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Oral Answers to Questions

Volume 485: debated on Thursday 11 December 2008

Business, Enterprise and Regulatory Reform

The Minister of State was asked—

Bank Lending

The credit crunch and the global economic downturn are, of course, having a serious effect on small businesses. As well as the measures to increase the availability of credit that have been set out by the Government in the pre-Budget report, my noble Friend the Secretary of State has established the Small Business Finance Forum, which involves all the major high street banks and the main business organisations. That body has drawn up a revised statement of principles covering business lending and is also monitoring the availability of credit to small business.

Some would say that the banks have been treated more than fairly, yet they have not passed on that largesse to their customers. Will the Minister look into a case where the Royal Bank of Scotland, which is one of the banks that has been bailed out, has increased fivefold the repayments required from one of the businesses in my constituency, despite an existing six-month agreement, and the fact it was a long-standing customer? That could, effectively, put 80 jobs at risk. Does he think that is fair and, given such agreements, what will he do to ensure that customers and businesses are treated fairly by the banks?

Ministers will not seek to place themselves in the shoes of bank managers and judge individual credit applications. However, of course, it is also true that many businesses have raised the difficulties of accessing credit with right hon. and hon. Members from all parties. The hon. Lady mentioned the RBS Group, which, with the NatWest Group, announced on 23 November that it would maintain existing overdraft pricing for small businesses until the end of next year. Some measures have been taken, but we are not saying that there is not an issue. That is why the Small Business Finance Forum has been established, and, indeed, why both the Chancellor and the Secretary of State will meet the high-level lending panel later today to pursue the issue further.

My right hon. Friend’s comments will give some comfort, but I draw his attention to one specific group of small firms that, even in easier times, have traditionally found it difficult to obtain finance: those firms involved in research and development. They are at the cutting edge of technology and are vital businesses in terms of the creation of future manufacturing strength and employment. Will he have a particular look at how such firms can gain access to finance in these difficult times?

In the pre-Budget report, my right hon. Friend the Chancellor of the Exchequer set out a number of measures that should help businesses to gain more access to credit. In addition to the existing small firms loan guarantee scheme, those measures included a small business finance scheme to support up to £1 billion of bank lending, a separate £1 billion guarantee facility to support bank lending to small exporters, and a £50 million loan facility based on swapping debt for equity. That is in addition to the measures announced by regional development agencies for transition loan funds. The Government have taken a number of measures to try to ease the problems of access to finance and credit, which small businesses across the country are raising with us.

The Prime Minister boasted yesterday that help has been given to small business, yet all the small businesses that have contacted me say that the banks are not well informed about the scheme, some are reluctant to promote it and many small firms are unaware of it. The Minister talked about monitoring, from which one assumes he has had some results. Will he tell us what results he has had, because my information is that things simply are not working?

I think the hon. Gentleman is referring to the small firms loan guarantee scheme. The measures that I listed in response to my hon. Friend the Member for Manchester, Central (Tony Lloyd) are in addition to that scheme and are coming on stream precisely because we recognise how important access to credit finance is to small businesses. Without such credit, businesses cannot take investment decisions and they cannot operate in the way that they should. That is why we are so active in this matter.

The measures that the Government have announced to help small business are clearly welcome, but there is a problem with small businesses knowing where to go. A plethora of initiatives has been announced, but the Government should take steps to improve one-stop shop access to make it clear to small businesses what initiatives are available. I would be interested to know what the Minister is going to do to address that problem.

My hon. Friend makes a good point. The Government have recognised a need for the simplification of information in business support schemes. Indeed, prior to the pre-Budget report, we announced a large-scale simplification of advice to businesses, collating all the different support schemes into a much smaller number. I hope that the process of obtaining advice about what help is available and where to go will be easier than it is at present. Business Link is the key place to go for businesses looking for advice on what help is available from the Government. I also think that the banks have a role to play in ensuring that an appropriate level of lending is available, so that the economy can work in the way that we all want it to.

Sharp practice by the banks clearly must be exposed and challenged, but Government interference is often not helpful itself. Why is the much-promised European Investment Bank money yet to reach our small businesses? Czech businesses have reportedly received €100 million, Spanish firms have received €200 million and French firms have received €300 million. Could the Minister tell us how much of the EIB money UK small businesses have received? I am talking about the actual businesses, not their banks.

A number of other countries have traditionally used EIB money, and that is precisely why their businesses are already receiving money. The banks in the UK have accessed up to £1 billion from the EIB, which will be channelled to small businesses.

Car Industry

2. What steps the Government are taking to support the car manufacturing industry; and if he will make a statement. (242332)

We are closely engaged in supporting the UK automotive sector, both at a European level, through pressing the European Investment Bank for an €8 billion automotive support fund and domestically, through our investments in low-carbon research and development and training, and our package of support for small and medium-sized enterprises announced in the pre-Budget report.

The Minister will be aware of speculation in the newspapers that secret talks are taking place between the Government—Ministers and perhaps his officials—and the owners of Land Rover and Jaguar about some kind of financial support. I would be grateful if he would tell the House whether that is the case and whether, given the severe situation in America and in its automotive sector—General Motors is in trouble over there—the Government are also having talks with Vauxhall, which is owned by GM.

I do not want to speculate on talks that the Government may or may not have been having with a range of automotive companies. What I want to say clearly to the House is that the automotive sector is extremely important to the UK. Peter Mandelson and I publicly had a meeting with a wide cross-section of the automotive manufacturers, suppliers and retailers on 27 November. We continue to engage closely with the sector, and I am determined that we shall do everything we sensibly can to help viable businesses during these exceptional times.

Clearly these are difficult times for the motor industry. Some of the major manufacturers are going on extended breaks as a result of falling sales. Does my hon. Friend agree that, although understandable, that can cause major problems down the line in the components sector? Does he also agree that we need to take real action to ensure that our technological base in motor sport, components and other parts of motor manufacturing is maintained, not just for the sake of jobs right now, but to secure our prowess in those areas in the future?

My hon. Friend is an expert in these areas, and I agree that the integrated nature of the automotive supply chain brings real challenges for suppliers when the automotive manufacturers decide to take extended breaks. We are acutely aware of the pressures that the situation is causing a number of supply chain companies. As he is aware, the UK has about 200,000 jobs in the supply chain alone, about 500,000 in retail and about 180,000 in direct automotive production. This is a vast and important sector of the UK economy, and we need to examine what more we can do to support companies that are going through very difficult times at the moment.

I heard what the Minister said, and he cited the statistics that I was going to cite about the manufacturing and retail sectors. But continuing to engage closely is not enough; action is urgently needed. I have just come from a meeting with the Retail Motor Industry Federation, which has suggested a range of practical measures that would help it and manufacturers. Such measures include abandoning the Government’s proposals to remove the right of car retailers to claim back vehicle excise duty in respect of unused car discs and ending the Government’s punitive attack on void rates. The pathetic measures introduced by the Chancellor just will not be enough for car dealers, who will have empty premises next year. A range of things, such as introducing 100 per cent. capital allowances for commercial vehicles, could be done now—urgently—to prevent an imminent disaster, not just for manufacturers, but for retailers.

There is a range of things that the Government are already doing, such as the small business finance scheme, the £1 billion in loan guarantees, the schemes to convert business debt into equity and the transition loan fund, of which the hon. Gentleman will be aware, that exists in the west midlands and other places. I have already written to supply chain companies, through the manufacturers, outlining the package of measures that are already available from the Government. However, we need to see whether we can do anything further, because we recognise as a Government that the UK automotive industry is of critical national importance. The Government are taking action. The action that we took on the recapitalisation of the banks and through the £20 billion fiscal stimulus, which the Opposition have opposed, is about responding. We are trying to kick-start the economy and help companies through difficult times, and I hope that the hon. Gentleman appreciates the actions that we are taking.

My hon. Friend is quite right to say that the car industry is of national importance, but so is the steel industry, which provides it with the basic raw materials. He knows that Corus recently had a meeting with the Prime Minister and other Ministers. Corus is making efforts to keep the work force together, which is a welcome break from the past, because losing a skilled work force makes it difficult when things turn around. Will my hon. Friend assure me that the Government will give Corus whatever assistance is appropriate to see it through this difficult period?

As I have said, we want to do all that we sensibly can to help viable businesses. My right hon. Friend will be aware from reports in the newspapers today of the discussions that Corus has been having with the unions about taking a pay cut, and of the other measures being taken to see people through difficult times. Whether we are talking about the steel, automotive or construction industry, the global credit crunch and the recession that we are all facing are bringing enormous challenges to companies, to people who work in them and to Governments. We need to ensure that we are up to the mark and are taking action to support our companies through these difficult times, and that is exactly what we are going to do.

As has already been said, the car manufacturing industry is a major part of British industry, as well as a substantial employer. Given that President-elect Obama has decided that the US car industry is too large to fail, what assessment has the Department made of the potential for a failure in the car industry to give rise to a systemic failure in UK plc? Would the Government consider a similar decision, and if so, what criteria would they use to make the judgment?

I have already quoted figures that demonstrate the importance of the automotive sector to the UK economy, and I do not need to repeat them. The Government are engaging with the automotive industry on a daily basis about the problems that it faces. We have already taken a range of measures to support companies, particularly some of the small and medium-sized companies in the supply chain, with the schemes that we have made available, which we are widely publicising to the industry.

There is a case for saying that we need to do more and we are actively considering that. I can only repeat that the circumstances in which we find ourselves are circumstances that we have not seen for more than a generation. Sales have fallen off a cliff. The November figures show that UK car sales are down by 37 per cent. The situation is the same in the United States and sales are down by 50 per cent. in Spain. Although they have declined less in France, Germany and Italy, the declines are still significant. When companies’ sales disappear, we need to ensure that we bring back confidence to the market as quickly as possible, which is why the fiscal stimulus is so important and why it is irresponsible of the Conservative party to oppose it.

Credit Availability

We understand that credit is a serious issue for business. That is why the Chancellor announced a number of measures in the pre-Budget report to improve access to credit, including the new small business finance scheme, which could make available up to £1 billion of additional credit, the export lending scheme and the transition loan funds that will be available through the regional development agencies in many parts of the country.

I would be interested to learn from the Minister about the methodology involved in the Government being able to get information, other than that provided by the banks, on the provision of credit to small businesses. He might be interested to know that, according to the Croydon Guardian, the chief executive of South London Business reports that many perfectly solvent businesses are being damaged, as many other Members have said, by the speedy removal of credit and the early calling away of debt. Many companies that are cashed out and close to being in default will be at risk if the Government are unable to bring forward measures in a speedy way to ensure that such companies are bailed out.

We are bringing forward measures, as I have said. There is a disjunction between what small businesses are reporting to the hon. Gentleman and many other hon. Members on both sides of the House, and what the banks are saying about the availability of credit. That is precisely why we have brought business and bank representatives together in the Small Business Finance Forum to examine the facts and to find out exactly what is happening in the lending market.

The Minister is a fellow west midlands MP, and he will know that many businesses throughout the region cannot get credit from the banks. Why is it that, within hours of coming to the Government, the banks received a big fat cheque from the taxpayer, when businesses in Shropshire, even after many weeks, cannot get the credit that they need to run on a day-to-day basis?

Had we not taken the action that we took to recapitalise the banks and inject more credit into the system, there would have been a danger of a complete seizure in the banking system, which could have had a catastrophic effect on the wider real economy and on the businesses that the hon. Gentleman is worried about. That is why it was entirely right for the Government to take that action to stabilise the banking system. We now need to ensure that lending at an appropriate level is available to businesses in the wider economy, and that is why we are working with the banks and why we have taken the measures that were announced in the pre-Budget report.

I recently met representatives of the Civil Engineering Contractors Association to discuss the impact of the downturn on its members, which include small businesses and some of my constituents. They broadly welcomed the measures that the Government have introduced to assist them with credit, but said that there were still some issues. They were also concerned about the small firms loan guarantee scheme, and gave me examples of their members being told that it would take four months for the process to go through. That is causing real hardship. Will my hon. Friend look into those delays and see whether anything can be done to speed the process up, so as to avoid the loss of jobs and skills in the sector?

It should not take four months for loans to be processed through the small firms loan guarantee scheme, and I will certainly follow that up for my hon. Friend if she gives me the details. The combination of measures that we have taken, including that scheme and the other measures announced in the PBR, are designed precisely to take action with regard to the problem that we are all concerned about—access to finance for small and medium-sized businesses, which are the lifeblood of our economy and which provide so much employment for our constituents.

As it is clear that, in this recession, the biggest single problem facing most businesses is a lack of credit, does the Minister not see that his small firms loan guarantee scheme is inadequate, and that he should take up our proposal for a national loan guarantee scheme? It would cost a lot more money, but it would be paid for by scrapping the ridiculous reduction in VAT, which has not helped industry at all.

Our proposals are not restricted to the existing small firms loan guarantee scheme because, as I said, the Chancellor announced additional measures. As to the right hon. Gentleman’s party’s proposals, the Conservatives really need to make up their minds. The other day, his party leader attacked us over our level of spending and borrowing; the Conservatives have now announced a new scheme, but we have not yet been told about the balance of risk between the Government and the banks or the exposure of the taxpayer to the scheme. If more action is needed, this Government have said that we will take it, but I can assure the right hon. Gentleman that, unlike what happens in his party, any measures we announce will be properly costed and thought through.

When the Secretary of State appeared before the Business, Enterprise and Regulatory Reform Select Committee, he made the valid point that it was important that bank bosses’ promises on lending got through to banks on the ground. This morning, I received a Christmas card from the Federation of Small Businesses Scotland—[Hon. Members: “Ah.”]—and a very nice one it is, too. It is a letter to Santa, which refers to overdrafts renegotiated, rates trebled and charges of £150 for the privilege. That is the reality on the ground. When the Minister has a summit with bank leaders, what other action will he take to ensure that any promises made to small businesses are actually carried out by bank managers on the ground?

It is important that any statements made by banks about the availability of lending are reflected in the reality on the ground. That is why the Small Business Finance Forum has updated the statement of principles that govern lending by banks to small businesses. I referred to RBS earlier, but Lloyds TSB has announced a charter for small businesses, which commits to maintaining overdraft limits and margins at existing levels, and HSBC has announced a £1 billion business support fund for UK small businesses to fund working capital. Some action has been taken, but we will, of course, continue to work with the banks to ensure that the sort of statements made by the banks and mentioned by the hon. Gentleman actually feed through to the small businesses in his and other constituencies.

The real truth is that businesses are increasingly desperate because their credit lines are drying up, the cost of borrowing has increased dramatically and credit insurers are refusing to underwrite the payment chain. Surely the Minister would agree that the recapitalisation of the banks has not yet filtered adequately, if at all, into the real economy. Why, then, has he chosen to reject our clear policy for a national loan guarantee scheme that would augment and underpin credit lines in a way that no Government policy yet does—or is he really saying that the Government have no ideas of their own and are simply rejecting it because it has on it the label, “Not invented here”?

We announced a loan guarantee scheme in the pre-Budget report, based on a balance of risk sharing between the Government and business. As far as the hon. Gentleman’s proposal is concerned, as I have already said, the Conservatives have not made clear what proportion of the loans would be underwritten or what balance of risk will be shared between the Government and the lenders. It is important that proposals in this area are properly costed. That is what we have done and if further action is needed to help small businesses, we will not hesitate to take it.

But one thing the Government could definitely do to extend credit to businesses is to let them delay their VAT payments. Yesterday the Prime Minister said at Prime Minister’s questions that that was his policy and it should happen, but businesses are saying that, in fact, they are not being allowed to do that because Her Majesty’s Revenue and Customs says, among other things, “Oh no, it would give such a company a competitive advantage.” How can the Minister reconcile what the Prime Minister says one day with what is actually happening on the ground, and what instructions—what clear instructions—have the Government given to HMRC about the deferral of businesses VAT?

The Chancellor announced in the pre-Budget report that HMRC would, on a case-by-case basis, allow businesses to spread their tax and VAT payments over a longer period of time. It is not the case that they have all been refused, as the hon. Gentleman claims that they have. It is judged, as I said, on a case-by-case basis.

In terms of policy—I know that the Conservatives like a leak—perhaps I should draw attention to the hon. Gentleman’s approach. I have an e-mail to him from his colleague, the hon. Member for Hertford and Stortford (Mr. Prisk)—

Car Industry

5. What recent representations he has received on the effect of the current economic climate on the car manufacturing and components industries; and if he will make a statement. (242335)

We have wide-ranging contact at all levels with the automotive industry. The Secretary of State for Business, Enterprise and Regulatory Reform and I met automotive manufacturers, suppliers and retailers on 27 November and we continue to have close dialogue.

Factories such as Nissan in Sunderland, Honda in Swindon and Toyota in south Derbyshire have components supplied by extensive networks of much smaller firms, which, lacking significant cash reserves, suffer disproportionately as car production is scaled back. Does the Minister agree that a possible erosion of jobs in parts suppliers by up to 25 per cent. will reduce the anchorage of car plants in the UK, with remaining firms sourcing much more from abroad? Further to the question asked by my hon. Friend the Member for Birmingham, Northfield (Richard Burden), what steps is the Minister taking to ensure British component firms have the necessary access to credit to enable them to trade through the deepening recession?

My hon. Friend is absolutely right to point to the importance of the supply chain and UK automotive manufacturers sustaining it in the future. Clearly, some of the major difficulties that the automotive industry faces have an impact on the supply chain. We saw Wagon Automotive going into administration in the UK only very recently. Any job losses are regrettable.

As a Government, we need to ensure that we continue to provide measures—the finance that is available—to the sector. As I explained, I have written to automotive suppliers, through the lead manufacturers, outlining a range and package of measures that are on the table and available now or will be available very shortly. Again, we need to see whether there is more that we can do to help some of the companies that are viable but are facing unprecedented shocks to their businesses as a result of the problems that we are seeing internationally.

Will the Minister confirm that it is not just about the manufacturers, or even the component manufacturers, but about the national network of dealerships, which employ dozens, if not hundreds, of people in each of our constituencies? As we know, they are struggling and have had a very bad year. Will he help them by the clarifying precisely which cars will have their vehicle excise duty increased over the next year or two, because people out there are still completely confused by this and it is acting as another deterrent to cars being sold? Will the Government enter into a campaign to demonstrate precisely which cars will have their VED reduced or increased, and clarify the situation for the people at large?

The hon. Gentleman is right to point to the importance of the retail end of the industry and the car dealership networks that exist in the UK. They employ significant numbers of people. While they might not be as geographically concentrated as some of the big automotive plants, the cumulative effect is that something like 500,000 people work in that retail sector. What we said about VED in our pre-Budget report was clear, but I will talk to some of my colleagues and officials in the Treasury to see whether there is more that we might need to do to ensure that that information is widely available. The industry as a whole has welcomed the announcement that we made on VED. We need to ensure that we actively promote it.

My hon. Friend will be aware that many small companies in my constituency are second, third and fourth-tier suppliers to the car industry. If they go under, it will not only be a tragedy for the employees of those companies, but it could undermine our future industrial capacity to meet the upturn when it takes place. Will he undertake to listen to their submissions and work on policies, but above all will he examine the potential role that Government procurement could have in the motor industry to sustain demand at this time when it is most needed?

My hon. Friend has made some key points. Obviously the development of lean production techniques and “just in time” manufacturing has led to a hugely interrelated supply chain. If one part of it suddenly breaks down, major problems can be caused to the process of making cars, so it is right for automotive companies themselves to take a close interest in the financial performance of their supply base. A number of companies have given their suppliers credit to ensure more prompt payment and to help the supply chain through difficult times.

I am not sure that a major Government programme of purchasing new cars would be effective. What we want is for people to start buying cars again because they feel confident about the future, and there are some pretty good car deals around at the moment.

The Government have already introduced a substantial bail-out package for the banks, and there have been calls for them to do the same for the automotive sector. Will the Minister tell us precisely what the policy is on the use of further taxpayers’ funds for future rescue packages, to enable the half million employees in the sector to whom the Minister referred to know exactly what they can and cannot expect from their Government?

We were absolutely right to make the decision to recapitalise the banks. Even the Conservatives have welcomed that decision, although they have cavilled at measures such as our credit guarantee scheme. The scheme is effective, and by the end of the year some £100 billion worth of guarantees will have been issued.

As I have said, it is important for us, as a Government, to see what we can do to help viable businesses through difficult times. We are engaged in a contingency planning exercise and we are considering a number of possibilities, which is the right thing for us to do. We will continue to consider what further sensible measures we can take to support the automotive industry during the current incredibly difficult period.

Topical Questions

Our Department is concentrating fully on working with businesses through what is a difficult economic period, and ensuring that British business can emerge from the downturn in as strong a position as possible.

In the absence of the Secretary of State, I must rely on my right hon. Friend, as his political amanuensis, to interpret Lord Mandelson’s views as reported in The Sunday Times last week. He said that

“it was up to individual companies to sort out their own future if they ran into trouble… ‘We”

—the Government, that is—

“‘are not going to step in when banks and other lenders are capable of doing it themselves.’”

What does my right hon. Friend think Lord Mandelson meant by that, against a backdrop of potentially the worst economic situation for generations?

What that means is that the Government cannot and should not seek to replace the role of the banks as the main lenders to the economy. We have introduced a number of measures—which I have mentioned several times today— to give small businesses access to finance, but the main lenders must be the banks themselves, and that is precisely what my noble Friend Lord Mandelson meant.

T2. I have given the Minister notice of this question. An important manufacturing company in my constituency has had to lay off a third of its work force, and 40 people face redundancy as a result. It would like some practical help and advice on how it can afford to pay the redundancy costs, keep going and develop into a slimline company. Can the Minister offer any advice on how the company can both pay the redundancy money and continue to operate in a slimmed-down form? (242352)

The hon. Gentleman did give notice of the question. My understanding is that the company has laid off a number of people and is having difficulty meeting the redundancy payments that may be involved in doing so. There is a scheme: the financial difficulties scheme under the Insolvency Service. It is designed to avoid both stress and delay in employees applying under such a scheme. Under this scheme, the Redundancy Payments Office can pay employees the redundancy payments to which they are entitled against an agreement from the employer to reimburse the national insurance fund over time. I am happy to look further into that matter for the hon. Gentleman.

T8. Is my hon. Friend aware that some major companies, such as Rolls-Royce, are trying to assist their suppliers through helping them with credit? What are the Government doing to encourage other major companies to do the same thing? (242358)

My noble Friend the Secretary of State yesterday met major businesses and the Institute of Credit Management to agree a code of prompt payment from large businesses through their supply chains. The Government have said they will do their best to be a good and responsible customer during this period, and we understand the importance of prompt payment to small businesses. I entirely agree with my hon. Friend that this is a job not just for Government, but for the many large businesses upon whom countless thousands of small businesses depend for prompt payment and their day-to-day business.

T3. One important area of British industry that is continually ignored by the Government is the pub industry. There is particular concern at this time of year about the income levels of publicans. May I bring to the Minister’s attention the Morgan Stanley report that revealed that between a fifth and a quarter of licensees make under £20,000 a year, which is deemed to be the minimum acceptable level? That equates to £3.30 an hour each for a couple, which is clearly below the minimum wage. Does the Minister therefore agree that the way in which the big pub companies operate the tie is not fair and that the Government should look at that again? (242353)

The hon. Gentleman might be aware that the Business and Enterprise Committee is currently looking at the issue. We are closely watching the different strands of evidence that are presented to it, and we will carefully consider any recommendations arising from the Committee’s work. As he alluded to in his question, pubs are crucial small businesses in many communities and, as he will be aware from the answers that my ministerial colleagues have already given, the Government are taking a series of initiatives to help small businesses, and pubs might be able to access them as well.

A written statement was issued this morning extending the compensation given to Icelandic waters fishermen to aggregate service not interrupted by 12-week breaks. That will be warmly welcomed in all the fishing ports, but will my right hon. Friend tell us what estimates he has of the number of fishermen affected? In terms of the unacceptable proposal to extend the conditions to requiring two years of service during the cod wars, will he bear it in mind that there were in fact three, if not four, cod wars, two of them in the 1970s?

I thank my hon. Friend for his welcome for the written ministerial statement tabled today, which is in response to the ombudsman’s recommendations on the Icelandic waters trawlermen’s compensation scheme issued last year. The statement says that we will run a new scheme based on aggregate service and not using the previous breaks rule. We estimate that that will benefit about 1,000 former trawlermen, who should receive additional payments. I pay tribute to my hon. Friend and all Members representing port communities who campaigned so hard and effectively for their constituents on the issue, and I hope he is right that this news will be warmly welcomed in port communities that have been affected over the years.

T5. I tabled a question on 11 September relating to the numbers employed in the various sectors of the textile industry. It appeared on the Order Paper on the first day back after the summer recess. Despite numerous calls—and answers to the effect that it was currently with two Ministers—the question fell at Prorogation. How can Members do their work properly if Ministers and Departments take so long to reply to vital questions? (242355)

I hope that the hon. Gentleman will forgive me for not knowing the specific details of what happened to that question, but I will investigate what happened and get back in touch with him by the end of the week.

May I add my warm congratulations to my right hon. Friend the Minister for Employment Relations and Postal Affairs on the statement that he made this morning about opening up the cod war trawlermen’s compensation scheme and on finding an answer to a very difficult problem? He will be aware that many of the people who will qualify under the new scheme are elderly, and some have died and their widows are also elderly. Can he give us some idea of the programme for the introduction of the scheme, because it needs to be done quickly?

My hon. Friend makes a good point and I know that he has campaigned hard and effectively on that issue. We are aware that this has taken a long time. It is a complex scheme because, as my hon. Friend the Member for Great Grimsby (Mr. Mitchell) said, we are often dealing with fishing records going back for some decades. I can assure my hon. Friends and other Members with an interest in this area that we will implement the new scheme as quickly and efficiently as possible.

T7. When will the Hooper review on postal services be published? When it is, will the Minister ensure that he resists any attempt to reduce the scope of the universal service obligation? Will he also use it as an opportunity to put pressure on those many companies that charge excessive costs for deliveries to the highlands and islands and suggest that they use the universal rate for parcel delivery offered by the Post Office? (242357)

If I may quote the Secretary of State who, when asked about the timing of that report in the House of Lords a couple of weeks ago, said, “Not before too long.” I echo that. In terms of the USO, I remind the hon. Gentleman that it was this Government who enshrined the USO in primary legislation.

Church Commissioners

The hon. Member for Middlesbrough, representing the Church Commissioners, was asked—

Church Collections

2. Whether the Church Commissioners hold information on the amount of money taken in collections in churches. (242323)

Collections in churches totalled £56 million in 2006, the last year for which figures are available. However, that is only a small part of the regular committed giving of members of the Church of England, most of which is by standing order. Total income from donors was nearly £537 million, including £70 million of reclaimed gift aid.

I congratulate the Church Commissioners on the staggering amount of contributions from the worshipping public. Do the Church Commissioners anticipate a reduction in the amount received because of the credit crunch? If so, will the hon. Gentleman join me in renewing our campaign to obtain a reduced VAT rate on church repairs, now that we have established the principle that the Prime Minister is minded to lower VAT in certain circumstances?

I am grateful to the hon. Lady for making that point. I should point out that the average donation to the Church of England is £8.64 a week, or £450 a year, but that is more than double the amount given by the average adult in the UK to all the other charities they support, so the Church clearly benefits from that dedication. The question of reducing VAT further is a problem throughout the European Union, as we need the consent of all the other member states. We have a reduction in VAT through a method introduced by the Prime Minister when he was Chancellor of the Exchequer. That is still available and it has no time limit.

Public Accounts Commission

The Chairman of the Public Accounts Commission was asked—

NAO Headquarters

3. For what reasons the Public Accounts Commission recently approved additional funding of £5.8 million for the project to refurbish the headquarters of the National Audit Office. (242324)

We approved extra funding because the initial work identified problems with asbestos, structural defects and, unexpectedly, construction-cost inflation. Those problems could not have been anticipated at the outset.

In view of the extra funding, can we be sure that the project will still deliver its original aims and meet its 2009 deadline? Will the revised budget of £83.24 million be the final figure?

The NAO has given us an absolute assurance on all those points. It will deliver on time next year, and within the new budget.

The right hon. Gentleman will know of the John Tiner report into the governance of the NAO. What does he think that the auditors will say about the refurbishments? Are there any plans to rotate the auditors?

We do rotate the auditors, and I cannot envisage that they will have any problem with these budget increases.

Church Commissioners

The hon. Member for Middlesbrough, representing the Church Commissioners, was asked—

Church Estate (Water Services)

4. What assessment the Church Commissioners have made of the effects of changes to charges for water services on the Church's estate; and if he will make a statement. (242325)

It is estimated that the new annual charge for surface water drainage will cost Church of England churches and cathedrals around £5 million or more. Churches using the public sewers will also be liable for highways drainage contributions at an estimated cost of around £10 million per annum.

By way of a statement, we are deeply concerned about the impact of these charges on the local work of the Church and other faith groups.

Do we not have enough difficulty finding funds to run and maintain our churches without the water companies adding to the burden by adding to their profits? Does my hon. Friend intend to seek meetings with Government and others to rectify the situation?

I am grateful to my hon. Friend for that question. Representations have been and continue to be made to the Government on that issue. We have looked at it carefully and are not convinced that it is all a matter of water company profits. The companies maintain that the change will be cost neutral as it redistributes charges falling on different categories of non-household customers. That includes businesses, churches, charities and community bodies. However, it is having a considerable effect on our churches.

I have been working on this problem with the diocese of Salisbury, and it has been reported to me that Wessex Water believes that the changes to the charging regime would come into operation only on change of ownership of the property involved. On the face of it, that would seem to make it unlikely that a church would be affected, but what would be the impact of a change from freehold to common tenure? I do not expect the hon. Gentleman to know the answer to that question today, but will he please let us know?

I am relieved that the hon. Gentleman does not expect me to answer that off the top of my head, and I would not wish to do so. It is a matter worthy of study, and I shall give him a specific response, and place a copy in the Library.

Is it not absolutely outrageous that the water companies charge churches and other similar bodies for the disposal of surface water? Rain comes from heaven: it does not cost the water companies anything yet they charge us for it. Why the devil are the Government allowing them to charge churches for the disposal of surface water? It is outrageous.

I am sure that the hon. Gentleman does not wish to answer his own question. I am happy to do that, but he knows that mercy is like the rain, gentle from heaven above. Unfortunately, the water company charges are not from heaven, but are induced and calculated. I support what he says, and agree that this is a Church-wide issue: a Teesside clergyman at St. Luke’s, North Thornaby has reported to me that his church has experienced a rise in its water charge of 1,300 per cent. His church warden created a petition on the No. 10 website, and so far it has attracted 37,000 signatories. Given the hon. Gentleman’s views, perhaps that total will now rise to 37,001.

Public Accounts Commission

The Chairman of the Public Accounts Commission was asked—

NAO Financing

5. What recent representations the Public Accounts Commission has received on the financing and cost-effectiveness of the National Audit Office. (242326)

The Public Accounts Commission monitors the financing and cost-effectiveness of the National Audit Office, especially when considering the NAO’s three-year corporate plan and when approving its estimates for the coming year.

I am grateful for that answer. Is it not the case that the NAO has a target of saving the taxpayer £9 for every pound that its operations cost? Would the NAO not be able to do that much more easily if it had a proper grip on the £250,000 million-worth of private finance initiative projects, which are prohibitive in cost, flawed in concept and intolerable in consequence? Alternatively, the NAO could get a grip on Her Majesty’s Revenue and Customs to bridge the tax gap, which at a minimum is at least £25 billion a year, in tax avoidance by the best-off individuals and the 700 largest corporations.

I should like to comfort my hon. Friend, as I know he gets very anguished about the National Audit Office. It has in fact progressively increased its performance. When I first went on to the Public Accounts Committee—I think it was in 1990—the ratio was 5:1 and at the request of the Public Accounts Committee and the Public Accounts Commission, the ratio has gradually increased to 9:1. A nice ballpark figure for my hon. Friend to remember is that as a result of that, in the last 18 months the NAO has saved the taxpayer £1 billion.

Church Commissioners

The hon. Member for Middlesbrough, representing the Church Commissioners, was asked—

Church Restoration

Church of England staff have been meeting officials from the Treasury, the Department for Culture Media and Sport, the Department for Communities and Local Government, the Office of the Third Sector and the Department for Environment, Food and Rural Affairs. The Church Commissioners encourage continued financial support for the English Heritage and Heritage Lottery Fund places of worship grant scheme. The Church’s discussions with the Government are focused on securing equal access to national and local government funding streams, and are ongoing.

I thank the hon. Gentleman for his reply. Does he agree that churches are a vital part of our Christian heritage and that everything possible should be done to protect and restore English churches? Will he accept an invitation to my constituency to visit St. Alban Protomartyr in Princes road, Romford to see the exceptional work of Father Roderick Hingley, who has raised money through public donations? Will he come to see that work, which is an example to others?

I am grateful to the hon. Gentleman for his kind invitation. He has made me an offer I cannot resist. Nearly half the population think that central taxation, local taxation, the national lottery or English Heritage should primarily be responsible for providing money to maintain churches and chapels. It is not something that I would wish to lay entirely at the state’s door but it should not be left entirely to the Church. I should like a better funding partnership. I welcome the hon. Gentleman’s invitation and I shall be happy to take it up.

Chancel repair obligations remain a medieval scandal and a nice little earner for the insurance industry, or a total disaster for the people who find that they are liable for them. There is a terrible degree of uncertainty among the churches where such obligations apply. There have been suggestions that the obligations should end, but the Church Commissioners appear to be running a policy of raising more money through chancel repair obligations, which will mean that more of our constituents become subject to a financial disaster of which they had no knowledge. Will the hon. Gentleman recommend the ending of that obligation?

I am grateful to the hon. Gentleman. He raises a matter of which I have no particular personal knowledge, but I will be glad to look into it, to give him a full report and possibly to put it in the Library.

Public Accounts Commission

The Chairman of the Public Accounts Commission was asked—

Tiner Report

9. With reference to paragraph 89 of the report of John Tiner on corporate governance arrangements for the National Audit Office, whether the external auditors will be appointed on a rotating basis. (242330)

We agree with John Tiner’s recommendation, subject to retaining the requirement that the commission approve the auditors’ appointment. The NAO’s audit committee will recommend a firm to the NAO board, which will appoint the auditors, subject to the approval of the Public Accounts Commission. The NAO already rotates its auditors—something that concerns the Government—in line with best practice.

I am grateful to the right hon. Gentleman for answering the question twice. Would it not have helped if the banks had followed that practice of rotating auditors, as they might not then have got into such a mess?

Certainly, that is best practice at the moment, and it is thoroughly recommended. If the banks have not been doing it, it is about time that they started doing it.