigned when that new scheme was imposed on him by the present Prime Minister.
Perhaps I can remind the hon. Gentleman that even in the old days to which he refers the Bank of England was responsible for the prudential supervision of banks but not for the supervision of many of the activities in which banks were involved, such as the sale of insurance. I also remind him that 10 years ago, no fewer than seven different regulators operated in the market: the Bank of England; the Securities and Investment Board; the Building Societies Commission; the Register of Friendly Societies; the insurance division of the Department of Trade and Industry; and three self-regulating organisations—the Investment Management Regulatory Organisation, the Securities and Futures Authority and the Personal Investment Authority. No one wants to go back to those days, when seven organisations were sometimes responsible for the same institution. That makes no sense at all. Having the central bank responsible for the stability of financial markets, and one organisation responsible for the supervision of institutions, is the right way to go, and most countries are moving towards that model, not towards the regime that was around many years ago, which would not work in today’s markets.
As a former employee of Northern Rock, a former shareholder and someone who still has an account with Northern Rock, I join my hon. Friends from the north-east in giving personal testimony both to Northern Rock’s status as a great employer and to the fondness for it that lies in the hearts of all north-eastern people. Everyone in my constituency, and in the north-east more widely, will know someone who works for Northern Rock, has a mortgage with it or holds an account with it. As has already been said, it is vital for us to give it all the help we can to resist any hostile takeover, and to continue as a north-east based bank.
As my hon. Friend the Member for Tyne Bridge (Mr. Clelland) pointed out, the Northern Rock Foundation is one of the major charitable givers in the north-east. Will my right hon. Friend commend the campaign by The Journal, which has done a great deal to highlight the need for the company to remain based in the north-east?
I know that the Newcastle Journal has been running a campaign, and that is not surprising because the Northern Rock bank is of great importance not just to Newcastle but to the north-east.
As I said earlier, the Government are providing support through the guarantee for Northern Rock, which will allow it time to decide which strategic option is best for it. However, as I have said many times this afternoon, at the end of the day it is for the bank’s directors to make that decision. It is their bank, and they must decide what is best. If we can help and it is appropriate for us to help we will do so, but ultimately the bank’s directors are responsible for all the decisions that they have made in the past and for any that they may make in the future.
It is clear to me that there were failures on the part of the regulatory bodies and also on the part of the directors of Northern Rock, who should have been questioning the extent to which their bank had become dependent on short-term lending, far out of line with all other banks.
Does the Chancellor recognise—he has already indicated in part that he does—that the bank as an institution is hugely important in the region, and that the Northern Rock Foundation, with its 5 per cent. share of the bank’s pre-tax profits, is also hugely important throughout the north-east? Whatever emerges—whether the institution is reformed or others participate in it to give it a future—it will be necessary to recognise the social responsibility that has been shown by Northern Rock as a company, and the need to support the work done by the Northern Rock Foundation in future.