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Commons Chamber

Volume 480: debated on Wednesday 8 October 2008

House of Commons

Wednesday 8 October 2008

The House met at half-past Eleven o’clock


[Mr. Speaker in the Chair]

private business



That Liz Blackman, Mr. Nicholas Brown and Mr. Alan Campbell be discharged from the Committee of Selection and Mr. Thomas McAvoy, Mr. Frank Roy and Claire Ward be added to the Committee.—[Mark Tami.]

Oral Answers to Questions

Duchy of Lancaster

The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster was asked—

Social Inclusion

The Government’s strong rural communities programme sets out our goals for those living in rural areas. The Department for Environment, Food and Rural Affairs monitors the outcomes of the programme, and our own public service agreement for socially excluded adults requires all local authorities in rural and urban areas to report on outcomes for particularly disadvantaged groups.

I congratulate the Minister and his ministerial team on their appointments, and look forward very much to working with them. Is he aware that in areas such as the Vale of York and rural north Yorkshire there are pockets of rural deprivation that have worsened over the past 10 years? People suffer from feelings of isolation and have poor access to rural transport because of the fact that Yorkshire is the biggest county in the country. What are his proposals to include them more, especially in the delivery of public services across the board? How will he ensure that rural communities get a bigger share of the public budget, compared with urban areas, than they do at the moment?

I am grateful to the hon. Lady for her welcome. I want to make three points in response to her question. First, she and the House will be aware of the work that the Government are doing to bring decision making in respect of the development of local areas much closer to local communities. Secondly, my right hon. Friend the Secretary of State for Communities and Local Government has brought together plans for housing and for new jobs under the single integrated strategy, and that gives both rural and urban areas much greater latitude and power to drive economic development. Thirdly, the Housing Corporation has set out ambitious plans to make affordable rural housing more widely available. Obviously, the Cabinet Office will retain a very strong interest in the livelihood of those at the bottom, as that is the indicator that we are particularly tasked to monitor, but giving local areas greater power to bring together economic development plans and making sure that councils are backed by the increases in central Government funding that we are providing are absolutely key to making progress on the issues that she has identified.

May I also congratulate the Minister on his new role? I wish him every success in it. Although free bus travel has been a huge success in rural areas of Wales, including in my constituency of Ynys Môn, many groups of people, including pensioners, still feel isolated. Will he join me in congratulating citizens advice bureaux on the benefit take-up campaign that they are holding this week? I am supporting it, and I am sure that many other hon. Members will too. Does he agree that local authorities across England and Wales have a greater responsibility to make sure that pensioner groups and individual pensioners are aware of all the benefits to which they are entitled, and that each year they should distribute a list of those entitlements with the council tax forms?

I am grateful to my hon. Friend for his words of welcome. I should like to extend my congratulations to the citizens advice bureaux in his area on the work that they are doing. Many Labour Members are extremely proud of the work that the Government have done over the past 10 or 11 years to lift hundreds of thousands of pensioners out of both absolute and relative poverty. The changes that we have made to pensions and pension credit are central to that progress, but it is vital for everyone in public life to make sure that as many people as possible know what their benefit rights are.

In extending my warm congratulations and best wishes to the new Chancellor, may I ask him to give the House his definition of the term “social inclusion”?

I am grateful to the hon. Gentleman for his words of welcome. In the past three or four days, I have been bombarded with so many definitions that I am going to give him a concise estimate by way of correspondence.

May I congratulate the Minister on his promotion and his elevation to the Privy Council? It is a pleasure to see such a strong west midlands presence in his ministerial team.

I have been working with the community council in Staffordshire to promote social enterprises and businesses such as community shops and community orchards that promote social inclusion. Does my right hon. Friend agree that that is a useful way forward, and does his Department support social enterprises in that sort of work?

The Parliamentary Secretary, my hon. Friend the Member for Cardiff, West (Kevin Brennan), who is not from the west midlands, will have more to say about that a little later in the time we have been given this morning. My hon. Friend the Member for Stafford (Mr. Kidney) is absolutely right to say that the energy, enthusiasm, enterprise and innovation that the third sector brings to tackling some of these questions is one of our greatest assets in this country. That is why the Government have done so much over the last 10 or 11 years to back those organisations. We have doubled the amount of Government support to them over the past 10 or 11 years. Increasingly, it will be for local communities to find the best ways of working with those organisations, and that is exactly why my right hon. Friend the Secretary of State for Communities and Local Government has such ambitious plans for devolving power from Westminster and Whitehall to local areas and an expectation that local authorities will delegate power further to local communities.

The Minister is quite correct. Although housing, better employment opportunities and transport links are vital for rural areas, does he not agree that education is, too? Will he join me in regretting that one of my local schools, serving a wide rural area, the Church Lawton primary school, is being considered for closure in the dying days of Cheshire county council? Will he join me in asking the county council to look again at the matter?

It is not in my brief so I can but guess the political control of the hon. Lady’s county council.

Sometimes, I do not need things written down in front of me, with the support I have behind me.

If truth be told, the number of schools in rural areas that have closed over the last 10 years is much smaller than it used to be. Overall, because of the changes we have made over the past 10 or 11 years, education is delivering on average better results in rural schools. Obviously, I shall be happy to look into the case the hon. Lady has brought to my attention and I will consult colleagues in the Government before I write to her.

I add my voice of congratulation to the new ministerial team, and commiserate with the new Chancellor of the Duchy of Lancaster on assuming that grandest of office at the very moment it is demoted from the Cabinet.

The new index of deprivation produced for the Government by Oxford university reports that almost 50 per cent. of neighbourhoods across England have markedly deteriorated over the past four years on the measure of geographical deprivation, which is what happens when communities are stripped of key local services. Post offices are of course the most devastating loss. More than a quarter of the network has been lost and now we are warned that thousands more will be forced to close if the Post Office loses its contract for the card account. As the Government dither, communities live with uncertainty. Given the impact on social exclusion, what is the Cabinet Office view on the future of the crucial card account, and when on earth will we get a decision?

I congratulate the hon. Gentleman on his rapid rise through the ranks of his colleagues. He joins a strong Front-Bench team.

If the hon. Gentleman spent a little longer looking at some of the evidence from up and down the country, he would see that people living in both rural and urban areas where there is deprivation have actually become better off over the past few years. That has not happened by accident; it is because of the extra investment that has gone into connecting people with jobs and into education and cutting crime. He brought up the example of Post Office accounts—a subject that has been debated at some length in these parliamentary questions over the past few months. He knows that about £150 million a year in subsidy goes from the Government into the post office network, so perhaps he or one of his colleagues would confirm today whether that policy is supported on the Opposition Benches. I think he would accept that £3.5 million a week in subsidy is not sustainable and that we need to make changes, but making sure that 95 per cent. of the population in both urban and rural areas live within 3 miles of a post office is perhaps an acceptable compromise.

Voluntary Sector

2. What recent discussions he has had with Treasury Ministers on support for those working in the voluntary sector; and if he will make a statement. (224356)

The current economic downturn disproportionately hurts charities and voluntary organisations in terms of costs, income and staffing. Will the new Minister press Treasury colleagues to introduce early measures to help the third sector, especially in reforming gift aid allowance and approved mileage allowance payments, and so demonstrate to unpaid volunteers the Government’s commitment to help them and not just the exorbitantly rewarded City bankers who fund the Conservative party and who have so recklessly gambled with all our futures?

Many hon. Members represent constituencies that are made substantially better by the work of volunteers and volunteering organisations. The truth is that the voluntary sector enters the current economic circumstances in much more robust health because of the fact that this Government have doubled, from £5 billion to £10 billion, our support for the sector over the past 10 or 11 years. Gift aid is one of the most substantial contributions that we have made to that new strength: it is now worth approximately £850 million a year in assistance to the voluntary sector. I am not sure that I shall be able to persuade the Treasury overnight to be any more generous—it made substantial contributions in the transitional allowances given in the last Budget. The key is that we understand what happens to giving and volunteering in the new economic conditions, which is why it is so important that we now have up and running—from 1 October—a new research centre on philanthropy, which is supported by the Government. That will allow us to make decisions based on evidence rather than anecdote.

One of the delights of the Chancellor’s new post is that he will be able to distribute money from the Duchy of Lancaster funds to voluntary organisations and charities. There is a pot of money there—after the events of the past few days, we hope that it is still there. Will he do all he can to promote that fund, so that we can develop the voluntary sector within the County Palatine?

I am extremely grateful for that advice. I now know where to look for advice on where that money is and what it should be spent on in the years to come.

Over the summer, almost all the volunteer advisers at York CAB resigned over differences they had with the management of the bureau. John Stoker, a former chief charity commissioner, has been asked to review what went wrong. Will the Minister look at the review when it is published, to see what lessons can be learned from it, so that people are encouraged to volunteer?

I am grateful to my hon. Friend for championing this matter and bringing it to the attention of Ministers and the House. Although I cannot comment on individual details, I welcome Mr. Stoker’s involvement and hope that his review will lead to a satisfactory resolution.

I, too, join in welcoming the new Chancellor of the Duchy of Lancaster to his post. As he will be well aware, the economic recession will put many new demands on voluntary services dealing with those who are financially damaged by the economic turmoil. Will he make sure that the voice of the voluntary sector is heard in the new National Economic Council? At present, voluntary institutions are both losing volunteers and donations and facing increased demands. Will he get behind efforts to ensure that funding does not dry up in this critical period?

The third sector will of course have a voice on the National Economic Council: that voice will be mine. I shall be supported in that work by the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Cardiff, West (Kevin Brennan). It is extremely important that we understand exactly what extra demands are being made on the voluntary and third sector in slower economic conditions, and that across Government we understand whether there are lines of funding, such as Futurebuilders, that can be directed in a helpful way. I am glad to be able to tell the House that my hon. Friend lost no time in getting together yesterday with about 45 organisations to begin that very conversation.

As I am sure the Chancellor knows, a quarter of all volunteers work in the sports sector. The Treasury has introduced the CASC scheme, which allows community amateur sports clubs to get tax relief, but there is a campaign to get junior subscriptions exempted from tax and to improve the position in relation to the tax system. Will he use his office to put pressure on the Treasury to introduce some of those measures as soon as possible, to encourage as many volunteers as possible and to encourage young people in particular to get involved in volunteering?

My hon. Friend is a tireless advocate of the sporting sector and of young people. We want to make a number of changes to cut red tape and make the business of administration much easier for the third sector. If I may, I shall spend more time with him in the coming months to make sure that we implement the package that was put together for the last Budget as fast as we can.

I join in congratulating the Chancellor of the Duchy of Lancaster and his colleagues on their appointment, and we look forward to working together to establish common ground wherever we can. On that front, does he share my concern about the fact that v, which the Government set up to channel more than £100 million of public money into stimulating volunteering among young people, is currently commissioning an evaluation of its effectiveness? As the Government’s last volunteering initiative, the Experience Corps, had to be scaled back after an independent assessment of its effectiveness, does he agree that a rigorous independent assessment of v’s effectiveness is needed?

I am grateful for the right hon. Gentleman’s welcome, and I look forward to working with him. I suspect that there is common ground between us; it is important that we find it and do our very best to champion causes. In an evaluation of any programme, when efficiencies can be made, it is important that we find that out, so I am more than happy to consider the points that he makes and to explore what there is in them. Of course, if there is room to ensure shared evaluation of projects, that is absolutely what we must ensure.

In the Minister’s conversations with the Treasury, will he raise the case of the Catz Club, which accepted that it illegally made donations to the Labour party? Catz Club was dependent on loans from the Cabinet Office quango Futurebuilders to stay afloat. When he has had a chance to look into the issue, will he tell us what role was played by Margaret McDonagh, the former general secretary of the Labour party, who is a director of the Catz Club, and by Amanda Delew, a former Labour party fundraiser who is now the fundraiser for the Catz Club? Can he tell us why the Futurebuilders website has removed all reference to its funding of Catz Club? [Interruption.]

Order. Before the Chancellor of the Duchy of Lancaster answers, let me say that there is too much private conversation in the Chamber. It is unfair to those hon. Members who are here to listen to these questions and answers.

I am grateful to the right hon. Member for Horsham (Mr. Maude) for bringing that case to my attention. He will know, first, that political parties’ members of staff are entitled to go on and do other things and, secondly, that charitable organisations are regulated by the Charity Commission, rather than by me. However, now that he has brought the case to my attention, I will of course do what I can to review it and to correspond with him.

3. What recent assessment he has made of the effectiveness of Government programmes to encourage voluntary work. (224357)

4. What recent assessment he has made of the effectiveness of Government programmes to encourage voluntary work. (224358)

A range of Government programmes has encouraged and supported volunteering. The statistics from the 2007-08 citizenship survey show that the proportion of people who volunteered at least once in the past 12 months remains high, at 73 per cent. of all adults.

As a fellow Welsh Member, may I be the first Conservative Member to congratulate the Minister on his preferment? On 7 May this year, his predecessor told the House that the youth volunteering charity, v, had secured pledges of £32 million in match funding from the private sector. A check on the charity’s website this morning revealed that the pledges had not increased; the sum was still £32 million. Is the House to infer from that that the charity is having difficulty securing match funding from the private sector, and what assurances can he give the House that it will meet its target of £45 million?

The direct answer is no, it does not mean that v has stopped raising money. Indeed, it is due to report its latest figures shortly. I am sure that the hon. Gentleman looks forward to that. I also remind him that the £32 million is matched by public funds, so there is £64 million of extra money coming in to help create wonderful youth volunteering opportunities that would otherwise not have existed.

I wish the Minister well in coping with the members of the west midlands mafia on either side of him. I put it to him that, at this time of economic downturn, we have never needed the voluntary sector more. There will be huge responsibilities on his and his colleagues’ shoulders to deliver on promises that were not properly fulfilled by their predecessors.

The right hon. Gentleman is a former member of the west midlands mafia, having represented the constituency of my hon. Friend the Chancellor of the Duchy of Lancaster. I assure the right hon. Gentleman that I will take forward my role as Minister with responsibility for the third sector very much as the Prime Minister asked that I should—as a champion for the third sector in Government. I am sure that the right hon. Gentleman will welcome the £450,000 of funding to the Berkshire Association of Clubs for Young People for a v involved team in his area, delivering wonderful youth opportunities for volunteers in Bracknell.

What steps can the Minister undertake, in association with his ministerial colleagues, to ensure that all those involved in voluntary work right across the United Kingdom, including Northern Ireland, can play a more significant role in the run-up to both the Commonwealth games and the Olympic games?

Clearly, the Olympic games provide a wonderful opportunity for volunteers across the United Kingdom. The office of the third sector is working within the Cabinet Office to ensure that there is a real legacy of increased civic participation as a result of the 2012 games. We want to enable third sector organisations to make the most of the opportunity of the Olympics to increase volunteering and we will ensure that individuals will have easy access to the increased number of volunteering opportunities that will become available in the run-up to the Olympic games.

Given that the Government now enjoy new influence on the banking sector, will my hon. Friend work to ensure that the banks show greater understanding for, and consideration of, the needs and working circumstances of the voluntary sector as it copes with a difficult fundraising cycle and the complexities of funding rounds? Banks are not always there to support that sector positively. Will the Government use their new influence to achieve a better result?

I am grateful to my hon. Friend and the hon. Member for East Londonderry (Mr. Campbell), who, as the Celtic mafia, have given me welcome relief from the west midlands mafia during this Question Time. My answer to my hon. Friend is “very much so”, and I am prepared to look, with him, at the issue that he raises.

Will the Minister ensure that funding continues for organisations that recruit volunteers, such as Chance UK? I spent a week volunteering at that organisation last month. Will the Minister commend its work in recruiting volunteers to mentor the most vulnerable five to 11-year-olds and raise their aspirations and behaviour? That work is so needed, particularly in respect of role models in our communities.

There is a social inclusion taskforce project in that very area. The role of mentoring is important. From my previous posting at the Department for Children, Schools and Families, I know that it spent a lot of money, working in conjunction with the office of the third sector, to promote volunteering in the form of mentoring, particularly for young people. I commend that work.

Third Sector

5. What research his Department has commissioned to underpin the development of its policies relating to the third sector in the last two years; and if he will make a statement. (224359)

The office of the third sector recently commissioned the largest ever survey of the sector, reaching more than 104,000 third sector organisations. It conducts additional research on issues including social enterprise, consultation, volunteering and charitable giving. It is also laying the foundation for future third sector research by investing £5.7 million in two third sector research centres with the Economic and Social Research Council.

I welcome that response from the new Minister and wish him well in his new job. He was an excellent Minister in the Department for Children, Schools and Families and I am sure that he will continue the good work at the Cabinet Office.

Not only the smaller charities and voluntary organisations help groups and people in our society now; many larger organisations are delivering front-line public services. However, in many of our towns and cities, charities, voluntary organisations and community groups are hampered in the development of their work by inadequate and inaccessible premises. As the Minister develops policies for the third sector in the next two or three years, will he consider that issue and the funding involved?

Yes, I will do that. As my hon. Friend will know, helping third sector organisations to take over former local authority premises has been one of this Department’s large programmes, and it will continue to be so.

Have the Government commissioned any research in the past two years that will not only underpin their policies but assist the third sector by identifying all those areas across Government Departments where the third sector can apply for grant, and would they publish that work to assist the third sector in knowing where it can go to seek funding?

We are doing a great deal of that work. In fact, we are following four different research strands. We are carrying out the largest ever third sector survey, this month we will open the third sector research centre, we are supporting the Centre for Charitable Giving and Philanthropy, and we are commissioning rigorous evaluation of the work that we are undertaking. I am happy to talk further with the hon. Gentleman about those issues.

Social Inclusion

6. What work programme has been put in place for the social exclusion taskforce for the next 12 months; and if he will make a statement. (224360)

The principal focus of the taskforce’s work is in ensuring delivery of the public service agreement that we have agreed on excluded adults. There will also be scope for a number of additional projects, which will be announced shortly.

The Secretary of State has recognised the work of the social exclusion taskforce, but does he recognise the following words:

“despite our successes, it is actually getting harder for people to escape poverty…In fact, it’s currently harder to escape the shackles of a poor upbringing in Britain than anywhere else in Europe”?

Does he agree with the right hon. Member for Kingston upon Hull, West and Hessle (Alan Johnson), the Secretary of State for Health?

I think that my right hon. Friend would agree with me that what is important over the next year is not only that the Government take action such as the action announced today to stabilise the banking system but that we do everything possible to help families and businesses through these more difficult economic times. Labour Members are determined to ensure that we come through the next year not only stronger as a country but as one nation, leaving nobody—no community and no business—behind. I hope that that ambition is shared in all parts of the House.

Prime Minister

The Prime Minister was asked—


Before listing my engagements, I know that the whole House will want to pay tribute to all the servicemen who have died in the summer months in Afghanistan and, in doing so, I send our profound condolences to their families and friends: Warrant Officer Class 2 Gary O’Donnell, Sergeant Jonathan Mathews, Corporals Jason Barnes and Barry Dempsey, Lance Corporals Kenneth Rowe and Nicky Mason, Private Peter Cowton, Private Jason Rawstron, Signaller Wayne Bland and Ranger Justin Cupples. We owe them, and all those who have lost their lives in conflict, a huge debt of gratitude. Like many Members, I have recently visited Afghanistan, and I have seen at first hand the superb job that our armed forces are doing. I believe that I can speak for the whole House in sending the full and unwavering support of this House for the great efforts of our armed forces.

This morning I had meetings with Ministers. I also talked to Chancellor Merkel, President Sarkozy and Prime Minister Berlusconi about the economic situation. I think that the House will want to know that the Governor of the Bank of England has just announced an immediate 0.5 per cent. cut in interest rates. He has done so in a co-ordinated action that is happening around the world, in which the US Fed has cut interest rates by 0.5 per cent. and the European Central Bank by 0.5 per cent. The Swiss, the Swedes and other members of the G10 have all cut interest rates, showing that global problems are best dealt with by global action.

I am sure that the whole House shares the sentiments expressed by the Prime Minister with regard to the fallen.

Does the Prime Minister agree with the International Monetary Fund that the British economy will shrink next year?

Every economy is facing problems, and I do not want to make predictions about the future. We are in very difficult times. However, I think that the hon. Gentleman will see, and the whole House will understand, the strength of the action that we have taken today. We have produced additional liquidity in the system of up to £200 billion. We have said that we are prepared to buy shares in our banks and recapitalise our banks to the tune of £50 billion. We have also done something that other countries will, I believe, follow very soon by providing medium-term financing of up to £250 billion, guaranteed by the Treasury. By taking co-ordinated action as a whole and leading the world in doing so, I believe that we can get our banking system on to a sound footing, and that is the key to the future. To have that combined with the macro-economic action—a cut in interest rates—is an important message that is being sent round the world: that we will do everything in our power to ensure that our economy moves forward.

Will my right hon. Friend guarantee that the fat cats of the City of London will not be allowed to line their pockets on the backs of the profound concerns of tens of millions of our fellow citizens? Will he assert that the jobs, homes, small businesses, savings and pensions of those fellow citizens of ours are the profound, top concern of this Government?

I was pleased to visit the constituency of my right hon. Friend when I opened a school only a few weeks ago, and we will do everything in our power to maintain our public services, to increase jobs in our economy and to protect the savings and deposits of the citizens of this country. I want to reassure people that everything that can be done will be done to ensure a flow of finance for mortgages and small businesses, despite the toughness of these times. I also say to him that the conditions we will lay down for support to banks in this country include executive performance and the way in which it is remunerated, and we will build on the Financial Services Authority’s work to ensure that excessive risk taking is not rewarded but punished.

May I join the Prime Minister in paying tribute to those servicemen who have lost their lives in Afghanistan since the House last met? Like the Prime Minister, I have been recently to Helmand, and I have seen for myself the courage, professionalism and dedication of people working in incredibly difficult conditions, and we owe each and every one of the fallen a huge debt of gratitude.

Right across the country, people are worried about their savings, their pensions and their mortgages. That is why I said last week that if the Government needed to take major steps to secure the banking system, they would have our support. Does the Prime Minister agree that the message should go out loud and clear from this House that in a free enterprise economy, banks play such an important role for everyone—home owners, businesses and individuals with savings—that the banking system cannot be allowed to fail?

I am grateful for the Leader of the Opposition’s support for the action that we are taking. I hope that we can proceed on the basis that there will be all-party support for the actions taken today and those taken on future days.

I believe that the scheme we put forward, which is a stability and restructuring programme, is not simply about new capital for the banks. It is increasing liquidity into the system so that there is overnight and short-term lending available for the banks. It is dealing with what is perhaps the bigger problem at the moment, which is medium-term funding that small businesses in our country need, as everyone recognises, to get funding. At the same time, mortgage holders and prospective home owners need to know that the market can resume. The absence of medium-term funding of loans over six months, a year, two years or three years has hindered the market, which is indeed frozen up in those areas. We are guaranteeing £250 billion at commercial rates, but we will do the job that the banks usually do, and should be doing in normal circumstances, by providing the guarantee that that system will work forward. In addition, the cut in interest rates will assure people that all action is being taken in the economy so that we can help businesses move forward.

I welcome the right hon. Gentleman’s support. I say to him that the measures we took this morning are far more comprehensive and wider than those speculated about in the press, and we are showing that we will do everything in our power to maintain the stability of the economy in the interest of every single British person.

Given, as the Prime Minister says, that we are trying to save the banking system not as an end in itself, but to save the wider economy, would he agree that the real test of success of these measures is not just, as he said, whether banks starting to lend to each other, but whether small business can get loans again and whether home owners can get mortgages again? Are they not the real tests that need to be met? Can he explain how he will measure whether they are met?

I am grateful to the right hon. Gentleman for giving me an opportunity to say, in addition, what we are doing to help small businesses. The key issues for small and medium-sized enterprises are cash flow, and, to some extent, access to finance, as I have just said. They need to be helped through this critical period. Late payment problems, which have intensified, with all firms on average lengthening the time it takes to pay their suppliers, including SMEs, go beyond agreed terms. The Government can ease the situation, and we will help cash flow through prompt payment. The Government have already agreed to move their procurement rules from payments within 30 days to a commitment to pay as soon as possible. In the current climate, we need to go further, with a harder target. We will therefore aim to make SME payments within 10 days. The Government will pick up the cost of that, but it is a small price for greatly increasing cash flow associated with £8 billion of contracts for SMEs.

As I announced last weekend, we propose that the European Investment Bank increase its loans worth up to £4 billion to United Kingdom banks for use by small and medium-sized enterprises. We are now pressing for further additional funding to be advanced, and for UK banks to be able to ensure that they take up the full funding available for SMEs. The Government will, of course, review the impact of any regulatory measures already agreed, but let me make it clear that we are doing, and will do, everything we can to assist SMEs throughout this period. Our restructuring of the banks is designed to ensure that, although it is difficult to achieve, credit lines can remain open to SMEs on a commercial basis. We will not accept that banks should cull their credit lines to eliminate their own exposure to risk, so we will do everything we can to help the 4 million small businesses of this country.

Taxpayers are making an enormous investment and potentially have a huge liability. They want their interests to be protected. That should mean no more irresponsible behaviour, no more inappropriate dividend policies and no more indefensible bonus packages. Will the Prime Minister confirm that those will be conditions of the agreement for getting taxpayers’ cash? Crucially, how will the conditions be enforced once everyone has signed up?

Again, I am grateful for the chance to explain how we will move forward the proposal that the Chancellor announced this morning. On the remuneration packages available to executives, it will be a condition of the capitalisation of banks that they accept new conditions attached to executive remuneration. We are in discussion, on a case-by-case basis, with the banks that want to take up the scheme about the level of executive remuneration, especially the bonus system that has caused so much difficulty.

Our aim is to support and reward work, enterprise and responsible risk taking, but not irresponsible and excessive risk taking, which has caused so much damage. The Financial Services Authority—[Interruption.] I was asked a question, so I think I should have the chance to answer. The Financial Services Authority will soon publish a consultative document about the danger to company balance sheets if, by excessive risk taking, some of their executives put those balance sheets and companies at risk. That will form part of its estimate of what capital those companies need.

It is not only a question of the individual banks with which we are dealing having to accept new conditions—there are strings attached and conditions must be met—but throughout the system, the FSA will propose a new way of dealing with executive remuneration, especially bonuses, which will allow it to regulate according to the capital requirements of a company that takes excessive risk.

May I ask a question that follows directly from the answer that the Prime Minister just gave? The banks that are most reliant on the scheme are those that have taken the greatest risks and, in some cases, behaved irresponsibly. Will the Prime Minister guarantee that, in those banks, there will be no bonuses for senior executives this year?

I think that we must get both sides of the matter right. Early on, the right hon. Gentleman said that he did not want any bank to fail, and we will take all the necessary action to ensure that banks are stabilised and can continue, and resume their normal process of lending. At the same time, we will insist in the conditions on which we issue shares that executive remuneration is as we want: based on responsibility, hard work, effort and enterprise. However, that will be part of the negotiations that we will hold. I think it is right to hold those on a one-to-one basis between the Government and the companies. Of course, those matters will be made public because that is what companies are required to do.

No one wants banks to fail, but also no one wants rewards for failure. Taxpayers now have an investment, so taxpayers have an interest, and they will rightly be infuriated if they see their hard-earned money going in bonuses that are rewards for failure. The other thing that the taxpayer will expect is that everything possible will be done to improve the regulatory system. One of the problems is that there is no one in the system who is there to take an overall view of indebtedness in the economy. Will the Prime Minister look with a genuinely open mind at restoring the role of the Bank of the England—the role that it had for decades—of calling time on debt levels in the economy? The regulatory system needs not just the right rules, but strong institutions. Should not the Bank of England be restored to its proper role in this regard, so that this never happens again?

Of course under the new legislation, for which I believe there is now all-party support, the Bank of England will have a statutory role in the supervision of the system. However, I have to remind the right hon. Gentleman that when we came in in 1997, there were seven or eight separate regulators all involved in the system. We co-ordinated that within the Financial Services Authority and we led the world in that way.

As for bonuses, the FSA will be responsible for issuing rules about capital adequacy to firms. It will take into account whether firms are taking excessive risk by rewarding people on the basis of short-term gains, not long-term success. So when the right hon. Gentleman asks what will be done, the answer is that on a case-by-case basis where we capitalise the banks, we will lay down conditions. As for other companies and the rest of the system, the FSA will now be in a position to regulate the capital requirements of firms according to the risk taking that is involved.

I hear what the right hon. Gentleman says about what he thinks about the irresponsibility of people in the City and some of the adjectives that have been used, but I have to remind him of what he said on the “Andrew Marr Show”:

“What you won’t hear from me this week is sort of easy, cheap lines…beating up…the market system, bashing…financiers.”

Now that the Government have brought forward such a bold scheme of support for the banks, does the country not have the right to expect the bankers to show a bit of courage and resume normal lending among themselves and to the wider community?

My right hon. Friend is absolutely right. What we are making possible to happen today is for that resumption of lending to take place. We are providing a guarantee for medium-term funding. I am thinking of the small business that is looking for funds for investment or the small firm with an overdraft that wants the help that a bank can usually give. I am thinking of the mortgage holder who wants to buy the next home or the first-time buyer. That is the cash that can be provided by a good banking system. To have it on a sound footing is an essential element of the programme, but to resume the medium-term funding is one of the least publicised elements of the programme that we have announced today. Not only will we do this in Britain—the £250 billion guarantee—but I have talked to my European colleagues over the past few days and I have hopes that this can become a wider scheme that other countries will take up. I hope that we will show that we have led the world in changing the terms and conditions on which we can help to renew the flow of money in the system.

I would like to add my own expressions of sympathy and condolence to the families and friends of those brave British servicemen who lost their lives during the summer recess in Afghanistan.

This is indeed a day of reckoning for the British economy. It is also a test for this House. We must show the British public that we can work together to halt the downward spiral in the British economy. That is why, speaking for the Liberal Democrats, I can confirm that we wholeheartedly support the Government package. When a ship is sinking, we send out the lifeboats. We do not argue about who has steered it into an iceberg—that is a debate for another day.

This is a national response to what the Prime Minister has rightly called a global crisis, so we need global responses, too. Will he give the House a bit more detail on exactly what he is doing to ensure that the European Union finally acts together? Will he and the Chancellor press the IMF later this week to provide support to Governments, such as Iceland’s, who are overwhelmed by the crisis and unable to cover the liabilities of their banks on their own?

Once again, I am grateful for the right hon. Gentleman’s question, because it allows me to explain, if he will allow me to do so, what we are doing in concert with our European partners and what we want to see happen at a global level.

First, the co-ordinated cut in interest rates is an important signal that the world will come together to deal with this economic problem. I believe that it has come at the right time to show that the action that we are taking, the action that the Americans are taking and the action taken in other countries in Europe is action that is designed to solve together the problem we face.

The problem is that the banking system has been overwhelmed by the fall-out from the sub-prime market in the United States and the bad assets that have been taken by many banks. Our method of doing this is to strengthen the banks in our country. In America, they are trying to move those bad assets into a Government fund. We feel that what we are doing is best for the banking system here, so while action is co-ordinated, each country will choose different things to do.

On Friday, the G7 will meet and agree co-ordinated action on transparency, disclosure and how we deal with accounting standards. I believe that the changes such as the new colleges of supervisors that will regulate multinational companies across frontiers should come in immediately and be set up before the end of the year. There will be a meeting of the IMF on Saturday, which I believe will agree the same principles. Having talked to President Bush yesterday, I think that we will have an international leaders meeting soon to look at what we can do together.

We need to have responsibility and integrity at the heart of the global financial system. We need a global early-warning system and co-operation among regulators that, to be frank, we in Britain have tried for for years, but have not been able to persuade other countries to support. We will continue to see co-ordinated action on economic policy.

I am grateful for the Prime Minister’s reply. I am sure that he will agree that although this package is hugely important, it is only one part of the jigsaw that needs to be put together to get the economy back on track. He has said, rightly, that this is a time for new thinking, not for old dogma, so does he recognise that struggling families facing huge bills need more money in their pockets now? Will he act to close the numerous loopholes in the tax system, which benefit only the very wealthy, and use that money to cut taxes for people on low and middle incomes, who need that money the most?

I am grateful to the right hon. Gentleman. Of course, wherever there are loopholes in the tax system we will act to close them, and have done so over the last nine years. He asks about money going to hard-working families in this country to help them through these difficulties. Every family—in fact, 22 million families, basic-rate taxpayers—will receive £120 as a result of the decisions made by the House to give a tax cut. Equally, at the same time, as he knows, pensioners will receive £250 in the next few weeks for their winter fuel. Pensioners over 80 will receive £400 to help with their fuel bills. We have also extended help to low-income families by increasing the social tariff numbers to half a million and more. We are trying to do more in that area. We are trying to deal with the unacceptable problems raised by pre-payment meters. We will legislate if necessary to stop the practice of discriminating against those on pre-payment meters and we will continue to do everything we can to help the hard-working families of this country.

Does the Prime Minister agree that the best way for the House to show its admiration for our troops in Afghanistan would be to investigate an alternative peace strategy that sought to consolidate the gains already made, end the bloodshed and bring stability to Afghanistan and Pakistan?

My hon. Friend is absolutely right in one thing: this is not a military strategy alone. I applaud the professionalism, dedication and ingenuity in the face of huge difficulties displayed by our British armed forces—more than 8,000 men and women who are in Afghanistan at the moment. As everybody knows, they face a new problem—not front-on combat with the Taliban, but guerrilla warfare, roadside bombs, devices such as car explosives and suicide bombings. We have had to restructure and reconfigure our troops to deal with that problem.

In addition, we are training the Afghan army to do its own job for itself—80,000 people are being trained. The Afghan police force is being trained, which is a more difficult task. Corruption has to be avoided so that it can also provide a policing role. I may say also that in what we have done in increasing the facilities available—for example, the dam in Afghanistan—we are trying to help to develop the economy of Afghanistan. We are trying to give people education and health, and all the opportunities that a civilised society should give. However, let us remember this: some criticise the effort in Afghanistan, but Afghanistan is now a democracy and millions of children, including 2 million girls who never went to school, are now going to school.

Q2. Does the Prime Minister share my disgust that some banks are charging small businesses more than 15 per cent. interest on their overdrafts? (224399)

That is exactly the problem that we are considering at the moment. Small businesses need the lifeline of banks that are able to service them. We are examining how we can use money from the European Investment Bank, the small firms loan guarantee scheme, and money that regional development agencies have to help businesses in their community, to get the banks to be better intermediaries to finance loans for small businesses at affordable rates. We have been discussing in detail with our European partners how a £25 billion scheme can be introduced. We are also considering how the small firms loan guarantee scheme can be improved. The situation is difficult and tough. Banks have increased the margins that they charge, and have responded to their difficulties by making it harder for small businesses. We should accept that that problem must be dealt with. But we must create a means by which the banks can be better intermediaries in getting funds to the 4 million small businesses in our country who deserve, and will have, our support.

I too congratulate my right hon. Friend on this bold, comprehensive financial package, especially as it has been struck voluntarily with the banks and will therefore not be delayed by legislation. Can he tell the House how quickly he thinks that the major banks will take up the offer on the table?

One of the reasons that the programme had to be completed in full before it was announced was that we had been in detailed discussions with the major banks. We have an agreement in practice that they will all join the scheme. The detailed working out of the scheme, through the conditions that we are attaching, will happen in the next few days. We must accept that this is a long haul for every economy of the world. But I hope that in a reasonable time we can get the funds from the banks into the small businesses, and resume the mortgage lending that is so essential, especially for young people looking for their first home.

Q3. When the Prime Minister was Chancellor of the Exchequer, he often used the occasion of the IMF forecast to revise his public borrowing figures. In the light of today’s revised IMF forecast, will he revise those public borrowing figures today? (224400)

If I may say so, public borrowing forecasts have always been revised in the pre-Budget report and in the Budget. I have never done that at the IMF, although sometimes at the IMF I have said what I think the growth pattern of the economy will be.

In the light of today’s historic and dynamic intervention, does my right hon. Friend consider that the proposed takeover of HBOS by Lloyds TSB will still proceed? If so, will he reassure my constituents in the Calder Valley, and those of my hon. Friend the Member for Halifax (Mrs. Riordan), many of whom are employed by HBOS in Halifax, that he will do everything that he can to ensure that there are no compulsory redundancies in the next three years?

My hon. Friend takes a huge interest in those matters, and I too am concerned with the interests of her constituents and those employed by HBOS and Lloyds TSB in Yorkshire and Humberside. When we changed the competition rules to make possible the takeover by Lloyds TSB of HBOS, the alternative that we faced—that a major bank that served a large part of our community would not be able to survive—was a great deal worse. We took the right action to make sure that Lloyds TSB could take over Halifax Bank of Scotland, with the company wishing to expand over time its business in banking, servicing the people not just of Yorkshire and Humberside but the rest of the United Kingdom. I will look at the matter carefully, and would be happy to meet her to discuss the conditions of employment that she finds. With Bradford & Bingley in the same area, I realise that people face difficulties. Our determination, however, is to stand on the side of those people who are worried about their jobs, and to help them through this difficult period.

Q4. Following the Prime Minister’s pronouncement in New York last week, will he now tell us when the age of irresponsibility began? (224401)

I am tempted to use my experience of studying history to go back quite a long time to explain what has happened.

I was talking about irresponsibility in the financial markets. Now everyone agrees about irresponsibility in the financial markets, but let me say, because I think it should be clear to the people of this country, that the dividing line here is not between business and being anti-business, or between market and being anti-market. The dividing line that we have is between rewarding hard work, effort and responsibility—rewarding enterprise—and rewarding excessive risk-taking or irresponsible risk-taking. [Interruption.] The all-party consensus seems to have dissipated a little.

I personally think that the whole country will agree that that is the right thing. Let us reward work, let us reward effort, let us reward enterprise, let us reward responsible risk taking; but let us deal with the problem—and sort it out once and for all—of excessive and irresponsible risk taking.

When the Prime Minister gave badges of honour to the women and male Spitfire pilots and others in the Air Transport Auxiliary, did he convey the great pride that the whole House shows in them, and the tremendous thanks of the whole country for their sterling service during our darkest hour?

I had the privilege, over the summer, of meeting many of the women Spitfire pilots, and the men and women of the Air Transport Auxiliary and I was able to congratulate people who had come from all over the country, and who had given a huge service to the country. Their contribution was in delivering aircraft between factories and airfields during the second world war. It is right, even 60 years after the war, that the nation has now determined that it will recognise the contribution of some very brave and courageous women and what they did.

Q5. I listened very carefully to the Prime Minister’s answer when he said that he often used the occasion of the IMF forecast to publish new growth forecasts. I repeat the question put by my hon. Friend the Member for Scarborough and Whitby (Mr. Goodwill): can the Prime Minister confirm that the Government agree with the IMF that next year the economy willshrink? (224403)

I said that I often forecast the path along which the economy will move forward. We publish—[Interruption.] I think the hon. Gentleman has been in the House for long enough to know that it is right for a Government to publish the exact figures of its forecasts at the time of a Budget and pre-Budget report. Anything else leads to uncertainty; and, if I may say so, the hon. Gentleman betrays some immaturity in expecting that we will give a running commentary on the economy.

Financial Stability

With permission, Mr. Speaker, I shall make a statement on the proposals that I announced this morning. I hope the House will understand that it was necessary for me to issue a statement this morning ahead of the opening of the markets, for very obvious reasons. Before I return to that, let me tell the House that the announcement made by the Bank of England half an hour ago of its intention to cut interest rates by half a per cent. to 4½ per cent. will help our objectives of maintaining stability and rebuilding the banking system.

As I said in my statement to the House on Monday, the disruption in the global financial markets has intensified over the last few days and weeks. I also said that the Government were ready, with the resources and the commitment, to do whatever was necessary—in terms of liquidity and capital—to maintain stability in the banking system. That is why today I put forward measures designed to restore confidence in the banking system and to put banks on a stronger footing.

There are three strands to what I have outlined today: first, to provide sufficient liquidity now; secondly, to make available new capital to UK banks and building societies to strengthen their resources and to restructure their finances, while maintaining their support for the real economy; and thirdly to ensure that the banking system has the funds necessary to maintain lending in the medium term. My proposals today, as well as supporting stability in the financial system, will protect depositors, safeguard the interests of taxpayers and play an important part in the international response to this global crisis. That, in turn, should help people and businesses, as well as support the economy in these extraordinary times.

Let me set out for the House further details and the purpose of our measures. First, the Government and the Governor of the Bank of England will take whatever action is necessary to ensure that the banking system has sufficient funds, or liquidity, to function properly. That crucial measure is needed to allow money to flow through the banking system.

To that end, I have agreed further immediate liquidity measures with the Governor. Until markets stabilise, the Bank of England will extend and widen its injections of funds into the system to build on the £40 billion that it put in yesterday. The Bank of England will continue to lend those funds to banks, in both sterling and dollars, by taking a wider range of security in exchange, and today I have increased the amount available to the Bank of England to lend through the special liquidity scheme to a total of at least £200 billion.

By injecting that short-term funding into the system, the banks will be better able to conduct their daily business with their customers. Importantly, that form of funding, which allows banks to swap assets for Government securities, keeps the risk of losses with the banks and not the taxpayer. The Bank of England will next week bring forward its plans for a permanent regime underpinning banking system liquidity, including a discount window facility.

The second step is to help the banking system to become stronger, so that it can better deal with the current turmoil in global financial markets. Banks will do that by raising the level of capital that they hold.

A healthy banking system is the cornerstone of the economy. Strong banks underpin a strong economy, but many banks, all over the world, do not have sufficient capital and banks need adequate capital, so that they can keep on lending to people. That is why today the Government have established a bank recapitalisation fund to allow UK banks to increase their capital position. The eight major UK banks have today announced that, in aggregate, they plan to increase their capital by £25 billion. Banks can raise that capital in the open market, in the usual way, or they can raise it through the newly created bank recapitalisation fund. Other eligible banks and building societies can also take part.

Through the fund, the Government stand ready to buy preference shares in the participating banks. Preference shares rank above the stock of ordinary shareholders. The Government will receive a fixed regular payment for holding those shares and will get better protection against any future losses. In addition to that, the fund will be ready to provide at least another £25 billion of capital to strengthen the balance sheets of any interested bank. The taxpayer, therefore, will be fully rewarded for that investment.

Additionally, the Government are also prepared to consider standing behind the issuance of new shares by any bank taking part in the recapitalisation fund. The fund will cover a wide range of financial institutions, from UK-based multinational banks to high street branches and regional building societies. Through those measures, UK banks will be strengthened to above the standards required by international conventions. It will put the banks on a stronger footing, making them better able to deal with future shocks and more willing to lend to people, families and businesses.

That brings me to the third element of the Government's proposal today. The root cause of today's problems is that, because banks all over the world are worried about each other's positions, medium-term lending between them has frozen up. Many banks have simply lost confidence in each other. If banks do not lend to each other, they will also not lend to people and businesses up and down the country.

To free up bank lending and reduce dependence on overnight lending, I want to remove one of the key barriers by offering a temporary underwriting for any eligible new debt issued by banks. That means that participating banks can start having confidence in each other again, because they will know that the Government are standing firmly behind them when they want to issue new debt. That guarantee aims to unblock the system, so that banks can go about their business of lending to people and businesses, and because it will be priced on commercial terms, taxpayers will be rewarded for the risk that they take on. The guarantee is expected to cover an amount of around £250 billion but we will keep this total under review. Over time the cost of lending between banks should fall, reducing the need for such a guarantee.

The freeze in global markets is a problem for all countries. Yesterday, at the meeting of European Finance Ministers, we agreed to work together to rebuild confidence in the banking system. I believe that the measures that I am announcing today are an important part of that. I shall be having further discussions with Finance Ministers, and when I go to Washington tomorrow I will be discussing with my colleagues there the extension of these proposals, as well as continuing our work towards strengthening the system of international supervision. The Prime Minister, as he has just said in Prime Minister’s questions, has agreed with other major countries on the need for a meeting of Heads of Government.

I believe that these measures are essential for the economy, but let me deal with the implications for the Government and, of course, for the taxpayer of those new proposals as well as others announced on previous occasions. When we nationalised Northern Rock, the Government had lent it around £30 billion. It has now paid back more than half of that ahead of schedule. When we nationalised parts of Bradford & Bingley, it was clear that we would run off its assets in an orderly way and get back as much as possible of the money that we provided to cover depositors. The injections of liquidity through the special liquidity scheme to which I have just referred simply allow banks to swap securities with the Bank of England, so the risk remains with the banks and not the taxpayer; in other words, we get our money back.

For all the operations of the recapitalisation fund announced today, we will be charging the banks on full commercial terms. We will hold a capital stake as part of the investment and that will include a payment of dividends on shares and the appropriate charges for the use of the guarantee ensuring that the taxpayer is appropriately rewarded. The implications for the public finances as a result of today’s announcements will be exceptional and mostly temporary and, in fact, will protect taxpayers by ensuring stability in the economy now.

In return for this offer to invest in banks I will need to be satisfied that the banks have the appropriate policies in place: policies to prevent the irresponsible behaviour that we have seen in some parts of the global banking system. The public are entitled to share in the upside of these proposals, so in return for our support, we will be looking at executive pay, dividend payments and lending practices, particularly to home owners and small and medium-sized enterprises.

I want to say something about the three Icelandic banks; Landsbanki, its UK subsidiary, Heritable, and Kaupthing, which was put into liquidation within the last hour. The Financial Services Authority decided yesterday that Heritable could not continue to meet its obligations and today it has taken exactly the same decision for Kaupthing. I have therefore used the special powers that I have under the Banking (Special Provisions) Act to transfer most of their retail deposits to ING, the Dutch bank, which is working to secure business as usual for its customers to protect its savers’ money. The rest of those Icelandic businesses have been put into administration.

On icesave, we are expecting the Icelandic authorities to put Landsbanki, which owns icesave, into insolvency. Despite the fact that this is a branch of an Icelandic bank, I have in the exceptional circumstances that we see today guaranteed that no depositor loses any money as a result of the closure of icesave and I am taking steps today to freeze the assets of Landsbanki in the UK until the position in Iceland becomes clearer.

Those actions demonstrate my strong commitment to protect UK retail depositors in these exceptional times. The purpose of these proposals is to get lending started again and to get the economy moving forward. It is one of a number of measures that we are taking to deal with specific cases as well as providing general support. We are ready to do more whenever it is necessary. Failure to act would have meant far greater risks to the economy and to the public finances in the future. I have made it clear that we will do whatever it takes to maintain stability, to protect savers and to rebuild the confidence to help businesses, people and the wider economy. I commend this statement to the House.

I am grateful to the Chancellor not just for his statement, but for discussing it with me this morning.

This has, of course, been another day of turmoil on the financial markets, and people watching us remain desperately anxious about their savings, their mortgages and their future jobs. That is why we continue to offer our constructive support for the package announced today, including the important steps on interbank lending that the Prime Minister mentioned at Prime Minister’s questions. Of course, as my right hon. Friend the Member for Witney (Mr. Cameron) said, the real test of the success of this rescue will be if credit starts flowing again through the veins of the economy. We want to see banks not just lending to banks again, but also lending again to the small businesses that need a loan extension and to the families who are trying to get a remortgage.

So may I ask the Chancellor the following specific questions? He said in his statement that he will require a full commitment to lending to small businesses and home owners. How exactly will that commitment be enforced? Does he have a commitment that the banks, for example, will not be charging small businesses 15 per cent. interest rates of the kind that we described on Monday? Does he have a commitment that the banks will pass on to customers the kind of rate cuts that the Bank of England has just announced today—and, perhaps, will also announce in the future? May I press him again on a question that my right hon. Friend asked of the Prime Minister? Does the Chancellor have a commitment that those banks that are most in trouble and most in need of taxpayer support will not be paying bonuses this year to their senior executives? The Prime Minister did not answer that question clearly and it would be good to have an answer from the Chancellor; there should not be rewards for failure—no bonuses for those who took their banks to the edge of bankruptcy. [Interruption.] Labour Members can ask the new Minister appointed in the House of Lords all about bonuses when they leave the Chamber. The Chancellor says that this is all the Financial Services Authority’s responsibility, but it is the Chancellor who is ultimately responsible for tax money, and how is he going to enforce these commitments, because while the Government can give their support now and strike a deal now, they will, of course, find it very difficult to withdraw that support once it is offered without risking further crisis, so what are the real sanctions that the FSA or the Treasury have to help small businesses?

Secondly, may I ask the Chancellor about the concerns of people with savings in Icelandic banks? They will welcome what the Chancellor says, but may I ask for some clarification for all our constituents? He says there will be no depositor losses as a result of the closure of icesave. Does that include—I assume it does—deposits of more than £50,000? Does it also include wholesale deposits, because, as I am sure he knows, many local authorities have large deposits with these Icelandic banks? Are their deposits protected as well? Also, where will this money ultimately come from? The FSA compensation scheme will be under considerable strain after the Bradford & Bingley deal. Is the Chancellor expecting, in the end, the industry to make a contribution? May I also ask whether the Chancellor has other plans for other UK deposits in other foreign banks that may be in difficulty at this current time?

Thirdly, will the Chancellor be using this moment to start driving through the longer-term changes we need to our system of regulation? There will be plenty of time to assess the mistakes that have been made and how we got into this situation, but one thing is clear: we must ensure that in future it is the banks and their shareholders who set aside capital, not the taxpayer. The Prime Minister talked in Prime Minister’s questions about the banking Bill and the Bank of England’s role in liquidity supervision, but is he going to consider giving the Bank of England new powers to manage overall debt levels in the economy, with perhaps an open letter system with the FSA?

Finally, may I also ask the Chancellor about the international front? We welcome the news of co-ordinated cuts in interest rates across the western world. He is, of course, travelling tomorrow to the meetings in the United States. What prospect is there of genuine co-ordination across western Governments on other areas of policy, such as support for financial systems, so that we can perhaps have some common approach to the guarantees that are being offered to different parts of those financial systems? On the broader economy, as we have just heard in questions the International Monetary Fund is now predicting negative growth for the UK, the biggest downgrade it has made of any major economy that it monitors.

In the Budget, the Chancellor predicted growth this year of 2 per cent. and 2.5 per cent. next year, and as the Prime Minister very helpfully just confirmed, when he was Chancellor he used the IMF meeting to set out what I think he called a broad pattern of growth, but what I seem to remember being very specific figures—he would often get out his downgrade before the pre-Budget report at the IMF meeting. Will the Chancellor be using this opportunity to predict growth, so that the country is fully prepared and aware of the very difficult economic times that lie ahead?

This is an extraordinary moment, when the British taxpayer is forced to step in and bail out the banking system, but let us be clear: we do this not to rescue the banks or the bankers, but to rescue the economy and the millions of families who depend on it. That will be the true test of whether today’s package succeeds, and we all hope that it does.

I am grateful to the hon. Gentleman for his support. I am glad that I had the opportunity to speak to him and to the hon. Member for Twickenham (Dr. Cable), who speaks for the Liberal Democrats, earlier this morning and to explain what we were doing and why. I also very much welcome the spirit of cross-party co-operation, and I hope that it lasts.

I shall now deal with the various points that the hon. Member for Tatton (Mr. Osborne) raised, beginning with Iceland. This afternoon, we will publish further details about how the financial services compensation scheme intends to proceed. I have to tell the House that getting information out of Iceland is proving to be quite difficult. That country obviously has severe difficulties, and that is why I decided that I had to intervene. It would have been quite wrong to say to people covered by the Icelandic scheme, “Sorry, you’ve got to go to Reykjavik and try to get your money there.” That is especially true when it is not clear to me whether the Icelandic scheme can be funded. So we have taken steps to freeze the assets of the bank involved, and I hope that we will be able to recover some of those assets in order to offset the money that we will have to provide to help people in the meantime.

The hon. Member for Tatton also asked about regulation. It is important that we learn from what has happened. First and foremost, we need to appreciate that, although it might have been sufficient in days past to allow a country to regulate within its own borders, it is now essential for a country that sees problems occurring within its own borders to discuss them with and report them to other countries. We saw problems in America, when that country was getting into the mire of the sub-prime market, and in the old days, that would have been a problem just for America, but it is now a problem for every country. So I think that the whole culture of and approach to regulation needs to change, and there are obviously developments that we need here—although I am bound to say that no one will convince me that we should go back to the old days when we had nine or 10 regulators in this country who were all tripping over each other. It would also be absolute nonsense to go back to the days of self-regulation. However, I believe that the Bank of England should now have a statutory role in ensuring financial stability—[Hon. Members: “Ah!”]—as I announced in January of this year. I am glad that there is support for that in every part of the House.

The hon. Gentleman asked about the proposals that I announced today. What I have done today is announce the principles that will underpin our approach. As I said, and as the Prime Minister said at Question Time, we will reach individual agreements with the banks concerned. If they choose to use the facilities that we are offering, we shall sit down and discuss the detailed proposals with them.

I am grateful for the Conservative party’s support for our approach to the excesses that we have seen. It is far more interventionist than I had always understood the Conservative position to be, but we must make sure that we go down what is a fine line. We must ensure that the public interest is maintained and yet not get ourselves into a position where we somehow think that we can sit in a boardroom and take all the decisions for everyone. At some point the hon. Member for Tatton came perilously close to suggesting that, but it is important that we make sure that we deal with some of the damaging effects of the bonus system that we have seen over the past few years.

The final point made by the hon. Gentleman had to do with international co-operation. I believe that such co-operation is more urgent now than it has ever been, and that is why I believe that we should remain fully engaged in the EU, as the obvious place to start is right on our doorstep. I also think that we need to remain engaged and take a lead in making sure that we maintain stability by improving supervision and regulation internationally. That is very much the theme that I shall be pursuing in Washington this weekend.

I refer to the point made by the Prime Minister that the media have not yet homed in on the Government’s medium-term financial strategy, under which £250 billion is being made available to small and medium-sized enterprises so that they can renew their overdrafts and loans when they mature. That is in addition to the £4 billion from the European Investment Bank and the £200 billion from the Bank of England’s window. Both the Prime Minister and the Chancellor have referred to home buyers and small and medium-sized enterprises, as well as to lenders, borrowers and depositors, but not all this country’s taxpayers welcome the measures that have been taken today as being in the interests of the wider community of which we are all beneficiaries.

I agree with my hon. Friend. I think that everyone in the House would acknowledge that all of us—whether individuals or small businesses—depend on an efficient and effective banking system. In many ways, in addition to helping banks recapitalise, the key measure today is the one that we are taking to guarantee lending. Unless banks start lending to each other over a wider period, we will merely see the existing problems continue. That measure is very important but, as my hon. Friend said, it is equally important that we see the benefit of that going to small businesses and individuals.

My colleague and party leader has already made it very clear that we support these measures as being in the national interest. They strengthen the banks and protect taxpayers’ interests in a very difficult situation. However, the situation is fast moving: I think that the Chancellor is now aware that it has emerged in the past hour or so that eight London councils—and no doubt many others—have large holdings in Landsbanki. That problem will require his immediate attention.

The key question that I wish to pursue in relation to the Chancellor’s statement has to do with how the investment in the banks is to be secured. When the IMF bails out countries, it imposes conditionality. How will the conditionality for the banks be enforced and monitored? How will the Chancellor ensure that the taxpayer’s money going into the banks comes out at the other end, so that he is not in effect pushing on a piece of string? What sort of assurance can workers and companies have that, at the end of the month when salaries and bills have to be paid, the money will be there in the banking system?

Also on conditionality, I have been as stunned as the right hon. Gentleman has been by the sudden conversion of the champions of the bonus culture to advocates of a 1970s-style incomes policy. None the less, the Conservatives are right to say that there must be a fundamental change in banking culture. I hope that that will be carried forward in this programme.

I welcome very much the decision on interest rates, which is all the more powerful for having been done collectively. It represents a recognition that we are not, as the Chancellor said, simply dealing with difficult times. We are also dealing with different times that require a fundamentally different approach from central banks. The key point is that we are moving on from problems in the financial system to problems in the real economy. Ordinary people are going to ask, “If the banks can be bailed out, why can’t we be?” In that context, will the Chancellor speak to the Justice Secretary about introducing new procedures for the courts, to ensure that repossession is the very last resort when people are experiencing serious difficulties with their mortgage payments? That is not the case currently for many of the creditors.

The Chancellor has been able to find £50 billion for the banks, so will he now ensure that the £8 billion that has been approved already for social housing is used rapidly to acquire the land and property that is becoming available at very big discounts, so that it can be made available for affordable housing? That would save many builders’ jobs and prevent the new accumulation of toxic loans in the banking system. I think that we all acknowledge that this is the first and not the last step in what will be a very difficult process of recovery.

Again, I am grateful to the hon. Gentleman for what he has said. I am very glad that he has welcomed the action taken by the Bank of England to cut interest rates to 4½ per cent. I hope that he will recall that, when he pressed me two days ago to intervene and take away the Bank of England’s independence, I said that I thought that the remit was adequate to allow it to do what was right—and so it seems to have turned out. I am grateful to the hon. Gentleman for his welcome. I am sure that the whole House and the whole country will welcome the reduction in interest rates, and I hope that banks will ensure that people benefit from it as soon as they can.

I agree that one of the reasons why we put in place today’s intervention is that we need to be mindful of the fact that if we did nothing, the effects would spread into the wider economy. This measure, and others that we have taken and will take in the future, will try to deal with that. The hon. Gentleman referred to our announcement about housing. He is quite right: I want to see that through.

The hon. Gentleman asked about agreements following my announcement today. The Government will obviously have to reach an agreement with individual banks, and those discussions need to take place. He asked what teeth there were. May I give him one example? As he knows, banks in the UK are regulated by the FSA. If it imposes a regulatory requirement—for example, following a code on remuneration, rewards or bonuses—the regulated banks have no alternative but to comply. That is the whole point of a regulatory system.

The hon. Gentleman asked about the Icelandic banks, and the hon. Member for Tatton, who speaks for the Conservatives, also raised the question of councils. What we can do is make sure that we look after the retail depositors—the ordinary men and women who put in their money, and might not have fully appreciated that Icesave is a branch of a foreign bank and not incorporated in the UK. I understand the position of local authorities, but they are in a slightly different situation, in that they are a more informed investor. However, as I said earlier, the situation is evolving; we are trying to sort the matter out with the Icelandic Government. I have had conversations with Icelandic Ministers—both the Prime Minister and the Finance Minister. In addition, one of my ministerial colleagues hopes to speak to the Icelandic Finance Minister again today.

On the point about the Justice Secretary, I have spoken to my right hon. Friend about the points relating to repossessions—not just today—and I am sure he will pursue the matter.

If £250 billion has been pre-emptively committed to securing the banks, for reasons that we all understand, how does my right hon. Friend envisage funding, presumably, stage 2 of his recovery plan—securing the real economy, manufacturing industry and jobs—if in fact a recession has already been set in train? I recognise that, of course, safeguarding the banks must come first, as clearly it must, but what leverage do the Government and taxpayers have to ensure that credit starts to flow freely again to businesses, mortgages and employment if long-term incentives have been given to the banks without—it appears—any enforceable conditions?

I am glad that my right hon. Friend agrees that we need to support the banking system. I refer him to what I said in the last few exchanges about how we propose to enter into agreements with the banks concerned. He rightly says that we shall need to take further steps to ensure that we protect the economy and jobs, which is something that I will return to in the pre-Budget report.

Does the Chancellor accept that yesterday’s gyrations in the markets were due in large measure to leaks and briefings from the Government? Is it not the case that such preferential disclosure is both highly improper and probably illegal, so will he invite the Financial Services Authority to carry out an investigation into his Department and No. 10 to identify those responsible for such disclosure, and take all appropriate action in the light of the findings?

No, I do not agree with the underlying premise of the right hon. and learned Gentleman’s question. Speculation, especially in relation to things that are highly market-sensitive, is deeply regrettable and it should not happen. I agree with him on that, but I do not agree at all with the other suggestions he was making.

I am sure that my right hon. Friend shares the joy of the whole House that the shadow Chancellor has managed to wipe that perpetual smirk from his face. May I put it to my right hon. Friend that memories in the City are short? There is a danger—is there not?—that once this crisis has blown over, although it may take some time to do so, old habits will be reverted to. He may recall that in the 1970s the building societies got themselves into similar trouble, although not quite on this scale, and had to be bailed out by the then Labour Government, but before long they were back at it again. What assurance can he give that the measures he takes to deal with the excesses of the past will make sure that they never recur?

My hon. Friend raises a valid point. Memories can be short. In another 15 years, when there is another generation, there is that risk. That is why we have to make sure that our regulatory system is constantly kept up to the mark, to take account of the fact that markets change, practices change and people change. People forget what happened in the past, so it is important that we maintain a collective memory both in the private sector and also, I suspect, in the public sector. It is very important, and we need to make sure that the regulatory system helps us to do that. Companies themselves have a responsibility. The first line of defence against irresponsible risk taking ought to lie in the boardrooms of British companies, and directors of companies should never ever forget that.

When the Liberals sound like Labour and the Conservatives like communists, the kaleidoscope has definitely been shaken—but while the pieces are in flux, why do we not reorder this world? What is so wrong about the taxpayer having a seat in the boardroom? Fifty thousand million pounds will buy a chair in any boardroom in the world. It would be taxation without representation, and will run the risk that the hon. Member for Sunderland, South (Mr. Mullin) has just adumbrated—that without a Government presence in the boardroom, those habits will soon be reverted to again.

The Chancellor and the Prime Minister have performed admirably and impressively over the last couple of days, but the real test will be how they respond to the crisis in the real economy. The country will not understand if banks can be bailed out but factories can go to the wall, jobs can be lost and the public can lose their houses.

I am grateful to the hon. Gentleman for his unaccustomed support for our position. I shall make the most of it.

In relation to Government nominees sitting in boardrooms, I never thought that a particularly useful course of action to follow—

Oh no I didn’t—and now I know who wrote that column in Private Eye; I always thought it was the hon. Gentleman. I appreciate what he says, but as with so many of the other things he has said, we shall probably have to part company on it.

I join other Members in welcoming the Chancellor’s statement, the scale of the action the Government have taken and the calibration of the risk involved. The Chancellor said that in return for Government support for the banks, the Government will be looking at executive pay, dividend payments and lending practices. Will they also keep an eye on the banks’ investment practices, so that they do not get back into speculating on futures and commodity indices so that they fuel energy and food price rises in ways that we have all suffered from? Can he assure the House that no matter what it takes, this will never turn into the taxpayer being taken for whatever? To help in that regard, will he support the establishment of a special Committee of the House to oversee these exceptional measures—to oversee both how the banks use and respond to them, and the returns that come to the taxpayer?

I expect that the Treasury Committee, with good reason, probably believes that is one of the things it is supposed to do. I am sure that our right hon. Friend the Member for West Dunbartonshire (John McFall) will want to reflect on what the hon. Gentleman has just said. However, he makes a fair point. For good and understandable reasons, which I think are shared everywhere in the House, we have had to intervene in these exceptional circumstances, to maintain stability in the banking system. Banks, too, have to remember that they need the public’s support. Just as in the good times they go out trying to win customers, I hope they also remember that in more difficult times people will appreciate it if the bank stands by them.

The Chancellor referred to the regulation of the Financial Services Authority. Another feature I should like to remind him about is the requirement for retail banks to abide by the principles of treating customers fairly. He has announced a very welcome cut in interest rates today, and we hope there will be further cuts to come. Surely, any banks helped by this system should treat their customers fairly by ensuring that those interest rate reductions are passed on to home owners and borrowers.

Given that we are compensating people who lost money in the Icelandic banks, does the Chancellor agree with me that it would be fair to look again at the collapse of Equitable Life, which, the parliamentary ombudsman tells us, was a result of a decade of regulatory failure? Would not people who lost money in Equitable Life look askance at people who put their money overseas being compensated when they were not?

The reason for my decision in relation to the Icelandic banks is the systemic problems that we now face in the banking industry. The Government will report on Equitable Life shortly, and of course the ombudsman’s findings will be taken into account, but we also need to take account of the findings of Lord Penrose, who investigated what happened at Equitable Life at some length and concluded that that company was substantially the author of its own misfortunes. We have a duty to treat policyholders fairly, but, as people have been saying today, we also have a duty to be fair to taxpayers. I will report back to the House as soon as I can.

I thank the Chancellor for advance notice of his statement. I very much welcome it because it is systemic and comprehensive, which I had asked for, and because the package as a whole is big enough to be very credible and to deliver confidence and stability. I hope that it does so. I particularly welcome the additional liquidity, and the fact that the Government will stand behind interbank loans.

The Chancellor said that he would guarantee that no depositor would lose money as a result of the problems at Icesave, and implicit in much of what he has said recently is that no depositor will lose money in the event of the failure of a UK institution. Notwithstanding my welcome for the package, I must ask him whether he stands ready to make his implicit all-deposit guarantees explicit, if required?

I am grateful to the hon. Gentleman for his comments on Icesave and what I said about the retail depositors there. I have always been clear that it is very important to protect the interests of savers and depositors and to give people reassurance. I have also said on many occasions that I will never rule anything out. In what we have done so far, approaches have varied from institution to institution. For example, there are legally binding guarantees in place in relation to Northern Rock, and in relation to Bradford & Bingley, we were able to transfer people’s savings accounts to Abbey Santander, so they have the backing of one of Europe’s biggest banks. We deal with these matters as we think appropriate, but the hon. Gentleman is correct: giving confidence to savers is important.

I welcome the package of proposals and the decisive action announced by the Prime Minister and the Chancellor this morning. Hard-working families in my constituency want assurances that the package will afford them greater protection and will not just be a bail-out for the banks. Will my right hon. Friend assure me that in the coming weeks and months, he will continue to communicate to those hard-working families that this Government’s priorities are their savings, their pensions, their jobs, their homes and their security?

My right hon. Friend is absolutely right: we should all remember that, at the end of the day, we are here to look after the interests of the people we represent—the people of this country and their businesses. That is what we are here for. We talk about ensuring the stability of the banking system, but we must remember what that actually means to people: if we do not have a banking system that functions properly, the first to be affected are our constituents. We need to make sure that they are protected.

I welcome what the Chancellor said about Icesave today. A recently retired couple in my constituency sold their home and deposited all they have—the £740,000 proceeds of the house sale—in a six-month bond with Icesave, so they will be particularly pleased. The Chancellor said that he would give more information later today. Will he tell us when depositors will be given clear guidance on how to recover their money—I suspect that they will want to do so as soon as possible—and what sort of time frame he is working to?

The hon. Lady asks a perfectly good question. The financial services compensation scheme, which is the lead organisation for dealing with this matter, has already issued guidance and it will issue further guidance as soon as it can. For our part, as I said in reply to the hon. Member for Twickenham (Dr. Cable), we shall continue to pursue with the Icelandic Government their responsibilities here. When one has responsibilities to people outside one’s own country, it is important to stick by them. I understand Iceland’s problems, and I hope that the authorities there will work closely with us to resolve them.

Does my right hon. Friend agree that the financial support for banks that he has announced today is the most comprehensive package in the world, that it puts us ahead of the game, and that it proves that the Government is not in the hands of a novice?

The steps that we have taken today are important, but I would say to the House that they are part of a process. What is going on in the world today has had severe implications in almost every corner of the world, and the reasons for these events are sometimes quite complex. Today’s steps are important, but I hope that other countries will help. We need to do what we can to help our banks and the banks here in this country, but that support must be replicated in other parts of the world.

The Chancellor will be aware that the tier 1 and tier 2 capital ratios are a better indicator of a bank’s stability than its share price. The Financial Services Authority will not publish those capital ratios, although the banks themselves might do so. Will the Chancellor discuss with the FSA the potential for a mechanism whereby ordinary investors can have access to a list of the tier 1 and tier 2 capital ratios, so that we do not have this unhealthy concentration on daily movements in the share prices?

I cannot give the hon. Gentleman any undertakings on that today, but I will raise the matter with the FSA. I shall write to the hon. Gentleman and arrange for a copy of the letter to be placed in the Library.

Will the Chancellor put my fears to rest? I see the market putting its invisible hand into the pockets of the taxpayer, taking £50 billion away and perhaps putting up two fingers as well. Can we arrest that? Does he agree with me that, in the wider context, what the international crisis represents is the end of neo-liberal ideas about the supremacy of the market, and all that that means in the social and political spheres and every other sphere of our lives?

I was going to say, in the nicest possible way, that my hon. Friend sounds like a new Conservative, but I am sure that he does not mean to. I do not agree with everything he says. On the availability of funds, if banks choose to use the recapitalisation fund rather than raise money on the markets, it will be in return for, usually, preference shares, and they will be remunerated in the usual way. As I said, other agreements will go with that.

I am glad that the Government have finally acted to recapitalise the banks. Of course, the litmus test of whether it works will be whether the interbank market unfreezes. The Chancellor has been closeted with the key banks for the past 24 hours. What estimate have they given him of the likelihood of an early unfreezing of that market— particularly before Christmas, which is one of the deadlines in his press release on the implementation of the scheme?

The hon. Gentleman knows very well that there is a lot of uncertainty in the market at present, but I hope that the measures will help. It will be helpful if our action is complemented by action taken in other parts of the world. One of the reasons why I attach so much importance to the meeting of the European Finance Ministers yesterday and the G7 meetings this weekend is that countries can do a lot themselves. Our interbank rate is lower than the United States’ rate at the moment, and obviously we would all like to see it lower still, but it is important that countries—especially the larger developed economies—act together in relation to both the banking system and their wider economies. It is all about restoring and building confidence.

I congratulate my right hon. Friend on his comprehensive and substantial set of proposals to restore confidence in the banking system, in which every citizen of this country has such a large vested interest. In particular, I congratulate him on his coup in obtaining a co-ordinated reduction in interest rates on a wide international scale, in which we know he played a leading role. As far as small businesses are concerned, I congratulate my right hon. Friend on the great measure that he has taken to provide liquidity and working capital requirements, which, as we all know from experience in our constituencies, is now very necessary. Only one point in his statement was not clear: are the shares that he proposes the Treasury have the right to subscribe to intended to be convertible? If not, I urge him to consider making them convertible, as that would ensure a further return to the taxpayer on another front.

Again, I am grateful to my hon. Friend for his support, and I agree with him about the decision taken by the Bank of England, which of course is independent of the Government; I attach considerable importance to that. The fact that it and the other central banks of all the major economies took the same decision at the same time sends a very important message. That very much complements what we have announced today.

Many smaller companies, particularly those trading in the emerging markets, are reliant on central banks to minimise regulation. There has been evidence recently of some central banks blocking money. Given the importance of cash flow to those smaller companies, will the Chancellor consider extending the export credits guarantee system to cover some of those smaller trading companies?

I am not aware of central banks blocking lending. I am aware that some people in this country have experienced difficulty in getting access to funding through our banks, and we are looking into that. [Interruption.] I think that I can hear the hon. Member for East Devon (Mr. Swire) say, from a sedentary position, “South America”. I would need to check the position there, because I do not want inadvertently to mislead the House on what is happening there. I agree with the hon. Gentleman that when we do have help, whether from the Export Credits Guarantee Department or the European Investment Bank, we must make sure that it feeds through to where it matters.

I, too, welcome the Chancellor’s statement, and particularly his point about Northern Rock. Many of my constituents and others in the north-east benefit greatly from the decisive action that the Government took to rescue Northern Rock. However, will he say more about how the package of measures announced today will benefit savers in my constituency, and small and medium-sized companies in my constituency and throughout the north-east?

My hon. Friend is right to say that the action that we took on Northern Rock is now seen as having been the right thing to do. Clearly, things are still difficult for Northern Rock, as it is for other organisations, and as she well knows, it is also difficult for the people who lost their job with that bank. We are doing everything we can to help. The broader answer to her question is that if we had not done anything, the position would have gradually become more and more difficult. I think that the measures that we announced today will go a long way to help. Obviously, there are a lot of other things going on around the world at the moment, as is shown pretty graphically in the newspapers and on television every day and every night, but I think that the measure is a major step forward. To come back to points that have been raised by Members on both sides of the House, it is important that we try to persuade countries in different parts of the world to deal with the problem. The global economy is a reality now. It brings fantastic opportunities, but there are also some pretty big threats, and we have to deal with them.

Along with everything else, people are worried about their savings, pensions, mortgages and jobs; that is what people are talking about all the time. I welcome what the Chancellor announced today, and we hope that it is successful, but people are also worried about tax. Will he indicate what the overall impact of the financial package will be in the short and, possibly, medium term, on the tax burden of the average hard-working family in this country?

As I indicated earlier, a lot of the money that we have been discussing today is money that the Government will fund through borrowing, but the money will come back. In relation to forecasts for the Government’s borrowing generally, I will set them out in the pre-Budget report. However, I very much agree that it is important to protect jobs. I am glad that over the past 10 or 11 years we have been able to do a great deal and to achieve so much by working with the political parties in Northern Ireland, especially after the Good Friday agreement. Anyone who lives in, or visits, Northern Ireland will have seen a tremendous difference in the past 10 years. Ensuring that Northern Ireland is a good place to work and live, and ensuring that there are jobs, is very important.

I very much welcome what my right hon. Friend said about supporting small businesses, and I particularly welcome the aspiration to ensure that the Government pay all bills from small businesses within eight days. However, as I am sure my right hon. Friend will appreciate, many of the companies working for Government are large contractors that have a number of small contractors working for them. If those small contractors are to benefit from this fantastic initiative, which would undoubtedly save them from going bankrupt, my right hon. Friend will have to ensure that the large companies pass on that benefit to the thousands of small-to-medium-sized ones that support them.

I agree with my hon. Friend. As she rightly says, there are many companies that do not depend on the Government directly, but are sub-contractors. That issue is worth pursuing, and she might want to take it up with the new Secretary of State for Business, Enterprise and Regulatory Reform, our noble Friend.

The Chancellor rightly wants to protect hard-working taxpayers, but some of those taxpayers also pay council tax. Is he wholly content, given what he has just said, that local authorities are informed investors, and their investments in Iceland will not be covered by the guarantee? Is he aware that we are not talking about trivial sums, but about hundreds of millions of pounds, and about some investments involving payroll? That will create a cash-flow problem. Is he wholly content that the burden should fall on council tax payers?

The point that I was making is that there is a distinction between the ordinary man or woman on the street—the retail investor—and others. I am aware of the problem for local authorities, and I will look into it, but my No. 1 concern is to make sure that we protect individual savers, and I am sure that we are at one on that.

My right hon. Friend will, I am sure, agree that the British people have an excellent track record of solidarity when it comes to putting up with difficulties in times of great national need, such as now. The British people will accept their share of the burden, especially if the action taken is seen to be both fair and necessary. Will my right hon. Friend therefore confirm that the review of regulation and remuneration in financial institutions being undertaken by Lord Turner will urgently address the need for fairness and transparency, so that in future we can all see that the system is operating properly?

I agree that the system needs to be fair and open. My hon. Friend is quite right that people accept the fact that somebody may be well rewarded for improving the performance of a company or working extremely hard. No one wants to stop that, but we do want to stop situations in which, by accident or as an unintended consequence, people are rewarded for doing things that seriously undermine the financial world, and which are bad not only for their company but for everybody else.

During the recess, the Government waived competition requirements so that Lloyds TSB could proceed with the takeover of HBOS. Ministers subsequently made supportive statements. However, part of the instability in the banking system is due to continuing doubts as to whether the merger will go ahead. Will the Government use any increased leverage in both banks to bring that uncertainty to an end?

The decision to merge was taken on a commercial basis by the two companies, Lloyds TSB and HBOS. The Government’s role was to waive the competition requirements that would have put an absolute block on it, because we think that a commercial solution would be far better. However, it is a decision for the companies. There are processes that need to be followed; not least, shareholders have to be consulted. That process is following its course now.

My right hon. Friend referred to the effect on the markets earlier this week of weekend speculation about this package. I understand that at the end of last week, the Governor of the Bank of England gave a briefing to the shadow Chancellor. I wonder whether the Chancellor of the Exchequer could confirm whether that briefing was confidential. Is he of the opinion that that confidence has been kept?

The Governor of the Bank of England is entitled to meet whomever he thinks appropriate. I am sure that discussions between anyone and the Governor of the Bank of England will, in the normal course of events, remain confidential.

Often, the gravest risk to accountability in this House lies when both sides agree; there is sometimes a lack of proper scrutiny. Given that there are now unrivalled risks to taxpayers and that, historically, Governments have a poor record of intervening in the marketplace, what is the Chancellor going to do to protect the interests of the taxpayer and ensure accountability to this House, through the National Audit Office and the Public Accounts Committee, for this taxpayers’ money?

I am not sure whether that was the first discordant voice that we have heard this afternoon, and the hon. Gentleman is saying that he does not support what we are doing. If that is the case, I just disagree with him. As the Chairman of the Public Accounts Committee, he knows perfectly well that there are mechanisms—through that Committee and, of course, through the National Audit Office—for holding Government spending and Governments to account. That is not the only way; there is also the Treasury Committee, and I am accountable to the House, as are other Ministers. There is plenty of scrutiny, and we are very happy to answer questions.

Has the speculation by the shadow Chancellor about recapitalisation helped the Chancellor or hindered him in his quest to bring calm and confidence back to the banking sector and the markets?

The right hon. and learned Member for Folkestone and Hythe (Mr. Howard) is no longer in his place, but I said to him earlier that we all sometimes have to be careful about what we say and that we need to choose our words carefully. The speculation over the weekend was unhelpful, but that is something that we just have to deal with. It is important that during normal exchanges and proper, healthy debates, people’s views are properly explored. But whatever happened then, I hope that people will see today’s announcement as an opportunity to make a step change and a real difference. That is what I would like to concentrate on.

May I assure the Chancellor of the Exchequer that I was briefed by Irwin Stelzer on the need to recapitalise the banks—and I leaked that information?

Will the Chancellor enlarge on the potential liability to the taxpayer? The £50 billion for the recapitalisation fund will have to be raised by the Government. How will that money be raised? Will the Government issue bonds, simply print the money or sell more of our gold reserves? What will the interest charge be? How will that be paid for, particularly if the preference shares that the Government buy from the banks cannot pay dividends because the banks themselves lack distributable reserves?

As I said earlier, the money will be raised through the Government’s normal operations when it needs to raise money. I also said that if firms choose to use the recapitalisation fund, the Government will take preference shares. That is pretty straightforward. The taxpayer will therefore be remunerated for those shares; of course, in due course they will be sold.

European Union (Transparency)

I beg to move,

That leave be given to bring in a Bill to require a Minister to certify on a Government Bill or a statutory instrument whether or not the Bill or statutory instrument is a result of a decision of the European Union; and for connected purposes.

Our democratic system is based on the principles of transparency and accountability. I do not believe that any right hon. or hon. Member of this House would disagree that members of the public should know the origin of the laws that govern them. When my constituents, especially schoolchildren, come to Parliament, I often explain that, as with other Members of Parliament, one of my roles is to scrutinise the legislation brought before this House. Yet there is little clarity—indeed, much confusion—over the extent of the European Union’s influence on the legislation brought before this House and the other place.

I bring in this Bill neither to praise nor criticise the EU per se, but to uphold the principles of openness and transparency on which our democracy is built. For more than a decade now, members of this House and the other place have been asking the Government what proportion of our law has been initiated by the European Union. No definitive number has ever been agreed. In 2006, the then trade Minister, Lord Triesman, estimated that

“around half of all UK legislation with an impact on business, charities and the voluntary sector stems from legislation agreed by Ministers in Brussels.”

Other European countries have reached similar conclusions. According to the World Bank Group’s review of the Dutch administrative burden in November 2006, EU regulations account for approximately 40 per cent. of all regulations implemented in the Netherlands.

In the 2003-04 Session of Parliament, my right hon. Friend the Member for Wokingham (Mr. Redwood) asked each Department what proportion of its legislation was introduced in response to directives from Brussels. Each Department revealed how differently it was affected, with estimated answers ranging from 0 per cent. to 57 per cent. Clearly, the proportion will vary each year according to the Department. However, Members should not need to ask retrospectively for estimates each year. We are legally bound to introduce the laws made by the European Union; the fact that legislation originated in Europe should therefore be made clear to MPs and members of the public when it is brought before this House.

Hon. Members will be familiar with the statement of compatibility with the Human Rights Act 1998 that Ministers must declare on the face of every Bill. In the same way, my Bill would ensure that Ministers declared whether a Bill or statutory instrument was the consequence of EU decision or EU legislation.

The Bill would be of particular benefit in respect of statutory instruments. So far in this Session of Parliament, more than 2,000 statutory instruments have been laid before the House, yet it is far from clear how many of those are implementing European legislation and how many are home-grown. My Bill will force Ministers to make the information clear, and thereby open up the legislative process. It will enable legislators and the public to understand the extent to which the European Union influences the laws of this country.

This is an important issue to raise, and not only because transparency is essential to the democratic process; there is considerable debate among the public about Britain’s place in the European Union. The EU has been widely blamed—rightly or wrongly—for the introduction of home information packs and the Government’s inability to expel criminals from the UK. The list goes on. Indeed, the EU has even been accused of trying to straighten bendy bananas; I shall not pursue that example as I know how sensitive bananas have become at the Foreign Office.

One of the main problems with the public perception of the EU is that its decisions can appear hidden from public scrutiny and its processes can appear unknown. Turnout at European elections is low, suggesting that the public do not feel involved in the European political process and do not understand how its decisions may affect their lives. If we asked the average person—indeed, the average Member of Parliament—what the four European institutions were, it would not be surprising if we drew a blank. Despite that, there is both great enthusiasm and great scepticism about the role of the European Union.

The information that the Bill would make available is particularly relevant given that the British Chambers of Commerce, an organisation committed to Britain’s membership of the EU, has estimated that legislation sourced in Brussels has placed a £47 billion burden on British businesses. The question of the EU’s influence on UK legislation is therefore not simply an academic exercise, but a pressing issue for businesses across the country—particularly at a time when businesses are increasingly hard pressed due to the worsening economic outlook.

Indeed, a recent report published by the BCC, “The British Regulatory System”, highlighted serious shortcomings with the Government’s impact assessment of EU legislation. That has left substantial costs to fall on UK business. Commenting on the findings of the report, Sally Low, BCC’s director of policy and external affairs, said:

“If we are to see a better regulatory environment for business then the Government must be engaging earlier in the EU’s policy making process. Our report highlights the fact that the Government is only focused on the UK end of EU legislation. There must be a clear linkage between events in Brussels and the UK’s own consultation and Impact Assessment process.

Without timely engagement and substantive consultation the prospects of the UK influencing EU policy to the benefit of British business is severely limited”.

If the full extent of the EU’s influence on our legislation were clearer, there would be an even greater imperative to engage fully with the EU’s policy making process. This engagement, as the BCC report highlights, has been far too little, far too late from this Government. Indeed, if it were clearer how much legislation already originated from the EU, that might make Ministers a little more cautious before they signed up to still more.

During the debate on the Lisbon treaty we had some opportunity to debate what role the EU should have. The Bill is not intended to reopen that debate; nor am I suggesting that it will completely enlighten the public about the role of the EU and its impact on the UK. However, it would allow us to have the essential information as to the origin of any new laws being proposed in order that we may subsequently have a more informed debate about Britain’s place within the EU. Although I am sure that Members will be aware of my views on this matter, I have come neither to praise the EU nor to bury it. In presenting this Bill, I want to ensure that the EU’s role can be better understood and scrutinised.

When the right hon. Member for Rotherham (Mr. MacShane), who I am pleased to see in his place, was Minister for Europe, he said that to calculate the number of legislative measures enacted each year in the UK directly implementing EU legislation

“would entail disproportionate cost to research and compile”.—[Official Report, 17 December 2002; Vol. 396, c. 755W.]

Such a statement leads me to question the extent to which the Government and this House are willing to put a price tag on openness and transparency. I understand the complexities of the process of adopting EU legislation, but such complexities should not make the process inaccessible and opaque.

My Bill enjoys the support of Members drawn from six parties in this House. My proposal is not a revolutionary one—it is common sense. I commend my Bill to the House.

I congratulate the hon. Member for Forest of Dean (Mr. Harper) on making a very moderate speech. I am grateful to him for remembering the modest contribution that I once made many years ago in serving Her Majesty on matters European. However, as so often with the Better Off Out group of the Conservative party, his speech and his Bill hide behind them concepts and problems that need to be unpicked.

I would have no objection if on the front of every Bill that came before this House there were some symbol or statement of its origin. The vast majority of legislation that has emanated from the EU has done so since the Single European Act was passed in 1986. That has had a huge impact on the legislation of 26 other countries. A great number of different groups in those countries think that the Single European Act, with its rather steam-rollering approach to enforcing free trade, is the child of the noble Baroness Thatcher, so perhaps on the front of every Bill across Europe that is connected with that Act we should have a nice picture of Margaret Thatcher to remind Europeans of where some of the best European legislation comes from.

The hon. Gentleman made heavy weather of trying to establish what percentage of our laws come from the European Union. If we think honestly about what takes up our time in the House, what worries our constituents and what fills the front pages of our newspapers, we find that very little is connected with the EU. Having already voted to outlaw wife-beating, I hope that later today we will outlaw child-beating. I do not know whether those on the Treasury Bench are of that mind.

Other issues ahead of us in the next few weeks include stem cell research, time limits on abortion, who might decide on the next police chief of London, identity cards, the length of detention for those suspected of serious terrorist crimes, university admissions and fees, our taxation policy, and what we heard about a moment ago from my right hon. Friend the Chancellor of the Exchequer, with the Bill that will follow. Those are all made-in-Britain laws. That is true in France, Germany, Poland, Sweden, Ireland, Finland and all members of the European Union. Of course, that which is connected to the Single European Act has to do with Europe.

In a debate earlier this year, I said that according to the Library—if I have time, I will read out some of its detailed statistics—only 10 per cent. of the laws that impact on us in the United Kingdom, adopted by this House principally through statutory instruments, emanate from the European Union. Then, to my horror, the right hon. Member for Richmond, Yorks (Mr. Hague), the shadow Foreign Secretary, leapt to his feet and quoted another right hon. Gentleman who had said that 50 per cent. or more of regulations came from the European Union. That right hon. Gentleman was the Prime Minister. Naturally, as a devoted admirer and fan of my right hon. Friend the Prime Minister over decades, I was very concerned thus to be put in my place. I wrote to the Prime Minister to see whether the right hon. Member for Richmond, Yorks had accurately quoted him. I have a letter here, very kindly addressed, “Dear Denis”, and dated 30 April this year, in which he says

“that—on average—around 9 per cent. of all statutory instruments transpose EC legislation…I believe this is the correct figure.”

In a debate in this House on 3 June, the right hon. Member for Hitchin and Harpenden (Mr. Lilley) said that about 80 per cent. of all legislation emanated from the European Union, quoting a German Government source. The BBC and others have been trying to find this German Government source—is it Goethe, Schiller, or Mrs. Merkel?—and find that they cannot. It really is not good enough to come to the House and quote anonymous Germans, whoever they may be, in defence of the preposterous position that 80 per cent. of all our laws come from the European Union.

Nevertheless, the right hon. Gentleman was in very good company. Only two weeks ago, I had the pleasure of switching on the “Today” programme before 7 o’clock to find Mr. John Humphrys interviewing my favourite Euro-comic turn, Mr. Nigel Farage of the UK Independence party. Nigel—I hope that he does not mind my being familiar, but we get on quite well—said that 75 per cent. of all laws in the UK were now decided by the European Union: 5 per cent. less than the right hon. Gentleman’s figure. I do not know what had happened in the intervening two or three months. As Mr. Humphrys is usually so swift and vigorous in picking up anything that is a palpable untruth, I wrote to the BBC to ask whether that figure was going to be corrected or whether Mr. Humphrys could be politely asked, next time he hears this nonsense, from whatever source, to slap it down.

Before the European Parliament elections it is important that we establish certain accepted truths about the European Union. It is time to nail here in this House, and publicly, the lie that the EU is responsible for 80 per cent. of our laws, according to the right hon. Member for Hitchin and Harpenden, or for 75 per cent., according to Mr. Nigel Farage. I have here a letter from Mr. Malcolm Balen, a senior editorial adviser at BBC News. It is very friendly, but whenever someone from the BBC writes to one of us on these issues they go into a special room, cover themselves in grease, and then go for a swim in oil, so what he says is, to put it mildly, quite hard to grasp. He turns to Mr. Mark Mardell, the BBC’s excellent Europe editor, saying that Mr. Mardell

“has previously researched Mr Farage’s claim, made on Today, that this figure is 75 per cent., and found that it is supposedly based on a German government statement, although no-one has actually discovered it.

Mark points out, however, that this whole area is a contentious one and that the last time he tried to establish an accurate figure he found the subject, in his words, too ‘jelly-like’ to nail down.”

We are not dealing with jelly, but with laws made in this country that affect all our citizens. On that point, I completely agree with the hon. Member for Forest of Dean, but we have to avoid a circular argument. That Conservative party front organisation against Europe, Open Europe, issued a document recently stating that the smoking ban and the provisions we have for cigarette packs originated in Europe. In fact, Britain was one of the earliest countries—going back to when there was a Conservative Government—to bring in the “smoking damages your health” warnings. They made the case for it in Europe, Europe made it a European-wide law, which I support, and it then came back into our law. We are seeing law made in Britain transposed through Europe back into our own legislation. We end up in a Kafkaesque world, where ideas start in Britain, and during a period of many years they go to Europe and are agreed there. They then come back into our law and are blamed on the European Union.

This Bill does not contribute one whit to reform or educating the public. It is part of the continuing drive by the Conservative party, as we saw expressed at its conference last week, to cut all links with the ruling centre-right parties in Europe, and—if we were to experience the misfortune of their forming a Government—to take us steadily to the exit door of the European Union. I oppose this Bill.

Question put, pursuant to Standing Order No. 23 (Motions for leave to bring in bills and nomination of select committees at commencement of public business):—

The House proceeded to a Division.

Orders of the Day

Children and Young Persons Bill [Lords]

[Relevant documents: The Fifteenth Report from the Joint Committee on Human Rights, Legislative Scrutiny, HC 440, and the Twenty-third Report from the Committee, Legislative Scrutiny: Government Replies, HC 755.]

As amended in the Public Bill Committee, considered.

New Clause 19

Support for accommodated children

‘After paragraph 8 of Schedule 2 to the 1989 Act insert—

“Provision for accommodated children

8A (1) Every local authority shall make provision for such services as they consider appropriate to be available with respect to accommodated children.

(2) “Accommodated children” are those children in respect of whose accommodation the local authority have been notified under section 85 or 86.

(3) The services shall be provided with a view to promoting contact between each accommodated child and that child’s family.

(4) The services may, in particular, include—

(a) advice, guidance and counselling;

(b) services necessary to enable the child to visit, or to be visited by, members of the family;

(c) assistance to enable the child and members of the family to have a holiday together.

(5) Nothing in this paragraph affects the duty imposed by paragraph 10.”’.—[Sarah McCarthy-Fry.]

Brought up, and read the First time.

With this it will be convenient to discuss the following: New clause 6—Looked after status—

‘(1) The 1989 Act is amended as follows.

(2) In section 85(4)(duty of local authority when notified of child accommodated by health authority or local education authority) at end insert “; and

(c) consider whether, in the exercise of their functions under paragraph (b), the child’s welfare is best safeguarded and promoted by being a looked after child.”’.

New clause 24—Responsibility for children in care who enter custody—

‘In section 20 of the 1989 Act after subsection (11), insert—

“(12) Where a child was accommodated by the local authority under this section immediately before being detained, the child shall continue to be deemed a “looked after child” for the purposes of section 23(1)(b) and section 24 of this Act save for the provision of accommodation.”

(13) In this section “detained” means detained in a remand centre, a young offenders institution or a secure training centre, or any other institution pursuant to an order of a court.”

In section 22 of the 1989 Act after subsection (1)(b), insert—

“(c) deemed to be looked after in accordance with section 20(12).”’.

New clause 26—Support for family and friends carers—

‘After section 17B of the 1989 Act insert—

“17C Support for family and friends carers

(1) This section applies to a person (“P”) who provides full-time care and accommodation for a child (“C”) for more than 56 days but who is not—

(a) a parent of the child, or

(b) a local authority foster parent.

(2) A local authority shall assess P’s need for financial and other support under Part III of this Act to care for C in any of the following circumstances—

(a) where the child comes to live with P as a result of a plan made following an enquiry under section 47 (local authority’s duty to investigate) or a Family Group Conference;

(b) where the child comes to live with P following an investigation under section 37 (powers of court in certain family proceedings);

(c) where P has secured a residence order or special guardianship order in order to avoid the child being looked after, and there is professional evidence of impairment of the parents’ ability to care for the child;

(d) where P has obtained a residence order or special guardianship order arising out of care proceedings;

(e) where P is providing accommodation for the child and then secures a residence order or special guardianship order.

(3) The local authority shall provide such support as is required to meet the needs identified by the assessment referred to in this section.”’.

New clause 28—Collection of statistics—

‘(1) The Secretary of State shall collect and publish annually statistics on the accommodation arrangements for young people who were in the care of a local authority on 1st January of the year three years earlier than the year in which the statistics are published and were over 16 years old.

(2) The statistics published under subsection (1) shall indicate in respect of the young persons the number who were with foster carers at the age of—

(a) 19, and

(b) 20.’.

Government amendments Nos. 8 and 9.

Amendment No. 13, in clause 9, page 7, line 41, at end insert—

‘(e) C does not have more than three placements within a 12 month period or more than two placements within the last year of compulsory schooling.

(8A) If the requirement in subsection (8)(e) is not complied with, the local authority must provide C with a written explanation.’.

Amendment No. 14, in clause 10, page 9, line 14, at end insert—

‘(c) a strategy with their Housing and Planning department for maximising the availability of foster care placements.’.

Amendment No. 18, in clause 11, page 9, line 28, at end insert—

‘(2A) A local authority must offer the services of an independent reviewing officer to any relevant child for whom it is the responsible local authority.’.

It is a great pleasure for me to open the debate. I am conscious that, as we are on Report, there have already been many hours of debate and deliberation, of which I was not part, given that I have only just joined the Department. I thank my hon. Friend the Member for Cardiff, West (Kevin Brennan) for his dedication and hard work in taking the Bill through its previous stages, and wish him well in his new post.

I shall introduce several Government amendments now and respond at the end of the debate to issues and questions that hon. Members raise. The first amendment grouping relates to three groups of children and young people: children who are provided with accommodation for three months or more under education and health legislation, the great majority of whom are disabled; children who are looked after or live with family and friends on the edge of care; and care leavers—relevant children who are 16 or 17 and former relevant children who are over 18.

I will start with the group of the children who are in accommodation arranged under health and education legislation. Amendments similar to new clause 6 were considered in Committee. The Government highlighted the serious defects in those amendments and explained why they would have no practical effect. I do not propose to repeat that explanation. However, we all share the ambition to ensure that social services are actively involved in a timely and appropriate manner when a decision to accommodate a child away from home is taken, so that consideration is given in every case to the child’s social care needs and to the needs of his family for support, to enable them to sustain their involvement in their child’s life.

May I congratulate my hon. Friend on her appointment to what is a strong ministerial team in the Department? May I also compliment her and the Department on how wide-ranging the amendments are and on how good the support is for families when their child is accommodated, perhaps hundreds of miles away from their home? That support includes help not just with travelling to meet each other, but even with going on holiday together. The proposal is a commendable amendment by the Government, who have responded to concerns raised in Committee.

I thank my hon. Friend for his intervention. It was important that the Government responded to the concerns that were raised in Committee. We considered our response when working with the Every Disabled Child Matters campaign—a campaign that I got involved in when I was first elected to the House and one that works so hard for disabled children. We worked with that campaign to see what more we could do to promote the welfare of that vulnerable group. I also had the opportunity to discuss the issue with my hon. Friend the Member for Stourbridge (Lynda Waltho) earlier this week, on my first day as Minister in the Department.

I am pleased to introduce the Government amendments, which will improve the well-being of the children concerned as part of a package that will make a significant contribution towards improving services for them. New clause 19 will require the local authority to have an appropriate tailored package of services suitable to meet the needs of children who are provided with accommodation under health or education legislation. In particular, the local authority will be expected to provide services that support the continuing active involvement of the parents in their child’s life.

May I be the first from the Conservative Benches warmly to congratulate the hon. Lady on her deserved elevation? It is good to know that a long period of labour in the Back-Bench vineyard has received its just reward.

In welcoming the thrust of new clause 19, may I gently say that it is not entirely clear to me—I do not mean to be pedantic; this is a serious point—why subsection (4), in contrast with subsection (1), says that the services “may” include the three categories set out? If the concept of the core offer to be applied universally is in ministerial minds, might it not be a good idea for the new clause to say not that the services “may” include those categories, but that they “shall” include them? That is a minor point, however; I wish the new clause and the hon. Lady well.

I thank the hon. Gentleman for his warm and kind words. I am not quite sure where the vineyard comes from, but we will worry about that later.

The point about the services and the support package that we will provide is that we will consult further on statutory guidance and regulations to determine what that support package may be. There is therefore still an opportunity—we are not being prescriptive—and we may be able to look at the matter further.

May I also welcome the hon. Lady, who has come from the Back-Bench vineyard? We know that the longer one leaves a wine, the more mature it gets.

I agree with the intention of new clause 19, but it is not clear whether the services referred to under subsection (4)(a) could be provided by relevant third sector organisations such as Youth at Risk and Regenerate, in respect of which I declare a non-pecuniary interest. Will the Minister consider allowing third sector organisations with a relevant interest in improving young people’s fortunes to facilitate in the kind of guidance and counselling referred to the new clause? Is she willing to accept representations from those voluntary sector organisations on how they might be able to facilitate the outcomes that the new clause is no doubt intended to achieve?

I thank the hon. Gentleman for his invitation and his warm words. I am pleased to be able to say, in the spirit in which we consulted when tabling new clause 19, that we want to consult as widely as possible on how the support packages will be put in place. It is Government policy to encourage voluntary and third sector organisations to get involved in the delivery of public services. Voluntary sector organisations very often enjoy the confidence of parents and others with whom they have worked for a long time, who do not see the barrier that they might sometimes see between themselves and those whom they may consider as authority figures. What the hon. Gentleman proposes is certainly something that we would consider when we consult on how the statutory guidance goes forward.

I join hon. Members in congratulating my hon. Friend on her exciting new role. As president of Blackpool Advocacy, I mention independent advocacy virtually every time I stand up to discuss such issues. Will my hon. Friend look into the importance of offering accommodated children access to an independent advocate? When she liaises with third sector organisations, will she consult with those that represent independent advocacy services, which in my opinion are vital to so many young people?

I thank my hon. Friend for making that very valid point. My earlier point about parents and looked-after children having trust in the relationship and the people advocating for them is important. I will take that forward as we put the guidance together.

The duty to arrange social work visits in clause 19 provides ongoing supervision for the placement that the local authorities will put in place and will ensure that the local authority can step in when there is any significant change in the child’s circumstances. One of the most important services that local authorities can provide is to take all reasonable steps to maintain contact between the parent and the child. New clause 19 therefore specifically refers to services

“necessary to enable the child to visit, or…be visited by, members of the family”

and to

“assistance to enable the child and members of the family to have a holiday together”,

as my hon. Friend the Member for Stafford (Mr. Kidney) pointed out.

The Government expect agencies to work together when making long-term plans to accommodate children away from home. The existing requirement in section 85 of the Children Act 1989 for local authorities to consider their Children Act duties when notified that a child has been provided with accommodation by health or education is complemented by corresponding provisions in regulations made under part III of the 1989 Act and by education legislation and guidance, and is reflected at the structural level by the duty to co-operate in section 10 of the Children Act 2004, which underpins children’s trusts.

Effective inter-agency working is essential for such children. However, we recognise that in some cases inter-agency working arrangements are not as effective as they should be, so we will use regulations made under clause 19 to require a visit to take place within the first seven working days of a placement or notification of a placement, unless an initial assessment has already been carried out as part of the placement decision. That will provide the reassurance that children’s social care professionals will be involved right at the start of the placement. It remains primarily the responsibility of the home local authorities to assess and provide services to meet the needs of the children being placed out of area under health or education legislation. Amendments Nos. 8 and 9 make that position clear beyond doubt.

I recognise that, for many children in long-term placements, parental engagement may unfortunately be difficult to establish or sustain. We will therefore strengthen statutory guidance to provide greater detail on the considerations relating to parental involvement and children’s needs and on when it would be appropriate for the local authority to assume responsibility for providing accommodation under section 20 of the 1989 Act and thus for the child to become looked after.

I add my congratulations to those that have already been expressed to the Minister on her appointment. Will she confirm that when that statutory guidance is being considered, there will be consultation not only with groups such as Every Disabled Child Matters, which are obviously important in this respect, but with the families of the children, so that the guidance does not become something that they feel is being imposed on them by the local authority and that they are very much involved in the detail of it?

I thank my hon. Friend for that intervention, which comes back to the point that I have made two or three times on the importance of trust between the parents, the child and those who are assuming responsibility and finding placements for them, and supporting them. I will be happy to ensure that we consult as widely as possible in order to put the statutory guidance in place.

This is a comprehensive package of measures that was developed in partnership with the Every Disabled Child Matters campaign, which many hon. Friends cited in Committee. As Every Disabled Child Matters says:

“These duties will make a huge difference to disabled young people in long-term placements, who are often placed far away from home, and can struggle to maintain contact with their families. The amendment should result in practical support to help families stay in touch with their children, such as help with transport costs, and also with essential advice and support to promote a strong relationship between disabled young people living away from home and their families.”

That is why the campaign wholeheartedly welcomes the amendment. As I have said, we will continue that constructive dialogue with Every Disabled Child Matters and other stakeholders, with parents and, of course, with hon. Members as we develop the regulations and statutory guidance.

As well as the Government amendments, hon. Members will discuss amendments relating to placement moves for looked-after children, support for kinship carers and strategies for securing sufficient fostering placements. In relation to care leavers, we will discuss support for voluntarily accommodated children who go into custody, reviews for relevant children and data collections relating to care leavers. As I have said, I will deal with all those issues when I respond.

First, I add my congratulations to those already offered to the Minister on her promotion and her joining the Department. It is an interesting brief that she has taken on, although we regretfully wave goodbye to the hon. Member for Cardiff, West (Kevin Brennan), who was a doughty champion of children’s issues—both in his ministerial role and in respect of his general interest—on this and many previous children’s Bills. He and I sparred on a friendly and positive basis over many years. He will be missed.

I shall speak to the amendments in the order in which they have been selected and focus on those that stand in my name and those of my hon. Friends. I shall refer first to Government new clause 19 and the concomitant amendments, which we very much welcome. I would certainly be churlish not to congratulate the Government on having listened to the not inconsiderable lobbying from Every Disabled Child Matters and other interested parties. We supported the amendments in Committee, and the former Minister was sympathetic to what we were trying to achieve in doing so.

In Committee, I tabled new clauses 6 and 10, which endeavoured to achieve what these amendments are now achieving, and I am glad that the Government have found a formulation of words that has enabled them to add the proposals to the Bill. Ensuring that the welfare of disabled children in long-term residential placements is promoted and protected affects a relatively small number of children, but they make up an important and potentially vulnerable group and it is right that they should be given special consideration in the Bill, as they now are. That is why Every Disabled Child Matters has welcomed what the Government have done and described it as a dramatic step towards ensuring that all disabled children who live away from home are well supported.

We tabled our amendments in Committee in an attempt to require local authorities to consider whether disabled children in long-term residential placements should have the protection and support of looked-after children status and to retain the flexibility to ensure that the right solution was found for each child and family, but also to ensure that every child placed away from home in those circumstances had their safeguarding needs properly considered. It was not to be imposed on those children; it would have been done in consultation with the families to ensure that the right safeguards were made available to each and every child appropriately.

We welcome the amendments and, in particular, the practical support that I hope they will achieve in helping families to stay in touch with their children, for example, through help with transport costs—the Minister reiterated that point—and with essential advice and support to promote a strong relationship between disabled young people living away from home and their families. Strengthening the guidance as she has promised is welcome.

I echo some of the comments made by Labour Members, in particular the hon. Member for Bristol, East (Kerry McCarthy), who played a significant part in Committee. We must ensure that before the final regulations are devised, there is close consultation on them with the disability sector, but also with the families involved, because we are talking about a finite and easily identifiable group of children and their families.

May I ask that consideration be given to grandparents and that the terminology for families is looked at as broadly as possible? Too often, grandparents have difficulties maintaining access to grandchildren—in a divorce situation, for example—and the difficulties are manifold in situations such as those that we are discussing.

My hon. Friend is absolutely right. That is a key consideration that I am always aware of and which came up many times in Committee. When we talk about family, we are talking about not just the immediate family, but the extended family. As we know, grandparents are a lifeline in many cases, especially where there is a problem in relation to the child and the birth parents’ ability to look after that child. I am sure that the Minister will take that point on board as well.

I welcome, too, the reference to strengthening the visitor role and, in particular, the immediacy of ensuring that a relevant professional visits and makes an assessment. Too often, the immediate concern is to find the placement and then the pressure is off, but finding the placement is only the first stage. We have to ensure that all the necessary support packages are in place, so I welcome the Minister’s comments in that regard.

However, all this also hinges on the availability of the appropriate professionals, especially properly qualified dedicated social workers. We know about the problems related to the shortage of and turnover in social workers, particularly in the area of child protection and those with expertise in children with disabilities. That came up many times in Committee and it is quite a specialist area.

Promoting the duty to notify will also be part of these considerations. Ensuring that the responsible authority has liaised properly with the host authority is a problem for children within the care system—both those who are disabled and who are not disabled—when they are placed out of area, as too many children still are. I hope that fewer will be as a result of other measures in the Bill. We welcome the Government new clause and the amendments that go with it.

Our own lead proposal is new clause 24 and I need to notify you now, Mr. Deputy Speaker, that we would like the opportunity to vote on it. Given how the system works, that vote will come later rather than at the end of this debate, as our new clause is not the lead amendment.

The new clause introduces a relatively new subject in terms of amendments to the Bill, but that subject has been of concern to me and my Conservative colleagues for some time. It involves the role of children in care in custody—a group that is very vulnerable and too large. Some 10,000 children pass through the secure estate for juveniles every year. At any one time, as we know all too well, approximately 3,000 children under the age of 18 are in custody in this country. It is not a good thing that we have locked up so many children and kept them off the streets; it is a sign of failure that they should have to be in custody in the first place. Many of us will agree that we need to think and act smarter as to how we divert those children from the custodial estate.

According to the Youth Justice Board, 71 per cent.—almost three quarters—of children in custody have been in the care of or involved with social services prior to entering custody. That is an alarming figure, again showing the failure of the state as the corporate parent, as three quarters of its charges in the custody system will have been in the care of children’s services previously. That is an indictment of the system.

The “Care Matters” Green Paper noted that the majority of children in care—those under section 20 of the 1989 Act—lose their looked-after status on entering custody. The only children and young people with care status in custody are: those under a full care order of section 31; those classified as in need under section 17 of the 1989 Act by the local authority in which the establishment is based during their time in custody; those children on remand in secure training centres or secure children’s homes; those 16 or 17-year-olds who have spent enough time in care to be “relevant children”, which is the technical term; and finally, 18 to 21-year-olds who are former “relevant children”.

The Green Paper did not go so far as to suggest that children entering custody should not lose their looked-after status. It did, however, suggest that children entering custody should be needs-assessed, and that individuals should continue to be supported as if they were a child in care. But any reference to children in custody was watered down in the “Care Matters: Time for Change” White Paper, to a requirement for social workers to visit previously looked-after children while in custody. The continuity of that arrangement is something of a postcode lottery.

Over the summer recess, Mr. Deputy Speaker, I am sure that you noticed and read from cover to cover the report produced by the Centre for Social Justice entitled “Couldn’t Care Less”. That excellent report was the result of a lot of research and interviews with people involved in the care system and the children themselves. The report states that the methods by which a child arrived in care should not influence the level of oversight and care that local authorities exercise over children in care who go into custody. Surely all children within the care system should be equal in the eyes of their corporate parent.

Let me quote some passages from the report, which are relevant to the need for specific action to be taken to give extra support and status to children in care in the custody system. It states:

“Children in care are being criminalised because Local Authorities are failing in their responsibilities to prevent them drifting into criminality. Mental health problems are left to deteriorate and neglectful Local Authorities provide more opportunities for children to be in contact with the police than to be in education or employment.

Once involved with the criminal justice system, it is difficult to disentangle children in care. The majority are placed in custodial settings: existing facilities do little to address the reasons why children commit crimes, nor do they teach them the skills necessary to live successful lives outside of prison. Local Authorities provide children in custody with poor support, both when they are in prison and when they leave it. As a result, many offenders with a background in care reoffend costing the taxpayer millions, and go on to experience a life burdened by unhappiness and dependency”—

effectively getting into a cycle of despair.

In a little while, I hope to catch your eye, Mr. Deputy Speaker, to speak about new clause 26, which relates to support for children on the edge of care. However, the hon. Gentleman talks about support for children at risk of going to prison, but there is one stage missing on the list that he has read out. It would be immensely helpful if social workers turned up at court with the children for whom they are responsible, so that magistrates effectively had the representative of the parent in front of them.

As is often the case, the hon. Gentleman is absolutely right, and I completely agree with him. We need to do far more preventively to keep children out of the custody system. That means better, closer working with consistent social workers, who are able to have a closer relationship. For those at the edge of custody, however, it also means ensuring that the key support person gives assurances to a court that steps could be taken to keep that child out of custody. That would require all the support packages on which he and I agree and to which his new clause alludes.

The trouble is that 3,000 children are already in the custody system, of whom a majority are from the care system. When they get out, we need to make sure that they are supported appropriately and can go into a setting that will ensure that they do not return to custody, and that they get back into the mainstream as quickly and smoothly as possible. I am sure that the hon. Gentleman would fully agree with those intentions.

I do not want to read out the whole report, although some of its contents are startling. Another statistic that came out, however, is that only 2 per cent. of the current care population in prison

“were placed there due to socially unacceptable behaviour of their own, the majority are in care as a result of abuse, neglect or family breakdown.”

They are not career criminals, but deeply damaged children from deeply damaged backgrounds, who find themselves caught up in a vortex of unacceptable behaviour, the only response to which is an unsmart, unsophisticated one of banging them up. That is not good enough, and it is also highly counter-productive given the recidivism rates.

For a child in the justice system—whether they are from the care system or not—at a young offenders institution, if placed on a sentence of less than 12 months, the recidivism rate is 92 per cent. That was the last statistic I heard. It is therefore virtually guaranteed that a child going into the system will make a career of offending. That cannot be right or helpful to the child, or to the community that must temporarily host that child before they get back on to the conveyor belt into crime.

We must consider the extra stresses on young people in prison. The Mental Health Foundation, for example, has estimated that rates of mental health problems among children and young people in the youth justice system are at least three times higher than those in the general population. Children in the care system are much more likely to have mental health problems, and are exponentially more likely to have mental health problems when they go into the justice system.

A vicious circle of deprivation exists. There is a triple whammy: perverse financial incentives to provide inappropriate kinds of custody; poor care, education and training in custody to prevent reoffending; and inadequate planning for release and support after leaving custody.

I am sorry that I have not read the report from which my hon. Friend has quoted. How much does it cost to keep a child in custody per year?

It is—[Interruption.]—a six-figure sum; that is what I am being prompted to say. Usually I have the figures at my fingertips. For someone who reaches the age of 18 who has gone into the youth custody system, I had a figure of well in excess of £1 million for all the costs of looking after them and of police investigations and detention. It is a substantial sum and much higher than the amount that could be put into prevention and early intervention to keep them out of the youth custody system in the first place. I am sure that the Minister would offer to write to my hon. Friend with the exact figure.

If my hon. Friend has the figure at his fingertips, it will save the Minister writing the letter.

I am extremely grateful. I am not in the business of preventing a letter from being written, but pursuant to the point made by my hon. Friend the Member for Broxbourne (Mr. Walker), may I put it to my hon. Friend that it is often a question of spending now in order to save later? Does he not agree that the fact that there are 11,000 people in our young offenders institutions, of whom typically more than 60 per cent. suffer from speech, language and communication problems that prevent them from gaining access to education or training courses, is a damning indictment? Do not those people perhaps need an independent advocate or A. N. Other to trigger the provision of a relatively inexpensive service which will do those people and the country great good, and prevent the vastly increased costs that would otherwise be incurred at a later stage?

I thank my hon. Friend, not for saving the Minister from having to write the letter but for the point that he has made so well. He and I, along with other Members, discussed precisely that problem during a Westminster Hall debate this morning. We all agreed that, however the process is triggered—and there are different ways of triggering it—it is essential to ensure that early intervention support services are available to those with speech and language difficulties, autism and associated special educational needs. A disproportionate number of children in the care system suffer from communication difficulties of that kind which might have been avoided—or at least alleviated—through early intervention.

I want to make a few more points about new clause 19 before turning to the other new clauses and amendments in the group. It is the largest group on the list, so—as I am sure you will be relieved to hear, Mr. Deputy Speaker—I shall not be as verbose as this later.

If we are truly to help our most vulnerable young people, the children who are already looked after on entering custody should not cease to be looked after. They should be entitled to all the benefits conferred by section 20 of the Children Act 1989, bar perhaps the provision of accommodation by the local authority. That would ensure that all looked-after children entering custody did not become even more disadvantaged. In 2005-06, about a quarter of the number of boys and half the number of girls in custody were held over 50 miles away from their homes, according to the Youth Justice Board. Again, continuity of care in such circumstances is all-important. The new clause would ensure that local authorities were in a position to provide suitable accommodation and support for looked-after children leaving custody.

The new clause is also important in safeguarding the longer-term provision of support for many extremely vulnerable children who at present should qualify for leaving-care assistance under the Children (Leaving Care) Act 2000. A child is eligible under the Act if he or she is aged 16 or 17 and has been looked after by a local authority for 13 weeks or more, provided that the period began after the child had reached the age of 14 and ended after he or she had reached the age of 16. The 13-week period does not need to be continuous, but a series of pre-planned short-term placements of under four weeks at the end of which the child returns to the care of a parent, or a person who has responsibility for him or her, will not count. Periods during which a child is remanded in the care of the local authority or in remand in a secure training centre will count, but remand to a young offenders institution will not.

There are anomalies in the system, and it will often be difficult to determine whether or not a child is eligible. At present, a typical scenario that needs to be considered would involve a young person being placed under section 20 of the Children Act 1989 owing to his or her chaotic circumstances, possibly as a result of court proceedings and bail requirements, but then being remanded to a young offenders institution or sentenced to custody before the 13-weeks were up. The child would thereby lose any entitlement to leaving-care rights. The hon. Member for Stafford (Mr. Kidney) may wish to comment on that, as it is an issue of which he has a great deal of experience.

Ensuring that those accommodated under section 20 do not lose their looked-after status on entering custody will entitle such vulnerable children to the support that they need to make the transition from childhood to adulthood and independent living, hopefully at liberty as well. The implications for successful resettlement when they leave custody are clear. However, as things stand there is a perverse incentive working in the system. I do not say that it is being taken advantage of or that it is happening a lot, but there is a perverse incentive for a children’s services department to foist a child in care on to the youth justice system so that the department no longer has responsibility, let alone financial liability, for the child. That is an enormous waste of money, and such deckchair-shifting is certainly not in the interests of the child—which, as always, must be our primary consideration.

The points made by the hon. Member for Stafford in new clause 26—along with, I am sure, the points that he will make in his speech—echo points made in Committee, and I sympathise very much with them. The hon. Gentleman’s aim is to increase support for “family and friends” carers. We have long championed—I tabled many amendments in Committee, which were supported by a number of members of all parties—the need to ensure that kinship care becomes a much more extensively used resource. It is still the case that only 4 per cent. of social worker-initiated placements are with kinship carers, which cannot make sense.

Despite the requirement that kinship carers should be at the top of the hierarchy of placements, they are still not getting enough of a look-in. Many of us will have been visited in our surgeries by, typically, grandparents who have offered to take on the care of a grandchild whose parents are deemed to be incapable of doing so, but are having to battle to gain that responsibility—and if they do gain it, many must then battle to obtain proper support and remuneration.

My hon. Friend has just given the House a shocking figure relating to the number of placements with kinship carers. Why does he think so few people gain access to children with whom they have blood relationships? That seems absolutely bizarre, and perhaps answers the wider question of why children in care in the United Kingdom do so badly.

My hon. Friend has raised a good point, which she also raised—and we discussed—in Committee. It is a complicated problem, but I think that ultimately it is simply easier to place a child with a non-connected foster carer who may be on the local authority’s books, and whom a social worker may know to be a safe pair of hands. The extra work involved, and the extra risk that may be involved, in taking on a new and unknown quantity in the form of a kinship carer can be enough to tip the balance.

I am not trying to attach blame to social workers; the blame lies with the system. As we know from last year’s report by our own commission on social workers, they are still under severe pressure. The lack of continuity among them makes it very difficult for them to form the close attachment to a case that should be required for, particularly, very vulnerable children. In Denmark some 40 per cent. of placements are made with kinship carers, which shows that it can be done, but for some reason our system militates against it. All the evidence shows that that lack of investment is a false economy, and that children placed with kinship carers fare as well as, if not better than, children raised by unrelated foster carers.

I am grateful to my hon. Friend for allowing me to pursue the point. He is a great expert on these matters. Clearly, when a local authority goes out to look for foster carers it exercises a rigorous process of selection to ensure that the children involved will be safe and well looked after, in line with the high standards that we seek in a foster carer. Inevitably, if a child is placed with a kinship carer, the standard of parenting is likely to be lower because of the compensatory factors involved in the existence of a kinship relationship. How can local authorities solve that difficult conundrum?

I thought that my hon. Friend was going to mention a specific case that she and I discussed yesterday. A degree of political correctness had crept in: although the potential foster carers or, ultimately, adopters appeared largely to fit the bill in that context, some of their views were rather less acceptable. In fact, there is a degree of political correctness in the whole issue. We should be more willing to take a risk when there is a chance that a child may have a solid second chance of a stable life with a kinship carer.

We debated the matter for many hours in Committee. Anything that we can do to re-establish some stability in a familiar environment, with familiar friends and with family members who one can trust, must be preferable, unless there is a clear risk of harm to the welfare of that child, which must always be the overriding consideration, to placing a child with an unknown foster carer.

I wonder how widely family group conferencing, which is mentioned in new subsection (2)(a) of new clause 26, is used among local authorities. It was used by Essex county council when I was a councillor there. I understand that the concept started among the Maori community in New Zealand, where the idea of kinship was extended even further and a group of people were brought together who were involved in that child's life but were not necessarily family members. Those people worked together to prevent the child from being taken into care. I wonder whether there is a requirement on local authorities to investigate family group conferencing or is it a voluntary thing? How widely is it used?

My hon. Friend knows that we have raised the subject of family group conferencing before. It gained a lot of support from Conservative Members, and I think that other Members also felt that its use needed to be expanded much more. We tabled an amendment to reinforce the desirability of pursuing family group conferencing, but, alas, the harshness of Mr. Speaker’s selection process has not allowed it to be debated today. I am sure that he is right in his decision; it is just a shame that we have not been able to debate that amendment. However, we have had an opportunity, through my hon. Friend, to say how much we support family group conferencing and getting everyone around the table: extended family members, close friends and all the agencies and professionals involved. That must be the best way to determine what is the best and most appropriate action for the child, because it means that all the opportunities are explored at the same time and kinship carers who want to put themselves forward can do so at the beginning and all the pros and cons of that option can be investigated, rather than adopting the all too common “We’ll get back to you” approach. I seem to be lingering too long on a new clause which is not mine, but the hon. Member for Stafford will gather that there is support for what he is trying to achieve.

New clause 28 was tabled by the hon. Member for Mid-Dorset and North Poole (Annette Brooke) with whom I concur about the paucity of information about accommodation arrangements for 19 and 20-year-olds. Once again, we are frustrated by Government replies that say that those figures are not collected centrally, because we need that intelligence if we are to discover the extent of the problem, especially given the fact that it does not exist just to the age of 16 or 18.

I am aware that there is an amendment on the selection list tabled by the hon. Member for Warrington, South (Helen Southworth), on which we will reserve judgment until she has spoken about it. I will not try to pre-empt her, as I have the hon. Member for Stafford, but we had advance warning of what he is trying to achieve.

Amendment No. 13 is not rocket science and what it proposes is not new. In fact, we went back to the matter on numerous occasions in Committee. Basically, it is about trying to put a cap on placements. I know that that is fraught with problems, but there is a strongly held view that the biggest issue undermining the chances of looked-after children getting a decent second chance is instability in their placements. If they are constantly being pushed from one foster placement to another, for the convenience often of the system rather than for their convenience, because it is easier to take a child in care from one foster parent to another some miles away than to try to provide the support package that that child needs to enable them to stay with the first foster parent—the child may have complex needs—that must be detrimental to that child's ability to get back on the straight and narrow. It must also be detrimental to efforts to secure some stability in the child’s education, particularly when a new placement means moving from one school to another.

The amendment repeats the principles that we supported in Committee by trying to cap the number of placements that a child can have, other than in exceptional circumstances, particularly for those children who are reaching the last year of their compulsory schooling, when such moves can obviously have a detrimental effect on their capacity to take their exams and to pass them.

We know that the educational outcome figures for children in care remain appalling. In school year 11, 64 per cent. of looked-after children obtained at least one GCSE or GNVQ, compared with 99 per cent. of all school children, and 13 per cent. obtained at least five GCSEs or equivalent at grades A to C, compared with 62 per cent. of all children. That gap has been widening. Although the achievements of children in care have been improving, that has not happened at nearly as fast a rate as among children in general. That is unacceptable.

The amendment would fix a cap on the number of placements, and if that cap were breached, it would be judged an exception to the rule and the local authority would have to give a full explanation of why that had been allowed to happen and what had been done to prevent a repetition. Fostering is the backbone of the care system. Seventy-one per cent. of children in care are now in foster placements, but a National Foundation for Educational Research report found that 29 per cent. of children in care had had three or more placements during their secondary school years, and 25 per cent. of them had had six or more placements. Some survey work for a report by the Centre for Social Justice revealed that almost one in 10 of care leavers interviewed had experienced more than six placements before they were 16 and that some had been in as many as 30. It also found that 41 per cent. of foster carers thought that stability would make the biggest difference to children in care. As David Holmes of the British Association for Adoption and Fostering said:

“The one thing that would make a difference to children is having a strong relationship based on strong attachment, intimacy and trust with at least one trusted individual which is going to be there for that child.”

Research has shown the importance of stability and continuity of care and its long-term effects on mental health. In a study carried out by the Royal College of Psychiatrists, adults who had been raised in stable foster homes and received specialist support from a dedicated fostering agency were found to be more socially well integrated.

It is always a pleasure to listen to my hon. Friend’s mellifluous tones, but surely the overarching theme of our consideration in these remaining stages is the rights, chances and outcomes of some of the most vulnerable children in our society. Before he concludes his remarks, I wonder whether, referring to his important exchanges on 16 June in the Second Reading debate, he would care to say something about the arguments powerfully articulated by the hon. Member for Blackpool, North and Fleetwood (Mrs. Humble) for the independent advocate, which has not yet featured in our proceedings, but seems to me to be at the heart of the debate.

My hon. Friend makes a fair point, which is somewhat separate from the point here, because, again, I do not believe that Mr. Speaker in his wisdom has selected any amendments to do with the independent advocate. Therefore, he would not want me to traipse down that path, but hon. Members on both sides of the Committee had some sympathy with the proposal to enhance that role, particularly for the most vulnerable children.

If social workers do not have the time to get to know children in care, they will be less likely to understand their true needs and to make effective decisions about the right type of care for those children. Furthermore, overstretched social workers find it harder to support children than those who look after them throughout their placements. Continuity and stability must surely be key, which is why we have tabled amendment No. 13.

Finally, you will be relieved to hear, Mr. Deputy Speaker, amendment No. 14 raises a new issue. It is a probing amendment, so I trust that the Minister or any of my hon. Friends will not ask me to flesh out too much of the detail.

Councillors and those in children’s services in various local authorities have mentioned problems with foster carers making adaptations to their houses or with housing a sufficient number of children, particularly in London boroughs. The shortage of foster carers is estimated at anything between 6,000 and 10,000 and there is a particular shortage of specialist foster carers to deal with complex needs and with some forms of disability, both physical and mental.

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I defer to everybody here—they are much more knowledgeable about this topic than me—but my concern regards potential foster children with physical needs and disabilities and the difficulties that foster carers have in claiming disabled facilities grants. Has the hon. Gentleman taken that into account?

That is part of the general principle behind the amendment. I am interested to hear the Under-Secretary’s comments on it and to hear how that might be conveyed to those responsible in the unlikely event of her not wanting to accept the amendment.

For local authorities coming up with strategies for looked-after children, it is not just a question of “Have we got the right number of foster carers and the appropriate services?” It is also a question of trying to get some flexibility in creating the environments that enable more foster carers to come forward, or that allow more current foster carers to increase their responsibility, such that they could accommodate more children at home if they made some adaptations. That might involve various grants being available, as the hon. Lady has just said. It would certainly involve some leeway on planning policies in some cases. I would go well beyond my brief if I tried to suggest that there should be a change in planning policy guidance of any description.

Housing and planning departments must be included within the planning for foster care placements in particular. I can think of one London borough where this has happened informally and, as a result, there is a much higher number of foster carers and the authority is able to make many more foster placements. More leeway could be allowed in terms of adaptations for children with disabilities or in the ability to accommodate more children, within the realms of safety; one is not trying to take risks. I wanted to place it on record in this probing amendment that housing and planning departments have a role in this as well, although one would not normally expect them to.

I am aware that I have taken up rather a lot of the House’s time but this is the largest grouping of amendments. There are some important amendments among them but I certainly would wish to pursue new clause 24 in a vote later today.

There was a time when I thought that “Report stage” was a misnomer for this part of our proceedings, because—except for those who had been on the Committee—what had happened before, and what was to happen next, to the Bill concerned was a complete mystery to Members. I was pleased to suggest a few years ago to the Procedure Committee and to the Modernisation Committee that we should have a report for the Report stage. The Library now does produce a report, and there is one for this Bill.

The hon. Member for Buckingham (John Bercow) mentioned advocacy. I can report back from Committee that the Minister of State said to me that the existing entitlement to advocacy to make a complaint or representation remained. In the case of a representation, that word should be read widely to mean as many things as people would like. The existing law gives quite good access to advocacy for youngsters. I know that the hon. Gentleman stressed the word “independent”, and there is still an argument about how independent some advocates might be.

As I said earlier, the Government amendments are welcome and deal with a number of points that were made in Committee. Much of the debate in Committee revolved around visits to children in care who had been placed a long way from their homes. To some extent, the amendments give some reassurance. In the Bill there is also a new restriction on how often local authorities will place children in their care beyond the borders of the home local authority. That is very welcome. The Bill requires that local authorities placing both beyond and within their borders must ensure regular visits to the child where he or she is placed. That will help.

I am sure that my hon. Friend is aware that constituencies such as mine have cases where children have been moved because of the lack of appropriate accommodation—in one case from Swansea to Essex, making visiting almost impossible. Could we try to ensure that such placements do not occur?