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Commons Chamber

Volume 481: debated on Monday 20 October 2008

House of Commons

Monday 20 October 2008

The House met at half-past Two o’clock

Prayers

[Mr. Speaker in the Chair]

Oral Answers to Questions

Work and Pensions

The Secretary of State was asked—

Labour Statistics

2. What assessment he has made of trends in the proportion of the labour force comprised of UK nationals. (227673)

The proportion of non-UK nationals in the labour force has increased as our economy has become more integrated into the European and world economies, but it is still low. Over nine out of 10 people in employment in the UK are UK nationals.

I am grateful to the Minister for that answer. This is a sensitive area, and I have consistently raised the need to train and employ more of the 5 million British people who are currently of working age but who are being paid not to work, while many foreign nationals hold jobs in the UK. May I congratulate the Government on planning to take much-needed action to help more British people to get jobs in our economy, and may I gently urge the Minister to get on with the job quickly?

With respect, we have been getting on with that job for some time now. Perhaps the hon. Gentleman is referring more directly to the other half of the equation—the introduction of the points-based system for immigration. That system was announced in 2005, before the last election, and it has been introduced in the speediest and most efficient manner possible.

Will my right hon. Friend welcome the presence of the great many Irish and American citizens who are non-British nationals? Will he also join me in deploring a leaflet that has been circulated in south Yorkshire that attacks as non-British a Danish lady who has been here for 24 years and is a Labour councillor? The leaflet was circulated not by the British National party or the United Kingdom Independence party, but by the Liberal Democrats. They should be ashamed of themselves.

Given my name and background, I of course welcome Irish non-nationals to economic activity and productivity in the United Kingdom’s labour market, as I do Americans and all others who contribute fairly. On my right hon. Friend’s second point, Liberal Democrats do not change, wherever they come from and wherever they are in the country.

Does the right hon. Gentleman acknowledge that there is a good deal still to be done in respect of training the United Kingdom work force? Does he agree that what we really need to do is cap the number of people who come here as immigrants in each year?

I certainly agree with the hon. Gentleman’s first point about training more UK nationals. That is perfectly fair. Central to the points-based system is a sector by sector assessment of exactly what the United Kingdom’s economy needs at any given time from those outside the European Union. We might approach this issue from different ways, but we achieve the same end.

Has the Minister had a chance to look at the figures that his own Department has just published on new national insurance numbers? Is he as concerned as I am that, in Newham—the centre for our great new Olympic village, with huge public funds that are supposed to lead to local jobs and training—more than 20,000 new national insurance numbers were issued to non-British workers? For London as a whole, the number of new numbers issued was three times the number of young people under 25 who are not working. When are the Government going to try to deliver on the Prime Minister’s promise of British jobs for British people?

My right hon. Friend’s point about Newham and, more broadly, about the London labour market belies his northern traditions, in the sense that the London labour market is absolutely distinct, compared with elsewhere in this country—quite rightly, given that it is the finest world city. On his broader point about the Olympic legacy for all people in London in relation to employment and to getting the right mix between the skills available and those requiring them, he is absolutely right. For a long time in the London market, there has been a mis-match between skills required and skills presented, particularly in an east-west dimension. Wearing my other hat, as Minister for London, I should be very happy to talk to my right hon. Friend about that.

I welcome the Minister to his first Work and Pensions questions in his new role. We hope that he enjoys it and that he manages to secure a promotion to full Cabinet rank in the not too distant future.

On 7 October, the Secretary of State said that the employment rate of 74.3 per. cent under this Government was

“the highest employment level that has ever been achieved in this country.”—[Official Report, 7 October 2008; Vol. 480, c. 205.]

He also said that 800,000 more British-born people were in work then than there were in 1997. Does the Minister still stand by those statements?

First, I thank the hon. Gentleman for his kind, but typically churlish, words. I look forward to working with him and hope that he retains his shadow Cabinet rank for a long time to come.

We stand by the figures, which are the highest ever. As I said in my earlier response, there has, of course, been a slight drop in the overall percentage of employment levels of UK nationals, reflecting the enlargement issues that we know plenty about. The figures are, however, still at record levels. As I have also said, more than nine out of 10 people employed in the UK labour market are UK nationals.

Ministers need to take a long, hard look at the figures they present to the House. According to the Library, the rate of employment under this Government has been lower than it was in the late ‘80s and lower than in the ‘70s. According to the Office for National Statistics, only 300,000 more British-born people are in work today than in 1997—not very impressive. Let me ask the Minister a different point. Why does he think that employment among British people has fallen by more 350,000 in the past two years, while employment among migrant workers has risen by nearly a million?

More recently, the rate of participation in the labour market by UK nationals has gone up. The figures were quoted by the hon. Member for Hertsmere (Mr. Clappison) in the weekend newspapers. I am looking to see precisely how the 365 and 865 figures were reached—the answer, from what I have seen this morning, is, not in the most direct route. It appears that the definition of working activity is being played around with, as is the definition of a UK national and a foreign national. That is how those figures are reached. When I am clear about the provenance of the figures, however, I will get back to the hon. Gentleman.

There is an ongoing issue in Milton Keynes about the ready availability of low-skilled jobs, which have attracted young people to leave school at the earliest opportunity to take them up. It is exactly those jobs that are first hit by the downturn in the economy. In that context, is not the route to success programme run by Milton Keynes college and aimed at this age group the right response to a recession—particularly the upskilling of young people so that they can take the jobs that are still available for which they were previously not qualified?

My hon. Friend is exactly right, and I will happily visit Milton Keynes to look in more detail at what the college is trying to do. It must be right for the 16 to 19 cohort to be provided with as much opportunity as possible to get the upskilling—a dreadful word, but it will do—necessary to face whatever challenges the labour market poses in the future.

Benefit Payments

3. If he will commission research on the effect on benefit payments of provision to patients with rheumatoid arthritis of treatment that enables them to continue in or return to work. (227674)

Although we have no plans for specific research on people with arthritis, the Department of Health and the Medical Research Council carry out a range of research projects concerned with arthritis and other rheumatic disease, and I will work closely with my ministerial colleagues on the work and health agenda.

Is the Minister aware of a recent report finding that diseases such as rheumatoid arthritis are responsible for the loss of 9.5 million working days a year, at a cost to society of more than £7 billion? Has the Minister or his Department had a conversation with the National Institute for Health and Clinical Excellence to help ensure that the broad costs to society are looked at and that those suffering from this terrible disease are given the necessary drugs and treatment at an early stage so they can carry on working and living normal lives?

I am grateful to my hon. Friend for that question. I am sure that she will be aware that Arthritis Care presented a report to MPs in Westminster just a few weeks ago, which expressed concern about people with arthritis—both those in work and those looking for employment. We have, of course, doubled Access to Work, which could be of assistance to that group of people and we have also invested £1.1 billion in pathways to work to assist disabled people to find work. I am certainly happy to discuss this issue and the report I mentioned from Arthritis Care to find other ways to assist these people either to stay in work or to find work.

Rheumatoid arthritis particularly affects people in the workplace. Many people with RA wish to continue normal work, but barriers often prevent them from working as normal. Can the Minister commit to using private and voluntary sector back-to-work programmes in addition to Government ones?

I can certainly commit to ensuring that a range of providers, in the public, private or voluntary sector, operate in the pathways to work programme. It is important to have systems in place to allow entrepreneurs, particularly those in the smaller niche charities, to deal with individuals’ specific concerns and conditions so that we can meet our target of taking 1 million people off incapacity benefit.

Unemployment

The jobseeker’s allowance count rose last month to 939,900. There are 608,000 vacancies in the economy and 80 per cent. of claimants leave jobseeker’s allowance within six months. We do not predict future levels of unemployment, but we have been planning for the impact of higher levels of jobseeker’s allowance claims in the coming months.

As I understand it, the rise in unemployment announced last month was the biggest in a decade, or two decades. To link my question with Question 2, there is some confusion about what the immigration Minister last week on reducing the number of immigrants because of employment problems. To return to that question, which the Secretary of State’s colleague failed to answer, could the right hon. Gentleman give an update on the Prime Minister’s policy of British jobs for British workers?

We absolutely want to train workers so that they can get jobs, improve their skills and get more money through employment. About half of the increase in employment has gone to UK nationals. We have a flexible labour market, which is important for the UK. I did not realise that the Opposition were against the idea of a flexible labour market.

This morning I was informed by Network Rail that trying to rush forward the £500 million upgrade of Reading station in my constituency would be problematic. It could lead to poor planning and mistakes, and it would make little short-term difference to unemployment. Does the Secretary of State agree that trying to bring forward big capital projects such as the one at Reading station is not the answer to unemployment, and that continuing a policy of reckless spending will do damage to unemployment?

The hon. Gentleman is welcome to campaign against investment in his constituency if he wants to. All I can say is that it is a very odd approach.

Does my right hon. Friend agree that one of the worst experiences our constituents can suffer is to be denied employment? Is it not essential that every help and assistance is given to them, unlike what occurred in the ’80s and much of the ’90s? A public work programme, which the Government are encouraging, is essential to help people to avoid the poverty and destitution that so often come with unemployment.

My hon. Friend is right. We need to help people to find work if they do lose their job. We are not talking about a statistic, but someone’s life, which is why there are more than 1 million visits to our website every day, and why we take more than 70,000 calls and have more than 45,000 interviews to help people to get back into work. There is excellent support for people who need child care, and help for people who need a suit for an interview and advice on interview techniques. We will continue to do those things. The Opposition abandoned people during a downturn; we will protect them, and prepare them for the upturn.

The Secretary of State will know that the parliamentary group on the Public and Commercial Services Union, which I chair, has expressed its concern about job cuts in the Department for Work and Pensions. There have been 30,000 already and another 12,000 planned, with 2,000 jobcentres potentially at risk. May I ask the Secretary of State to consider a moratorium on those job cuts, and to review the future job strategy in the Department? Many of us fear that the rise in unemployment will overwhelm the service if he does not address the issue.

I hope that my hon. Friend will agree that we will do better than that. We are taking on an extra 2,000 people to introduce the employment and support allowance, and we will keep them on to help with job claims, so we are responding to that. We have been planning for a while to ensure that we can cope with the higher inflow level, and it is also important that we have an efficient system. We have moved people from dealing with paper-based systems in back rooms to helping people with claimants in front rooms, making sure that we have more investment in the front line. That is why we process claims much quicker than we used to—people get an appointment within three days.

We need to continue to improve the efficiency of the system, which is why, for example, we announced last week that people throughout the country can claim their benefits, tax credits and housing benefits at Jobcentre Plus in one visit, instead of having 28 previous contacts, as before. That is a more efficient system, and one that is better for claimants.

As the Minister will know, the media recently reported that as we head into a recession welfare-to-work contracts are becoming less attractive to potential bidders and therefore potentially more expensive to the Department. Meanwhile, the flexible new deal will become increasingly important as more people are out of work for longer. What is being done to ensure that bidders for the flexible new deal have accurate information about the number of people whom the Department considers can be helped back into work during a recession, and that funding structures deliver support where it is really needed, helping those who are furthest from the job market to return to work—which they will find particularly tough at a time when unemployment is rising?

The hon. Lady will be glad to learn that we met the potential bidders recently and discussed precisely that issue. It is important to note that they are bidding for five-year contracts, which will extend over an economic cycle. It is up to them to decide what proposals to submit and the levels at which they bid. However, the fundamental point is that we are spending £500 million more on this than we were in 1997, when the JSA count was 1.6 million compared to the present figure of just over 900,000. That means that more help is being invested per person than in 1997.

I thank God that this party is in government, rather than our opponents. Many of us will remember what the position was like in the 1970s, when whole communities were decimated and there was no help for the unemployed.

I congratulate my right hon. Friend on the incentives he is providing to ensure that when people are made unemployed, there is a route for them to take. Will he now confirm his commitment to the Train to Gain programme, and to the other programmes that are desperately needed by people who lose their jobs? Unlike the past—

My hon. Friend is absolutely right. We are increasing the protection that we are providing. We are giving people more and earlier help with their mortgage costs, and, if other parties in the House are happy to co-operate, we shall want to make the changes in January. That would mean shortening the consultation procedure by a certain amount, but if people consider such action right at a time of financial turbulence, we propose to take it.

We want to give people more help in redundancy by providing better training for them. That is why we announced another £100 million to help people to return to work. We will not repeat the mistake of the 1980s by abandoning people, fiddling the figures and leaving them on benefits and without support.

One of the early and most obvious indicators of a slowdown is the state of the building industry. My constituency lost 50 jobs recently at Rehau Ltd, which makes unplasticised polyvinyl chloride goods for the building industry. We have also lost a firm called Action Makers, who are steel erectors. May I urge the Secretary of State to liaise closely with his Cabinet colleagues, and introduce measures to kick-start the building industry in both the public and the private sector?

The hon. Gentleman is welcome to do that—and, indeed, we are taking such action already. The authorities have introduced a programme very similar to ours to help those who will be made redundant. It is a very good programme, helping people to retrain and return to work quickly. Hon. Members can also play a part in ensuring that if there are redundancies and Jobcentre Plus does not offer help immediately, they can do so. We have organised a very good system involving a rapid reaction force which helps people even before they fall out of work, and which provides a role for all hon. Members.

If the labour market does become still more competitive, will my right hon. Friend look closely at the needs of people with disabilities who want to enter it? We must maintain our core principles of equality in the labour market, and never use people with disabilities as a statistical convenience to reduce the employment figures.

My hon. Friend is absolutely right. There are 600,000 vacancies in the economy. It is important for us to help people who have just lost their jobs to get back into work, but also to help people who have been out of work for longer than that, and people with disabilities. My hon. Friend will be pleased to learn that for that reason we are doubling the budget for Access to Work, which pays the extra costs of employing someone who is disabled.

First, may I make it clear that we share the concern that has been expressed in all parts of the House about the rise in unemployment, and that we want appropriate help to be brought as quickly as possible to the newly unemployed? To return, however, to the contribution of the Minister for immigration on this subject just last week, and the connection he chose to make, in his own way, between unemployment and immigration, will the Secretary of State simply tell us whether there is any change in Government policy in this regard? A yes or no answer would be helpful.

As the hon. Gentleman knows, we have been developing the points system since the last election. It will help to make sure that vacancies that can be filled from the UK labour market are filled from it. It is important that we help people to get back into work. That is why the Train to Gain budget and the flexible new deal matter, and that is what we are focusing on.

Benefit Payments

6. How many people with HIV have had their (a) disability living allowance and (b) incapacity benefit reduced or withdrawn in the last 12 months. (227677)

The figures my hon. Friend asks for are not available in that form. However, he may know that we have been conducting a review of disability living allowance cases where the recipient has been in receipt of the benefit for three years or more and was qualified as being terminally ill. That includes some cases where the recipient has HIV/AIDS. As a result of that exercise, I can tell the House that up to the end of September, 1,040 people have had their benefit maintained or increased, 730 people saw their benefit reduced and 510 had it stopped, although these figures are likely to change as a result of any appeal or dispute.

I congratulate my hon. Friend on his meteoric rise from having expertise on the Norfolk broads to his work and pensions brief; it is truly awesome. HIV infection leads to a fluctuating health condition for many people in that they can be assessed one week as healthy or otherwise, and the next week as quite the opposite. Will my hon. Friend’s new disability living allowance assessment procedures allow for such flexibility, so that we can have an assurance that the fear many people feel can be dismissed?

I am grateful to my hon. Friend for bringing this matter to the attention of the House. He will know that in special rules cases where someone is terminally ill, we ensure that decisions on disability living allowance are given within days rather than weeks. That is for the obvious reason that when someone receives disability living allowance in such circumstances, they are terminally ill. We are reviewing the situation for when people have been in receipt of it for longer than three years, however. The point my hon. Friend makes about fluctuating conditions and diseases such as HIV and AIDS is right. That is why we have consulted with HIV specialists and we are working in partnership with organisations such as the Terrence Higgins Trust, ensuring that our decision makers are fully aware of all the points my hon. Friend has made.

Given the depth of stigma that is still associated with HIV, and in particular the effect it has on an individual’s ability to work, will personal advisers under the new employment support scheme undergo any HIV-specific training for the job?

I am grateful to my hon. Friend for that question. Under the new employment support allowance, it is essential that staff have training in a wide range of conditions so that they can assist people back into work. We are certainly aware of that issue. On the wider point about disability living allowance, I am sure my hon. Friend will agree that it is right for us to look at those in receipt of the special award that is implemented at the point when someone is diagnosed as terminally ill. We want to assist people when they have been diagnosed with that condition—we want to assist people with that condition so that they can work and get into work. My hon. Friend is also right to raise the issue of stigma; we need to continue to tackle that as well.

On the question of stigma and people with HIV, surveys show that 44 per cent. of the population would expect to be told if they were working with a colleague who was HIV-positive. Does my hon. Friend recognise that, in finding jobs for people who are HIV-positive, there is a stigma in the work place and it is not just a matter of them wanting a job, but it is also a matter of the employer being prepared to take them on? Under this new scheme, the Minister and his departmental colleagues need to be aware of that.

Many people in society are affected by prejudice and by preconceived ideas about what they are rather than what they can do—disabled people, those with HIV/AIDS or those with a whole range of other conditions. We as a House, as Members of Parliament and as a Government need to ensure that we tackle those preconceived ideas and prejudices to ensure that employers up and down the land appreciate people for what they can do, not what condition they have.

Child Poverty

7. What recent assessment he has made of the likelihood of meeting the Government’s 2010 child poverty target. (227678)

11. What recent assessment he has made of the likelihood of meeting the Government’s 2010 child poverty target. (227682)

We are determined to eradicate child poverty in this country. The Prime Minister announced in September that we will enshrine in legislation our commitment to eradicate child poverty by 2020. Of course, 600,000 children have already been lifted out of relative poverty compared with 1997, and a further 500,000 will be lifted out of relative poverty as a result of policies already agreed and in the process of being implemented. We will continue to do everything we can to support low-income families with children.

On 4 October, thousands of people filled Trafalgar square to urge the Government to keep their promises on child poverty. Given that more than half the children in poverty are in working families, does the Minister agree that the sanctioning regime needs to be properly monitored to ensure that it does not just move families from out-of-work poverty to in-work poverty?

The hon. Gentleman is right to mention the end child poverty campaign. I think that about 10,000 people attended the rally at the beginning of this month, and a further 50 attended the parliamentary reception only last week. I wish to pay tribute to that coalition for the effective campaign it is mounting.

The hon. Gentleman is, of course, right that part of the solution in our commitment to eradicate child poverty is to encourage parents who are able to work to enter the work market, and then to ensure that they can progress to the good jobs that are the only sustainable way of lifting children out of poverty permanently. To that end, I am sure that he will be delighted that the three children’s centres in Kettering are already reaching more than 3,000 children. The new centres that are planned at Meadowside infants school and Rothwell Victoria will respectively reach a further 714 and 917 children in his constituency.

The Government measure relative poverty, which effectively means that the only way to reduce child poverty is to increase pensioner poverty. Would it not make sense to recalibrate the system to measure actual poverty—the ability to buy food, housing, clothing and so on—rather than relative figures that are somewhat difficult to understand?

We have set ourselves the most challenging target, recognising the importance of our work in this area. I do not agree in the slightest with the hon. Gentleman that the only way to meet our child poverty target is to increase pensioner poverty. Rather, we intend that someone will be no more likely to be in poverty simply because they are a child. It is completely unfair that people in this country should be disadvantaged due to factors entirely outside their control, and that applies to no one more than it does to children.

I welcome my hon. Friend to what I believe is her first Question Time on her new brief. I appreciate the fact that she is continuing the work on child poverty. On that subject, are the Government still on track with the changes in housing benefit and council tax benefit that will come in next year and lift many more children out of poverty?

I am grateful to my hon. Friend for her kind remarks and pay tribute to her for the long-standing reputation that she has established for herself in this field. The answer to her question is simply yes.

Does the Minister consider one of the weaknesses in the Government’s approach to be the division between three Departments—the Treasury, the Department for Children, Schools and Families and the Department for Work and Pensions? Given her recent Treasury experience of problems in the tripartite regime, will she consider reforming the way in which the Government deal with child poverty?

I will put to one side the hon. Gentleman’s cheeky remarks on the tripartite regime, with which I do not agree. I simply say that it was precisely the cross-governmental importance of this issue that led to the Prime Minister establishing the child poverty unit, which reports equally to all three Departments.

I, too, welcome the hon. Lady to her post. I would like to draw her back to the question, because she was asked what assessment the Government had made on whether they would hit the 2010 child poverty target and she was careful not to answer. Given that that date is only two years away, could she give us a clear answer from the Dispatch Box as to whether the Government will or will not hit that 2010 target—yes or no?

As I said, we will do everything in our power to meet our targets that have been laid out. We have made significant progress by lifting 600,000 children out of relative poverty, and a further 500,000 are due to be lifted out of it as a result of policies that have already been announced and are in the process of being implemented. We will continue to do everything that we can to eradicate child poverty. I would be interested to know whether the hon. Gentleman shares the target, because that has not been entirely clear from what we have heard so far.

Post Office Card Account

8. When he plans to make an announcement on the outcome of the bidding process to operate the Post Office card account. (227679)

9. When he expects to announce the successful bidder for the contract to provide the Post Office card account. (227680)

This is a commercial tendering process, bound by UK and European law, and we will announce the outcome when that is completed.

Given that 60 per cent. of rural communities have a post office but only 4 per cent. of them have a bank, what assurances can the Secretary of State give the 6,500 Post Office card account holders in Westmorland and Lonsdale that they will be able to have easy access to their money and benefits under the card system replacing POCA?

As the hon. Gentleman knows, the tendering process involves access criteria, which bidders must meet. He will understand that I am limited in what I can say on that procurement process, because it is ongoing. I am sure that he welcomes the £1.7 billion that the Government are investing and the access criteria that have been put in place for post offices for the first time.

In May 2007, the then Under-Secretary, the hon. Member for Warwick and Leamington (Mr. Plaskitt), announced to the House that a decision on the Post Office card account successor contract would be taken in early 2008, yet that decision has still to be taken. The continuing doubt and uncertainty is damaging what remains of the post office network and is causing great concern to the 4.3 million POCA users. Recent press speculation says that the decision is being deliberately delayed again because of the Glenrothes by-election. Will the Secretary of State tell the House precisely when this long-awaited and crucial decision will be announced?

I assure the hon. Gentleman that the press speculation is not accurate. We will announce the decision when it has been taken, but I am sure that he understands that it is important to take it on the basis of proper procurement practices—that is the right thing to do.

I hear what my right hon. Friend says, but psychological damage is being done to the network, and postmasters and postmistresses wish to have clarity. Does he accept that Labour Members, too, feel that the earlier this decision can be taken, the better? As far as we are concerned, only one decision can be taken.

I am going to start to sound like a broken record. I am sure that my hon. Friend would like me to obey procurement processes in the right way. I totally understand the importance of the post office network for our communities, and that is why we are taking this decision in a careful and planned way.

Before the House sat again, I took a petition and a large number of campaign cards urging that the Post Office retained the Post Office card account. I did so largely because people in Brackla, in my constituency, were very concerned that they would not be able easily to access their benefits. Will my right hon. Friend assure me that people’s ability to access their benefits will be taken into consideration when viability is examined and the POCA contract is awarded?

This Department needs to play its role, as do all Departments, in sustaining, rather than undermining, the post office network. To that end, will the Secretary of State assure the House that the Post Office card account will not be the last option offered to new pensioners, but that it will be offered on an equal basis? Will he consider paying housing benefit and local housing allowance on the POCA? Will he also ensure that our constituents can pay their utility bills by direct debit on the POCA to save them money?

Of course they can do that already from the post office through the 27 accounts that are available. It is important that people have access to direct debits to reduce the cost of their bills. I can assure him that we understand the importance of the post office network. Ensuring that people can access their benefits and their money has been one of the key criteria during the whole tendering process.

Four million people access pensions and benefits through the Post Office card account. It is not surprising that 3 million postcards have flooded in to protest about the problems that exist. Some 3,000 post offices are apparently at risk. When the Secretary of State reviewed the file on taking up his present post, did he look at the rationale for the original decision to see whether proper account had been taken of the social and political impact of the re-letting of the contract which would seem to outweigh any other reason in the decision that successive Ministers have refused to take—to declare that POCA should go to the Post Office?

I shall not give a running commentary on what was done at various stages. I am sure that my hon. Friend would want me to act legally. As I have now said many times, we will make the announcement when the decision has been properly taken.

Several of the small islands in my constituency have a post office, but no bank. Will the Secretary of State assure the House that pensioners on those islands will be able to collect their pension at the post office without having to open a bank account?

That is why, in response to the hon. Member for Cheadle (Mark Hunter), I said that access criteria had been built into the tendering process. Once we have made the decision, we will announce it.

Distress Cases

10. What steps he is taking to co-ordinate the work of local jobcentres, the social fund and Jobcentre Plus to deal promptly with distress cases. (227681)

Jobcentre Plus is well placed to deal with the current period of rising unemployment. It is able to manage current volumes and has put in place plans to function effectively if numbers increase further across all benefits including the social fund. Local jobcentres will continue to give people the support they need to move from benefits and into work.

With growing numbers in a distressed situation because of joblessness, what can the Minister’s Department do to improve the service currently given to people who are being refused face-to-face interviews, are told to use a helpline that never answers or is permanently engaged, and is at best highly impersonal and unco-ordinated? How can that situation be improved?

As I have already said, we have measures in place to ensure that we are able to cope with any increased demand. I might hint that the hon. Gentleman’s experience, as he relates it, does not fit with the experiences that my constituents report to me. He has talked of times of crisis: at the moment, urgent inquiries for living expenses, when people face particular difficulties and whether or not they have recently lost their job, are processed on average in 1.7 days. I would be interested to know how he thinks that we could improve that.

The experience of my constituents certainly reflects that of the constituents of the hon. Member for Twickenham (Dr. Cable). The Minister will be aware that rural areas such as the Vale of York do not have jobcentres. Will she therefore ensure that those jobcentres that serve the Vale of York make themselves accessible, possibly by sending staff to meet those constituents who have no work and no transport?

We are happy to look into specific circumstances. The most important thing is the service that we provide. Jobcentre Plus has a good record in assembling the teams that are required to ensure that people receive the service they need, regardless of the surrounding circumstances. I would be happy to consider the situation in the hon. Lady’s constituency if she would like me to do so.

Unemployment

As my right hon. Friend the Secretary of State said earlier, the jobseeker’s allowance count rose last month to 939,900. There are 608,000 vacancies in the economy and 80 per cent. of claimants leave jobseeker’s allowance within six months.

Although we do not predict future levels of employment, we have been planning, quite properly, for the impact of higher levels of jobseeker’s allowance claims in the coming months.

The latest Office for National Statistics figures reveal that the number of Welsh 16 to 17-year-olds who are economically inactive rose by 12,000 in the period between June 2007 and 2008, which equates to an increase of 32 per cent. Does the Minister accept that that is an alarming upward trajectory? What does he think that his Government can do to halt that steep increase?

I thank the hon. Gentleman for his question. It might be that he was showing guarded and rather contorted support for all young people staying on in full-time education until they were 18—I would welcome that. Jobcentre Plus, in Wales and elsewhere, stands ready to help all people, throughout all age cohorts in the labour market, to get into the job market at the earliest opportunity. That includes the very youngest. However, it must be right that the most appropriate way to do so is to get them the skills and training that they need through to and beyond the age of 18.

Topical Questions

In April of this year we introduced the local housing allowance, a more straightforward and transparent way of calculating entitlement to housing benefit in the private rental sector. However, an unintended consequence of the changes meant that in a limited number of cases the taxpayer paid out significant sums to private landlords to house people in the sorts of property that they could not afford if they were in work. That was clearly unacceptable and I ordered an urgent inquiry into the local housing allowance rates for properties with more than five bedrooms.

Today, I can announce that LHA rates will be capped at the five-bedroom rate for all new customers. We will lay regulations as soon as possible, to come into effect no later than next April. In the interim, DWP and the Rent Service will monitor such applications carefully and advise on a case-by-case basis. Those currently claiming LHA above the capped rate for a property with more than five bedrooms will have their case reviewed on the first anniversary of their claim. This announcement fits with the wider DWP and Treasury review of housing benefit, which is currently under way. A key outcome of the review will be to ensure fairness for the taxpayer and to ensure that housing benefit provides the right incentives to work.

The Secretary of State will be aware that earlier this year Dame Carol Black published a report entitled “Working for a healthier tomorrow”, which highlighted the fact that sickness accounts for a cost to our economy of up to £1 billion. However, in these economically turbulent times the Government have so far failed to acknowledge the report or to give a proper response. Will the Secretary of State undertake to do so with immediate effect?

The hon. Gentleman needs to get his facts right, I am afraid. We have welcomed the report, attended the launch and are working on our response. We have announced, for example, that we will be replacing the sick note with a fit note and that we will be pursuing “fit for work” pilots. I refer him to the welfare reform Green Paper.

T2. From this autumn, lone parents whose children are of secondary school age will be moved from income support to jobseeker’s allowance. That change will affect existing claimants next April. Will the Secretary of State reassure the House and my constituent, Mr. Bennett, who has calculated that that change, because of changed links to housing costs, will mean that he will be at least £50 a month worse off? Is that an unforeseen consequence, or are his figures incorrect? (227698)

I cannot comment on the individual case, although I am quite happy to look at it for my hon. Friend. I am sure that he will welcome the increased support that we are giving people, such as the fact that they will have an in-work credit of £40 a week, better help with transition costs and in and out-of-work advice. We know that that support works. We believe that ensuring that more people take up work will lift 70,000 children out of poverty. I am sure that my hon. Friend would welcome that.

T3. Given the effect of economic turbulence on the value of pension funds, will the Government consider suspending the present rules, which force people to lock themselves into long-term pension arrangements on their retirement age or on the occasion of their 75th birthday? (227699)

I am sure that the hon. Gentleman will know that that subject will be debated during proceedings on the Pensions Bill in the other place. Obviously, it is ultimately a matter for Treasury policy, but we should be clear that the vast majority of people buy annuities well before the age of 75. Only about 5 per cent. delay until after that age, and they tend to be the wealthier pensioners. The proposal put down by the Opposition for a temporary suspension has been greeted with some dismay by many in the industry, who feel that it is unworkable. Annuity rates are at a six-year high, and obviously as people get older and move towards the 75 age limit their funds will be moved into more secure funding, such as Government bonds and gilts. Although obviously this is an idea that has been considered—

Order. I remind the right hon. Lady that we are on topical questions so I expect quick and sharp replies.

T4. I greatly welcome the £100 million boost that the DWP, with skills Ministers, is providing for reskilling and retraining people who have lost their jobs, but I press the Minister to say that those who have worked in small and medium-sized businesses and those who are self-employed should also benefit strongly from that money. My Blackpool constituency is very dependent on such businesses, as are many seaside and coastal towns. It is important that people who lose their jobs there, such as the 30 people who only today lost their jobs in a manufacturing company in my constituency, are given proper and strong support. (227700)

I thank my hon. Friend for his welcome for the fund which, as he knows, is on top of a range of other support mechanisms for those facing redundancy. We are working through the detail of the mechanisms for the £100 million, and looking at what we can do through other programmes to address precisely his issue about other sectors and I shall be happy to talk to him about that subsequently.

T5. Will the Minister look at a specific anomaly in respect of the Child Support Agency, whereby if somebody has a company car, it is disregarded as income when calculating maintenance payments, but if the same person is given an allowance from his company to purchase a car for the same purpose, it is regarded as income, and maintenance for the child or children is enhanced accordingly? Surely, they should be the same. (227701)

T6. Further to the Minister’s very disappointing reply to the question asked by the hon. Member for Southend, West (Mr. Amess), I stress that I have been contacted—as I am sure have many Members—by constituents, particularly those aged 74, who have seen huge falls in their pension funds, yet the Government’s response is simply to say that the issue is being looked into, when day by day, people see the future value of their pension savings being wiped out. I agree that a temporary measure is not acceptable, but will the Minister tell us that the Government are seriously looking at permanently scrapping that inflexible rule, which penalises people who have saved all their lives through their hard work? (227702)

As people move towards the age of 75, their funds will be moved into more secure funding streams anyway. That is why the proposal to move further will not solve the problems of the majority of pensioners. It is a short-term measure, aimed at a few people who, as I said, tend to have been able to delay taking an annuity until 75. Other options are still open to people at that age, such as alternatively secured pensions.

Can my right hon. Friend the Secretary of State look at what seems to be the Child Support Agency’s approach of making people with arrears repay them over one or two years? Whatever the rights or wrongs of their being in arrears that means that they have to pay large amounts of money, which tips them and their new families into real hardship.

The No. 1 priority of the Child Support Agency and its successor body has to be to contribute towards alleviating child poverty and I am sure my hon. Friend agrees. In some circumstances, flexibility can be shown about the rate of time over which arrears can be paid and if she has specific examples where she feels that is not working, we shall of course be happy to look into them.

T7. After the Government’s welcome announcement last week on the 13-week period for mortgage payments, is the Minister aware that many moneylenders are taking people to court for eight weeks’ arrears, and even less? Will she explain how the Government will properly co-ordinate their approach to mortgage repossessions and arrears, so that the most ruthless members of the mortgage-lending community do not take advantage of the taxpayer? (227703)

Both our Department and colleagues in the Treasury, working with the Council of Mortgage Lenders and other lending bodies, have made it entirely clear that in these times we expect lenders to use repossession as an absolute last resort. The hon. Gentleman will be aware of recent statements to that effect, following the emergency measures that my right hon. Friend the Chancellor took to inject more capital into the banks. Suffice it to say that it is very important, at this time, that all families and others realise the punitive interest rates that some people knocking on their doors can offer. I urge them to seek affordable credit, if it is indeed credit that they require.

May I welcome my right hon. and hon. Friends to their new roles? I recently met my constituent, Katy Watt, who has returned after spending four years as a youth worker on the Isle of Man. She put the entire proceeds of the sale of her home into the collapsed Icelandic bank, Kaupthing Singer & Friedlander. I have advised her to claim pension credit, but I wondered whether Ministers could give my constituent and me advice on whether the notional sum tied up in the bank counts as savings towards her entitlement to pension credit. If they have not done so, will they issue guidance on the subject as soon as possible?

I am very happy to do that, and for my hon. Friend to meet someone from the local service. As she knows, they regularly visit pensioners who claim pension credit, and they will answer her question in a precise way.

Does the Secretary of State accept that those of us who support the exceptional measures that the Government have taken in recent days would think it entirely perverse if he were to sign the death warrant of 3,000 post offices?

We will make an announcement on that in due course; the hon. Gentleman may have heard me bore on about that earlier in Question Time. We completely recognise the importance of the post office network for communities around the country, and that is why we will take the decision carefully and properly.

I return to the subject of housing benefit. What does the Secretary of State have to say to the 800 people in my constituency whose housing benefit is being cut, or is threatened with being cut, because of the new absurd way in which the broad market rental areas are being calculated? I understand that he has already undertaken to review the policy, but in light of its illegality, as declared by the House of Lords, will he make sure that all those people who have wrongfully lost out will be fully compensated when the policy changes, as it must?

The hon. Gentleman rightly raises the issue of the impact of what I think is known as the Heffernan case judgment in the House of Lords. We are urgently considering it as part of our internal housing benefit review.

T9. In recent years, the Government have made drastic cuts to the number of people employed in jobcentres in Argyll and Bute. With unemployment rising everywhere, how will those jobcentres cope with the extra numbers of people who will seek advice on finding work? That could become a particular problem in Campbeltown, where more than 100 extra people may be visiting the jobcentre soon if the threatened closure of Vestas goes ahead. What support will the Government make available? (227705)

The hon. Gentleman must accept that the Jobcentre Plus network is now far better placed for any slow-down than it was. When it comes to employment, in the Department for Work and Pensions and the Jobcentre Plus network there is a shift to the front line to help the people whom he describes.

According to figures released by the House of Commons Library, unemployment in my constituency was up 17 per cent. in the year to July 2008. Does the Minister agree that perhaps the time has come for the local economy, rather than the Stalinist housing targets imposed from Whitehall, to be the driver of the expansion of Milton Keynes?

I do not accept the point about Stalinist housing targets. There has been a lot of consultation on those targets across the growth area. The hon. Gentleman would do well to understand that Milton Keynes has a lot to offer, in terms of growth for the entire east midlands area. I am not sure whether he should knock that in the way that he does.

After 11 years of a Labour Government, can the Secretary of State explain why there are more people unemployed in Wellingborough now than there were in 1997?

I am pretty sure the rate has fallen in the hon. Gentleman’s area. There are 3 million people more in work than there were in 1997. We have reduced the number of people on jobseeker’s allowance from 1.6 million to 900,000. That is in clear contrast to unemployment reaching 3 million under the Government whom he supported.

May I refer the Secretary of State back to the Post Office card account? Surely a time of banking crisis, when more and more of our constituents are looking to safe deposits and the Post Office and National Savings, is not the time to threaten the future of the Post Office card account. Will he give a better answer than he gave earlier?

I am sorry if the hon. Gentleman did not like the answer I gave earlier. I recognise that it was not a very interesting answer, but it is right that we should take the decision properly, with due process, and we will announce it to him and everyone else at the right time.

European Council

With permission, Mr. Speaker, I should like to make a statement about the European Council held in Brussels, which I attended with my right hon. Friends the Chancellor and the Foreign Secretary on 15 and 16 October, the main business of which was to consider European action to stabilise financial markets and how we can work together to reform our international financial systems. The Council also welcomed the co-ordinated interest rate cut by central banks around the world.

At the heart of our considerations was our shared understanding that the massive reduction in global financial activity and the fracturing of the global financial system has been the result of irresponsible and often undisclosed lending that started in American sub-prime markets. And while national action is necessary, the root problem can be dealt with only by changes in our financial systems, to recapitalise banks and to reform supervision around the principle of rewarding hard work, enterprise and responsible risk taking, but not irresponsibility and excess.

Market estimates suggest that in recent years some $2 trillion of US-originated loans, many of them toxic, were bought by European Union banks, so to strengthen our banks the Council welcomed the comprehensive action on liquidity, capital and funding guarantees of our Government here in the United Kingdom and of the eurozone countries under the leadership of President Sarkozy, President Barroso and the president of the European Central Bank, Jean-Claude Trichet. The Council also welcomed the joint commitment from the leaders of the G8 countries to hold a leaders meeting, and agreed the principles and priority areas for global action.

Stage one to recovery has been to stabilise financial markets, thereby securing a resumption of lending. In Britain almost £50 billion has been injected as capital into our banks. The Government alone have taken shares worth £37 billion in two of our largest banks. Across the world, more than £300 billion has now been approved from public funds to recapitalise the banking system.

At the heart of the British decision was that medium-term funding was conditional on bank recapitalisation, so we also welcome the agreement of the European Council that countries within the EU will provide medium-term state guarantees for new interbank loans. I particularly welcome the decision of the European Investment Bank, following proposals that we made at the G4 summit in Paris earlier this month, to mobilise and frontload €30 billion to support new lending to Europe’s, and then Britain’s, small businesses.

However, confidence today depends upon there being confidence about the future, so we agreed on the need to achieve a reform of the global financial system based upon five key principles—transparency, integrity, responsibility, sound banking practice and international governance, with co-ordination across borders. We will submit a detailed set of proposals to the international leaders meeting. I will be putting these proposals to all countries, including emerging market countries. I have already put them to President Bush and will put them to both presidential candidates in the United States of America.

I can tell the House today that these proposals include insisting on openness and disclosure, with off-balance sheet vehicles brought back on to balance sheets, greater transparency around the use of credit derivatives, and a rapid adoption of internationally agreed accounting standards so that value-impaired assets can no longer be hidden; and then removing once and for all the conflicts of interest that have distorted behaviour and undermined trust, so that credit rating agencies no longer act as advisers to the companies they rate, and executive remuneration rewards not excessive or irresponsible risk taking, but hard work, enterprise, effort and responsible risk taking.

We must also ensure that board members have the competence and expertise to manage the risks for which they are ultimately responsible, and cannot walk away from their obligations. We will look at regulation that examines both solvency and liquidity and which ensures that the financial system supports wider economic stability. There will be a new international architecture for the global financial sector for the years ahead.

We want to move to early decisions with our international partners about the reform of the International Monetary Fund and Financial Stability Forum, including the creation of an early warning system for the global economy; about globally accepted standards of supervision applied equally and consistently in all countries; about effective cross-border supervision of global firms, starting with establishing 30 international colleges of supervisors by the end of this year; and about cross-border co-operation and concerted action in a crisis. We also want to see greater global macro-economic co-ordination, and to prevent the return of protectionism we want to see the reopening of the world trade talks. I welcome the proposals that have come from the Australian Prime Minister Kevin Rudd.

The events of the last few days have demonstrated that we need urgently to deploy in eastern Europe and emerging markets the IMF’s facilities and resources to the fullest extent, and also the resources of the multilateral development banks. We need urgently to prevent capital flight, engage in and support counter-cyclical policies and finance domestic growth where exports have declined and capital has flown outwards. We also need urgently to consider creating a new IMF facility for emerging economies in the current crisis. Rescuing eastern European countries is particularly urgent and I have asked the European Bank for Reconstruction and Development, the European Investment Bank and the World Bank, as well as the IMF, to consider what they can do immediately.

The Council also discussed in detail how each of our economies was being affected by the global downturn that started in America. Had we not acted to stabilise the banking system, the effect on households and business would have been even more severe. However, notwithstanding the action that has been taken, the world is facing a severe global economic downturn, with negative growth already seen in France, Germany and Italy this year, and in the United States last year.

The United Kingdom cannot insulate itself from this global downturn, but with interest rates low and falling and inflation expected to come down over the next year, these underlying economic indicators, particularly interest rates, make us stronger than at any other previous downturn. Debt has been considerably lower than a decade ago, and lower than that of all G7 countries except Canada, enabling the Government to increase borrowing at the right time to support the economy. The Government will do whatever it takes for mortgage holders, for small firms and for employees, to help families and businesses through what will undoubtedly be a difficult period ahead.

Like all Governments across the world, we are considering how fiscal policy can support the economy at this time: carefully targeted, rigorously worked through investments that help people fairly through the downturn and lay the foundations for stronger growth in the future. In Britain’s case, we can start from a position of low public debt. We will bring the same focus and determination to the task of safeguarding jobs, homes and small businesses as we have done to avert the threatened meltdown of financial systems. That will be the central mission of this Government over the coming weeks and months. I welcome the support in the national interest of all prepared to give that support. Let us be clear: it is also action that we take globally to get to the root of the problem in global banking that will make the biggest difference.

The Council also reached important conclusions on energy and climate change, on Russia and Georgia and on the European pact on immigration and asylum. Next year in Copenhagen, the world has an historic opportunity to secure prosperity for generations ahead with international action on climate change. While there are those who will seek to use current global financial problems as an excuse to pull back from change—to pull up the drawbridge and renege on commitments—in fact it is now more essential than ever to push forward with an ambitious agenda on energy security and climate change.

As the Stern report showed, weak or delayed action will cost us more in the years to come, both financially and economically. The Council reaffirmed its commitment to reach agreement by December on its energy and climate change measures for 2020. We made clear the importance in doing so of achieving a fair balance, with all member states accepting new commitments. We made it clear that there must be flexibility for member states to meet targets in the most cost-effective way, and that Europe’s package must send the strongest possible signal to encourage the rest of the world to aim high at the Copenhagen summit next year.

As last week’s statement from the Secretary of State for Energy and Climate Change made clear, the Government are committed to the most ambitious of targets—cutting greenhouse gas emissions by 80 per cent. by the middle of this century, not just for the future of our environment but as a crucial part of our strategy for energy security. But we cannot fulfil our aspirations for climate change without nuclear power or without European and international co-operation. That is why we will fully engage with the European Union on the environment and will not pursue a policy based on unilateralism and detachment.

Faced with historically high and volatile oil prices, it is more essential than ever before that we act to end our dependency on oil. The European Council supported greater diversification of energy sources, the completion of fully functioning EU energy markets, and improved critical energy infrastructure—for example, in the southern corridor. Our London energy meeting in December will seek to drive forward progress in the critical dialogue between oil producing and oil consuming nations. Today I would urge the Organisation of Petroleum Exporting Countries, at its meeting on Friday, to work through dialogue with consumer countries to stabilise the energy market as a whole.

The Council has expressed its grave concern over Russia’s actions in Georgia and called on all sides to implement in full the six-point plan agreed with European leaders. The Council therefore welcomed the withdrawal of Russian troops as an essential additional step in the implementation of the agreements of 12 August and 8 September and the launching in Geneva of the international discussions provided for by those agreements. The Council and the Commission will, however, continue to make a full in-depth evaluation of relations with Russia ahead of the EU-Russia summit. The Council also resolved to continue its support for its eastern neighbours in their efforts to achieve democracy and economic modernisation and to consider a future EU eastern partnership.

Finally, the Council considered the European pact on immigration and asylum, underlining the importance of ensuring coherence between Union policies, including free movement. Britain and Europe benefit economically from free movement, but free movement cannot be an unfettered right. It must bring with it clear responsibilities, with failure to meet them carrying clear consequences including, where appropriate, the loss of that right entirely. I discussed this point in further detail with a number of European leaders at the Council, building considerable support among member states and agreement to look further at the responsibilities associated with free movement where crimes are committed by EU residents in the EU but outside their country of origin, and we agreed to return to this issue at our December meeting.

This summit showed that in facing global challenges, whether the credit crunch, climate change or energy security, we succeed best not in isolation but in co-operation, not with unilateralism and separation from our European neighbours but in active partnership with them. That is why our policy will rightly remain one of being fully engaged at the centre of Europe. I commend this statement to the House.

I thank the Prime Minister for his statement. Rightly, the financial crisis was the most important issue at the summit, but before asking about that let me raise some other matters.

First, on climate change, does the Prime Minister agree that while the restating of the EU goals on climate change was welcome, disagreement over the action plan was disappointing? Will he confirm that there are no new powers in the Lisbon treaty to help on the environment? Indeed, there are just six words. Does that not illustrate that what is needed in Europe is not new institutions or treaties but just some political will?

Secondly, on trade, the last thing we need in a downturn is protectionism, as has happened so often in the past. Does the Prime Minister therefore share my dismay that the communiqué does not mention the Doha trade round at all?

Thirdly, on Georgia, given the Russian invasion, the breach of international law and the ethnic cleansing in Abkhazia and South Ossetia, for Europe it must surely not be a case of straight back to business as usual. Can the Prime Minister confirm that the criteria for resuming talks on the partnership agreement between Russia and the EU will include not only the implementation by Russia of the six points of the ceasefire plan but the return of Georgian refugees to their homes?

Next, there is immigration and asylum. The Council agreed a new EU pact—the Prime Minister did not really mention this—including joint border guards, sharing asylum seekers and a single asylum procedure. Can he assure the House that as those proposals are not consistent with running our own immigration and asylum policy the Government will not adopt any of them? While on the subject of immigration, can the Prime Minister tell us what his policy now is? We have long supported an annual limit on non-EU economic migration—do the Government now agree?

On the Lisbon treaty—which, by the way, did not get a single mention in the statement—I have a very straightforward question for the Prime Minister. I am not in favour of forcing the Irish people to have a second referendum—is he? Would the British people not think it completely indefensible to force the Irish people to vote twice when we have not been allowed to vote once?

On the financial crisis, may I welcome the specific mention in the communiqué of examining mark-to-market accounting rules? Does the Prime Minister now support suspending those rules? He mentioned the European Investment Bank and its funds. Will he confirm that, to date, only three British banks have access to that money and that they do not include the Royal Bank of Scotland, Lloyds or HBOS, all of which the Government have a major stake in? Can he tell us about plans to change that?

On international co-operation on financial regulation, are there not three keys to getting it right? First, with major financial markets in Hong Kong, Shanghai, Sao Paolo, Dubai and Mumbai, co-operation needs to be genuinely worldwide, so can the Prime Minister confirm that the forthcoming international summit will include not only EU and G8 countries, but China, India, Brazil, Mexico, South Africa and middle eastern economies?

The second key is that international co-operation is not about the minute detail of regulation, but about setting frameworks and issuing early warnings. On the frameworks, does the Prime Minister agree that currently, capital adequacy rules—setting how much capital a bank must hold—can actually make things worse? They allow too much credit during a boom and can be very restrictive in a recession, so does he intend to reform the Basel II accords, in order to make them less pro-cyclical and to rein in any return to an asset price boom in future?

On the early warnings, which the Prime Minister is fond of mentioning, he knows the International Monetary Fund has a key role, but is not the real question what Governments do in response to those warnings? Let me take a case in point, while he shakes his head—he might remember this one. A year and a half ago, the IMF warned the UK about rapidly increasing household debt, vulnerable financial institutions and the growth of potentially risky and illiquid instruments. What steps does he think are necessary to ensure that Governments and regulators respond to those warnings?

The third key is that international co-ordination on financial regulation is necessary but not sufficient to ensure a stable financial system. Did the European Council discuss the need for effective domestic action? The Government keep saying—the Prime Minister I think said this at least three times in his statement—that this is a crisis from America, as if no one in Britain had any responsibility for anything that went wrong. Will he confirm that Britain is entering the downturn with the highest Government deficit in the industrialised world? That was not down to America; it was down to this Government, here in Britain.

Can the Prime Minister confirm that British household debt, which is the largest that any major economy has ever seen, is not something that we imported from America, but was down to bank lending and regulatory failure here at home? On specific institutions, will he confirm that the international measures discussed at the EU Council would not have stopped, for instance, the Bradford & Bingley lending more than 80 per cent. of mortgages as risky or buy-to-let mortgages? That was a UK bank, regulated by UK regulators, for which the UK Government are ultimately responsible.

So in the light of the need for both national and international action, could the Prime Minister begin his response by commenting on the figures published today for Britain’s budget deficit? Is it not the case that Britain is heading for a record budget deficit, contrary to what he said, put by some independent forecasters as high as £64 billion? Will he confirm that that has happened after 14 years of economic growth and when half the OECD countries are entering the downturn with a budget surplus? Is not the £64 billion question this: why, when business and families need more help, has he left the cupboard so bare?

Let me deal first with the issues that the right hon. Gentleman raised at the beginning. Of course the environment is a priority of the European Union, and anything that suggests that that is not the case is wrong. The environmental discussions formed a large part of what we did in Brussels on Wednesday and Thursday. I put the point to him again: if he wants environmental co-operation across Europe, he needs to be at the centre of the European Union, not threatening to renegotiate the treaty.

As for the trade round, the right hon. Gentleman will probably have seen the statement from the G8, which includes France, Germany and Italy, supporting a resumption of world trade talks. I believe that at the international leaders summit we will see the reopening of those trade talks.

As far as Russia is concerned, the right hon. Gentleman knows, as I have told him, that the Council was right to agree that this was not the right time to resume talks on new partnership agreements with Russia. How we make the decision on that resumption will be based on a number of criteria, including some of the ones that he mentioned.

As for immigration and asylum, we make the decisions on that policy. We have introduced a points system, which means that people from outside the European Union without skills to offer to the country are not invited into the country. I believe that the points system—and the obligations that people have to accept as part of their citizenship—is a far fairer way of going about the issue than the policies of the Conservative party. As for the Irish Republic, it is a matter for them what they do. The right hon. Gentleman will remember that, on a previous occasion, the Irish Republic decided to have a second referendum. It is therefore a matter for them.

As far as the right hon. Gentleman’s comments on the economy are concerned, let me just say that the reason we can borrow at this time is that our levels of national debt are low. That is the right policy. I noticed that, on the radio this morning, he could not make up his mind from one minute to the next whether it was the right policy to borrow for this. It is because we have cut the levels of national—[Interruption.] Let me just read the IMF’s figures to the House so that there is absolutely no doubt about this. These are the recently published net debt comparisons for 2008. The figure for the United Kingdom is 37.6 per cent.; for France, 55.5 per cent.; for Germany, 56.1 per cent.; for Italy, 101.3 per cent.; for the USA, 46.3 per cent.; and for Japan, 94.3 per cent. It is because we cut the national debt over the last few years that we are able to do the right thing. Even if the right hon. Gentleman cannot make his mind up about it today or tomorrow, it is the right thing to do to deal with this problem.

I would have thought that, after weeks of discussing these issues, the right hon. Gentleman would understand that we cannot solve this problem unless we get to the root cause—[Hon. Members: “It’s you!”] This is an Opposition who will not face up to their responsibilities. The problem cannot be solved unless we get to its root cause. We can do a great deal with initiatives to help small businesses, to help mortgage holders and to help people in jobs, and we will do that—as we have done with small businesses—by drawing on the European funds, by cutting the time by which payment has to be made by Government Departments, by increasing the funds available to the small business loans guarantee scheme and by more measures that we can take. We can take action that will help home owners, as we have done over repossessions, and that will help jobs, as we will do with an extension of the new deal, but the problem can be solved only by getting to the root cause.

The root cause of the problem—which did start in the United States of America, despite the right hon. Gentleman’s wish to avoid that question—was the irresponsible and undisclosed lending that took place in the private sector. The solution to that is not the one or two initiatives that the Opposition want to take; it is to recapitalise our banks, to ensure that lending can start again, and to ensure that there is confidence in the banking system. It is to adopt the very reforms that I have mentioned today. People must have confidence when they go to their bank that their savings are safe and secure, and that is why it is necessary not simply to recapitalise the banks but to take action to ensure that there is reform of the system as a whole.

The all-party support that we had for our measures lasted for a few days. The Opposition could rise to the challenge of giving bipartisan support for only a few days, but I have to tell them that everybody’s judgment is being tested here. I have to remind them that, when we took the decision on Northern Rock, they opposed it. When we took the decision on Bradford & Bingley, they opposed it. When we intervened to deal with speculation in the shares market, they opposed it—[Hon. Members: “Rubbish!”] The night before—[Interruption.]

The night before we took that decision, the shadow Chancellor was on “Newsnight” saying that it would be the wrong course of action. I see that Opposition Members are silent now. When we intervened to improve regulation, the Conservative party’s policy think-tank decided that it would be better to reduce the regulation of mortgages and pensions. And that is where we are. So when we look at the issues ahead, let us look at the judgments being made. I say to the House that this cannot be sorted out without global action as well as national action. I hope that the Opposition understand that that is what is necessary for the future.

I am grateful to the Prime Minister for his statement. The summit was indeed a breakthrough. It was the first time I can remember in 10 years that the Prime Minister seemed to enjoy the company of other EU leaders—[Interruption.] Well, he cancelled his appearance at Prime Minister’s questions to get there early. As a lifelong pro-European, I have been waiting to hear the Prime Minister recognise and celebrate the fact that no Government of this country of whatever party can deliver what the British people want without our playing a positive, engaged and central role within the EU. I regret that it took economic disaster to make the Prime Minister appreciate that fact, but I none the less acknowledge that he did so.

In the past, I have been dismayed by the way the Prime Minister has copied the wrong ideas and ignored the right ideas. He copied the wrong idea from the Conservatives to give inheritance tax cuts to the very wealthy and he ignored advice from us, stretching back years, but coming particularly from my hon. Friend the Member for Twickenham (Dr. Cable), about the unsustainable nature of the credit and housing boom, when this lot—the official Opposition—sat on their hands and said nothing. So I am glad that the Prime Minister has got a lot better at copying: he was right to copy the Swedish model of bailing out the banks, as they did in the 1990s, and I am glad that he persuaded other European leaders to copy his copy.

It was significant that President Sarkozy invited the Prime Minister to the eurozone meeting. The eurozone group will obviously be the forum at which many discussions about the future regulation of our financial services sector will take place. What arrangements has the right hon. Gentleman made with the Government of Sweden—and the Czech Republic, which will hold the EU presidency next year—to have further access to the eurozone group so that he can participate in those discussions next year, too?

As important as EU action is, it is action to help ordinary families in this country now that must be taken. Will the Prime Minister—I have pressed him on this before—cut taxes for people on low and middle incomes to get money into the pockets of people who need it by closing the loopholes that benefit only the very richest in this land. Does he also agree that British families struggling to heat their homes this winter will be angry that the so-called single market in Europe still leaves us with the fastest rising prices in Europe. When will he deliver the fairer truly competitive energy market we all need?

This summit was originally initiated to tackle energy and climate change, but that was sidelined, understandably, to focus on the economy. There are now rumours that the EU will ask developing countries to shoulder a big chunk of the burden of our commitment to cut carbon emissions. Will the Prime Minister confirm that he will not be party to any buck-passing of Europe’s environmental obligations on to developing countries?

Finally, although I welcome, of course, the commitment made at the summit to diversify our energy supply, will the Prime Minister accept that committing billions of pounds of British taxpayers’ and other EU taxpayers’ money to underwrite the nuclear industry will simply mean that there is not enough money to roll out the green renewable energy sources we so desperately need?

I would take the right hon. Gentleman’s party more seriously if the major item at his party conference had not been to cut public spending by £20 billion—with all the damage that would do to the ordinary families he claims to represent.

As far as specific issues about the eurozone are concerned, of course we will work with other countries, where it is appropriate to do so, and in the spirit of European co-operation to solve our problems, but the right hon. Gentleman has not fully understood that this is a global problem that needs global action as well as European action. That is why it is important to have an international leaders meeting and why it is important to agree on the reforms that are necessary. People will have confidence in the international financial system only if we root out the problems that made this become a crisis in the first place.

The right hon. Gentleman mentioned Britain’s inflation rate. The problem we have faced over the last year is a problem that all countries have faced—rising oil prices as well as rising food prices. The fact that the price of oil is now coming down means that petrol sold at the pumps is coming down in price. I would like it to come down faster, as would other Labour Members. At the meeting on Friday, we will be pressing OPEC not to cut production, but to enter into a dialogue with the consumer countries.

As to the other issues that the right hon. Gentleman raised—tax cuts for ordinary families, for example—he will know that 22 million families are receiving £120 in tax cuts during the course of the next few months. He will also know that the quickest way of getting money to the poorest families in this country has been through the tax credit system, which has given money to 6 million families and taken large numbers of people out of poverty. I hope that the right hon. Gentleman will give more support to the tax credit system in future.

The right hon. Gentleman says that climate change was not given the attention that it deserves at the European Council, but it was. There were long discussions on Wednesday night and Thursday morning about how we can meet our climate change obligation. We stand firm behind our objectives, and we will ensure that the future mechanisms will encourage—and force, if necessary —other European countries to meet their obligations.

We cannot meet our climate change objectives and achieve energy security and affordability in prices without the use of nuclear power, and the sooner that both Opposition parties realise that, the better for our country.

I warmly welcome the action that my right hon. Friend has taken to stabilise the banking system. Can he tell the House what he will do to ensure that cuts in headline interest rates are translated into effective cuts in the interest rates charged to home owners and businesses, in order to avoid what happened during the last Conservative recession, when a large number of solvent but illiquid businesses went bankrupt?

I am grateful to my right hon. Friend, who served with great distinction in the Treasury, as well as at the Department of Trade and Industry and the Department of Health. She is absolutely right: the aim of the recapitalisation of the banks, and the other action that we are taking, is to ensure the flow of money to small businesses and families in our economy. It is to deal with the problem that she raises of affordable money, the source of which is banks that have in so many cases stopped lending for the time being.

We are trying to restructure the banks by recapitalising them and by signing an agreement with them that they will ensure that they resume lending to small businesses. That is central to what we are doing, and I am grateful that the rest of the European Union has taken such action as well. It has happened in other countries, too. South Korea, Australia and New Zealand have adopted the policy, as well as America. The key is getting the resumption of lending to take place at affordable prices, and my right hon. Friend is right to say that small businesses cannot afford the penal interest rates that we saw at the beginning of the 1990s.

Does the Prime Minister acknowledge that this is the first global financial crisis in over 100 years that cannot be resolved by the United States and the western European powers alone, but must include China? As China is not a member of the G8, and is unlikely to be one soon, does he accept that it is not simply a question of inviting it to the international leaders group? As thought is given to a whole new international financial structure, China must be as involved as western Europe and the United States in the discussions that take place.

As the right hon. and learned Gentleman knows, the G20, which was set up after the Asian crisis, includes China in its membership, and rightly so. The Financial Services Forum includes Hong Kong as one of its members because it is one of the financial centres of the world. If there is to be an international leaders meeting, I am convinced that it would be incomplete without the presence of some of the new major economies that are making their mark in the world. The lesson of recent financial events is that global action is necessary to deal with a global problem, which means that, at a macro-economic level as well as in the reform of the international financial system, we need the support of the Asian countries. I am grateful that he agrees with me about that.

The whole House should congratulate and thank the Prime Minister and the Chancellor for their sound judgment and political courage in giving the leadership that has stabilised the financial markets.

Yes, why not?

Wisely, the package that rescued the bankers had a price, which was help to householders, those with mortgages and small businesses. Last week, the Select Committee on Treasury met representatives of the building societies and, sadly, they seemed to be very complacent about the trauma caused by repossessions and the growing number of them. They seemed to be unaware of the need to revisit their lending policy, or lack of one. Will the Prime Minister assure us that they will be tied to the agreement that they have made?

I am grateful to my hon. Friend for the leadership role that he plays on the Treasury Committee, and for his knowledge of these matters. He is absolutely right: in these difficult times, when interest rates are relatively low in comparison with rates during previous downturns, it is right to ask the building societies and banks to take a careful look at their policy on repossessions. It is right to consider—as does the communiqué signed by the Council of Mortgage Lenders and others—that repossessions are the last resort, not the first resort. We will ensure with the measures that we have taken, such as reducing the number of weeks for which people must be unemployed to receive help with their mortgages, that we do all that we can to help home owners in this country.

Following the point raised by my right hon. Friend the Member for Witney (Mr. Cameron), can the Prime Minister explain the mechanism of distribution by the European Investment Bank to small businesses, many of which are in crisis? Why have only three British banks been licensed to deal with the process so far?

That is exactly what we are dealing with now. I have been involved in the process for some weeks, first because I wanted the EIB to agree to frontload the money that is available over the next four years—which has been agreed—secondly, because I wanted the EIB to take a greater share of the risks than it does at present, and thirdly because we wanted an increase in the number of intermediaries in Britain that can access the EIB money and then pass it on to small businesses. In other words, we wanted, and are trying, to devise a package that will lead to the involvement of other intermediaries—that is, other banks in Britain.

Can the Prime Minister confirm that the motto of the European Union is “unity in diversity”? In the initial part of this world financial crisis, did we not see disunity in adversity? Building on the question from my hon. Friend the Member for Leeds, East (Mr. Mudie), may I suggest that we should congratulate not only the Prime Minister but President Nicolas Sarkozy on the leadership that they have given in this matter? As for the Prime Minister’s role, not only has he given leadership here for the British banking system, but he has given partnership for Europe and also for the United States. Is it not now appropriate to move to the third stage of world regulation of the banking sector, for which he has been asking for the past 10 years?

Because the Conservatives have the wrong analysis of the problem with which we are dealing, they cannot understand the importance of the global action that we are now contemplating and wanting other countries to follow. I hope that they will reconsider their position on these issues, because without a restoration of confidence in the banking system, which includes the restructuring, but also the reform measures about which we are talking, it will be more difficult for every continent in the world to escape from this global downturn. I therefore hope that all parties can agree—as I thought they had agreed a few days ago—that the international financial system is in need of the reforms that we are suggesting.

I praise President Sarkozy of France for his leadership in calling the meetings. He met President Bush in America on Saturday. We are working very closely together, as are those in the other European countries, including Chancellor Merkel and Mr. Berlusconi from Italy, in trying to agree a set of European reform measures that we can put to the rest of the world. I think that, in this particular set of circumstances, all countries now recognise the importance of change—a change that, if I may say so, we have proposed for nine years, since the Asian crisis.

The Prime Minister referred to lengthy discussions on climate change. Is he going to use some of his new-found super-powers to persuade all 26 neighbours to adopt the climate change targets that his Government, whose initiative I welcomed, adopted on Thursday? Is he proceeding along those lines, or is he perhaps going to be more Flash Harry than Flash Gordon?

I said to the European Council when we discussed the issue that there would be a new American President in January, and both candidates want to see major change in the position on climate change at the Copenhagen summit. Europe must have a common position that we can put to the European summit then. I believe that countries are aware of their responsibilities. Obviously there will have to be some flexibility in how people meet their targets, but I think that people are now seized of the need for a European position to be established well in advance of Copenhagen.

Can my right hon. Friend confirm that the Council took note of a report from the presidency on the oil price and its volatility, and requested the Commission to promote transparency of commercial oil stocks? Does that refer to stocks within all the member states of the European Union, will there be an attempt to estimate stocks outside the EU, and does my right hon. Friend believe that the EU can make a contribution to help us to achieve our objective of security of supply in energy and to meet our climate change commitments?

I am grateful to my right hon. Friend for his question. He has always taken a great interest in energy matters, and was an Energy Minister himself. He is absolutely right to concentrate on the problem that has arisen from both the price volatility and high price of oil. Even though the price has decreased substantially in the past few days, the problem arises from there having been more demand than supply and people’s perception that in future years there may be more demand than supply, particularly because of the globalisation of our economy and the rise of China and other Asian countries, which are consuming more oil.

Therefore, we need an energy strategy that deals with the price volatility and high price of oil. That means that we need to diversify out of oil and not be wholly dependent on it. That means, for those people who will not face up to this, that they must confront the issue of nuclear power—16 European Union countries have done that—and the issue of how we can get affordable renewables. We must also look at how the car is powered, so that we can have savings in the oil that is used by cars as well. We will need to have an arrangement between consumers and producers so that we can deal with the continuing volatility of the oil price, and I would have thought that this is now the time for all-party agreement on that as well.

This country has had 10 years of economic growth under a Labour Government. I cannot recall that being achieved by the Conservatives.

Is my right hon. Friend aware that in 1945 the then Labour Government had to take some measures? They did not have two ha’pennies to rub together, and they had to borrow money in order to create full employment and the national health service, and in order to take utilities into public ownership. We are already doing some of those things, and my right hon. Friend has already passed the examination paper that has been placed before him. He has convinced right-wing Governments, such as those in France and Germany, and Bush across in America, to carry out the solutions that he has introduced. It is now high time that we put public ownership of the utilities back on the agenda, so that we have a sweeping victory at the next election and then carry that out.

And council housing, my hon. Friend says. I had not anticipated last year that we would be part-owners of two of the biggest banks in the country and that we would now be the shirt sponsor of Newcastle United football team, just as the American Government are the shirt sponsor of Manchester United now as a result of having taken over AIG. However, I must say that our determination to buy these shares is a result of the difficulties we face, and I am sorry to have to tell my hon. Friend the Member for Bolsover (Mr. Skinner) that it will be temporary.

The recent high prices and volatility in the price of oil is symptomatic of geological constraints on supply—also known as peak oil and gas. Do the Government have a view as to when peak production will occur globally, and does the Prime Minister believe that it is worth doing that research?

The hon. Gentleman is right to raise the question of supplies of oil for the future. That is concerning all countries. Not only do we need stability of supply, but, even as we move into nuclear and renewables, we will need a constantly rising supply of oil. That means that we must ensure that the demand for oil is met by supply, otherwise the price will go up again. We are, therefore, looking at what supply of oil there is, and we are trying in the North sea to increase the production that is available from some of the smaller marginal fields as well as from some of the fields that have previously been explored and developed but not exhausted.

On the financial and banking items, did the Council consider the future of the EU’s capital requirements directive? As my right hon. Friend knows, that is largely based on the Basel II agreement, and yet that allows banks to choose their own forms of regulation, and, in fact, downgraded the risk in mortgage lending. He has long campaigned for reform in that area. Does he agree that anything in Europe based solely on Basel II could prove inadequate to the task?

First, we need international standards, not just European standards, for the future. There is a huge debate about how we can get to that, and progress has been made. Secondly, one part of our proposals that we have circulated around other countries—I will make sure that a copy is placed in the Library—is the reform of Basel II.

Will the Prime Minister, in referring to the statement, also refer to the presidency conclusions? Can he explain to the House how in those conclusions, which I have in front of me, the European Union is able to lecture the House, himself and the United Kingdom, when Lisbon has engendered failure on enterprise, when the stability and growth pact has failed, when unemployment levels have been going inexorably up and when there is massive over-regulation? In the real world, does he not believe that this undemocratic, unaccountable system must be reformed and renegotiated?

In a period of economic difficulty, is it not better that people come together rather than split apart? Is it not better to use the fact that we work well with our neighbours in Europe to develop common policies to deal with this financial crisis? I know where the hon. Gentleman is coming from: we should accompany our policies, he says, with the real threat of withdrawal.

May I, too, welcome the reaffirmation of the climate change 2020 targets at the European Council last week? They come despite the growing tensions between the richer, older members of the EU and the more recent, poorer members, particularly those such as Poland, which is 95 per cent. dependent on coal. What discussions are taking place to help countries such as Poland and the other eastern European states to meet their 2020 targets?

I am grateful to my hon. Friend, because I know of his expertise in these matters and the work that he has done to further the cause of environmental improvement. He is absolutely right that some countries, particularly those that have a great deal of coal, want to know how they can meet those targets and want a degree of flexibility. That will be the basis of the discussion over the next two months before the summit in December. I am confident that even though there are difficulties, people want to see a resolution of the problem.

Is the Prime Minister aware that at a time of grave economic crisis, the House can rarely have heard a statement of such worrying complacency about the public finances? In particular, he apparently believes that as long as the ratio of debt accumulated to GDP is low, it does not matter how high the current deficit is. That is the exact opposite of the experience of most countries. He should recall the mistake made by the previous Labour Government, who thought that they could enter a recession with a high level of deficit and spend their way out of the recession. They found that they had to call in the IMF in the biggest rescue of a developed nation that there has ever been.

I recall that the right hon. Gentleman was a Minister in the Conservative Government when borrowing was 8 per cent. to 9 per cent. of GDP, so before he gives lectures to us, he should examine what happened in the early 1990s.

On Russia, I welcome the Prime Minister’s firm stand. Russia must not be rewarded, or allowed to continue business as normal, after dismembering a sovereign republic state of the United Nations. The last time that that happened was when the Reichstag voted to incorporate the Sudetenland into the Third Reich. Does he share my dismay that when the issue was fought out at the Council of Europe the other week, the Russians’ closest collaborators and fellow travellers in the debate were UK delegates from the Conservative party?

The Council was right to say that this is not the time for a decision to be made about resuming talks on a new partnership agreement with Russia, but we have always wanted our relationships with Russia to be good, not bad. That depends on decisions that Russia itself will take, and we look forward to a resumption of the partnership agreement talks being possible.

The Prime Minister continues to quote the historic borrowing number, but will he confirm that if one examines the true state of borrowing in this country, including off-balance-sheet liabilities, one finds that it is 126 per cent. of GDP?

Our figures are based on international accounting standards and on the independent Office for National Statistics. We follow the practices adopted by previous Governments. I remind the hon. Gentleman that debt was at 44 per cent. in 1997—far higher than in the past 10 years.

I welcome my right hon. Friend’s comments on climate change. If we are to succeed in producing the clean energy that we need for the future and in supporting industry, we need to ensure that we maintain our investment in science. Will he ensure that the Government avoid the temptation to reduce investment in science at this time, when it is so vitally needed?

My hon. Friend will know, because his region is one of the beneficiaries of scientific investment in our country—some path-breaking work is being done in the north-west—that we are doubling the science budget, and it is vital to our future. I hear what he says: it is important to maintain levels of science investment for the future.

May I remind the Prime Minister that on 11 November 1997, during the debate on the Bank of England Bill, his previous banking Bill, I urged him not to deprive the Bank of England of its supervisory powers over the commercial banks and set up a trilateral alternative arrangement? Did he explain to the European Council that his misjudgment on that was responsible for the fact that his Financial Services Authority failed to supervise AIG in London’s Mayfair, whose default credit documents were owned by almost every major bank in the world? That meant that when, on 15 September, AIG had its credit rating dropped below AAA, almost every bank in the world was faced with the possibility of bankruptcy. All that disaster stemmed straight from his original folly in reducing the supervisory powers of the Bank of England.

I have great respect for the hon. Gentleman’s recollection of history, but I should tell him that AIG is an insurance company—it is not registered as a bank in the same way—and that in the old days it would have been regulated as an insurance company, not as a bank. I should also tell him that he opposed, or his party opposed, the independence of the Bank of England, which I believe his party came to regret after a few years. The Bank of England has always had responsibility—[Interruption.] It is very interesting that Conservative Members try to change the subject whenever I mention the independence of the Bank of England. It has always been the case that the Bank of England has had responsibilities for financial stability.

First, may I say how much I agree with the comments made by my hon. Friend and comrade the Member for Bolsover (Mr. Skinner)?

A decade ago, my right hon. Friend the Prime Minister wisely kept Britain out of the eurozone. It contains countries that are very different in their economic strengths—some are more able to cope with the financial crisis than others—and that is causing tensions in the eurozone. If I were the Italian Finance Minister, I would like to devalue the lira and reduce interest rates. I would not be able to take such an approach, because the lira does not exist any more. Will my right hon. Friend tell us whether there have been any discussions, private or otherwise, about the tensions in the eurozone and where they might lead?

Just to reassure my hon. Friend, may I say that we have no proposals to join the euro? We also have no proposals to renegotiate our membership of the European Union.

Given that the Prime Minister has called for greater transparency, with off-balance-sheet financing being brought on balance sheet by the private sector, will he be bringing such discipline to the public sector accounts, which currently show more than £1 trillion off balance sheet, or is this another case of, “Do as I say, not do as I do”?

Whatever the debate, the hon. Gentleman always asks me the same question about off-balance-sheet activity. The answer is that we follow the international standards and the Office for National Statistics on that, and, in fact, we follow the practice of the Government whom he supported.

I have lost count of the number of times that the Prime Minister has announced the relaunch of the world trade talks. What is different this time? Having discussions at summit meetings and making grand declarations will not make anything happen. Who has decided to do what, where, how, with whom and on what timetable, given the expiry of the fast track in the American Congress and the near death of the present American President?

I thank the right hon. Gentleman for raising that question. The trade talks fell down on a very narrow point about a protection mechanism that would be put in place if imports to certain countries rose very fast. That argument prevented the reaching of agreement in the summer, despite all the attempts that we and other countries made. Given that the differences between countries are narrow, and not of fundamental principle, my hope has always been that we can, with good will, resume the trade talks. It is more important to do that now, and other countries recognise that. Protectionism is the danger that we face, and countries that were not prepared to sign the agreement in the summer will be encouraged by worries about future events—and what might happen if protectionism increased—to come back to the table to discuss a solution. I cannot say that the process has been easy, because these talks have gone on for years, but there is enough common ground for us to start again to see if we can reach agreement.

As the Prime Minister is going large on intervention, will he personally intervene with the banks to stop them throwing people out of their homes? As a taxpayer-owner of the banks, I now say, “Not in my name.”

We have published guidelines with the Council of Mortgage Lenders so that repossession is a last resort. We have also published legislation that will mean that people need to be unemployed for only 13 weeks before they can draw on support to pay their mortgage. We will not pursue the policies pursued by the last Conservative Government, who let far too many people fall into negative equity.

The preference share subscription agreements and the ordinary share offering agreements for the £37 billion investment in the banks were helpfully placed in the Library by the Chancellor. Can the Prime Minister confirm that those terms and conditions have not changed?

We are in discussions with the banks all the time about how we can implement the agreements that we have made. The right thing to do is to continue the discussions with the banks. We must not get into the situation in which we are not discussing things with banks in which we are major shareholders, so we will continue to discuss such issues over the next few days.

May I remind the Prime Minister that the IMF was warning about rising debt levels in the UK as long ago as 2003? Will he now return to the reasonable point made by my right hon. Friend the Leader of the Opposition? What is the point of calling for an early-warning system in the international markets if the Prime Minister, as Chancellor, has a track record of ignoring those very warnings?

I remind the hon. Gentleman that our debt levels, as published by the IMF, are 37 point—[Interruption.] Our debt levels are 37.6 per cent., but France’s are 55.5 per cent., Germany’s 56.1 per cent., Italy’s 101.3 per cent., Japan’s 94.3 per cent. and the USA’s 46.3 per cent. He can see that from being the third worst in the G7 in 1997, when we inherited power, we are now the second best. If a country has a low level of debt to national income, it is in a position to borrow during a difficult time. The Conservatives want to say that it is impossible to borrow because debt levels are too high. They are wrong: debt levels are not too high. Ideologically, they think that they can argue from the position of the debt levels, but they are entirely wrong.

On Monday, a senior official from the Department for Communities and Local Government told the Select Committee that the Prime Minister had been involved with a difficult decision to remove £600 million from the East of England Development Agency grants for small businesses. Is that the best way to protect small businesses—keeping the quango, but removing the funding?

The hon. Lady is referring to the development agencies as a whole and what we did to help housing. That is what we announced in September.

What are the Government doing to protect the interests of the many British people who hold deposits in Icelandic banks through branches in British dependent territories such as Guernsey and the Isle of Man?

Discussions on those matters are continuing with the Icelandic authorities, as the Chancellor said. We believe that they have a responsibility in this matter, and we will continue to pursue that with them.

On nuclear power, is the Prime Minister convinced that the City will be willing to meet the costs of the contingent liabilities of decommissioning nuclear power stations in due course, or will the state have to act as guarantor for those decommissioning costs?

This is part of the decisions that we made on nuclear energy. I think that the hon. Gentleman can see from announcements that have been made by one large company in the past few weeks that companies are prepared to invest in nuclear power in this country. That will continue in future years. Opposition Members have to face up to the fact that if we are to meet our climate change obligations, if we are to have the energy security we want and if we are to have long-term affordability of energy that is not dependent on a volatile and high-priced commodity—oil—we will have to diversify our investments. That includes investment in clean coal and in renewables, but I have to say that it includes nuclear, too. I thought that the Conservative party would wake up to that fact and would have woken up to it long before now.

In the presidency conclusions, the European Council emphasises that

“the real performance of company executives should be reflected in their remuneration, including their severance pay…which should be in line with their actual contribution to the success of the company.”

As finance director and chief executive of the United Kingdom over the past 11 years, the Prime Minister’s promises to abolish boom and bust have ended in the biggest bust in British economic history. Do those strictures apply to him, and, if not, what will he do with his severance pay when he finally finds the courage to meet the judgment of the British people?

I hope that, on reflection, the hon. Gentleman, who is usually a moderate man, will realise the exaggerations that he has made. We have had the longest period of economic growth as a single Government, we have created 3 million jobs over the past 10 years and the reason we can face a world downturn with confidence that we can come through it, is that we have low debt and low interest rates, companies’ funds outside the financial sector are strong and we are making the right long-term decisions for the future of this country. The decisions that we are making include decisions on transport and infrastructure, nuclear energy and planning. The unfortunate thing is that in all those major long-term decisions we have not had the support of the Conservative party.

The Prime Minister particularly spoke about insisting on openness and disclosure. He wants off-balance-sheet vehicles brought on to balance sheets. Will he therefore tell the House—he knows the answer—how much, to the nearest billion or so, we as a country and the Government owe in off-balance-sheet debt?

If the hon. Gentleman is referring to private finance partnerships, those figures are published regularly by the Treasury and he has access to them. We comply with international standards, and the Conservatives will not get very far with that argument because they followed the exact same practice when they were in government.

Orders of the Day

Political Parties and Elections Bill

[Relevant documents: The First Report from the Constitutional Affairs Committee, Session 2006-07, on Party Funding, HC 163, and the Government’s response, Cm 7123, and The Committee on Standards in Public Life, Review of the Electoral Commission, Cm 2006.]

Order for Second Reading read.

I inform the House that I have selected the amendment in the name of the Leader of the Opposition.

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

Shortly after Labour’s general election victory in 1997, to implement a key manifesto commitment, our then Prime Minister invited the Committee on Standards in Public Life, under its then chairman, Lord Neill of Bladen, to conduct a major inquiry into the funding of political parties. Lord Neill’s report was published in 1998. It was followed by a White Paper and draft Bill that I published in 1999. The process of consultation on that draft Bill culminated in the passage of what became the Political Parties, Elections and Referendums Act 2000 in autumn that year.

Lord Neill’s report and the subsequent Act were based on some key and agreed principles that are fundamental to the health of any democratic system. They are that there should be clear limits on the amount that can be spent by political parties on election campaigns and that voters have a right to know who is funding those parties. To ensure that those principles were put into practice, PPERA—the 2000 Act—set out a new regulatory regime and established the independent Electoral Commission, to be answerable to the House, and not, I should add, to any Minister. Although there was, quite properly, careful scrutiny of the Government’s proposals, and arguments about some of them in the 1999 Bill that became the 2000 Act, I was determined that there should be cross-party consensus on the new Act if it was at all achievable, and indeed it was. I was, and still am, in no doubt that the need for broad consensus in this area of policy is a third key principle.

By any international standard British politics is fundamentally clean, because of spending limits, transparency and our political culture; but ultimately it is clean because there has been an understanding between the parties that changes made to secure partisan advantage would be impermanent and would serve only to undermine the public’s faith in the democratic process. For a wide range of matters that come before the House, the knowledge of Members is necessarily at one remove. We articulate the experiences of our constituents, of business people, homeowners, the elderly and the young, and only sometimes will they be within the direct experience of individual Members and their families. However, in the area of party funding and control, Members articulate their experiences and, understandably, every Member claims expertise, so I make the following remarks with some trepidation.

First, the reforms that the House agreed in the 2000 Act were, and are, fundamentally right. The historical system of controls on candidate spending was a necessary response in the days when election campaigns were fought entirely at local level, but those controls were not on their own sufficient for the circumstances in which we now find ourselves, when general election campaigns are co-ordinated at national level and often commence many months, or sometimes years, before the official starting gun is fired.

Secondly, the old system, which was in essence one of self-regulation, had its advantages, as do all systems of self-regulation, especially for those being regulated, but over the past 20 years the House has increasingly insisted that one area of society’s activities after another should be subject to external regulation. That is why a decade ago the House, led by my party, decided that we needed to prescribe for ourselves the remedies that we were prescribing for others.

Thirdly, there is recognition that the new system of transparency and of more comprehensive regulation is what the public expect. However, as is almost inevitable with a new system of regulation, not every aspect of it has worked out as well as was intended, so 10 years on from Lord Neill’s report it is right to take account of those experiences and revisit the 2000 Act framework to ensure that its key features—transparency, sensible control on spending and an effective Electoral Commission—are maintained, strengthened and, where necessary, reformed.

The Lord Chancellor is speaking as though the Hayden Phillips committee had never existed, yet he and I served on it for many long months and strove mightily to reach consensus until the Conservatives walked out. Having striven mightily to produce consensus, why has the Lord Chancellor brought forth this pathetic little mouse of a Bill, which does not deal properly with the abuses of party funding in terms of either donations or spend? It does not deal with what he acknowledges are absurdities in some aspects of trade union funding and it does not deal properly with third-party funding of parties. Why do we not have the Bill that we deserve?

While the hon. Gentleman was indicating that he wanted to intervene, I was indeed debating whether to go on to the next section of my speech, which mentions the Hayden Phillips report. I disagree with the hon. Gentleman’s description of the Bill, and I ask him to reflect on the likely outcome of parliamentary proceedings in which there was a dogfight between the parties and no consensus was achieved. The simple fact is that we do not live in circumstances of exact symmetry between each political party—no democracy should. Each party has a different history and a different demography in terms of its supporters, although that is changing over time. There is another fundamental difference that changes over time and which I have had the privilege of seeing from both sides—he, sadly, has done so only from one side: the perspective of a political party when in office is different from when it is in opposition.

Of course I regret the fact that we were not able to reach agreement in the Hayden Phillips talks, in which the hon. Gentleman and I were broadly on the same side. However, if we get into a party political dogfight on the issue—I am happy to have a party political dogfight about virtually anything—any changes that are made will be impermanent and will not be properly enforced. The whole body politic will suffer as a result. That is not to say that we should back away from difficult issues; I do not suggest that for a second. What I was able to achieve in what became the 2000 Act was a broad acceptance of some key principles that I think have stood the test of time.

The Government were aided in reaching the conclusion that we need to re-examine the experience of the 2000 Act by the work of successive independent inquiries, including the report of the Constitutional Affairs Committee, published in December 2006, the review of the Electoral Commission conducted by the Committee on Standards in Public Life, which published its report in January 2007, and the report and draft agreement published by Sir Hayden Phillips in March and October last year. Each of the reports had a particular focus, but some common themes are clear.

The Select Committee report to which the Secretary of State referred was indeed a consensus; it was supported by Members of all parties, and Sir Hayden Phillips’s report was, to a very large extent, based on that. Why could not the Secretary of State use that consensus as the basis for saying that he would put before the House not proposals peculiar to his party, but proposals on which there was already party consensus?

The answer is that I have not put forward in the Bill proposals “peculiar” to the Labour party, any more than the proposals in the 1999 Bill were “peculiar” to my party. I want to seek a consensus on the proposals. The right hon. Gentleman was a party to the talks. I greatly regret that no agreement was reached, but he knows that Sir Hayden Phillips entered those talks saying, quite properly, that nothing was agreed until everything was agreed. We can spend time going backwards and forwards on the issue of what happened in those talks, but the simple fact of the matter is that there was not agreement. At the risk of tedious repetition, I repeat that there is little purpose served by the House ramming through changes to the party funding regime that do not command a consensus.

If the right hon. Gentleman does not believe me, he need only consider what happened in another area of electoral law when there was not consensus. He went to the United States; there is no consensus there about boundaries, so what happens, as he will know if he has ever seen a boundary map of congressional districts, is that each side gerrymanders the boundaries, which are subject to one rule only in basic law, which is that the boundaries should connect. It leads to a ridiculous position. I do not want to get into that situation. Nor do I want us to experience what has happened in at least two western European countries, where the electoral system was changed for political advantage. We have to be very careful. In particular, there is a responsibility on the Government, who have a majority, to be careful.

I am sure that the Secretary of State will appreciate that huge advantages of incumbency are inbuilt in our electoral system. Of course Members of Parliament need money to do their job, but over the past five or six years, we have absolutely stuffed ourselves with additional money. Perhaps the least attractive allowance is the communications allowance. Would it not be a good start if the House got together at the earliest opportunity and scrapped that allowance, thereby saving the taxpayer about £6.5 million a year?

There could be great debate about whether incumbents benefit. They do when they are winning, and they do not when they are losing; that is the simple truth about incumbents. The hon. Gentleman’s party knows that, and so does mine. There is a great debate, some of which is brought out in the excellent, as ever, Library note, about the alleged benefits or disadvantages of incumbency.

It fell to me when I was Leader of the House to move the proposals for a communications allowance, but they did not come from the Government. They came from the Members Estimate Committee and the House of Commons Commission. I had something to do with those. My aim in introducing the communications allowance was to cap spending by some right hon. and hon. Members on, for example, franked envelopes, which in my judgment was reaching excessive proportions. In any event, although only one or two Opposition Members voted for the communications allowance, I looked up the figures earlier and, from recollection, I think that 574 Members spent the communications allowance last—[Interruption.] That is what I was told in my brief. If it is inaccurate, I am happy to stand corrected, but that was in my official brief.

With respect, the right hon. Gentleman must not be allowed to get away with that. If he refers to that debate, he will see that many Members made it clear that they would have to claim the communications allowance for expenditure currently incurred under existing allowances. It therefore does not follow that they have made additional claims on the House following the introduction of the communications allowance.

I never suggested that they had, but the right hon. Gentleman makes my point. To my certain knowledge, the House is enforcing the allowance, and it is being used for parliamentary purposes and not for party political purposes.

I thank the Secretary of State for giving way. I have had to use the communications allowance. I have used about 0.02 per cent., I think, because certain advertisements for surgeries that I used to be able to pay for under the office costs allowance must now be paid for under the communications allowance. There is a big difference between that—I suppose I am one of his statistics for using the communications allowance—and Members using £10,000 or whatever the allowance is. I shall stick to my less than 1 per cent. until the communications allowance is abolished, when I can go back to the old system which allowed such minimal expenses under a sensible office cost allowance.

I am grateful. I shall take the Secretary of State back to the Bill. Does he agree that the political consensus on the Bill has been put at grave risk by the Conservative party continuing to fund, by tens of thousands of pounds, marginal constituencies prior to an election being called? That is against the spirit of what the Bill seeks to achieve. It is against what the British people think is fair play. Does that not show how necessary the Bill is?