Wednesday 17 October 2007
[Sir Nicholas Winterton in the Chair]
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Roy.]
It is a great pleasure to serve under your watchful eye this morning, Sir Nicholas. I also welcome the Minister to his place. I suspect that the Ministry of Defence and the Department for Business, Enterprise and Regulatory Reform had a battle to decide which would reply to the debate. It is a matter of huge regret that the Minister’s Department lost but, nevertheless, in a personal sense, it is good to see him here.
The Prime Minister, in his leadership acceptance speech, said:
“One of my first acts as prime minister would be to restore power to Parliament in order to build the trust of the British people in our democracy.”
We all welcomed that statement. Today, we have an opportunity to hold the Government to account for what I believe is the classically bad decision to close the Defence Export Services Organisation and move its residual role to another Department. On 25 July—the day before parliament rose for the recess—the Prime Minister went very much against what he said in his speech by sneaking out a written statement of just 19 lines that brought to an end 40 years of successful Government support for our defence export sector. Some people will call me naive, but I hope for some answers from the Minister this morning about the closure of DESO.
I chose the subject of this debate carefully, as I want to point out how damaging the decision is, and what impact it will have on the future of defence exports. I want to know what was going on in the Prime Minister’s head—I think that we all do from time to time—that led him to do such damage to such a successful brand. And let us be assured: the brand is dead. Whatever arises from DESO’s ashes, the perception in the marketplace is that Britain is out of the game. The best people are leaving to work in the private sector and there is a general belief in the marketplace that the British Government want nothing to do with defence exports. I noticed how happy some organisations opposed to the arms trade were with the decision, and there was talk of parties being held after the announcement. However, I submit that their joy should be short-lived.
One group of people who, I am sure, are delighted at the decision are members of the Liberal Democrat party, who have always been enemies of defence exports, no matter how legitimate and proper. Has my hon. Friend any idea why there is not a single Liberal Democrat present in the debate—not even their spokesman?
I suspect that they have other things on their mind at the moment, but they should not delight in the decision. Perhaps they mistakenly believe that stopping arms sales and defence exports from this country will somehow improve the situation around the world. Countries such as Russia and China are salivating at the prospect of expanding their defence export sales at our expense. The consequence will be an expanded manufacturing base in those countries which, unlike us, do not care much about the question of to whom they sell arms. That is the great mistake of the Liberal Democrats and others opposed to the arms trade.
Does the hon. Gentleman acknowledge the fact that it is possible to rejoice in the imminent demise of DESO without necessarily being against defence exports as such, and does he accept the estimate made by many reputable economists that the section of the economy linked to defence exports is less than 0.2 per cent.—less than one job in 500? That is not exactly a body blow to the British economy, is it?
That is one of the most dangerous and complacent views that I have heard on the whole issue. I have constituents working for small companies of 25 people that depend on DESO when they go abroad. Those companies do not have a large marketing department. They do not know how the economy and marketplace work in some countries. They go straight to the post. If the hon. Gentleman thinks that £5 billion a year of arms sales and defence exports is insignificant to the economy, I urge him to consider the tax take from those companies, and what the effect will be on hospitals, police and public services in his constituency.
The debate is intended to draw out from the Minister important answers to important questions: why the Prime Minister took the decision, and why it was dealt with in such an underhand and incompetent way. The decision came only a few days after the Prime Minister called for government to be more open and accountable. I cannot think of a decision that was more closed or more designed to avoid being held to account. It came less than 10 days after an advertisement appeared in The Sunday Times advertising the post of director of DESO. Why was the decision made without any provision for what would fill the vacuum created by DESO’s demise? At the very least, one would expect the most basic measures to be in place for what was to come post-DESO.
Internal briefing documents for staff about that extraordinary decision are flying around Whitehall and Westminster. They are in question-and-answer form, and some of them have fallen into my hands and my colleagues’ hands. The answer to one question is:
“How UKTI will manage their responsibility for defence trade promotion remains to be decided.”
Another question asks:
“Where will the transferred staff be located”?
The answers states that that is “to be decided.” The answer to the question of whether staff will
“transfer to UKTI on the same terms and conditions as they have now”
is that that will be
“worked out during the implementation and planning phase.”
Another question asks:
“What will happen to the (Army) Export Support Team?”
Importantly—and this relates to the point made by the hon. Member for North-West Leicestershire (David Taylor)—the answer, again, is that that is “to be decided.” The question of what will happen to the DESO first secretaries overseas, too, is “to be decided.” What an extraordinary decision from a Government who claim to be competent, open and accountable. How extraordinary to make a major change to a Department and to have nothing in place—nothing; a vacuum.
Why was there no consultation with industry? In a debate last week, several Members quoted letters from large companies—one was from the managing director of BAE Systems—and companies such as Thales. Many other letters in circulation have come to my attention. Why was there no consultation with the unions, as required under civil service codes? For the past few days, I have been talking to the unions, and I can find no evidence of any formal briefings, discussions or consultations about what transfers will take place or under what conditions DESO employees will be employed in any new organisation. More importantly, why was there no consultation with Ministers? I think that the House deserves to know when the Secretaries of State for Defence and for Business, Enterprise and Regulatory Reform were informed of the decision. I would that that happened on or around 25 July, and that it was as much a surprise for them as it was for the rest of us.
Why was the decision taken in a manner designed to prevent proper parliamentary scrutiny? The House, the industry and its hundreds of thousands of employees, as well as the dedicated staff at DESO, deserve answers. I do not wish to prejudge the Minister, but I must warn him that it would be contemptible if in his reply he simply dished out the usual blandishments and non-answers about how DESO has done excellent work in the past. We know about that, and accept that it is a remarkable organisation.
The announcement did not relate to the end of the British defence industry; it related to the imminent demise of DESO, which employs about 450 staff in London and overseas, including 200 who work on Government-to-Government contracts. If a large employer of, say 1,000, 2,000 or 5,000 employees had their operating base closed by Government edict, the hon. Gentleman would expect a statement to the House and consultation at the highest level, but we are talking about 450 jobs, and those people will be readily redeployed in other areas of Government industry.
I hope to prove to the hon. Gentleman that his view is mistaken. It is of fundamental importance that DESO should remain part of the MOD. He is right: we are talking about only 400 or so people, but there are much wider implications for the economy as a whole.
I congratulate my hon. Friend on securing the debate. The intervention from the hon. Member for North-West Leicestershire (David Taylor) betrays a lack of understanding of the specialist requirements of defence exports, which are an extremely complicated area of business to manage. They are of fundamental importance not only to our economy, but to the armed forces, because a successful British defence export base supports our forces and ensures that they have more kit than they would otherwise have for the requisite defence budget.
I am grateful to my hon. Friend for putting more eloquently than I could have done the argument I was about to make in response to the point made by the hon. Member for North-West Leicestershire.
I hope that the Minister will not claim that defence exports would be better served by operating within UK Trade and Investment. The Minister knows that nobody outside the Prime Minister’s narrow circle and one or two Labour Back Benchers believes that that is the case. To take up the point made by my hon. Friend, as of this weekend, the DESO website—I suspect that the announcement will not be there in a few hours’ time—says with a pride which, I am sure is matched by that of the dedicated DESO staff, that it gives
“assistance to company-led marketing campaigns”.
It says that it supports the “MOD’s defence diplomacy efforts” and its “partnerships and alliances”. It says that it offers “security building measures” and promotes
“British interest and influence abroad”.
Those are four good reasons—key strategic reasons—for keeping DESO, or that Government discipline, in the MOD.
The Government support all exporters through their agencies, but defence exporters need support from the MOD, mainly because they sell to overseas defence ministries. DESO’s website states that it is
“an integral part of the Ministry of Defence”
“is well placed to give defence industry the kinds of support it needs”.
My hon. Friend should remember in his excellent speech that the point of DESO was that it was separate from the various dud organisations that have promoted—allegedly—British exports overseas under Governments of both parties. Such organisations were monstrous bureaucracies, but DESO was lean, extremely fit, and accomplished. That is why it attracted the Prime Minister’s opprobrium.
My hon. Friend has huge experience in this field and I hope that he will contribute more to the debate, but he is absolutely right. We are talking about a highly technical economic activity and it is vital both that it is linked to service personnel, who understand the equipment that DESO helps to sell, and that there is hands-on use of the equipment in the field.
The DESO website states that its activities
“differ from those in the civil sector in many respects because of the specialised requirements of…military customers”.
My hon. Friend is right that DESO is a lean organisation. It does not operate under the leaden hand of departmental organisations that seek to help business but which sometimes have the opposite effect.
DESO has 460 staff worldwide and about 200 in the UK—that number is falling rapidly—and has an annual net budget of £16 million, which is paltry in terms of MOD spending. However, it assisted with £500 million-worth of sales last year and contributed massively to the value of defence exports, which averaged £5 billion. The DESO brand is trusted around the world, which has helped to place Britain second only to the United States in defence exports.
The hon. Gentleman said that DESO is a trusted brand. Does he believe that that trust was damaged by the organisation’s involvement in the al-Yamamah deal with Saudi Arabia? That deal inflicted its most recent casualty yesterday when the chief executive of BAE Systems departed early.
The hon. Gentleman ought to do more research. The MOD Saudi Arabian projects organisation—MODSAP—handled that deal on a Government-to-Government basis. The deal was not as he alleges. I shall address his point more broadly, because I believe that the al-Yamamah deal is partly responsible for the bizarre decision on DESO.
Would not a deal such as al-Yamamah still be dealt with by the MOD under the new arrangements? Government-to-Government deals would still be the provenance of the MOD and separate from company-to-Government deals, which would be dealt with by the Department for Business, Enterprise and Regulatory Reform.
If my hon. Friend will allow me, I will give way to him once I have completed my point.
Was that daft—I use that word carefully—decision taken, as my hon. Friend the Member for Mid-Sussex (Mr. Soames) claimed last week, as
“an act of bovine stupidity, engineered by some communist woman at the Treasury”?—[Official Report, 9 October 2007; Vol. 464, c. 223.]
We need an answer from the Minister. Was the decision made to appease to some faction within the Labour party? In answer to the point made by the right hon. Member for Warley (Mr. Spellar), I wonder whether it was a classic piece of new Labour spin. Did the Government perceive a problem with the BAE Systems al-Yamamah deal, and did they wish to park it? Getting rid of DESO means that they can say to the Liberal Democrats, or any organisation with which they may wish to make deals, that they have dealt with the issue. It does not matter that DESO was not part of the deal or that the issue was not about DESO. The decision is hugely damaging and wrong, but the Government have taken it.
The hon. Gentleman has made the point that I wished to make a few moments ago. Surely this is a classic piece of horse trading and gesture politics. The Government are on the back foot, as their own left wing and the Liberal Democrats are baying about the dropping of the BAE Systems case. The decision is a sop—a piece of red meat thrown to the lions, irrespective of the merits of the case.
My hon. Friend who, like my hon. Friend the Member for Mid-Sussex, has great experience in these matters, is absolutely right. To mangle an analogy, the decision is like using a sledgehammer to miss a nut.
Sustaining a capable and flourishing UK defence industry base, as my hon. Friend the Member for Reigate (Mr. Blunt) said, offers the UK a strategic advantage. It allows us to depend on quality, home-grown procurement for our defence needs. It helps keep down the cost of UK defence procurement by creating competition between domestic and overseas suppliers and generating economies of scale. It also helps to co-ordinate directly our armed forces’ urgent operational requirements in the field, which feed through into our defence exports. I am talking about real operational experience from our armed forces. Keeping that operation in the MOD strengthens relationships, with positive consequences for both military and foreign security policy objectives. The Government ignore that point at their peril. It is not I who has thought this argument up. It is all there in the Government’s defence industrial strategy 2005, which states:
“A strong defence industrial base is important for the UK’s defence.”
I ask hon. Members to consider for the moment a small African country—Botswana, let us say. Some people in the House believe that it is entirely wrong that a poor country such as Botswana should spend money on arms, but it has a right to defend itself. It has a right to have a small number of armed forces, and it may wish to take part in African Union missions to places such as Darfur. Where should Botswana go? Its first port of call should be the country with which it has a relationship—Britain. In the circumstances, I foresee that Botswana will believe that there is no value, no relationship, no future in coming to a country such as Britain, and it will receive a very welcome invitation from countries such as China, Russia or Israel. Many of those countries have very different attitudes towards arms sales from us.
The value of the export support team in our missions around the world is evidenced by the letter that has come into a number of hon. Members’ hands from Helen Liddell, the high commissioner to Australia, who eloquently sets out her experience in a mission of the value of such organisations and the way in which a country such as Australia buys into a relationship. She explains how a small manufacturer in any of our constituencies can go to Australia, go straight to the post, talk to the DESO representative—the first secretary—to understand how to do business with the Australian Government. It is vital to maintain that link, which operates through the military attaché network as well. I therefore hope that the Minister shares with the House the reaction of the key players to the Prime Minister’s decision.
We understand that two Ministers—Lord Jones and Lord Drayson—are very keen to make whatever comes out of this mess work. I pay tribute to them—I shall pay tribute, too, to the Minister for Employment Relations and Postal Affairs if he is prepared to give us that assurance—but things have not started very well. There are reports in the trade press that Lord Jones has described the Prime Minister’s decision as “bonkers”. Lord Drayson is alleged to have said, in the hearing of many officials, journalists and others at the farewell party for the director of DESO, Alan Garwood, that the Prime Minister’s decision was a great mistake. Such candour is to be admired. I hope that we hear more of it, and that it manifests itself in a genuine desire to sort out this mess.
Was the Secretary of State for Defence involved in the decision? If so, when did he learn of the Prime Minister’s tortured thinking? What is the involvement of the mysterious Baroness Vadera? I assume that she is the person to whom my hon. Friend the Member for Mid-Sussex referred last week. We are told that she has enormous influence over the Prime Minister and I think that the House deserves to know what her involvement in the matter is. What about the defence industry? We have heard from BAE Systems, Thales and others organisations. How many other companies have written to the Prime Minister, to the Minister or to others to complain? How many small companies in our constituencies have complained to the Government about the decision? The decision is much more important for them than it is for larger companies, which have large marketing departments and have experience all over the world. It is the smaller companies that account for a large percentage of the several hundred thousand employees affected—the people who need the support most.
What about the unions? What issues have they raised with Ministers? I said earlier that a number of them have not yet had the discussions with Government required under civil service rules. How many ambassadors and high commissioners were as bemused as Helen Liddell was in her letter? How many of them have contacted the Government? With open and accountable government, these matters should be put before the House. It is simply not good enough for the Minister to come here today and pretend—and I hope he will not do so—that he did not expect to be asked these questions. His civil servants will have told him what was said in the House last week. He will know that internal memos, minutes and documents relating to the matter are flying around Westminster and Whitehall like confetti.
I am grateful to those hon. Members who could not attend this debate or, indeed, last week’s debate on defence procurement for providing me with a wealth of material from constituents and others closely involved with DESO. A great many people, with varying degrees of involvement, are so disgusted with the Government’s behaviour that there is no shortage of information on just what has been going on inside this dysfunctional Government. If we do not receive answers today, this matter will run and run and become a festering sore for the Government. I have already drafted a raft of written questions, and I shall table them formally after our debate if the House does not receive the answers that it deserves. The Freedom of Information Act 2000 offers tempting avenues if approach fails. I hope that the Select Committee on Defence, on its return from an overseas trip, will set in train a detailed investigation into the matter.
I hope that the Minister will not insult our intelligence by claiming that the decision will strengthen UKTI and put this vital area of economic and strategic importance on a better footing. I hope that he will not make the fatuous claim that it will somehow remove the clutter of another department from the MOD. DESO was one of the great success stories, precisely because it was part of the MOD as well as being at arm’s length from operational matters. We may attack the decision and the way in which it has been taken, but we must obtain answers for the future. What arrangements exist in UKTI to undertake the work currently being carried out by DESO? I am sure that Lords Drayson and Jones want to make the best of it, but a rumour is going round among colleagues in the know that whatever emerges in UKTI may have the politically correct title of “Defence Services Research Group.” I urge the Minister to tell us that that is not so, because it sounds like some quasi-intelligence organisation, and customers will not want to touch it with a bargepole. Most of all, the industry wants to know if support for defence exports will remain part of the MOD’s remit. I hope that the Minister will not pretend that the process was a well thought-through, strategic change to the machinery of government. It was a ham-fisted and poorly thought-through decimation of four decades of success.
Thank you for allowing me to speak, Sir Nicholas. I did not intend to speak, but the hon. Member for Newbury (Mr. Benyon) has provoked me to make certain comments.
There is a strong case for withdrawing Government financial support from the Defence Export Services Organisation. We are dealing with an internationalised arms industry. DESO was set up by the then Defence Secretary Denis Healey in 1966; it was then called the Defence Sales Organisation. There was at that time an identifiable UK arms industry, which existed primarily to supply the UK’s own armed forces, and a UK arms export would then have been relatively easy to identify and define. Today, there is no identifiable UK arms industry. Military industry is internationalised, with most equipment containing components and sub-systems from a variety of companies. The companies may have their headquarters in one country, but subsidiaries in several others.
May I put it to my hon. Friend that the British defence industry is very identifiable by the tens of thousands of skilled British workers who are working in British factories throughout the country and often at the cutting edge of technology, which is an important driver in maintaining Britain’s manufacturing base? I think that they could identify the defence industry quite well.
That is not the point that I am making. In an earlier intervention, I made the point that one job in 500 in the UK economy is linked to the British defence industry. I shall try to make my point in a different way. BAE Systems illustrates the trend. It sells more to the US Department of Defence than it does to the UK Ministry of Defence. Most of its shares are held outside the UK, and barely one quarter of its work force is employed in the UK. It would already be a US company had it been able to persuade one of the massive US companies to buy it. BAE Systems and the other major arms companies exist, of course, to maximise profits for their international shareholders and they have little or no commitment to the UK and UK defence.
Astonishingly, DESO has responded to that internationalising trend not by being more selective about which exports it supports but by broadening its assistance. In 2005, Alan Garwood, the head of DESO, was asked what determined whether his organisation would consider a particular export a UK one and thus entitled to DESO support. His reply is lengthy, although I shall shorten it, but it illustrates that the definition of an export worthy of DESO support, and by implication the UK Government’s and taxpayers’ support, is both wide and unclear.
I congratulate the hon. Gentleman, who did not intend to make a speech, on having such an extensive script from which to read. His general theme seems to be that DESO—or should I say the British defence industry, which is formally represented in DESO’s activities—is not worth all that much to the British economy. Does he accept that it is worth some £5 billion a year, and does that figure not strike a chord in his memory as being exactly the size of the present Prime Minister’s raid on pension funds when he was Chancellor of the Exchequer?
The figure that the hon. Gentleman quotes may or may not be correct. I do not think that what amount the former Chancellor took from pension funds is a subject for this debate.
When asked that question, Alan Garwood said:
“The broad test for assessing DESO support to a UK-based defence exporter is not company ownership but the added value that the export would bring to the UK defence industrial base. When assessing competing bids, including situations where one of the suppliers may be foreign-owned, employment, the quality of the work, and the transfer of technology to the UK will be key influences.”
Swedish fighter aircraft have received DESO support, as they
“use some UK-manufactured components”,
and exports by the UK subsidiary of the US-based Lockheed Martin might also qualify under that definition.
Military exports are not unique in raising questions about the appropriateness of UK Government support for a multinational commercial enterprise. As the hon. Member for Newbury mentioned, the Export Credits Guarantee Department is holding a consultation on foreign content in which it proposes to address the problem with a formula based on percentage terms. In contrast to the ECGD’s approach, DESO’s UK test seems noticeably vague. It is unclear how it was developed, and the test is open to subjective decisions by DESO, which—particularly if there are competing bids—is left susceptible to lobbying.
I turn to second-hand sales. A major part of DSO’s work was to sell surplus UK armed forces equipment, thus making a return to the Ministry of Defence. However, two and a half years ago, the Disposal Services Agency, which is responsible for that work, moved from DESO to become part of the Defence Logistics Organisation, so the need to recoup MOD costs is no longer a reason for continuing Government support for DESO.
Should a private industry receive public subsidy? DESO co-ordinates most of the direct Government support for arms exports, provides marketing assistance and advice on negotiation and financing arrangements and organises exhibitions and promotional tours. The hon. Gentleman is quite right—the budget for operating costs is a relatively limited one, at £15 million or so during the last financial year.
As well as DESO’s assistance, the arms companies value the position DESO gives them at the heart of government. The head of DESO is always seconded from an arms company. DESO can argue a company’s case against other Departments and, through its explicit role of lobbying Ministers, is likely to distort policy making.
I am quite happy for defence equipment to be exported by the UK defence industry. It has an appropriate part to play in countries around the world. There are some examples of exports going to regimes that should not be receiving UK arms by that or other means, but in general I am happy. With parts of it, I am not. I hope that that answers my right hon. Friend’s question.
Military exports undoubtedly bring commercial benefit to UK-based companies—I acknowledge that—but it is not the same as benefiting the UK economy as a whole. Taxpayers should not be in the business of subsidising private companies to help them boost their profits and share prices.
I am grateful to the hon. Gentleman for reading out his brief from the Campaign Against Arms Trade. Perhaps he has not been briefed on this, but does he not accept that defence exports enable British industry to achieve economies of scale that reduce the unit cost of British defence equipment to the United Kingdom Government? In other words, defence exports result in direct benefit and cost reduction to the Government.
That is an interesting hypothesis, but it is not necessarily borne out by the facts. I do not think that that suggestion is true in practice.
What would happen if the arms trade to certain regimes were scaled down? The many millions invested in that industry could be invested in others, such as renewable energy and transport, creating new and highly skilled jobs.
I understand the hon. Gentleman’s feeling about the arms trade, and I respect it. It is interesting that he is here today to speak on the abolition of DESO. I have not yet seen either an early-day motion or an Adjournment debate in his name about the abolition—it happened almost without a press release—of the Defence Diversification Agency, whose job was to diversify the defence industry into the UK market. It is contradictory for him to come here and not mention that. It is part of the same issue that he has raised today.
That is a fair point. When I get back to my desk, I shall look to see whether there has been an omission or oversight leading to the lack of an early-day motion to that effect, but I am not sure whether the hon. Gentleman’s point is accurate.
The existence of DESO places the reputation of the Government and the UK at risk. Military industry ranks alongside construction as the world’s most corrupt sector. DESO’s close ties with and public support for military companies risks tainting the Government with allegations of corruption. There is quite a long track record of it. Back in the late ’60s and early ’70s, DSO officials turned a blind eye to corruption in UK arms sales to Saudi Arabia. More recently, before the al-Yamamah probe was dropped, the Serious Fraud Office interviewed Alan Garwood under caution. It is understood to have asked him whether DESO knew if payments made to Saudi officials continued after 2001, when the law was changed to make payments illegal that could be construed as bribes. I refute the point made in an intervention that DSO had no involvement in the al-Yamamah deal. It might have been a Government-to-Government deal, but DSO provided advice, support and consultation. Its fingerprints are all over that unfortunate deal.
When I described it as unfortunate, I was referring to the circumstances—the financial arrangements and the covert organisation that existed to push substantial sums into hidden pockets in Saudi Arabia and elsewhere. That is what is unfortunate—not the deal, the arms or the country receiving them but the arrangements surrounding the deal. I am sure that my right hon. Friend will want to contribute to the debate later, having worked as a Minister with some distinction in the relevant Department earlier in our Government’s time in office.
I wish to make two further brief points. Military exports are often justified as a way of ensuring continuity of production, so that the UK’s armed forces can be supplied whenever necessary. However, exports can take precedence. For example, the first 24 Eurofighters for Saudi Arabia will be taken from those that were originally destined for the RAF. That is hardly continuity in supply for the UK’s armed forces.
Finally, one reason given for wanting the continuation of DESO—we shall see what happens after its demise—is that public support for military exports is based on defence diplomacy. However, the Saudi Arabia saga exposed the lunacy and fallacy of that argument. For all the Government’s desire to expand our influence around the world, the dropping of the SFO inquiry—perhaps the Minister will incorporate an answer to this point in his reply—shows clearly that the real power lies with the customer Governments and the supply companies. The interests of the Government and the taxpayer come a very poor third and fourth in that equation.
Although I respect the motives of the hon. Member for Newbury in wanting to debate the subject—I congratulate him on its timeliness and on his speech—the activities of DESO, its style and its involvement in numerous dodgy deals over many years mean that it is at last being consigned to the wastepaper basket of the defence industry. That is where it deserves to be. The UK defence industry will continue to thrive and expand, it will continue to provide jobs and advance technology, and it will continue to be a British influence around the world. It does not need DESO. DESO is a barrier to that; it is a brake, not an accelerator or a catalyst. DESO is going, and good riddance to it.
It is a pleasure, Sir Nicholas, to be under your chairmanship for a debate on defence, as no one has done more over the years to support the defence industry and our armed forces. I am pleased to contribute to the debate. It was initiated by my hon. Friend the Member for Newbury (Mr. Benyon), who rightly pounced on the matter as being of the first importance to our national life.
As far as I know, I have never seen the Minister before in my life. I understand from “Dod’s” that he was the last Prime Minister’s political secretary. Of one thing we can be sure: the last Prime Minister would not have behaved in this way about DESO—as the Minister will know. I put it on record that there can be no more inappropriate person to answer this debate than a Minister for Employment Relations and Postal Affairs. It is a farce that, on such a matter, the Government could put up a Minister who has had absolutely no interest in or responsibility for any of the decisions that we are debating today. I hope that the official channels will note that fact, as it deserves broader and wider recognition in the House.
As my hon. Friend pointed out so well, the DESO decision was not a well thought out strategic change to the machinery of government. It was, as he said, a ham-fisted and poorly thought out decimation of four decades of outstanding success and service to UK Ltd. It was not only a bad decision, it was a rotten decision. It was taken to appease a number of factions. I understand it was done to appease a communist who works in the Treasury, and it was done in a thoroughly underhand and low way.
I understand that only nine days after the appearance of an advertisement in The Sunday Times for a new head of DESO, the permanent under-secretary at the Ministry of Defence was summoned to No. 10 to be told that DESO was to be closed. The permanent under-secretary then informed Sir Alan Garwood, the head of DESO, who informed his staff the next day. There was no consultation. Not even Sir John Rose, the chief executive of Rolls-Royce, or Mike Turner, the admirable chief executive of British Aerospace, were informed that the change was about to take place, let alone consulted about it. That is in keeping with the present Prime Minister. Indeed, it is my strong belief that the Secretary of State for Defence was not told. As you may know, Sir Nicholas, the Secretary of State was not even told that the Prime Minister was to make an announcement in Iraq about the return of 1,000 men, most of whom were already here.
As I said, the change was dressed up as an improvement to the machinery of government. If one can believe it, that change included a Government proposal to undergo a major reorganisation of the head office of the Ministry of Defence—which is to proceed at exactly the same time as they are prosecuting a war on two fronts. It is hardly surprising that parts of the Government should be held up to ridicule and contempt if they take their eye off the ball in order to reorganise head office at the same time as their men are fighting on two separate fronts. It is, indeed, an astonishing decision. It is living proof that this Government are not competent, open or accountable.
I ask the Minister to answer these questions today. Was the Secretary of State told before the decision was taken? Was he consulted in any way? Was Lord Drayson, Minister for Defence Equipment and Support, consulted? I want answers to those questions before the Minister finishes replying to the debate.
The point of DESO is this: it is an extremely efficient, effective and vigorous promoter of its operations, quite unlike the dud organisation into which it is to be broken up and shunted. I had the privilege, as did the right hon. Member for Warley (Mr. Spellar), who was a doughty defender of defence interests, to be Minister of State for the Armed Forces and to work alongside one of the great heads of DESO, Sir Charles Masefield. He was a truly remarkable man. His energy, commitment and effort, together with that of DESO, secured major international successes and commercial contracts for British companies of all sizes.
I strongly commend the words of my hon. Friend on the vital importance of the holistic approach that DESO took to the defence industry; it dealt not only with the great companies but with the small businesses struggling to make their way in overseas defence markets. I have the greatest admiration for DESO, especially for its success overseas in the interests of our country. It is one of the most effective organisations for the expansion of British commercial interests overseas.
DESO linked extremely well and very effectively with our embassies and attachés, and it had unrivalled knowledge of its markets—something that UKTI could not even begin to achieve. It took a seamless approach; everyone knew what DESO was doing. The staff of DESO attached to our embassies and high commissions were extremely good at developing those vital markets. The Government are quite unclear about whether the staff will be retained.
As I said, the decision was taken in order to appease a number of factions in the Labour party. One has to assume that those who initiated the decision are working for another power. They cannot be working in the interests of the United Kingdom. They appear to be determined, for that is what they will do, to undermine the commercial efforts of Britain in some of the most competitive and important markets for our commercial endeavour overseas.
I believe that the Select Committee on Defence should examine that grotesque decision, taking evidence from all the parties involved on how it came about, who was responsible, who initiated it and what were the thoughts behind it. Clearly, no strategic thought was given to the change. It is a terrible, dud decision, and my hon. Friends and I will continue, through parliamentary questions, debate and with freedom of information, to get to the bottom of the matter. We have little hope of hearing anything useful from the Minister. However, if he intends to remain an honourable member of the Government—I am sure that he is—he must answer openly and make the Government accountable for that decision, and tell us today how it came about, who took it, and what he believes the consequences to be.
I cannot believe that the Government can do such a stupid thing. DESO has been a great success for this country. As I said in the House last week, wilfully to undermine it, break it up and take it out of the Ministry of Defence, which has the back-up and the people to know what it is doing, and where it is linked into our defence diplomacy and export efforts, is a decision of bovine stupidity.
When you introduced the debate, Sir Nicholas, you said, quite understandably, that this is one of a series of debates on defence that have rightly been occupying the House’s attention in recent days. If only that were true. It would have been true had the debate been held a few months ago, but as we can see from the Government’s representation here today, the Government do not regard the debate as one about defence at all. The Minister answering for them is not a Minister for defence, but for the Department whose title, I believe, is the Department for Business, Enterprise and Regulatory Reform, or DBERR for short. As I would understand it from any lexicon, the word “deburr” would mean something like “to take the rough edges off something”, which I am sure is what the Government have been trying to do by making this meretricious and indefensible move.
The significant aspect of the debate is not so much the difference between the opinion of every Opposition speaker, on the one hand, and on the other hand that of the Government and of the one speaker from the Labour Back Benches who so far has defended their move. What is significant is the debate that took place in a series of interventions on that one speaker, the hon. Member for Wolverhampton, South-East, by his right hon. Friend the Member for Warley (Mr. Spellar), who was a distinguished junior Defence Minister at the time when the Government were producing sensible documents such as the strategic defence review.
The hon. Gentleman might wish to correct his references to hon. Members. I am happy to defend all my own comments, but I am the Member for Wolverhampton, South-East. I believe that the hon. Gentleman was actually referring to my hon. Friend the Member for North-West Leicestershire (David Taylor).
I am happy to acknowledge that error, and I only hope that that will not be the sum total of misapprehensions on which the Minister is able to correct this side of the House. His hon. Friend the Member for North-West Leicestershire (David Taylor) and his right hon. Friend the Member for Warley have between them absolutely encapsulated the reason for the change. Had DESO remained with the Ministry of Defence, we would not have seen the sort of concern and outrage that has resulted from what is purely a political gesture. As my hon. Friend the Member for Newbury (Mr. Benyon) said in his excellent opening speech, and as numbers of hon. Members have said since, that gesture is clearly meant to appease those people who object to the Serious Fraud Office having dropped the BAE Systems inquiry.
My hon. Friend really knows his stuff in this area and was a very distinguished shadow Minister. Is he aware that the head of DESO once told me that the former Prime Minister, the former Member for Sedgefield, was absolutely assiduous in helping the cause of British defence exports throughout his time in office, and was always prepared to help DESO in its overseas work in the greater interests of the United Kingdom’s commercial success?
I can well believe that. Indeed, given that very commitment by the Prime Minister’s predecessor, the whole strategy of the present incumbent in seeking to distance himself from what he no doubt regards as the tainted legacy of his predecessor adds to an understanding of the reasoning behind the decision. One might think that the Government would be rather discomforted by the fact that, so far, only a single Member of the Labour Back Benches has spoken up for their decision, whereas every other speaker—not least my hon. Friend and former boss as shadow Secretary of State for Defence, the hon. Member for Mid-Sussex (Mr. Soames)—has excoriated it. It would be a mistake to think so, however. I am quite sure that every speech that points out the unjustifiable, indefensible and outrageous nature of this decision—both in its own right and in its execution—will enable the Government spin doctors to point to the Government’s critics and say, “You see, we have delivered. We have upset and outraged all those people whom you oppose because they believe in a strong defence industry and in strong defence exports.”
I am most grateful to the hon. Gentleman for spelling out in his own terms the importance of the arms industry. Does he believe that the shock departure of the chief executive of BAE Systems yesterday was linked to the al-Yamamah deal, to which he referred earlier, or might it have been linked to other corruption inquiries in relation to the arms trade that involve BAE in South Africa, Tanzania, Chile and the Czech Republic?
I would be astonished if there were such a link, and there is something that I have not quite understood, either from the tenor of the hon. Gentleman’s speech or from his interventions. Either he accepts that there is a role for a legitimate arms industry for export from this country, or he does not. He indicates that he does. We must therefore question the entire relevance of his speech—one that sought to minimise the importance of the industry—to the Government’s decision to move an efficient Government agency from the Ministry where it is most appropriately sited to a different one, where there is no experience and where effectively the Government will be starting from scratch in the representation of such an important industry.
I am not being party political when I say that it is emblematic of what has occurred that the Liberal Democrat party has not seen fit to send a Back Bencher, let alone a Front-Bench spokesman, to take part in the debate. No party would have been more in the vanguard of opposing the arms trade and calling for changes of this sort than the Liberal Democrats. However, they have got what they want, and they are now involved in their favourite spectator sport—from our point of view—of engaging in another round of leadership elections. Those elections are not due until some time near the end of the year. Are we therefore to expect a merciful release from Liberal Democrat contributions to all our debates between now and the end of the year, or is it simply that they are leaving this debate alone because they know that their objectives have been achieved in relation to arms exports and defence representation?
The point has been made repeatedly about the advertising of the post to head DESO only days before the announcement of DESO’s abolition. Yet this is the Government who entered office talking about joined-up Government. What we must remember is that, if the Government are dissatisfied with the uses to which exported arms may be put, it lies in their hands to lay down rules and regulations on countries to which arms are exported. As it is, we are seeing a sort of reversion to old style unilateralism. By emasculating the organisation, the Government are now saying, effectively, “Let’s leave it to other countries—countries that have more ethical foreign policies than us, such as France, the USA, China and, of course, such as our old friends the Russians.” Vladimir Putin has been pictured shaking hands with President Ahmadinejad of Iran on the front pages of today’s newspapers.
I believe that what has happened today is a gesture to certain parts of the old Labour constituency, and our reaction is enabling the Government to say, “You see, our gesture means something because you have upset the forces of darkness.” But they are not the forces of darkness, they are the forces that enable £5 billion a year of revenue to flow into this country’s economy and that are rightly regulated by the Government, who decide where arms exports can go. It is a sign that the habits, practices and indulgences of manipulation, spin and devious techniques did not die with the passing of Tony Blair as Prime Minister.
I think that it is in order for me to declare that in my previous employment I worked for QinetiQ, which at that stage was the Government defence research authority. Indeed, I therefore have some shareholdings in defence companies, although they are too small to warrant an entry in the register.
I totally agree. I opposed the sell-off of QinetiQ, and I do not have any shares now—nor did I have any then—in the company. I do not believe that those massive pay-offs were worth it—no one warrants that. I agree with the hon. Gentleman on that point.
We all call it “arms” today, because it suits the Campaign Against Arms Trade to do so, but the British defence and aerospace industry goes much wider than arms. We do not make Kalashnikovs and all those things that we mainly see on the television. As a north-west MP, I am incredibly conscious of the weight and contribution that the defence industry gives to the UK economy. We make a whole range of things that, in today’s environment, mainly have dual uses. That is important.
My hon. Friend the Member for Newbury (Mr. Benyon) correctly pointed out that one of the reasons that we have an arms industry in this country is to spread the cost and to allow our armed forces to afford the best kit available. If we did not share the cost of those procurement cycles, we might not be able to afford them. That means sharing and selling to our allies. No one here says that we should sell weapons systems, or even defence systems, to our enemies or to people with whom we disagree.
The hon. Member for North-West Leicestershire (David Taylor) pointed out that BAE Systems sells more to America than to Britain. Well, that is not a surprise, as America is our biggest ally and also the biggest defence market in the world—shock, horror! People may have views about the Bush regime, but let us remember that it is not a regime—he is an elected President, and one with whom the hon. Gentleman’s Government went to war in Iraq. America is a perfectly acceptable ally for us today, in the past and in the future. I am very happy if British companies share their technology with American companies and American armed forces benefit from the protection that our defence industry can give them and vice versa. The Government have just placed an order for Mastiff vehicles to protect British armed forces in Iraq and Afghanistan from mines. That is an American company selling to Britain. I hope that no one objects to that, and nor should they.
The industry also allows us to keep a skills base. When I worked at QinetiQ, it employed 10,000 people across the United Kingdom. It was the biggest grouping of PhDs in Europe, and the biggest research technology organisation in Europe. In this day and age, when we are threatened by Chinese and Indian competition in the realm of technology development, to have an organisation such as QinetiQ, founded in the defence and aerospace industry, is a real asset to the UK. Before we push away what it does because it is founded on defence, we should think what such companies have contributed for our daily use. As I stand in this Chamber, I can see plasma screens, a QinetiQ invention that people daily queue up to buy from Currys or wherever else. The timing clock is a military LED invention. When I get e-mails from all those people in the Campaign Against Arms Trade, I like to remind them that the internet was invented by the Department of Defence in the United States—how nice that they can send e-mails, based on a military system. Perhaps that is why the Minister responsible for postal services is here—so that he can offer an ethical alternative for sending communications.
We should remember that the arms industry—the defence industry—gave us the jet engine and facilitates everything that we do today. People cannot merely say, “If we get rid of our arms trade, that will be fine.” Spin-off from the aerospace industry benefits United Kingdom citizens, the taxpayer and the Treasury. I find it totally ironic that the new Prime Minister is at the heart of the decision to abolish the Defence Export Services Organisation—the man who has always played to the chorus of Rosyth. I am an ex-MSP who represents a north-western English constituency, and my father is from Fife—in fact, he grew up in the Prime Minister’s town when the Prime Minister was the son of the manse, which anyone from Scotland knows is a far higher class than most people in Scottish society. This is the man who makes capital out of backing Rosyth and lives next to Raytheon in Glenrothes. In he comes, and to give some sop or make some easy decision, he abolishes DESO. I hope that the voters in Fife remember that that is what their Prime Minister has done. They did in the other seat in Dunfermline, which became, rather ironically, a Liberal Democrat gain. The Scots know a good thing when they see it, and I hope that they remember what the Prime Minister has done with DESO.
We should also remember about dual use technology. Yes, we have invented things, but today’s threat is not the Soviet Union—it could well be Russia or China in a few decades, but it is not now—but the terrorists on our street. When I was in QinetiQ, I personally worked on projects that are right now keeping us safe from suicide bombers. Most of what we do in defence today is about scanners, sensors and communications. It is not about firing the gun but about trying to anticipate the actions of our threats. As we speak, in this building, some—probably 99.9 per cent.—of the sensors that are being used were developed by the arms industry. Let us call it the arms industry, because we can take these people head on. Those sensors, developed in that industry, keep us safe in aeroplanes and on the streets.
Smiths Group is an excellent company that is now equipping every single New York tube station with chemical and biological detectors to ensure that the population of New York is protected from weapons of mass destruction used by terrorists. If only our Mayor of London were clever enough to invest in such a system. That is a British invention, and I am proud that we supported it. We did so through DESO, which got those sales for us—something it is extremely good at. In my experience, I would go to an embassy, and DESO would know what it wanted. It would know the market and the customer. Let us remember that DESO was on the side of small business. It was not BAE Systems. Yes, it helped BAE Systems and everything else, but it also helped small companies in my constituency and in that of my hon. Friend the Member for Newbury by giving them the marketing infrastructure and international presence that they would not otherwise have had. Frankly, without that they would have been crushed by the likes of the American, German and French giants. If people are on the side of British defence, they should be on the side of DESO.
My hon. Friend the Member for Mid-Sussex (Mr. Soames) is absolutely right when he talks about the Department of Trade and Industry being a dud—we call it “deter trade international”. We used to go to the embassy, but we were lucky if the staff knew anything from their elbows, and when they did sort of know what was going on, their only response was, “Ring up your Business Link in your regional development agency.” That is the real game—keeping each other going: the RDAs keep the DTI going, and the DTI keeps the RDAs going. I spoke to a woman on the desk at Southampton—I wonder if she was the same communist who now has got a job in the Treasury—who did not even know where the Czech Republic was when I asked if she could help with a tender in that country.
We should be reversing this decision. It is an horrendous decision for a small, £16 million project. Not much in the Government works extremely well for £16 million, but DESO does. We should all recognise that not a single MOD Minister, nor probably a single DTI Minister—for its short remaining life span—supports this decision. However, the Prime Minister is at the heart of this. He can reverse the decision, and he must.
I am delighted to respond in this debate on behalf of the Opposition. I congratulate my hon. Friend the Member for Newbury (Mr. Benyon) on securing this very important debate, which will be widely read across the land and where the defence industry is represented. I am proud to be the Member of Parliament representing the headquarters of BAE Systems and QinetiQ—two of Britain’s greatest defence companies. I make no apologies.
I am replying to this debate because I am a shadow Defence Minister, and I think that it is a mark of the contempt with which the Prime Minister and the Government hold the defence industry in our country that they have put up today a Minister representing postal services. I have never met him—it is not his fault, and I dare say it is mine—but I have read through his experience, and he seems to have none of the defence industry. It is contemptible that he has been put forward to respond to this debate. The truth is that Defence Ministers are consumed with embarrassment about a decision on which the Secretary of State for Defence was not consulted, let alone his junior Ministers. They have managed to shuffle off the responsibility on to the poor, hapless Minister here today.
As my hon. Friends have explained so graphically, the truth is that this was not planned. In July of this year, an advertisement in The Sunday Times invited people to apply for the job of head of the Defence Export Services Organisation. This is how the Government described the appointment:
“This is a vital role supporting defence objectives and contributing to wider national interests. It is a highly significant appointment”.
It was so significant that 10 days later the Prime Minister scrapped the whole organisation, so obviously no one new was appointed to run it.
When I asked whether anyone in the industry had been consulted, eventually I received a reply from the Secretary of State for Defence, who said:
“This was a Machinery of Government change and in such circumstances, it is not unusual for announcements to be made quickly and without prior discussion with those outside Government. However, the current and future Chairs”—
which I assume means chairmen—
“of the National Defence Industries Council, Sir John Rose and Mr Mike Turner, were informed by telephone that morning.”—[Official Report, 17 September 2007; Vol. 463, c. 2173W.]
What contempt! Those captains of British industry, who are working their guts out for their employees and their country and for the defence of the realm, were informed by telephone that morning. Indeed, they were informed only after Alan Garwood had been, at half-past 9 in the morning—and he is only the bloke running the system! It is perfectly clear that there was no consultation.
My hon. Friends have asked for some answers from the Minister, and I have some questions of my own. It is his duty to answer those questions, although I doubt that he will be able to do so. The good news that I can tell my hon. Friends is that, according to the Campaign Against Arms Trade, whose brief was most ably read out by the hon. Member for North-West Leicestershire (David Taylor):
“There will be more about how the campaign was won in the next CAATnews.”
We will look forward to receiving information on how that decision came about, probably not from the Minister, but from the Campaign Against Arms Trade. That is highly appropriate, because my hon. Friend the Member for New Forest, East (Dr. Lewis) made it clear that this was a sop to the old left of the Labour party and those who were upset by the calling off of the Serious Fraud Office investigation.
It is clear that some Labour Members have it in for the defence industry, and the hon. Member for North-West Leicestershire demonstrated his complete, abject lack of understanding of Britain’s defence industry and its importance to constituencies across the land. He ought to understand the anger of his party colleague, the right hon. Member for Warley (Mr. Spellar) at his display of such ignorance in front of a man who, of course, was a Defence Minister, was probably instrumental in shaping the strategic defence review in 1998, and continues to make an important contribution to defence matters in our country.
The hon. Member for North-West Leicestershire was inveighing against the cost of DESO. In one year, it costs about £15 million net, but produces returns of £5 billion in sales for our country.
I am sorry, but I do not want to hear any more from the Campaign Against Arms Trade.
My hon. Friend the Member for Reigate ( Mr. Blunt) pointed out that DESO contains specialist services and expert knowledge, and of course people in uniform, because overseas Administrations are not organised in the same way as the United Kingdom. Many of them want to come to the United Kingdom and speak to military personnel, in a military environment, and talk to military Ministers in the Ministry of Defence. By this break-up, the Government are proposing to remove that special experience. As my hon. Friend the Member for Newbury said, all the able people will be making tracks to the front door, if they have not done so already.
As the right hon. Member for Warley pointed out, Government-to-Government deals will remain the responsibility of the MOD. My hon. Friend said that information had been circulated to some of us from people who are desperately concerned. The Minister does not understand. I assure him that this is no synthetic anger. We are deeply angry about what the Government have done, and so is British industry.
In case the Minister does not know, the answer to the frequently asked question:
“What will happen in future with overseas customers who want to deal with the MOD, not a trade promotion organisation?”,
“That is again something that will need to be worked through with the other Government departments concerned. As the Prime Minister's statement makes clear, current and planned arrangements, mainly with the Saudi Government, will continue.”
Everybody else will be subject to arrangements yet to be decided.
Interestingly enough, the Campaign Against Arms Trade is also saying that by shifting this into the Department of the Minister here today, the defence industry will be removed from the Ministry of Defence, which will leave it much more subject to policy decisions from the Foreign and Commonwealth Office and the Department for Business, Enterprise and Regulatory Reform. This decision will have a huge adverse impact. It is already having an adverse impact on the way in which defence business is done between the United Kingdom and potential overseas customers. Has the Minister attended the defence systems and equipment international exhibition at docklands? He should do so.
Clearly this is an act of political spite. It is a pay-off to Baroness Vadera, who got a peerage as well. We need to know which officials in the Ministry of Defence and the Treasury are either involved themselves in the Campaign Against Arms Trade or have family members who are involved. We also need to know what resources are going to be put into the new arrangement with UK Trade and Investment. What is the MOD’s commitment going to be? I understand that the Minister’s Department intends to set up an organisation within the DTI with military officers seconded to it. Is that the case? Have those military officers agreed? Where will they be located? Will they have access back into the MOD? What about small and medium-sized enterprises, which some of my hon. Friends have mentioned? I received an e-mail from a company that I know called Christy Military Flying Training Ltd, which is a DESO charter member. It had to qualify to become a charter member, which gives it instant credibility in the overseas market. It said:
“The removal of that Charter Member status will, at the very least, have an impact on our ability to break into overseas markets”.
It also said that
“being a DESO Charter member has been of significant benefit, giving us direct access to sales support overseas and overseas contacts via FCO.”
SMEs will be wiped out of the picture. We know from a written answer published today that DESO branches—project offices—throughout the world number about 15. What will happen to them? We need an answer from the Minister.
This is a contemptible, personal decision by the Prime Minister, whose interest in defence does not venture beyond his own constituency, where Rosyth is located.
Hon. Members: Or a photo shoot in Iraq.
Indeed, my hon. Friends are right.
This decision is a sop to the left and a kick in the teeth for the United Kingdom’s most successful manufacturing industry. Some 21 per cent. of defence employment is linked to defence exports, I can tell the hon. Member for North-West Leicestershire. Ultimately, however, the real crime is that the decision is a gift to our competitors. Unless seriously satisfactory alternative arrangements are put in hand, we shall reverse this decision when we return to office, and we shall re-establish DESO.
I congratulate the hon. Member for Newbury (Mr. Benyon) on securing the debate. I appreciate his strong interest in defence issues and his background as a member of the armed forces. We also heard from a former shadow Secretary of State for Defence, the hon. Member for Mid-Sussex (Mr. Soames), and from others with a background in the issue. I assure them that I have full respect, as they would expect, for that experience. If that respect is not returned, that is a judgment not for me, but for Opposition Members.
The question was asked why a Minister from the Department for Business, Enterprise and Regulatory Reform is speaking in this debate. The answer is that the Prime Minister’s decision, which was announced on 25 July, was to transfer some of the Defence Export Service Organisation’s responsibilities to UK Trade and Investment, which has two parent Departments, one of which is DBERR, so in the future my Department will have a strong interest in this area.
I shall begin by endorsing the sentiments that have been expressed about the strength of DESO’s record, the quality of the people who work there and its success in securing many orders for the defence industry throughout the UK. Hon. Members asked several questions about the transfer, but at root there is one more fundamental question about whether in the transfer we will lose the record, expertise and quality that DESO has stood for over the years, or whether there will be an opportunity to add to it. The Government are of the view that the change does not mean losing that quality or that record but gives us an opportunity to add to it.
One point was made in the debate that I cannot endorse: that somehow UKTI is not a successful body for the UK, that it is not respected throughout the world and that it does not have expertise and value to add to the promotion of exports in general and of defence exports in the future. The question was asked about the announcement itself, and I am afraid that I must agree with the answer that the Opposition spokesperson, the hon. Member for Aldershot (Mr. Howarth), read out a moment ago. As the machinery of government changes, it is not unusual for such changes to be announced in that way, or for the implementation details to be worked out afterwards. It has happened in the past, and it may happen in the future.
That responsibility passes to UKTI under the proposals. I can confirm to the hon. Gentleman that my colleagues, Lord Jones of Birmingham, Lord Drayson and others are engaged in intense discussions with industry representatives to make a success of the change. There is a shared desire to do so.
We do not make the change because we believe DESO is in any sense a failing or a bad organisation but because, despite its record of success and the quality of its people, we believe that value can be added by integrating defence exports efforts with the efforts of UKTI to promote exports throughout the world.
The Minister is being very gracious in giving way. He said that it was a machinery of government decision and that such decisions are routinely taken in that way, but are they routinely taken in that way without consulting the principals that the decision affects, as has clearly happened on this occasion?
I have given my answer to the machinery of government question. The Prime Minister is responsible for machinery of government decisions, and it is not without precedent for such decisions to be announced and for the implementation details to be worked through afterwards. That is what has happened in this case.
If hon. Members will bear with me, I should like to make some progress and perhaps provide them with some of the detail that they have asked for during the debate.
The new organisation will be integrated with UKTI. It will deliver services that are responsive to the needs of our overseas customer Governments in a way that coheres with UKTI’s strategy. The transfer will establish the new organisation as a UKTI business unit with expertise in defence services and products, but it will be managed and run like other UKTI business units.
The question was asked about what staff will work in the unit. I am happy to tell Members that it will contain a mix of civilian and military staff, and we recognise the point that was made about the importance of serving officers being part of the organisation. I hope that that answer clarifies the situation. We are trying to keep DESO’s value and record, and to increase the synergies between the defence industry and the wider manufacturing and service sectors within the UK. Many defence manufacturing companies manufacture more than solely defence goods, and at present they must draw on expertise that is spread widely across Government. That divide need no longer apply, and the same can be said of investment advice.
We recognise that there are specific features that are unique to the defence sector that must be accommodated in the new arrangements. The defence industrial strategy describes the part that defence exports play in ensuring that those sovereign operational capabilities, vital to our defence needs, are maintained within the UK. Defence exports can also play an important role in building bilateral relations with friends and allies throughout the world.
Several questions were asked, and people have read from briefing documents, about decisions that have yet to be taken. I shall be honest with Members: there are decisions that have yet to be taken. The plan is to develop an implementation plan, led by the Cabinet Office, by the end of the year, which will answer many of the questions that have been put today. Work has already begun on the transfer in order to ensure that it is done as seamlessly as possible. In managing its implementation, there is of course an important dialogue to be had with industry, to ensure that we understand the specific requirements and achieve the best possible result from the transfer. We will of course retain strong links with the MOD afterwards. We recognise that that is essential in order to ensure that the advice and assistance of the armed forces can continue to be used in support of defence products.
Sir Nicholas, I should like to continue, but perhaps time demands that I end there.
Export Credits Guarantee Department
It is a pleasure to serve under your chairmanship for the second time in two days, Sir Nicholas. It is becoming a welcome habit.
I am delighted to have the opportunity to spend some time throwing a spotlight on an important institution that has a long track record of supporting British exports and facilitating British trade, but which has been dogged by controversy for most of its history, not least because of its involvement in projects such as the Baku-Tbilisi-Ceyhan pipeline and, most recently, Sakhalin. That institution is the Export Credits Guarantee Department.
The organisation needs to be modernised, and I speak as a member of the Environmental Audit Committee, although I was not a member in 2003, when it published its groundbreaking report calling for changes to the ECGD’s remit. I am also a board member of the Conservatives’ quality of life policy commission—recently, it, too, called for changes to that remit. My thesis is simple: Britain is a recognised thought leader on climate change. Indeed, the Government take pride in their reputation for leadership on the agenda, and some of that pride is well placed. They have taken a lead in setting targets, pushing climate change up the agenda of international politics and, most recently, submitting to the House a draft Climate Change Bill. However, at this critical time we should seek to demonstrate best practice in our institutions. The ECGD is a particularly important institution, because export credit agencies are an important source of capital and therefore an important driver of change in the business community. Those agencies and the ECGD engage with other countries, so they should therefore reflect the British Government’s priorities and values.
The ECGD’s importance is made apparent by its own sustainable development action plan, in which it states:
“The annual total value of capital goods exported with medium to long term finance supported by all the ECAs of the OECD countries usually ranges between £30 billion and £40 billion, with ECGD’s share being around £2 billion. Although this level of ECGD support represents only around 2 per cent. of UK exports annually, the exports that are supported often form part of larger projects”.
“ECGD’s involvement provides an opportunity for it to influence the attitudes of project sponsors, host Governments and the other financial institutions in regard to Sustainable Development issues at the project level.”
We therefore expect the ECGD to represent best practice on environmental standards, but the truth is that it pays lip service to them and runs with an unambitious pack. We expect it to support the industries of the low-carbon future, but instead it subsidises a relatively small number of powerful industries that are among the most polluting in the world. Surely, if the Government are serious about matching rhetoric with action, now is the time for them to show more ambition by changing the remit and culture of the ECGD to align it more explicitly with their sustainable development strategy, position it to support the clean industries of the future and bring it out of the shadows. That would transform it into a transparent and accountable public institution of which we can be genuinely proud.
I am delighted to make my argument to a Minister with excellent credentials. The hon. Member for Croydon, North (Malcolm Wicks) is a well respected Energy Minister whose commitment to the environment is not in question. Anyone who doubts it should visit the planning department of Croydon council, where they can see the files that bear testimony to his persistence in trying to install a wind turbine on the roof of his house. In fact, his passion for such technology extends to his having recently presented me with my own mini-wind turbine as a wholly undeserved reward. I have no doubt that he is a Minister who has fully aligned himself personally with the Government’s rhetoric on climate change and the importance of the environmental agenda.
I should like to break my argument into three parts. First, what should we expect of the ECDG? Some voices say, “Don’t muck around with it. It is working—don’t muck around with the core focus.” I suggest to the Minister that that is not good enough in 2007 in the face of climate change and the growing recognition of the wider damage that we are doing to the natural resources on which our prosperity and well-being ultimately depend. Leading politicians attach huge priority to climate change as the greatest threat to our long-term well-being, and we know that the response will require huge change and a transformation of our energy and transport infrastructure. In the short term, we face a major challenge in stabilising our emissions, let alone reducing them. You will be aware, Sir Nicholas, that we have an unfortunate track record over the past 10 years, as our domestic emissions have risen, not fallen. The past 10 years have taught us that tackling the problem is hard, but there is growing consensus about the role of Government. They should correct the market’s failure to put a value on carbon, set the clearest possible framework for the market and lead by example.
There is also growing consensus about the need to reinforce the principle that the polluter should pay. A key audience for that message is business, which is a key agent of change, not least because of its ability to drive change through the supply chain. Sometimes business responds to Government through regulation, and sometimes it responds to employees. It certainly responds to customers and to sources of capital. Export credit agencies are a major source of capital. The Environmental Audit Committee pointed out that they are
“collectively the largest source of public finance for private sector projects”
“powerful, influential players in the field of international business. They underwrite ten per cent. of exports from large industrialised countries”.
They are funded by the taxpayer and are accountable to Government. Given the priority attached to climate change, and the Government’s pride in their leadership, an external observer would expect such an important organisation as the ECGD to be a shining example of best practice, standing shoulder to shoulder with the Government’s policy priorities. It is not.
In theory, the ECGD reports to a Government Department but in fact it stands apart and does its own thing. It derives its powers from the Export and Investment Guarantees Act 1991, which has not been materially adjusted for 16 years. It is an institution in decline, given the volume of business that it underwrites. Its core business is the subsidisation of a relatively small number of powerful industries—defence infrastructure, aerospace, oil and gas—that are characterised by their negative impact on the environment. Meanwhile, its participation in the financing of new industries is negligible, at 2 per cent. of the current fund, despite the commitments made by the British Government at Johannesburg in 2002 and, more recently, at Gleneagles. Instead of being at the forefront of promoting corporate responsibility, it pays lip service to what is explicitly described in its sustainable development report as a secondary duty to operate in accordance with other Government objectives,
“including those on sustainable development…human rights, good governance and trade.”
Since 2000, the ECGD has been required to produce a statement of business principles, and I acknowledge the Government’s role in that important initiative. The ECGD’s business principles state:
“We will promote a responsible approach to business and will ensure our activities take into account the Government’s international policies, including those on sustainable development”.
No reference to climate change is made in any of the ECGD’s strategies, risk assessments or investment decisions. The business principles are assessed by case impact analyses, which are designed to provide an assurance that the ECGD’s activities are consistent, but such analyses are not required for its aerospace or defence business, which is subject to other codes with environmental standards of questionable stringency. Even in cases in which the analyses are applicable, impacts are assessed by comparing them with the relevant international standards, for which the benchmark is World Bank standards which, historically, are not very demanding. A process is under way to find a common, more demanding standard, but I do not get the impression that there is much political momentum behind it. I should be interested to hear the Minister’s view and to receive an update.
It would not matter if the standards were the most exacting in the world, because it is quite clear to anyone who does business with the ECGD that it considers environmental and social assessment procedures to be discretionary. Standards apply, but only when it sees fit. It is therefore not surprising that it is extremely reluctant to disclose its analyses, obstructing attempts to obtain them through freedom of information requests. It is not surprising, either, that it has never rejected a project on environmental or social grounds, or that it is embroiled in legal cases with non-governmental organisations such as WWF that find its attitudes utterly frustrating in the new political environment.
Does all that matter? Of course it does, for at least three reasons. First, because at a time when British taxpayers are being told about the changes that they have to make to reduce their carbon footprint, their money is being spent on subsidising the development of projects with high carbon impacts for which the sponsors are not accountable. Secondly, our poverty of ambition has resulted in a missed opportunity to show a lead to other export credit agencies, and, thirdly, the impact of emissions can be linked both directly and indirectly to ECGD activity. In aviation, for example, in the past five years, the ECGD has provided £3.3 billion of finance for the supply of 294 aircraft, which is equivalent to British Airways’ entire fleet being added to the global airline industry every five years with Government support. The ECGD should act as a gadfly to the industry, encouraging it to move further and faster to improve the energy efficiency of those aircraft, but it is not at all clear that it has done so. The Sakhalin project is another example: WWF estimates that the 1.6 billion tonnes of carbon dioxide emissions from the lifetime oil and gas production of that one development are equivalent to just three years of UK national emissions.
That is not good enough. At an absolutely critical time, a key British institution that the Government ought to be able to control is sending the wrong signals to the market. The Government should point the ECGD in a different direction. First, they should change its remit. The 1991 Act should be amended to make it clearer that the Secretary of State and the ECGD must have more explicit regard to climate change and other key policy requirements. Secondly, the Government should change the culture of the organisation to make it more transparent. We should know about direct and indirect emissions resulting from investments facilitated by public money; the ECGD should be required to disclose them and bring its aerospace activities under the scope of the environmental and social assessment, including climate change. Thirdly, they should bring the ECGD into the collective Government effort to control greenhouse gas emissions in this country. They should have targets to reduce contributions to those emissions.
Lastly, and more controversially, the ECGD should lead a shift towards low-carbon finance as part of a Government-led initiative to phase out subsidies to fossil fuel industries. By taking a lead on that issue, the British Government would reinforce leadership on climate change and go with the grain of developments elsewhere. The Minister may be aware that the “End Oil Aid” Bill was introduced in the United States in April 2007 to end subsidies for oil companies’ international operations. Calculations by the World Bank and the Organisation for Economic Co-operation and Development show that global subsidy removal could reduce CO2 emissions by about 10 per cent. worldwide. The EU sustainable development strategy requires a 2008 road map to phase out subsidies that are harmful to the environment. The message is that the polluter should pay, not be paid.
There are concerns about competitiveness, and the Minister might make that argument. I urge him, however, to consider the example set by the Canadian equivalent of the ECGD, which follows best practice by disclosing the environmental standard used to assess projects, and allows appeals against decisions, unlike the ECGD. Unlike its British equivalent, its business is not in decline. Indeed, last year it reported record numbers and business grew by 15 per cent. The message is that the world is changing and it is time for the ECGD to change with it.
I shall close with some questions for the Minister. Does he believe that the ECGD is playing its full part in the Government’s battle to reduce greenhouse gas emissions? Is he satisfied that it is operating with satisfactory levels of transparency and accountability to the public? Does he believe that it offers the taxpayer value for money? Would he support an investigation by the National Audit Office into whether it offers best value? Does he believe that a publicly funded body should continue to subsidise the fossil fuel industry, particularly in emerging markets where the priority should be to help develop clean energy? Does he think that the ECGD should retain its current focus and prioritisation or does he accept the need for change?
May I, too, say what a pleasure it is to have you in the Chair, Sir Nicholas, although it is my first time in two days, unlike the hon. Member for Ruislip-Northwood (Mr. Hurd)? He is clearly more experienced here in Westminster Hall.
I congratulate the hon. Gentleman on the thoughtful way in which he presented his argument. I want to reflect on one or two things that he said, but let me give some background. As the UK’s official export credit agency, ECGD’s current statutory objective is to help to facilitate exports. Its aim, which is set out in its mission statement, is to benefit the UK economy by helping exporters of UK goods and services to win business and by helping UK firms to invest overseas by providing guarantees, insurance and reinsurance against loss, taking into account the Government’s wider international policies. In a sense, that balance is what we are discussing today.
In line with my last point about our wider policies, in 2000, ECGD adopted a set of business principles that help to ensure that it operates in a way that takes account of wider Government policies on sustainable development, debt sustainability, environmental and social impacts, human rights, transparency and combating bribery and corruption. So, we operate within a framework of social and ethical principles.
ECGD undertakes detailed environmental and social impact assessments, including on greenhouse gas emissions, for all the infrastructure projects that it is asked to support. Those assessments are done by its business principles unit—a team of environmental specialists who also help it to establish its policies and practices. Broadly, it requires projects to meet the higher of World Bank or local standards on environmental, social and human rights impacts. That is the benchmark by which it judges the acceptability of projects that it is asked to support.
ECGD has implemented a case impact assessment process, which is publicly available on its website, by which the impacts of projects are assessed and graded so that the projects that it supports are compatible with its business principles. Projects are graded as having high, medium or low potential environmental and social impacts. With high-impact projects, it expects the project sponsors to make environmental impact information, such as an environmental impact assessment or summary, publicly available at an appropriate stage in the development of the project. As part of its continuing commitment to greater transparency, ECGD now publishes a list of projects with potentially high impacts for which its support has been requested, which allows interested parties to make comments. For those projects to which it gives support, compliance with environmental and social standards is monitored during the construction and operational phases of projects.
So much for infrastructure projects; what about ECGD’s other business? Its business is reactive, as it is there to support projects on demand. As the hon. Gentleman has noted, the main demand for its support currently comes from the civil aerospace sector, defence exporters and heavy capital equipment manufacturers. While he was speaking, I was reflecting on whether it would be appropriate, as I think he was arguing, for us to allow certain goods, such as aeroplanes, to be used here in this country, but have a rather more restrictive policy on export credits. There is a real dilemma there, and I am not quite sure where he would go on that. Are we really saying that the ECGD should not support the export overseas of something that is acceptable in the United Kingdom?
I just add that following the world summit in Johannesburg, which the hon. Gentleman mentioned, the ECGD set up a £50 million line of credit for exports of renewable energy technology. That is the good news. However, there have been no applications to the fund in six years. Notwithstanding the ECGD’s reactive role, after this debate I shall ask more questions about why there have been no applications to that £50 million fund for renewable technology.
The ECGD provides some £2 billion of support for new business each year. Some 40 per cent. of that is for the aerospace sector, particularly Airbus aircraft. Leaving aside the potential inaccuracy of an ECGD estimation of an aircraft’s emissions over the course of a working life that may cover different routes, no recognised reporting mechanism makes export credit agencies responsible for reporting emissions resulting from the products of the projects that they support. That responsibility lies with direct investors and managers. Banks have adopted policies in line with that, as they are direct investors, but the ECGD is not. It takes account of the European Union and North American aircraft certification system to determine the acceptability of the emissions from individual types of aircraft and aero-engines. At present, export credit agencies support only new aircraft, often enabling airlines to retire old aircraft and reduce emissions. That is an important aspect of the work.
It is not UK Government policy simply not to support industries that contribute to climate change. It is our policy to require industry to adopt best practice, modern technology and high standards across a range of environmental impacts. The ECGD is in line with that policy. Indeed, it requires applicants for support to state whether their product meets UK standards.
I am aware of the interest in the large integrated oil and gas project being developed at Sakhalin island in Russia, to which the hon. Gentleman referred. There has been controversy about the project’s environmental and social impact. Alongside Japanese and US export credit agencies and commercial banks, the ECGD has been asked to support the provision of export credits of $650 million. WWF-UK recently launched legal proceedings to seek a judicial review of a decision that it claims has already been made by the ECGD to support the project. The Government’s position is that no decision has yet been taken on whether the agency will support it. A decision is unlikely to be made until the new year, and it would be wrong for me to speculate about it now, but I can give an assurance that it will be based on whether the project meets the ECGD’s publicly stated environmental and social impact policies, consistent with its business principles.
May I also say, as it is part of this ethical debate, that the ECGD’s business principles require that it take reasonable precautions to avoid financial loss from supporting businesses tainted by bribery and corruption. Following an extensive public consultation, the agency introduced new strengthened bribery and corruption procedures on 1 July 2006. They require greater transparency on the part of exporters, including providing the ECGD with the name of any agents involved and giving it new audit rights to check compliance.
The UK has played a major role in supporting the multilateral debt relief initiative. The Government have played their part in assisting the world’s poorest countries to address their debt problems as part of their commitment to poverty reduction as the overarching objective of the UK’s aid and development policy. The ECGD is playing a full role in that.
In order not to recreate the debt problems of the past, the ECGD’s business principles require that it take account of debt sustainability when it supports projects to countries that are vulnerable to debt problems. It has adopted productive expenditure policies so that its support to such markets is made available only for projects that will provide economic benefit to the country concerned and not undermine debt sustainability; for example, import substitution projects that earn foreign exchange.
Many of the agency’s policies and practices are informed by international agreements through the Organisation for Economic Co-operation and Development, which is the primary body for the international regulation of officially supported export credit, and through the EU. For example, several international agreements set minimum standards in areas such as credit terms and premium rates. They help to ensure that export credit agencies all work to common terms, so that competition is between exporters and not their Governments. The context is that export credit agencies are big players in financing international trade. In 2005, agencies from the OECD countries financed projects worth more than $45 billion.
The ECGD has been an international leader in improving discipline in the provision of export credits. More recently, its efforts have helped to achieve OECD agreements to combat bribery, to apply common approaches on environmental issues and to adopt certain principles on the provision of export credit support to very poor countries that are vulnerable to debt problems.
I have been following the Minister’s argument with interest, but he is moving on from the thrust of my argument. I know that I can speak frankly to him. He is a highly intelligent Minister, capable of delivering his own personal view on a subject. He is reading out a fairly explicit brief from the Department, but may I ask for his personal view? Does he accept that there is an argument for a change to the ECGD’s remit in respect of striking a balance between the need to promote trade and the need to protect the environment, or is the message from the Department that the status quo is entirely adequate?
What I have been doing, albeit with a little help from my friends in the Department—we work closely together—is to demonstrate to the hon. Gentleman that there is an ethical framework. We take account of environmental considerations and social impacts, and we work internationally with other export credit agencies to ensure that purpose. If he is asking whether we might be doing more to ensure that we can align our sustainability and climate change objectives with our export credit objectives, perhaps we can, and I shall certainly consider that. The hon. Gentleman presented a bleak picture of what the agency is doing, but I do not accept it. His view was not as balanced as the one that I would usually expect from him.
Given that much export credit is now given by countries outside the OECD, and that that can bring difficulties in the future, we are doing our best to work with such countries to ensure that there will be common standards. An objective of the OECD is to reach out to the export credit agencies of non-OECD countries to ensure that they play by the same rules as the agencies of OECD countries. In that context, it is reassuring that Brazil recently agreed to sign up to the OECD’s aircraft sector understanding which governs export credit agency support for aircraft sales, and that several non-OECD countries, including China, have attended OECD meetings on export credits as observers.
The hon. Gentleman would expect me to put the debate in the wider context of what the Government are doing about climate change. He paid tribute to the Government for being a world leader on climate change issues. It is important to put matters in context. We are all concerned about emissions from aircraft and from aviation. It is one of the reasons why we want aviation to be brought into the reform and future of the EU emissions trading scheme.
Also, because of our commitment, we have recently announced two major projects. A Severn barrage would have a major impact on producing more renewable energy in the future, and on cutting emissions. We are interested in the major feasibility study on it. The hon. Gentleman will also have noted the recent announcement about a carbon capture and storage project. We want a major UK demonstration of that important technology.
I promise to reflect on what the hon. Gentleman has put to us thoughtfully and with much intellectual rigour this morning. I have set out the Government’s position, but nothing is set in stone. We will look to the future together.
Sitting suspended until half-past Two o’clock.
Last week, a national newspaper carried an article entitled “Why are our young people killing each other?” The story referred to the violent murder of a young boy who was simply minding his own business. His murder brought the number of young people’s deaths from gun or knife crime in the UK to 51. Only the families and friends of those young victims know the pain and hurt of losing a loved one in such violent circumstances. I hope that we all recognise how precious life is but, regrettably, it is of little significance to some others. I do not wish in any way to demean the memory of those 51 individuals, because they are as precious to their loved ones as all those who daily lose their lives on our roads are to their loved ones.
The startling statistics for road deaths show that while individual drivers do not go out with the intention of having a road traffic accident that could result in a fatality, the way in which some people drive on our roads, especially some young drivers, means that young people are killing one another on our roads. Let me make it clear that the vast majority of drivers of all ages on our roads are good drivers. However, among the 3,200 lives lost and 30,000 injuries resulting from road traffic accidents there is a disproportionate number of deaths and serious injuries in the 17 to 25 age group. Male drivers in that group are over-represented in the crash statistics. Under-25s account for one in eight licence holders, yet one in three drivers who die on our roads are in that age group.
Some people argue that the word “accident” should not be used, as it implies that there is something inevitable about such collisions. They believe that they are almost entirely avoidable with appropriate training and testing, the correct attitude, a licensing regime that supports an extended learning period for new drivers, and appropriate sanctions on those who transgress. Single vehicle crashes involving novice drivers occur most often at night between 10 pm and 6 am, and mainly involve speeding with other teenagers present in the vehicle. There is substantial evidence that when teenage passengers are present with young drivers the risk of a crash increases significantly.
I imagine that almost everyone in the Chamber possesses a driving licence. Even with many of the smaller engine vehicles constructed today, it is easy to exceed the maximum speed limit on our roads. How many of us can honestly say that we have never found ourselves inadvertently exceeding the speed limit on an open road when the weather and road conditions were good? It is easy for the speed to creep up without the driver realising, and that is even more so on a long journey. Passing the driving test in 2007 provides nothing more than a certificate allowing the holder to drive safely on their own, and it is worrying that the majority of those who pass are deemed not to be the finished product or a finished driver. Learning to drive is really about preparing for that one day when the test is taken in the hope of passing it.
Only yesterday evening, I spoke to a constituent who hopes to become a qualified driving instructor. He informed me that it is possible for someone to sit the theory driving test on their 17th birthday, and within two months take and pass their driving test. Thereafter, that person can go out and drive any car with any size of engine. Drivers who have just passed their driving test are informed about the opportunity to develop their skills through the Pass Plus scheme, but only about one in eight takes that opportunity. I have explained how easy it is in today’s modern vehicles to drive at excessive speeds, and while it has been shown that speed is all too often a contributory factor in many crashes, accidents often happen because the driver cannot handle or control the vehicle.
I want to thank my local police force, Dumfries and Galloway constabulary, particularly Inspector Gordon McKnight, for providing me with some local statistics for this debate. During the three-year period from January 2004 to December 2006, 61.5 per cent. of all casualties were male, and further analysis reveals that in the under-45 age group, the average number of male casualties remained at 65 per cent. The under-16 category accounts for 11 per cent. of all casualties; the 16 to 20 age group accounts for just over 18 per cent.; and the 21 to 25 age bracket for 11.1 per cent. Overall, the 30 and under age group accounts for 47.5 per cent. of all casualties, and as one in three casualties fall into the 16 to 25 age bracket, Dumfries and Galloway constabulary decided to target that age group through education and, when necessary, enforcement.
How do we attempt to get the message about the dangers on our roads across to young drivers? In Dumfries and Galloway—and these statistics are linked to those for Cumbria—we have witnessed the death of 44 young people between the ages of 16 and 25 over the past three years. Today’s method of communicating with the younger generation is changing rapidly, and I congratulate the Highways Agency on its attempt to get that safety message across by backing the innovative cross-border campaign to try to cut death and injuries among young road users in Cumbria and Scotland. Financial resources from the agency will fund a project that uses YouTube videos and texts to get key road safety messages across to young drivers. Between now and Christmas, there will be three 20-second ads on YouTube. They may be beyond you and me, Sir Nicholas, and other hon. Members—they certainly are for me—but the younger generation often uses YouTube.
The inquiry by the Select Committee on Transport into novice drivers was published in July. I tried to hold this debate in the run-up to the recess, and it is ironic that I should have secured it on the day on which the Government’s response to the Committee’s report was released. However, I regret that I have not had time to study the response in fine detail. I have explained how easy it is for some people to pass their driving test within a few months of turning 17, and we must ask whether it is wise for people to take the test at that age. I am sure that we have all said that we do not start to learn to drive until we are out on the road on our own, after we have passed our driving test. That may be true, but if we cast aside everything that we learned when we received professional tuition, we will develop bad habits and, more worryingly, drive dangerously and all too often be oblivious to other road users and pedestrians. I fully agree that we need to foster a culture that values continuing driver education. Rushing to take a driving test and having too few lessons may be a false economy, especially if people end up failing the test and retaking it.
I should like to highlight some of the issues arising from the Transport Committee report that are worthy of further mention. Again, I emphasise that the vast majority of young or newly qualified drivers are responsible, but if we look at the problems that we face and at the number of road fatalities we see, as with so many other issues, that we must concentrate our efforts and focus on the few who cause problems. Young drivers are vulnerable on our roads and, regrettably, a small number are a danger to themselves, their passengers and other road users. Such unsafe driving arises from an almost total disregard for road traffic laws—speed limits are sometimes ignored even in built-up areas, where there are many more dangers and thus higher casualties if there were a crash.
The casualties that we see year on year must be reduced, and a starting point is a structured approach to driving instruction. I welcome any attempts to ensure that ongoing professional development for driving instructors is more fully considered. Further professional enhancement can only be good for those under instruction. The low uptake of Pass Plus—a scheme for people who have been successful in their practical tests—is disappointing. I pay tribute to the group of advanced motorists and motorcyclists in Dumfries and Galloway who do an excellent job of encouraging young motorcyclists and motorists to learn the skills that they need on the road, and deserve great credit for the work they do with new drivers. The Pass Plus uptake is disappointing, because the scheme benefits those who take up the additional challenge it offers. We cannot force individuals to take it up, but its success and what it offers to new drivers ought to be included in the instruction that people receive before they take a practical test. I hope that that proposal will be considered.
May I return to the issue of how quickly young drivers can find themselves on the road on their own in a powerful vehicle, having passed both the theory and practical tests? Some people advocate increasing the age at which it is possible to hold a provisional driving licence above 17, but it would make more sense to ensure that people have a minimum learning period of about a year. I have been contacted in recent days by the insurance company, esure, which believes that the number of road traffic accidents caused by, and involving, young drivers would be reduced if pre-driver education were rolled out nationally with Government endorsement and support. In 2005, esure ran the safe drive, stay alive road safety campaign in Surrey, which was co-ordinated by the Surrey fire and rescue service and involved a number of local organisations. Although I am not in a position to judge the campaign’s success, the sooner we can get young people involved in the safety aspects of driving, and make them understand the dangers of driving, the better.
Finally, graduated licences have proved relatively successful in other countries and in some parts of the United States. Some people argue that introducing graduated licences would be like using a sledgehammer to crack a nut. As I have said several times, the vast majority of young drivers are responsible and considerate to other road users, and are safe drivers. However, consideration ought to be given to the question of limiting the engine size in cars driven by new drivers; reducing the speed limit to 50 mph; and introducing driving restrictions such as limiting the number of passengers during certain hours of the evening and night—some of the worst tragedies on our roads have involved four or five youngsters in a car driven by someone who has recently passed their test.
I hope that the Minister will give careful consideration to my arguments and those that we are about to hear from other hon. Members. We have a duty to reduce the carnage on our roads. Over the years, I have spoken with a number of people who have been faced with that fateful knock on the door and police officers standing before them to break the bad news. It has been a haunting experience for those individuals and their families. Let us move forward in the coming years and ensure that there is a rapid reduction in such visits to people’s homes.
May I first congratulate the hon. Member for Dumfries and Galloway (Mr. Brown) on the timeliness of the debate? The issue is serious and affects many people around the country in all constituencies. For too long, modern-day young people have found the use of a motor car to be far more accessible than perhaps we did when we were younger. Consideration must be given to car use and the dangers it might cause.
The rural roads in south-west Norfolk in my constituency are long and winding and they are far too often the scene of tragic road accidents in which, on occasion, innocent passers-by are involved and killed.
I shall speak briefly as I wish to make a few specific points to the Minister that I hope he will take on board—I know him well and he has dealt with me courteously in the past. Does he agree that the current legislation might encourage young drivers, particularly those under the influence of drink or drugs, to flee the scene of road traffic accidents? Motorists who kill on the road while driving under the influence of alcohol or drugs face a maximum penalty of 14 years in prison. Failing to stop at the scene carries a maximum sentence of only six months, which effectively encourages those over the legal limit to leave the scene and to leave their victims injured or dying on the road.
I believe that such drivers hope that by the time the police catch up with them, they will have sobered up sufficiently to pass any tests. Does the Minister agree that due consideration ought to be given to reforming the current guidelines and to remove what is an unnecessary incentive to young drivers? That would send a message to every young person who passes their test that they have full responsibility and that the rule of law will come down on them extremely heavily at every opportunity, because we must not fail to remember the victims of accidents and those who must live with the death of a family member for the rest of their lives.
I, too, congratulate my hon. Friend the Member for Dumfries and Galloway (Mr. Brown) on securing this debate. It is allowing us to highlight the pressing need for urgent action to tackle the toll of death and injury of young people on our roads.
Of course, any death or injury on our roads is a tragedy for the individuals involved, their families and the wider community, but the loss of a young person’s life is particularly tragic because it means that their potential is destroyed. It is sadly true that young drivers and passengers are so much more likely to be involved in a serious incident or accident on our roads. My hon. Friend gave us some of the statistics, but the fact that the death rate of young drivers—under-25s—is more than double that of the general driving population particularly highlights the situation for me. One more statistic that underlines my point is that the peak age group for passenger fatalities is 16 to 19. So many lives are taken at an early age in such tragic circumstances.
The figures for Great Britain are seen at both national and regional level. In Scotland in the first half of this year, the number of under-25s killed on the roads was up by 30 per cent. compared with the same period last year and compared with a 10 per cent. increase in road deaths in the first half of this year for the general driving population. Of course, that is a very worrying trend for the general population as well as for young drivers, given the long-term trend of road deaths and injuries going down in the UK over more than 30 years, but it emphasises how young drivers and passengers are over-represented in the number of deaths and serious injuries on our roads.
Having taken an interest in this subject ever since I was elected as an MP, I have studied the way in which the Government have taken measures over a number of years to try to tackle the situation. I certainly recognise that they have done a lot, but we always need to do more because, ultimately, any death on our roads is a tragedy and a death toll of more than 3,000 every year, with young drivers and passengers particularly highly represented in that toll, is just not acceptable. We must always try to do more to bring down the figure for deaths and injuries.
I endorse the suggestions made by my hon. Friend the Member for Dumfries and Galloway and outside organisations and I urge the Government to introduce new measures and initiatives to try to cut the death and injury rates on our roads for all drivers and road users, but for young drivers in particular. The Government have certainly been given many suggestions of what to do, as my hon. Friend the Minister knows. Organisations such as Brake—the road safety charity—other road safety bodies, the Select Committee on Transport and many others have made recommendations. I have recognised what the Government have done, but they still need to move more urgently to take up some of the suggestions that have been made, which have been around now for a considerable time.
It always depresses me that it takes so much lobbying, campaigning and pressure to get changes in road safety law or in road safety measures and to get introduced measures that on the face of it are obvious steps to cut death and injury on the roads. Why that is the case, I do not know. Perhaps there are bureaucratic problems somewhere in the system. Perhaps someone somewhere is always nervous of offending motorists. If that is the case, I hope that the Government will recognise that all motorists and road users will be safer if something is done about the minority of young drivers who drive in such a way that they are a menace not only to themselves and their passengers, but to the general road user. I certainly endorse, therefore, the calls made by my hon. Friend the Member for Dumfries and Galloway for some of the measures that he has outlined to be considered.
I want to emphasise the measures that I believe should be considered urgently. First, we need to provide more education in schools and among our young people. The Driving Standards Agency has done and is doing good work. It has a programme to give road safety presentations to teenagers in schools and colleges, but at the moment that is still reaching less than 1 per cent. of 15 to 25-year-olds in the UK, which is clearly not enough. There are advertising campaigns but, again, the proportion of the budget specifically targeting young drivers last year was under £400,000, which may buy some time on YouTube, but buys only about seven minutes of prime-time TV advertising, so more needs to be done in that regard.
I am very interested in the proposals for a graduated licensing scheme, to which my hon. Friend referred. Such schemes have been implemented in New Zealand, the USA and Canada, and there is certainly a growing body of support for the introduction of such a scheme in the UK. My hon. Friend referred to Transport Committee recommendations for a graduated driving licence scheme. He and the Minister will be aware that just a few weeks ago a broad-ranging coalition of interest groups, including the Association of British Insurers, the RAC Foundation, PACTS—the Parliamentary Advisory Council for Transport Safety—and road safety groups, made proposals for a scheme to require young drivers to have a minimum learning period and a structured learning programme to encourage less driving at night, and measures to reduce the number of passengers carried by young drivers. I agree with my hon. Friend the Member for Dumfries and Galloway that the current situation, in which someone can have only eight, nine or 10 hours of lessons and, the day after their 17th birthday, drive almost but not quite any vehicle will clearly not encourage, in some circumstances, safe driving by some individuals.
Continued action is also needed on uninsured and unlicensed drivers, because unfortunately the reality is that many uninsured and unlicensed drivers who kill themselves, their passengers or other road users are also young drivers. Measures are needed to take further action to deal with those drivers. I would be interested if the Minister could update me on the implementation of the offence of causing death while driving unlicensed or uninsured.
The next question that always has to be addressed is what we do to tackle those who drive under the influence of drink and drugs. It is a reality, even leaving aside the influence of drink and drugs, that young drivers are more likely to seek thrills from driving fast and cornering at high speed than older drivers. That is not true of all young drivers by any means or even the majority of young drivers, but there is well founded research carried out for the Department for Transport emphasising that it is a problem in the case of some young drivers.
Unfortunately, young drivers aged 17 to 19 are six times as likely to have a drink-drive crash, and young drivers aged 20 to 24 are four times as likely to have a drink-drive crash, as drivers in the general driving population. Unfortunately also, young drivers under 25 who are involved in a crash in which someone is killed or injured are twice as likely to fail a breath test as drivers in the general driving population. Only 4 per cent. fail a breath test, so 96 per cent. do not, but it is still twice as many as in the general driving population.
That is another reason why, as part of the effort to tackle death and serious injury among young drivers, we must return to the question of a reduction in the drink-drive limit. Clearly, that would be for all drivers and would be of benefit generally in reducing death and injury rates on the roads, but because of the significance that it would have for young drivers, it would surely reduce the death and injury rate among young drivers in particular.
Brake, the road safety organisation, is calling in its latest statements for a reduction in the limit from 80 mg per 100 ml to 20 mg. If the Government think that that is too drastic, I would say that the case for reduction to the general rate throughout most of Europe of 50 mg per 100 ml is now overwhelming.
This year, road safety week runs from 5 to 11 November. Coincidentally, or perhaps deliberately, Brake is launching new research on the morning of 6 November, just before the Queen’s Speech. The Minister is one of the speakers at the press launch. It would be a major step forward if the Government could make cutting the death toll among young drivers and passengers in particular a major theme of their programme this year. I am sure that those who are responsible for advising Her Majesty on the contents of her speech are already well advanced in the writing of that important announcement, but I hope that what I have described will be reflected at some stage in the Government’s programme in the coming year, because, to conclude where I started, the death toll of more than 3,000 people on our roads every year, a disproportionately large number of whom are young drivers and young passengers, is unacceptable.
Much has been done, but much more needs to be done, and I hope that the Government will give serious and favourable consideration to the measures that I propose and that have been proposed by my hon. Friend the Member for Dumfries and Galloway and by the various organisations, campaign groups and pressure groups that seek to address what is a scandal for our society.
I add my congratulations to the hon. Member for Dumfries and Galloway (Mr. Brown). The debate is long overdue, and to bring it to the table on the day of the Government’s response to the Transport Committee is very apt. I also add my thanks to Brake. We have had tragedy in our constituency over the past couple of months, and it has been a source of comfort in some respects to know that there is a group out there fighting for the health and safety of young drivers.
We have had two significant incidents in my constituency in the past six months. The first killed four young girls under 16, who were passengers. The driver, who was 17, had passed his test only three days before. If that does not bring home how serious the driving test and driving ability are, nothing will. Within months of that, a 15-year-old passenger was killed. The driver, again, was only 17. Age is a significant factor, although I understand that driving is a necessity in this day and age.
The important thing is education, which has been mentioned a number of times—education in accident statistics, how to drive and what can happen. At the end of the day, a car is a deadly weapon; it can cause huge damage to those inside and out. That should be part of the citizenship agenda in schools. At 14 or 15, young people look forward to driving lessons and learning to drive, and it should be part of the curriculum.
My other worry concerns intensive driving courses—in which someone can supposedly learn to drive in a fortnight, three weeks or even days in some cases—especially at an age when the individual’s maturity must be questioned. Intensive courses can be very dangerous.
Although I have not read it completely, it is interesting to note from the Government’s response that although the number of accidents and serious injuries has fallen, the number of deaths has risen since 2000. That must be of concern to us.
I do not wish to throw a hospital pass at parents, because we as a society are quick enough to blame them, but there is a parental responsibility involved in driving. When people under 18—or 20, or 21—apply for a driving licence, perhaps we should consider showing the parents themselves what can happen to young people in road accidents. It was wondered earlier whether we would have had the kind of cars that are on the road today, and I often wonder how young people of 17 and 18 can afford to drive some of those cars—we heard about engine sizes—with such significant power under their foot. I wonder also whether parents should think twice about what type of car they buy for their children. An educational programme on that would be worth while.
The tragedy that hits a constituency after such an accident—I know that it has happened in probably every constituency in the country at one time or another—cannot be underestimated. The effect of losing four lives, as we did in my constituency, is unbelievable, but still we see young people speeding in the streets. Having seen the press coverage at the time, we still see speeding vehicles driven by young people. It worries me, and that is why I think that education before young people learn to drive is important.
The other thing with which we are struggling in my area is the implementation of speeding fines. We do not have enough hand-held speed cameras to catch young people and others who speed or drive erratically in our streets. I am sure that we have all seen it in main streets, not just bystreets or side streets. It is very dangerous, not just for drivers but for passers-by and passengers.
I thank you, Sir Nicholas, for the opportunity to express the feelings of Blaenau Gwent today. It is a subject that we need to discuss thoroughly. Some issues have come out of the Select Committee that we might discuss seriously, one of which is an age limit of 18. Initially, I supported it fully, but then I had phone calls from young people saying, “How will I get to work?” or “How will I get to college?” It is not as easy as saying, “Put the age up to 18;” there are lots of other issues to be discussed, but I urge the Government, as have other hon. Members here today, to take preventive and not remedial action.
I am concerned about a threat to the island. It affects those who learn to drive on motorcycles. The test centre will be closed and motorcycle tests will instead be provided on the mainland—not even close to ferries. That is wholly unsuitable for motorcyclists, as tests will be 20 or 30 miles from where they live, and I fear that they will drive without a licence. I ask the Minister to look at that again.
You have a disadvantage, Sir Nicholas—we are not labelled—but thank you for getting there in the end.
I appreciate the opportunity to speak in this debate. I congratulate the hon. Member for Dumfries and Galloway (Mr. Brown) on bringing up an issue that, as the hon. Member for Blaenau Gwent (Mr. Davies) said, affects every constituency. I also congratulate the hon. Member for Blaenau Gwent on his contribution, which touched the emotional core of the thoughts of everybody here—the tragedy of the loss of young life, or indeed any life, in a car accident.
I shall try to keep my comments brief, as so much has been said and we are all eager to hear from the Minister on the Government’s reply to the Committee’s report. Like many others, I support the idea of a minimum learning period before achieving a driver’s licence. When I first got my licence, back in the mists of time, I was, frankly, dangerous. Like many of us, I came from a family that had never had a car and in which nobody else was a driver. My ability to deal with anything other than the most predictable events on the road was minimal. How we got through that without a crash is beyond me.
My children learned to drive in the United States and they learned much younger. Their provisional training began at age 15, and they had their licences on their 16th birthdays. The whole approach to training was entirely different and gave me enormous comfort. I hope that the Government will consider that range of possibilities. My children’s school took on the responsibility of ensuring that they received driver training. It was a year-long programme. The children could get behind the wheel earlier by signing up than they would have otherwise and it was cheaper than traditional driving lessons. It was a great incentive to the youngsters. The training was far more comprehensive and they learned with their peers, so it was not just one child learning to be responsible but probably all the children with whom they spent their free time.
As a result of the programme and how it was packaged, I felt entirely comfortable getting into a car with my youngsters, whereas, looking back, I would have been terrified to get into a car with myself. There is a great deal that we can do, and we can learn a great deal from other countries if we make it a priority.
The idea of a graduated licence and some sort of provisional period seems to make sense. We must question whether some adults might earn only a provisional licence. Maturity and judgment create a different environment. Some adults have many years’ experience driving in another country and are thus earning only what they see as a British licence, but we should probably consider that provision for all new drivers without significant experience.
During this debate, we have focused almost exclusively on drivers themselves and the rules governing licences, but the number of accidents raises questions about issues such as road design. When we design our roads, is safety as high a priority as necessary? In my constituency, we have struggled endlessly for funding for some particularly difficult roads about which everybody agrees that action must be taken, but for which money is not easily available.
I was about to come to that. The hon. Gentleman will be aware that my hon. Friend the Member for Manchester, Withington (Mr. Leech) tabled a ten-minute Bill suggesting that the default speed limit in urban areas should be 20 mph rather than 30 mph. We need to examine such issues, and local councils certainly need much greater flexibility to set appropriate speed limits. There are quite a number of issues around speed, which we need to examine so that we can at least ensure that local conditions are appropriately managed. We will probably need to return to that issue in a different debate and for longer.
Others have mentioned enforcement, and it is one of the most significant issues. I have been trying to have conversations with various chief constables, and many of them, as they have come under financial pressure, have essentially decided that they can make cuts in road traffic policing. That should be of general concern to us. As hon. Members will know, the British crime survey does not give a line item to road traffic accidents. In a sense, that pulls it off the list of matters that gain forces brownie points and which affect how forces are measured and how chief constables are rewarded. We need to re-examine those issues and to give much higher priority to a problem that causes so many deaths, especially among young people.
The Highways Agency traffic officer service has received a lot of investment, but, again, we have a significant body of uniformed officials who cannot enforce most aspects of the law. They cannot stop drivers for drink-driving and they are not equipped to test for drug-driving. Essentially, they can manage the scene of an accident and direct traffic around it, but their inability to enforce laws is now widely recognised among drivers, which is leading a fair number of drivers to abuse those laws. Having sailed past one of the service’s cars, young people will be more tempted to drive at totally inappropriate speeds on motorways in the future. We therefore have to look at the whole issue of enforcement.
I look forward to what others will say in the debate. I am glad that the issue is being given high priority. It may not be glamorous, and the only time that it hits the newspaper headlines is when there has been a terrible tragedy, but so many families have suffered in one way or another—perhaps they have not suffered a death, but an accident—and they deserve the protection of the House.
I congratulate the hon. Member for Dumfries and Galloway (Mr. Brown) on choosing such an important subject for debate. We have all heard horror stories from around the country, and I am sure that the poignant one from Blaenau Gwent about the young people who tragically died just when they were beginning their adult lives hit home with us all. Thirty-two years ago, a school acquaintance of mine was killed in a road traffic accident during the summer holidays. He had been celebrating the end of his A-levels and was on the point of going to university, and his death brought the issue home to me.
It often seems sensible to see what people are doing abroad and what we can learn from them, and the story is actually very good from the United Kingdom’s point of view. England and Wales have about 62 fatalities per million of the population—that includes young and older drivers—while Scotland has 74. That compares with Portugal at 289, Greece at 225, France at 144, Germany at 104 and Italy at 117. In fact, only two European countries have a better record than us. That is no reason for us not to try to do better, but we can at least take pride from the fact that a lot has already been done. None the less, more needs to be done. Those statistics are particularly surprising, given the problems that we have with the way young people use alcohol in this country, compared with other EU countries.
I suppose that I should declare an interest because my eldest son is 18 and has passed his test, and he now drives to work every day at the bus factory in Scarborough. When he embarked on driving, it was interesting to see how difficult it was for him to get insurance. When I started driving, my father bought me a big, solid Volvo, but my son has had to get a Vauxhall Corsa with a very small engine, although it still cost him £1,700. I am sure that the engineering in it is as good as it was in Volvos 30 years ago, but just out of interest I rang my insurance agent to see what it would cost my son to drive a Volvo. A Volvo F40 with a 1600 engine is not a particularly large car, but it would cost my son £5,063 to insure for himself. So not only are our young drivers inexperienced and sometimes reckless, but they also have to drive around in much smaller vehicles than we did a generation ago.
During my 18 months on the Select Committee on Transport, we were given evidence by groups such as Brake, which do wonderful work on behalf of young people, many of whom have had personal experiences that have caused them to become engaged with such groups. I have to say that if my son had been killed in an accident caused by a drink-driver, I would want to reduce the alcohol limit to zero. If he had been killed by a speeding motorist, I would want a 20 mph limit on all our urban roads and perhaps a 60 mph limit on all other roads. It is difficult for someone to take an objective view when such experiences have affected their lives so much.
Several measures are, of course, already in place. The Government have legislated to disqualify young drivers who get six points in the first two years after they have passed their test—other drivers require 12 points. There are several options that the Government could take, and we have heard them rehearsed this afternoon. I am sure that the Government are keeping them constantly under review. For example, we could make the test harder. That is an obvious step, because it would take people longer to learn. We know that male drivers between 17 and 20 are 10 times more likely to be killed or seriously injured than men aged between 40 and 49, but they are precisely the people who pass the test with flying colours, and I am sure that the Department collects the figures. Making the test harder would not affect those young drivers, who are, by and large, the ones who easily pass the test. It would, however, affect people such as the lady in my village who took her test in her 70s after her husband—a former Desert Rat tank commander—died in his 70s. Sadly, she is the kind of person who would be affected by making the test harder, even though she is a careful driver, and it is wonderful that she has managed to learn to drive.
Hon. Members, including the hon. Member for Richmond Park (Susan Kramer), have talked about a longer training period. We could perhaps have a six-month training period, but in a rural constituency such as mine that would cause particular problems for people who want to get to work or to enjoy a social life. It would also impinge greatly on young people’s freedom to do what they want, and they will have to impose on their parents, who will have to run them around and pick them up. In many cases, young people who cannot upgrade to cars will spend longer riding mopeds, which are more dangerous.
It has been suggested that we have a curfew from 11 pm to 6 am, and that is probably a good idea, but who will police it? How many police are on the roads of the Isle of Wight, rural Wales or Scotland at that time of night to enforce such a provision? It is always a problem to ensure that such matters are policed.
Another proposal is that we reduce to one the number of passengers in cars driven by young drivers. That is fine, but it may result in more people racing. When my son goes out with his friend and their girlfriends, I am sure that he would resist the temptation to race with the four of them in the car. However, if those four people were in two separate cars, there might be more incentive for them to race around the countryside.
Limiting the engine size sounds like a good idea, but many young drivers gain important experience by driving the family car, and most people’s family car probably has a larger engine than the cars that young drivers start with. In my part of the world, most young drivers start off driving a Land Rover, which has quite a big engine. So what can we do? The most important imperative for the Government is to address these issues through policing. We need real police on the streets—not cameras or Highways Agency officers who do not have the powers of the police. They need to be out on the road, policing—not back in the police station filling in forms.
I recently met traffic police representatives and we discussed the issue of drink driving. Yes, we could reduce the limit, but drink driving is not a key performance indicator for the police. It is not a crime that is reported. In many cases it does not feature highly on the priority lists of police forces. Perhaps there should be more incentive for police forces to pay attention to drink driving. Perhaps there should be more high profile policing of drink driving. The fact is that if someone’s car is taxed and insured, and does not trigger the automatic number plate detection system, and if they are driving in a reasonably straight line with no back lights off, there is a good chance of their getting away with drink driving in some parts of the country, where there are not so many police around, for quite a long time.
Although there has recently been a lot of press coverage of the inquest on the death of the late Diana, Princess of Wales, there are only two conclusions that we can all draw: that there were three people in the car not wearing seat belts, and they were the ones who were killed; and that one person in the car was, reportedly, over the drink drive limit, and that was the driver. Those are the lessons that we need to learn, and to apply to policing, for our young people.
There are problems with respect to uninsured people and MOTs. On that point, one of my son’s friends recently bought a vehicle for £50, in which he drives around. Can I have an assurance from the Minister that we shall not move to a system of MOTs every two years rather than annual MOTs? I know that the matter is under review, but it is much more likely that many young drivers will drive a car that is not roadworthy, if we go with the European model of two-yearly tests.
It is vital to improve children’s education in this context. My children are not keen on the citizenship studies that they do in school. They are taught a lot of stuff that they do not want to know about, but it would be very useful to teach them what can happen if they drive irresponsibly, show them the videos that are available and get people who have been touched by accidents in to talk to them. A friend of mine was recently flashed by a camera when he was doing 33 mph and given the option of taking a £50 course, rather than have points on his licence. He went on the course. Before he did so, he was rather cynical about it and thought that it would be a complete waste of time. After he had taken the course, seen the videos and learned a little more about the dangers of speeding, he was very positive about the whole thing.
On that point, does my hon. Friend accept that that course, with which I am familiar—because constituents have drawn my attention to it, not because I have been a victim of it myself—is not available across the country, and that not every constabulary has adopted it? Perhaps it is time that they should.
It is an excellent suggestion that best practice should be shared around the country. Of course, we have heard about YouTube in this context. I admit that I occasionally surf around that site to see interesting films and find out what is on there. You may, Sir Nicholas, remember the “Top Gear” film highlighting level crossing safety problems, in which a train was driven into the side of a car on a level crossing. That is on YouTube, and many young people watch that. Perhaps we should look at imaginative ways to get the message across, using new media such as YouTube.
In conclusion, may I once again thank the hon. Member for Dumfries and Galloway for securing the debate today. If we can reach evidence-based solutions—measures that will work, rather than those that we wish would work—Her Majesty’s Opposition will be more than happy to support the Government in bringing forward measures.
It is a pleasure to see you presiding this afternoon, Sir Nicholas.
I congratulate my hon. Friend the Member for Dumfries and Galloway (Mr. Brown) on securing the debate on a very important issue, which is of concern in all our constituencies. I especially commend his setting of the tone for this serious debate about how to cut deaths and injuries among young drivers.
We are making encouraging progress, with a 33 per cent. reduction in reported incidents of people being killed or suffering serious injuries, against the 1994-98 baseline that we set ourselves, but we must do much more. There were 3,173 road fatalities in 2006 and more than 28,000 serious injuries, including 8,500 to 17 to 25-year-olds. The debate is about young driver accidents. There were 1,065 fatalities in crashes involving a driver aged 17 to 25, including 393 of those drivers themselves.
Against that bleak background, let me say something first in defence of the majority of young drivers. I am pleased that my hon. Friend made similar points. Those drivers want to be safe and responsible. They deserve good training. Unlike a minority of young men, they do not speed and drive dangerously, or drink and drive. They and their passengers wear seat belts. A minority disregard the basic road traffic laws that would, if they were observed, make our roads much safer. They would probably treat any new laws in the same way. It must remain a priority to enforce existing laws against those irresponsible people.
We must consider whether driver training and testing meets the needs of the responsible majority. In February, the Department for Transport promised fundamental reform. The debate allows me to explain why. We aim to start consultation on our proposals before the end of the year. The driving test was introduced in 1935. Roads and traffic have changed out of all recognition in 70 years. The test has also changed over time and it is still recognised as one of the best, but we cannot go on with incremental fixes. The time has come for a new system for the years ahead. In 1935, only a minority had the opportunity to drive. The test was conceived to ensure that those who had access to a vehicle knew how to operate it. Driving has become very important to most of us, especially young people, as the hon. Member for Scarborough and Whitby (Mr. Goodwill) described. It gives access to the social and economic opportunities of independent adulthood. A modern driver training and testing system is thus more vital. It must deliver safe lifelong drivers.
We must ask how the present system measures up. Let us start by asking whether learners value it. Our conclusion is that they do not. Young people in particular say that they learn to pass the test and then teach themselves what they see as proper driving. The pass rate is low. It could be much better if learners generally waited perhaps only a few weeks. Too many learners waste money on tests when they are unready, because they think that the result is a matter of luck. Learning to drive is not cheap. Many spend more than £1,000 on lessons, and some spend £150 on tests. Training still focuses on vehicle handling, but we know that attitude and motivation are also very important, if not key factors in good driving, and that learners are insufficiently prepared to make safe use of road space shared with others, many of whom are vulnerable.
I do not blame driving instructors. My father was one for many years. Their customers are driven by perceptions of the test. They want to know only how to get through quickly. Learners are ill-informed about the test standard, and learning is poorly structured. Some have little or no exposure to typical conditions such as night driving. Most of those who fail have thought themselves ready, and they put their failure down to bad luck and nerves. Eco-driving is not integrated into the learning process. That cannot be tackled with a quick fix: it calls for a wholesale change of driving and training style. Extra lessons do not seem to make things better. Research suggests that learners overall are taking more lessons, but the pass rate and accident record are not improving. Some candidates are nowhere near the standard. Driving examiners often have to grab the handbrake or steering wheel, or use the dual controls.
Many trainees pass without achieving a consistent standard. We asked a group to take the test twice in the same week and of those who passed only 64 per cent. passed on both occasions. Hon. Members may ask themselves if they would still pass the test if they took it today. The truth is that too many learners who passed last week would not pass either. Women find the test more difficult but have fewer accidents as novices—more evidence of female superiority, if any were needed. Training and testing should achieve a consistent result across all groups.
I do not overlook the main point made today—that those most recently trained and tested have the worst accident record. Young drivers are over-represented in the casualty figures. They make more expensive claims, so they face very high motor insurance costs. There have been calls for restrictions on novice drivers. Many believe that those who pass the practical test are not ready to drive solo. That surely reflects on their training. How can we expect young people to understand the risks that come with bad driving if it is not a formal part of what they have to learn to be a driver?
Finally, coming back to whether people value the present training and testing process, too many people opt out of the licensing system altogether. They are the most dangerous drivers. It would be a mistake to try to fix one or two of all those problems.
The hon. Gentleman makes a good point about the validation of licences issued by European partner states. Enforcement in the case of foreign qualified drivers is clearly even more complicated when one has to check foreign credentials. I recently visited the DVLA at Bristol and saw how the credentials submitted by drivers who have qualified elsewhere are checked against the documents issued in their own countries. It is a very thorough process. However, just as some domestic drivers drive while disqualified or drive without passing the test, I am sure that some people from those countries are in the same position. We need to bear down on them as much as we bear down on people here who are not following the norm.
We talk of fundamental reform because we believe that there is a case for it. We said in February that we need a comprehensive package of reforms. They include education to influence attitudes before the age of 17, thorough training and a reformed assessment process. We need to do more to help drivers maintain high standards for life, especially if they drive for work.
On the specific point of what needs to be done, would the Minister give careful consideration to an issue that has already been raised—those who are not insured and who have no intention of being insured who take cars? Dare I say that some parts of the country have gained cult status through the activities of such people, which often get videoed and put on the internet—and which encourages all their mates to do precisely the same?
I entirely agree with the hon. Gentleman. The last thing that we want to do is to create any kind of climate where disregard of public safety of the sort that he described is encouraged in any way, shape or form. We need to ensure that such behaviour is tackled as effectively as possible.
The tools are already available to create a new approach. At the heart of our reform is a new framework setting out the skills, knowledge, understanding and attitudes required for safe driving. That will be the foundation for all our work on education, training, testing and lifelong learning, including developing skills, remedial training, and work-related driving. It is a modern template, consistent with vocational frameworks in the education system and in industry. Systematic assessment criteria will be used to establish that candidates have the required level of competence. A similar framework will be developed for instructors and examiners, linked to schemes for continuous professional development—a point made by my hon. Friend the Member for Dumfries and Galloway.
Our overall aim is simple. Anybody who prepares properly should expect to pass the test; and those who skimp or treat the test as a matter of luck will fail. Too many young people opt out of driver training and testing. We will aim to persuade them, but we will not tolerate the dangerously bad driving of the minority. We do not propose new restrictions on learners and newly qualified drivers, but we intend to have a wide-ranging and open consultation. I undertake that it will be fully addressed, even though it may not form part of our proposals.
I turn to some of the points raised during the debate. The hon. Member for South-West Norfolk (Mr. Fraser) raised an interesting and challenging point about penalties. I regret to report that I am unaware of any work being done on the matter. However, he made the point effectively; I am certainly happy to raise the matter with the Ministry of Justice, and I shall keep him posted.
My hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) asked about enforcement and mentioned the DVLA. As I said earlier, those who avoid paying tax and/or insurance are among the most dangerous drivers. The DVLA now has more new technology and a partnership with National Car Parks, and something like 1,500 vehicles a week are being impounded. New electronic equipment is being rolled out: all Welsh and Scottish police forces have it, and 12 English forces have it, and the aim is to complete the process by the end of 2008. In 2009, we will be introducing continuous insurance. That will ensure that vehicles can be tracked. Much as with TV licences, when the authorities know where people live and whether they have a licence, it will soon be known whether they have a car and whether they have insured it. In due course, that will help considerably.
I echo your comment, Sir Nicholas, that it is good to see the hon. Member for Isle of Wight (Mr. Turner) in his place today. He, too, contributed to this important debate, but I have not been briefed on the details of the main issue that he raised. However, I will contact his office and look into the matter in detail. The hon. Gentleman spoke about motorcycles and particularly about motorcycle safety. When I had responsibility for the fire service two years ago I visited Cheshire, where I saw a special initiative called “Fire Bike”. As many as 70 motorcyclists each year were being killed on Cheshire’s roads. It is a wonderful county, with lovely lanes and so on. I hope that the hon. Gentleman will forgive me, but I have not visited the lovely Isle of Wight. However, I know that it has the reputation of offering similar enjoyment to those motorcyclists who enjoy riding on rural roads. However, some motorcyclists may not be used to such roads. The police in Cheshire were trying to tackle the inordinate number of people being killed on motorcycles in that county, but I will look into the matter. I assure him that I have had several meetings in the past fortnight with motorcycle organisations and I have discussed motorcycle safety and other issues.
The hon. Member for Scarborough and Whitby (Mr. Goodwill) made a challenging point about what price we were prepared to pay when trading freedom against additional restrictions. Our consultation, which will be published shortly, will provide the opportunity for organisations and individuals to comment, and the balance of that argument will obviously colour our judgment as to what we should do.
The hon. Gentleman also asked about enforcement and police numbers. I entirely agree with him that the prospect of being caught is one of the most effective deterrents. We are working closely with the Home Office and the Association of Chief Police Officers to ensure that traffic policing and enforcement is maintained. We are looking at how the issue is reflected in police targets in order to ensure that it receives the appropriate attention. Recent drink-drive campaigns have increased the number of drivers being tested. Again, that demonstrates that we are moving in the right direction. I am also informed that more speed awareness courses are being rolled out.
I was asked about the MOT consultation. That is still being discussed between Departments, and I shall alert Members as to when that is likely come about. However, I hear exactly the point that was made; it was made also by a number of organisations when I was at the Department of Trade and Industry, and as Minister with responsibility for better regulation I chaired a challenge panel every quarter to deal with exactly the same concerns, particularly about a move to less frequent MOTs such as on the continent. However, the issue is still very live.
Driving is a skill that people use for most of their lives. It is vital that we prepare new drivers properly. It is a huge challenge. There is no quick fix. Change will take time to complete, and there must be full consultation. The debate has been a valuable opportunity and I look forward to further discussions—especially with drivers and with the public at large—as we thrash out our proposals in the coming months.
I conclude by again congratulating my hon. Friend the Member for Dumfries and Galloway on securing the debate and by thanking those hon. Members who have participated in it. The subject matter of the debate is very important, and we all agree that too many people still die or are seriously injured on our roads, so I hope that the debate will help in the efforts to reduce those numbers. I assure hon. Members that I shall use my own very best efforts to work with them for further progress in the months ahead. Government, Opposition parties, road safety campaigners and other external bodies such as the emergency services and enforcement organisations all want to achieve the same objective. I hope that, together, we shall continue to drive casualty figures down.
I congratulate the House on a most well-informed and interesting debate. It has been a pleasure to be in the Chair for it, and I congratulate all those hon. Members who participated on their contributions. The debate has finished some 20 minutes early and, although the initiator of the next debate is present, the Minister sadly is not, so I suspend the sitting.
Worklessness (West Ham)
I shall take this opportunity to talk about the unfairness in the benefits system, which ensures that many of my constituents are unable to work or keep a roof over their heads. Until the system is changed, key Government aims and objectives—in particular, our determination to eradicate child poverty by 2020—cannot and will not be realised in London.
I bring to this Chamber the problem as expressed to me by local people and charitable agencies. I know that I may be criticised at the end of the debate for not offering many solutions, but my purpose is to try to persuade the Department for Work and Pensions and, indeed, the House, that the situation urgently needs a solution. I shall highlight the problems faced by my constituents in particular and more widely by those on low incomes across London who wish to work and to advance in life, but who are frustrated by the combination of high housing and child care costs, and by the way in which the benefits system plays with their incomes.
We must seek a solution to the disincentive that confronts 1.7 million low-paid families, who lose 60 per cent. or more of any increase in their wage packet because of the benefit configuration. If we as a Government are to hit our target to end child poverty by 2020, we must tackle poverty in London—not the London of the champagne Charlies, but the London of real economic hardship and deprivation, in which many people, such as the unemployed and those on low incomes, struggle to survive. Some 41 per cent. of London’s children grow up in poverty. Excluding pensioner households, half of income-deprived households have someone in employment servicing and enabling London’s economic success and thus the country’s economic success. However, that work does not lift them out of poverty.
Housing benefits impact on the Exchequer—I have no doubt about that. Combined with council tax benefit, housing benefit is almost equal to all the other means-tested benefits added together. It is clear that we must get housing benefit right, and not spend it in a way that is counter-productive to the Government’s wider objectives. Almost 30,000 families in the London borough of Newham are on the housing waiting list. The wait for a three-bedroomed property is nearly 12 years, and for a four-bedroomed property it is almost 13 years. While those families languish—there is no other word for it—in temporary accommodation, housing benefit spending in my council is £245 million. That is just a single London borough. Nearly one third of that £245 million—£67 million—is spent paying private landlords.
The rents average £300 per week, or £1,200 per month. That rent does not secure a pleasant house, such as those on some of the television makeover shows that create properties for the buy-to-let market, but a flat situated over a shop or takeaway outlet. The average amount of housing benefit paid to council tenants in Newham is £70 a week. The average payment for housing benefit in temporary accommodation is £350 a week—five times the housing benefit paid to council tenants. That figure illustrates a disparity in rent and employment levels. The cost of housing has created a divide between those able to work and those for whom there is little incentive to do so, or even a negative incentive. The failure to provide enough affordable housing has created a boom in the buy-to-let sector. Temporary tenancies are often on short-term leases and tenants face the prospect of regularly having to move. The Minister will agree that that is very distressing and unsettling for families, particularly for young children who either have to change school or face long journey times to school every time that they move house during the 12 year wait for local authority housing. That is extraordinarily disruptive.
That would all be bad enough, but the problems caused by a lack of public sector housing are compounded by the impact of the benefits system. I am bombarded with evidence from constituents about housing benefit and the way in which it combines with other sources of income, benefits and tax to create a poverty trap for those in low-paid work. I have constituents who asked their employers to retract their wage increases because they were worse off after the increase. Others work part-time, but want to increase their hours to full-time, make progress at work, have a career and access housing associations’ joint-housing purchase schemes, but they simply cannot afford the additional rent that they would have to find for private, rented accommodation because, by dint of the additional wages that they would receive for additional hours worked, their housing benefit would be reduced. They are simply unable to take that first step, so they cannot find their way out of the poverty trap.
At the centre of the problem is the 65p in the pound withdrawal rate of housing benefit as income increases. John Hills, who is a professor of social policy at the London School of Economics and director of the Centre for Analysis of Social Exclusion, said:
“Housing Benefit is a major contributor to the ‘poverty trap’, where people’s net incomes rise by only a very small proportion of any rise in gross earnings. The higher the rent paid, the wider this zone. As a result, although the level of someone’s rent has no effect on their net gain from working at all, it can make a large difference to their net gain from extra earnings. For example, a couple with two children paying a typical private rent of £120 per week would gain only £23 if their earnings rose from £100 to £400 per week (as a result of reduced benefits and tax credits and higher tax and national insurance).”
I shall come to my own example in a minute, but my community would kill for such a rent level. Let us take Professor Hills’ example, which represents an effective marginal tax rate of 94 per cent. on the poorest in society. The Secretary of State for Innovation, Universities and Skills has expressed concern about the lower level of job retention for those returning to work. Despite recent falls in the likelihood of their leaving work, lone parents are still almost twice as likely to leave their job as non-lone parents. Fewer than one in five lone parents who leave income support return within six months; over one quarter return within a year, one third within two years and almost two fifths within three years.
Lisa Marker’s report on child poverty, published at the end of last year, projected figures that showed that if the rate of job exits among lone parents was reduced to the level of those among non-lone parents, the Government’s 70 per cent. employment target could be met without any increase in the number of lone parents entering work. That is a remarkable finding, but before we think about putting further pressure on lone parents, it is important that we recognise that that evidence implicates the state in what has happened, as it has created an imbalance in work incentives, and we must do something about it.
I asked the excellent social regeneration unit at Newham council to analyse an example for me, so that I could present the Minister with the impact of the problem on my community. The unit used the example of a lone parent paying an average private rent—not the top figure—with two small children. If that parent had a job paying the minimum wage, she would earn £10,075 a year, which in London, with our high costs of living, is nothing short of a pittance. After the loss of benefits she would be just £50 a week better off than she was on income support. I suppose we can call that an incentive to work.
Let us take the analogy a little further. Let us assume that she is a bright and motivated young woman—why not?—and applies for another job, which she gets, along with a pay increase of £5,800 a year before tax and benefits, so that she is on £15,000 a year in London. Again, it is not a high wage, but what does she get at the end of the day? She is £7.78 a week better off than she was with her £10,000-a-year job. Can we honestly imagine how disheartening that would be? A new job, promotion and an additional £5,800 a year, but no new clothes to help with the new job, no additional socialising with colleagues, no holiday with the children and no impact at all upon their lives. If we are to incentivise lone parents to return to work, we must analyse the benefits system. The 65p in the pound housing benefit tax rate is at the core of the issue.
To develop the story, I shall discuss tax credits so that we can begin to understand why almost two fifths of lone parents who leave income support return within three years. I realise that responsibility for tax credits rests ultimately with the Treasury, but in these days of joined-up government I am justified in briefly mentioning the way in which the system disincentivises the work force. My hon. Friend the Minister will know that any increase in earnings one year will have a knock-on effect on tax credits the following year. In some ways, the system is excellent: it cuts overpayment and gives the person returning to work a buffer, as they receive additional money for the remainder of the financial year. The lone parent receives a promotion and additional income, she comes off income support and climbs beyond housing benefit and council tax benefit, so she loses fewer benefits. She is out of the poverty trap, and she feels great. However, the increases are due to the frozen tax credit. Next year, a new calculation will be made, her tax credits go down by what can be very significant amounts, the family struggles and work is no longer incentivised.
To give an example of the system’s impact, before I entered the House, as part of my job I organised focus groups with residents in a London borough to discuss local service provision. I was staggered to discover that at least four fifths of the women whom I interviewed had recently returned to work only to leave because they could not afford to stay on. The realities of work—how little additional income the returnee would receive, given the additional expenditure that work requires and the journey times between work and school—had not been properly costed or considered by their back-to-work adviser. As a result, those women left employment with significant debt in some cases, because they were struggling to carry on. They were totally demoralised and fearful of trying to work again. They were not bad, feckless or lazy women, nor had they taken unaffordable foreign holidays or bought wardrobes of new clothes for their new jobs. They were women who wanted to be parents in hard-working families. They knew that there would be a positive impact on their children if they returned to work, they wanted to have pride in themselves and they were aspirational, but they were let down by the system.
Surely to goodness we can see that that situation will not provide us with what we desire—a fair and equal society in which we offer
“the best of chances for all families”;
in which all children have the best of chances when growing up; and in which
“all families who work hard can build a better life for themselves”.
We must look at the tax system again. We must consider making regional variations in tax relief for those on low income; raise the taxable allowance at the bottom end of the income scale; and raise child benefit radically, and make it taxable at the top end. I accept that those measures go far beyond the scope of the debate, but I seek an undertaking from the Minister that we will investigate the impact of tapering housing benefit at a slower rate, even if only in certain regions and until house building in London and the south-east has begun in earnest.
I am not alone in making that call. The Harker report recommends a proposal to reduce the 65 per cent. withdrawal rate, as does the London Child Poverty Commission. Housing benefit is at the bottom of the food chain, and it is calculated on net income, so making it more generous does not have knock-on effects elsewhere, unlike tax credits. Overhanging all those arguments is the desperate need for affordable housing on a huge scale in London. It is the only solution that begins to depress housing costs generally, and I heartily welcome the Government’s renewed commitment to the issue.
The Government have been considering the problems that I have outlined for some time. Pilots in communities, including my own, are testing different models of intervention, but they are all short-term and time-limited, and families may be significantly worse off once they have concluded or the grace period has expired. A young woman with three children came to my surgery last week. She went back to work on one such pilot, which finished, but the organisers did not tell her. She is in debt by £17,000, which she owes in backdated rent. She believed that her rent was being paid by the pilot which, however, was time-limited.
In truth, the pilots tell us what we already know. If we make it easier for families to afford a roof over their head, and if they can access affordable rents, they work. If families can afford to work, they want to do so. If they are allowed to aspire to a better standard of living, they tend to grab the opportunity. When my right hon. Friend the Member for Barrow and Furness (Mr. Hutton) was Secretary of State for Work and Pensions he admirably expressed the aspiration that
“every generation deserves the opportunity and support to raise and fulfil their aspirations; every individual the support to lift themselves and their families free from poverty and dependency.”
I agree. What then are we going to do about housing benefit?
I congratulate my hon. Friend the Member for West Ham (Lyn Brown) on her contribution to the debate. She spoke with much conviction and force about an extremely important subject, and clearly she represents very effectively her constituents, who face the challenges that she ably described.
May I begin by telling my hon. Friend that Ministers in the Department for Work and Pensions need no further persuasion of the importance of the subject, nor, indeed, of its complexity, which she rightly identified? She called for more fundamental reform of housing benefit, and interestingly, I think she said that in her borough, £60 million of housing benefit is paid to private sector landlords. She will know about our introduction of the local housing allowance, which will begin to take effect from April next year for new claimants. It represents a fundamental reform to housing benefit in the private rented sector, and if she has not seen already the analysis that we received from the pilot areas that tested the allowance in the private rented sector for up to two years, I can tell her that its impact on people’s willingness and ability to move off benefit and into work is very encouraging. I hope that as the allowance moves into her borough from April next year, she will begin to see in her surgeries some of its beneficial effects. I shall certainly be interested to hear how she thinks it is going once it is in effect.
I agree with the point towards the end of her speech that the fundamental solution is an increase in the supply of affordable housing. That is absolutely right, and I am pleased that she acknowledges that the Government have picked that up and that, although the debate is about housing benefit, the fundamental issues points to a story more of housing than of benefit. The benefit story is a consequence of the current position of the housing supply. If we can get to work and make progress on the housing supply, we shall certainly start to get a grip on the problem.
On housing benefit, we recognise that the current system may be perceived as a barrier to work. We have already taken steps to address that problem, for example by reducing bureaucracy and trying to provide a better service to customers. We are also considering ways to make customers more aware that housing benefit can be claimed while they are in work, as evidence shows that that knowledge may have an impact on their employment decisions.
Together with the Department for Communities and Local Government, we are supporting the working future pilot, which is led by the Greater London authority and the East Thames Group. It is testing how lowering rents and increasing training opportunities and employment support for those in leased temporary accommodation can help them to overcome some of the barriers to work. It will provide us with valuable information on the impact of high rents and work-based initiatives on tenants’ incentives to move into work. As my hon. Friend may know, the project started in September 2005 and is expected to last two years. Evaluation will take place continuously and in the latter part of this year after the pilots have been completed.
My hon. Friend also mentioned the effects of the housing and council tax benefit tapers on the poverty trap, which is an important and complex subject. Since 1997, the number of people facing marginal deduction rates of more than 70 per cent. has fallen by about 500,000 as a result of changes to the tax credit system. Benefits provide a secure source of income for individuals who are out of work or who receive a low income from their work. As a claimant’s income or capital increases, they are expected to contribute more towards their living costs. The more they earn, the higher their expected contribution and the lower their benefit entitlement. It is therefore inevitable that marginal deduction rates are affected by the withdrawal of help as income rises.
People are better off under tapered benefit arrangements than under schemes that operate a cliff-edge cessation of benefit. Such schemes remove all entitlement to benefit when income exceeds a certain level. The high housing benefit taper directs support at those most in need, by ensuring that those with very low incomes receive sufficient support with housing costs in work while those with higher incomes float off benefit and thus have sufficient incentives to increase their earnings.
When we include the effects of taxation, the highest possible marginal deduction rate that a claimant could face is set at about the 95 per cent. mark that she mentioned, but housing benefit accounts for only a quarter of that total rate. The biggest contributors to that high rate, as she correctly identified, are national insurance contributions and taxation. Reducing the taper in housing benefit would reduce the severity of the poverty trap faced by those on benefit, as each pound of increased income would be accompanied by less withdrawn benefit, making the system more generous. However, because the system would be more generous, the level of income required to float off benefit entirely would be increased, thereby extending the poverty trap to more claimants with relatively high earnings. It is therefore important to have a taper rate that balances those two opposing effects—reducing the severity of the poverty trap and increasing its extent. In addition, reducing the taper rate from 65 per cent. to 50 per cent., for example, would incur public expenditure of about £400 million.
We conducted research that highlighted areas in which we need to improve the basic awareness and understanding of housing benefit and council tax benefit as in-work benefits among Jobcentre Plus staff and customers. In general, claimants do not take account of those benefits in their better-off calculations, which distorts their decisions about moving into work. The lack of awareness of in-work housing and council tax benefits implies that marginal deduction rates are not at the forefront of people’s minds when they consider a move into work. Evidence reveals that if some clients had been aware, or been made aware, that those benefits could be claimed in work, it would have had an impact on their decision to take up employment. We are currently pursuing strategies designed to address the problem.
My hon. Friend gave an example of a lone parent who gains a promotion and sees her tax credit award fall suddenly a year later. The purpose of the working tax credit is to offset the impact of taxes on the earnings of low-income individuals. It is income-related, so it is reduced as the income earned increases. That is logical, and the same principle applies to all income-related benefits. However, in the case of tax credits, a person’s entitlement is worked out annually and a change in income up to £25,000 does not change their entitlement for the year. That makes the system more efficient in administration and less of a burden on the customer. It means that in the example that she gave of the lone parent, the customer’s earnings increase in the tax year but she continues to receive her working tax credit at the rate decided when she was earning less. In effect there is a buffer between her salary increasing and her tax credit being reduced as a result.
In addition, as part of the Government’s wider service transformation agenda, my Department and Her Majesty’s Revenue and Customs have established a programme of joint work. The first project in the programme looked at improving the overall service given to customers who move in and out of work. The trial proved particularly successful in showing that practical ways can be found for the organisations to work together on working age benefits, housing benefit and tax credits.
Cities, most importantly London, pose one of the biggest challenges if we are to achieve our long-term aim of an 80 per cent. employment rate. The 10 biggest cities account for one fifth of the UK’s total working-age population. Through our cities strategy, we have created 15 pathfinder local authorities with responsibility for developing and delivering targets and outcomes to tackle worklessness. Giving local areas more flexibility enables them to tailor provision and support to help move local residents into employment. The cities strategy should play a significant role in increasing local employment rates, ensuring that the most disadvantaged people in the labour market receive the help and guidance that they need.
West Ham will benefit from the additional funding that we have provided in London for training in English as a second language. That additional provision was announced in the 2007 Budget and it recognises the diversity of need and the extent of deprivation among parents living in London who, in addition to the other problems that my hon. Friend correctly identified, must often overcome language barriers to return to work. She also referred to the role of tax credits in addressing poverty. As she knows, they provide support to 20 million people, including 6 million families and 10 million children—more than any previous system of income-related financial support. She also knows that we recently announced an increase in the child element of the child tax credit. That and other policies designed to make work pay have contributed to the record level of employment that we now have; indeed, it is the highest since records began.
We are also supporting lone parents into work by extending the availability and number of Sure Start child care centres and through the extended schools programme. As my hon. Friend will know, an issue that lone parents in particular face is not just the in-work calculation in the transition from benefit to earnings but the cost implications of child care, which are part of the calculation that they have to make. I hope that I can reassure my hon. Friend that we understand completely the importance of the points that she has made. We understand the specific needs that exist in London, particularly in her borough. I shall not try to pretend that reform is straightforward or easy, but I wish to reassure her that the issue is very much on our agenda and that a number of programmes are running. We are giving further thought to issues specific to the capital city, and work is under way. I appreciate the fact that she has raised the issue, and I look forward to hearing from her again as the reforms that have been introduced are rolled out.
This afternoon’s debate has somewhat unusual parentage. Practically every hon. Member gets letters and e-mails about buses. Over the years, I have had meetings with many bus companies and have written to local authorities and, occasionally, Ministers on the issue, which has been one of many that I have taken up on behalf of local residents. However, I recently got involved with a social networking site on the internet called Facebook—I imagine that you do little else, Sir Nicholas—and young members of my constituency have been registering their views with me on that site. I wondered what young people in my area might be concerned about, thinking that it might be world peace, climate change or terrorism, but it turned out to be buses. They are the No. 1 issue that young people, perhaps in their early 20s, have contacted me about—not in ones and twos, but in droves. I was so struck by the strength of feeling among those young people, that I decided to do something about it. That is not to say that other people’s views on buses do not matter, but the overwhelming volume and concentration of those young people prompted me into action.
I have a second reason for mentioning those young people. Many of them think that we in this House—present company excepted—are a waste of space, and so many of them thought that saying something to me on the internet would probably be a waste of time, but slightly thought that it might be worth their while, that I was determined to do something about it now that they have registered their concerns. Consequently, their concerns are being aired, we will hear an effective response from the Minister, I am sure, and I will feed back to them so that they can see that the whole process works and achieves something. That is why I am standing here today.
Some of what I have to say is about economic theory and how bus services, which are, in a sense, local monopolies, should be organised and what is the best way to run them. However, much of what I have to say will give a local flavour from local young people. I shall start with a few excerpts from what young people have written on Facebook. One wrote:
“the bus service to Bristol is very slow and expensive.”
That is a simple point. We live in an area of market towns and villages on the outskirts of a city, and most bus services run into and out of the city, although there are some between. Many villages have poor services, especially in the evenings and at weekends, and those services that are there are not very frequent. The service is universally regarded as being quite slow, expensive and often unreliable.
Another person said:
“I am concerned about the terrible state of public transport in Britain…I have recently returned from living in Japan”—
she goes on to say how good that was, and continues—
“I was shocked at the state of public transport here when I returned…Coming home at night the bus only runs once every two hours, on top of which the journey is expensive (six pounds return).”
A lot of the figures I will quote are the cost of going from villages and towns in my constituency to the centre of Bristol, and return fares of £4.50, £5 and £6 are normal. Some constituents tell me that those fares are a significant proportion of their modest wages from a Saturday job, and others say that if they want to go to the cinema and a cinema ticket is £5, they need to double that amount to pay the bus fare as well. Others say that if two or three of them go out together, it is cheaper for them to get a taxi than for three of them to get a full return bus fare.
I have spoken to the director of Firstbus in the local area about those issues. It is easy to portray Firstbus as the villain of the piece—it is known locally as Worstbus—and that is partly fair, but it has to deal with congested roads and the local authorities that it works with must take some responsibility. The root of the problem is that Firstbus and other operators are private monopolies. There is a semblance of competition—in theory I could start the Steve Webb bus company tomorrow, get a licence and start competing—but in practice, a huge investment would be needed to compete against a big group such as FirstGroup, which has massive resources. It would undercut and outdo me, then jack its fares up again as soon as I had gone, so there is no real, effective competition.
There are areas in which it is good to have a vibrant, free market, such as with telecoms. We have gone from having one nationalised industry to having a vibrant, competitive market with entry and innovation, and that is great; I have no problem with that. In other areas, having a state monopoly is the only way in which to do things, such as with some elements of the health service, but the worst of all possible worlds is having a private monopoly trying to provide a public service.
Sitting suspended for a Division in the House.
To continue seamlessly, I made the point that many young people contacted me about their bus service. I shall give another quote. It links with what I was saying about the right way to do such things. One young person from a village in my patch stated:
“I rely almost entirely on public transport as the cost of owning and driving a car is collosul”—
a misspelling, but one cannot have everything—
“But First Buses Bristol seem to do nothing but raise prices and rip people off, it currently costs me…over £5 return to the centre of Bristol”.
The interesting phrase in the message is
“considering they have the monopoly on the local bus services, shouldn’t there be some regulation on their prices?”
Later on, there was a reference to extortion.
That is the point that I was trying to develop when the bells rang. There are several different models for running a public service. One is complete competition, which operated for a period after deregulation in the mid-1980s. I remember that in Oxford, where I was a student at the time, the bus companies were fighting each other. A bus would pull up literally a minute before the time the bus from the rival company was expected, take all the passengers and bomb off down the road. One could barely move for buses. That all ended. The fittest survived, and eventually the situation degenerated into a monopoly.
A competitive model does not work for bus services, especially in market towns and villages. The situation may be different for urban services, but when we are talking about rural routes, infrequent routes and, often, not huge passenger numbers, the idea that two companies will run side by side—that there is the volume for that—and that there is always an entrant waiting to chip away at and threaten the incumbent is just nonsense. FirstGroup has huge resources—it could see anybody off. To all intents and purposes, it is a monopoly provider. Yes, the council occasionally lets out a franchise for evening and weekend services, and FirstGroup gets some of them as well. There are other small operators in the area, but FirstGroup overwhelmingly dominates.
So we have a private monopoly. When I ask the managing director why he does not lower the fares, his response is that at peak hours the buses are full, so if he lowered fares, he would lose money. The rest of the time, the additional passengers that he would get from lowering the fares would not make up the money that he would lose from lowering them, so it is not worth his while. The answer is always, “We are not a charity, we are a business. We run to maximise our profits.” He tells me that the rate of return for the bus business is not as great as it is for some of the other bits of FirstGroup’s business, so he is not interested in lowering fares.
The managing director’s tone has mellowed a little since I first spoke to him, but, in essence, his attitude is, “You want a public service, you pay for it.” Britain is unusual, in that 90 per cent. of the revenue for bus services comes from bus passengers. Some 10 per cent. is from subsidies of various sorts from central and local government, but the vast bulk of the cost is met by passengers. Belgium, where the figure is 30 per cent., has taken the view that public transport is a public service—I agree with that—and that therefore more Exchequer input is probably the only way to deliver it.
Of course, things can be done. Quality bus partnerships, bus lanes and real-time information are all good things and can help, and I do not wish to decry the efforts that have gone into making improvements. But, when it comes down to it, when my constituents contact me about the cost and reliability of buses and the routes run by the companies, I tell them that the bus company will not make changes because it will not make any money, and the council will not subsidise services because it does not have any money. Tough, get lost, go away—there is nothing that can be done because we are at the hands of a monopolist.
Bizarrely, the Select Committee on Transport looked into the Government’s draft Local Transport Bill, and said that when there is more than one operator and they want to co-operate—for example, one might want to cover one area and the other might want to cover another area, with through ticketing—competition law may crack down on that and deem that they would be acting collusively, which would undermine competition. Competition is the wrong model, and we must make it clear that local transport providers should be able to co-operate and work together in the public interest.
I could go on at length and give a large number of quotes from young people—for example, “The fares have gradually gone up and up, but the service has not improved”; “I would use the buses as it saves me attempting to park the car, but I can’t afford to”; “The bus goes once an hour and costs £4 return.” People talk about the proportion of their income spent on fares—for example, “I am spending a quarter of my wages on buses.” I am talking about young people, perhaps with Saturday jobs, and recent graduates with relatively low incomes.
The subject deserves much more time than we can give it this afternoon. I want to convey young people’s frustration, and the fact that because of the way in which the system is structured it is a private monopoly about which we can do very little. The Government are considering some sort of re-regulation, but my worry is that it will not go far enough. A bit more regulation will not make FirstGroup provide a quality public service. It is a private business, and if we want a quality public service, we, the public, will probably have to pay for it.
I congratulate the hon. Member for Northavon (Steve Webb) on securing this debate about a matter that is obviously vital to his constituents and the public everywhere. I wonder whether this is the first stage of his leadership bid. If it is, I am honoured to be in at the start of it.
It is right to say that buses play a key role in our transport system. Two thirds of all journeys on public transport are made by bus, well over 4 billion journeys are made in England every year, and not far off 5 billion are made throughout Great Britain. During the past 50 years, bus usage has steadily declined, but in recent years patronage has stabilised and is now steadily increasing. The problem is that that does not apply in all areas.
The hon. Gentleman referred to young people’s reaction in his area. He is right in saying that too many of them give up using buses the moment they pass their driving test. I was talking to some young people in my constituency who said exactly the same thing, and our big challenge is to change that culture. We want young people to recognise the advantages of bus travel. Despite all the temptations for getting behind the wheel, we must try to change that behaviour and ensure that their peers do the same.
In Newcastle, I met the Bus Buddies, who are a campaigning group of young people, and the hon. Gentleman might like to inform his constituents of their work. They have tried to give a voice to the region’s young people on bus issues. They have developed links with local bus operators, the Government office for the north-east, and local authorities in their area. I notice from today’s cuttings that the bus company Stagecoach is launching a VIP ticket for young people to encourage them on to the buses in that area.
Some authorities offer discount or free travel to young people, and we have tried to find out through local transport plans what can be done to encourage more young people to use buses. By 2010, the travelling to school project will have spent around £140 million on finding out what we can do to get more young people to walk or cycle to school, and to use public transport.
I accidentally under-ran, so I have a little more time than I thought. I want to make it clear that the sort of people who are contacting me are not going to school and are not of an age that would be covered by a local authority concessionary scheme. They are typically 19 or 21, and I do not know of any local authority in Britain that gives free travel to 21-year-olds. I should have made it clearer who I mean when I refer to young people, because many of those concessions do not apply to them.
I understand that. If the hon. Gentleman is talking about over-18s, such concessions would be outwith that group. However, he referred to high fares, fare increases, and the deterrent effect on passengers.
Obviously, the hon. Gentleman knows that bus services outside London were deregulated by a previous Administration around 20 years ago. The majority of those services are now provided on a commercial basis without subsidy. However, local authorities have the power to subsidise services that are necessary for the community but not provided on a commercial basis. Around 20 per cent. of bus services outside London receive local government subsidy.
All in all, public expenditure on buses amounts to around £2.5 billion, which is up from around £1 billion a decade ago. We have seen increased expenditure on bus services, and that includes reimbursement for concessionary fares. I am sure that the hon. Gentleman is aware of our schemes for older people, which have certainly led to increased bus usage, and the bus service operators grant from my Department to support socially necessary services.
We are of course aware that when bus services were deregulated, there was an expectation that there would be plenty of competition to keep fares low and customer services high. However, we now find that in many parts of the country there is no real choice of operator. It is open to other operators to challenge the incumbent if they think they can provide services more cheaply and efficiently, or better tailored to public demand, but the hon. Gentleman is right in saying that there is a certain amount of discontent in various parts of the country about the provision of services.
All our experience in this country shows that bus services work best when there are good relations between bus operators and local authorities, and when each is prepared to invest. The local authority might invest in better infrastructure, and the operators might provide better vehicles. Each side must play its part if we are to succeed.
During a recent tour of the regions, I visited the Bristol area, and became aware of the importance of that close working together. I know that there have been many problems in the greater Bristol area in past years, but local authorities and FirstGroup have jointly drawn up a major scheme to improve bus provision, underpinned by quality partnership schemes. That builds on the successful showcase bus route scheme that was opened a couple of years ago and achieved significant growth in bus patronage. At the moment, my Department is assessing that scheme as a bid for major project funding, and we hope to make a decision soon.
It is true that there has been dissatisfaction with the way in which bus services operate, which is why we want to give local authorities a better range of options to improve bus services in their area. The building blocks were laid down in the Transport Act 2000, and we accept that they need refining.
Last May, the Government published the draft Local Transport Bill for consultation and pre-legislative parliamentary scrutiny. A major part of that is connected with bus services. As the hon. Gentleman said, we also received a report from the Transport Committee, and it published our response today. I hope that the hon. Gentleman will read that and find it encouraging. The Bill will be similar to the draft, but we have changed it to account for views expressed in the consultation.
The hon. Gentleman referred to the London-type system. The Bill will say that when there is a strong case for quality contracts—a London-type system—we will make it a more realistic option. The draft Bill would provide more opportunities for quality partnerships and, particularly, it would allow them to specify minimum frequencies and maximum fares, which I am sure the hon. Gentleman would welcome. Obviously, operators would need to be willing partners to make the partnership work, but, crucially, the negotiating hand of the local authorities would be greatly strengthened.
The draft Bill also includes measures to tackle problems such as poor punctuality, which is clearly an area in which local authorities and operators need to act in harmony. When people face a situation in which they do not know when the bus will arrive, or when they think a bus will arrive but it does not turn up, they are completely put off getting the bus. Young people who want to keep appointments are unlikely to be attracted to a bus service that offers such poor punctuality.
May I take the Minister back to her interesting remark about the power of councils to cap bus fares? I shall pass on her words, as she would expect, to the young people, and they will read every word. Is she saying that councils will have the power to cap bus fares, but only if the bus company agrees? Is that the position?
The idea of a quality partnership is that local authorities will sit down with bus operators and say, “We are going to commit to improving the infrastructure, either through bus lanes or real-time information,” and bus operators will reply, “If you commit to that, we will commit to this or that.” That is the idea of the partnership, but agreement is important; the partnership cannot be imposed. If quality partnerships or local bus services are not delivering, we could move to the next stage—the creation of a quality contract. Again, it would be possible for local authorities to specify the routes that they wish bus services to take and fares, and it would be up to the bus operators to tender to operate in the area, as happens in London, as we said.
Punctuality is a key part of what the Government will attempt to achieve with the Bill. The draft also contains measures that would allow the setting up of new passenger transport authorities. That measure could well benefit the west of England, where a small number of unitary authorities makes co-ordination that much more difficult. Bristol city council has expressed an interest in setting up a strategic transport authority. Local authorities in the area have recently submitted an outline proposition to the Department for Transport that would have them agree to continue to work together to develop a bid to the transport innovation fund to tackle the area’s congestion challenges. I understand that that will include a number of measures to improve public transport in the area.
I hope that I have outlined not only an honest recognition of the problems that certain areas face, but a vision for the future that will give local authorities and others the powers that they need to improve services. The matter is not about massive underinvestment. I have outlined the increased investment in bus services in the past 10 years, but despite that there are still problems. The draft Bill, which the Government hope will become the Local Transport Bill, is a way in which to put right some of the problems. I hope that the hon. Gentleman will take that reply back to his young constituents and give them some reassurances.
Question put and agreed to.
Adjourned accordingly at five minutes past Five o’clock.