Skip to main content

Commons Chamber

Volume 480: debated on Monday 6 October 2008

House of Commons

Monday 6 October 2008

The House met at half-past Two o’clock

Prayers

[Mr. Speaker in the Chair]

Death of a Member

I regret to have to report to the House the death of John William MacDougall, the Member for Glenrothes. I am sure that Members in all parts of the House will join me in mourning the loss of a colleague and in extending our sympathy to the hon. Member’s family and friends.

Oral Answers to Questions

Culture, Media and Sport

The Secretary of State was asked—

Sound Recordings (Copyright)

1. What his policy is on the extension of copyright duration and terms affecting sound recordings; and if he will make a statement. (224370)

Policy responsibility for intellectual property rests with the Department for Innovation, Universities and Skills. However, given my Department’s responsibility for the music industry, these are issues in which we have a close interest. The Government are considering the European Commission proposal currently on the table in Brussels. Discussions are still continuing at a European level.

A band named Pendragon in my constituency tells me that when it recently produced a new DVD it sold 50 copies in the first week, but in that same week 3,000 copies were illegally downloaded. Does the Secretary of State not agree that he ought now to implement the recommendation made two years ago in the Gowers report that would take some steps towards stamping out illegal downloading, which is driving smaller bands and small labels in particular to the wall, and is it not also about time that he accepted the Select Committee recommendation that copyright should be extended to 90 years?

There are two issues in that supplementary question, the first of which is about illegal downloading. The hon. Gentleman will have seen that in the summer the Government facilitated a memorandum of understanding signed between the film and music industries and the major internet service providers, with general agreement to achieving a significant reduction in illegal downloading within two to three years. He is right to raise this issue, because it goes right to the heart of the success of the British music industry in the long term; there are still far too many tracks downloaded illegally, and we have to take firm action. I hope that he agrees that the Government have changed their tone on this issue and are signalling far more urgency.

The question of term involves complicated issues, and while the Commission has put forward its proposals, I think it is fair to say that no consensus has yet emerged around them. Here, our Select Committee proposed the idea of term extensions to 70 years, so there are different ideas and we need to see if we can find a way through and a compromise position. Again, I am looking very closely at all the issues that the hon. Gentleman raises.

The Secretary of State has consistently said that he wants to do something big for the music industry. Well, here is his chance. He talks about consensus; all the stakeholders in the music industry, from the labels to the musicians, collection agencies and publishers, want an end to this unique and historic discrimination against musicians. The draft directive is on the table in Brussels. All the Secretary of State has to do is say yes and support it. Why will he not do that?

The memorandum that I mentioned a few moments ago is something significant for the music industry, because illegal downloading is seriously threatening its future. On the question of copyright term, I think it is fair to say that there is not quite the unanimity that the hon. Gentleman seems to suggest. There is still some debate about whether the Commission’s proposals are the right ones. They take us a step further forward and they raise the question of benefits to performers, which is important, and which, from my Department’s perspective, I am keen to pursue. However, I do not think this is quite as easy as he seems to make out.

May I say what a pleasure it is to see a young Evertonian at the Dispatch Box, as opposed to an old Etonian? On this subject, does my right hon. Friend know whether Mr. Steven Wonder, the author of “A man with a plan”, is still receiving his loyalties at present? Finally, may I say that there is a great deal of confusion, and that while we seek illumination we seem to find caliginosity everywhere? Will the Secretary of State please undertake at some stage in the future to clarify this issue?

Well, I could do with some clarification myself, I think, after that question, but my hon. Friend is right that there is a need for clarification. These are complicated issues, which we are looking at very carefully. They raise strong feelings in the music industry, as the hon. Member for Perth and North Perthshire (Pete Wishart) mentioned. We are looking at them very carefully and we will come to a UK Government position very soon.

If I write to the Secretary of State, will he look at the issue of copyright extension as it affects the British Film Institute, which, as he knows, has the largest and most important film archive in the world? Will he, furthermore, congratulate the BFI on its 75th anniversary, and in particular “Screenonline” for schools, which has brought schools, through digital media, to so many of our educational institutions?

I am grateful to the hon. Gentleman for that question, and indeed I will congratulate the BFI. The scheme that he mentions is very worthy and valuable. Illegal downloading affects both the music industry and the film industry, although it has affected the music industry first, and the memorandum we signed affects both music and film. He also talked about copyright extension. These are issues that potentially have an impact on more than just the music industry, and we have to give careful consideration to rewarding people who have made content that is still very much in demand around the world while striking a fair balance for consumers who wish to get access to that content for the lowest possible price. These are complicated judgments. We have to come to the right decision, but I can assure the hon. Gentleman that I have the interests of the film and music industries very much at the forefront of my mind.

Elite Athletes

The Government and UK Sport are working with sports governing bodies to identify and develop elite Olympic and Paralympic athletes through our world-class performance programme. We have seen a fundamental shift in the way in which elite sport is resourced—from £63 million of lottery funding for Sydney to £265 million of lottery and Exchequer funding for Beijing, building to a significant package of lottery, Exchequer and private funds for London 2012.

I am sure that the Secretary of State will join me in congratulating the Sunderland boxer Tony Jeffries on the bronze medal that he won in Beijing. However, the Secretary of State may not be aware of the problems that Tony Jeffries encountered trying to secure funding for his pre-Olympic training. My friend and neighbouring MP, my hon. Friend the Member for Blaydon (Mr. Anderson), thanks to some good work, managed to secure some funding on Tony Jeffries’ behalf. Can the Secretary of State assure me that the same problems will not be encountered by north-east athletes or indeed athletes from anywhere in the UK in the run-up to 2012?

I am grateful to my hon. Friend, who gives me a useful prompt to say that I am sure that the whole House wishes to join me in congratulating our Olympians and Paralympians on their outstanding success at the Beijing Olympics in the summer. They truly inspired and lifted the entire nation, and we all pay tribute to them; it was the best ever performance by Great Britain on foreign soil in an Olympic games. I saw Tony Jeffries fighting while I was in Beijing, and I am sure that we would want to congratulate him, too, on his bronze medal. I know that he faced particular challenges leading up to Beijing, although he did benefit from some world-class performance funding. What this says to me is that as we move forward, we need to put in place a package of support that really lets our young people focus on sport. That is the real benefit of world-class performance funding—giving them some certainty, so that they can focus on what they do best. We can all learn the lessons of the run-up to Beijing, and try to do even better as we come into the London Olympics.

In a similar vein to that of the hon. Member for Gateshead, East and Washington, West (Mrs. Hodgson), I wonder whether the Secretary of State will join me in wishing the very best of luck to Jake Arkell and Callum Frowen, from my constituency, who this weekend will be participating in the world drugs-free powerlifting championships in Antwerp. They trained at the Forest fitness centre in Cinderford, which trains people across my constituency. I am sure that the Secretary of State will join me in wishing them the very best of luck.

I certainly will. I am sure that everybody wishes to see British sporting success continue and the momentum that we established in Beijing go on and on, so they have my very best wishes.

I am sure that my right hon. Friend will not mind if we do not run through all the medallists that we have in Loughborough; we would probably be here for some time, and I think that we came 34th in the medal table at Beijing this time round. However, he will know that there is still the substantial shortfall of £100 million of funding—it has probably reduced a little now, to £69 million—leading up to 2012. Unless there is a significant change in the Government’s position in the immediate future, the cuts to the programme could put at risk all the success that we achieved by coming fourth in the Olympic and Paralympic tables in Beijing. Will my right hon. Friend as a matter of urgency make sure that this thing is sorted out by the time of UK Sport’s December board meeting?

My hon. Friend is absolutely right that we do not wish to lose any momentum that we have gained on the Olympic games. It is also important to say that the public support available now to our elite Olympians and Paralympians is obviously unprecedented, but we always said that wished to supplement it with funds raised from private sponsorship in the private sector, so we have come to a package of support for elite athletes that is essentially a mixed economy of lottery and Exchequer funds and funds from the private sector. In the long term, that will be the best way to sustain elite sport. We will soon announce a new scheme called “medal hopes”, which will provide opportunities for businesses up and down the country to be associated with the world-class performance programme, and I am very confident that we will raise the money needed to ensure that we get even more success in London 2012.

Does the Secretary of State agree that the National Rifle Association at Bisley has done a tremendous amount of work in the past few years in encouraging young people to develop their skills and their participation in the Olympic sport of target shooting? Wonderful work has been done. Can the Government say anything to encourage that improvement among young people that the NRA has started? Can he say a word or two about Bisley’s future as far as the Olympics are concerned?

I would not disagree with anything that the hon. Gentleman said; the NRA does extremely good work. My hon. Friend the Minister for Sport has visited Bisley, and we remain in close discussion with the NRA and the Home Office, which has an interest in these matters. We shall continue to take forward those discussions, and I entirely endorse what the hon. Gentleman said.

May I associate myself entirely with the Minister’s remarks about our Olympians and Paralympians?

I wish to pick up on the point made by the hon. Member for Loughborough (Mr. Reed). Over the past month, I have met every sports organisation involved with sourcing this missing £100 million—UK Sport, the British Olympic Association, the governing bodies of the individual sports or even Fast Track—and not one of them believes that the full amount is deliverable from the private sector, simply because so many other organisations are in the market looking for private funding. The Secretary of State must be aware that that uncertainty is having an extremely damaging effect on preparations for London 2012. Have any of those key organisations given him the same warning that they have given me?

I shall come to the hon. Gentleman’s question, but first I wish to put some facts on the table. Some £265 million of public money was made available to support our Olympians and Paralympians in preparing for the games in Beijing. Let us cast our minds back. Practically nothing was available in the run-up to the Atlanta Olympics and Britain came 36th in the medals table. [Interruption.] Opposition Members say, “Before the lottery”. It may have escaped the hon. Gentleman’s attention that some Exchequer funding was put into the effort to support the team for Beijing.

The hon. Gentleman talks about a missing £100 million. It has always been our plan to put in place at least the same amount of support that we had for the Beijing games and then to supplement that with contributions from the private sector. We are working out the details of that scheme. Before the end of this year we will make a detailed set of announcements that give sport certainty going into this Olympic period—a unique period when the world spotlight will be upon us. I am proud of what we have done so far to support elite sport, and I am confident that we will build on the momentum and success that we achieved in Beijing.

World Heritage Sites

With your permission, Mr. Speaker, before I answer the question I should like to pay tribute to the work done by my predecessor and friend, the right hon. Member for Barking (Margaret Hodge), and wish her husband, Henry, a very speedy recovery.

The Government are reviewing their UK world heritage policy, and as part of that review we will examine the costs and benefits of world heritage status and the future of the UK tentative list. We propose to consult widely on that shortly, and we are also looking to enhance protection for our world heritage sites through the planning framework.

Do we not need to do more to promote UK world heritage sites around the world? Do not the 2012 Olympics give us an excellent opportunity to promote world heritage and world games? Will the Minister agree to meet me—I chair the all-party group on world heritage sites—and the Local Authority World Heritage Forum to discuss how the Government can support the better promotion of world heritage sites in the run-up to 2012?

I would be very happy indeed to do that, and I pay tribute to my hon. Friend for the work that he and the all-party group on world heritage sites do. I know that he has a particular interest in the site at Ironbridge.

May I warmly welcome the Minister to her new role and urge her to put Stonehenge at the top of her priorities? Since Stonehenge was declared a world heritage site, more than 50 Ministers have had some responsibility for it, which is probably why nothing has happened so far. Will she assure me that she will meet the new roads Minister to discuss the current proposals, the consultation on which ends this month, so that she can make progress on Stonehenge, taking into account not only its international and national significance, but the burden put on local communities by the lack of proper facilities at Stonehenge and the gridlock that occurs there every weekend?

I commend the hon. Gentleman; when I was a Parliamentary Private Secretary in this Department, I had great admiration for his tenacity on this subject. I will indeed do as he asks and meet the Transport Minister responsible.

In congratulating my hon. Friend on her new role, may I invite her to visit Gorton monastery in my constituency, one of the most superbly refurbished world monuments in this country—

We’ve had MacShane: what about Lucan?

In inviting my hon. Friend the Minister to visit the monastery, may I ask her to consult colleagues about the ludicrous anachronism that prevents civil marriage ceremonies from taking place there, because the Marriage Act 1994 prevents civil marriages from taking place in a former place of worship? In her new role, will she show her dedication to world monuments by consulting colleagues to put that right?

I thank my right hon. Friend, and I would be very happy to visit the monastery. I have a family interest in such matters as my husband writes about them extensively. I will also consult colleagues on the Marriage Act.

Saltaire is a marvellous world heritage site in my constituency, and the biggest problem that it experiences is congestion at Saltaire roundabout. Does the Minister agree that the regional transport board that decides such matters should take into account the visitor experience at that world heritage site, and will she use her good offices to try to persuade the board that funding for improvement of that roundabout should be a priority?

I will indeed. It is a great heritage site, and as a regional Minister I know how important it is to get regional engagement on these matters.

The Minister’s predecessor not only agreed to support the Jarrow-Wearmouth bid for world heritage site status, but agreed to meet a delegation on the issue. May I take it that the Minister will confirm her support for the bid and carry on the commitment to meet the delegation from Jarrow?

I am very happy to do so. I seem to be collecting quite a lot of meetings today, but I am happy to meet my hon. Friend and to confirm my support for the site.

May I also pay tribute to the Minister’s predecessor, the right hon. Member for Barking (Margaret Hodge), who brought huge passion and enthusiasm to her job? I regret that she has left the Front Bench, but my regret is tinged with joy in welcoming the new Minister, who also brings huge passion to the job, as well as a close association with one of the greatest literary figures in this country. We will welcome her contribution over the next few months.

I invite the Minister to admit that she feels ashamed that, on this Government’s watch, seven out 27 of our world heritage sites have been threatened with inclusion on UNESCO’s in-danger list. Now we learn that the Government have overruled their own planning inspector on the Doon tower. When will this Government take our world heritage sites seriously?

I thank the hon. Gentleman for his gracious remarks. I do not think that my husband would describe himself in such terms, but I will convey them to him. I am only proud of what this Government have done and what we intend to do for heritage. Some of the UNESCO reports have been slightly exaggerated.

Football Clubs

The governance and ownership of football clubs is primarily a matter for football. However, I believe that given the changes in the game in recent years a number of legitimate concerns are being expressed by football supporters and now is the time to have a proper and open debate. My right hon. Friend the Secretary of State and I will shortly meet the football authorities—the Football Association, the premier league, the Football League and others—to discuss the financial regulatory framework of football and a range of issues surrounding the game.

I thank my hon. Friend for that reply. I am sure that he will want to join me in passing on our best wishes to Mike Newell, who was announced as Grimsby Town’s new manager this morning. The club suffered financial difficulties due to the collapse of ITV Digital and I know that the Minister’s own club, Bradford City, has had financial problems, too. In those meetings with football authorities, will the Minister discuss ways in which they can help with the governance of the game to ensure that clubs do not amass crippling debt and that there is greater financial transparency?

I am grateful to my hon. Friend for raising that issue, which has been raised with me by a number of colleagues in the House and in the other place, as well as in correspondence from a variety of football supporters. The time is right to look at football. On his initial point, I, too, wish Mike Newell well—as an ex-Evertonian he must have some knowledge of the game—and I wish Grimsby Town well. This is a serious subject that affects many football clubs and a great number of people in the country. We want to work with the football authorities and look forward to doing so.

I appreciate that the Minister is a hard-working and committed football fan, but I think that his sense that football can get on and regulate itself is somewhat far from the mark. There is great concern that football needs to get its house in order, particularly given the amount of public money that has gone into the game over the past decade and a half and the fact that we also wish to host the World cup. Those are real concerns that he touched on earlier. Will he ensure that he works closely with his erstwhile colleague, Lord Triesman, who now has an important role in the Football Association, to ensure that more is done and that the high-profile concerns about the football industry are brought to book?

I understand that it is the hon. Gentleman’s birthday, so I wish him a happy birthday. We have to consider the key issues, and it is quite interesting to hear from Conservative Members suggestions that we look at more regulation. We have to take the key issues into consideration, and first of all the international bodies—FIFA and UEFA—will play a role.

We have to appreciate that some work has been done. That done by the conference on early warning systems and financial difficulties has been an important step forward. We want to see transparency, and perhaps we need to look again at the fit and proper persons test. Clearly, the matter has to be the responsibility of football, but we will do what we can to ensure that the concerns of supporters are addressed. The hon. Gentleman will know that the FA has an independent chair as a result of the Burns report, and so movement has clearly taken place.

Given the takeover of Manchester City by a mega-rich plutocrat from a country governed by a hereditary dictatorship and given the dubious source of finances used to buy Chelsea and Heart of Midlothian football clubs, does the Minister agree that now really is the time to regulate the way in which British football clubs are acquired, particularly when they are acquired by people who have become billionaires through corruption, dishonesty or extortion, or all three?

First, I do not think that it matters what the nationality of an individual is. We have examples in the premier league, such as that of Aston Villa, where people are doing well in their ownership of the club and in its development within the community. My hon. Friend touches on the fit and proper persons test, which needs to be revisited. That is one of the issues that we will take up with the football authorities.

I am grateful to the Minister for the answers that he has already given. I join him in believing that we need football club owners who really care about the long-term interests of the game. Indeed, the Secretary of State said that more than 10 years ago. In each reply so far, the Minister has said that the football authorities should resolve the issues, including the fit and proper persons test. Does he accept that the premiership has said only recently that the Government and not the football authorities must lay down the rules of ownership for football clubs? What are the Government going to do?

I do not recall the premiership saying that it wants Government interference, but I will check the record for the hon. Gentleman. Clearly, the country has laws on fit and proper persons, on company directors and on their rights, responsibilities and duties. Yes, there are laws effective on insolvency, and we need to find out whether we can do any more in terms of the laws of the land. But at the end of the day, it is not for the Government to run football. That would be the wrong thing to do, but we are certainly working with the football authorities to ensure that we do everything that is possible. We are ensuring that the concerns of supporters and others are getting across. The Government have supported Supporters Direct, and we have been working with the supporter organisations to ensure that they have a voice.

Does my hon. Friend agree that, although it is important to keep his beady eye on Abramovich and all the rest of them, it is probably more important in this world of politics, especially at this time, to ensure that bloated plutocrats such as Lord Ashcroft do not own the Tory party?

I take on enough in dealing with the world of sport. Clearly, the funding of the Tory party is a matter for it, but Lord Ashcroft’s donations have not gone unnoticed on the Government side.

As the Minister knows, I have written to him to express my concerns about the penalties that the football authorities imposed on Luton Town football club. That is clearly a major issue for Luton Town, but it also affects other small clubs around the country. Can the Minister assure me that the same penalties would have been imposed if Luton Town was in the premier league, or is there no level playing field in football these days?

I can understand the frustration of Luton Town fans, particularly as its new owners have done everything by the book. I can understand their feeling frustrated at the number of points that have been deducted, but that is clearly a matter for football and how it operates. However, such concerns have been put to me, and we will take them up with the football authorities.

Television (Access)

7. What steps he plans to take to enhance access to television for people with visual impairments as part of digital switchover. (224378)

Blind or partially sighted people are eligible for the digital switchover help scheme, which provides help with equipment, installation and after-care support. Audio description is accessible through the equipment provided by the scheme.

I am grateful to my right hon. Friend for his interest in this subject, particularly in relation to audio description, but is he concerned that the industry’s target is 10 per cent. by 2013, whereas awareness of the service has already gone up from 43 to 72 per cent. among people with visual impairment? Is not digital switchover a unique opportunity to ensure that people can get Freeview receivers that include audio description? Will he urge the industry to increase the target to a more realistic level and to do so within months, rather than years, so that my constituents can benefit during 2009?

I pay tribute to my right hon. Friend for the determination with which he pursues these issues and for his work with the Royal National Institute of Blind People on these incredibly important matters. He is right to remind us that the digital switchover provides an opportunity to ensure that everyone can enjoy the benefits of digital technology. There are two issues on audio description. One of them is to ensure that it is as easy as possible for people to use. We are currently reviewing the core receiver requirements—the set-top box requirements—to find out whether we can make that easier still, so that we give people single button access to audio description. But he is right to push me and to ask whether more programme makers should include audio description on their services. Although I cannot give him a firm commitment today, I give him a commitment to look again at whether the ambition for programmes to carry audio description can be raised.

Is the Secretary of State aware that, in the past few months, it has been apparent that a number of people who invested early in digital terrestrial TV set-top boxes to get ahead of switchover have discovered that they now do not work due to the fact that Freeview has changed the technology that it uses? Will he consider whether there is a case for extending the help scheme to any vulnerable or elderly person who suddenly finds that they are faced with black screens as a result?

I am aware of the technical problems raised by the hon. Gentleman, who is the Chairman of Select Committee on Culture, Media and Sport. Indeed, I have begun to notice an increasing number of letters on the issue arriving from hon. Members on both sides of the House. I agree with him that it is somewhat annoying, to say the least, for people who invested in digital technology very early to find that it does not work. I will look closely at the issue, and if he wants to meet to discuss it further, I am happy to do that, too, but it is now very important to maintain people’s confidence in the services that they are switching to.

With regard to access, the Secretary of State will be dismayed to hear that my local council has announced that many, if not a majority, of its tenants are likely to be without any access to TV after digital switchover. That is absolutely unacceptable for all my constituents, particularly those who are disabled or who have any sensory impairment. What guarantees can the Secretary of State give—I am not referring to the companies, which are offering a prayer and a promise—that my constituents will not be without a TV signal, and that switchover will not be allowed to happen if huge numbers of people cannot access TV?

I am grateful to my hon. Friend for raising the issue. The problem relates to a relay transmitter in the Skelmersdale area, if I am not mistaken. Obviously, we are approaching the switchover point in Granada-land, as we in the area like to call it; I think that a date is to be announced later this month. That should focus the minds of a few Labour Members. Clearly, we have to be sure that we are on top of such issues and that there is a fair solution, so that people can continue to access television services. I am aware of the issues that my hon. Friend raised and I am working through them, but I would be happy to meet her to discuss them further.

Television Licence Fee

None. The licence fee settlement announced in January 2007 by the then Secretary of State, my right hon. Friend the Member for Dulwich and West Norwood (Tessa Jowell), covers the period from 1 April 2007 to 31 March 2013.

By 2013, we may find that the licence fee itself is somewhat out of date. Mr. Speaker, when you and I were boys—not so long ago—the BBC was regarded across the world as the gold standard of broadcasting, but many people now question the regressive nature of taxation through the licence fee. They question whether it gives the BBC an unfair advantage over commercial competitors, not just in the broadcast media but among local newspapers. Notwithstanding the work of the BBC Trust, people question the accountability of the BBC. Does the Secretary of State believe that the BBC gives the licence fee payer value for money, and will he address the concerns that people have raised?

The hon. Gentleman sounds dangerously off message; it sounds as though he has not done his homework. I am led to believe that one Polly Toynbee is the columnist of choice for those on the Conservative Benches these days, and I am sure that her column is the first thing that he looks for when the papers drop through his letterbox. In The Guardian today, she says that:

“at less than the price of a daily newspaper, the BBC remains astounding value.”

I happen to agree with that—[Interruption]—but from the noises on the Opposition Benches, I am beginning to pick up on the fact that the Opposition do not. If they do not, they should make that absolutely plain.

Obviously I agree with the Secretary of State’s estimation of the BBC, but he should accept that this reactionary and regressive tax, which means that the poorest in the land pay the same as the richest, may no longer be sustainable. I ask him to talk with the BBC, just as we are talking with energy companies and others. If very poor people in my constituency who do not watch the BBC continue to have to fork out for this ever-increasing tax, there will be serious social problems.

My right hon. Friend will remember that there was a very thorough debate on the issues when my right hon. Friend the Member for Dulwich and West Norwood set the new licence fee only a few months ago. All those issues were taken into account. The charter review concluded that, compared with the alternatives, the licence fee continues to be the best funding mechanism for the foreseeable future. Now that there is pressure on commercial public service broadcasting, it is crucial that we maintain a strong BBC as the backbone of our public service broadcasting system. The BBC is an international beacon, and I think that the licence fee is the fairest way to fund a universal service that is widely loved and respected by many.

BBC Alba, an excellent new Gaelic channel, has met with popular acclaim, particularly in my constituency, since it began broadcasting about two weeks ago, on channel 168 on Sky. Will the Minister use his influence with the BBC and the BBC Trust to make sure that the licence fee is used to ensure that the channel is accessible on Freeview as soon as possible?

I give the hon. Gentleman a commitment that I will look into that proposal. My Department has been very supportive of the service that he mentioned, and we will continue to support it in whatever way we can. I cannot stand here today and give him a precise answer to his question, but I will look into it.

Topical Questions

Mr. Speaker, with your leave, I wish to update the House on important developments announced by my Department since the summer break.

I have set out the timetable for my review of public service broadcasting, which I will continue to take forward in conjunction with Ofcom, and I am very pleased that Stephen Carter has been appointed to support me in this work. I have also announced that I will commission an independent review of listed sporting events to look again at whether the right sporting events are protected for free-to-air broadcasts, and whether the right balance is struck between the interests of sport and the interests of television viewers.

We continue to work on the implementation of the McMaster report, including the recommendation to make more arts events free to the public. I recently announced a £2.5 million programme, funded through the spending review by Arts Council England, to give young people under 26 the chance to see free theatre at 95 venues across England. My right hon. Friend the Member for Barking (Margaret Hodge) played an enormous role in that scheme and in the implementation of the McMaster report. I would simply like to echo the very generous comments made by Opposition Front Benchers earlier in Question Time. My right hon. Friend stepped back for family reasons; I am sure that the whole House wishes her well, and wishes the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Stevenage (Barbara Follett), well in her new role, too.

The Wellingborough and District Nene angling club has existed for 139 years, and owns and operates lakes in Northamptonshire. Recently, Natural England slapped an SSSI—site of special scientific interest—designation on it and imposed hundreds of restrictions, which makes the club’s viability doubtful. Is it a new Government policy to close angling clubs, or is Natural England out of control?

We fully support angling. Indeed, we have had regular meetings with angling associations. I am pleased that many of those associations have come together in one body, as we start to look at how we can be more supportive in future. Clearly, however, this is an issue, and I am happy to meet the hon. Gentleman and go through it in greater detail.

T7. Given that the Secretary of State said in a speech in June that it was very disappointing that ITV had failed to meet its regional production quotas for two years running, and that that was non-negotiable, was it not an act of defiance for Ed Richards, the boss of Ofcom, last week to suggest reducing that quota from 50 to 35 per cent., particularly given the fact that his predecessor Lord Carter, who is now broadcasting Minister, set the figure of 50 per cent. just three years ago? (224341)

I am grateful to my hon. Friend, who takes a passionate interest in these matters, as do I. I have a strong belief in ITV as a company that has its roots in the regions, and has produced excellent news programmes for many years. He is right: I said I was disappointed because that was a legal requirement, not an optional target. Ofcom is dealing with the matter, so it would not be appropriate for me to comment further. However, my hon. Friend must recognise, as must Members on both sides of the House, that as the analogue licences wind down and we move towards a new world in broadcasting, which is all multi-channel and fully digital, the basis on which we regulate broadcasters changes and we cannot ask for the same deal in return for access to the scarce spectrum. That is just a fact of where we are, but I think we are all united in saying that we want strong regional output with a range of voices—more than one company providing it—in future, and I will talk to all broadcasters, ITV included, about those very issues in the months ahead.

T3. The Secretary of State will be aware that, should Newcastle and Everton be acquired by private owners in the near future, as is likely, more than half the clubs in the English premiership would be foreign owned, leading the former Sport Minister, the right hon. Member for Sheffield, Central (Mr. Caborn), to refer to that as a tipping point, so that the English game would “cease to be English”. Is it not therefore time that the Government ordered a royal commission, or some other inquiry, into the whole stewardship and future of the national sport? (224337)

As I tried to say earlier, we want football to resolve these issues. I do not think it is a question of nationality. We can give examples in which foreign nationals do well with some of our premier league clubs. However, I take the point that there are issues that we need to consider, which have been raised by supporters and by many in the House, concerning the governance of the game and concerning early warning systems in respect of financial accountability. A royal commission would be going too far, but we will report to the House the outcome of the discussions that we have with football authorities. Then we can have a debate in the House about the future of the game.

T8. My right hon. Friend will be aware that during the summer the Performing Rights Society carried out a clampdown in certain areas, one of which was Yoker resource centre in my constituency, where the after-school care group was prevented from playing music and DVDs to entertain the children after they came out of school. Will my right hon. Friend look into such cases at Yoker and other centres so that people in deprived areas do not have to fork out an exorbitant amount of money to keep children occupied? (224342)

I have to say that I was not aware of the issue that my hon. Friend raises in relation to his constituency, but I am prepared to look into it. I agree that in general terms we want young people to be able to enjoy music without any barriers.

Mr. Speaker, may I welcome you back after the recess? I welcome the new Under-Secretary of State for Culture, Media and Sport, the hon. Member for Stevenage (Barbara Follett), to her post. Her biography states that she is not so much a champagne socialist as a cappuccino socialist. As a cappuccino Conservative, I look forward to many stimulating cups of coffee with her at arts events. [Interruption.] May I move the discussion on from cappuccino to ask the Secretary of State about the free swimming offer that he announced earlier this summer?

The Opposition welcome anything that gets more people involved in swimming. What is the Secretary of State’s response to the letter that he received this summer from the Labour leader of Stevenage council, the new Minister’s constituency, which said that the average cost to a district council of implementing that offer for the over-60s alone would increase council tax by nearly 2 per cent? Will the right hon. Gentleman give the House a categoric assurance that his Department will fund the offer in full and not pass the costs on to hard-pressed council tax payers by the back door, when they are already so concerned about rising bills?

I do not know about cappuccino, but there was a certain amount of froth in that question. The hon. Gentleman seems to have misunderstood the package that we proposed. The initiatives began in local government. Many councils have begun to make swimming free for older and younger people. My council, Wigan, has, entirely from its own resources, already put in place a free swimming scheme. We said we would like to help councils to go further, so in support of our objective of getting 2 million more people active by the time of the 2012 games in London, we wanted more councils to offer such schemes to their public. We said all along that it was a challenge initiative and that local authorities could opt into it, should they choose to. Of the 354 eligible local authorities, some 300 have confirmed their participation in the over-60s element of the free swimming programme, and 296 in the under-16s element. It is their decision to take advantage of the scheme. If the Opposition and the hon. Gentleman’s council do not wish to take part, that is a choice for them, but Labour and the Government believe in sport for all.

T10. Will the Minister redouble his efforts in respect of sport as a way of tackling regeneration? Is he aware of the efforts by Sport for Nottingham, part of the local strategic partnership in Nottingham, which is trying to get young people on the outer estates and in the inner cities involved in sport as a means of team building and leadership building? It is already putting considerable effort into that. Will my hon. Friend ensure that sport is undertaken not just at the prestige level but at grassroots level, where it can help with crime, health and many other issues? (224344)

I congratulate my hon. Friend on showing such great leadership in his locality on sport and showing the impact that it can have on people’s lives. He is quite right: this is not just about elite sport, important though that is; it is about ensuring strong community sport and strong sport in schools. He will know that we have restructured Sport England so that we can now work with governing bodies to look into whole sport plans. For me and the Government, a key element of that is ensuring that communities benefit from that participation through sport. We are happy to work with my hon. Friend and Sport England to ensure that everybody has access to sport.

T4. Has the Minister seen “Dance Manifesto”, which is supported by more than 130 dance organisations across the spectrum, from our wonderful English National Ballet to I Love Salsa? Given the health, social and artistic benefits of dance, what will the Government do to strengthen it as an artistic pursuit? (224338)

I am grateful to the hon. Lady for raising this issue, because it is ever more popular across the spectrum, as we see in the variety of television programmes about it and about dance fit for young people. The Government are fully supportive. We believe that dance is an ideal tool for making people’s lifestyles healthier and improving their self-esteem and confidence. We are working with the dance authorities and with regional partners to ensure that we invest in dance.

T5. Kettering borough council is keen to opt into the free swimming initiative. Although it can already do so for the over-60s, it is unable to do so for the under-16s because it still awaits detailed financial information from the Secretary of State’s Department about how the grant funding mechanism will work. That information was due in September, but I understand that Kettering borough council is still awaiting it. Will he ensure that it is released as soon as possible to district authorities? (224339)

I welcome Kettering borough council’s participation in the scheme for older people. My local experience is that not only was there an increase in people going swimming when we made it free for the over-60s, but there was an increase in the secondary income that comes from people using leisure centres and pools more regularly, which is another good source of income for local authorities, so the scheme seems to work. We have been in discussion with local authorities, asking them to opt into the different funding streams. We will give final allocations to local authorities on 15 October, so I am sure that we will be ironing out those issues with Kettering in the next few days. However, I will ensure that we do so, following up the hon. Gentleman’s question.

Will my right hon. Friend ensure that he does not oversee the end of political programming in the regions? Will he now give Ofcom the teeth to ensure that it makes ITV stick to the franchise agreements on which it is currently trying to renege?

I know that my hon. Friend appears regularly on Granada’s late-night programme—indeed, I look forward to his words of wisdom when I get home on a Thursday evening. He and I are from the same region and we share the same passion for regional broadcasting. As I was saying to my right hon. Friend the Member for Rotherham (Mr. MacShane) a moment ago, as long as there is still value in the licence, it is important that we prioritise news, current affairs and political programming. That comes out loud and clear from Ofcom’s research into the issue. I will continue to talk to Ofcom and ITV to ensure a good, strong regional offering in news and current affairs.

T6. The Taking Part survey has shown a decline in the number of over-75s taking part in cultural activities. Given that the Government are reviewing their ageing strategy, what steps is the Secretary of State’s Department going to take to reverse that decline? (224340)

We commissioned the Taking Part survey precisely to ensure that we do reach all parts of the community. One of the great things about free entry to museums and galleries over the past 10 years is that it has encouraged more people to use them more regularly. However, we keep such issues under review, and I can assure the hon. Gentleman that we shall respond in due course to the issue that he raises.

T9. The Secretary of State will be aware that there has been something of a renaissance in British film recently. Will he guarantee the future of local cinemas, such as the Ritz in Thirsk, which may suffer unfair competition from home entertainment plans? (224343)

This is a very important issue, and I am sure that it raises strong feelings locally in areas such as Thirsk and elsewhere in the hon. Lady’s constituency. The Film Council has given some funds to help to put digital screens into smaller local cinemas, but ultimately I cannot guarantee their future. That is something that it is beyond my power to do, but we do support local cinema and we will engage constructively—as will the Film Council—to ensure that their survival continues.

Olympics

The Minister for the Olympics was asked—

Site Landscaping

Before I answer the hon. Lady’s question, I am sure that the whole House will want to congratulate Team GB on its extraordinary performance in Beijing in the summer, where it came fourth in the medal table, and also to congratulate the really amazing and uplifting performance and achievement of our Paralympic athletes, who came second in the medal table—a foretaste of what is to come in London in 2012.

As for the landscaping of the Olympic park, the total budget for landscaping the site is more than £240 million. The Olympic Delivery Authority announced in late September that Edmund Nuttall would be the contractor to manage the delivery of the northern section of the Olympic park. That firm will procure and manage a large number of specialist subcontractors and suppliers, which means that there will be many further opportunities for businesses around the country, through the CompeteFor network, to bid to be part of landscaping the Olympic park.

May I echo the Minister’s remarks, and may I also say that the investment and foresight of John Major in creating the lottery for the purpose of the Olympics has been vindicated many times over? Is the Minister aware that the landscaping contracts are subject to environmental constraints—such as all materials needing to be brought to the Olympics site by barge—and does she not think it perverse that a German company is being allowed to contract for the landscaping project in preference to Johnson’s of Whixley in Vale of York, and other British companies?

On the hon. Lady’s point about the achievement of investment in sport, yes, the lottery has certainly played an invaluable role in funding our athletes, but so too has the sevenfold increase in the funding of Sport England since 1997. On the detail of the contracts that she has raised, and particularly on her specific constituency interest, I shall be very happy to write to her.

Does my right hon. Friend agree that David Higgins and his team in the Olympic Delivery Authority have done a magnificent job in the preparation of the Olympic park, including the environmental work and the soil cleaning, and that it is essential that they should have the maximum freedom to award contracts in a way that will deliver most cost-effectively and successfully? That kind of political interference—suggesting that contracts should be awarded by individual Members of Parliament—is entirely inappropriate to the successful running of the Olympic games.

As I am sure that every Member of the House will recognise, being an advocate for businesses in their local area is entirely legitimate, but my right hon. Friend is absolutely right to say that value for money and timeliness will be the criteria by which the award of contracts will be judged.

May I associate colleagues on this side of the House entirely with the Minister’s congratulations to our Olympians and Paralympians? She will be aware that the ODA has spent a lot of time touring the party conferences over the past three weeks, warning of the necessary increases in the budget to deal with the current economic situation. However, the landscaping contract, among others, must also be subject to pressures in the opposite direction. Building cost inflation is now lower than it was, and the labour market has eased. Will she arrange for the ODA to present a statement to the House, following her report in July, to show which costs have gone down, as well as showing those that have gone up?

The hon. Gentleman is well aware of the reporting arrangements that apply, as well as the level of transparency, the three-monthly reports and the regular briefings that are provided to members of the Opposition parties. There is ample opportunity to examine those figures in the way that he suggests, including through the Select Committee, without placing a further burden on the ODA, which is getting on with the job of delivering the Olympic park on time and on budget, and doing it very well.

Paralympic Games

2. If she will make a statement on the participation of people with learning disabilities in the London 2012 Paralympic Games. (224391)

The Government fully support efforts to see athletes with intellectual disability eligible to compete in the Paralympic Games. I am delighted that the International Paralympic Committee and the International Sports Federation for Persons with Intellectual Disability envisage that that should be possible for the London 2012 games. That is reliant, however, on some additional work in order to ensure full fairness, and I am delighted that the Department is helping to fund that further research.

I am very grateful to the Minister for that answer. I am sure that she was as heartened as I was by the announcement during the Paralympic games that progress had been made on an objective test so that it could be verified that athletes did indeed have a learning disability. I am sure that she will welcome swift progress towards allowing these people to compete. We both share the vision of having them compete in London 2012, which will be particularly important for those who train at the Forest fitness centre in my constituency. For them, the goal of participating in the London Olympics or Paralympics is indeed inspirational.

I fully recognise that this would be both a popular and fair move—one that I have argued for throughout my long association with the Olympic movement. I very much hope that negotiations will conclude and allow athletes with learning disabilities to take part in the 2012 games.

Notwithstanding changes in the Olympics and Paralympics and the success that Loughborough has had, will the Minister also recognise the special place of the Special Olympics, which will come to the city of Leicester in 2009? I declare an interest as a board member, but this should not be just a Leicester city or county-wide celebration; it should be a nationwide celebration of people with learning difficulties participating in the Special Olympics.

My hon. Friend is absolutely right and I am quite sure that Leicester will look forward to welcoming the world to the Special Olympics when they are hosted there next year. I look forward to attending them.

Legacy (North-West England)

I regularly meet the nations and regions group to ensure that the UK-wide legacy of such an important promise as the 2012 Olympics is delivered in practice. The groundwork for the legacy in the north-west is already in place. The hon. Lady will no doubt be aware of the success of firms in the north-west in procuring contracts for a number of training camps for Olympians and Paralympians. I am also delighted in respect of the broader legacy of greater participation in sport and about the significant number of local authorities in the north-west which have taken up the Secretary of State’s proposal to offer free swimming in order to get the north-west fit for 2012.

I am grateful for that answer and I can confirm that the Alsager campus of the Manchester Metropolitan university has been selected as a training camp, mainly because it is recognised as the foremost college of sports science and medicine and because it has outstanding facilities. What will be the specific benefits of the Olympic legacy to the north-west, particularly for young people? Will there be more coaches, more volunteers and more opportunities for physical activity? Will the Minister be more specific about the benefits?

I have set out the what the benefits are now—what is happening and what is already in place. The hon. Lady may be interested in attending a briefing on 13 October, at which the Organising Committee and others will set out the legacy in more detail. Having been through the briefing papers on the legacy for the north-west, I will be happy to place a detailed report in the Library. Here on the Floor of the House, I believe Members are on edge to hear more about the financial markets rather than the Olympic legacy for the north-west, but I am happy to provide that information, as I said.

Does the Minister agree that the legacy in the north-west would be greatly enhanced if the Government moved with the same speed as our wheelchair athletes, swimmers and cyclists towards a system of gross profits tax, as suggested on the Liberal Democrat Benches three years ago, as that would enhance the resources available to good causes, not only in the north-west but everywhere else in the country?

The hon. Gentleman should be aware that, although that matter is not entirely straightforward, the Government have reached an agreement to look at it again. It is in everybody’s interest that every pound of lottery money is spent to produce maximum public interest, particularly given the commitment to the Olympics.

Financial Markets

With your permission, Mr. Speaker, I would like to make a statement regarding developments in financial markets to bring the House up to date.

The events in America over the last few weeks and in Europe over the last few days have again demonstrated the global nature and the sheer scale of the problems affecting the global financial system. What started in America last year has now spread to every part of the world and the disruption in global financial markets has intensified, especially over the last few weeks.

People are rightly concerned about what is happening, and I have made it clear that we will do whatever is necessary to maintain stability. Along with Governments across the world, I have a responsibility to support a stable, well functioning banking system. Financial transactions are at the heart of everything we do. They allow people to buy goods, pay for services, buy homes, save for pensions and invest, so it is essential that we take action to support the banking system as a whole, as well as being ready to intervene in particular cases where it is necessary to do so. It is not a case of doing either one or the other. Both general support and individual intervention are necessary.

We need, too, to work with other countries to tackle the causes of those problems, as well as dealing with their consequences. Let me briefly remind the House of what we have done to stabilise the banking system as a whole. Since April, the Bank of England, with support from the Government, has introduced the special liquidity scheme providing funding to the banks. The Government have made available in excess of £100 billion of long-term funding to be lent through the scheme, and the Bank of England has extended it until January. I am willing to make further resources available as necessary and the Governor has made it clear that

“in these extraordinary market conditions, the Bank of England will take all actions necessary to ensure that the banking system has access to sufficient liquidity”.

The Bank of England has also continued to inject substantial funds into markets through its normal operations, and it will continue to do so. Tomorrow, it will put in another £40 billion, taking in a wider range of security, and those operations will continue into November.

We also need to deal with specific problems as they arise, to maintain stability. In February, we took special powers to bring Northern Rock into public ownership—now seen by most people as the right thing to do. I can tell the House that Northern Rock has now paid back more than half the taxpayers’ money that was lent to it and it continues to repay its loan ahead of schedule.

In August, I announced that the Government would swap up to £3 billion of outstanding debt for equity, if required, to strengthen Northern Rock’s capital position. In September, we amended the competition regime to allow the interests of financial stability to be considered in the proposed merger between Lloyds TSB and HBOS. We took that exceptional measure because financial stability had to come before normal competition concerns.

Ten days ago, we had to deal with the problems at Bradford & Bingley. We transferred the savings business, the branches and the related jobs to Abbey Santander, protecting savers, and took the rest of the company into public ownership. We acted decisively to protect savers, and also the interests of taxpayers, ensuring that the financial sector bears its share of the costs.

I have made it clear on many occasions that our priority is to maintain stability and protect the interests of depositors, and safeguard the interests of the taxpayer. I want to set out what we have done so far here at home and also to deal with developments in Europe over the weekend.

The Financial Services Authority has announced a further increase from tomorrow to the compensation limit for retail bank deposits to £50,000 per depositor, which means £100,000 for joint accounts. That measure will ensure that 98 per cent. of accounts are fully covered. The FSA is consulting on whether to increase that limit further to ensure that arrangements here continue to be comparable with international best practice.

I have always been clear that each country needs to do whatever is necessary to deal with its own particular circumstances. However, I also believe that, wherever it is possible to do so, countries should work together and act to maintain stability. This afternoon—in the last hour—all 27 European Union member states have reaffirmed the need to take whatever measures are necessary to maintain the stability of the financial system, whether through liquidity support, action to deal with individual banks or enhanced depositor protection schemes. But in the light of what has happened over the weekend, it is especially important that EU member states work far more closely together. So tomorrow I will meet European Finance Ministers in Luxembourg to discuss further how we bring stability to the system and protect depositors.

This demonstrates that every country in the world—Europe included—is being affected by these problems. In the United States, Congress has now approved measures to support its banking system, which we welcome. Our approach has been different, but what has happened in America emphasises yet again the need for countries to take whatever action they believe is necessary while also working closely together not just to resolve these problems, but to try to prevent them from happening again.

Later this week, I will attend the G7 and International Monetary Fund meetings in Washington. Our aim is to reduce uncertainty and to improve confidence in financial markets by increasing the openness of financial institutions’ exposures. We also want to change and improve the effectiveness of credit rating agencies. These measures are now being implemented, but I believe that we need to move far more quickly.

Here at home, a number of specific steps are necessary. First, the Bank of England will continue to do whatever it takes to make cash available for banks to lend. Secondly, the banking Bill will be introduced tomorrow, building on the special powers we took in February to allow us to intervene quickly and decisively. It will also give the Bank of England a statutory role to maintain financial stability, to complement the role of the FSA.

Thirdly, just as at an international level, lessons need to learned. We need to ensure our regulatory system here is up to the mark. It is not about light touch against heavy-handed regulation; it is about making sure that we have the necessary rules in place and that those rules are enforced effectively. I have asked Adair Turner, the new chairman of the FSA, to make recommendations for reforms. As recent events in the financial markets have shown us, regulation should be about liquidity as well as capital. That is why the FSA is considering changes to the liquidity requirements. It is also looking at remuneration structures in the institutions that it regulates.

Fourthly, we must do everything we can to ensure not only that banks have the confidence to lend to each other, but that lending is maintained to the mortgage market, businesses and individuals. I shall publish Sir James Crosby’s recommendations on options for improving the functioning of the mortgage finance markets shortly.

These are exceptional times, and I am in no doubt as to the size of the task facing us and Governments across the world in bringing order to the financial system. The process of change will necessarily take some time to work through, and because we are dealing with international institutions and international markets, it will require not only action at a national level here, but concerted international action.

It is right that we look at every aspect—liquidity, capital and regulation—with other countries and of course with the financial sector itself, but it would be irresponsible to speculate on the specifics of future responses. Indeed, providing a running commentary could add uncertainty in already febrile market conditions. But I want to make it clear that all practical options must remain open to us. I have made it very clear that the Government are ready, with the resources and the commitment, to do whatever is necessary, and I will keep the House informed.

Our priority, at home and abroad, is to bring stability to the financial system, to ensure that depositors and savers are protected, and to defend the interest of the taxpayer. I commend this statement to the House.

As we see again from today’s markets, these are times of great instability for our economy and of great anxiety for the people we all represent. Families are deeply worried about their savings, their homes and their jobs, and it is up to us to try to work together to get the country through this current crisis. I do not think that the British public would thank us if they saw happening here in this House of Commons what everyone saw happening in the American Congress. That is why we offer to look constructively at any proposals brought forward by the British Government.

For let us be blunt about it: if the banking system fails, it is not just the banks that go bust—businesses fail, families cannot get mortgages, and people lose their jobs, not just in the banks, but across the wider economy. The Prime Minister said that we would never see a return to 15 per cent. interest rates. This week, one of our high street banks has written to many of its small business customers, increasing their interest rate to 15.8 per cent. All of us need to work together to stop Britain sliding from a banking crisis into a deep recession.

Of course, constructive support does not mean that we are suspending our critical faculties. We will return at a later date—[Interruption.] Oh yes. We will return at a later date to ask how on earth Britain found itself, at the end of this age of irresponsibility, with more personal and public borrowing than any other advanced economy in the world. But today I want to ask the Chancellor about the immediate issues facing the banking system: the issues of confidence, liquidity and capital.

The Chancellor mentioned the banking Bill. Will he confirm that it will create the Bank of England resolution regime that we think should have been used to deal with Northern Rock and Bradford & Bingley? As I told him last week when we met, the Bill will have our support. We also welcome the decision to raise the limit of protection on retail deposits to £50,000. We have been proposing that from the Dispatch Box for almost a year, and it is clearly the right thing to do. Even so, events are moving fast, with the broader guarantees issued first by Ireland and Greece and then by Germany, Denmark and others. Will the Chancellor confirm that none of those countries informed the British Government in advance, and does he agree that it is not helpful for European leaders to call for international co-ordination at summits and then, hours later, to act unilaterally? As he implied in his statement, their confusion is adding to market anxiety today. He is going to ECOFIN tomorrow. What reassurance can he give us that we can avoid descending further into a beggar-thy-neighbour approach that will, in the end, help no one?

Let me turn to the issue of liquidity. The increasing reliance of our banks on the overnight money markets is creating a hair-trigger effect which leaves individual institutions more and more exposed to events. That must clearly be undone, so we all support the Bank of England’s decision to extend funding to the banks from tomorrow—it should address the urgent liquidity problem—but let us be clear about what is happening here. The Bank of England is becoming not just a lender of last resort, but the lender of only resort. Does the Chancellor agree that, in the medium and the long term, that is unsustainable? We need to address not just the symptoms of the crisis but the cause, and that brings me to the issue of capital.

The cause of this crisis is that we built an economy on a debt-fuelled bubble. Now the bubble has burst, and the debt is being called in. That leaves banks under-capitalised and their balance sheets weak. There are steps that can be taken now to stop, for example, the mark-to-market accounting rules adding to a downward spiral of falling asset values and restricted lending. The Chancellor’s immediate reaction when we proposed that was to say that it would make “no difference”. Many, many banks disagree with him, and so do many European countries. If he will not accept our argument, will he at least engage with theirs?

That still does not address the central challenge: the need to recapitalise the British banks. Does the Chancellor agree that that must, in the first instance, mean shareholders’ accepting their responsibility? As I said to the Conservative conference, banks that pay out dividends instead of rebuilding balance sheets should be held to account by regulators.

I know the Prime Minister said when he went to New York that he wanted to handle the crisis on a case-by-case basis, but events have moved on. Does the Chancellor accept that the ad hoc approach is running out of road? No one is expecting the Chancellor to stand up here and speculate on every single option available, but he himself confirmed yesterday that big steps were being considered by the Government. Would it not be irresponsible not even at least to consider more dramatic measures to help our banks, including support from creditors and Government injection of capital? Of course there would have to be very strict conditions to protect taxpayers and ensure that they benefited first from any gain, and we could not contemplate taxpayers’ money being used to prop up the kind of salaries and bonuses that we have seen in recent years. We must make sure—[Interruption.] The Chancellor can ask his new City Minister in the House of Lords about that.

We must make sure that in return for any support the banks start lending again, but in the end, for all the risks to taxpayers involved, there is one thing worse than Government action, and that is inaction in the face of this crisis—for then the far greater risk to the taxpayer and the country is a long and lasting recession. Boom has turned to bust; now bust must not become something worse. That is why Conservatives stand ready to help.

I welcome the shadow Chancellor’s offer of co-operation and help, especially as he appears to have changed his tune somewhat about what remedies he now thinks are appropriate. I hope that he will now recognise that it is necessary for Governments to play an active role in trying to resolve the problems that we face, in order to produce greater stability as well as to help depositors.

I disagree with the hon. Gentleman in one respect in particular. Our position is not that one has to choose between generalised measures of support and looking at particular cases case by case. When we were confronted with the problems at Bradford & Bingley 10 days ago, for example, we had to deal with that specific case, because the problems were peculiar to that bank—it was the same for Northern Rock, and different particular issues arose in relation to Lloyds TSB. In addition to dealing on a case-by-case basis, it is necessary to have an overall approach. That is why the special liquidity scheme, which the Bank of England operates, was put in place, and there will be other measures, too.

I am glad that the hon. Gentleman welcomes the Bill, and I hope that we will get support for the measures in it. I very much welcome the fact that he and the hon. Member for Twickenham (Dr. Cable), who speaks for the Liberal Democrats, are anxious to ensure that we try to get the legislation on to the statute book by the middle of February next year, when the provisions we made to take Northern Rock into temporary public ownership will expire. That would be extremely helpful and useful.

So I welcome the support of the hon. Member for Tatton (Mr. Osborne), although I notice that his tendency to lapse into points-scoring and party politics did not take long to reappear. I must make this one point to him in passing: our interest rates are 5 per cent. now, and while people obviously have their views on that, they compare rather favourably with the 15 per cent. interest rates that we had some 15 years ago.

The hon. Gentleman went on to raise some perfectly pertinent points, which I want to deal with. First, in relation to guarantees and what happened over the weekend, as far as I am aware no Government—nor the European Commission—was made aware of what the Irish Government were proposing to do last week. I took up that matter with Brian Lenihan, the Irish Finance Minister, and he explained that they did that because, in their judgment, they needed to take action because of what was happening in Europe. I understand that, but it demonstrates the problems that arise when member states take unilateral action, because, of course, it has a knock-on effect for other member states. Similarly, Germany announced action yesterday. As I understand it, Germany has made a declaration that is not legally binding; it is a political declaration about guarantees.

This emphasises the need for us all to work together, which is why from last night we have been working with the French presidency to get a declaration from all member states—a pledge to work together, to act together. As I said, that statement was finally agreed just an hour ago. I very much hope that when we meet in Luxembourg tomorrow we will agree that, whatever is done, European member states act together. That is very important; otherwise, we will end up with a situation that is confusing not just to depositors, but to institutions themselves.

On the hon. Gentleman’s points about accounting rules, the European Union is looking at that. On Friday, the International Accounting Standards Board said that it would look at the lessons to be drawn from what has been happening in markets, to see whether any changes ought to be made and also to make sure that we do not find that European and American rules start to diverge. However, I say to the hon. Gentleman that it would be a huge mistake to assume that changing the accounting rules would sort out the problem. Especially at this time, markets want to know exactly what is going on, and they do not want to think that the situation has apparently improved simply because the ways in which things are accounted for are different. That issue is not somehow a “get out of jail free” card; it needs to be looked at, but it does not provide the answer that the hon. Gentleman might have been suggesting.

Finally, on capital, I said in my statement that we stand ready to look at the issues of liquidity, capital and regulation. They all need to be looked at, and we are ready to do whatever is necessary. I also went on to say—here, I agree with the hon. Gentleman—that we saw from what happened in the United States that nothing is worse than coming forward with a plan that is not sufficiently developed and about which questions cannot be answered, which resulted in some $1.5 trillion being lost over the 10 days that followed. I am determined that when we take action, we take it quickly, we take it decisively and it works. That is what I am determined we will do.

I thank the Chancellor for his statement. I do not think that any of us envy him for the very considerable weight of responsibility that rests on his shoulders, and we are going to have to work together in the common interest. There will be a time to decide who made mistakes, but the issue now is: have we moved forward?

The Chancellor said that he will do whatever he has to do in the financial crisis. He is right, and I hope that he will, but there are some issues that need clarifying. In the wake of the apparent German decision to give a complete guarantee for all deposits in the German banking system, it seems to us that the British Government will indeed have no alternative but to give a comparable assurance to people in the British retail high street banks. We all know that our bank deposits are safe. Some of my own modest savings are in the Bank of Scotland and some are in the Royal Bank of Scotland, so I am more than usually dependent on both the Chancellor and the Prime Minister and on the First Minister of Scotland not to let me down. However, there are anxieties. People have anxieties about specific questions such as merged banks, large deposits during house sale transactions and small independent businesses, and there needs to be more clarity about the guarantees than the Financial Services Authority has currently given.

Secondly, the Chancellor said in his statement that he is pursuing a case-by-case approach. He is right, and we have no quarrel with what he did in relation to Bradford & Bingley and HBOS-Lloyds—that seemed to be the right approach. However, we are now in a different situation, where banks are being picked off one by one. I set out proposals yesterday, and the Conservative leader said something rather similar this morning—[Interruption]—about the need for recapitalising the banks with a form of partial nationalisation. I hope that the Chancellor will confirm that those specific ideas are under active discussion.

Finally, I would like to say a little bit about interest rates. Of course, the issue is about the availability of credit, but it is also about official interest rates and the implications for mortgage borrowers and small businesses. I have been a very strong advocate of the independence of the Bank of England; I made my maiden speech about it in this House 10 years ago. Does the Chancellor not think it appropriate, in emergency conditions, to make it absolutely clear that the mandate of the Bank of England must include responsibility for averting a meltdown in the financial and economic system? Those members of the Monetary Policy Committee who are going around saying that the problems go no further than the financial system need a line of communication back to planet earth. We do need to be thinking about radical cuts in interest rates.

I know that the Chancellor has said that my comments on this subject are dangerous, and I recognise the dangers. These are very dangerous times, and decisive decisions are going to have to be taken over the next few days and weeks to safeguard millions of jobs and homes. I hope that the Chancellor will give us the leadership that we need on those issues.

I am grateful to the hon. Gentleman and for the fact that on many occasions over the summer he indicated his support for the general approach that the Government are taking. He asked three main questions, one of which related to guarantees. As I said earlier, I think it desirable that European member states act together. If the House looks at the statement that all 27 member states signed up to earlier this afternoon, it will see that there is a commitment there to work together, and it is important that we work together. We have the FSA announcement that it will increase the amount covered to £50,000, and as I said, that covers 98 per cent. of all accounts.

The hon. Gentleman mentioned liquidity and capital. May I emphasise to him that, as I said in my statement, I believe that we must look at three elements? First, we must ensure that there is adequate liquidity in the system. That is absolutely essential, which is why I welcome what the Bank announced this week and the fact that it is looking at providing facilities for far longer than is usual. The problem is not just an immediate one. He rightly says that we need more liquidity, because without it we cannot move to the second phase. I have also said that we need to look at regulation and at issues such as capital, and we will do so; when I have proposals to make, I shall come back to the House to set them out.

Finally, on interest rates, I do not think that I ever said that the hon. Gentleman is dangerous—whatever else he is, that is not quite the right description—but I think that in this case he is just wrong. If one establishes an independent central bank, distant from government, I do not think that one should change its terms of reference just because times are difficult. I should just remind him and the House of what the Bank of England Act 1998 says. The objectives of the Bank of England are

“(a) to maintain price stability, and

(b) subject to that, to support the economic policy of Her Majesty’s Government, including its objectives for growth and employment.”

I do not see any need to change that remit.

There is much concern and anxiety in Halifax about the uncertain future of HBOS, which is the second largest employer in the town. Will the Chancellor guarantee that he will do all he can to safeguard these jobs and give a commitment that Halifax and other HBOS locations will be on a level playing field?

My hon. Friend has already raised with me the question of jobs in her constituency and the surrounding area. I understand that the future of HBOS and the developments at Bradford & Bingley mean that a much wider area is affected. I hope that HBOS and Bradford & Bingley will do everything possible to try to maintain jobs and to help people for whom there will not be jobs in the future to get jobs elsewhere. I have met the regional development agency and the Minister for Yorkshire and the Humber, my right hon. Friend the Member for Doncaster, Central (Ms Winterton). We are determined to do everything we can to help people through what is undoubtedly a very difficult time. I know, from my conversations with them, that HBOS and Lloyds are acutely aware of the impact on employment in my hon. Friend’s constituency. I am sure that she will continue to do everything she can for her constituents, as she has done ever since the announcement.

I know that the Chancellor understands the impact on the wider local economy of what has happened to both HBOS and Bradford & Bingley, and I sincerely appreciate the fact that there will be no compulsory redundancies at Bradford & Bingley for six months—that has been welcomed.

Many employees were also small shareholders in Bradford & Bingley, and many of them loyally supported their company through a recent rights issue in order to try to save the business. I understand that the business had £1.5 billion of equity at the time of nationalisation and that the sale of the savings side raised £400 million. The expected losses on the mortgage book are independently assessed to be about £1 billion. That leaves about £800 million, which, split between 1.6 billion shares, works out at about 50p a share. Does he recognise those figures? Can he give the House some idea of what might happen to those small shareholders?

The hon. Gentleman is understandably concerned about jobs in his constituency. As I said to my hon. Friend the Member for Halifax (Mrs. Riordan), we will work with Yorkshire Forward and the company to see what we can do. I am glad that he also recognises the fact that we were able to provide funding to ensure that people will be employed for six months. That will help, although the situation is clearly difficult. The problem with Bradford & Bingley was that its model just did not work. It tried, as did we, right up until last Saturday to find a commercial solution—or even an approaching commercial solution—but we could not do so.

The hon. Gentleman rightly asks about shareholders. We sold the branches and transferred the deposits to Abbey Santander, and the money from that will go into the pot. However, we also had to transfer and finance some £20 billion of deposits. That amount, which is due to the Government, will be reduced in time as the assets of Bradford & Bingley are realised and mortgages repaid. I cannot say what those assets will realise, or when; it will take years to repay some of them. Some of the buy-to-let mortgages might be worth something in a few years’ time, although they are not worth much just now.

I cannot say at this stage how much, if anything, will be left. I understand the position, because it is exactly the same as that with Northern Rock: people who were not big-time share dealers, but who lived locally, thought that they were doing the right thing in buying shares to support their local company, but then the company failed. We will do what is right, but at this stage it is impossible to say what, if anything, will be left at the end of the day. The bank has a lot of assets that, frankly, are not worth much at all.

I congratulate my right hon. Friend on his steady and careful approach to this catastrophic situation and on trying to avoid it becoming more of a catastrophe. I welcome his commitment to improved regulation of the City, so that people’s homes and jobs are not imperilled by banks that were so stupid in making their complex arrangements that they could not distinguish between liabilities and assets; by firms of auditors that apparently did not spot that anything was wrong; and by ratings agencies that gave AAA ratings to spurious transactions, apparently unaware of the fact that the pieces of paper involved were worse than worthless. I hope that my right hon. Friend will accept my assurance, on behalf of every Labour Member, that we will support improved regulation even if the Tory party—the political wing of the banking industry—opposes it and speaks out against regulation.

I agree with my right hon. Friend that it is necessary to have a regulatory system that is robust. As I said earlier, it is not a question of light touch versus heavy-handed regulation. We will not pursue a knee-jerk reaction, but it is important that we avoid situations such as those experienced in the US—but by no means the US alone—in which banks were able to incur substantial risks, apparently without people at the top of the bank being fully aware of just how exposed they were. Nor do we want a repeat of the situation in which regulators, who were concentrating—for understandable reasons—on solvency, did not pay enough attention to the question of liquidity. Across the world there are lessons to be learned. Changes will be necessary, and I am grateful for my right hon. Friend’s support in that regard.

In the light of the Bank of England’s statement about the special liquidity scheme and the Chancellor’s statement today, is it right to assume that the Government now accept that the Treasury must support the Bank in providing just as much liquidity as is necessary on the widest possible class of assets as security for as long as is necessary, until the money markets start to function again and inter-bank lending is resumed? It is obvious that banks will not resume lending normally to businesses or households until there has been some recapitalisation. As there is open speculation about the Government using taxpayers’ money to take a stake, will the Chancellor accept that he needs to come to a decision rapidly on that issue to bring the speculation and uncertainty to an end and enable us to move towards a more normal banking system?

I agree that speculation can be harmful, which is why everyone has to be careful about what they say and when they say it. It is important that when we have proposals to make—whether on liquidity, regulation or capital—we make them as soon as possible, consistent with having proposals that are fully developed and ready to be implemented. As I said in my statement, it is also important to discuss the matter—as we did the special liquidities scheme—with the financial services industry, where appropriate, so that we ensure that whatever we do achieves what we all want, which is to begin to bring about a situation whereby we can return to sensible lending and where banks will start to lend more freely to individuals and to businesses.

In relation to the right hon. and learned Gentleman’s points about the special liquidities scheme, I have always said that we have never set a cap on the amount that the Government are prepared to make available. Although the scheme will run for three years, we will keep that under review. I am determined to do everything we possibly can to stabilise the present situation and to make improvements so that we can get out of the difficulties that we face. The special liquidities scheme is an essential part of that. The right hon. and learned Gentleman can rest assured that I will do whatever it takes to ensure that it works and that it does so effectively.

Does my right hon. Friend agree that the 100 per cent. deposit guarantees by the taxpayer that appear to be on offer in some major economies—he will need to be careful with his comments on this subject—are harmful and mistaken as policy instruments in this respect? They will encourage a huge moral hazard in the banking industry unless they are backed up with incredibly intensive regulation, which will stifle innovation and growth.

As I said in my statement, it is far better—especially in Europe where so many banks have branches and subsidiaries in many different countries—that any action that is taken is taken together. I have always made it clear that countries need to do whatever they think is appropriate to look after those institutions for which they are directly responsible, but working together is very important. Ironically, the summit called by President Sarkozy in France on Saturday pledged each of the participants to working together. We need to get back to that, because it is the best way to try to resolve the matter.

I am sure that the whole House will realise the very terrible times that we are in. I remember being a lad in Ulster and the soup kitchens, the poverty and the terrible happenings that took place. We must all, in our own way, do what we can to help one another to get some way through this very dark hour for our nation. I know that there are many beliefs in this House; my belief in God is well known and my religious convictions are known. I trust that our whole nation will turn in repentance and cry to God for an intervention so that the calamity will not come on our children and on the babes in their cots.

I think that I agree with the right hon. Gentleman on the need to work together. I am not as well qualified as him to comment on whether divine intervention can help us, but I think that Governments and financial institutions both have a huge role to play. Governments can make a difference and they need to make a difference, precisely to ensure not only that we stabilise the situation but that we get through it.

Will my right hon. Friend rule out a straitjacket on the Bank of England giving long-term help to banks if necessary and if it is decided on over the course of the next few weeks, months and perhaps even years? Will he also remember that when interest rates hit 15 per cent. and above, small businesses were paying 25 per cent., which is why so many of them, sadly, went bust?

My hon. Friend is quite right on that last point. We need to recall from time to time exactly what happened in the past when interest rates went way up—the consequences were devastating. That is all the more reason to ensure that we take the right action, including supporting the Bank of England. I have made it clear, as has the Governor of the Bank, that we will do whatever it takes and whatever is necessary. We will do that because it is essential if we are to ensure that money is available in future not just to individuals, to enable them to buy houses and to invest, but to businesses. British businesses depend to a large extent on their banks, and it is important that we do everything we can to ensure that banks remain in a position to lend to them, because without that lending those businesses would be in difficulty.

I recognise that the Chancellor will have difficulty in answering a number of these questions, but I wonder whether I can return him to Germany’s statement about protection for its depositors. At the Dispatch Box, the Chancellor mentioned, quite rightly, that our protection covers about 98 per cent. of all depositors, but he will also recognise that we have significantly more money on deposit than Germany does. The reality is that that 2 per cent. represents a very significant amount of money. What concerns me right now is that, given the febrile nature of the markets—watching little things and then panicking—if they see any flight of capital, even that 2 per cent., towards Germany, it could cause another stampede and another crisis. I recognise the Chancellor’s problem about indicating what he may or may not do, but does he not recognise that that 2 per cent. alone is perhaps enough to tip over the markets if they saw a flight of that money to, say, Germany or even Ireland?

The right hon. Gentleman makes the point that I was making earlier: difficulties arise if different countries do different things at different times, and we should do our level best to try to avoid that.

I make a plea to the Chancellor that, when he speaks about protecting the taxpayer and depositors, he continues to include customers or borrowers. The whole House understands the importance of helping the banking and finance industry on the grounds of stability, but the sight of the same banks calling in loans to small businesses and making many thousands of good people homeless by making their mortgages unaffordable is totally unacceptable. If we are prepared to have a lifeboat for the finance industry, it should be prepared to participate in a lifeboat for its customers.

My hon. Friend makes a perfectly good point. It is important to remember when we talk about stability and the whole financial system what it actually means to people with houses or people who have businesses who depend on the ability to borrow money. In relation to people who get into difficulty with mortgages, we have been working very closely with the Council of Mortgage Lenders and others to ensure that there is a rigorous code of conduct, so that banks do everything that they possibly can to help any customer who might be getting into difficulty. Exactly the same thing applies to businesses. Of course, one of the other things that we are doing is working with the European Investment Bank to ensure that the substantial sums of money that are made available find their way through our banks into the hands of small businesses.

This is the worst problem that any Chancellor of the Exchequer has faced for a very long time indeed, and I am sure that the whole House wants to be able to support him in whatever proposals he makes to deal with it. He has done a lot on the liquidity front, but he has done relatively little, if anything, on the capital adequacy front. I urge him to address that problem fairly quickly, because such things get worse if they are allowed to drift on. I hope that he will consider the concept of supporting direct injections of capital, as opposed to what the United States did in buying bad assets at a premium in the market, which is a complicated way of doing the same thing. However, I also urge him to take another look at the Dormant Bank and Building Society Accounts Bill, which we will debate this afternoon and which will have the effect of extracting £400 million or £500 million of the banks’ safest and most solid deposits and putting the money into a reclaim fund for good causes. Could we not start by allowing the banks to convert that to some form of capital security? The reclaim fund could still hold the money and distribute it to good causes in due course. That Bill was conceived when the situation was very different from now, and I urge him that that is at least a way to start to make some form of contribution to the capital of banks and that he should propose do to that in Committee.

I understand what the hon. Gentleman is saying. Of course, the proposal on dormant assets in the Bill that we will debate this afternoon is a long-term measure, but I am sure that he will want to return to such measures, perhaps during Second Reading, and my right hon. Friend the Chief Secretary will be happy to respond.

I commend the Chancellor and the Prime Minister for their calm and authoritative leadership, but global political leaders and central bankers seem to be behind the curve, as the financial crisis spreads rapidly into the real economy. Does he agree that it is no longer simply a question of sub-prime versus prime, but about asset quality in infrastructure, businesses, commercial and other property and even car loans and so on? In addition to the special banking powers that he is taking, will he consider legislating to enable reserve powers over infrastructure—rail, vital utilities and similar things—in case they fall into serious problems, as I fear they might, so that we are not behind the curve but ahead of the game, with those powers sitting ready to be taken, perhaps involving stakeholdings, recapitalisation and other matters and procedures that might prove necessary?

I am grateful for my right hon. Friend’s support, and I agree that it is important that all of us—Governments, central banks and regulators alike—keep an eye firmly on problems that might arise in future. I also agree that it is important to ensure that investment, especially in transport infrastructure, continues; I feel very strongly about that, for reasons that he will understand. That is why I am pleased that our Government have been able hugely to increase the amount of money that they are spending on transport infrastructure, and why it is important that, in what will undoubtedly be a difficult time, we ensure that investment does not suffer. Long-term investment in infrastructure is very important.

I agree with the Chancellor that we should consider every aspect of the issue, including liquidity, capital and regulation, and I would add confidence and stability to that list. I very much welcome his saying that “all practical options must remain open to us”. I understand that he will not speculate on his final plan, whether it be enhanced deposit protection, a guarantee of all sterling deposits—that is our favoured option—or an extension of the list of assets against which banks can borrow. May I recommend, as a matter of urgency, that he finalises his plan and makes a firm, detailed, comprehensive statement about the actions that the Government intend to take? Otherwise, as regards confidence and stability, the Government will be seen to be buffeted by events, and to be merely reacting. I am calling for a proactive statement and a detailed plan—a comprehensive set of measures to provide stability and confidence. Will he draw up that plan, and set it out in a single, comprehensive statement?

What I have done this afternoon is set out for the House what we have done so far, in order to provide the House with an opportunity to question me about developments over the summer. However, the hon. Gentleman is right: there are further things that we need to do, and I will come before the House to announce them as soon as I am ready to do so.

Does the Chancellor agree that recapitalisation when property values are falling increases the risk to taxpayers and will prove ineffective, and that we therefore need the Bank of England advisory committee to recommend a significant decrease in interest rates in its recommendations this week? In addition, recapitalisation could start the round of speculation off again, so will he assure the House that he will stand ready with plans for nationalisation of the banks, if necessary?

As my hon. Friend knows, I have nationalised two banks in the past year. Ten years ago, I would never have thought that I would be able to say that to him.

Not even 20 years ago. On my hon. Friend’s point about interest rates, I do not think that I can add anything to what I said to the hon. Member for Twickenham (Dr. Cable), who speaks for the Liberals.

Some of us on the Liberal Democrat Benches anticipated at least some of the problems, and were concerned about the fact that the regulatory authorities did not clamp down on the excessive unsecured credit that was put into the marketplace; that put pressure on financial services in London and Edinburgh, and it is that pressure that is causing us so much trouble.

Moving on, may I pick up on the point made by my hon. Friend the Member for Twickenham (Dr. Cable)? The Chancellor said that he thought that the remit of the Bank of England required no amendment, but can he really stand by that when inflation, which is the overriding concern, is outside the target? Does he not accept that it would be desirable temporarily to set aside the requirement on the Bank, so that the Government can deal with the crisis today? I campaigned for an independent Bank—he did not—and I believe that independence is right, but the parameters have to be right. Would it not be good to ensure a cut in interest rates, so that we can get the economy going and get banks lending again, and a cut in taxes to help people deal with rising costs?

The right hon. Gentleman may have campaigned for an independent central Bank, but I was part of the Treasury team that legislated to put the measures in place. To be fair, the Liberal Democrats have been consistent on the issue, and did support an independent central Bank. However, if they are to be consistent, they should not, for goodness’ sake, ask for a change of rules when things get difficult.

Does not my right hon. Friend agree that the Government have acted decisively and with great expediency on the issue, and will continue to do so? On interest rates, will he confirm whether my recollection is correct: is it not right that, although it will rightly be enshrined in statute that it is part of the Bank’s responsibility to maintain financial stability, it is his responsibility as Chancellor to set the interest rate? It is then the Bank’s responsibility to maintain that rate through the appropriate monetary and other policies. If that is the case, as I think it is, it is still for him, as an appropriate and necessary part of his normal functions as Chancellor, to set that rate. Will he bear that in mind in the months ahead, which are bound to be very difficult?

It is my responsibility to set not the interest rate but the inflation target, which is something that is done at the Budget every year. As I said, both in the House today and on previous occasions, I think that targeting inflation is important. Inflation has been a huge problem for this country in the past, and I believe that the Bank’s present remit, both in relation to its inflation target and, subject to that, to its broader objectives, is the right objective.

We have not seen a Northern Rock-type run on the banks—mercifully—but is the Chancellor aware that there is still huge confusion on the high street? There are a lot of people trying to shuffle money, and wondering whether they ought to do so, between institutions, to find some sort of safe haven. Should we not be grateful to building societies such as Skipton and the other five Yorkshire societies that have remained mutual societies? If I may make a suggestion to the Chancellor, perhaps he might talk a little less about systems, and a little more about people, because the anxiety spreads to every level of society, and the one question that they want answered is, “Is my money safe?” The sooner that he can answer that, the quicker we will get calm on the marketplace.

I agree with the right hon. Gentleman that what matters is people, and one reason why the FSA, with our strong support, increased the upper end of the compensation limit to £50,000 for an account holder was precisely to provide additional security, which is very important. He made a point about building societies, especially those that did not demutualise, and I understand why he did so, because I think that I am right in saying that all the building societies that demutualised have either been taken over or, sadly, are no longer with us.

The Chancellor of the Exchequer touched on this briefly, but may I congratulate the Prime Minister on his initiative in Paris at the weekend, in saying that the European Investment Bank should release £12 billion to £14 billion to the small and medium-sized business sector, with a further £12 billion to £14 billion coming later on? Building on the Chancellor’s response to my hon. Friends the Members for Edinburgh, South (Nigel Griffiths) and for Leeds, East (Mr. Mudie), is not this sector the most important sector in the country, and can we say, building on the point made by the shadow Chancellor, that if the banks are not lending to one another, at least they should lend to that sector at reasonable rates?

I strongly agree with my hon. Friend. It is important that small businesses in particular, as well as other businesses, can get access to the money that they need. The initiative to which the Prime Minister referred at the weekend from the EIB is very important. I had discussions with its managing director a couple of weeks earlier in France, and it is important that that money is not only released, which it will be, but that businesses in this country can get it through the banking system. I hope that we will have something to say in the not too distant future that will help with that.

Does the Chancellor agree that guaranteeing all deposits, although it may well prove necessary, is at best a sticking plaster, not a cure for the underlying disease, which is that the value of loans made by banks, and even more of the collateral that they have accepted, has fallen below their obligations and their ability to meet them from reserves? If he is not to have to make that good himself, he must provide incentives for those banks to raise new reserves. Will he consider guaranteeing the proportion of reserves newly raised from this date in the event of any subsequent reconstruction in which the state is involved?

The right hon. Gentleman is right. If we look at the fundamental causes of the problem, we see that banks took on risks that either they did not evaluate or, if they did, they did not take enough steps to ensure that they could withstand any fall in assets. That is something that we need to look at, and it is something that the regulators need to look at.

Will my right hon. Friend accept my congratulations, as the constituency MP for many Halifax Bank of Scotland employees? We were grateful for the work that the Prime Minister and he did in arranging a marriage between HBOS and Lloyds TSB, but on reflection, would it not have been a better option to part-nationalise HBOS to keep its integrity and independence and to keep the jobs, rather than creating a vast monopoly—a third of the market—which will come back to haunt consumers and those of us who represent Yorkshire constituencies? The bank is, after all, the largest private employer in Yorkshire.

I am very aware of the importance of HBOS as an employer in Yorkshire, but if it is possible to reach a commercial solution to problems, that is by far the best route to pursue. A commercial decision was taken by HBOS and Lloyds TSB. Yes, we intervened to waive the competition rules that would otherwise have stopped it, but as I said in relation to Northern Rock a year ago—at that time many people believed that the best option was to try to find a commercial solution, but it did not work at the end of the day—one day even Northern Rock will have to be returned to the private sector. I do not think the Government can run banks particularly effectively, and I do not think that is desirable. If we can get a commercial solution in relation to these matters, that is far better, and it is what is proposed in this particular case.

Has the Chancellor studied the history of the Japanese economic crisis of the 1990s, where the failure of that Government to reduce interest rates in a timely manner led to a prolonged recession, which lasted for a decade?

The Chancellor told me in the summer that he had regular secret meetings with the top bankers. They seem to be coming with a begging bowl, which has been rewarded with massive liquidity. What has he got from them in return—for example, to deal with the fat-cat bonuses and pay-offs that they have had?

I do not think I told my hon. Friend that I had secret meetings with the bankers. If I did, it clearly would not have been a secret any more. It is no secret that I meet people from the banking industry on a fairly regular basis. Indeed, people would be surprised if I did not. On my hon. Friend’s other point, yes, of course there is concern about the way in which employees were paid or incentivised. Many people are concerned that employees were paid bonuses to take on risks which, it turned out, did not just put the individual employer or their bank at risk, but put everybody else at risk at the same time. That must change.

Does the Chancellor agree that without in any way compromising the independence of the Bank of England, he could put into abeyance the inflation target for a period, and therefore allow the bank to take the steps necessary to prevent the present crisis from spilling over into the rest of the economy? Our experience so far has shown that the idea that financial crises could be contained is holed below the waterline, and that the inevitable consequences of not stemming overspill will be detrimental to just about everybody in the country.

I do not agree with the hon. Lady. As I have said before, the remit given to the Monetary Policy Committee is wide. It was designed for the good times as well as the more difficult times. To chop and change it would undermine the idea and principles that underpin the concept of an independent central bank.

How are the Government measuring the danger to the British economy if, when trying to pursue a policy across Europe, we find that we are, for example, the last Government to offer 100 per cent. guarantees to individual savers with deposits in British retail banks? Will he give a guarantee that we will not find ourselves in that position?

We are not in that position. I said earlier that if action is taken, there is much to be said for having a discussion about these matters and acting in a way that avoids the distortions that I referred to. That is one of the things that we will be discussing tomorrow.

The Chancellor may not know, but I can tell him that many small businesses will be disappointed with his statement today. They are facing increasing debt, including massively increased bad debt, and are under tremendous cash-flow pressures. They go to their banks, but their banks are not being helpful; in fact, they are increasing interest rates. Will the Chancellor give the small business sector some confidence today, by saying that he will go to the banks and ensure not only that small businesses get their fair share of the guarantees being given, but that banks will cut interest rates to them?

I think that I have said on a number of occasions this afternoon that there is concern in all parts of the House about the impact that the credit crunch is having on businesses. That is why it is important that banks and Governments act together to try ensure that we help small businesses, whether directly or through the European Investment Bank or other such measures. That is what I want to do.

Does the Chancellor recognise that the markets are in a panic because the authorities are seen to be losing control of events? The right place for the risks of a rescue is not the balance sheets of national Governments, which are there to help the less well-off, not the super rich. Tomorrow he must go to Europe and get a Europe-wide run-off and rebuild facility that can really bear the strain of events and put the authorities across Europe back in control of the situation, not running constantly behind.

I agree with my hon. Friend that it is important for Governments not just to deal with day-to-day events, but to anticipate them and try to restore the calm to which he referred. That said, there are some things that can be achieved on a Europe-wide level, but there are other areas where that might prove more difficult. He may be aware that the Dutch Government came up with a proposal for a pan-European solution that, as far as I can see, has not attracted a great deal of support from the rest of the European Union. However, it is important that if we can take action together, we should do so. If that is not possible, we should redouble our efforts—our Government and other Governments of like mind—to ensure that we do precisely what he suggests: to anticipate and deal with some of the problems that we know are there or which are coming towards us.

As we address such issues in this place, should we not bear in mind that the crisis has been exacerbated because, during the summer, people in high places consistently forgot that there is no situation that is not made worse by panic?

New Member

Will Members wishing to take their seats please come to the Table?

The following Member made the Affirmation required by law:

John Fingland Mason Esq., for Glasgow, East.

Orders of the Day

Dormant Bank and Building Society Accounts Bill [Lords]

[Relevant documents: The Eleventh Report from the Treasury Committee, Session 2006-07, Unclaimed assets within the financial system, HC 533, and the Government response, HC 1028, Session 2006-07.]

Order for Second Reading read.

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

I thank my hon. Friend the Member for Burnley (Kitty Ussher), the former Economic Secretary, for all her hard work in developing the Bill and supporting its progress, and welcome to the Treasury Bench my hon. Friend the Member for Dudley, South (Ian Pearson), the new Economic Secretary, who will be taking the Bill through Committee.

The Bill implements the commitment in the Labour party’s 2005 manifesto to channel unclaimed financial assets back into the community. It has already been through the other place, where it received broad cross-party support as well as extensive debate, and I hope that we will see that cross-party support continued here. The purpose of the Bill is to enable what are effectively lost assets to be put to use in supporting the community while ensuring that, should their former owners discover them again, they can still get them back.

We begin our deliberations in this place in a rather different financial climate from that in which we started, and I am sure that the changing circumstances will form part of our deliberations here and in Committee. The hon. Member for Stratford-on-Avon (Mr. Maples) has already raised this matter with the Chancellor today, in the course of the discussions on the statement. It is important to recognise that the Bill is not about tackling today’s market conditions; it is about the future, and about laying the foundations for a scheme that will be in place in mid-2009 at the earliest. The scheme will be voluntary, and it has been brought forward with the full support of the industry.

The point that I was making earlier was that, although the Bill is well conceived—I have no objection to the idea of taking dormant deposits and spending them on good causes—it was, as the Chief Secretary has acknowledged, conceived in a very different banking environment. One of the problems that the Chancellor is trying to deal with is the capital adequacy of the banks, and there will probably be a need for some public sector injection in that regard. Between now and the Committee stage, will the Chief Secretary consider whether it would be sensible to allow this money to be used temporarily for that purpose, so that the reclaim fund would own shares—be they convertible notes or preference shares in the banks—that could buy capital for the banks? In due course, when the banks’ situation has improved, the reclaim fund could then sell the securities or redeem them in order to use the money for good causes. In the meantime, however, I think that the public will find it odd that we are going to take £500 million off the banks to spend on good causes, when it could be used to bolster their balance sheets.

I hear the point that the hon. Gentleman is making. First, the Bill will not come into force until next year and it will obviously take time to set up the reclaim funds, so his proposals would not address the current market conditions that the banks are facing. Secondly, this will be a voluntary scheme, so it will be for the banks and building societies to choose to participate. In the discussions that we have had with the British Bankers Association and the Building Societies Association, they have made clear their continued support for the scheme, and said that they are continuing to encourage their members to participate and believe that they are keen to do so, even in the current market conditions. It is also important to recognise that the assets and liabilities will both be transferred to the reclaim fund, which will obviously have a rather different outcome in regard to the impact on the capital position. As I have already said, however, the changing climate and the credit crunch will obviously be part of our deliberations in Committee in regard to lessons that can be learned to ensure that we get the detailed legislation right.

I would also like to point out that, according to the banking sector, the banks estimate that their dormant assets represent less than 0.07 per cent. of the £535 billion held in retail banking and savings by the UK’s nine largest groups. Although that is a small proportion of their retail banking, that money could make a real difference to projects in the community.

Will the Minister confirm that that figure is £5 billion, which is not chickenfeed? Can she tell us when she was given the advice by the banks that they were happy to proceed with this plan? Was it given in the past 24 hours, or is it two weeks old?

No, it is not £5 billion; that would be 1 per cent. of £535 billion. I was talking about 0.07 per cent., the figure in the banks’ estimates. Also, may I again make it clear that this will be a voluntary scheme?

The banks estimate that they have between £250 million and £350 million in accounts that are lying dormant and have been untouched for more than 15 years, and sometimes much longer. The building societies estimate that they have a further £130 million in the same position. The evidence shows that some people forget about or lose track of often small deposits of money in bank or building society accounts—perhaps because they changed address or lost contact with their banks, or because the account holder has died without anyone being made aware of the money.

The Chief Secretary will be aware that many of these dormant accounts are, in fact, owned by charities, having been left to them through legacy. However, there are very few mechanisms for identifying the accounts and reclaiming the money. Will she bring in some structure that will enable them to do so under the legislation?

The hon. Lady is right that we should do everything possible to reunite the money with the original account holder, whether it be a charity, an individual or whatever. That is an important part of the legislation. Customers always have the right to reclaim their money, but we also think it important to make a concerted effort to reunite account holders with their lost money before the scheme comes into operation. We have encouraged the financial services to do that and we welcome the launch by the British Banking Association, the Building Societies Association and National Savings & Investments of the “mylostaccount” website in January this year. More than 175,000 people have already used this free cross-industry service to reunite themselves with tens of millions of pounds. It is an important part of the scheme.

My right hon. Friend has three times mentioned that the scheme will be voluntary. Is she aware that the National Council for Voluntary Organisations, the Treasury Select Committee and others have been very sceptical about the effectiveness of a voluntary scheme, given that the five or six such schemes already operating around the world are all done on a mandatory basis and they clearly produce a far higher return for good causes than would any voluntary scheme?

I recognise my hon. Friend’s point, but the scheme that we are proposing has strong support from the industry and both banks and building societies have said that they intend to participate in it. That is encouraging, which is why we have set out the Bill in this way, but we will need to review the situation over time, to monitor the scheme’s progress and to look into what further support may be needed.

Three principles have informed the Government’s approach: first, that the preferred outcome should, where possible, be to reunite account holders with their money; secondly, that account holders must have the legal right to reclaim their money at any time; and thirdly, that the scheme should be designed to run effectively and efficiently in order to maximise the money available for reinvestment in the community.

The scheme will allow eligible banks and building societies to transfer money in accounts that have lain untouched for at least 15 years to a so-called reclaim fund. By making the transfer, the liability to repay the account holder will also pass from the bank to the reclaim fund. Any money that the reclaim fund does not need to meet the claims of customers will be passed over for reinvestment in the community via the Big Lottery Fund.

The scheme aims to capture genuinely lost accounts. That is why we have set the dormancy period at 15 years. Some people have argued that it is too long, but we still think that it is appropriate. We will, however, bring forward an amendment to enable this period to be made longer or shorter in future if the evidence shows it to be appropriate, as it is important to ensure proper protection for account holders.

How confident is the Minister in the figures provided by the British Bankers Association and the Building Societies Association, particularly given that The Times was reporting up to the end of 2006 that the amounts involved in dormant accounts could be up to £20 billion? Are the figures given by the Minister for a 15-year dormancy or is there an aged analysis of dormant accounts from a more recent period—perhaps with a three-year dormancy? These will effectively be brought in over time.

We have said that we view 15 years as the appropriate period, so it is not our intention to reduce the dormancy period. The reason for bringing forward an amendment is in order to respond to points made in the other place and as part of the consultation to the effect that there should be greater flexibility and no need to return to primary legislation if certain evidence arises. That will be a matter to discuss in Committee—as I have said, an amendment will be brought forward—but we believe that 15 years is the appropriate period.

The figures that I cited from the banks and building societies are obviously the best that we believe are available. Clearly, they are estimates and different ones will be put forward, but it is right to work on the basis of what we believe to be the best figures available. This will need to develop over time as the reclaim fund is established and it becomes clear what sorts of account can be transferred into the scheme. We will have to look at the evidence as things develop. That is why it is right that there should be some kind of review of the scheme as it progresses.

In the other place, the Bill was also amended to require banks and building societies to consider any customer-initiated activity, such as correspondence, telephone calls, voting at annual general meetings and so on, when determining whether an account is eligible for the scheme. We recognise the intention behind that amendment because, of course, we would expect banks and building societies to do exactly that, but we do not currently believe that it is necessary to legislate on that point.

I must declare an interest as a trustee of a number of charities. In particular, the People’s Dispensary for Sick Animals, of which I am a long-standing trustee, has expressed concern about using the Big Lottery Fund to identify worthy causes, first, because it is an expensive mechanism and, secondly, because its record in choosing good causes is perhaps not as strong as it might be, given that, on occasion, it has been used for purposes that might otherwise have been funded by the Government. Will the Minister reconsider using the Big Lottery Fund?

We think that the Big Lottery Fund is the appropriate organisation. It is important that we use an existing body to do this, rather than create duplicate organisations, which would increase the cost of distributing the money when our priority should be to get the resources to local schemes and, in particular, the young people who could benefit from this proposal.

We think that the Big Lottery Fund has the capacity to distribute resources on a large scale. Obviously, the issue will be discussed further in Committee, but the Big Lottery Fund also has access to an extensive network of third sector and public sector delivery partners, ranging from the large national charities to local community groups. Therefore, we think that it represents the best way to distribute the money and to get the best value for it by using it effectively.

May I complete the point that I was halfway through when I took the intervention? On the issue of the amendments made in the other place, the ultimate safeguard for customers is that they will be able to get their money back at any point from the reclaim fund, via their own bank. We believe that there are also some drafting and legal difficulties with that amendment, which is why we shall seek to overturn it.

I am very supportive of the proposal in the Bill, not least because many of my constituents and organisations in south London see the opportunity for money to come in to help work with young people.

When a group of young people and their organisations came together the other day following the knife crimes that have happened in London, one of the questions that they asked me to ask is whether money can come in and whether it is the Government’s plan not just to create new buildings, but to support existing organisations that could do with expansion or additional resources to do the good work in the community that the community needs them to carry out. If so, can we come to see somebody about that—which Minister is it?—to put the case for existing organisations to be supported, not just for new work to begin?

Treasury Ministers will be happy to meet the hon. Gentleman to discuss his point further. Obviously, some of those issues will be for the Big Lottery Fund to set out as part of its distribution, but it probably is important that during consideration of the Bill we have a good debate on how the resources should be distributed.

The hon. Gentleman would probably agree with me and any other Member of the House who has conducted any kind of local community consultation that one of the key issues on which we can get young and old alike to unite is the need for more facilities for young people and for more for them to do in local areas. That can have benefits not just for those young people, but right across the community. That is why it is so important that we should look to access and use those resources to build a stronger future for young people as well.

It is important not to double count in relation to the possible impact on charities in constituencies such as that of the hon. Member for North Southwark and Bermondsey (Simon Hughes). The figures suggest that the biggest 12 banks and building societies currently give more than £300 million a year in their own charitable donations. Does my right hon. Friend have any indication of the possible impact on that level of giving if banks and building societies lose control of and access to their dormant assets?

I do not believe that the measure will reduce the amount that banks and building societies can contribute to different charitable works. There are two things to consider. First, the Bill allows both assets and liabilities to be transferred. If the banks or building societies continue to hold the assets, they also continue to hold the liabilities on the dormant fund, which could limit what they can do as a result. Secondly, the scheme is voluntary. It is a way of ensuring that building societies and banks do what they think is right in terms of accessing the assets and putting them to good community use.

It is important to remember that the money does, or did, belong to someone and that some of it might have belonged to people who have died and left legacies. A group of charities has asked for a reserve power to be included in the Bill. The charities are worried that they cannot trace the money that they have been left in a legacy because it is too difficult under the current online registration scheme to know when people have changed names or houses. We should bear it in mind that they are asking for something not for today but for the future. If, in three years’ time, Parliament considers that not enough progress has been made in attaching legacies to the relevant charities that would benefit from them, the Government will have to come back to the House with primary legislation. Will the right hon. Lady consider including a reserve power in the Bill so that we do not have to do that?

We have not so far seen the need to include additional support. Obviously, we are happy to consider further issues in Committee. This is a Bill that should command cross-party support. We are happy to continue to look at the issues. As has been said, this is about where possible reuniting the resources—the money and the assets—with those who originally put them in the account or, if they have died, respecting any legacies or wills that they might have set up. Clearly, that is an important part of the approach to the Bill, but equally we have to recognise the existence of dormant assets, which have often sat in accounts for many decades, and put them to good use.

The reclaim fund will receive money from dormant accounts. The Bill does not create a reclaim fund, but it sets out the requirements that a company must meet in order to operate as one and provides for its authorisation and regulation by the Financial Services Authority. The FSA will ensure that the reclaim fund has sufficient money to meet anticipated levels of claims for repayment and will set out a regulatory regime, which will of course be subject to full consultation as well. The Bill requires the fund to meet repayment claims, manage money prudently, and transfer surplus funds to the Big Lottery Fund for distribution. It also allows the fund to cover reasonable running costs.

The Bill was amended in the other place to make a reclaim fund accountable to Parliament. We strongly agree that the fund should function transparently and the Bill requires it to publish key information about its operations, but we do not believe that it is sensible for a private company to become accountable to Parliament in that specific way. Therefore, having considered the issue, we will propose further amendments in Committee to improve the transparency of the arrangements and to respond to some of the concerns raised in the other place.

The National Consumer Council has said that not enough effort is made by banks to reunite dormant accounts with their holders, and a major campaign is required in that respect. Is the right hon. Lady confident that enough is being done by the banks to ensure that that happens?

The banks set up the new “mylostaccount” website in January this year which has helped more than 100,000 people to get their money back. It is always important for us to urge banks and building societies to do more and to do whatever they can. However, the ultimate and hugely important safeguard for people is that they will also be able to get their money back from the reclaim fund.

The Chief Secretary spoke of reversal of the Lords amendment relating to the parliamentary accountability of the reclaim fund, but she forgets that the Treasury has power to give direction to the company that sets up the fund. In view of that, I think it important for there to be some parliamentary accountability.

Clearly the Treasury is always accountable to Parliament for the use of its powers, but I think we should bear in mind the complexities involved in an attempt to establish parliamentary oversight of a private company, as opposed to parliamentary oversight of the Treasury and its decisions. We will propose further amendments to respond to some of the points made in the other place. We do not think that the way in which the Bill currently deals with the issue is satisfactory.

Account holders will experience no practical difference in the way in which they are treated as a result of the scheme. Banks and building societies will act as the reclaim fund’s agents, and on validation of their claims account holders will be repaid in full by their banks. That will include any interest that is due.

The case was made in the other place that the Bill should require a triennial review of the scheme. We feel that we must ensure that the scheme is working simply and fairly, and we think it right to review it once it is up and running; however, we do not think it right to require triennial reviews in perpetuity to be included in the Bill. That issue will also feature in the discussions in Committee.

As I said earlier, we need to ensure that the money raised is distributed fairly throughout the United Kingdom to deliver practical programmes that will bring about real change to neighbourhoods and benefit a diverse range of communities. As we said in the pre-Budget report, the Government intend the resources, in England, to be focused on youth services, financial capability and inclusion. Investment in young people is investment in the future of the whole community, while raising the levels of financial capability and inclusion across the population can help people to make the right financial choices to support themselves and their families. In addition, following consultation, we should like a proportion of the available assets in England to be invested in the long-term sustainability of the third sector, if resources permit such investment.

The spending areas in England are set out in the Bill. Following the model used for the national lottery, the Bill also empowers the Secretary of State to identify particular priorities within the spending areas that must be taken into account in the distribution of assets. We believe that the approach should follow the precedent of the national lottery spending directions, rather than some of the proposals made in the other place. Scotland, Wales and Northern Ireland will determine their own spending areas, which will reflect the needs of communities in each country.

I welcome the boost that the scheme will give youth services, but what many of those services need in particular is an asset base. A straight revenue grant will be of no use, because it will merely postpone some of the problems. Can we be creative in the way in which the lottery is asked to provide funds? Surely providing that asset base is the most appropriate use of the funds.

My hon. Friend is right. We need to ensure that the funds are used to provide sustainable support for young people in particular areas, rather than short-term support that cannot be replicated in the future. Further consultation and discussion will be needed on exactly how that should be done, and I hope that we can take my hon. Friend’s points on board at that stage.

I am grateful to my right hon. Friend for giving way, and also for her answer to my hon. Friend the Member for Stroud (Mr. Drew), but will she consider again how the help will be focused? Will the Big Lottery Fund be able to operate proactively in geographical terms? For instance, will it be able to target resources on areas where there is great need but little capacity for making bids, and where awareness of the fund may be low?

My hon. Friend makes an important point. We want to ensure that the resources are distributed fairly across the country and that those areas which might have less capacity or expertise to access the funds do not lose out unfairly as a result, so we would certainly be keen to take on board those points in terms of the way the distribution mechanism operates.

Finally, I wish to make the point that we have in the Bill introduced the provision that small financial institutions, particularly building societies, should be able to operate alternative arrangements where they play an important role in their local communities and want to be able to distribute dormant account money to local charities. These alternative arrangements will allow the reclaim fund resources to be returned to the bank or building society for distribution to local charities. We had originally proposed that in order to qualify for this alternative scheme an institution must have total assets of £7 billion or less. Amendment in the other place makes the option available to small banks and all building societies. In fact, the vast majority of building societies were covered by our arrangements. We have listened to the arguments for the inclusion of big building societies, but we do not believe that the expansion of the alternative scheme is desirable. We believe that the larger financial institutions serving wider communities across the country should take part in the main scheme to ensure that resources can be distributed fairly and strategically across the country to meet the priorities discussed in this House. Therefore, we will bring forward amendments in Committee to focus the alternative scheme on the ability of small institutions to support their local communities.

Is not the Chief Secretary being a little disingenuous when she talks about the vast majority of building societies being covered, because some 83 per cent. of the assets of the building society sector are with the big seven, so she is really talking about taking away the independence of those building societies to distribute the funds as they see fit?

I do not think this is remotely about taking away the independence of the building societies. The building societies have the ability to have their own charitable support schemes and programmes operating in their areas and to use their assets accordingly, and many of them do have such schemes. This is about using parliamentary legislation in order to be able to access dormant assets by allowing them to transfer the liability as well as the assets to a reclaim fund. The hon. Gentleman is right that there are a lot of resources in the large building societies, and those building societies should be part of the main scheme. What we are trying to do is help the smaller building societies—of which there are many across the country. Where they are very much embedded in a particular local area or community, that should continue to be supported. However, where the larger building societies can serve much wider communities, we believe they should be part of the wider scheme which involves the banks as well.

This Bill offers an historic opportunity to unleash the potential of the money in the dormant bank accounts in order to deliver social benefits. It does so while maintaining strong support for protection for consumers and for ensuring that they can continue to have their rights respected—and, where possible, for them to be able to get access to their money as well. This is a big opportunity, and a long-term programme to help support improved youth services and other social benefits across the country, and as such I commend it to the House.

It has been six years since the Government first raised the prospect of using money from dormant accounts for good causes. Since the Government published their consultation paper on the Bill, we have had three Economic Secretaries—I am glad to see that the third is in his place—and it has been eight months since the Bill had its First Reading in the Commons, and I suspect that even now it will be at least a year, if not longer, before the money will start to flow. However, in that time, the scheme has changed so that now, rather than charities benefiting directly, the money will be spent at the direction of the Government in line with the priorities they set out in the Bill and, as a number of interventions have indicated, the amounts involved have shrunk. The unclaimed assets register suggested there was about £8 billion split between bank accounts and National Savings & Investments. The current estimate from the Building Societies Association and the British Bankers Association is that there is about £400 million to £500 million from banks and building societies to be used in the scheme. Clearly, the effectiveness of the operations to reunite customers and their accounts will reduce those amounts, so, although the amounts involved are still significant, the scaling down of the estimates does lead, as I shall mention later, to some difficult issues regarding the distribution of the assets.

However, an important prior step to the process set out in the Bill is to ensure that banks and building societies take action to clean up their records, and try as far as possible to reunite customers and their dormant accounts. I am aware from my conversations with the sector that banks and building societies are taking steps to do that. For example, Lloyds TSB announced in June that it is appointing a company to help trace the holders of dormant bank accounts. HBOS has united £18 million sitting in dormant accounts with its customers, with another £29 million left to trace through. According to the BBA, some £50 million has already been reunited with its rightful owners.

In addition to the efforts of individual institutions, there has been a collective effort through the website mylostaccount.org.uk, which provides bank, building society and National Savings & Investments customers with a single point of contact for tracing accounts. Since its launch on 30 January 2008, more than 140,000 people have submitted search forms for money left unclaimed in dormant accounts. That compares with 44,000 claims in 2007 via the separate tracing services for the BBA, the BSA and NS&I. That demonstrates that the focus on reuniting has led to an increase in interest in the matter, and more customers clearly are trying to track down their unclaimed assets.

I want to address the concerns that a number of Members have expressed about charities. Charities represented by the Unclaimed Assets Charity Coalition have set out a very important case—they believe that they would be unable to unlock money sitting in dormant accounts where they are the residuary legatee. They have argued for a central register of accounts that they could use to identify accounts that they believe belong to them, and that a reserve power should be included in the Bill. I can understand their arguments and have some sympathy with them, but such a power goes beyond the voluntary approach that forms the basis of the Bill. However, clause 12 provides them with an important safeguard, as the triennial review explicitly refers to the right of a charity to receive money due to it under the terms of a will. That is an important safeguard, and I hope that that transparency will encourage banks and charities to work closely together on making sure that they have access to those dormant accounts. However, it will be interesting to see how the debate plays itself out in Committee.

It is imperative that, within the constraints of the scheme, there is a robust exercise to reunite customers with their money. If the process is robust, there will be much greater certainty that money transferred across to the reclaim fund relates to genuinely dormant accounts and is therefore less likely to be subject to a reclaim. The Bill before us sets out a legal framework for a voluntary scheme to enable money sitting in dormant accounts to be used for the public good, while ensuring that those who rightly own those assets are able to recover them. The Bill has four essential components: one relates to the question of how we know when an account is dormant, the second extinguishes the liability on the bank’s or building society’s balance sheet when the asset is transferred to the reclaim fund, the third establishes the proper legal framework for the reclaim fund and its functions, and the fourth relates to the allocation of amounts transferred from the reclaim fund to the Big Lottery Fund and to the spending priorities identified in the Bill. However, I want to explore some issues that flow from those steps.

Although there has been a great deal of discussion in recent years about the use to which unclaimed assets in a range of categories can be put, those assets are there to meet liabilities—there is a debt due to a customer, a pension to be paid out or a life assurance policy to mature—so in any scheme it is vital that the record of liability be retained, even if the liability itself is legally removed from the institution’s balance sheet. It is therefore important that, once that liability has been extinguished from the balance sheet, there is a reserve in the reclaim fund to pay out to customers who come forward to reclaim their money.

One of the fund’s priorities is to build up sufficient reserves to cover future claims, yet there is a countervailing pressure to transfer as much money as possible from the reclaim fund to the Big Lottery Fund for distribution. Too few reserves will leave the fund and potential claimants exposed. In the event of a fund’s being unable to meet all its claims, customers will be covered by the financial services compensation scheme, but that is not a green light for the reclaim fund to be imprudent in how it operates. I am also conscious of the fact that if too little money is distributed to the Big Lottery Fund and to the spending priorities, there would be pressure from the potential beneficiaries, and perhaps the Government, for more to be distributed.

I come back to my intervention on the Chief Secretary, because the Bill gives the Treasury the right to give directions to the reclaim fund. I would be grateful if the Economic Secretary’s response could explain how those powers might be used, because a conflict of interest is involved: the Treasury has a role not only with regard to the reclaim fund, but as one of the departmental sponsors of one of the spending priorities—financial inclusion. How does he believe the Treasury will help the fund to strike the right balance between protecting the interests of customers and ensuring that the right moneys flow through to the spending priorities?

Given the important role of the reclaim fund and the need for public confidence in its work, we support the amendments tabled in the Lords to require the accounts of the reclaim fund to be laid before Parliament. I am sorry to hear that Ministers are seeking to remove those provisions in Committee. We will clearly have a debate about that, because it is important to recognise that although the reclaim fund is a private body in terms of its constitution, it is clearly not just a private body. The Bill provides for the Treasury to give direction to it and, as such, one would expect the levels of transparency and accountability to go beyond those applicable to a conventional limited company.

Once proper protection for customers has been established, the next stage is how to use the money. As the Chief Secretary has said, the Bill distinguishes between two sources of these funds: building societies and small banks, and large banks. The money from large banks will go to the Big Lottery Fund, and I shall return to that matter in a moment. The Bill, as drafted, allows for building societies and small banks to allocate the amount from dormant accounts, over and above that needed for the reclaim fund to protect its customers, to be allocated through their own charitable foundations, reflecting the strong links that exist between building societies and the communities that they represent.

The hon. Gentleman has mentioned that two sources of dormant assets may produce the financial flows that we have heard described today, but there are also comparable sums of dormant assets in insurance policies and, in particular, in NS&I. The Treasury Committee recommended that, in respect of equity, NS&I assets should be treated in the same way as those of banks and building societies. The Government have refuted that by saying that NS&I’s unclaimed assets are used for the community benefit anyway, but as a quid pro quo for not having its dormant assets liable for this type of activity should not NS&I at least invest much more activity in promoting the existence of arrangements for people to identify whether there are NS&I unclaimed assets to which they might be entitled?

The hon. Gentleman makes two important points, the second of which I shall deal with first. NS&I has made some progress in reuniting customers with their assets—that is an important step for it to take. We put pressure on banks and building societies to do that, so we want NS&I to undertake the same process of ensuring that customers to whom this money belongs are reunited with their assets.

The hon. Gentleman’s first point was about the Bill’s scope, which is narrow; it focuses primarily on banks and building societies. The Treasury Committee put forward a clear argument for including NS&I in the Bill, and I was not entirely convinced by the Treasury’s arguments as to why NS&I should be excluded from its scope. The suggestion was almost made that NS&I customers should not take their money out of NS&I savings products at all because that would force the Government to find new customers for those products. I did not think that it was the most robust argument that we have heard from the Government as to why NS&I should be excluded from this process. Clearly, NS&I customers are entitled to the same degree of support in identifying their assets as customers of banks and building societies. We would expect a public body to be as good as, if not better than, banks and building societies in that respect.

The Chief Secretary made an argument about the exclusion of large building societies from the scope of the Bill. Many of them have strong local ties, but they are also mutuals. We are not talking only about money from their customers, but about money from their members. Some of the larger institutions feel that the Government have overlooked that element of their mutuality in trying to reverse the amendment made in the House of Lords. Account holders have a different relationship to their building societies from that which bank account customers have with commercial banks. I expect that we will have a long and healthy debate about whether that approach is appropriate.

Once money from large banks has been transferred to the reclaim fund, and reserves have been put to one side for reclaims, the Big Lottery Fund will be the distributor to the three causes identified in England—youth services, financial inclusion capability and social investment—and the devolved Administrations will decide their own priorities for their share. We welcome the priorities set for England, but the Bill is silent on how those priorities will be ranked. I would be grateful if the Economic Secretary, when he winds up, could explain a little more about how the money from the reclaim fund will be used and how the priorities will be set. Will a fixed proportion of the funds go to each of the three causes? Does the order in the Bill reflect the order of priorities? Will a fixed monetary sum, rather than a proportion, be allocated to each cause? Who will determine the allocation between the various priorities? The Bill makes frequent reference to the Secretary of State, but given that the priorities cover three Departments—the Department for Children, Schools and Families, the Treasury and the Cabinet Office—and the Big Lottery Fund itself is accountable to the Department for Culture, Media and Sport, to which Secretary of State does the Bill refer? We need some clarity—[Interruption.] The Economic Secretary says that the DCSF is the lead Department, but how can people who are operating in the area of financial inclusion, or social investment wholesalers, be sure that their priorities are getting a proper hearing from the Secretary of State for Children, Schools and Families? We need to bear in mind that co-ordination issue, and it is odd that a Secretary of State with a particular interest in one of the priorities should take the lead. We will need to explore that.

On the issue of the causes, we must express some sympathy for Sir Ronald Cohen and the Commission on Unclaimed Assets. It must have thought that when Sir Ronald, the chairman of commission, who was so close to the then Chancellor—now Prime Minister—suggested that money from unclaimed assets should go to a social investment bank, the recommendation would have been accepted. However, that was until the then Economic Secretary—now Secretary of State for Children, Schools and Families and an even closer ally of the Prime Minister—pulled rank and put two of his own pet projects in the list of priorities. He added youth services, in a nod to his future job, and financial inclusion, which was one of his priorities as Economic Secretary. That means that it is not clear whether sufficient funds will be available from this exercise to provide the sort of contribution to a social investment bank that the commission thought was necessary. It said, in its initial report, that there should be initial capital of £250 million and an annual income of £20 million for the next four years. Given the way in which the funds available for distribution appear to have been scaled down over time, it is not clear whether that ambition can be met.