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Commons Chamber

Volume 467: debated on Monday 19 November 2007

House of Commons

Monday 19 November 2007

The House met at half-past Two o’clock


[Mr. Speaker in the Chair]

Oral Answers to Questions

Work and Pensions

The Secretary of State was asked—

Credit Unions

Via the growth fund, we are investing £42 million over three years in more than 120 credit unions and community development finance institutions. To date, more than 40,000 affordable loans worth a total of £20 million have been made, and as a result thousands of people have been prevented from falling into the clutches of high-cost lenders or loan sharks.

I am grateful to the Minister for his reply. He will be aware of the socially responsible work that credit unions carry out, but he will also be aware that the credit union movement feels that the current legislative framework is stunting its growth, and he will be aware that there are far higher levels of credit union membership in other countries, such as Ireland. What steps is he considering taking to update the law governing credit unions?

First, I should point out that the growth fund investment that my Department is making is the first ever substantial investment by Government in the credit union movement, and my hon. Friend will know of the First Alliance credit union in Ayrshire which is benefiting from growth fund money. My Department is looking in conjunction with the Treasury at the legislative and regulatory rules that affect credit unions, and I am sure that colleagues in that Department will have more to say about that in future.

Does my hon. Friend agree that it is important that credit unions are not just an urban phenomenon, but that they also offer savings and loan opportunities in rural areas? Will he commend the work of North Yorkshire county council, which on 4 December will consider a business plan drawn up in association with local housing associations to expand the common bond of the York credit union to the whole of North Yorkshire so that credit union facilities will be available in the whole of the county of Yorkshire?

I agree with my hon. Friend, and I can tell him that no fewer than 11 credit unions in Yorkshire are benefiting from the investment that the Government are putting in through the growth fund. We have found that in many areas a number of small credit unions have come together to collaborate and pursue a bid for growth fund money. That has been especially effective for credit unions that cover rural areas. My hon. Friend is right that such amalgamations must take place if we are to get wider coverage on behalf of credit unions, and that is precisely the sort of thing that growth fund investment has encouraged.

I am grateful to my hon. Friend the Minister for his answers. Obviously, the people who benefit most from credit unions are those at most risk from loan sharks and least able to look after themselves in this respect. Will my hon. Friend clarify the situation with regard to the funding he mentioned in his first answer? Is that just for expanding existing credit unions, or are there facilities for creating new credit unions from scratch, and where should people go if they want assistance in, or advice on, starting a credit union?

The growth fund money is being used in a number of ways. Some of it is expanding the capitalisation of credit unions—it is having a substantial impact in that respect. As I said, a number of credit unions have amalgamated or brought collaborative deals to us in order to bid for the growth fund. Some of the money is also available to assist in training and development for those who work in credit unions—both full-time staff and volunteers, who play an important role.

Speech Impediments (Young People)

Most people are able to make use of the mainstream employment placing services provided by Jobcentre Plus to find a job. However, for those who need more specialist help, such as someone with a speech impediment, Jobcentre Plus provides a range of tailored disability measures via our highly trained disability employment advisers.

I am grateful to my hon. Friend for that answer, but what would she say to a 17-year-old constituent of mine with a severe stammer who could be helped by a SpeechEasy device to get into employment—it would help him make telephone calls, attend interviews and so on—and yet has received just one piece of advice: that he should go on jobseeker’s allowance and then people will look at helping him? He is a bright young man who is eager to work, and a small investment now would repay the taxpayer many times over in the future. Can we not look at providing more help for people such as him who want to contribute to society?

I recognise the picture that my hon. Friend has painted. Through Jobcentre Plus and our disability employment advisers, there are ways in which a young man in such a position can be assisted through the training and interview processes. If they are successful in getting a job there is also, of course, our successful “access to work” programme to address ways of supporting them in employment. I know that my hon. Friend has written to me on the specifics of her constituency case and I will respond on that as soon as possible.

Anyone who has a speech impediment or communication difficulty, whether it results from a physical disability or a psychological problem, should ideally be able to access speech therapy long before they reach the stage when they want to attend a job interview. I would include in that many young people who do not have a speech impediment but who have barely intelligible speech. They need to have that made known to them, so that they present themselves well and to best advantage when they go for a job.

I understood the comments of my hon. Friend the Member for Warrington, North (Helen Jones), and likewise I understand exactly what the hon. Lady is saying. I hope that she welcomed the recent statement in the pre-Budget report supporting enhanced facilities for speech therapy. We recognise that communication is important in getting through the interview process and getting a job. That is why Jobcentre Plus works with the individual, particularly if they have a speech impediment, to see what is most appropriate to take them through that quite difficult process,

Does the Minister think that a young person who has a severe speech impediment would qualify for incapacity benefit under the new assessment announced today, or would she include such a person in being part of the sick-note culture? Would it not be better for all concerned if the Government concentrated on putting their efforts into providing tailored support for such people to get back into work, as proposed in the Freud review, which Ministers have now ditched, rather than on demonising disabled people by using negative stereotypes of the type that we have read about again in the papers today?

I regret the sort of angle from which the hon. Gentleman has come at this issue, because when we debated the Welfare Reform Bill in Committee, we were clear that the way in which we would work in future would be to consider and support the individual, and to identify their needs to ensure that they moved into work with the proper support when that was appropriate. Of course, it would be ludicrous for me to say that one person would be able to qualify for the new employment and support allowance whereas someone else would not, because it is very much tailored to individual needs, including training needs, individual aspirations and how those people move into work. For the hon. Gentleman’s information, we are implementing the recommendations of the Freud report.

My question follows the point ably made by the hon. Member for Warrington, North, and is similar. The Minister will know that last week Scope launched its “no voice, no choice” campaign, which specifically examines the need of many disabled people for communication devices, both to have much more fulfilled lives and to get into employment. Is she able to update the House on the steps that she and her colleagues are taking to improve that situation to deal with both the constituency case that has been mentioned and people more widely?

Obviously, I have read Scope’s report. We have clearly identified communication as an issue for many people, which is why we have support workers for many people who have a visual impairment and why Braille is part of the working environment—that is supported through our access to work programme. For those who have a hearing impairment, we provide British Sign Language signers and we examine different ways in which we can support technology to maintain people in their employment. Of course, I would be delighted to update the hon. Gentleman, in his new capacity as shadow spokesperson on disability, at an appropriate future time.

Child Maintenance and Enforcement Commission

3. When the Child Maintenance and Enforcement Commission will commence its work; and if he will make a statement. (164993)

Subject to parliamentary approval, the Child Maintenance and Enforcement Commission will become operational in 2008. I have appointed Janet Paraskeva as its chair designate. She brings considerable skills and experience to the role and she will provide outstanding leadership.

I thank the Secretary of State for that answer. What would he say to my constituent, Martin Smith, who has been in correspondence with the Child Support Agency for the past four years? He has stated that he was the father of a child, and he then submitted his DNA report, which the CSA has lost. The CSA has been taking money out of his account every week, and he now risks losing his job. Will the Secretary of State assure the House that the transitional arrangements that he brings into force will ensure that such cases will be dealt with swiftly before the new organisation takes over?

I would certainly like to examine the case of the constituent mentioned by my right hon. Friend, because his account makes it sound disturbing. There is no doubt that from its original inception in the early 1990s, the CSA has been a real problem in dealing with the problems that it was set up to resolve. It has improved its performance recently, but we are replacing it with the new commission precisely to start on an entirely new footing and to ensure that we provide child support in the way that it ought to have been provided all along.

The Secretary of State has just rightly said that since its inception the Child Support Agency has encountered many difficulties. I am sure that he will be aware, as are many hon. Members, that one of the principal difficulties has occurred when the absent parent—the parent without care—has been self-employed, and it has therefore been impossible to reach or place enforcement orders on their earnings. Can he tell the House whether the new agency will have any other, better methods of dealing with that intractable problem than has been the case in the past?

We will provide powers for direct collection from bank accounts, because the hon. Lady is right that there is a problem with self-employed people. We will also encourage mediation, especially for those on benefit. At present, they have to enter into a statutory relationship, via the CSA. If the issue could be voluntarily agreed, it could remove that obstacle to a proper relationship between the parents and support for the resident parent. The self-employed issue remains one that we need to resolve.

Will the new CMEC take a different approach to shared care, in which children spend 50 per cent. of their time with each parent, especially when both parents are working and have an income? Under the CSA, one parent always has to be identified as the parent with care.

Yes, I do think that CMEC will provide a more satisfactory outcome in such instances, to which my hon. Friend is right to draw attention. For a start, it will provide scope for greater voluntary arrangements and mediation, as well as an ability to offset in cases like the ones that she mentioned.

I am sure that we all have numerous cases of the insensitivity and inefficiency of the CSA that we could lay before the Secretary of State. What procedure will the Secretary of State adopt to monitor the work of the new body, so that we do not have a disaster followed by a fiasco?

I am confident that we will not have that—[Interruption.] Well, I remember the early days of the CSA, as a Back-Bench Labour Member, after it was set up by the previous Government, and it was an absolute disaster. Performance has improved, but the hon. Gentleman is right to demand of me that it improves further. It will be monitored, and I hope that the Work and Pensions Committee will also keep a beady eye focused on it. We want the new arrangement to ensure that the support gets to the child, so that the non-resident parent—usually the father—fulfils his responsibility, but it should be done in a fair way, which is often perceived not to be the case.

Child Support

The first concrete steps in implementing the reforms have already been taken. For example, in the pre-Budget report, we announced the increases to the child maintenance disregard to £20 a week by the end of next year, and to £40 a week from April 2010. That change alone will lift 50,000 children out of poverty.

I am grateful to my hon. Friend for that answer. When we move to the new system, there will undoubtedly be a mass of cases under the first two systems in which there are still unpaid arrears. Will he consider whether mediation might have a part to play in resolving long-standing disputes about how much should be paid each week or month, and if alternative dispute resolution proves successful in that regard, will he consider a role for it in the new system?

We are taking an important step in the direction that my hon. Friend seeks, in that CMEC will come with an information and support service which will, for the first time, give advice and support to separating couples about how they should proceed and what arrangements they might make on a voluntary basis for securing the future flow of maintenance. He will also know that since January 2006 the family mediation helpline has been in existence, and I expect that the new advice and support service will be able to signpost the mediation service and refer people to it.

Although I realise that the CSA has a difficult task, what does the Minister propose to do about calculations of the income of absent fathers that take so long that by the time the arrears are due the father gets a shock and is unable to pay them all in one go? That is a real problem, as I am sure other hon. Members have heard; those people are faced by payments that they cannot meet.

Of course, improving performance as the hon. Lady describes is not just a case of waiting for the new commission to come into existence; it is important to improve performance now, for exactly the reasons she indicates. That is why we are making additional investment through the operational improvement plan, and the secret of that is to speed up the processing of cases, so that whereas back in March 2005, before the plan was under way, only 30 per cent. of cases were processed within 12 weeks, the number is now 74 per cent. The significant investment we are already making in the existing agency is already improving performance and that will carry forward under the new arrangements.

Pensioner Poverty

The Minister for Pensions Reform (Mr. Mike O'Brien): Since 1997 pensioner poverty has been reduced by a third to 17 per cent. Through targeted support, such as pension credit and £11 billion of extra funding, we have lifted more than 1 million pensioners out of relative poverty.

I am grateful to the Minister for those comments.

According to the Prudential, rising food prices affect pensioners more than any other age group. Does the Minister share my concern that as food prices are increasing at their fastest rate in 14 years, that is having a negative impact on pensioner poverty?

What we have ensured is that we continue to deal with the issues surrounding pensioner poverty, which is why we introduced pension credit. We have sought to lift the poorest pensioners out of poverty, and they are the people who would be most affected by increases, say, in food prices. At the same time, we have sought to provide a solid foundation of support for pensioners who are beyond pension credit levels. Those are issues, which is why the Government continue to upgrade the level of pension credit.

My hon. and learned Friend will be aware that fuel prices are an issue for many pensioners, but is he aware of the British Gas scheme for a social tariff for those on lower incomes? One of the problems of expanding the scheme is access to data, so will he undertake to have conversations with British Gas about data sharing and how it might be taken forward?

But can the Minister confirm that 2 million pensioners are living in poverty and that the very poorest pensioners are seeing their real incomes fall by 4 per cent. a year—costing on average more than £250? Will he join me and my hon. Friend the Member for Epsom and Ewell (Chris Grayling) tomorrow night at the vigil outside Downing street to be held by some of the 125,000 pension victims? If he comes to talk to them, will he explain why he is still refusing them the help that they need?

First of all, in terms of numbers we estimate that 1.1 million to 1.7 million pensioners do not take up pension credit. I think before the hon. Gentleman makes comments such as those he has just made, he should recall that when the Conservatives were in office they left 2.7 million pensioners living in poverty, many living on as little as £69 a week; many women were restricted from building up state pension entitlement in their own right and carers were similarly mistreated. In talking about the financial assistance scheme—the help for the 125,000 pensioners concerned because of the breakdown of their pension scheme—the Tories should be a little careful; they cannot afford to claim that they looked after pensions during their term. They created the circumstances in which many of those schemes got into trouble. In 1986, pension fund surpluses were capped by the then Chancellor. They allowed pension holidays—

Should not the Government be warmly congratulated on the measures taken in the past 10 years, which the previous Administration refused to take and from which many of my constituents and others, especially poorer pensioners, have benefited? When the Government are acting in the right direction, as they do on most occasions, no one is a greater admirer than I.

As always, I am grateful to my hon. Friend for his support. This Government are tackling the problems of pensioner poverty left to us by the previous Government.

Foreign Workers

6. What estimate he has made of the change in the proportion of foreign workers in the UK labour force since 1997. (164996)

7. What estimate he has made of the change in the proportion of foreign workers in the UK labour force since 1997. (164997)

According to the latest estimates available, about 7 to 8 per cent. of those in employment are foreign nationals; in 1997, the figure was 3 to 4 per cent. The employment rate of both UK and foreign nationals has increased since 1997, from 73.2 per cent. in 1997 to 74.8 per cent. in 2007 for UK nationals, and from 60.6 per cent. to 67.6 per cent. for foreign nationals in the same period.

I am grateful to the Secretary of State for such a comprehensive answer. When the Prime Minister said,

“British jobs for British workers”,

he knew that that policy was illegal under European Union law. Given the facts that the Secretary of State has just stated, would the Prime Minister have been straight with the British people had he said, “British jobs for European workers”?

The Prime Minister set out very clearly his objective, my objective and the Government’s objective of getting British benefit claimants to become British workers by getting into British jobs. That is our strategy; it is perfectly in line with EU law, and it marks a strong contrast with the record of the Conservative Government, under whom the benefits mountain mushroomed. We have now taken 1 million people off benefits, and many more people are coming into jobs every week as a result of our Government’s employment programmes.

Following on from the question put by my hon. Friend the Member for Wellingborough (Mr. Bone), is the Secretary of State telling the House that he agrees with the Prime Minister’s statement that there should be British jobs for British people, when most hon. Members believe that such a slogan is one that we would find the British National party using, and is neither enforceable nor legal?

I have just explained to the House, and I remind the hon. Gentleman of what I said. Does he not support the Government in getting people off benefit and into work—getting British people off benefits and into British jobs? Of course he should support us. That is our objective and that is what the Prime Minister was talking about. The vehicle for doing that is the signing up of more than 200 local employment partnerships, with employers joining them, to get people directly off incapacity benefit and into work, and to get older people and lone parents into work. Our aim is precisely to achieve genuine full employment—an objective whose achievement was completely impossible under the Tory Government, but is now in sight as a result of our policies.

Sections of the British economy, not least the national health service, the caring professions, the construction industry and food processing, have benefited enormously from the efforts of foreign-born workers, but if we are to continue to benefit, the general public must have greater confidence in the figures that the Government produce. Does my right hon. Friend agree that there is a risk that “official Government statistics” will become a term of abuse and dispute?

If my hon. Friend is saying that the statistics produced for Ministers and used publicly in good faith should be the best possible estimates, I completely agree with him. That is why, at the earliest opportunity, when the Minister for Employment and Welfare Reform, my hon. Friend the Member for Don Valley (Caroline Flint), and I discovered that we had been wrongly advised about those estimates, we immediately corrected them to the House. In addition, at my first opportunity I phoned the shadow Secretary of State to tell him, so that he could go out and attack the Government’s record in the media. He had plenty of warning.

There are two ways of dealing with the problem of immigration. One is to welcome the economically active and very intelligent workers whom we have taken into my constituency, largely from Poland. The other is deliberately to foment trouble by attacking such workers in the local paper and having pictures taken outside Polish shops, as though they were not only a wave of invaders who are damaging the economy, but totally unacceptable. Will my right hon. Friend condemn those who, for narrow political purposes, seek to foment trouble between a stable section of society and one that will benefit from the incomers?

I could not have put it better myself; my hon. Friend is absolutely right. The truth is that foreign nationals have made a significant contribution to Britain’s economy over the years, including as regards our recent record of growth and rises in wealth. They have made a positive contribution in her constituency and, I am sure, every other constituency in the country.

The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) was absolutely right in what she said, and many of us realise the problems that she faces in her constituency, but are not the Government aware that unless foreign workers are regulated and restricted in coming to this country, it is likely that a lot of them coming here will depress the wages of the lower-income groups in this country? That is surely a disadvantage and, in times of rising unemployment—maybe we will get that—there could be a problem; social tension might be created. Is it not responsible to take a really sensible line on the number of immigrant workers who come to this country?

I am very much in favour of sensible lines. In respect of the problem, the hon. Gentleman is right to say that there is a danger that foreign nationals could depress wage levels. That is why the minimum wage that we brought in must be enforced rigorously throughout the economy. In some cases, that is not happening, and foreign nationals themselves are being exploited, so we are bringing in tougher measures to ensure that it does happen—and to enforce employment rights, which are not always enforced. I hope that he will join me in insisting that the legal rights for which we have legislated as a Government, including the minimum wage, are properly respected, in Macclesfield and elsewhere.

The Secretary of State was right in his statistic when he told the House that the proportion of non-UK workers in the work force has almost doubled since 1997. He could have added that the proportion of UK workers has fallen in the same period. Furthermore, is he aware that since 1995, the number of British jobs occupied by British workers has decreased? At the same time, there has been a continued increase in the number of non-UK nationals in employment, including both EU nationals, to whom the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) referred, and non-EU nationals. The Government continue to issue an ever-increasing number of work permits, at a time when there is an influx of nationals from the A8 states. Is it not time for proper co-ordination between Departments on the issuing of work permits, rather than country-cramming and idle boasts about British jobs for British workers?

If the hon. Gentleman supported the policy of identity cards, it might be easier to resolve the question that he has put. Let us look at the facts. The facts are that we have seen a million more British nationals in jobs under our Government. Unemployment and the claimant count rate are at an historically low level. There are 660,000 job vacancies in the British economy today and every day. Also—this is crucial to a sensible analysis of the debate—the number of working-age British people has fallen significantly, because it is an ageing society. Therefore, one might also ask the question: what if those foreign nationals, including those from Europe, had not been here to fill the jobs in the gap that an ageing population left behind? That is why we want to get more people off benefits and into work, and why the Prime Minister’s policy of getting British benefit claimants into British jobs, so that they become British workers, is the right policy.

Financial Exclusion

8. What steps his Department is taking to encourage third sector organisations to help tackle financial exclusion. (164998)

The £42 million growth fund is investing in more than 120 credit unions in all areas of the country, including Glasgow. In addition, the “Now let’s talk money” campaign is raising awareness of the need for financial inclusion. As a result, more than 2,000 intermediary organisations are helping people to take advantage of free face-to-face advice and affordable credit.

Credit unions and the Citizens Advice money-lending advice centre face the threat of cuts in their funding. Is it not time that we took stock of that and made sure that people receive the services that they so richly deserve and need, instead of cutting money for people who need it most?

I agree with my hon. Friend’s comments. As he knows, three schemes in Glasgow are already directly benefiting from the additional investment from the growth fund. The “Now let’s talk money campaign” is rolling out across the entire United Kingdom. Local organisations in Glasgow are benefiting from that help, and in turn they can do more in the local community to assist people who need help managing their finances or who need debt advice.

Due to the complexity of the benefit system and the fact that many Departments are simply not doing their jobs properly, organisations such as Kettering welfare rights advisory service are doing sterling work to make sure that people are not financially excluded. In the past financial year, Kettering welfare rights advisory service secured more than £3 million for people who would otherwise not have qualified for it, including £1.3 million in attendance allowance, more than £1 million in disability living allowance and £173,000 in pension credits. If Departments were doing their jobs properly, organisations such as Kettering welfare rights advisory service would not have to do that good work.

All constituencies contain welfare rights organisations that provide the assistance to our constituents to which the hon. Gentleman has referred. Those organisations do a fantastic job, and I am happy to congratulate the organisation in Kettering that he has mentioned on its work. It is important that we continue to make progress on the simplification and reform of the benefits system, which is why we are putting additional investment, through the means to which I have already referred, into a variety of local organisations, which exist in the hon. Gentleman’s area as well as in others, that work on financial inclusion in communities by giving individuals welfare advice as well as debt advice.

Child Support Agency

9. If he will make a statement on progress of the Child Support Agency’s operational improvement plan. (164999)

The agency is halfway through its three-year operational improvement plan and is showing significant improvements in client services. For example, uncleared applications have more than halved, and more than half of all new applications are now routinely cleared in less than six weeks. As a result of those recent improvements, additional maintenance worth more than £130 million is now flowing to an extra 130,000 children.

The emphasis on collecting historic debt is warmly welcomed by many of my constituents who have long-standing CSA cases. Will the Minister outline what progress is being made under the improvement plan and state how long it will take to recoup outstanding arrears?

The debts within the organisation built up from day one of its operation, and they have accumulated over no fewer than 14 years. Within the operational improvement plan, we aim to collect £200 million of arrears by March 2009. Halfway through the plan, the latest figures show that we have collected £148 million of additional arrears. We have also given staff in the agency new powers to collect those arrears by, for example, using credit card collections over the phone. That has only recently come into effect, and it is proving to be very effective and has already raised an additional £12 million of arrears.

I know how hard CSA staff are working to try to improve the service that they offer to people such as my constituents in Basingstoke. Does the Minister share my concern that the operational improvement plan is falling somewhat short when it comes to more complex cases handled through the Bolton office? What reassurance can he give my constituents in Basingstoke, who are still experiencing waits of up to six months before they hear anything about how their case will be handled through Bolton? Why is it—

Thank you, Mr. Speaker. Complex and clerically handled cases were transferred to Bolton; as we have said before, there were difficulties with that. That situation is now improving. The fact that we transferred some of the more complex clerical cases to Bolton released a significant number of staff at the agency to pursue other objectives.

I do not agree that the operational improvement plan is falling short of its goals. For example, the number of uncleared cases, which stood at 226,000 in March 2005, is now down to 128,000—that is a 43 per cent. drop. Some 130,000 more children are benefiting and £130 million more is being collected. Furthermore, the number of cases in receipt of maintenance is up by 29 per cent. Just halfway through its phase, the operational improvement plan is delivering the improvements that we expected of it.

What steps is the CSA taking to clean up its act on the length of time that its staff—who are probably very overworked—take to reply to letters from MPs about CSA cases? In my recent experience, the service to MPs, who act on behalf of constituents who are often in considerable financial difficulties, has worsened.

I am disappointed to hear that, because I have visited the CSA section that handles MPs’ correspondence—it has received from us additional staffing support and additional investment—and my understanding was that the processing times for MPs’ correspondence had improved. If my hon. Friend gives me the details of the particular case on which he is trying to make progress, I shall be happy to pursue it for him.

Credit Unions

10. What recent steps his Department has taken to support the work of credit unions; and what plans he has for further assistance. (165000)

Further to the answer that I gave to my hon. Friend the Member for North Ayrshire and Arran (Ms Clark), we are awaiting the outcome of deliberations on how the £130 million financial inclusion fund, announced in the recent Budget, will be utilised. Given appropriate funding, our intention is to support growth in the third financial sector, to encourage high-performing credit unions to extend their reach, to offer banking services, to promote safe saving and to offer basic insurance products.

Will the Minister have urgent talks with Treasury colleagues about why they have been encouraging credit unions to offer easy credit rather than follow the well-tried policy of insisting that customers prove their ability to save? My local credit union in Llanelli, which provides an excellent service, is concerned that easy credit could lead to unserviceable debts and put the security of the credit union itself at risk.

Under the rules that apply to investments in respect of the growth fund, it is clear that credit unions should do a full assessment of individuals applying for credit. It is certainly not the case that credit should be extended to individuals who cannot meet the repayments. The important advantage that the growth fund investment gives is that its loans are running rates that are probably at least half those for loans secured from doorstep lenders and vastly less than rates secured from loan sharks. Provided that credit unions carry out the necessary checks on individual applicants, the loans should be affordable.

Disability Living Allowance

11. What estimate he has made of the average time taken for a medical re-examination in connection with a disability living allowance application to be carried out in the most recent period for which figures are available. (165001)

Following receipt of a request to examine a disability living allowance customer, ATOS Healthcare took an average of 11.4 days to complete any medical examination process in the three months to September 2007. There is no distinction between initial examinations and re-examinations.

I am sure that the Minister will appreciate that in some cases the process takes quite a bit longer. A constituent of mine, who struggles to walk, cannot lift heavy things and cannot even raise her arms above her chest, was receiving the disability living allowance; on further examination, however, it was removed. Four weeks ago, she reapplied for a medical assessment, but she does not even have a date for it yet. If I supply the Minister with the details, perhaps she will kindly look into the matter. In general, is the picture not rather a poor one?

The target is an average of 12 days, so, on average, the company is within target. I accept, however, that when there are averages some people fall outside them. If the hon. Gentleman writes to me, I would be happy to follow up the details of his constituent’s case.

Maternity Leave

13. What plans he has to extend support for people on maternity leave to students and those paid a stipend or grant rather than a wage. (165003)

The Government view individuals studying full-time in further or higher education as students and, therefore, the responsibility of the education system. However, support may be available for some students through income support and tax credits, depending on their individual family circumstances.

I thank my hon. Friend for that response. She may be aware of the situation of Beth Porteous, one of my constituents, who is a postgraduate student at Durham university and is expecting a baby. She gets paid quarterly by the university for research work that she undertakes, but she has been told that she does not qualify for statutory maternity pay or maternity allowance and that she must take unpaid leave and return to work eight weeks after the baby is born. I should be grateful if my hon. Friend would undertake to look at cases such as Beth’s to see what additional support can be given to women who find themselves in that unfortunate situation.

I thank my hon. Friend for that question on behalf of her constituent. I think that the complication in this particular case is that her constituent is designated as being on a research grant as opposed to receiving a wage from the university. However, I will of course give her a commitment to look into the precise situation and come back to her with a written response.


One of the key responsibilities of my Department is to ensure that all those who have a health condition or a disability but who could work are given the right type of help and support to enable them to find and keep a job. Many of the 2.64 million people of working age are currently on incapacity benefit because the personal capability assessment has focused more on people’s incapability than their capability for work. In October 2008, I am therefore introducing a new medical test—the work capability assessment—that will assess people’s physical and mental ability and what they can do rather than what they cannot do. I placed a report evaluating the new test in the Library this morning.

May I invite the Secretary of State to indulge in a bit of interdepartmental thinking and action to overcome a problem that is becoming very apparent in inner-city areas such as mine? Single parents have great difficulty in accessing council or housing association properties because of the shortages and are therefore placed in private accommodation by the local authority, often on a very high rent—sometimes as much as £300 or £400 a week. That rent is then paid for by housing benefit. I have no problem with people getting housing benefit; this is not an attack on housing benefit, but the problem that then emerges is that, if and when they are offered a job or encouraged into a job by the agency, they have to reject it because they need to get one that pays more than £15,000 to start with just to pay the rent. That means that they are in danger of losing benefits and we are in danger of losing somebody who wants to work and contribute to society. This is a twin problem of benefits and housing. I realise that it is not entirely the Secretary of State’s responsibility, but does he recognise that it is a serious issue, and is he prepared to do something about it?

I recognise that this is a real problem, especially in London, with high housing costs as well as, in the case of lone parents, high child care costs. That is why the Prime Minister recently announced that for London there will be an in-work credit of £60 a week for an individual coming off income support, in the case of a lone parent, to enable them to take a job and to deal with precisely the problem that my hon. Friend describes. We will continue to look into the problems of housing costs and how we can resolve them, because we do not want them to be an impediment to work in the way that he describes.

This morning, the Secretary of State provided the media with a briefing about his new announcement on incapacity benefit assessments. According to the BBC website, he said that he would tackle sick-note Britain and that the new system will place greater emphasis on what the sick and disabled can do rather than on what they cannot do. Funnily enough, two weeks ago, on 5 November, he made exactly the same announcement to the media, saying that he had plans to “rip up sicknote Britain” and that there would be “an assessment” that would look at

“what people can do rather than what they can’t.”

Why did he make the same announcement twice in a fortnight, and why does he keep briefing the media first and MPs second?

I placed a copy of the report that makes an analysis of the new medical assessment in the Library this morning. The House was the first to see it, as far as I know. We sought to draw attention to a radical change from what has gone on in the past, in the 1980s and 1990s, when people were smuggled off the unemployment statistics on to incapacity benefit. The numbers tripled, which led to the benefit mountain we received as a legacy from the previous Conservative Government. We are reducing it. For the first time in a generation, the figure has come down—by 120,000 during the past few years—having risen year on year as a result of that legacy. The new, stringent, personal capability assessment, of which I have informed the House, will enable us to bring that number down even more.

In fact, the first time we heard about that was in a press release from his Department in January 2006.

Will the Secretary of State confirm that today’s announcement involves 20,000 fewer people claiming incapacity benefit? Will he confirm that that represents less than 1 per cent. of the total of 2.6 million currently claiming the benefit? Unless he manages to increase his current rate of progress, he is set to be 25 years late in hitting his target of getting 1 million people off incapacity benefit.

On the contrary, compared with the record of the Tory Government, where incapacity benefit tripled, we have already brought the numbers down by 120,000 and this additional test will enable us to accelerate that process. In addition, the rolling out of pathways to work throughout the country by April next year will bear down even more sharply on those figures. At last we will begin to get rid of the awful legacy bequeathed to us by the previous Tory Government, where people were written off on incapacity benefit, instead of being helped into a job, or being given new opportunities, skills and support to get a job, which enable them to transform their lives as a result.

T2. Would the Minister comment on the study by Aon Consulting, published last week, which says that British pensioners receive a pension equivalent to 17 per cent. of average earnings? That is the lowest level in Europe. Are the Government still committed to restoring the link to earnings by 2012? (165017)

The comments in the Aon Consulting review were directed at the basic state pension, and then it worked out that figure. Of course, we know that there is a second state pension—an important part of the UK state pension system—that brings people up to a third of average earnings. In the UK, private pensions are more important, and 86 per cent. of UK pensioners have income other than state pensions. Private pensions are also eligible for tax relief so, including a private pension, a pensioner on a medium income gets an income of two thirds of average earnings. The Aon report got a headline, and added a lot of heat but little light. We remain committed to our policy of re-establishing the link to earnings.

T3. The Secretary of State just said that he wants to focus on getting those on incapacity benefit into work. We learnt on Friday that the latest figures show that 510,000 people came from the new Commonwealth countries of India, Pakistan, Sri Lanka and elsewhere, presumably looking for work. He must surely accept that there are not that many vacancies available. How will he achieve what he hopes to do when able-bodied people are coming from central and eastern Europe, as well as new Commonwealth countries, and competing with people on incapacity benefit? (165018)

First, we are changing the basis on which people will be entitled to come and work and introducing a points-based system. In respect of the wider situation, there are 660,000 vacancies in Britain today. It is not like the 1980s and 1990s when people were stuck on incapacity benefit and could not get a job because there were no jobs in constituencies such as mine—former mining constituencies in south Wales. Now there are jobs. There are vacancies everywhere, in every constituency in this country, which is why we want people on incapacity benefit, lone parents on income support, older workers and the long-term unemployed to join the jobs programmes we are undertaking with local employers to get them into work, and we can do that.

T5. Scores of grandparents in my constituency, and many thousands throughout the country, do a terrific job of supporting their grandchildren in a parental role. They are not always given support by residence orders from their local authorities. What more can we do to encourage local authorities to provide such allowances, and what more can be done to support grandparents through the tax and benefit system? (165020)

I appreciate the points that my hon. Friend makes about the important role that grandparents often play in the bringing up of the children, but those are matters for other Departments. However, I shall happily refer what he said to them, and I am sure that they will contact him.

T4. Last week the Under-Secretary said in a written statement that overpayments of £26 million had been made in relation to duplicate disability living allowance and attendance allowance payments. Will he confirm whether that will mean trying to recover, on average, £6,500 from pensioners up to the age of 76? Will he also say what percentage of the 4,000 pensioners affected he would expect to write off those overpayments for? (165019)

I can clarify the situation for the hon. Gentleman. We shall not be recovering the overpayments from anybody who was overpaid in those circumstances, as was set out clearly in the written statement. In case he has not understood the point, let me clarify it for him: there will be no recovery of the overpayments. Indeed, in some instances we shall continue with the current payments—to those who are terminally ill, for example—while ex gratia payments will be made to those disadvantaged by the error.

T6. May we return to the matter of pensions? I am increasingly concerned that those with occupational pensions who have lost heavily—there are many cases in my constituency—are currently experiencing dire financial hardship. Are the Government in a position to indicate when some action will be taken to assist the 125,000 people who have lost out so much? (165021)

I share the hon. Gentleman’s concern for the 125,000 people whose pension schemes have failed. We are awaiting the outcome of the review by the Government Actuary, Andrew Young, which is due in the next few weeks. We have indicated that we are looking to maximise the returns from the amounts that remain in those failed pension schemes. We shall then see whether we can match that, to move towards 90 per cent. of the core pension.

T7. Is the Minister aware that benefit claims for Gloucestershire are now dealt with in St. Austell and that claims in Cornwall are dealt with in Gloucester? Is that not rather an odd situation and are there any proposals in the document published this morning to correct it? Since jobcentres were instructed not to give advice or to deal with claims, the whole process has become inefficient. (165022)

I do not agree that the process has become less efficient. The fact that benefits and employment advice are now dealt with in one place has been welcome. The transformation of our jobcentres from places where furniture was chained to the floor and people looked over large counters to the rather more friendly and welcoming environments that we have today is a plus. Again, however, we constantly seek to improve the delivery of our benefits and to keep on target for waiting times, to ensure that those who are entitled to benefits receive them and that those who are not do not, but get into work.

T8. The staff in Stafford jobcentre do fantastic work in helping people get back into work. I am particularly impressed with their dedication and hard work, and with the way the personal advisers give personal support to new deal clients. As the programme expands, I am sure that staff will be delighted to help get other British benefit claimants into British jobs, but they will also want to know whether they will be supported with the appropriate number of workers to do the work in their office. Against the background of a falling work force in the Department, will local jobcentre offices be given the kind of support that will be needed under the new scheme? (165023)

It is very much our intention to have the staff to do the jobs that we want them to do. However, the issue is not just about numbers of staff, but about how they work. We have a number of different advisers for different types of programmes, and a certain amount of rationalisation would help in that regard. The issue is also about how our Jobcentre Plus staff work with other organisations, such as the housing benefit office, and with the voluntary sector and, importantly, about the changes that we are going to make to the contracting of provider services, to ensure that we get better outcomes for the taxpayer’s investment, rather than just paying for processes. That is the direction for the future, with jobcentre staff, others in partnership and contract providers playing an even more effective role.

Perhaps the hon. Gentleman would like to stand and give us his question, then we can get on with it. This is a topical question; he asks the question and he gets a response.

Thank you, Mr. Speaker. I would be grateful if the Secretary of State could tell the House how many people are not in work, education or training, and what the Government are doing about that?

I congratulate the hon. Gentleman on his belated question; it was a very good one. We are taking action to ensure that we reduce those numbers, including by extending the age until which people will need to remain either in training, in an apprenticeship or in full-time education at school. That policy will help us to bear down on the number of 16 and 17-year-olds who are not in education or training.

Northern Rock

With your permission, Mr. Speaker, I should like to make a statement to update the House on the current position with regard to Northern Rock. The House will recall that last week I said during the Queen’s Speech debate that I would keep the House informed of developments. I also said that I expected to publish a statement of principles underpinning the Government’s approach to proposals received by Northern Rock with regard to its future. I published that statement this morning, prior to the markets opening, in the usual way. Copies are available in the Vote Office and the Library of the House.

It is important to be clear about the respective responsibilities of the Northern Rock board and the Government. The board is legally responsible to its shareholders for the future of the company. However, the Government have a wider public interest in maintaining financial stability, which is why we agreed to lender-of-last-resort support in September and subsequent lending by the Bank of England. The Government also have an interest in protecting the interest of the taxpayer. Because of this, the Government have, as a major creditor, a direct interest in the future of Northern Rock. The Government therefore have to agree to any proposals for the future of Northern Rock.

Before turning to our approach, let me deal first with the position on the guarantee arrangements to Northern Rock depositors provided by the Government and, secondly, with the loan facilities provided by the Bank of England to support Northern Rock and to maintain financial stability in general. First, we have made it clear that the guarantee arrangements already announced for depositors in order to safeguard their position will remain in place during the current instability in the financial markets. These guarantee arrangements were absolutely necessary. They have not had any cost to the taxpayer because these deposits covered by the guarantee arrangements remain in the bank. As I have said before, savers are free to take their money out if that is what they want to do, but they have no need to do so. The guarantee arrangements ensure that savers’ deposits are safe. The guarantee will not be removed without proper notice being given to depositors.

Looking ahead, I have made it clear that the Government will legislate for a new regime for protecting bank depositors. As the House knows, we have published a discussion paper on this legislation, and I very much welcome the offer of cross-party support for it. But it is important that we get it right. There are many examples, both here and in other countries, of legislation having been rushed through only to be regretted later. The current consultation finishes on 5 December. I will bring forward proposals in the new year when I have also had time to consider the outcome of the Treasury Committee’s work, as it has requested.

The second element of support is the Bank of England loan facilities. It is important to remind ourselves of why this support was provided in the first place. Northern Rock got into difficulties because it was almost totally reliant on getting very substantial sums from the securitisation and money markets on a continuous basis to do its business. When that lending became ever more difficult, it had no option other than to go to the Bank of England. Because of the possible impact on the stability of the wider financial system, it was right that I authorised the Bank of England to intervene. That, too, had cross-party support.

While international financial markets have shown signs of improvement since the sharp credit squeeze in August and September, following the problems that arose in the American housing market in the summer, there clearly remains continued uncertainty in the markets. The rates at which banks are willing to lend to each other also remain high in all the major currencies. It is therefore vital that we do everything we can to maintain stability internationally, as well as here at home. As the House knows, we are taking steps at an international and domestic level to improve the regulatory regime and to provide greater transparency. That was the subject of the discussions of G20 Finance Ministers that I attended in Cape Town over the weekend.

The continuing support of the Bank of England has also given Northern Rock an opportunity to consider its strategic options. I am very clear that this is also the right thing to do and, indeed, when I announced this, it enjoyed support from both sides of the House. I know that there has been interest in how much support the Bank of England is giving. The Bank publishes its balance sheet every week. However, in common with other central banks, it does not provide details of any operations because it believes that doing so would undermine its ability to provide such support. I understand the frustrations that that can sometimes cause, but to provide what would, in effect, be a running commentary on any operations would be likely to have adverse affects that none of us would want.

Having said that, I can tell the House that Bank of England lending is secured against assets held by Northern Rock, which include high-quality mortgages with a significant protection margin built in and high-quality securities with the highest quality of credit rating. The Bank is the senior secured creditor. The Financial Services Authority has said before, and continues to say, that Northern Rock’s main asset base—its mortgage book—is strong and sound.

As with any lender on this scale, we have ensured that the Bank’s lending is subject to significant conditions and controls to ensure that our interests are protected, and, in return for that facility, Northern Rock has agreed a number of controls, including not declaring, making or paying any dividend without the prior written consent of the Bank of England, and not making any substantial change to the nature of its business.

I now turn to the next stage. It is in the interests of everyone that the situation with regard to Northern Rock is resolved as soon as possible. That was why Northern Rock asked for expressions of interest in purchasing the business. As the company announced earlier today, as part of its review of its strategic options, it has received indicative expressions of interest, covering a range of options for the business. It currently expects to receive further expressions of interest in the next few days.

It is essential that the public interest is protected. That is why I have published today the principles that will underpin the Government’s approach, when assessing proposals from Northern Rock regarding its future. As I have already said, the Government have to agree to any such proposals. The principles make it clear that the Government have a clear duty to protect the public interest, and we will do so. However, I think that the whole House, and particularly Members representing the north-east, will want us to do everything we can within the constraints on us to resolve a very difficult position for Northern Rock.

Let me therefore set out our approach. First, we must protect the interests of the taxpayer. Substantial sums have been lent, and that money has to be repaid at an appropriate time and rate. The Government will consider proposals with a view to reaching the best outcome for the public purse. Secondly, we want to protect depositors. It is essential to do everything we can both to safeguard their interests and to maintain the service provided to them. Thirdly, we will maintain wider financial stability.

As I have made clear all along, the Government will now assess proposals from the company consistent with the approach that I have set out, and we remain closely engaged with the company as the best outcome for its future is assessed. As the company has acknowledged today, any proposals would have to be approved by the Government and, importantly, any proposal can be vetoed by the Government. In that way, the Government can ensure that the public interest is safeguarded. As I have told the House on previous occasions, any outcome must meet EU state aid rules.

It would be quite wrong to dismiss any option now without proper consideration, as some have suggested we do. I continue to believe that it is right to use this time to explore the best outcome for the company and the public interest. I agreed to Bank of England support because I believed it was right to do so. I agreed to continue support to allow Northern Rock the time it needs to consider its strategic options because it was right to do so.

I have set out today the approach that the Government will take as they assess proposals from the company to ensure that we will approve a solution only if it safeguards both the public interest and the specific interests of the taxpayer. That work is being done now and will be concluded as quickly as possible. I will, of course, continue to keep the House informed in the coming weeks. I commend this statement to the House.

The fallout from the first bank run in 140 years gets worse each week, and today has been another day of weakness and confusion from the Chancellor of the Exchequer. Of course, we all hope that a buyer can be found who will save the jobs at Northern Rock and repay the taxpayer. [Hon. Members: “No you don’t.”] I am sorry that Labour Members are not interested in jobs in the north-east or in the future of Northern Rock. Perhaps they will pay attention, because we are conscious of the impact of this in the north—[Interruption.]

The question we now ask of the Chancellor is simple: has he been honest with taxpayers about the risks that they face, and has he told the whole truth? First, let us look at what he has announced today. He announced that what was supposed to be a short-term emergency facility for Northern Rock may now be extended beyond February and could last for years. Thank you, but we already knew that because it was in a memo from the company’s advisers that was leaked last week. Indeed, throughout the crisis we have learned more from media leaks than we have from the Government.

The Chancellor will not tell us the size of the facility, when he expects it to be repaid or the terms of the repayment, even though much of that information is an open secret in the City. Indeed, the Governor of the Bank of England wants to publish the letter that he sent to the Chancellor to set out those terms. He told the Select Committee that he wanted to do so, but the Chancellor refuses to publish the letter and simply says that it is in the public interest that he should refuse. Clearly, the Governor of the Bank of England disagrees. Will the Chancellor explain in greater detail why he will not publish that letter?

This is not about the commercial interests that the Prime Minister spoke about last week, but about the public interest and the £900 that has been pledged on behalf of every taxpayer in Britain. The Chancellor talks about the Government’s liabilities being secured against £100 billion of Northern Rock assets, but he does not say that many of the assets are already promised to other creditors. Will he confirm that the free assets at Northern Rock could be closer to £40 billion and that total Government liabilities, through both the facility and the deposit guarantee, might now be approaching the total of the available assets, putting the taxpayer further at risk?

The Treasury also said today:

“Authorities expect the costs and risks associated with Northern Rock to be borne to the greatest extent possible by the current and future private sector providers of capital.”

So do we, but has the Chancellor given a general guarantee to cover the £13 billion or so lent by medium-term note holders—the large institutions that lent money with their eyes open? Has the Chancellor considered reducing the risk to taxpayers by announcing a cap on the guarantee offered by the Government so that only individual savers are fully protected? Of course, we need to get the depositor protection legislation right, but we now know from the Governor of the Bank of England that he has been pressing the Chancellor to do that for a considerable time.

The Chancellor has failed to address today the two things that he appears so far to have kept secret from Parliament and from the taxpayer. First, will he tell us whether it is true that the Treasury, as well as the Bank of England, has lent money to Northern Rock? He mentioned only the Bank of England in his statement, but today we are told that the Treasury has also lent so-called subordinated term debt, which does not have to be paid for five years, comes at the back of the queue and is in most danger of default if the bank is wound up. If that is true, taxpayers have been exposed to an extraordinary long-term risk, yet we have been told about that Treasury loan by the BBC’s business editor rather than the Chancellor of the Exchequer. If it is true, the Chancellor is surely deliberately withholding information from Parliament and the public. Will he confirm the existence of that Treasury loan?

The second thing that has become clearer today is that the Chancellor cannot be sure of keeping the promises that he and the Prime Minister made to the taxpayer. He said to the Select Committee that

“we fully expect to be able to get that money back.”

He said to the public that

“any money that the Government makes available”

to Northern Rock

“we can recover from its assets”.

The Prime Minister said at the Dispatch Box last week that the money from the taxpayer was

“guaranteed against Northern Rock assets.”—[Official Report, 14 November 2007; Vol. 467, c. 660.]

Today, the Chancellor merely says that he wants the best outcome for the public purse. Will all the money lent by the taxpayer be repaid with interest—yes or no? Let us hope that the answer is yes and that, in the final reckoning, the taxpayer will not have paid a heavy price for the Government’s incompetence. Let us hope that the Chancellor can be honest today about the risks to the taxpayer and about the existence of the secret Treasury loan.

We are considering a tale of incompetence and weak leadership from a Government who now reel from one disaster to another. We have a Chancellor who appears to have made secret loans from the Treasury, who has made guarantees to the taxpayer that he cannot be sure of honouring and whose weakness contributes to the instability of the financial system. That is why the Chancellor’s job is now on the line.

I am sorry that the hon. Gentleman was unable to make any constructive proposals. He supported the decision that I made at the start to enable us to provide lender-of-last-resort facilities to the bank. He also supported providing a guarantee, yet he now tries to give the impression that he does not agree with any of those things.

On the many questions that the hon. Gentleman asked about future proposals, he knows full well that, until we have had a chance to assess the proposals that the various financial institutions have presented and reach a view about what would work, it is impossible for me to state precisely the arrangements that we expect for Northern Rock in future. However, it is right to spend time assessing the proposals that the various institutions have made and then come to a view about what is best to ensure that we secure a future for Northern Rock and protect the wider public interest, especially the taxpayers’ money that has been lent to the bank.

It is hardly a secret that we have made facilities available to Northern Rock—I have informed the House at each and every stage of events, as hon. Members would expect. Furthermore, we were absolutely right to take such actions because the consequences of letting the Northern Rock bank fail, as the hon. Gentleman now appears to suggest that we should have done, would have been immensely damaging to this country’s financial institutions.

The hon. Gentleman asked several questions. First, he asked about the deposits that we are guaranteeing. As I told him, they remain in the bank, so there has been no cost to the taxpayers. The money is there; people can take it out if they wish. However, the guarantee exists, and it is not, therefore, necessary for people to take out the money. There has not been a cost to the taxpayer because the money is in the bank.

The hon. Gentleman asked about lending to the Northern Rock bank. The lending of last resort and the lending that started in the week beginning 9 October has been by the Bank of England. He asked especially about a story that appeared on the BBC this morning on the element of the loan that represents the penal rate of interest that the Bank of England normally charges. The sum concerned is nothing like the figure about which Mr. Peston speculated on the radio. It is a small amount of money, which will be recovered from Northern Rock. It is due to be recovered by Northern Rock as and when we move to the next stage. There is, therefore, nothing secret about it. It is a perfectly normal lending operation by the Bank of England that is necessary to secure the future of Northern Rock.

The hon. Gentleman asked about the letter that the Governor of the Bank of England sent. I repeat what I said when he asked that question last week—the Treasury Committee asked the same question. On the evening before the lender-of-last-resort facilities were announced, both the Governor of the Bank of England and the chairman of the FSA wrote letters advising me to authorise such facilities. The letters must be seen together. It is true that the Governor of the Bank of England told the Select Committee that he had no objection to publication. However, the chairman of the FSA most certainly objects to the letters being published. As I said to the Treasury Committee, I do not say that we will never publish them—I believe that, given time, it may be appropriate to do so. However, it would not be in the public interest to publish them now. I have consistently taken that position with the Select Committee and in the House last week and today.

I believe that what I did in respect of Northern Rock at the start was right. I believe that it is right now to give the bank the space that it needs to consider its strategic options. Anything else, I believe, would be grossly irresponsible, and I am sorry that the hon. Gentleman has chosen to follow that path.

May I say to my right hon. Friend that, contrary to the view expressed by the hon. Member for Tatton (Mr. Osborne), his proposals have been rightly welcomed so far in my constituency, where Northern Rock has its head office, and in Newcastle in general? He said that he would outline the principles on which the Government would act in the coming weeks, and I am pleased that the public interest was put at the forefront of those principles. In defining the public interest, is he prepared to look at the question of employment, not only at this time but at the time that any bid might be successful, and for a five-year period afterwards? Will he ask any bidder to itemise its employment plans, both at the time of sale and for a period of five years afterwards?

I am grateful for my hon. Friend’s support. As he rightly says, there is a great deal of understandable interest in the issue in the north-east, because of the impact on jobs and on the wider economy there. As I have said on previous occasions, I hope that we can do everything possible to allow the Northern Rock to continue to do business. As he knows, many hurdles must be crossed, but we will do everything we can to help. That is why it is so necessary to provide Northern Rock with a breathing space, and it is deeply regrettable that some people, particularly Conservatives, now seem to be suggesting that that is wrong.

I do not know whether the Chancellor has been singing in the bath, but he does bear an increasing resemblance to the former Conservative Chancellor, Norman Lamont, who presided over a comparable financial disaster.

I want to focus on the £24 billion loan—£900 for every taxpayer—which is over and above the £18 billion deposit guarantee, which is less controversial and which we all support. The former Prime Minister, Tony Blair, was widely criticised for advancing £800 million for the millennium dome. In the past few weeks, the Government have provided the equivalent of 30 millennium domes to this bank, without even the prospect of a decent pop concert at the end of it.

The key question, which I put to the Prime Minister last week, is this: is the lending secured? He said that it was. Will the Chancellor confirm, however, that that is not the case? Of the loan, £13 billion has a first charge security, although at a more relaxed standard than is normal; £11 billion, however, is wholly unsecured. Half the assets of the bank have been packaged up by a company called Granite, which is registered in the Channel Islands and has the first claim on the assets. The remainder is a collection of mortgages, many of which were advanced at the peak of the property market and are now of declining value. I therefore return to the question that I put to the Prime Minister, and that has been partially put to the Chancellor already. Will he stand up and give an absolute guarantee that the loan will be repaid in full, with full interest, within the lifetime of this Parliament?

Will the Chancellor also comment on the management of the company? Does not Mr. Adam Applegarth, who has just been dismissed, now have a pension pot of £2 million and various bonuses, which are underwritten by the taxpayer? Will the Government explain how they got into a position in which they have entrusted £24 billion to a management team that was discredited, that led the bank into its present crisis, and whose chief executive showed such contempt for his own bank that he sold his own shares to invest in a country estate and a Ferrari for his wife?

That is not the only conflict of interest. An attempt is being made to sell the bank, led by the company. The company has a clear conflict of interest. It is in the interests of the directors and the management to maximise the taxpayer’s contribution. The taxpayer’s money is being used to prop up the bank, and to provide a profit opportunity for spivs in the City.

Let us consider the alternatives. The ideal outcome—[Interruption.]

The ideal outcome would be the sale of the bank, as a going concern, to a private operator who could maintain the employment in the north-east and the brand, and repay the Government in full. It is clear from this morning’s bids, however, that that is a fantasy and will not happen, which leaves us with two very unpalatable options.

The first option is liquidation of the bank—putting it into administration—which I think we all agree would be a disaster. It would devastate the north-east, the shareholders would get nothing, and the Government would lose a great deal of money. Should not the Government therefore consider the other option, which is temporarily assuming full control of the bank? That would eliminate the conflict of interest, it would provide a breathing space enabling—[Interruption.] It would provide a breathing space—[Interruption.]

I note that over the weekend the hon. Gentleman changed his position on Northern Rock several times. On Saturday he was calling for full-scale nationalisation, by yesterday he was calling for reluctant nationalisation; and today it was reluctant nationalisation for a very short period. This afternoon, having denounced the City, he went on to press for a quick sale to the very people whom he had denounced.

I understand full well that the board and the shareholders have a particular interest with regard to Northern Rock—I made that clear in my statement—but we, the Government, have an interest in protecting not just financial stability but the taxpayer’s money that is being lent. The reason that we insist on our interests being upheld is that we would have to agree with any proposal for the future of Northern Rock. If we do not like a proposal, we can say no to it. We can veto it because, through the Bank of England, we are by far the major creditor.

I believe, however, that simply plumping for one solution today—and presumably, by extension, not bothering even to consider any of the expressions of interest that have been received—would be extremely short-sighted and foolish. Would it not be better to use the time that we have to establish whether those expressions of interest can be translated into a firm proposal that would both help the company and, crucially, protect the public interest? I think that that would be far the better course, and it is the one that I propose to pursue.

At least 6,000 people work at Northern Rock, many of them in my constituency. I agree with my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) that employment is a big issue among my colleagues and Members of Parliament in the north-east. I join my hon. Friend in asking the Chancellor please to ensure that those jobs are secure. We know that the money is important and paying back the taxpayer is important, but 6,000 jobs are a lot of jobs and we cannot afford to lose them.

My hon. Friend is absolutely right. The jobs are very important, which is why I think that the Liberal Democrats’ attitude is so short-sighted and wrong. I think that we owe it to people in the north-east, as well as to the general public, to do all that we can to try to reach a point from which this business can be taken forward. It will be difficult—many hurdles will have to be overcome, and a great deal of hard work will be involved—but I think that the Government have a responsibility to ensure that we can manage the process, and that it would be wrong to close the door on any possibility of something in the future.

Will the Chancellor spell out in more detail why, despite the unprecedented sums involved, he is unable to be more transparent with the House in regard to the amount, the conditions, the terms and the repayment process? He now says that that is not possible because of the central bank’s commercial confidentiality, but we were told earlier that the potential deal being considered by the Treasury and the bank was aborted precisely because it was thought that such details would have to be made public.

The right hon. Gentleman raises two points. Let me deal with the second one first, as there has been some comment about a proposal that a major bank made to the Government, the Bank and the FSA at the end of August. There was no firm proposal on the table, but, as the FSA chairman has said, an exploratory inquiry was made as to whether the Bank would be prepared to lend the institution in question about £30 billion at commercial rates. It was explained that there were three problems with that. First, neither the Bank nor the Government normally provides commercial lending in this way to a going concern, which is what that financial institution was. The second problem was that if we were to entertain such an option we would have had to ask other banks whether they would be willing to enter into a similar arrangement, perhaps involving less Government money. As the right hon. Gentleman will recognise, the Government cannot just, in effect, lend £30 billion to a bank without there being some sort of due process to allow others to see whether they could do something more competitively. I would have been open to severe criticism if I had done that. The third problem was that, on any view, this would have been state aid.

As it happened, having made the preliminary inquiry the institution never pursued the matter. The proposal was made on a Saturday and the institution withdrew its interest in Northern Rock on Monday. Therefore, it was never the case that there was a proposal on the table that was there to be considered and accepted or rejected. There was a preliminary inquiry, and I have explained what the difficulties were. However, as I have also said to the House, and to the Treasury Committee, I have always taken the view that had it been possible for Northern Rock to have been acquired prior to all these difficulties, that would have been the best solution. I must also say to the right hon. Gentleman—I apologise to the House for taking up so much time in dealing with this, but it is important—that we should remember that that approach was made before anybody in the outside world knew there was a problem with Northern Rock. For us to have then started a competition as to which bank might take it over might have drawn attention to the very problems we are concerned about.

Let me now deal with the other part of the right hon. Gentleman’s question. I will be able to tell the House about the terms of repayment once it is clear what course of action is best for Northern Rock and the public interest, as I have set out. It is not possible to do that until we have a proposal that is properly assessed and worked out. On the right hon. Gentleman’s point about the general Bank of England question, I explained the position in my statement.

The whole House will have noted that the Liberal Democrats have as much regard for the 5,500 employees of Northern Rock in the north-east—and the 6,500 nationally—as they had for the job of their former leader. [Interruption.] Two or three faces in public, 10 in private—that is the policy of the Liberal Democrats.

Does my right hon. Friend accept that the policy of nationalisation would lead to a slow lingering death for the jobs of the Northern Rock workers, its assets and Britain’s reputation as a major financial services centre, with my right hon. Friend the Chancellor cast in the role of undertaker—and that only by finding a successor business to grow on those jobs, assets and reputations can we offer any real prospect of the taxpayers getting their money back?

I agree with my hon. Friend. It is regrettable and surprising that the Liberal Democrats never seemed to support our earlier proposals to keep Northern Rock open. It would also, however, be a mistake to shut off all other options and simply go for one at this stage; that does not seem to me to make any sense at all.

Is it the Chancellor’s position now that there is no agreed schedule of repayments for the £23 billion? Is it not also clear from his statement to the stock exchange that he now envisages state aid continuing well beyond the original February deadline?

In relation to that last point, as I said to the Treasury Committee, of which the hon. Gentleman is a member, we wanted to make it clear to the company that we needed to get proposals and we needed to bring that to a head, which is why we said that we would review the matter at the end of February. We have never said that everything would stop at the end of February and could not possibly continue. Surely the best thing to do to secure the best possible repayment of the loan made by the Bank of England is to assess the proposals being worked up and then decide on the appropriate rate and timing of repayment. To box ourselves in now and exclude options without having properly considered them would be the wrong thing to do.

I refer the Chancellor to his statement on principles this morning. Paragraphs 2 and 3 talk about protecting taxpayers’ interests, promoting financial stability and ensuring that the consumer is safeguarded. For the sake of the Treasury Committee’s inquiry, will he tell us in what order he places those objectives? May I remind him about Friday’s statement from Northern Rock, which was put out late in the evening and did nothing to bring credibility or focus to this issue. Will he impress upon Bryan Sanderson, its chairman, that there is no case for a payout for its chief executive, Adam Applegarth? Suspicious minds would consider that he is staying on until February so that it is reported in the spring 2009 annual reports, when this will have been swept under the carpet. Credibility is important in negotiations over the next few months. Will the Chancellor ensure that that credibility is injected into this company?

I am sure that Bryan Sanderson will have heard what my right hon. Friend has had to say. It is important, especially given the position that Northern Rock is in at the moment, that whatever it does, it must ask itself whether that is the right thing to do. In answer to his question about the three principles that I set out—to protect taxpayers, to promote financial stability and to protect depositors—they are all equally important. For the avoidance of doubt, both inside this House and out, ensuring that we safeguard the taxpayer’s interest is very important, but the other principles are important too.

The Chancellor said in a previous answer that the facility would be reviewed at the end of February. Today’s Treasury press release was headed:

“Principles for assessing Northern Rock proposals”.

It states:

“The principles clearly state that interested parties should not assume at this stage that the current Bank of England loan facilities will be available beyond either any sale or the expiry of the facilities in February.”

Yet in his statement the Chancellor said that it would be wrong to dismiss any option, and the third point of what he called his approach was to maintain wider financial stability. Those comments may seem slightly inconsistent, so to help provide transparency, which he was discussing with the G20 Finance Ministers at the weekend, will he tell us how long he expects to, or would be prepared to, have the guarantee and the facility in place?

May I suggest that the hon. Gentleman read the statement on principles that I have published today? It says that bidders should not just assume that the facilities will be available in perpetuity, and then goes on to say that we

“are willing to discuss any proposals made”.

That is entirely consistent with what I said in my statement, and with what I said to the hon. Member for Sevenoaks (Mr. Fallon). To get ourselves into a situation whereby right from the start we impose conditions on ourselves that mean that we may not get the best deal available would be a mistake. Most people in this House want to see a solution that, ideally, would help Northern Rock move on in the future and also ensure that we can safeguard both the wider public interest and the specific taxpayers’ interest. If the hon. Member for Dundee, East (Stewart Hosie) were to examine paragraph 3 of the statement on principles, he would see that that is precisely what the Government set out.

The Chancellor of the Exchequer has just repeated what he said earlier, in his statement—that he is trying to balance financial stability, the taxpayer’s interest and the depositor’s interest. May I assure him that if he follows the line taken by the hon. Member for Tatton (Mr. Osborne) and secures only individual investors rather than institutional lenders, the financial markets would see havoc overnight? May I echo the thoughts of my hon. Friends who represent Newcastle seats—that 6,100 jobs are at stake and that this is a major regional company? What we are seeing in this House is Northern Rock being used as a political football, not a surrogate attack on our financial stability.

It would be regrettable if the future of Northern Rock became a political football, and I know that my hon. Friend—who of course represents a seat in the north-east—is very mindful of the effect on the economy of the north-east. I agree that the three principles set out this morning are important. As for the guarantee, perhaps I did not deal with the point raised by the hon. Member for Tatton (Mr. Osborne). Having given the guarantee, I am now invited by him to unpick it—but that would be the wrong thing to do.

Surely if a way ahead is to be found, it will be on the basis of known facts. For the Government to plead confidentiality, and for an injunction to be sought to prevent the publication of facts relating to the matter, must be counter-productive. Can the Chancellor specifically confirm or deny that there is a proposal for a five-year subordinated loan stock to roll up the interest on the loan?

The hon. Gentleman refers to an injunction that was sought by the company, in which the Government played no part.

Is it not now clear that if either of the Opposition parties had been in power, Northern Rock would already have sunk without trace and 6,000 jobs would have gone down the drain? Is my right hon. Friend aware that whatever the outcome of this, the people of the north-east are at least assured that the Government are doing whatever they can to ensure the future of that business and the thousands of jobs involved?

My hon. Friend is right. He has raised that point every time we have discussed the issue on the Floor of the House, and he is right. We owe it to people to do everything we can to help the situation. It is unfortunate that some of those who supported what we were doing at the start now appear to be changing their tune.

The Chancellor charges the shadow Chancellor with irresponsibility, but many taxpayers believe that the Chancellor may have acted irresponsibly by putting their money at risk. They will not be reassured by the vague assurances that he has given today, unless he is more specific. For that reason, can he tell us the precise value of the free collateral that Northern Rock holds, and how many of its assets are already pledged to other creditors?

I do not think that I said that the shadow Chancellor was irresponsible: that is the hon. Gentleman’s word, not mine. There are two issues in relation to the point that he makes. It was, and continues to be, right to give Northern Rock both the initial lender of last resort support and subsequent support. The hon. Gentleman almost implies that we should not have done that—[Interruption]—but that would have meant that Northern Rock would have been in substantial difficulties—[Interruption.] Well, that is the implication of what the hon. Gentleman said. As for the loans made by the Bank of England, they are secured in the way that I described in my statement.

Is my right hon. Friend aware that Labour Members fully endorse his triple objectives? I wish to remind him, as many of my colleagues from the north-east have done, of the employment considerations. We also fully support him in taking time to find a solution that meets those objectives, but time is also pressing, in that further large loans may come to maturity in January and February and could make the Government’s exposure even greater. Therefore, I urge him to make it clear to those with whom he is negotiating that ultimately—if they are very unreasonable and cannot come to terms with the Government on those reasonable objectives—there is an alternative available.

I am grateful to my hon. Friend, and I think that I have set out the right approach, although he is right that the situation cannot be allowed to drag on. We need to try to bring the matter to a conclusion as quickly as we reasonably can, consistent with an opportunity to assess the proposals that we have.

What are the implications for the Government’s borrowing requirement of the unexpected multi-billion pound liability for Northern Rock?

The position with regard to the Government’s borrowing was set out at the time of the pre-Budget report. The Bank of England’s lending is being done by the Bank, but clearly the Government stand behind the bank.

I wonder whether my right hon. Friend is aware that my constituents are very grateful to the Government for the way in which they acted to support Northern Rock depositors and to secure a future for the bank, but that confidence in the bank, and the well-being of my constituents, is not helped by the comments of Opposition Members? Can he tell us whether the public interest criterion will extend to trying to secure a future for the Northern Rock Foundation as well as for the bank itself?

I know that many people in the north-east are concerned about the foundation, which has provided support in excess of £24 million for projects. That is important, so I hope that anyone making proposals will bear it in mind; it is one of the reasons why Northern Rock is so appreciated in the north-east. I can only repeat what I said earlier: we will do everything we can to help. There are considerable difficulties, and the period for assessing the proposals will allow us to see whether we can make progress.

In the Chancellor’s statement he said that the guarantee for depositors would not be removed without proper notice to depositors. May I invite him to be a little more specific? Surely, without a successful sale, any withdrawal of that guarantee will simply precipitate another run—a terminal run.

I was making the point that the guarantee is there and that it will not be removed without warning. I said it would continue as long as current conditions subsist. One of the things that we will consider is future legislation to put in place a long-term deposit protection scheme, as I indicated earlier. What I have tried to do right from the start is to provide stability not just for Northern Rock but for the financial system as a whole, and the guarantee is an important part of that.

Unlike those on the Opposition Front Benches, I remember having welcomed the Chancellor’s giving the facility to Northern Rock on the grounds that it would avoid wider financial instability. My memory is better, and I stick by it. I now welcome the spelling out of the priorities in terms of taxpayer and depositor protection, as well as wider financial stability—but has the bank made crystal clear to private shareholders, including the one or two hedge funds that have opportunistically come on board, the reality of their position, and made sure that they approach the private bids with that reality in mind?

My hon. Friend raises an important point, and I think the shareholders are aware of their position. Our responsibility in respect of the stability of the financial system is to make sure we can help depositors and maintain the interests of taxpayers as we look for a solution. Those are our objectives, and people should be in no doubt about them.

On 5 November, the Chancellor appeared to make it clear that any money the Government made available to Northern Rock would be recovered against Northern Rock’s assets, but today he has studiously avoided answering that direct question, and studiously avoided providing us with a guarantee for our taxpayers that in the end we will get our money back. Will he now give taxpayers that pledge?

I said in my statement—as I have said on a number of occasions—that money lent by the Bank of England is secured against assets such as mortgages held by Northern Rock, so we fully expect to get it back.

Northern Rock is the only major financial institution with headquarters in the north-east, and I concur with the sentiments expressed by Members from the north-east who argue that those jobs are important to the north-east economy. Will my right hon. Friend ignore the sanguine voices of Opposition Members, including the former Economic Secretary, the hon. Member for Stratford-on-Avon (Mr. Maples), who said last week that by the end of this week we should let Northern Rock go into receivership? That would be not only disastrous for the north-east economy but bad for the negotiations.

I agree with my hon. Friend. It is important that we do everything we can to assist in this situation, and I am sorry that a number of Opposition Members take a different view.

Should the Chancellor not make clear how much money is available and for how long, to avoid a false market in the shares and allow fair evaluation of the bids?

No, I think that the approach that we are taking is right. As I said, I wanted to provide Northern Rock with the breathing space to assess the options available to it. We have to make that assessment too, because of the interests that I have outlined. It is important that we take the necessary time to do that, but I have also said that we cannot allow the situation to run indefinitely, for perfectly obvious reasons. To impose an artificial deadline or date would be unhelpful at this stage.

It does not surprise any of us that Opposition parties do not care about 6,000 jobs in the north-east, as they have a track record of not caring about work in the north-east. What is really in the interests of the public and taxpayers is to ensure that neither Opposition party ever again gets control of the financial levers of this country.

As the Chancellor has now been forced to concede that the business editor of the BBC was right to say that the Treasury, too, is loaning money to Northern Rock, the only questions are: how much, at what rates, and when is it to be repaid?

I did not say that at all. I said that the element that was being talked about, to which the penal rate of interest has been applied and which is being treated separately, is being made available from the Bank of England—but we expect that to be repaid, too.

If the board of directors rejects all the expressions of interest by hedge funds that are large shareholders in the organisation, what powers do the Treasury and the Secretary of State have to ensure that we bring the matter to a quick conclusion so that we do not end up with a liquidation, which would be to nobody’s benefit, least of all the employees of the bank?

The Northern Rock bank has to consider all the options available to it. It is perfectly well aware that the option of doing nothing is not open to it; that just cannot be the position. The Government will remain in close contact with the bank to ensure that it examines all the options. As I have made clear, we need to keep all the options on the table. It would be a big mistake to rule out any one of them.

Is it still the Chancellor’s position that if any other bank were to find itself in comparable difficulties, the same sort of support would be provided?

Yes, I have made it clear that the Bank of England’s job as a central banker is to ensure the financial stability of the system, so if we were to have another situation with a bank like what happened with Northern Rock, the approach would be clear. That is the job of the central bank in this country, as it would be in any other country.

Following on from the previous question, does the Chancellor have any concerns that any other bank, along the lines of Northern Rock, has borrowed excessively on the inter-bank market and therefore put itself and its customers in some danger? Does he have any proposals to change legislation in that respect?

I made it clear that I think two things are necessary. One is that the FSA, as it has already said, needs to examine the way in which it regulates banks. It has said, perhaps with the benefit of hindsight, that what was happening in Northern Rock should have been looked at earlier. One thing that we should not lose sight of is the root causes of the problem: Northern Rock had a business model predicated on its being able to get very large sums of money from the financial markets, which simply dried up so that it could no longer get those sums. The FSA accepts that it should have looked at that situation. I have also said that we need to consider whether to make any further changes to the regulatory system, and that is being considered by the Treasury Committee, too.

For the elimination of doubt, will the Chancellor confirm that the BBC is wrong, and that no loans whatever have been made by the Treasury, as opposed to the Bank of England?

I have explained the position on that element of the loan—the penal rate of interest. I have nothing to add to what I have said in response to previous questions on that subject.

In the case of Northern Rock, there was no adverse finding by the ombudsman but a 100 per cent. bail-out of savers by Government. In the case of 125,000 pensioners, there is an adverse finding by the ombudsman but currently only an 80 per cent. bail-out. Will my right hon. Friend agree to increase the financial assistance scheme bail-out to 100 per cent., and, if he does not agree to 100 per cent. for those pensioners, can he explain the inconsistency in the Government’s position?

Financial support for pensioners is a different matter altogether. As my hon. Friend knows, the Government have been considering the position, and I expect that my right hon. Friend the Secretary of State for Work and Pensions, who was at the Dispatch Box just before me, will have something to say about it in due course.

Point of Order

On a point of order, Mr. Speaker. I seek guidance on an important matter of parliamentary protocol. The right hon. Member for Redditch (Jacqui Smith), who is now Home Secretary, has been made aware of my point of order in advance. In November 2004, when she was Minister with responsibility for the regions, she made a statement to the House regarding the appointment of new directors to the South West of England Development Agency. An important element of that statement was later found to be inaccurate. I seek general guidance on whether a Minister making an inaccurate statement to the House should also be the Minister who makes the required correction to that statement, and whether a Minister should correct an inaccurate or untrue statement even after some time has passed.

I do not think that that is a matter for the Chair. The hon. Gentleman should put his questions to the Department concerned and seek the rectification that he is looking for. It is not for me to intervene in the matter.

Orders of the Day

European Communities (Finance) Bill

Order for Second Reading read.

I beg to move, That the Bill be now read a Second time.

We have a rare treat today—a Treasury double-header, as Sky Sports might say. The Bill implements the decisions agreed at the December 2005 European Council under the UK presidency and gives effect to the new own resources decision for the financial perspective from 2007 to 2013. That agreement was in our long-term national interest. It is good for Britain and good for Europe, and today I shall explain why. It is good for Britain because it not only preserves our rebate but will see it rise in value during the next six years. It is good for Europe because it provides investment to help the emerging economies of eastern Europe prosper, which in turn and in time will benefit our own economy, as have all previous EU enlargements. The Bill will help to pay for European enlargement.

I thank the Minister. He says that under the deal, the British abatement will increase. Will he confirm, though, that Britain’s net contribution to the EU budget will increase by £2.3 billion a year?

I will come to the changes implemented by the decision, but the point that I was about to make when the hon. Gentleman intervened is that it is not enough for the Conservative party to say that it is a supporter of European enlargement; it is not enough to support the end goal without taking the sometimes difficult decisions that will allow that goal to be met. It is simply not good enough to flinch from decisions on the issues that stand in the way of making EU enlargement a success. I shall return to his precise point and make the positive case throughout my remarks.

The Minister mentioned that the agreement will benefit eastern European states, but is he aware that some of those states are already struggling to spend the money that they have been given, and that they have a big backlog of money from the European Union that they have not been able to spend?

I respect the hon. Gentleman’s knowledge of eastern Europe, but he will understand that the rate at which countries can draw down allocations from the EU budget determines the size of the contribution that others make. He will understand that the position of the wealthier nations is protected.

The Minister will remember that the Government’s original position was that the rebate would be given up only if there were meaningful reform of the common agricultural policy. Given that there has been none and that, having sacrificed our rebate—or a large part of it, anyway—we will pay in 20 per cent. more than France in the coming years, but get back only half what France gets back, does he understand why British taxpayers believe that they are being short-changed by the Government?

The hon. Gentleman has raised a range of points that I will address in the substance of my remarks. As I have said, I want to make a positive case for what Britain agreed in 2005. That agreement brought Britain and France into rough parity on net contributions to the European Union. The Government made a clear request for a review of the European budget as part of that agreement, which we secured. We can address all the hon. Gentleman’s points.

Today, I expect to hear variations on the refrain that what is good for Europe cannot possibly be good for Britain and that Europe’s interests and Britain’s interests are essentially incompatible, and I intend to meet that argument head-on. The Government reject that isolationist and negative thinking, although we do not uncritically accept everything that Europe says. The deal secured by the Prime Minister and the former Prime Minister, Tony Blair, is €160 billion cheaper than the original proposals from the European Commission.

Will the Chief Secretary indicate in straightforward and simple language how much less will be made available to the regions of the United Kingdom from funds such as the structural funds?

I will come on to that point in my remarks, if the hon. Gentleman will hold his horses. I ask him head-on whether, if he supports the EU, he supports enlargement. If so, will he accept that a contribution should be made by this country to the cost of enlargement? As English regions improve their competitiveness, as I am pleased to say Merseyside has recently done, is it not right that the available funds should go to support the regions of Europe that most need that extra investment?

The Chief Secretary is right that it is important that the parts of Europe that need structural funds receive them. Cornwall, in which my constituency is situated, will continue to receive those funds. Does he agree that the funding available is also based on the amount of match funding available from the Government? It is unfortunate that the Government are not match funding at similar levels to those achieved on objective 1 funding.

The hon. Lady is right on that strict technical point. I hope that she accepts that Cornwall will continue to benefit from structural and cohesion funding. To pick up the point made by the hon. Member for Stone (Mr. Cash), funds will continue to be available to the less well-developed regions of Britain. Merseyside has recently improved its competitiveness, but challenges remain in Cornwall and, I believe, the western highlands. Parts of this country will still benefit substantially from funding to improve their competitiveness.

Many of us are and always have been in favour of expansion and of contributing money to the new accession countries, but why is France the biggest recipient of funding from the EU budget? The Chief Secretary, the present Chancellor and the present Prime Minister should not get the blame for this appalling document, because we can all agree that a bad boy did it and ran away.

My hon. Friend knows my background, and I do not agree with him at all. Indeed, it is possible to argue that in this financial perspective we make ground on the traditional complaint aired by many Eurosceptics over the years. I am comfortable with the deal. I come back to where I started: the deal is good for Britain and shows that Britain is a middle-ranking net contributor among the wealthier nations.

If the Minister cares to read page 32 of the excellent paper prepared by the Library for this debate, he will see in the final column on net contributions for 2006, which is before the next budgetary round kicks in, that France made a net contribution of €3,140 million and the UK made one of €4,086 million. France is therefore up with the UK and Germany as a major net contributor. I am afraid that the notion that France is a net recipient is 20th century truth, but 21st century mythology.

My right hon. Friend is absolutely correct: France is a net contributor, as is this country. As I have just said, France’s contributions will grow twice as fast in this financial perspective—as, incidentally, will Italy’s. That is why I come back to the point that the agreement is good for this country.

Let me give an indication of the net contributions that we will make. Table B11 of the pre-Budget report document shows that the estimates for the net expenditure transfers to EC institutions are £5.6 billion for 2007-08, £5.5 billion for 2008-09 and £5.7 billion for 2009-10.

The Minister has mentioned France’s and Italy’s net contributions. In the interests of transparency, will he give a commitment to the House to publish official Treasury estimates of the net contributions of all member states? My understanding is that, to date, the Treasury has officially published only an estimate of the French net contribution.

I should say to the hon. Gentleman—[Interruption.] If he holds his horses, I shall give him his answer. It is not common practice for one EU state to publish details about others in a haphazard and cherry-picking way; the Commission makes those figures available. I have said clearly this afternoon that, on the basis of figures in the public domain, Britain’s net contributions will be in rough parity with those of the French. I hope that he is satisfied with that answer.

Will the Minister tell us what our total gross contribution as a country will be between 2007 and 2013?

I will answer the right hon. Gentleman, but Members are tempting me to the meat and detail of my speech before I have reached them. The overall gross contribution will rise—the figure is a rough one; obviously, we are talking about forecasts—by about 3 per cent. a year during this financial perspective. I shall come directly to the figures later. Obviously, there was a bigger increase in the net contribution rather than the gross contribution.

The Minister has been generous in giving way. He takes the view that the deal is good for Britain and that spending all that money is in our interest, and I disagree fundamentally. The Court of Auditors has refused to sign off the accounts for the 13th year running. Even if one accepted the Minister’s argument, one would still have to ask how on earth he can say that it is in British taxpayers’ interests to keep giving more and more money to a body open to so much fraud and whose accounts the auditors will not sign off. Is there, anywhere in the world, any other organisation whose accounts have not been signed off by auditors, but to which the Treasury would agree to keep giving more and more money?

I hope that the hon. Gentleman will keep his seat, because I am going to read out one of his own quotations later—a treat that we can all look forward to. The statement issued by the Court of Auditors last week showed some progress, but it was disappointing, and there needs to be further progress. Let me refer him to a report by the House of Lords on this issue, which states that

“the failure to give a positive Statement of Assurance does not tell the whole story…Firstly, we argue that a lack of a positive Statement of Assurance does not necessarily indicate that high levels of fraudulent or corrupt transactions have taken place.”

[Interruption.] I simply refer the hon. Gentleman to that learned document on the European accounts, which he should consider before he indulges in his sweeping and ill-informed generalisations about what those accounts mean.

May I try to correct something on which I think that the Minister—I say this in all fairness—misled the House just now, as did the right hon. Member for Rotherham (Mr. MacShane)? “Misled” is perhaps overdoing it, but they inadvertently got their figures a little muddled. The figures on net contributions per head, which are of extreme interest to individual members of the electorate, produce a quite different answer from that proposed by the right hon. Member for Rotherham. In the United Kingdom, we pay €124 per head, which is the third most. Denmark pays the second most, with €127, and the Netherlands pays the most—€241. Germany’s net contribution per head is only €100, while France pays only €50. Does not that rather blow his argument out of the water?

I know that the hon. Gentleman gets heated on these matters, but I urge him to use temperate language. I have not misled the House. He has brought his own set of figures to the debate. The point that I was clearly making was that on the basis of gross national income, the agreement that we are about to discuss—I hope that he will begin to let me discuss it in more detail—leaves France and Britain in rough parity in terms of our overall contributions to the EU budget. I stand entirely by what I said.

Assuming that the hon. Member for Stone (Mr. Cash) is reading from the same document as me, the UK is at the bottom of the column, where it says that the figure is €68 per head. He read out the Swedish figure of €124 per head. I am tempted to say something to him in Swedish, but it would be helpful if he were able to read a column of figures before contributing to the debate.

If anybody is watching at home, I will leave it to them to draw their own conclusions about who has been misleading the House.

Order. I think that we should now move on. People are quoting different sets of figures, which are matters for debate. Perhaps we can now proceed.

A visit to an optician’s in Stone might be in order, too.

This Government will continue to make the positive case for an enlarged and prosperous European Union as being directly in our national and economic interest. Britain benefits from being part of an open, prosperous Europe of 500 million people. The EU is Britain’s largest market by far, and—I hope that Conservative Members will listen to this point—it follows that British business needs a Government who engage constructively in discussions about the operation and rules of that market. It is precisely because we engage constructively, rather than grandstanding and posturing, that we secure results that are in the national interest.

To aid our debate today, let me put some facts on the table. First, the Bill and the agreement that it implements will preserve the British rebate in full on all spending on the EU15 and on all agricultural spending on the EU27, irrespective of their accession dates. The abatement has the same basis as it did at its inception at Fontainebleau in 1984. The rebate will be disapplied only on non-agricultural expenditure, which primarily supports economic development in the member states that have joined the Union since 30 April 2004.

I shall give way to the hon. Gentleman, but let him answer this question: does his party support helping those countries to improve their economic development?

The Minister said that it was in our economic interest to be in the European Union. When we went into the Union, we had a trade deficit with the EEC of £1.327 billion. That was recalculated to be £11.3 billion, and today’s balance of trade deficit with the European Union is £38 billion. That represents 80 per cent. of our trade deficit. When we went in, it was only 50 per cent. How is that an economic positive?