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Commons Chamber

Volume 478: debated on Tuesday 24 June 2008

House of Commons

Tuesday 24 June 2008

The House met at half-past Two o’clock


[Mr. Speaker in the Chair]

Oral Answers to Questions

Foreign and Commonwealth Office

The Secretary of State was asked—


1. What recent representations he has made to the Government of Burma on the renewed detention of Aung San Suu Kyi. (213055)

My right hon. Friend the Prime Minister and President Sarkozy of France jointly called for Aung San Suu Kyi’s immediate release on 19 June, her birthday. My right hon. Friend the Foreign Secretary deplored the extension of her house arrest on 27 May. We worked to ensure that the European Council and the United Nations Human Rights Council issued calls for her release in the past week.

I am grateful to the Under-Secretary for that informative reply. Given that the illegal, immoral and intolerable detention under house arrest of Aung San Suu Kyi for more than 12 years is but one example of the Burmese Government’s egregious human rights abuses, which include rape as a weapon of war, extra-judicial killings and the active denial of aid to hundreds of thousands of people following Cyclone Nargis, will she work with her international counterparts to press the United Nations Security Council to refer the Burma Government’s conduct to the International Criminal Court?

I am sure that all hon. Members agree with the hon. Gentleman’s sentiments. He will appreciate the difficulties of getting a resolution through the Security Council on those matters. At the moment, we are concentrating on seeking an authoritative assessment of the situation on the ground. The UN Human Rights Council agreed a resolution by consensus, which calls for the regime to give full access to all parts of Burma.

Does my hon. Friend appreciate the amount of frustration felt in this country at our inability to effect any change in this wicked regime and its attitude to that fine woman? Does she realise that even moderate Members of Parliament such as me would change their minds about a boycott of the Beijing Olympics if we found that, in Burma, as in Zimbabwe, China is the block on anything being done by the international community?

Of course, I appreciate the frustrations that many people feel in this country about the lack of change in Burma. We have succeeded in getting aid into Burma, especially with the help of the Association of South East Asian Nations countries in the region. China agreed with the consensus on the UN Human Rights Council declaration. On that basis, we believe that we can continue to work with China to put pressure on the Burmese regime.

Will the Government ensure that sanctions are tougher, more targeted and hit the military junta where it hurts, not least on arms? Will they also ensure that international aid from taxes and charities does not unwittingly get into the despicable junta’s hands?

On the latter point, I reassure the hon. Gentleman that aid in Burma goes through the UN and non-governmental organisations on the ground. On the first point, our sanctions in the European Union are designed to do exactly what he said: to be targeted on the regime, through, for example, timber, precious gems and so on. We are also doing further work to ascertain whether any financial sanctions could have the same effect.

I am sure that my hon. Friend will be pleased to hear that, in Cardiff on Saturday, nearly 200 people attended an event to mark Aung San Suu Kyi’s 63rd birthday. Does my hon. Friend agree that, following the referendum, which many people consider rigged, Burma’s new constitution will effectively debar Aung San Suu Kyi and her party from taking part in the democratic process? What can she do about that?

I congratulate my hon. Friend and the people of Cardiff, who keep the issue in the public eye, which is essential. She is right that the constitution has no legitimacy. Indeed, it is incredible that anyone could believe that the referendum was fair. The constitution is flawed and would debar Aung San Suu Kyi, and we continue to call for a proper process, which includes all those in Burma who have an interest in the development of democracy—Aung San Suu Kyi and all the leaders of the different ethnic groupings.

I see that the Foreign Office has a special representative, whose responsibilities cover the wider middle east, including Iraq and Iran, as well as the middle east peace process. He is also responsible—rather bizarrely—for Burma. Has that representative been involved in any negotiations with the Burmese Government on the issue that we are considering and others? When did he last visit Burma?

The hon. Gentleman refers to Michael Williams, who has been very involved in our work on Burma. He has spent a great deal of time travelling in the region and speaking to countries there about the pressure that they can bring to bear. He also attended the donors conference in Burma at the end of May with my right hon. Friend the Secretary of State for International Development.

My hon. Friend would recognise that Aung San Suu Kyi has been completely failed by the international community. Whichever way we look at it, we see that there have been 12 years of imprisonment and a lot of fine words, but absolutely no movement and an evil regime still in place. What can we do, other than just having fine words from all the different nations? What sanctions can we put in place to overthrow the Government in that country?

The truth is that neither sanctions by the international community nor engagement by countries in the region has brought about the result that we would desire. In the aftermath of Cyclone Nargis, we have seen something of a change in the neighbouring ASEAN countries, which are now indicating more vocally that they believe that things need to change in Burma. We will continue to work with those countries and with the United Nations. Ban Ki-moon has said that he will return to Burma later this year, following up his visit after the cyclone. We are hopeful that that will enable us to move the political process forward in the right direction.

Baha’is (Iran)

2. What recent reports he has received on the situation of Baha’is in Iran; and if he will make a statement. (213056)

When I raised with the Iranian ambassador to London the UK’s great concerns about reports of maltreatment of adherents of the Baha’i faith in Iran, he told me that Baha’ism is not officially recognised as a religion in Iran. We receive reports that Iranian Baha’is face routine discrimination and harassment on the grounds of their faith, and the informal Baha’i leadership has been detained for more than a month now. We remain deeply concerned by the situation of the Baha’is in Iran and will continue to raise our concerns with the Iranian authorities.

I thank the Minister for his response. He will be aware of reports from Iran that a new penal code is being drafted, which will be considered by the Iranian Parliament, that would introduce a mandatory death sentence for apostasy. The code would have extra-territorial jurisdiction and could lead to a fundamental attack on the human rights of Christians and Baha’is, particularly those with one Muslim parent, who could, under the new law, be considered apostates. Will the Minister confirm what action the Government are taking on the issue, in particular with the international community, to remind Iran of its responsibilities under international law, in particular article 18 of the international covenant on civil and political rights?

Yes, I can confirm that the new draft penal code is currently being considered by a judicial committee in the Iranian Parliament, but it has not yet been debated or voted on in plenary. We are very concerned that the draft code makes apostasy punishable by death and that the provisions contravene the principle of religious freedom. We are worried about the impact that they would have on religious minorities in Iran, including Christians, as the hon. Gentleman said, and the Baha’i community.

We have certainly made representations to the Iranian Government about the matter. The EU issued a statement of concern on 25 February and raised its concerns with Iranian officials in Tehran on 4 March. I called in the Iranian ambassador to express the UK’s concerns on 1 April. We are keeping a close watch on the issue, and I very much hope that our concern will help to galvanise international opinion against this barbaric proposal.

As an officer of the all-party friends of the Baha’i faith group, may I thank the Minister for the representations that he and others have made to the Government of Iran about the situation of individual Baha’is whose cases we have drawn to his attention? Will he also make representations to the Government of Iran about the denial of access to higher education of young Baha’is in that country? Of some 200 Baha’is who began university courses in autumn 2006, about 130 have since been expelled on the grounds of their religious faith. Will the Minister raise that point with the Government of Iran, too?

Yes, we will certainly raise it with the Government of Iran. That is one example of the way in which Baha’is in Iran are being marginalised because of their beliefs. That is wholly without justice and is a very worrying development.

The Minister will know that not only Baha’is, but Christians and indeed homosexuals often face torture and sometimes even death in Iran. Does he therefore share my concern about the recent alleged comments made by the Home Secretary when asked about failed asylum seekers who are openly homosexual, that they should return to Iran and be discreet in their sexuality? Given that there is no discretion, with the eyes of the state constantly on the gay community in Tehran and Iran more widely, does the Minister want to put it on record that he perhaps has a different view?

I am completely unaware of the alleged statements made by my right hon. Friend the Home Secretary, but I am only too willing to put it on record that people should not be punished in any way for the way in which their sexuality guides them. They should certainly not be tortured, imprisoned and hanged, as they have been in Iran.

Middle East (Egypt)

3. What recent discussions he has had with the Government of Egypt on the middle east peace process. (213057)

I spoke to the Egyptian Foreign Minister yesterday about the middle east peace process. I thanked him for Egypt’s efforts in bringing about a ceasefire between Israel and Hamas. It is vital that the ceasefire now holds, allowing the humanitarian situation to improve and bringing to an end the rocket attacks on southern Israel.

I thank my right hon. Friend for that answer. I agree that the Egyptians have made commendable efforts in the last short while. Does he agree, however, there is a great deal more that they could do? I hope that they would agree that that is the case as well. I am thinking in particular of the tunnelling under the border, which is continuing, and the smuggling of people and dangerous contraband.

My hon. Friend raises an important point. He will know that smuggling is a long-term issue that is a threat to Egypt as well as something that just goes through the country. This is intimately related to the crossings between Gaza and Egypt, and the crossings into Israel. As soon as we get properly organised legal traffic going through those crossings, which is a priority for all sides, there will be a parallel commitment to crack down on the smuggling that is a threat to all the countries in the region.

I welcome, as did the Foreign Secretary, the ceasefire between Hamas and Israel. Does he agree, however, that there is now a pressing need to ease the blockade on Gaza? I went to Gaza two months ago, and I was horrified by the crippling poverty there, and particularly by the impact of the blockade on health services. In his discussions with Egypt and with Israel, has he had specific talks about the passage of patients across the border to access better health care? I certainly saw individuals being denied that health care.

The hon. Lady raises an important point, and it is one that we raise particularly in respect of health supplies, and in general in respect of fuel, electricity and other traffic into the Gaza strip. It is important to say that we are not just calling into thin air for improved access to Gaza on humanitarian grounds. As part of the agreement, Israel itself has committed to improving the flow of goods services, and all the independent estimates—and statements by Hamas and by Israel itself—show that there has been an improvement of, I think, about 30 per cent. during the first three days of the ceasefire. That is certainly something that we should encourage all sides to build on.

The Foreign Secretary referred to the Rafah crossing. He will aware that the opening of that crossing in 2006 was negotiated after a lot of effort by the US Secretary of State, Condoleezza Rice. What recent discussions has he had with Condoleezza Rice about the prospects, seven months on, for securing the Annapolis process agreement?

On almost every occasion that I meet or speak to Secretary Rice, we discuss the situation in the middle east. We certainly did so on Sunday, when I last spoke to her, and I will obviously meet her at the G8 Foreign Ministers’ meeting on Thursday in Japan. I know that the middle east will be a major topic there, and we are looking forward to her latest report on her recent visit, and also to having further discussions on how to advance a process that, I think it is fair to say, is slightly more promising than it would have been in a Question Time two or three weeks ago. The developments in Gaza and the Lebanon, and the opening of the Israel-Syria talks, are creating a more propitious environment for the Israeli-Palestinian track. It is important that we should not get carried away by any sense of optimism, but there are some important stirrings there.

Can the Minister give me an assurance that there will be no negotiations with Hamas by the British Government until the three Quartet principles have been met and upheld?

Yes, we certainly stick to the Quartet principles. It is important to say, however, that the lack of contact is not the real issue in respect of Hamas. The real issue is the choice that it has to make about the role that it wants to play in the future. The Norwegians have publicised the fact that they are talking to Hamas, and Hamas has obviously been involved in discussions with the Egyptians over the humanitarian situation in Gaza. The announcement by President Abbas that he wanted to re-establish Palestinian unity on a basis that recognised the state of Israel, that renounced violence and that respected previous Palestinian agreements was the right way forward. It is important that we take our cue from President Abbas on this matter.

In congratulating the President of Egypt on, and thanking him for, the key role that he has played in bringing about the ceasefire between Hamas and the Israelis, will my right hon. Friend say whether when he has his discussions with Secretary of State Condoleezza Rice, he will also discuss with her the continued expansion of illegal Israeli settlements on the west bank, which are against international law and which President Bush to his credit—a very rare thing—has denounced?

Yes; my right hon. Friend has made his own position clear and I have made the Government’s position clear from this Dispatch Box on many occasions: the requirement on all sides to live up to their road map commitments does indeed apply to all sides. The Israeli commitment in respect of settlements needs to be honoured. There is significance in what President Sarkozy said in Israel yesterday and in what President Bush said there the week before. There is real determination in the international community to hold on to the idea that 2008 has to be made into a key year for the middle east peace process. There has not been such a process for seven years; there is one now, and it is precious, so we need to ensure that we make some progress.

Human Trafficking (Romania/Bulgaria)

I met Bulgaria’s Europe Minister earlier this month and discussed a range of rule of law issues. The Under-Secretary of State for the Home Department, my hon. Friend the Member for Gedling (Mr. Coaker), has recently visited both Romania and Bulgaria to discuss a number of issues, including those relating to human trafficking.

In light of the Foreign Office’s responsibility for dealing with human trafficking under the Government’s action plan, does the Minister think it sensible to discuss with his opposite number the possibility of our embassies in both Bucharest and Sofia doing more to raise awareness of the scale of human trafficking in Bulgaria and Romania? Hundreds and thousands of children from poor Roma communities are sold into slavery every year, so should not our embassy be doing more? Could we not lead a crusade in eastern Europe with other embassies to raise the whole profile of the trafficking problem in eastern Europe?

The hon. Gentleman raises entirely reasonable points and I hope that he is reassured that our embassies in both Bulgaria and Romania are working very hard on these issues. That is not to say that we cannot continue to look for additional initiatives and energies to expend. He rightly draws attention to the trafficking of children in particular, and it may help the House if I say that intelligence reports have identified a network of ethnic Roma criminals involved in the trafficking of Romanian Roma children, particularly to the UK. Police forces in the UK have identified more than 200 children being exploited in London and beyond. We are grateful for the co-operation that we have with the Governments of Bulgaria and Romania, but there is more that we can do together.

Is my hon. Friend quite satisfied that the Russian Federation is doing enough to halt the flow of trafficked people through its territory?

I know that the Russian Federation is committed to controls on people trafficking, but it is certainly the case that, across the European Union and the wider sphere of Europe, there is far too much people trafficking, with criminal gangs exploiting the vulnerability of often frail and desperate people in a vile and sick trade. We do all we can in the EU through the European neighbourhood policy and much else besides, but if my hon. Friend has specific additional points that she would like Her Majesty’s Government to address with the Russian Federation, I am always happy to listen.

I would like to re-emphasise the concern over child trafficking, especially of babies, for all sorts of purposes—slavery, sex and so forth. The Minister says that we can do more. What does he have in mind?

The fact is that as these criminal gangs become more sophisticated, we always have to develop new ways to deal with them. Working with Save the Children in Romania is one important example of what we need to do, and the voluntary return of children, if their safety and well-being can be guaranteed, is another. We continue to discuss such issues with the Governments of both Bulgaria and Romania. As I say, as the challenge changes and these gangs become more sophisticated and in some ways more subtle, we have to be equally determined and flexible in our efforts.

EU Presidency

My right hon. Friend the Prime Minister said to the House yesterday that we will continue to focus on an outward-looking European agenda. We look forward to working with the French presidency on climate change, defence and security, migration, and rising food and fuel prices.

Should not Her Majesty’s Government be impressing it upon the French presidency that the kindest thing for the treaty of Lisbon is to let it die? The people of Europe do not want it. Some of the matters that the Minister raised at the Dispatch Box a few moments ago are far more important for the people of Europe than this treaty.

The fact is that the United Kingdom Government will not seek to decide, determine or dictate to the Irish Government regarding their next move. It is for the Irish Government to make their decision. I offer an observation in passing: as has been said, the Lisbon treaty is the first treaty that officially recognises children’s rights across the EU. Previous treaties recognised animal rights; this treaty recognises children’s rights. That is an important innovation and improvement.

Was not President Sarkozy right at the weekend when he said to the former Member for Hartlepool—the future Lord Mandelson, no doubt—that he was responsible for the Irish “No” because of his free trade policies, which frightened Irish farmers into the no lobby? Does the Minister agree with that assessment and does he recognise that the laissez-faire attitude of the EU and its undemocratic roots are having a similar impact on the core vote that might have supported continued membership in this country?

I thank my hon. Friend for the gracious way in which he carefully put his point. I do not agree with him, however. I think that Peter Mandelson is doing a fantastic job as Commissioner. [Interruption.] I had thought, until today, that the Conservative party supported reform of the common agricultural policy as we continue a wider review and reform of Europe’s budget so that it reflects the future, rather than the historical past of massive subsidies being paid to farmers instead of protecting the environment.

It would be welcome if the French presidency looked closely at the European neighbourhood policy. A great many projects previously supported by member states are now part of the ENP. Does the Minister agree that, with close attention from the presidency and the Commission, those projects can go from strength to strength?

I do agree, and I had the opportunity to meet the hon. Gentleman yesterday to discuss many of those issues. Europe has substantial influence in countries on its borders, both to the east and to the south. That is a responsibility and an opportunity, and we should seek to maximise our influence on democracy, the rule of law, human rights, penal reform and a range of other matters. He is absolutely right, and the French presidency shares our ambitions for a European neighbourhood policy that seeks to do more in supporting human rights and democracy.

The Minister for Europe mentioned the problem of high energy prices, but EU policy on climate change and the directive on renewable energy and biofuels will increase energy prices further, so can we have some consistency here? Will the Government stop complaining about high energy costs while supporting measures that will increase them further?

In response to the point raised by the former Minister for Europe, I point out that it is important to reflect the fact that the EU is working on an energy policy and a climate change policy that are about transparency in the market, matching supply and demand, investment in climate change technologies such as carbon capture and storage, and so much else besides. That variety of policies plays an important role in supporting our economies, but also in protecting our environment.

The people of Ireland clearly rejected Lisbon by an emphatic margin on a record turnout, since when The Economist has wisely advised the Government, “Just bury it”. Will the Minister answer the question that the Foreign Secretary clearly ducked last week and assure the House that no further work on the External Action Service will be undertaken by British officials, including during the French presidency?

The Foreign Secretary was very clear on this point, as was my right hon. Friend the Prime Minister: in light of the Irish referendum result, plans to have discussions on the External Action Service at the General Affairs Council and the European Council were cancelled. That was the right response to the referendum in Ireland. No further work will be carried out, and the work has stopped in the UK until such time as there is a new suggestion from the French presidency or a way forward suggested by the Irish Government. That is very clear.

Palestinian Occupied Territories

6. What assessment he has made of compliance of the operations of the Israeli defence force in the occupied Palestinian territories with the fourth Geneva convention. (213061)

We expect Israel, including the Israeli defence force, to comply with its obligations under the fourth Geneva convention, and have made clear where we profoundly disagree with Israel on key issues, such as the route of the barrier and location of settlements. The Annapolis talks provide the best opportunity yet to move forward. The announcement of a ceasefire in Gaza was welcome. We are doing all that we can to help to relieve suffering and move towards resolution of long-term issues.

I am grateful to the Minister for that answer, and agree with his points. I am interested, however, to know what he means by “location of settlements”. Article 49 of the fourth Geneva convention is extremely clear that colonisation of occupied territory is illegal. The settlements in all of the occupied territory are the biggest physical obstacle to a settlement between the Palestinians and the Israelis. Now that a ceasefire is in place, surely the Palestinians can expect us to pursue the matter under international law. What kind of signal does it send when settlers’ leaders are then invited by Her Majesty’s ambassador to Israel to a party celebrating the Queen’s birthday?

Not very helpful signals, and I agree entirely with the hon. Gentleman that this is the time to push the Israelis hard on the question of illegal settlements. Clearly, they are illegal and are not helping the Annapolis process in the least. Indeed, they are an obstacle to progress.

Can the Minister help us with another question concerning the role of the occupying forces in Palestine: the imprisonment of elected Palestinian parliamentarians, about 70 of whom are still in detention, which is outrageous? If we support Palestinian democracy, what pressure are we putting on Israel to release those who were elected to represent the Palestinian people?

We continue to raise the issue with the Israelis, and continue to urge them either to charge those individuals or release them—it is as simple as that. They are elected representatives and should be treated as such. If the Israelis believe that they are guilty of some crime, they should charge them, not keep them incarcerated without a proper trial.

In the Minister’s opinion, is the continued holding of hostages by Hamas, Hezbollah or whoever helpful to the peace process? Under the current ceasefire, will further pressure be exerted to release the Israeli hostages?

The taking of hostages was not only a despicable act in itself, and it remains so—kidnapping is always one of the worst crimes—but caused thousands of deaths in the Lebanese war of July 2006. We urge the Palestinian and Hezbollah factions to release the Israeli soldiers. That would be a concrete and important step towards a sustainable peace in that region.

Is it not the case that in Israel too small a minority, unfortunately, realise that the behaviour of the Israeli soldiers and armed forces generally in the occupied territories demonstrates, day in and day out, a contempt for human rights? Have the Israeli Government any understanding of the contempt that we have for the way in which their country occupies the post-1967 territories?

I certainly do not believe that all officers and all men in the Israeli army behave in that way. Many soldiers, including many whom I have met, have a real regard for human rights—the human rights of Palestinians as well as of Israelis. We will continue to urge Israel to abide by international law in its treatment of Palestinians in those occupied territories, and to work towards a sustainable settlement so that the Israeli defence force does not need to be in those areas. That must be our object, and we believe that a two-state solution is the right one.

I welcome my right hon. Friend’s comments about settlements, but given that the website of the Israeli Ministry of Construction and Housing lists 4,900 housing units that are currently in the construction programme, may I ask him what response is coming from Israel to our representations on the matter, particularly in relation to the E1 scheme?

I should like to think that my hon. Friend had inferred that our actions were having some effect, but I do not think they are having a great effect. The latest announcements—within the last few weeks—of 1,000 new dwellings on occupied territories are doing no good whatever to the Annapolis process.

When I met Prime Minister Fayad in Berlin last night, he repeatedly referred to the issue of illegal settlements as one of the greatest impediments to progress on Annapolis. My hon. Friend is right: we must keep plugging away, and trying to convince the Israelis that this is one of the most important steps forward that they could take.

When my hon. Friend assesses Israel’s reactions to attacks on its citizens, does he bear in mind that false allegations can be made? Is he aware, for example, that Hamas has now admitted that the explosion that killed 50 people on 13 June was not Israel’s responsibility?

My hon. Friend is right. I have seen and heard many reports of truck-loads of rockets intended to be fired into Israel that have been hit or handled badly and have exploded. People have been killed, including onlookers and innocent people in the streets of Gaza. I take reports of that kind with a pinch of salt, and I think we all should. The fact is that there is a propaganda war going on in the area, as well as a deadly war involving bullets, bombs and rockets.


7. If he will visit Yemen within the next six months to discuss relations with the UK and regional issues. (213062)

Foreign engagements for my right hon. Friend the Foreign Secretary and other Ministers are kept under constant review. We do not announce visits until they have been confirmed, and final decisions on overseas visits are often not possible until shortly before the day of travel. Last month, however, I paid my third visit to Yemen. It included a visit to Aden, which I know is a place close to my right hon. Friend’s heart.

I welcome the fact that the Minister went to Aden, the city of my birth, and acknowledge the fact that he returned from his visit. No one fired any shots at him, no one directed any bombs at him; he came back safely. So why does the Foreign Office continue to pursue a travel advice policy that prevents business persons and tourists from going to Yemen? Surely the best way in which to ensure good relations with the country is for us to allow our people to engage with the people of Yemen.

My right hon. Friend will know as well as I do that civil unrest in Yemen is growing. There are grievances throughout the country. Al-Houthi-led rebels in the north have been exploding bombs, and indeed exploded bombs while I was there, although luckily out of my earshot for a change. There is also a great deal of disquiet in the south, even around Aden. As my right hon. Friend will know, people in the south feel that they are not receiving the investment that they should be receiving for their industries and infrastructure.

There is a great feeling of unease. Tourists have been kidnapped, and although they have not been British tourists—thank goodness—I am not sure that I would like to ease that travel advice and then find that as a consequence someone caught up in a bomb outrage had been killed or maimed, or someone had been kidnapped or shot. I am sorry to say that, because Yemen is a very beautiful country which ought to be prospering as a result of tourism.

When the Minister next meets the Yemeni authorities and those of neighbouring countries, will he raise the concern that is felt about the increasing piracy off the coast of the horn of Africa around Somalia and Yemen and the effect that that is having on international shipping?

Yes. It is an extremely serious problem. The hon. Gentleman will be glad to know that the British Navy and the British coastguard service have been co-operating closely with the Yemeni—

I am sorry: the Royal Navy. [Interruption.] No, not the Welsh navy. The Royal Navy has been co-operating very closely with the Yemenis on this. The authorities in Somaliland and Djibouti, which are also exercised about the problem, are now beginning to co-operate with Yemen to try to eradicate it, but it does not just involve piracy. There is an enormous amount of people trafficking, and an enormous number of people are drowning as they try to make the crossing from the horn of Africa to the Saudi peninsula.

As my hon. Friend knows, the Yemeni constitution guarantees freedom of expression, but in reality that is not the case. Will he take up the case of Yemeni journalist Abdul Karim al-Khaiwani, who was sentenced to six years of imprisonment on 9 June? Amnesty International considers him to be a prisoner of conscience, as he has been convicted and sentenced solely because of something he wrote. Last week, he received an Amnesty award, among its annual awards, for his work, and I ask the Minister to take up his case and ask for his release.

Iran (Nuclear Programme)

8. What recent assessment he has made of developments in the Iranian nuclear programme; and if he will make a statement. (213063)

Dr. el-Baradei, the International Atomic Energy Agency director general, reported on Iran’s nuclear programme on 26 May. I spoke to him last week about his report. He confirmed that Iran had failed to suspend enrichment-related activities; had made no progress on transparency measures, for which the United Nations Security Council and the IAEA had called; and had failed to answer the IAEA’s questions relating to studies with a possible military dimension. He said that these studies were a “matter of serious concern”, and they are the subject of continuing IAEA investigation.

Why did the Prime Minister say on 16 June, after his meeting with President George Bush, that that day he would take action that would immediately freeze the assets of Iran’s biggest bank, Bank Melli, when many days later that clearly still has not happened?

I am sorry that the right hon. Gentleman says that has not happened, because there was political agreement at the Foreign Affairs Council that I attended last Monday, and yesterday the formal technical procedure that froze the assets of Bank Melli went through the European Union. I would have thought that that would be welcomed in all parts of the House.

The Foreign Secretary will have seen the reports over the weekend that the Israeli Government were carrying out exercises that suggested a possible long-term intention to attack Iran and her nuclear establishment. Will the Foreign Secretary make every effort to persuade the Israeli Government that such an action would be profoundly unwise?

I am very happy to confirm to the right hon. and learned Gentleman that we are 100 per cent. committed to the pursuit of a diplomatic resolution to the problem in respect of Iran’s nuclear intentions, which are, of course, a threat to stability right across the region. There is now an ever wider coalition ready to put pressure on the Iranian regime, and also to try to make it clear to the Iranian people that a major offer of economic, cultural and scientific co-operation is waiting for them. The economic malaise that currently afflicts Iran is the result of the choices made by the Iranian Government, but there is an alternative for them, and we are committed to make sure that the sanctions and incentives reflect that.

The Foreign Secretary will recall that the Prime Minister promised in his Mansion house speech last November tougher sanctions on oil and gas investment in Iran, and yet only last week in his joint press conference with President Bush, the Prime Minister said:

“Action will start today in a new phase of sanctions on oil and gas.”

I wonder whether the Foreign Secretary can explain the reasons for this seven-month delay, and does he accept that if Ministers threaten sanctions and then fail to deliver them, all they end up doing is undermining the credibility of any threat this country can make?

I am genuinely sorry that the hon. Gentleman has taken that tack because actually there is agreement across the House that a sanctions and incentives dual track is the right approach to Iran. There is agreement—from Iran to the United States, to this country and to any independent observer—that the sanctions are having an effect on the Iranian economy. The Bank Melli decision has been implemented, as of yesterday, and UN resolution 1803 has been fully implemented and the further sanctions to which he referred. Although the International Atomic Energy Agency discussions were completed only in May, there is the report to the IAEA board, and, as I said, UN sanctions resolution 1803 is now to be implemented. There should be a shared commitment to see those fully in force. The fact that, side by side with those measures, there is a revived offer to Iran is a good thing, not a bad thing, and I am sorry that the hon. Gentleman has tried to create division about that.


9. What assessment he has made of the prospects for achieving sustainable peace in Lebanon following its recent presidential elections. (213064)

The Doha accord and the election of President Sleiman were important steps forward for Lebanon, but the situation remains extremely fragile. It is now vital that a national unity Government be formed as soon as possible. During my recent visit to Lebanon earlier this month, I underlined my strong support for President Sleiman and Prime Minister Siniora, including through $4 million of UK support to the Lebanese security sector that will be so important in rebuilding the confidence of the citizens of that country in their armed forces.

We certainly do need to rebuild confidence, because earlier this year they had gone to the brink, almost reaching civil war. The Doha agreement has proved the way forward, yet the situation remains deeply unstable and tense; indeed, I understand that troops were called out onto the streets of Tripoli today. What more can my right hon. Friend do, particularly in using his good offices, to ensure that a Government are elected at the earliest opportunity? That is the way that we can bring greater stability not only to Lebanon but throughout the middle east.

I know that my hon. Friend has championed the importance of Lebanon not just to the Lebanese people but in terms of security and stability across the middle east, and he is absolutely right to do so. I think that it is the nomination of a Government that is currently held up, and I spoke to Prime Minister Siniora about that when I was in Lebanon and last week, in advance of yesterday’s and today’s conference in Austria on the rebuilding of the Palestinian refugee camps. The nomination of the Government will take place and, next year, there will also be elections for a new Government. I very much hope that all the parties will recognise their interest in pursuing a stable strategy in advance of those elections, and in allowing them to take place in conditions as close to normality—certainly without violence—as possible.

Topical Questions

I spoke in the House yesterday of the appalling campaign of state-sponsored violence that made a free vote in Zimbabwe impossible. I welcome yesterday’s UN presidential statement, the first from the UN Security Council, condemning the violence and demanding that the Zimbabwean Government respect basic political freedoms. Regional and international partners need urgently to ensure that the democratically elected will of the people of Zimbabwe, reflected in the results of the 29 March election, be respected.

In the past, the British Government have been accused of pussyfooting around the issue of human rights in Uzbekistan, partly because of the need for the Americans to use bases in that country. What is the current assessment of political and human rights in that country, in particular with regard to child labour in the cotton fields?

The hon. Gentleman is correct about the worrying reports of human rights abuse in Uzbekistan as detailed in the Foreign Office’s annual report on human rights. We raise this issue regularly, bilaterally and multilaterally. There are very worrying reports of child labour in the cotton industry. We have raised these matters with the Government, but we also support the demand of UNICEF and the International Labour Organisation for an external examination and oversight of what is happening in the Uzbek cotton industry, so that those reports can be discounted or proven once and for all, and then action can be taken.

T2. Will the Foreign Secretary comment on the capacity of the Palestinian Authority to provide security for their own people, and outline what came of the Berlin security conference? (213047)

My hon. Friend raises a very important point. I was able to see for myself in Jenin the real efforts being made by the Palestinian security forces, and I am pleased to say that those are successful efforts to bring new security to that city and effectively to end the occupation. For the first time in the occupied Palestinian territories, there has been a withdrawal of Israeli defence force troops and the installation of the Palestinian security forces. We are big sponsors of the Palestinian security forces financially, but also through the mentors whom we provide there. I believe that my hon. Friend the Minister for the Middle East discussed the matter with Prime Minister Fayad last night in Berlin. The critical thing is that the successes in Jenin are now repeated in other parts of the west bank.

May I join the Foreign Secretary in welcoming the UN presidential statement on Zimbabwe and ask him whether the Government will now put forward a concrete set of proposals for European Union sanctions on the Mugabe regime that are more serious, more far-reaching and more rigorously applied than anything that we have seen in the past? Will they include, in particular, a full visa ban for Mugabe, his officials and their families and associates, a range of financial measures, including an assets freeze on institutions complicit in the regime’s abuses and a ban on their transactions, and a guarantee that there will be no more invitations to European Union summits for a criminal Government who have lost all legitimacy?

I am pleased to tell the right hon. Gentleman that no such summit is currently in prospect. I can assure him that all the options that he has described will be discussed at European Union level; last night, I spoke to the Dutch Foreign Minister. This is not Britain against Zimbabwe; the whole of the European Union now wants to recognise the importance of the situation. On the basis of two recent phone conversations and exchanges with Mr. Kouchner, the French Foreign Minister, I am pleased to say that the incoming French presidency wants to give this matter priority too.

We hope that these measures will be not only options but British and French proposals in the coming days. May I additionally ask the Foreign Secretary, particularly in the light of the African National Congress statement today, which is much more critical than the South African Government have been of the situation in Zimbabwe, whether he has had any indication of any change in South Africa’s policy? Given that President Mbeki has been invited to the G8 summit in two weeks’ time, where Africa and development is on the agenda, will the Prime Minister and the Foreign Secretary try to ensure that the G8 communiqué calls specifically on all nations present at that summit to cease any actions that prop up a regime that is doing untold damage, both to Africa and to development, and thus give appropriate voice to world opinion on the conduct of the South African Government?

I think the whole House united yesterday in recognising the importance of South Africa to change in Zimbabwe. The right hon. Gentleman asked whether I had been given any indications about a change in the South African attitude, perhaps suggesting some private conversations. One can look at the public actions of South Africa, notably in the UN Security Council yesterday, when the presidential statement was published—it is available on the website—by unanimity. South Africa and China, countries that were mentioned in yesterday’s discussion, signed up to language condemning the Mugabe regime, both for its humanitarian abuses and for the way in which it tried to rig the election—or made the election impossible— and calling on African leaders to take steps forward. On the G8, the Prime Minister and I will certainly be arguing for the most effective and strongest possible G8 and G8 plus five communiqué to address all our responsibilities to tackle those issues.

T3. On one of the hottest days of the year so far, may I turn the minds of Ministers towards Antarctica—the two are, of course, linked? What are we doing to preserve the great wilderness that is Antarctica and to ensure that we use the resources that are there in abundance very carefully? (213048)

It is a pleasure to answer my first ever question on Antarctica. The protection of the Antarctic environment is enormously important and is provided through the 1991 protocol on environmental protection to the Antarctic treaty. My hon. Friend will know, given his interest, that that treaty has so far been successful in preserving Antarctica as a natural resource devoted to peace and science. It is an example of the international community working together to achieve that aim, and I assure him that this Government will continue to give it their full support.

The Iranian Government are reportedly sympathetic to the idea of an international consortium enriching uranium on Iranian soil. Given that that would allow western powers to be involved with, and to oversee, enrichment and the harnessing of nuclear power for civilian use, would the British Government back such an idea?

The hon. Gentleman will know from the package that was presented to the Iranian Government 10 days ago, and has now been published right round the world, that we believe that there is a future for civilian nuclear power generation in Iran. However, the history of Iran’s failure to be open and transparent with the international community about its nuclear intentions has gravely undermined confidence. Therefore, at this stage it is right to talk openly and plainly about continued commitment to shipments of uranium into Iran, for example for the Bushehr reactor, for which the Russians are responsible. It is right that we are willing to open discussions with the Iranians should they first freeze and then suspend their uranium enrichment programme. It is premature for us to say that we know that there is one single answer of the sort to which the hon. Gentleman refers. We have to recognise that confidence has been gravely undermined and needs to be rebuilt step by step as the Iranians show themselves to be a trustworthy partner of the international community.

T5. What confidence does my hon. Friend have that the figures given by the Colombian Government on the deaths of trade unionists are accurate, given that Amnesty International reports that many more deaths have occurred? Imagine the atrocity of people losing their lives just because they are trade union members. (213050)

The murder of trade unionists and human rights workers in Colombia is an issue of great concern. I have seen various figures and the picture is far from clear, but the bottom line is that a single murder of a trade unionist or a human rights defender is one too many. My hon. Friend will know that, whichever figures one takes, the number of such killings was falling year on year until this year. I am sure that she will share our great concern that the trend has been reversed and, as I did in April, I call on the Colombian Government to do everything that they can to ensure that those in Colombia who fight to defend human rights are able to do their work in safety and without fear.

What is the Foreign Secretary doing to end the scandalous situation in which a British bank—Barclays—still bankrolls Mugabe’s thugs by operating through a local subsidiary, thereby bypassing EU sanctions on Zimbabwe? Why has action not yet been taken to deal with that insidious loophole at either the UK or the EU level? Will he condemn that practice which flouts the spirit if not the letter of the sanctions against Zanu-PF’s leaders?

I condemn anything that gives financial or moral succour to Zanu-PF leaders. As far as I am aware—and I am happy to take new information if the hon. Gentleman has it, and follow it up—we know of no British company that is breaking the sanctions regime.

In respect of companies that are using subsidiaries or other means, I would want to look at the details of any individual case. The details are important, because there is the question of employment and support for ordinary Zimbabweans as well as succour for the regime. However, we utterly condemn anything that gives support to the regime.

T6. My hon. Friends will be aware of the ceasefire in Burundi between the FNL and the Government. Hopes are high that that will lead to peace talks and a settlement, but we have been here before. Critical to any success will be the reintegration of the FNL combatants into Burundi society. What efforts are Ministers making to assist in the peace process and, perhaps more importantly, to help Burundi reintegrate people into society after the civil war? (213051)

We too are optimistic about the peace process and the UK Government will continue to support the Government and people of Burundi in terms of that process. We are expecting about 150,000 refugees to return to Burundi this year, and my hon. Friend will know that that means that the rate of return has increased considerably. The UK provided £1.1 million in October 2007 for cash grants for those returning refugees.

If the catastrophe and suffering in Burma are not sufficient, and the bloodshed, violence and economic destruction taking place in Zimbabwe are not sufficient, can the Minister please tell us what set of circumstances would warrant intervention under the doctrine of responsibility to protect?

We did not manage to get to this question in the first 45 minutes, and the hon. Gentleman is absolutely right to raise it. As he knows from the debates we had about Burma, we are ready to use the full force of international law. Of course, the responsibility to protect has legal aspects as well as political aspects—those legal aspects include proof of crimes against humanity, war crimes or ethnic cleansing.

Because Zimbabwe is not a signatory to the International Criminal Court, the hon. Gentleman will know that a UN Security Council resolution is required for any referral. He will know from yesterday’s statement that we have been working very hard to get Zimbabwe on to the Security Council agenda and that that has not been possible until now—never mind getting a Security Council resolution with a reference to the ICC. However, the UN’s call for humanitarian envoys to be sent to Zimbabwe to assess the situation is the first step towards not only exposing the regime but making possible any referral such as that to which he refers.

T7. Given the adoption of the new constitution in Kosovo, will my right hon. Friend comment on the progress of the withdrawal of the UN forces and the deployment of the new EU mission? (213052)

My hon. Friend makes an important point. The untold tale of the past three months is the lack of violence in Kosovo. The fact that 120 days have gone by since the declaration of independence—15 June marked that date—is very significant. This week, the Secretary-General of the UN will be taking forward the commitments in his report on the reconfiguration of the UN force into an EU presence right across Kosovo, respecting the need to ensure that there are no parallel security structures or alternative state structures in Kosovo. That is a major issue for the completion of the process of reconstruction in the former Yugoslavia and the western Balkans. It is a major achievement for European security and defence policy because the stability that now exists, although it is fragile in all sorts of ways, represents the best hope for Kosovo and its newly independent authority and Government.

Will the Foreign Secretary give the House an undertaking that Zimbabwe will remain at the top of the Government’s agenda until Mugabe has been removed from office and that there will be no question of giving help, aid or succour of any sort to other African leaders who make any attempt to sustain him in office?

Yes, certainly. I am sure that the hon. Gentleman will agree that Zimbabwe should remain at the top of our agenda beyond the date of the end of the Mugabe regime. Both sides of the House recognised yesterday that the massive reconstruction job is one in which we are not monopoly players—we are not the sole players—but I hope that we will be significant players in supporting a decent Government for those decent people in Zimbabwe who desperately need the help of not only Britain but all the richer countries, and certainly all their neighbours.

T8. My right hon. Friend will be aware, as I am, of the worrying speculation about an impending famine in Ethiopia and its consequences. We have all seen this before. How are the Government and other players preparing to ensure that we do what we can either to avoid the famine or to deal with the lack of food so that the people of Ethiopia do not suffer? (213053)

I visited Addis Ababa last week and tried to discover what I could about the preparations that have been made to meet that impending catastrophe. As far as I could judge, it certainly does not look as though it will be on the scale of 1984. I was told that there are adequate food supplies and that the systems are in place to get that food to the people. I hope that that is right. The Secretary of State for International Development has been keeping a close eye on the matter and our aid agencies in Ethiopia are working very hard to ensure that those systems are used to the full and that starvation does not occur.

The Foreign Secretary will be aware of the tragic and disturbing case of my constituent, Scarlett Keeling, who was brutally murdered and raped on a beach in Goa. What steps has the Secretary of State taken to review the advice to visitors to Goa? Will he meet her mother, my constituent Fiona MacKeown, who is extremely anxious to meet him?

All our travel advice is reviewed regularly, to take account of changes in the diplomatic situation and of examples such as the tragic case that the hon. and learned Gentleman has cited. I am sure that the whole House will want to send our condolences to Scarlett’s mother. Ministers will of course meet any family who have experienced such a tragedy, and I am sure that my noble Friend Lord Malloch-Brown will be happy to meet Ms MacKeown.

T9. Ministers may be aware of an organisation called the Westminster Foundation for Democracy, which is funded out of taxpayer’s money by the Foreign and Commonwealth Office. What is the organisation’s purpose, how is the money spent, and what parliamentary accountability does it have? (213054)

The Westminster Foundation for Democracy facilitates links between political parties around the world to help build democratic skills. We all know that training people and strengthening Parliaments and political parties at national and local level are very important to ensuring transparency and effectiveness. The FCO provides grant aid for the foundation, whose board includes six independent governors and eight governors from the Westminster political parties.

Protection of Bats and Newts

I beg to move,

That leave be given to bring in a Bill to permit the disturbance of bats and newts for specified purposes; and for connected purposes.

I should at the outset declare an interest, as I have been a member of the World Wildlife Fund, now called the World Wide Fund For Nature, longer than I have been a member of the Conservative party.

It is not shocking at all.

I am very fond of bats and newts and it still thrills me when I see them. As a child, I used to catch newts when doing what is now known as “pond dipping”. Like Ken Livingstone, I like newts and, on that basis, I would name this Bill the “Livingstone Mayoralty Memorial Newt Bill”.

Although there may be some amusement here, this is a very serious issue. What links great crested newts and bats is that they are both European protected species—EPS—and that gives strict protection under the European habitats directive.

I shall illustrate but two of many recent cases that explain the problem. First, last summer Mr. and Mrs. Histed, who live near Chippenham in Wiltshire, were flooded out of their house by 3 ft of water when a ditch blocked. Repairs to the house cost a quarter of a million pounds and, not unreasonably, they wished to unblock the ditch. However, they were refused permission by the Environment Agency, which ordered a “newt search”, forcing this pensioner couple to remain in a caravan.

Secondly, on the edge of my constituency, the Earl Shilton bypass was delayed three months after it was believed that great crested newts might be on site. The council spent £1.2 million erecting special newt fencing and traps, but it never found a single great crested newt.

That is hardly surprising, as anyone who knows anything about the life cycle of great crested newts will know that they can move 1,000 yd or more from their breeding sites. One might think that this newt must therefore be rare but, according to the Government, there are 66,000 great crested newt breeding ponds in England alone, and the Secretary of State for the Environment said in a letter to me that

“great crested newts are widespread in lowland England and in some areas are present in good numbers”.

Furthermore, the decline in these newts results from changed farming practices, which have caused ponds on farmland to be filled in. May I suggest that creating new ponds would be cheaper and more effective than expecting the Leicestershire council tax payer to fork out £1.2 million for nothing?

Bats—which are so beautiful flying at dusk—are also an EPS under the habitats directive. They are wild creatures whose natural habitat is roosting in caves or rotten trees. They existed long before man built houses and churches. Bats in the belfry may be a longstanding joke—of sorts!—but it is no joke in many churches.

I should like to draw particular attention to St Nicholas church in the hamlet of Stanford on Avon, 100 yd outside my constituency in the constituency of my hon. Friend the Member for Daventry (Mr. Boswell). The 14th century church is filled with the most marvellous monuments in alabaster and marble. There is an organ case from the chapel royal in Whitehall palace that was sold after the execution of King Charles I. Simon Jenkins gives the church four stars in his book, “England’s Thousand Best Churches”, but if the mediaeval stained glass had been in situ rather than being restored, he might easily have given it five stars. The church is part of our national heritage, and deserves to be preserved. I was there on Sunday, sitting next to a 16th-century tomb of a knight and his wife. The tomb was restored at great cost, which was partly met by taxpayers through English Heritage and the National Heritage Memorial Fund. Bat droppings are stuck all over the intricate tracery and writing on the tomb and can also be found all over the walls and often on the altar. That is very unpleasant and is a hygiene risk during communion.

Much worse is the damage being caused to another fine marble monument, which has been under a bat roost. The urine, which contains ammonia, has stained and scarred the marble and the monument itself is sometimes completely covered in piles of droppings; I am talking about not one or two, but bucketloads of droppings. I have a photograph that I am happy to show any concerned Member.

The church’s tiny congregation is unable to take any action because of the habitats directive. Natural England has not been helpful. It has suggested ludicrous gazebos over the monuments; I wonder how that approach would work with wall paintings similarly at risk in other churches. Helpfully, Natural England charged the church warden £525 for its useless advice. The taxpayer funds the restoration of churches through one Government body, but another Government body insists that they cannot be preserved from damage by bats. Even worse is the fact that the diocesan advisory committee for Coventry and Leicester wrote that the parochial church council

“should seriously consider declaring the church redundant”

because of the infestation. I shall be writing to the bishop.

Bats, of course, will live elsewhere. According to the Bat Conservation Trust,

“The Pipistrelle bat has probably declined as a result of modern agricultural practices”—

no mention is made of boring sermons in church. One can assist bats by putting up bat boxes and by leaving rotten trees to stand, and we should do such things.

My problem with both the EPS issues that I have mentioned is that the entire approach is disproportionate. The Department for Environment, Food and Rural Affairs tells me that it advocates a proportionate response regarding great crested newts, but I note that last year Taylor Woodrow was fined £2,000 for damaging a newt site in Essex.

If anybody doubts the ridiculous bureaucracy surrounding this issue, they should look at the way in which Natural England thinks one should deal with great crested newts. It recommends completing a “method statement” on an Excel-format spreadsheet template. There is not much common sense in that.

Furthermore, the Government’s Countryside and Rights of Way Act 2000 has made disturbing or handling the animals arrestable offences—someone could get a six-month jail sentence for pond dipping. Why is there not a proportionate response? The House might know that there was a derogation under the original legislation in 1994. Members might wonder what the European Court of Justice does, and now I can tell them: it judges these matters, and it overturned the proportionate approach and the derogation. It transpires, I regret to say, that this ridiculous situation is all down to the wicked European Union. [Interruption.] It is true.

Mankind can and should be able to live in harmony with the animal kingdom, including bats and newts. We should have a balanced approach so that, without harming newts or bats, people can get on with their lives. Our natural heritage, which I wish to see enhanced, can co-exist happily with our national heritage in churches in Norfolk, Stanford on Avon and elsewhere. It is ridiculous that some very intelligent, highly paid civil servant in Brussels, or indeed in Whitehall, should be laying down such detailed and foolish laws. In this case, the law really is an ass.


My Bill would ensure that Ministers insisted on the reform of the European habitats directive and set up a more pragmatic, balanced approach, conserving our natural heritage of great crested newts and bats without the adverse consequences that I have illustrated.

Hon. Members may know act IV, scene i of “Macbeth”:

“Fillet of a fenny snake

In the cauldron boil and bake;

Eye of newt, and toe of frog,

Wool of bat, and tongue of dog”.

The issue is not about putting bats and newts in cauldrons, but there is toil and trouble. Let us have some common sense instead.

Question put and agreed to.

Bill ordered to be brought in by Mr. Andrew Robathan, Sir Patrick Cormack, Christopher Fraser, Mr. Tim Boswell and Robert Key.

Protection of Bats and Newts

Mr. Andrew Robathan accordingly presented a Bill to permit the disturbance of bats and newts for specified purposes; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 17 October, and to be printed [Bill 125].

Opposition Day

[15th Allotted Day]

Cost of Living

I inform the House that in both debates I have selected the amendments in the name of the Prime Minister.

I beg to move,

That this House expresses its deep concern at the rapidly rising cost of living; recognises the pressures this places on wage-earners and pensioners, especially those on the lowest incomes; acknowledges the danger to the UK economy of entrenching inflation through excessive wage claims in response to rising prices while understanding the concern of people who find their living standards squeezed; and therefore regrets the inability of the Government to provide assistance and support to hard-pressed families because of what the OECD describes as ‘excessively loose fiscal policy’ pursued by this Government over the years of economic growth.

The cost of living is back at the top of the political agenda and on the front pages of all our newspapers. When I first became aware of political debate in my early teens, the economy dominated the agenda and the battle to control inflation dominated the economic policy debate. It influenced almost every aspect of that debate; it toppled Governments and shaped our national institutions. Indeed, for many of us, it shaped our perceptions for half a lifetime. Then, after the Conservative Government introduced inflation targeting in 1992 and the incoming Labour Government reinforced that move in 1997 by creating the independent Monetary Policy Committee of the Bank of England, it ceased, for a decade or more, to be an issue on the political radar screen.

How tempting it was, therefore, to believe the rhetoric of the then Chancellor, our Prime Minister, that the dragon of inflation had really been slain—that the sunlit uplands of endless economic growth, low interest rates and appreciating asset values had been reached without the unwelcome spectre of inflation spoiling the view. Indeed, the Prime Minister built his entire reputation on the claim to have been the man who delivered economic stability—who ended boom and bust. Well, not any more.

Will the hon. Gentleman accept that the former Chancellor built his reputation on the independence of the Bank of England, which the hon. Gentleman’s party did not support at the time, and that that has been a major weapon against inflation?

If the hon. Gentleman had been listening, he would have heard me say a few moments ago that inflation targeting was introduced by a Conservative Government and reinforced by independence of the Bank of England, which we, in turn, are now committed to reinforcing still further in a way that this Government have resisted.

Does my hon. Friend remember that, far from creating an independent Bank of England, the Chancellor gutted and filleted it, taking away debt management and nationalising it into the Treasury, and taking away day-to-day banking supervision, so that the Bank was blind and deaf in the money markets when the credit crunch hit? Is not that a major problem?

My right hon. Friend is absolutely right. As he will know, we have been arguing for some time that the responsibility for rescuing a failed bank under the proposed new system must lie with the Bank of England, not the regulator. We are delighted that the Chancellor appears at last to have come round to accepting the logic of that position.

The former Chancellor’s reputation is unravelling before his eyes. The man who rode the Asian tiger of imported deflation bleats that what is happening in Britain today is all someone else’s fault—from the credit crunch, to the fuel price at the pumps, to the soaring cost of food and spiralling home heating bills. He was the lucky Chancellor whose good fortune was to preside over the greater part of what the Governor of the Bank of England has called the NICE—non-inflationary, consistently expansionary—years, and whose misfortune is now to have his legacy exposed as a sham, because when the wind blew the economic house that Gordon built turned out to be made of straw.

The hon. Gentleman calls the former Chancellor the lucky Chancellor, but when we set his record beside those of Charlie McCreevy and Brian Cowen as Finance Ministers of the Republic of Ireland, we see that the growth that he achieved was only half what they achieved. He was not that lucky or that golden—in fact, I would contend that he was a bit rusty.

The hon. Gentleman makes a point. By “lucky Chancellor” I simply mean that he was riding the crest of a wave of imported deflation, which created many of the conditions upon which he built his claimed reputation. The hon. Gentleman is absolutely right to point out that UK economic growth, like UK productivity growth, has been poor over the past decade compared with many of our competitors.

The economy is firmly back on the agenda. Inflation is booming on the high street and the Prime Minister’s reputation for economic competence is bust. The cost of a shopping basket of groceries has rocketed by 12.6 per cent. according to The Grocer—that well-known authority on grocery prices—while fuel and domestic energy prices are up 17 per cent. and 9 per cent. respectively, with a further increase of at least 40 per cent., or around £400, for an average household predicted in domestic gas prices for the coming winter. Worse than that, the cost of a basket of 40 essentials has increased by 19.8 per cent. over the last year, piling the pressure on the most vulnerable consumers—those on low and fixed incomes. Bread is up 29 per cent., eggs are up 48 per cent, butter is up 30 per cent. and transport costs are up 16 per cent. The Daily Mirror’s cost of living index shows most people faced a rise of 11.6 per cent. over the last year, not the official 3.3 per cent. I think that even the Government are likely to agree that that is unlikely to be a Conservative plot.

A family that spent £100 a week on food or drink a year ago has to find an extra £1,000 this year for the same items. There are some positive consequences. Apparently, more people are growing their own vegetables—one in three of us according to a survey in The Daily Telegraph, with nearly half motivated by cost. But there are some not so positive consequences. Bargain hunters are moving away from fresh foods and resorting to cheaper options. Frozen fish sales are up 11 per cent. on a year ago. A survey of citizens advice bureaux in England and Wales suggests that a growing number of people are having difficulty in paying for, and are seeking help with, essential household bills.

Does the hon. Gentleman agree that among the most vulnerable groups—those who are hit hardest—are disabled people, who have higher energy costs and often higher food costs as well? Inequality among the most vulnerable has widened.

The hon. Gentleman is absolutely right and I shall say something about that in a moment.

Ctizens advice bureaux reported a sharp increase in the number of mortgage arrears problems, which were up 35 per cent. in the first two months of 2008, compared with the same period in 2007. They also report a continuing increase in problems relating to basic essentials, such as gas, electricity, water, telephone and council tax debts. The CAB’s briefing reports that the combination of big increases in household bills, especially fuel, and rising housing costs is putting additional pressure on people’s finances when they are already stretched to the limit. Bureaux reported that they had dealt with 215,000 new debt problems in the first two months of 2008 alone and the report goes on to list examples that all have one thing in common: people on low or fixed incomes who are living at the margin of economic viability. For many people, the surge in living costs is turning a situation that is just manageable into one that is not.

We have tabled this motion to give the House an opportunity to debate the soaring cost of living and the Government’s lack of room for manoeuvre in responding to it. The first part of the motion expresses the House’s deep concern at the rapidly rising cost of living. To be candid, there are two reasons for that concern. The first, as the CAB report demonstrates, is a compassionate concern because inflation hits hardest those with the least bargaining power: pensioners on fixed incomes, the lowest paid in the most marginal jobs and people with long-term disabilities who are living on benefits. When an economic shock strikes, those groups, by definition, will be the least able to cope with it and the least likely to have any savings cushion. All of us in Parliament must voice their concerns and fears because they have little bargaining power themselves.

There is, however, a more calculating economic reason for the rising cost of living. Rapidly rising inflation also affects those with more bargaining power in the employment marketplace. Their response to the rapidly rising cost of living poses the genuine threat to our future economic stability, hence the second part of the motion, which acknowledges the dangers of a wage-price spiral.

As the economy slows and earnings stagnate while prices rise inexorably, the average family is already £400 a year worse off than it was a year ago. The current official retail prices index inflation is 4.3 per cent. a year, but the expectation of future inflation is as important as the level today in determining the behavioural responses to it. Every hon. Member knows from discussions with constituents that people’s perception of price increases and their expectations of future inflation are far higher than the official data suggest—unsurprisingly, in view of the figures that I have cited.

Mounting evidence shows that rising prices are feeding into higher wage demands and settlements. Pay rises in the energy, water, chemicals and engineering sectors in the quarter to April were at or above current inflation. The recent Shell tanker drivers’ settlement has subsequently added a further turn of the ratchet. The Incomes Data Services data, which were published this morning, show how many private sector settlements now include RPI linking, reigniting memories of the disastrous flirtation with indexation in the 1970s.

Yesterday’s announcement of a vote for industrial action by local authority workers rejecting a 2.45 per cent. pay offer underlines the scale of the challenge that the Chancellor will face as he repeats his exhortation for pay rises to be kept in line with the Government’s 2 per cent. inflation target, even as inflation looks set to reach double that figure. The prospect of a summer of discontent looms and Conservative Members wait with interest to see how a Labour Government, desperate for cash from the unions to save the Labour party from bankruptcy, will deal with the new militancy on wages on top of the already aggressive demands for further competitiveness-eroding employment legislation.

Last week, the Governor of the Bank of England gave a frank appraisal of the threat to Britain’s economy from the rising cost of living. With consumer prices index inflation up from 1.8 per cent. to 3.3 per cent. in the past nine months and a raft of further price increases to feed through, the Governor warned of the dangers of a wage response, which would mean that the jump in food and oil prices was embedded in our economy through an old-fashioned wage-price spiral, with wage earners trying to compensate themselves for rising prices, thus ensuring the further erosion of the value of their wages.

Let me take the opportunity to say from the Dispatch Box that the Governor of the Bank of England is right. Given that growth is slowing significantly below the Treasury’s Budget estimate, if the inflationary pressure that has surged through into the index in the past months is reflected in future wage rises, Britain risks revisiting the 1970s, with entrenched inflation and stagnant growth—stagflation in all its horror. By warning of his determination to stick to the Chancellor’s inflation target, the Governor is effectively throwing down the gauntlet to the unions, with the clear threat, “Go for the inflation-matching wage rises and I will bust you with growth-killing and unemployment-creating interest rate increases.” They should listen to the Governor of the Bank of England.

We will support the Government when they do the right thing on pay restraint, as my right hon. Friend the Leader of the Opposition said yesterday. However, after two years of stagnant real wage increases, let us be clear about what the Chancellor is demanding. As with taxes, so with wage policy—let us have an end to stealth and a new openness; an explanation of policies, tough or tender, up front and without spin. I put it to the Chief Secretary that the Chancellor is demanding a cut in living standards—is not that the essence of a demand for below inflation wage settlements? Is not the legacy of the Prime Minister’s 10 years in the Treasury falling living standards for British workers? Yes, inflation has to be controlled, so that Britain can maintain its competitiveness and be in a position to respond when the upturn comes. That means difficult times ahead. The truth is that the Government are in no position to help out and soften the blow of this painful adjustment to economic reality.

Obviously our country faces great challenges, and the hon. Gentleman is right: people are hurting. He talks about openness of policy, so could he tell the House the extent to which he thinks any Government can alleviate the sorts of difficulties that our country faces, and what his party’s policies are to address them? The Conservative party motion puts forward no policies, whereas the Government amendment sets out four of the steps that the Government have taken to try to address the issues. If we are to have open debate and openness about policies, for which the hon. Gentleman calls, could he tell us his party’s policies?

The hon. Gentleman asks what the solutions to the problems that we face are. He is right in one sense: there are no easy or quick solutions and no magic wands. The essence of our argument against the Government is that we have entered this downturn—and it is a downturn—uniquely ill prepared to deal with it. The Prime Minister did not fix the roof while the sun was shining, and the British people will pay the price for the lack of preparedness of the British economy.

What the hon. Gentleman says is exactly what he and his hon. Friends keep saying. What particular cuts would have been made by a Conservative Government in the past 10 years? What expenditure would not have been incurred, to make the savings that would have achieved his objective? [Interruption.]

My hon. Friends behind me are throwing out a few suggestions: the refurbishment of the Ministry of Defence headquarters, identity cards and money wasted on computer systems that never work. If the hon. Gentleman thinks back, he will remember that my party’s manifesto at the last election set out some clear proposals for cutting costs and waste in government. However, we want to look to the future and talk about the policies that we need to adopt to prevent a repetition of this situation, so that we never return to this position again, by setting out a long-term policy to share the proceeds of economic growth, so that in future we do not borrow through a boom and leave ourselves unable to respond to the kind of situation that the Government now face.

The incoming new Labour Government promised my constituents, particularly the low-paid and those living in isolated rural areas, that they would be wise spenders, not big spenders. Those people feel absolutely let down by a Government who were supposed to be there to look after the least well-off, when it is the least well-off who are paying the highest price for that Government’s failure.

My hon. Friend expresses eloquently the concerns of his constituents and those of many other of my hon. Friends’ constituents.

Does my hon. Friend also share my concern about the sheer levels of national debt that the socialists have incurred over the past 10 years? We now owe more than £700 billion, which has obviously put them in a straitjacket, which means that they cannot inject liquidity into the economy when we face a recession.

My hon. Friend is right. I will return to that issue in a moment, because that is the essential point. Although we agree with the Government about the need to avoid a wage/price spiral and the need for wage restraint, they have put themselves into a position in which they simply do not have the tools available to respond to the pressure that families and businesses are feeling.

I will in a moment, but I want to make a little progress.

The Government have no room for manoeuvre, because they did not act prudently during what the Governor of the Bank of England called the NICE years. Fiscal policy is now alarmingly loose and monetary policy very tight in response—the classic hallmarks of a basket-case economy. Yet the Government still seem to be displaying just the tiniest bit of self-satisfied complacency. In their amendment to the motion, the Prime Minister invites the House to note that

“unemployment, inflation and interest rates”


“all at historically low levels”.

But what matters to people now is that interest rates are the highest in the G7, unemployment is rising and the inflation rate is double what the Government inherited 11 years ago. Their amendment boasts about the measures that they are taking to support families and business, including increased tax allowances and winter fuel payments, yet those are the very measures that the Chancellor was forced to concede to buy off the rebellion on his own Back Benches over the 10p tax rate.

Interestingly, the amendment describes the extra winter fuel payments and increased tax allowances as measures that the Government

“will continue to take to support families and individuals”.

At first they said that they could not reopen the Budget, but then they did. Then they said they had no money, but when the political chips were down, they found some. Then they told us they would not announce until the pre-Budget report whether the additional winter fuel payments and increased tax allowances would be ongoing. Now they have done so, in this amendment. When the Chief Secretary to the Treasury responds to the debate, will she confirm that this is a policy announcement, and that the extra winter fuel payments and increased tax allowances are measures that the Government will continue to take to support families and individuals? And if that is the case, will she tell us what the cost will be for next year and the year after?

I keep hearing from the Conservatives the mantra that the Government should have fixed the roof when the sun was shining. Will the hon. Gentleman comment on this quote from Michael Portillo, the then shadow Chancellor, in 2000, when the budget surplus was at its height and the sun was shining most strongly? This is what he said:

“Conservatives will tax less, spend better and deliver more…We will cut taxes on business, so that they can compete and create prosperity and jobs. We will reform Labour’s taxes on entrepreneurs…We will encourage savings…We will help pensioners and hard-working families. We will restore a married couple’s allowance. We will cut the duty on fuel. That gives you a flavour of my budgets!”

He did not sound as though he intended to put a lot of money aside for the lean years.

The gentleman in question went on to try his luck, lose and depart from these Benches. The Conservative party, too, has moved on in the past few years. We are always happy when Labour or Liberal Democrat Members offer quotes that merely serve to emphasise the extent to which my right hon. Friend the Member for Witney (Mr. Cameron) has changed the direction of the Conservative party.

No, I want to make some progress.

Where did it all go wrong? The Prime Minister must ask himself that question every morning when he wakes up. It went wrong because he swallowed his own line on boom and bust. He started behaving as though the good times—the NICE years—were here for ever, and there were no rainy days to prepare for, and no roof to fix while the sun was shining. He borrowed through a boom, apparently oblivious to the need to prepare for the possibility that it would not be perpetual. Now he can stick “inappropriate pro-cyclical fiscal policy” on his mantelpiece next to “post-neoclassical endogenous growth theory”—[Interruption.] I think I said it okay, didn’t I? For seven consecutive years he predicted that the deficit would turn into surplus three years out, and for seven consecutive years that target was rolled forward. He offered jam tomorrow, like putting a carrot in front of the donkey. While competitors and trading partners such as Australia, Sweden, the Czech Republic, Denmark and South Korea used the worldwide boom in trade and economic growth to pay off their public debt—making them well placed to weather the slowdown—he rolled out more, right the way through the good years.

So, as a third of OECD countries face the economic slowdown with their budgets in surplus, Britain, with over 3 per cent. of GDP, has the largest public sector net borrowing requirement of any country in the world bar Hungary, Egypt or Pakistan, making Italy look like a paragon of fiscal virtue.

We all recognise that we have economic difficulties, but I noticed that when the hon. Gentleman responded to my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) who asked about alternatives, he started to talk very vaguely about ID cards and that sort of thing, and in response to the hon. Member for Taunton (Mr. Browne) he mentioned the manifesto. All that he talked specifically about was cutting waste—an argument that is always used. May I remind the hon. Gentleman that in 1997 we inherited a situation in which 50p in every pound went to pay off debt? The hon. Gentleman did not touch on those things. The Conservatives borrowed their way through the ’80s and the ’90s, so what is their solution to the problem now, as it is worldwide?

I am not really sure that I understand the point of that intervention, but I would say this to the hon. Gentleman. We have set out a very clear policy of sharing the proceeds of economic growth and we want it to go forward. It is a rule that will prevent us from getting into the same kind of trouble that the Prime Minister has got this Government into. I shall explain in a few moments, if I may, what I think has gone wrong.

The Prime Minister swallowed his own line on boom and bust. He apparently believed that the good times would never end, and instead of putting something by for the more difficult times that were bound to come, he just went on spending and borrowing right the way through the boom.

I want to make some progress.

Britain, with 3 per cent. of GDP as a net borrowing requirement, is going into an economic slow-down in a very serious fiscal position. In 1989-90, the Budget was in surplus as we moved into a period of economic slow-down. Where the Government have led, the consumer has followed, piling up a mountain of debt on the back of asset price inflation, with 175 per cent. of personal disposable income in household borrowing—the highest ratio in the world. The Government cannot help households because they have over-borrowed, and households cannot help themselves as the squeeze tightens because they have over-borrowed as well.

Let me make my point, and then I will.

As well as being unable to help people, the Government are actively reinforcing the inflationary pressures and thus the risk of a wage response. Consumer prices index inflation at constant tax rates is 3.1 per cent., which means that if taxes remained at the rates prevailing at the beginning of this year, inflation would be 0.2 per cent. lower than it is today.

The issue of diesel prices has moved up the political agenda. That is hardly surprising, because the figures show that before tax the UK has lowest diesel prices in the EU, but after tax is added they are the highest. With inflation expectations so important, the Government must look again, as they surely will be forced to do by their own Back Benchers, at the swingeing road tax increases for next year and the year after, which are doubling the road tax for about a million older cars and raising it on the overwhelming majority.

What the hon. Gentleman is failing to point out to the House is that at the beginning of the 1997 cycle, Conservative debt was more than 41 per cent. of gross domestic product. Under Labour in this cycle, it is less than 37 per cent. The cost of servicing that Conservative debt was 9 per cent.; now it is less than 6 per cent.—a saving of around £23 billion to put into services each year. The hon. Gentleman may be shaking his head, but the truth is that debt levels under the Conservatives were astronomical compared with debt levels today, and he should admit that fact.

We have to remember that nowadays there is a huge concealment of Government debt off balance sheet, through the private finance initiative and other mechanisms. What I remember of 1997 is rising economic growth, falling unemployment, falling youth unemployment, falling inflation, and inflation half the level it is today. That is the legacy that I remember, which the hon. Gentleman’s Prime Minister has squandered.

To clarify the point that my hon. Friend is making, may I add that the figure is, I believe, not 40-odd per cent. of GDP but about 110 per cent., if we include all the debt that this Government have put off balance sheet?

My hon. Friend is right. If we strip out the Enron accounting we will get to some very different figures, which few Labour Members will want to quote back at us.

I want to finish, as many hon. Members would like to speak.

There are other practical steps that the Government could take to help, such as promoting greater awareness of the best tariffs available from gas and electricity suppliers, adopting the proposal made by my right hon. Friend the Member for Witney (Mr. Cameron), the Leader of the Opposition, to include in gas and electricity bills information on average consumption levels of similar properties and a roll-out of smart metering to help people to manage their energy consumption better. However, the sad truth is that the Government have boxed themselves in. Excessively loose fiscal policy has left the UK, in the words of Alan Greenspan, “more exposed” than the US and facing difficulties that, in the words of the OECD, will be “larger than elsewhere”.

So here we are, with a Labour Prime Minister who for the last decade has been lecturing his neighbours on the continent on how to do it, now being slammed by the OECD for excessively loose fiscal policy, disciplined by the EU for the size of our deficit and, more importantly, unable to take action of the kind that more prudent Governments are taking to help their citizens and businesses when they most need it, not just because Governments are there to help their citizens, but because that is the best way to counter the pressure for inflationary wage increases.

With the cost of living set to go on rising as growth stagnates, there are just two possible outcomes: either real living standards will fall in the immediate future or inflationary wage rises will defer the moment of pain, and in the process risk destroying Britain’s competitiveness, and thus its prospects beyond the current downturn. The Government need to be frank with the electorate about the situation. Either way, the British public will know who to blame: a Prime Minister whose sole legitimacy was the claimed ability to manage the economy, but whose economic incompetence has left Britain and its citizens so ill prepared for the economic slow-down that we now face.

I beg to move, To leave out from “House” to the end of the Question, and to add instead thereof:

“notes the significant increases in world prices, with the oil price rising 80 per cent. and food prices up 60 per cent. in the year to May 2008; notes that the Governor of the Bank of England’s letter to the Chancellor dated 16th June 2008 said that 1.1 per cent. of the 1.2 per cent. increase in inflation over recent months was due to world food and energy prices, and that the Government was right to tackle the rises with action on an international level, including urgently looking for a successful conclusion to the Doha round of negotiations in the World Trade Organisation and examining the impact of biofuels on food production; supports the Government’s global leadership on these issues; recognises the pressure that these increases in world prices put on family budgets; further notes the measures that the Government will continue to take to support families and individuals, including pensioners and businesses, throughout the UK, including through extra tax credits, increased tax allowances, winter fuel payments and increases in child benefit; further notes that the most important support for working families is a strong and stable economy; and supports the Government’s actions that have delivered unemployment, inflation and interest rates all at historically low levels, helping millions of families into stable home-ownership and sustainable employment.”

This is an important debate at a time when families across the country face pressure from rising world food and fuel prices. Those prices are going up across the world, not just here in Britain. Oil prices have nearly doubled in a year. Whereas a barrel of oil cost $10 a decade ago, a few weeks ago the price rose by that much in one day alone. That puts up the cost of petrol at the pump, as well as the cost of gas and electricity bills, which have themselves risen by 15 per cent. and more than 12 per cent. respectively in the last 12 months.

The Minister mentions the rising price of oil in world markets, but my constituents face prices per litre for diesel and petrol that are 30p more expensive than in the Irish Republic. Will she accept her responsibility and that of her Government in relation to the pump prices that people face?

Right across the country, there are pressures that people face—at the petrol pump, but also with their utility bills. There are also different parts of the country that show disparities in the prices that they face, which do not appear to be justified by ordinary economic factors. We are keen to look further into that. Discussions have taken place on the issue.

If people could still get petrol at £1.15 a litre, 70p of that would be Government taxes, which have been going up this year when the Government claim to be worried about the plight of the motorist. Why do they not simply get their tax down, because that is the dominant part of the price at the pump?

As the right hon. Gentleman knows, we have delayed the fuel duty increase, and fuel duty has fallen in real terms over many years as a result of the decisions that we have taken. The issue that faces people at the petrol pump is not fuel duty, but the fact that we have seen such substantial increases in the price of oil, which is affecting countries right across the world.

The Chief Secretary is a reasonable person, and knows that hundreds of thousands of people across the country, in every part of the economy but notably in the national health service and social services departments, are subsidising their employers every time they fill up their cars with petrol that they use in the course of their work, because the approved mileage allowance payment scheme, set in 2002 at 40p a mile for the first 10,000 miles, has not been upgraded. Last year there was a review, which has not been published. I have tabled a parliamentary question asking the Department to publish that review, and have not been answered for three weeks. If she wants to take us into her confidence, could she not publish that report so that we can see why the Treasury has refused to take the simple step of upgrading such mileage allowances so that some of the poorest people in society no longer subsidise their employers?

I am happy to look into the point about the review and to write to the hon. Gentleman about it. Again, however, the fundamental problem faced not just by this country but right across the world is the soaring price of a barrel of oil. Fuel duty is 16 per cent. lower in real terms than it was in 1999. Every country in the world is facing problems. Egypt, Haiti and the Philippines have had riots over food prices as a result of the pressure on commodity prices. In Spain and Italy, major protests have taken place about the cost of petrol. Countries right across the world are affected, and that is feeding into domestic inflation in this country too.

On that point, is not the pertinent issue that other countries, particularly the United States, have in their armory fiscal policy to alleviate the credit squeeze? They are in a position to do that, but we are not, as a result of our Government’s fiscal management.

I want to come on to that point, because it is important. As a result of changes to tax credits, tax allowances and so on, we are putting money into the economy this year, and such support is right. The record of the hon. Gentleman’s party on fiscal policy and debt management, however, was atrocious. Under this Government between 1997 and 2007 public sector borrowing was 1.2 per cent of GDP, whereas under the last Conservative Government between 1992 and 1997, public sector borrowing was considerably higher at 6 per cent. of GDP, and that is why debt was also considerably higher. He is therefore in no position to provide lessons on management of fiscal policy.

The Chief Secretary has referred repeatedly to the price of petrol and diesel. What plans does she have to help essential users such as road hauliers and those in the farming industry in the short term, to help them to overcome the petrol costs crisis?

As the hon. Gentleman will know, such users can claim back VAT, and there is support in place to do that. We must recognise, however, that such price increases are having an impact across the economy, on businesses as well as on households. That is why it is important that sensible decisions are taken not just in this country but globally, to try to get through the problems that we face as rapidly as possible.

The problem affects not just oil, but food. Global food prices have also risen by over 40 per cent. in the last year, with basics such as rice and wheat hitting new highs. The increased price of bread and eggs in the shops has an impact on families. The Governor of the Bank of England has said that the inflation increase that we have seen is accounted for by

“large and until recently unanticipated increases in the prices of food, fuel, gas and electricity.”

Those components alone account for 1.1 percentage points of the 1.2 percentage points increase in the CPI inflation rate since last December.

The price rises are having an effect across the world. Those on fixed incomes, and particularly pensioners, who are often on fixed incomes and might be on lower incomes than households across the board, face particular pressures when they look at their gas and electricity bills and worry about prices as winter approaches.

I shall be happy to give way after I have made a little progress.

The world economy faces rising prices, and at the same time we are having to deal with an ongoing global credit squeeze that is having an impact on mortgage lending. As a result the British economy faces tougher times ahead, and like other countries we will need to respond to that. However, we face these challenges in a much stronger position than our position in earlier decades. Overall inflation stands at 3.3 per cent.; the Governor of the Bank of England has said that he expects it to rise to 4 per cent. before falling again towards the target next year. Our inflation rate is still lower than the rates in the United States and the eurozone, and very different from the rate in the 1980s and 1990s.

The Minister says that we face these pressures in a stronger position than other countries, but Alan Greenspan says that the United Kingdom is more vulnerable than other major economies. I understand that Alan Greenspan is, or was, an adviser to the Prime Minister. Is he wrong?

Last month’s report from the International Monetary Fund stated:

“For over a decade, the United Kingdom has sustained low inflation and rapid economic growth—an exceptional achievement…the fruit of strong policies and policy frameworks, which provide a strong foundation to weather global”


Let us examine the position from which we start, compared with that of previous decades. While the CPI inflation rate is now 3.3 per cent., it was 8.5 per cent. in April 1991, and for nearly two years it was more than twice as high as it is now. The retail prices index inflation rate is now 4.3 per cent. It peaked at over 20 per cent. in 1980 and averaged 6.4 per cent. from 1979 to 1997, compared with an average of 2.8 per cent. since. We should now be supporting the pensioners who experienced the breaking of the link between pension and earnings, cuts in their pensions and persistent high-inflation problems throughout the Conservatives’ time in office, rather than listening to lessons from the Conservatives, whose record on both inflation and the management of public finances is one of which they should be ashamed.

Does it not occur to the Minister that the hostile public sentiment being directed at the Government is partly due to the fact that, while everyone understands that big global problems are affecting the economy at the moment, during the good times for the Government over the past 10 years they never observed that they were being assisted by benign economic conditions throughout the world, but tried to take the credit for all that was going well?

I certainly think it worth reflecting on some of what has happened over the last 10 or 11 years. There have been benefits from world commodity prices, largely thanks to developing countries. There have also been significant benefits as a result of our making the Bank of England independent—a decision which, as the hon. Gentleman will recall, was opposed by his party—and there have been changes to support more competitive and global markets across the board. During the same period we have dealt with global challenges: for example, the bursting of the dotcom bubble and the events of 9/11, which pushed other countries into recession. Over the past 11 years other countries have experienced recession, while the United Kingdom has continued to experience strong economic growth throughout. We have weathered global storms before, and have done so better than other countries.

The particular challenges that we face at the moment—the dual challenges of increasing world prices and a global credit crunch—are also posing considerable challenges to every other country in the world, but over the last 11 years income per head of population has grown faster in this country than in any other G7 country. In 1997 we were bottom of the G7 prosperity league; now we are second to top. We begin this period with employment at a record high, rather than the record unemployment that we experienced in earlier decades.

None of that should cause us to underestimate some of the challenges that we will face as a result of these global problems, and the need to respond to them. No national Government can act alone to stop a global slowdown, and no national Government can act alone to solve problems caused by rising world commodity prices. What we can do, however, is work with the rest of the world—with our global and European partners—and take action here at home to support the economy and the families who face difficult times.

Pensioners in Clacton face a fall in their standard of living. Their incomes are by and large fixed, but the costs of energy and utility bills and council tax bills have shot up. Apart from offering pensioners free swimming, what does the Minister think can actually be done to try to help their situation?

As the hon. Gentleman will be aware if he has talked to pensioners in his constituency, we have increased the pension credit, as a result of which some pensioners are £2,000 a year better off than they would have been in 1997. We have also introduced the winter fuel payment, which will be increased this year by £50 for the over-60s and by £100 for the over-80s, particularly because we know that pensioners will be facing winter fuel bill pressures as a result of rising oil prices. We have increased the pensioner tax allowance this year as well. We have, therefore, already done a lot to support pensioners. [Interruption.] My party colleagues on the Back Benches are reminding me of other measures, such as concessionary fares, free bus passes and the Warm Front programme to help pensioners insulate their houses. [Interruption.] Yes, TV licences, too, and free eye tests. This Government have introduced a whole series of measures that the Conservative party did not introduce in order to help support pensioners. We want to continue to support pensioners, because we recognise that pensioners on fixed incomes face the greatest pressures.

I have given way to the hon. Member for Na h-Eileanan an Iar (Mr. MacNeil) once already, so I shall give way to my hon. Friend the Member for Coventry, South (Mr. Cunningham) instead.

My right hon. Friend lists what we are doing for pensioners, and I am sure that the Government understand that there are both fuel and economic problems. Will she also mention what she is doing for women between the ages of 60 and 64, because that is important, too, and people are concerned about it?

My hon. Friend is right. As well as the winter fuel payment increase, we have increased the tax allowance; my right hon. Friend the Chancellor announced that.

It is also worth pointing out that the Conservative party’s own research document on the cost of living was forced to admit that since 2001-02 pensioner couples are in real terms £30 a week better off and single women pensioners are £21 a week better off. Those are not our figures; they are the figures that the Conservative party produced on the impacts on pensioners.

Members will appreciate that I have given way a lot, and I know that many Members want to speak, but I shall give way to my hon. Friend the Member for Hastings and Rye (Michael Jabez Foster).

I am grateful to my right hon. Friend. May I remind her of the deal she has done with the energy companies? The poorest pensioners in my constituency are getting 15 per cent. reductions in their fuel bills as a result of the social tariffs she has brought about.

My hon. Friend is right. After this year’s Budget, we held discussions with the utility companies, and as a result of working with them they have agreed to treble the amount of investment they are putting into assistance for the most vulnerable households—those on the lowest incomes, and those at greatest risk in terms of fuel poverty—in order to help them with their fuel bills this year. That is hugely important, and it needs to be seen alongside work to reduce the demand for electricity and higher heating levels by improving insulation through the Warm Front programme and also the requirement on the energy companies to put more money into insulating people’s homes.

I must make a little progress before giving way again. I will take more interventions later, if I can.

The fundamental problem is that the world is not producing enough food or energy to meet rising demand, particularly with the growing demand from developing countries as well. We need to act at international level to help increase production in the short term. That means working with international partners to remove some of the barriers preventing increased supply. On food prices, the UK will work with other countries to put forward proposals for increasing agricultural production at next month’s G8 summit. We have already committed to doubling investment in agricultural research to help improve efficiency and production over the next five years. We are continuing to press for reform of the common agricultural policy, because it is unacceptable that the EU continues to apply high tariffs to many agricultural imports, particularly at a time of such high prices.

On oil, we are pressing for the removal of barriers that are preventing an increase in supply. This weekend, the Prime Minister was in Saudi Arabia making the case for greater transparency in the provision of data on oil supply and demand.

We are continuing to press for further energy market liberalisation in the EU, so that consumers and businesses do not lose out as a result of inefficient and expensive gas and electricity markets. Of course, in the medium term we need to do more to reduce our dependency on oil and gas both in Britain and across the world, for the sake not simply of the world economy but of the planet. That is why we will be setting out further proposals on renewable energy later this week.

On the rising price of oil, a claim is being made in the US that some of this increase is due to speculation in the oil futures market, and the Fed lays considerable blame for this on the London oil futures market, which it claims is under-regulated and wants greater regulation of. Will the right hon. Lady comply with that?

The Financial Services Authority has been looking at this issue, and there are different views on speculation. There is also an underlying view that there are long-term problems here, regardless of the impact of short-term speculation, which mean that we are overly dependent on oil and gas not simply as a nation, but across the world. We need to do more to address that and to improve energy efficiency, while also recognising some of the pressures in the market that prevent increasing responsiveness to price signals in the energy market but also in food production.

I am grateful to my right hon. Friend. She has read out a long list of what the Government are trying to do to assist in this difficult situation. Does she agree with me that the official Opposition are not fit for government, given that they cannot put forward any policies? They decry jam tomorrow when in fact, all that they are talking about is proceeds of growth, which is a “jam tomorrow” policy if ever I heard one. They are the ones who caused the roof to be leaking in the first place, which we fixed literally and metaphorically around the country. They say that we need to tighten fiscal policy, but they do not even say whether they will put taxes up or cut spending. With a rhetorical flourish, the hon. Member for Runnymede and Weybridge (Mr. Hammond) sets out his policy to address the huge problems associated with the cost of living—smart metering. That is their policy.

My hon. Friend is right—there was a distinct absence of alternatives and proposals from the Conservative party that would actually help either the UK economy or the global economic situation.

We will continue to support the Bank of England through the monetary policy framework, and we are urging a responsible and disciplined approach to pay on both the private and public sectors. From the boardroom down, people do need to recognise the importance of this, of avoiding a return to the destructive wage spirals that we saw in previous decades, and of the Bank of England’s being able to respond within the monetary framework. That is why we have welcomed the three-year pay deals in a series of areas in the public sector.

The hon. Member for Runnymede and Weybridge (Mr. Hammond) was keen to protest the Opposition’s strong support for wage restraint, probably in some determination to correct the hon. Member for Tatton (Mr. Osborne), who told the BBC,

“I’m not against opening negotiated pay deals”,

sending a much looser signal about their commitment to support for wage restraint at a difficult time. We are increasing borrowing to support the economy, and that is the right thing to do at this stage in the economic cycle. We have delayed the increase in fuel duty, and we have increased tax credits and allowances for pensioners and cut the basic rate of tax. In addition, the Chancellor has increased the tax allowance for this year not just for those affected by the 10p rate, but for all basic rate taxpayers, putting £120 into the pockets of some 22 million people. The overall tax burden, which is less than it was during most of the 1980s, is set to fall this year.

The impact of all this is that families with children will see their tax bills fall, in many cases by several hundred pounds a year, giving them more support at a time when there are difficulties in terms of pressures on the cost of living.

I am listening carefully to what the right hon. Lady is saying. Will she answer the question that I put to her? Will she confirm that, in asking people to settle for wage increases lower than the rate of inflation, the Chancellor is asking them to take a cut in living standards?

I should point out to the hon. Gentleman that his own party’s research document has recognised that in real terms, since 2001-02—even in advance of some of the most recent changes that we have set out—families with children are better off than they were in 1997, or in 2001-02. They are seeing real improvements in their income and their support. For example, lone parents are £12 a week better off and couples with children where one parent works full time can be more than £700 a year better off. That is why we are also providing people with additional support through tax credits. I should point out to the hon. Gentleman that this extra support being provided through tax credits, and by increasing child benefit in the next year and the winter fuel payment this year, is funded by the increase in alcohol duty that Conservative Members have opposed. They are opposing our measures to provide additional support to families at a time when people are under pressure, particularly from their winter fuel bills.

It is worth reflecting, as my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) suggested, on what the Conservatives’ remedy might be. They have said that they would not put up alcohol duty and would have lower borrowing—not that they can point to any kind of historical record to support their position. We must remember that this is a party that has never proposed lower borrowing. Instead, it has repeatedly proposed spending increases and tax cuts at the same time—that would push borrowing up. Over the past 12 months alone, the Conservatives have called for £10 billion of extra spending on unfunded tax cuts. At the previous election, just at the time they now say they would have cut borrowing, they were actually calling for billions of pounds in extra borrowing—the independent Institute for Fiscal Studies costed their tax and benefit plans alone at an extra £5 billion. In 2005, they were also planning billions of pounds of extra spending on top of that, on things such as the pupil passport and the patients passport for private care, not to mention defence, the right to buy, tuition fees and offshore processing centres for asylum seekers.

At the 2001 election it was the same story: a £3 billion unfunded tax cut on savings, which would help those on the highest incomes, but billions of pounds more spending on asylum seekers’ reception centres, defence and other areas. The Conservatives would not have cut borrowing; instead, they promised again and again to dig themselves a massive black hole for the public finances. So much for telling us to fix the roof; they promised to dig up the foundations.

This Government did invest in fixing the roof. Not only did we mend the hospital roofs, the school roofs and the council house roofs that the Conservative party neglected and abandoned, but we invested in the infrastructure and skills that the British economy needs. We have been operating within our fiscal rules to bring down debt substantially and to cut the bills of the economic failure and high unemployment that we inherited from the Conservatives. That is why we have the flexibility to support the economy right now.

Britain, like other countries, is facing a difficult time as a result of world economic problems. Families across Britain are facing the pinch. They are facing higher prices as a result of increasing world food and fuel prices, but these world economic problems need a serious response—with substance, not just showmanship, and with serious policies not just spin—to help households and businesses through the more difficult times. That is why the House should reject the posturing of the Conservative party and back the Government amendment.

The hon. Member for Runnymede and Weybridge (Mr. Hammond) gave a clear and forceful critique of Government economic policy, much of which I agreed with and so do not need to repeat. I am thinking in particular of the sense of hubris that derived from the claims about there being no more boom and bust and about the best economic performance since the Hanoverians, and the contrast with today’s reality.

There is one commodity that is not in scarce supply at the moment, and that is criticism of the Government, so I do not need to add to a glut in the market. I shall concentrate instead on scrutinising more closely what the Conservatives are offering as an alternative economic strategy and the terms of their motion. I think that there is a genuine interest, both positive and negative, in what an alternative Government might have to offer. Perhaps I could start by dealing with the phrasing of the motion, by which I am genuinely a bit confused. The first five lines seem eminently sensible and fair, but the motion then goes on to talk about “excessively loose fiscal policy” with approval. The correct policy response to excessively loose fiscal policy—this is presumably what the Conservatives think the Government should have done, and is what the Conservatives would have done and would now do—is to use a combination of higher taxes and reduced spending. That is the opposite to loose fiscal policy. But the motion does not say that. It says that what the Government should have done—what the Conservatives would presumably have done—is to provide assistance and support to hard-pressed families, which involves cutting taxes and increasing spending. Within the same sentence, we have two diametrically opposed macro-economic policies—

Was the hon. Gentleman asleep when the Conservatives produced endless proposals for getting better value for money and having fewer administrators, fewer targets, fewer quangos, fewer ID cards and all the other claptrap that has wasted billions?

I was not asleep: I was assiduously reading “The Cost of Living Under Labour” and I shall address the seven-point plan that the Conservatives propose to deal with the situation. It is possible plausibly, and perhaps wisely, to argue for fiscal austerity and for crowd-pleasing tax cuts and spending measures, but to advance them at the same time completely lacks credibility. I will proceed through the seven points, and I hope that my argument will begin to stack up.

I have great respect for the hon. Gentleman on these issues, but does he accept that “excessively loose” was not our description of the Government’s fiscal policy—it was the OECD’s description? Does he agree that if the Government had adopted a less excessively loose fiscal policy during what the Governor of the Bank of England called “the NICE years”, they would be in a stronger position now to provide support and assistance to hard-pressed families and businesses and thus to draw the sting from the pressure for inflationary wage increases that they now face?

That does not follow at all. The hon. Gentleman said in his speech that the main emphasis of policy has to be on monetary policy and if interest rates have to fall—which I think is what he wants to happen to deal with the slow-down in the economy—fiscal policy would have to be tightened. There is a problem with fiscal policy, as the OECD identified, although it is less extreme than the hon. Gentleman claims. Were we to go into a period of slump, or of prolonged stagnation as they had in Japan, it would be very difficult for the Government to embark on strikingly Keynesian policies, because of the erosion in the fiscal rules that has already taken place. But that is not what the motion says. It gives the impression that we can simultaneously have fiscal austerity and crowd-pleasing measures of assistance and that is a fundamental contradiction.

I shall go through the seven proposals. The first is to give 1.8 million couples an extra £2,000 a year, addressing the couple penalty in the tax credit system. That is a good policy, and I applaud it, but the concluding sentence makes it clear that the change

“will be implemented as savings are generated through our radical programme of welfare reform.”

In other words, it may happen, but it would take time and it certainly would not provide much relief to hard-pressed families in the short term.

The second proposal, which interested me particularly, was shifting the burden of taxation away from families. It talks about

“our commitment to increase the proportion of taxation raised through green taxes by rebalancing taxation away from taxing ‘good’ things, like jobs and investment, towards taxing ‘bad’ things, like pollution and carbon emissions.”

When I read that, I felt like a member of the General Medical Council reading an essay by Dr Raj Persaud. I felt that I had read that somewhere before and, in fact, I wrote it. The Conservatives have lifted our green tax switch policy of several years ago.

As a candid friend, I can tell the Conservatives in strict confidence that adopting Liberal Democrat policy in that respect would not be without problems. There are two ways in which that Conservative policy—I take it as a compliment that they have borrowed it from us—could be delivered. The first is to have a carbon tax, which in reality is a tax on household fuel, and even I am not brave enough to argue for that. The second is to increase taxation on transport fuels. A bit can be raised from aviation taxes, but the green tax switch, which is the third element in the Conservative proposals, in fact involves increasing taxation on the motorist.

I do not know whether the editor of the Daily Mail has been told yet that the Conservatives are campaigning to increase taxes on the motorist. I am not even sure that the shadow Chancellor has been told, because he told The Daily Telegraph last week that he was committing himself to not increasing the 2p rate on duty on petrol in the autumn, which struck me as an extraordinarily silly and impetuous thing to do. It might be that the Government will not increase it, and that might perhaps be the right thing to do, depending on conditions at the time. We do not know what the Government’s fiscal position will be in the autumn. We do not know what the oil price will be. Any sensible person would wait before making such a commitment.

Being lectured by the Liberal Democrats on tax policy is rather like being lectured by a eunuch about an orgy. The only two discernable fiscal policies that the Liberal Democrats have had are the 50p top rate of tax, which was unpopular, and the local income tax, which is completely unworkable. Apart from that, the Liberals are doing well. Has the hon. Gentleman any other ideas on fiscal policy that he will be putting in his next manifesto?

I was actually talking about one of our policies, which the Conservatives are talking about introducing, and I was explaining how they could do it. I am not sure what the hon. Gentleman’s problem is.

As I say, the shadow Chancellor has committed himself to the 2p tax reduction—at least, he has made that commitment to the readers of The Daily Telegraph blog, although it might not have gone any further yet. The implication, of course, is that the family fund that the Conservatives propose to establish to help cut taxes for families starts with a deficit of £1 billion a year. That is a problem.

The third element of the programme involves cutting stamp duty for first-time buyers, but to do so at this stage of the housing cycle is not just economically foolish but positively unethical as that is trying to draw people into the housing market at a time when house prices are falling. Be that as it may, I agree that stamp duty needs to be reformed. In particular, it needs to be reformed not for people at the bottom end but for those who are paying more than £250,000 for a property, who pay the 3 per cent. slab. There is an argument for reforming stamp duty to shift the burden on to much higher value houses from those in that price range.

The interesting thing about the proposal—perhaps the Conservative spokesman can clarify it—is that that policy depends on the assumption that the tax change will be paid for in full by the fixed levy on foreign non-doms. My understanding is that that levy is going through the Budget, but once the Budget has been completed, will that policy lapse or will there be a second levy on foreign non-doms? That is a legitimate question and I hope that at some point we might get an answer.

There is another set of Conservative proposals to do with personal debt. I am very interested in the subject and have spoken a lot about it, and the Conservative suggestions are quite sensible if extremely modest. The one specific suggestion concerns illustrative scenarios for credit card users, and the only problem with the policy is that it is already happening. I believe that the Office of Fair Trading ruled three years ago that such illustrative scenarios for credit cards should be introduced. They have been introduced and they do not work because they are not comparable. The policy seems to have limited value, although it is perfectly sensible—

The hon. Gentleman mentions our policies, but it is not our Opposition day. We had an Opposition day three months ago in which we set out some detailed proposals on the housing market and repossessions. I am happy to repeat what I said then, but this is not our Opposition day. The Conservatives have set themselves up and I hope that they would accept that it is reasonable to scrutinise what they have to say.

Finally, I want to draw attention to the proposals on council tax, because they are fair. The Conservatives rightly point out that the doubling of council tax since the Government came in has been a major contributory factor to the pressures of the cost of living on low-income families and pensioners. It is a regressive tax that bears very little relation to current property values, and the Conservatives should know that because they introduced it. What I am puzzled about is why they have ignored some perfectly sensible reforms. We have argued that council tax should be abolished, but it does not have to be. The Lyons report contains some perfectly sensible reforms for increasing the take-up of council tax benefit, but they are not even mentioned by the Conservatives. Instead, they suggest that there should be a referendum to deal with excessive increases in council tax, and on page 18 of their document they list five councils that have imposed such increases.

The unfortunate problem is that four of those councils are Conservative led—indeed, two of them, Birmingham and Leeds, have benefited from a joint administration with the Liberal Democrats. They are clearly not bad councils, therefore, but they appear to have been singled out for a referendum on the council tax.

I am genuinely puzzled about how the referendum would work in helping people with the cost of living. What question would be asked? If people vote no to a proposed council tax increase, does that mean that councils would have carte blanche to cut their education budgets? Would they be free to use their reserves without being subject to the present constraints? The policy is extremely badly thought out, yet it is at the centre of the Conservatives’ proposals for dealing with the cost of living.

In the few minutes that remain to me, I want to concentrate on what I think are the two key elements in the increased cost of living that, in reality, we face. On the front of their report, the Conservatives have helpfully included a summary of the main contributory factors to what they describe as “Gordon Brown’s Disaster”. Those factors are nine price increases—seven of them in food, and the other two in fuel.

What is the Conservatives’ proposal for dealing with those nine price increases? Indeed, what can anyone do about them? Three of the price rises relate to dairy products—butter, milk and cheese. What is the failing in Government policy in respect of the dairy industry? How could the Government be expected to mitigate the problem? I have sat through years of painful Department for Environment, Food and Rural Affairs questions, in which the main challenge from both Conservative and Liberal Democrat Members has related to the poverty and poor returns of dairy farmers.

That problem has been rectified through the market, so are the Conservatives suggesting that dairy farmers are now being paid too much, or that the market should not be allowed to work? I do not know, but we are talking about part of “Gordon Brown’s Disaster”, so I presume that the Conservatives have some idea of how the problem should be rectified.

A much bigger problem exists, of course, and I agree with the Government motion in that much of it has to do with world trade in food. I should be intrigued to know how the Government have responded to last weekend’s insane rant from President Sarkozy criticising Mr. Mandelson. I think that he suggested that Mr. Mandelson was responsible for millions of children dying of starvation because he was failing to support French protectionist food policy. That is completely idiotic, and I hope that the Government will make it absolutely and publicly clear that they do not subscribe to that sort of nonsense.

The main contributor to inflation in the short run has been the price of energy. It is worth devoting some time to looking at how that problem has arisen. We might also consider some possible solutions to it, and whether any party has any answers.

The rise in energy prices is partly a function of world prices but, as the right hon. Member for Wokingham (Mr. Redwood) correctly noted in an intervention, another factor is the way that the economic rent from oil is divided between Governments, consumers and producers. For the moment, though, I want to focus on the problem with world prices. It is clear that the Prime Minister thinks that he has a role to play, as he went to the middle east in an attempt to influence the producers.

It is important to say that some foolish myths are circulating. The Government—and the Prime Minister personally—have been responsible for the first of them, as they have argued that the price of oil in world markets is being forced up by members of the OPEC deliberately withholding supply. That is complete nonsense: there is less than 2 per cent. spare capacity, and there are serious production problems in countries such as Nigeria and—because of the war—Iraq. The price rises are not due to the malicious withholding of supplies, and the Prime Minister is totally wrong to have created that impression.

The other myth in circulation is that the price rises are something to do with wicked speculators. It may seem odd, coming from a Liberal Democrat, but I disparage that argument. It has become a fashionable argument; indeed, the leader of the Conservative party was advancing it yesterday. However, there is not a shred of evidence that there are accumulated oil stocks or that futures markets have systematically pushed prices in their current direction. Those markets affect the level of volatility, but not long-term trends.

Speculators are clearly not the issue. There is a policy problem, on which the Prime Minister reported yesterday: there is a shortage of investment in the oil industry. I would like to have raised two issues with him at the time, and I will communicate them to the Minister. If the oil producers are so negligent in failing to attract foreign investment in the oil industry, why was the one OPEC country that has welcomed foreign oil companies—Iran—threatened with sanctions the moment it did so? Foreign oil companies were only too happy to invest in Iran, but they have been told that they will be penalised if they go there.

I am sure that the Saudis and others have made another point to the Government, who should reflect on it. The Saudis and others would ask, “Why are you criticising us for not investing, given that you have increased additional corporation tax and petroleum tax levies on the North sea oil industry, making the west of Shetland fields completely financially unsustainable?” Through its own policies, Britain has as much responsibility as the oil producers for failing to produce a supply.