Skip to main content

Commons Chamber

Volume 486: debated on Wednesday 14 January 2009

House of Commons

Wednesday 14 January 2009

The House met at half-past Eleven o’clock


[Mr. Speaker in the Chair]

Oral Answers to Questions

Duchy of Lancaster

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

Power of Information Task Force

1. What steps his Department is taking to encourage greater consultation with individuals and local communities on shaping public policy and services through its work on the power of information task force. (246511)

As the web approaches its 20th anniversary, we can all see that the internet is driving changes in expectations about Government, business and social life—changes that large institutions of all kinds have struggled to cope with in the past. However, the fog of uncertainty about how the internet can help us all is starting to lift, and we know that the public expect us to try a lot harder than simply putting online what was once offline. The power of information task force has been finding out about how smarter engagement with the net can lead to new expectations about Government. That will be led and informed by the public.

I am sure that I do not have to tell my hon. Friend how important nationally social networking sites are, but I wonder whether he has pondered how important they are locally, especially for MPs? May I persuade him to think about creating a FTSE 100 of social networking sites that do brilliant things locally? [Interruption.] Perhaps he could also borrow from the e-inclusion awards in Vienna, and create annual awards for e-inclusion in the United Kingdom. [Interruption.]

I fear that a few of our analogue representatives on the Conservative Benches are not great enthusiasts for my hon. Friend’s suggestion, but I think that it is a wonderful idea, and I shall consult my Twitter community to see how best we can do what he suggests.

Is the Minister aware of mySociety’s five priorities for how the Government deal with the internet, particularly those concerning how the Government can free up data, create large-scale e-consultations, and open up a variety of Departments and public bodies to the internet for constituents to interface with? [Interruption.] Will the Minister listen to those experts, and make sure that their innovative techniques are used to open up government properly?

The hon. Lady is somewhat enlightened on this issue, and perhaps we can work together to show some of our colleagues on the Conservative Benches how we can embrace mySociety’s five points. If we are all honest with each other, we can see that the work that mySociety has done to introduce digital tools to make this House more transparent and accountable has improved our work. I read the five-point plan on the mySociety blog last week, and I did not disagree with a word of it. We might not have achieved its aims, but we will certainly work towards them.


The Government have been in constant dialogue with the third sector about the impact of the downturn. We will shortly publish an assessment of the effects on the third sector and the action that the Government will soon take to support the sector through the downturn. I can confirm that the package announced by my noble Friend Lord Mandelson will be open to third sector businesses.

The voluntary sector already employs 1.5 million people, and it has the potential to create many more part-time, full-time and voluntary jobs. Will the Minister say why the voluntary sector was not represented at the jobs summit on Monday, and why the Government are ignoring its important potential to create new employment in the downturn?

The House should be clear that the third sector enters this downturn with unprecedented strength because the Government have doubled public income to the sector, taking it from about £5 billion to about £11 billion today. Tax relief alone is now worth £3 billion. In all my conversations on the National Economic Council and elsewhere, I have ensured that third sector interests are represented. That is why the package announced by Lord Mandelson today is open to third sector businesses. In this debate, it is important that we talk about investing in the third sector, rather than cutting. I, for one, was unhappy to see proposals from the right hon. Member for Witney (Mr. Cameron), who says that he wants to cut 1 per cent. from the Cabinet Office budget—

Does the Minister agree that the establishment in Yorkshire last year of the Charity Bank in the North, funded by Yorkshire Forward, is one of the many practical examples of what the Government are doing to sustain charities in this difficult economic downturn?

My hon. Friend is absolutely right: the pre-Budget report confirmed spending totalling nearly £500 million—on top of the £11 billion or so that now goes into the sector—over the next couple of years to help third sector organisations, which are on the front line in helping many communities through the downturn. My hon. Friend will want to know that if we cut £100 million from that budget, we would be cancelling grants for more than 2,000 small local charities, and about 400,000 volunteering opportunities. That is why we will not propose that course of action.

Given the economic downturn and its impact, what steps can the Government take to make people even more aware of the generous tax breaks that are available on donations to charities, which in turn may enable charities to employ people to do even better the work that they do so well?

The hon. Gentleman is right to say that tax breaks are now a vital part of the income of third sector organisations. We are very proud of the fact that gift aid has increased from £385 million a year to almost £900 million a year. The pre-Budget report that my right hon. Friend the Chancellor published last year set out a range of new measures that we will investigate to ensure that tax reform in future years helps the third sector in the way that it could. We will continue at every opportunity to promote to individuals the benefits of gift aid because it is now such an important part of third sector income.

The George Thomas hospice in my constituency—a charity named after one of your predecessors, Mr. Speaker— reports to me that in the downturn individual donations have dropped and corporate giving has been slightly reined in, but that charity shops have increased their income. Does my right hon. Friend believe that that pattern is being repeated across the country?

My hon. Friend raises an important point. The third sector is experiencing different effects and we will take into account the different views when the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Cardiff, West (Kevin Brennan), publishes our third sector action plan. We are grateful for about 80 detailed and helpful representations from the sector, and we will reflect on that advice before we publish our action plan in the coming weeks.

Will the Minister stop wittering on about the third sector? May we talk about the voluntary sector? Does he recognise that gift aid will go down for many reasons, not least the fact that the 28p is to be reduced to 25p?

Quite significant arrangements were in place to help make sure that transitional benefits were in place to protect gift aid contributions to the third sector, the voluntary sector and the charitable sector over the period in which different tax rates come into effect. On nomenclature, I will constantly seek to profit from the hon. Gentleman’s advice.

Many charities, including Rainbows hospice in my constituency, have reported similar patterns of reduced corporate and personal giving while the income from charity shops has increased. At this crucial time, it is important that Departments in particular play their full role, with respect not just to hospices—I hope my right hon. Friend will make the case that they should be properly funded by the NHS—but to community and amateur sports clubs, on which some Government policies are having an impact, particularly water charges in some parts of the country. Will my right hon. Friend ensure that bureaucracy and added burdens on community groups in constituencies such as mine and those elsewhere across the country are reduced as quickly as possible?

My hon. Friend underlines the fact that now is the time for sustained investment in the third sector. Different parts of the third sector, the voluntary sector and the charitable sector are experiencing different pressures every day. Many are experiencing an increase in requests for services, and others are confronting challenges in new patterns of voluntary giving. It is surely right to continue to invest in the third sector, the voluntary sector and the charitable sector so that they help us come through the downturn faster and stronger. That is why we will not seek to cut 1 per cent. from the Cabinet Office budget over the next couple of years, as that would weaken the sector, not strengthen it.

Further to the excellent question from my hon. Friend the Member for Upminster (Angela Watkinson), which reminded the House of the potential of the voluntary sector to create desperately needed jobs, may I press the Minister to be more explicit about when the long-awaited action plan will be published? Will he confirm that it will contain new investment, new resources and new money for the sector, rather than the repackaging of existing initiatives?

Let me be clear about what the action plan will not contain. It will not contain any proposals to cut 1 per cent. from the third sector budget in the Cabinet Office. Let me remind the House that that would mean cancelling grants to more than 2,000 small local charities across the country and cancelling about 400,000 volunteering opportunities. When the third sector action plan is published, it will contain proposals to strengthen charities, voluntary organisations and third sector organisations because they are on the front line in helping many people and many communities get through the downturn in good shape.

Public Information

The Government are systematically improving access to their services by ensuring that information and services are found through search engines, that there are fewer but higher-quality websites so that users can get to what they need, and that the websites are accessible and more usable.

As the hon. Member for East Dunbartonshire (Jo Swinson) mentioned in her question, the greatest social and economic value is achieved when we open up public information. The power of information task force has been working with the Office of Public Sector Information, the Central Office of Information and Government Departments to make public data easier to find, easier to understand and easier to reuse.

How effective is the Downing street petition website? I am thinking particularly of people’s concerns about Jaguar Land Rover. Is my hon. Friend aware that the Coventry Telegraph, the local evening newspaper, organised a petition on that issue involving 6,000 people? Will the supporters of Jaguar Land Rover be listened to?

I commend my hon. Friend for his imaginative question. We welcome the online engagement of citizens and it is heartening to see that the Downing street petition site is being used in such a way; we should also praise the Birmingham Post for leading the petition campaign. The petition site has received 2.2 million unique signatures in the past 12 months alone. The last time I checked the Jaguar Land Rover petition, nearly 7,000 people had used it, and I noticed that my wife was one of them. I give my hon. Friend the commitment that I will raise the issue with the Chancellor and Ministers at the Department for Business, Enterprise and Regulatory Reform.

Those who lose their jobs have to find out from Jobcentre Plus about benefits, from the Learning and Skills Council about training opportunities and from Business Link about help in setting up new businesses. Will Ministers ensure that the websites of the three different Departments of State involved are compatible and give information relevant to the local situations? It is no good people in Oxfordshire who apply to Business Link being directed to somewhere in London. A number of us are now organising job clubs and it would be really useful if Government websites helped us to direct our constituents who lose their jobs to accessible information through the web.

The hon. Gentleman raises an important point; a lot of thought and work is going on in that area. I point him to the Directgov site, which in recent months has been improving how we support people seeking work and how we get them back into the jobs market when, sadly, they lose their jobs. The Government are doing a lot of work on how we can provide public sector vacancies in an accessible form. We will make announcements on that later this year.

What is the Government’s policy on archiving online information? I have found that some of the most interesting material that I want to get hold of has been archived and is inaccessible.

My hon. Friend raises an important point. In fact, we do not have access to the first ever Government website, which came out in 1994; the technology to track it down is not available. It was, of course, the website of a previous Government. My hon. Friend will be pleased to know that the website rationalisation programme will have closed some 1,500 websites by 2011. The National Archives are taking the lead on that, so that important information that my hon. Friend and future generations need to find will be accessible for generations to come.

It is great to see the Chancellor of the Duchy of Lancaster here, filling a gap in his schedule between his cappuccino and his soup. Yesterday, he published a White Paper that made much of the aim, shared by everyone, of removing barriers to opportunity for people from disadvantaged backgrounds. Why, then, are half of all civil service vacancies published only on a secret website accessible only to existing civil servants? Is that not exactly the sort of barrier to opportunity that should be swept away? Is it not a modern-day closed shop?

Yes, the right hon. Gentleman is right: internal vacancies are naturally advertised internally to colleagues, but we are doing a lot of work on this and I very much hope that civil service jobs will get a wider audience in weeks and months to come.

Is not the real reason for keeping this information secret from the public the fact that there is now a proliferation of public sector—state sector—jobs? Just this week, the Cabinet Office alone is recruiting for a chief psychologist, a Downing street butler and a change manager. Is not the solution to the recession caused by Labour not a change manager but a change of Government?

No, none of that is right. We have the smallest civil service since the second world war, and we are targeting £5 billion of efficiency savings. However, the right hon. Gentleman is right about the specific question. We do need to improve how people access vacancies for civil service jobs, and I hope to announce more measures on that in months to come.

Social Enterprise

Following the social enterprise action plan, Government support for social enterprise has never been greater. Many Departments are adopting social enterprise. For example, the Department of Health has committed £100 million to a social enterprise investment fund, the Department for Communities and Local Government has created a social enterprise unit, and the Department for Business, Enterprise and Regulatory Reform and the Ministry of Justice are engaging in new social enterprise projects. I can also confirm what my right hon. Friend the Minister for the Cabinet Office said earlier—that social enterprises and businesses owned by charities can use the small firms loan guarantee and benefit from additional measures announced by the Business Secretary this morning.

I thank my hon. Friend for that reply. Yesterday, I met my right hon. Friend the Minister for the Cabinet Office, and this afternoon I will meet the Secretary of State for Work and Pensions—[Interruption]—to discuss the important role that social enterprise can play in creating jobs, opportunity and, most importantly, social mobility in deprived neighbourhoods. What role is my hon. Friend and his Department playing in co-ordinating the response from all Departments on social enterprises in deprived neighbourhoods?

I think that our Front-Bench team is an exemplar of social mobility. I praise my hon. Friend because, although the Opposition mock him slightly for his activities as a local Member in meeting those Ministers, in a way he himself acts, as do many Members, as a sort of social entrepreneur in bringing people together to do things for his constituency. Such enterprises are more likely to emerge in deprived areas as a communal way of tackling entrenched social problems. Working closely with the Office of the Third Sector, leading Whitehall Departments such as the Department of Health, the Department for Communities and Local Government and the Department for Children, Schools and Families now have dedicated social enterprise teams and funds to allocate to viable social enterprises to deliver public services, often in the most deprived areas.

Will the Minister work to ensure that local government supports social enterprises? In particular, will he look at the example of Conservative-led Newark and Sherwood district council, which not only closed the local leisure centre at Rainworth, but whose help in taking those swimming baths forward as a social enterprise has been next to nothing?

I am sorry to hear about the circumstances involving my hon. Friend’s local council. Of course, social enterprise can be a very effective way of delivering public services, as Greenwich Leisure has shown in London in taking over many local leisure services. I hope that his local council will look again at the potential for social enterprise to deliver such services.

Social Mobility

5. What steps he is taking to ensure an increase in social mobility, particularly for disadvantaged people. (246515)

Over the next two years, spending on education, skills and communities will rise by well over £10 billion. Yesterday’s new opportunities White Paper showed how we will deliver that investment across people’s lives to help families turn the aspirations of today into future success.

I welcome the publication of the White Paper yesterday. Eleven years into a Labour Government, some families are still caught in a cycle of deprivation and face intergenerational poverty and worklessness. Apart from some of the big initiatives that the Government have introduced, such as extending nursery education and introducing Sure Start, what else can my right hon. Friend and the Government do to break these cycles of deprivation?

Yesterday’s White Paper set out a very simple argument—that if we make the right investments today we can capture for this country a big share of the 1 billion skilled jobs that will be created around the world over the next 20 years. If we are to open those jobs to anybody who is prepared to work hard and has got a bit of drive and determination, we have to invest right across people’s lives, in families and in communities. That is why we are determined to open up free nursery education to two-year-olds, why we are determined to see better teachers in schools, starting with our most challenged schools, and why we are determined to expand the number of apprenticeships to 250,000, to give more young people the chance to go to university, and to bring workplace investment in training up to £1 billion a year by 2011. That is how we can expand social mobility in this country, and it is why we will continue the pace of reform after three decades under the Conservative party when social mobility in this country did not move a bit.

Given that it would be unconstructive, flippant and just plain wrong to dismiss a commitment to greater social mobility as being somehow a commitment to a class war, I say to the right hon. Gentleman that I warmly welcome the publication of the White Paper on social mobility, together with the appointment of the right hon. Member for Darlington (Mr. Milburn) to chair the commission on new opportunities. Should the right hon. Gentleman not be encouraged to explore every practical means by which we can ensure that more people from poor socio-economic backgrounds who are able can scale the professional peaks in far greater numbers than they do at present?

I very much welcome that support. As ever, it was a thoughtful contribution from the hon. Gentleman. He is right to say that we all need to do more to open access to professions, including opening access in this place to the profession of professional politician. Surely there is more that we can do as Members of this House to show our constituents, particularly those from lower socio-economic groups, how they can get on in a career in public service and politics, thereby making a contribution to the future success of this country.

In congratulating my right hon. Friend on the delivery of yesterday’s White Paper, may I urge him to ensure that during the deliberations that take place in the next few months, people work throughout government to ensure that early intervention works effectively for those children who need it most and who are most vulnerable, so that we can say in the next decade that those who start with the poorest opportunities are able to make their way in our society in Britain?

I should put on record my thanks and congratulations to my right hon. Friend for the work that she did when she had my job in pioneering family nurse partnerships and bringing help, education, advice and support to some of the most vulnerable parents in this country and their children. This Government are proud of the fact that we have invested £25 billion in early years education. It is clear from the evidence that the more we invest wisely in our children’s early years, the greater their later success. [Interruption.] That is why the Government are committed not, as the Opposition propose, to cutting £200 million from Sure Start, but to expanding the reach of those services in the years to come. [Interruption.]

Order. There is far too much noise in the Chamber. It is unfair to hon. Members who are here for this part of the business.

The independent Social Mobility Commission, whose report was also published this week, showed that poor quality and overcrowded housing is a key cause of entrenching social disadvantage. After 11 years of this Government, social housing has been so depleted and waiting lists are so long that one family in my constituency have been told that they are going to have to wait more than 10 years before they can move to a larger property. Their two children will grow up into their teens in a one-bedroom flat, sharing with their parents. What hope can the Minister give children in that situation, whose life chances are being destroyed by a failure of housing policy?

I, too, welcome the analysis that the Liberal Democrats published this week. The hon. Lady is right to say that not only do we have to increase investment throughout individuals’ lives—in early years, in schools, in apprenticeships, in giving more kids the chance to go to university and in workplace learning—but we have to invest in families and in communities. Better social housing is at the core of that prognosis, which is why we remain determined to renew 3 million homes in the years to come. That, together with new investment in schools, the £35 billion we propose to spend on Building Schools for the Future and record investment in the national health service, gives us the chance in this country not only to renew our civic fabric, but to strengthen opportunities and life chances for generations to come.

Youth Projects

In December 2008, the Cabinet Office announced a new £3 million intergenerational volunteering fund to create 20,000 new opportunities for younger and older people to volunteer together.

In addition, the Office of the Third Sector issued guidance in May to make it easier for volunteers to work with young people, and invested £117 million in creating new youth volunteering opportunities.

We are all well aware of the excellent work voluntary groups do to promote social cohesion and to engage young people in their communities, and of the excellent qualities that volunteering brings. It promotes self-esteem, and a Community Service Volunteers survey showed that 17 per cent. of 18 to 24-year-olds said that volunteering had actually improved their sex lives.

Is the Minister concerned about the shortage of volunteers helping with youth groups, and about the waiting lists for them? Many groups, such as the scouts, cite problems with the bureaucracy of multiple Criminal Records Bureau checks and excessive health and safety requirements. Are we in danger of stifling vital volunteering by being excessively protective?

I shall not comment on the colourful part of the hon. Gentleman’s question, other than to say that I volunteered earlier this week with the WRVS in Cardiff.

It would not help volunteering to cut 1 per cent. from the budget of the Cabinet Office. It is important to ensure that volunteers, like paid employees, are properly checked when they work with vulnerable people.

Prime Minister

The Prime Minister was asked—


Before I list my engagements, I am sure that the whole House will wish to join me in sending our profound condolences to the families and friends of the servicemen killed in Afghanistan since we last met: Serjeant Christopher Reed of 6th Battalion The Rifles, and Corporals Robert Deering and Liam Elms, Lance Corporal Ben Whatley and Marine Travis Mackin, all from the Royal Marines. Afghanistan is the front line against the Taliban. These were brave and committed men, dedicated to their country and to their colleagues, and I know that the whole House will agree with me that we owe them, and all who have lost their lives, all our gratitude for all their services. Their lives will be remembered with pride.

This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further meetings later today. I shall be meeting President Sarkozy this evening and visiting Chancellor Merkel on Thursday, and looking at what we can do to work for a ceasefire in Gaza as well as what the G20 will be able to do to deal with the global financial crisis.

I thank my right hon. Friend for his answer. May I, too, offer my condolences to the families affected?

Today’s announcement on support for small businesses will help some firms in Erewash, and will crucially help my constituents stay in work. However, can my right hon. Friend assure me that the help that is on offer will be properly targeted and focused on the businesses that need it most?

I am grateful to my hon. Friend, who has been a great supporter of business in her constituency. This is real help for business now. It is targeted and focused, it is funded and it is additional to what has been done before. It is real help to small businesses that are looking for help with their overdrafts or looking to invest in the future. It is real help for businesses that are looking for working capital over the next year, and will increase the supply of that by £10 billion. It is real help for high-technology firms that want their debt replaced by equity. We will buy shares in those companies, and there will be real help with credit insurance. This is real help now, to deal with specific problems—real help that is funded by Government.

Planted question, copied policy—what a pity the Government did not agree to a parliamentary statement to announce a good Conservative policy.

I join the Prime Minister in paying tribute to Marine Travis Mackin, Serjeant Chris Reed, Corporal Liam Elms, Lance Corporal Benjamin Whatley and Corporal Robert Deering. That so many lives have been lost in the past four weeks is a poignant reminder of the sacrifices that our troops are making in Afghanistan on our country’s behalf, and we pay tribute to them all.

At the start of this year, I would like to give the Prime Minister a chance to be straight about the recession that he said we would never have. Will he now finally admit that he was completely wrong to say that he had abolished boom and bust? That was wrong, wasn’t it?

This is a global financial crisis; it is happening in America, in Europe—in every part of the world. Let me tell the right hon. Gentleman one thing: nobody is copying Conservative party economic policy. He likes to think that people are. France is not copying Conservative economic policy; Germany is not copying Conservative economic policy; the current Administration in America are not copying Conservative economic policy and the future American Administration are not copying Conservative economic policy. No one except the right hon. Gentleman proposes to cut public spending at this time. The whole Conservative party policy is to cut public spending when we need it. One cannot fund support for business without the public expenditure to make it possible. The whole Conservative strategy is to cut when we need to invest.

The Prime Minister says that no one is copying our policies in a week when he has announced a pale imitation of our jobs package and of our loans package. It is not a butler they need in Downing street; it is a photocopier.

On boom and bust, does the Prime Minister not understand that, because he cannot be frank about the past, no one will believe him about the future? Is that not one of the reasons why it is so difficult to get confidence back in the economy? Evidence of the depth of this recession is mounting: nearly 10,000 more jobs lost in the past week, 10 more firms going bust compared with a year ago, and the worst survey since records began. The forecast of just seven weeks ago was that the economy would start to grow again at the end of June. Is the Prime Minister willing to repeat that forecast today?

I have said everywhere that that depends on the level of international co-operation that we can get. The right hon. Gentleman says that we are copying his policy on unemployment, but he wants to abolish the new deal, which is the basis of helping the unemployed. He wants to cut the budget of the Department for Work and Pensions, when it needs to do more to help the unemployed. One can pluck any figure out of the air about help one wants to give business, but if there is no money behind it and no possibility of funding, and one wants to cut the budget of the Department for Business, Enterprise and Regulatory Reform, which is doing the funding, it adds up to nothing. It is a do nothing policy. That is the Conservative party.

The point is that the Prime Minister is achieving nothing. The whole House will have heard that he will not repeat the Chancellor’s forecast of just seven weeks ago. The explicit reason that the Chancellor gave in his pre-Budget report for his forecast being more optimistic than almost anybody else’s was his measure to cut value added tax. That VAT cut has been condemned by retailers, attacked as “fatuous” by a former Trade Minister and ridiculed by shoppers. Worse, it is adding £12.5 billion to Government debt. Is it not now clear that the centrepiece of the Government’s strategy to fight the recession is an expensive failure?

We raised the pension by £60—the Conservatives opposed it. We raised child benefit from 1 January—they opposed it. We are raising tax allowances in April—they opposed it. We are investing more in the economy and they are opposing that.

As for VAT—[Interruption.] Incidentally, it was promoted not just by us but by the former Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke), and Lord Lamont, who said:

“If there are to be any tax cuts, my first candidate would be VAT”.

So the Conservative party is not exactly united on that. The right hon. Gentleman may think that VAT is unimportant, but at the end of every week, the typical family has more than £5 extra in their pockets. It may not matter to the people on the Opposition Front Bench that £5 extra is in people’s pockets—that is £275 a year, as a result of the cut in VAT. It is more money for everyone in the community, not just the few whom they support, and more money so that people can make choices about what they spend. If we take together all the measures that we have taken, and look at every other country in the world, we find that they want fiscal expansion and that the Conservative party is the only party that wants public spending cuts. The Conservatives are out of touch with the rest of the world; they are completely isolated.

There is no other country in the world that is proposing to cut 2.5 per cent. off VAT. There is no other country in the world that is having to put up taxes on people earning £19,000 and £20,000 because it is so bankrupt. It is the Prime Minister who is completely isolated.

I thought that the Prime Minister might mention the former Chancellor, my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke)—my forecast is slightly better than the Prime Minister’s—and I checked what he said on the day of the pre-Budget report. He said that the fiscal stimulus was “not affordable” and a “reckless gamble” and that it would make the recession “worse” and

“the recovery…long and painful”.—[Official Report, 24 November 2008; Vol. 483, c. 511.]

That is what he said—and by the way, this was the Chancellor who gave this Prime Minister a golden inheritance that he ruined. Only the Prime Minister could smile at ruining a golden inheritance.

Let us look at what the retailers say about this VAT cut. The head of Marks and Spencer says that the VAT cut has

“not made a material difference”.

The head of Sainsbury’s describes it as an “annoyance”. These are the very people it was meant to help, yet they are condemning it. Is it not time to admit that the Prime Minister has wasted £12.5 billion in an appallingly expensive failure?

Let us be clear, first, about what the former Chancellor said:

“I may be in a minority,”


“I would look at a…temporary reduction in VAT which is the best way of stimulating spending, consumer spending which helps businesses”.

That is exactly what he said, and so did Lord Lamont. My point is that we have spent £1 billion on this. It is a tax cut for the whole year which adds up to £12 billion. It is £275 in people’s pockets, as a result of the effect on the typical family. The right hon. Gentleman may think that it is irrelevant, but people in my constituency and others think that it is important. He opposes, let us remember, the £60 increase in the pension, the rise in child benefit that we brought about and a fiscal stimulus, because he wants to cut public spending. He is totally on the wrong side of the argument. Even the monetarists in America are now supporting the need for the stimulus. If he wants to be outside the consensus about what needs to be done, let it be; but people will remember that at a time of difficulty for the British people, the Conservatives wanted to cut the very services on which the British people depend.

It is not that I think that the VAT cut is irrelevant; it is that the leaders of the biggest retail chains in Britain all think that it is not working and that it is irrelevant. The truth is that the Government’s policies are achieving nothing. They announced a stamp duty holiday and the housing market got worse; they announced a bank bail-out, yet the banks are not lending; they announced a jobs summit on the day when thousands of jobs were lost. It is not just that the Prime Minister is running round like a headless chicken, making one bogus announcement after another, doing nothing for confidence. Is not the worst thing of all this: by spending £12.5 billion by cutting VAT, is he not just building up debts for Britain’s children in a vain attempt to save his own skin?

The only party that can help Britain’s children is the party that is increasing child benefit, investing in the child trust fund, investing in Sure Start and investing in nursery education—all the programmes that the Conservative party will cut. I hope that the Conservative party will wake up to an economic reality: that it cannot promise £50 billion to business and then say that it is to be funded by absolutely nothing. That is a do nothing policy. The Conservatives are the do nothing party. They would leave people defenceless in the face of a global financial crisis. Other countries will not do that. We will not walk by on the other side. The Conservatives would; we will not.

Hundreds of thousands of innocent Tamil civilians are under siege in Sri Lanka because of the aerial bombardment by the Sri Lankan Government. Last Sunday, the editor of the leading newspaper there was assassinated. He said, in an obituary written before he was killed, that this was due to the forces of the Government. Will the Prime Minister please use his good offices, either unilaterally or through the European Union, to call for a ceasefire so that all those involved in this conflict stop their violence, so that peace can return to that beautiful island?

I know, from talking to my right hon. Friend on many occasions about this, how strongly he feels about what is happening in Sri Lanka. I agree with him about the terrible violence that is happening there. I also agree with him about the need for a ceasefire. I will be talking to President Sarkozy and Chancellor Merkel, and that will be one of the issues that I will raise with them.

I should like to add my own expressions of sympathy and condolence to the families and friends of Corporal Robert Deering, Lance Corporal Ben Whatley, Corporal Liam Elms, Serjeant Christopher Reed and Marine Travis Mackin, all of whom tragically lost their lives serving this country and the people of Afghanistan in Helmand province.

Taxpayers have already had to sink £37 billion into our banks to get them lending again, so today they will be wondering why on earth they should risk a further £10 billion, just to get the banks to do what they promised to do in the first place. Why is the Prime Minister playing copycat with the leader of the Conservatives when he should be playing hardball with the banks?

I have just explained that the Conservative scheme is completely unfunded, and the right hon. Gentleman had better look at what he would put up to help people in this difficult situation. As far as the banks are concerned, the £10 billion is working capital that will go to firms over the course of the next year. The business guarantee scheme is to help firms that want to convert their overdrafts into loans, or that need investment capital. We will buy shares in high-technology companies that have a viable future, so that they can transfer their debt into equity. These are the things that we can do practically. Since November, 20,000 firms have already benefited from the cash-flow promises that we made in the Budget that we would give deferral of taxation to people who were facing a need for working capital or for cash flow. So far from not taking action, 20,000 firms have already benefited.

Here is what he should do—[Interruption.] He should stop telling the banks to hoard cash and to lend it out at the same time, and he should use one of the part-nationalised banks as a state bank to lend money directly to viable British businesses. I put that to him, right here, two months ago, and he did not listen. Is it not time that he did?

I admire the right hon. Gentleman’s certainty, but let me just say this: we have asked the two banks in which we have shares to maintain the lending of 2007, which was a high level of lending both to businesses and to mortgage lenders. I believe that that is what they are doing at the moment, and we are monitoring what they are doing every week. As for placing further conditions on the banks, so that we can get more lending into the economy, we are making available the money that we have announced today, which will go to small businesses themselves. That is an important element of helping small businesses through these difficulties, but we will not hesitate to look at other measures that are necessary to get the financial system moving. All around the world, people have recapitalised the banks. All around the world, getting the funding moving is the important question. I believe that the measures we have taken today will make a difference, but we will not hesitate to take further measures when they are necessary.

Will the Prime Minister bear it in mind that, in the past three weeks, the Israeli forces have killed 1,000 people in Gaza, 300 of whom were children, and denied medical aid, food and energy and blockaded the people during the past year? These are war crimes. They have committed acts against the people of Gaza that ought to be referred to the International Criminal Court. Will the Prime Minister join the calls to ensure that that takes place?

We took action in drafting the resolution that went through the United Nations last week. Words cannot describe the feeling that families will have as a child dies, or at the level of civilian deaths and casualties and the displacement of 90,000 people in Gaza, but our resolution sought to call for an immediate ceasefire, to recognise the damage that had been done and was being done, and to call for humanitarian action—a call that I repeated when I talked to Prime Minister Olmert last night and asked him to increase the humanitarian action and to take the necessary action to achieve a ceasefire.

The reason why we supported the UN measure was that the Arab countries were also prepared to sign up to two things that are very important to any sustainable ceasefire. The first is an end to arms trafficking and particularly the destruction of the tunnels in Gaza. I talked to President Mubarak yesterday about what we can do and how we can help to achieve that. Secondly, of course—[Interruption.] I think this is important, as we will also need international support to execute the opening of the crossings. It is important that we have the support of the Arab League countries as well as the other countries that signed that motion. In other words, we are doing everything that we can to make possible an immediate ceasefire.

Q2. In July 2007, the Prime Minister promised to lay before Parliament an annual report detailing Ministers’ interests. Why, 18 months later, are we still waiting for one? (246426)

I congratulate my right hon. Friend on the publication of the “New Opportunities” White Paper. Does he agree—I have an instinct on this one—that although social mobility is of course a matter of social justice, it is also a matter of simple economic common sense?

I would have thought that there would be all-party support for the “New Opportunities” White Paper. It is, after all, about helping children and particularly infants get the best possible chance in life by extending play groups, Sure Start and nursery education. It is about giving people the best teachers at their schools and giving people the chance to get the benefit of the best education that is possible. It is about giving more people the chance to go to university and college or into apprenticeships—and there were precise announcements yesterday about what can happen. It is also about giving people a second chance if they missed out at the beginning. I am sorry that the Conservative party could not support the “New Opportunities” White Paper. Again, it would cut spending in the very areas that we need to expand for the sake of both the society we live in and the country’s economy.

Q3. The Prime Minister will recall that on 27 February last year, he said:“The message should go out today clearly that decisions in this country should be made in the Chamber of this House and not on the roof of this House.”—[Official Report, 27 February 2008; Vol. 472, c. 1082.]Will he now make a pledge that any further expansion at Heathrow will be subject to a vote in this Chamber? (246427)

The hon. Gentleman—I think—knows the procedure that we are following on this. First, there was a decision in principle—subject to air noise, subject to pollution and subject to access. The Secretary of State is examining this matter and he will report to Parliament. There will be a debate about what he says in the questions that follow. Then, if the matter were accepted and a proposal were put by the Secretary of State, it would go to a planning inquiry.

Will the Prime Minister send best wishes to President-elect Obama for his inauguration next Tuesday, and will he work with him to secure lasting peace in the middle east?

I have had the advantage of talking to President Obama about some of these issues. The whole House will want to welcome the new President. We hope to work very closely with him. There are major international issues, but the first and most immediate is the middle east. I believe that the relationships between Britain and America will strengthen over the years.

Q4. Seventy per cent. of imported pork is produced to animal welfare standards that would be unlawful in this country. [Interruption.] Given the Environment Secretary’s recent comments that we need clearer food labelling, which my Food Labelling Bill with all-party support would have provided, does the Prime Minister agree that now is the time for compulsory country-of-origin labelling to give a fair deal to British consumers, British farmers and British meat? (246429)

If I may say so, that was an appropriate question from the aptly named Member. The Department is in active discussions with all parties on this issue, and we are also in discussion with the supermarkets. We want an agreed set of voluntary criteria that will allow consumers to make informed choices and support our farmers. I believe that UK producers set the standard for compassionate pigmeat production when we introduced new welfare standards, but all EU member states must be compliant with the new EU legislation. We will insist that standards be met.

For too many of my constituents, the worst consequence of the last recession in the early ’90s was losing their home as a result of repossession. Can my right hon. Friend reassure us that in this downturn, either the loss of a job or a dramatic reduction in family income, will not necessarily result in the loss of the family home?

That is why on 1 January we introduced a new measure so that at a point of 13 weeks from when someone becomes unemployed, they will get support directly for their mortgage. It is a far more generous scheme than we had a few years ago. Our determination is that nobody who is attempting to pay their mortgage will lose their house as a result of being jobless.

At the same time, we recognise that people in work, where one in the family is not working, may suffer a loss of income as well. We are looking to the building societies for a moratorium on repossessions. We are looking for a very precise code that can deal with this problem, and we are prepared to back financially measures that will allow people to extend their mortgages at a time of difficulty.

I accept that this costs money and that it is necessary to fund it. We are prepared to make available the funding necessary in the interests of working people. Not all parties, unfortunately, agree with us.

Q5. Will the Prime Minister confirm that as we face the deepest recession in a quarter of a century, the project to rebuild St. Helier hospital—a snip at £150 million, just 100th of the amount spent on the VAT reduction—will receive his support and will receive the signature of his Chancellor on the £150 million cheque at the appropriate moment, thereby providing real jobs for local people and new hospital beds for local patients? (246430)

The hon. Gentleman is right: this is a major investment that the trust board has approved—I believe that it is £140 million for St. Helier hospital. It means a brand new state-of-the-art building that will house the majority of the hospital’s wards and clinics. I believe that the business case has been approved by the primary care trust and the acute trust board. It has now been submitted for consideration, and then it will come to the Department of Health for approval. I gather that he met the Secretary of State for Health last night to discuss it, and we will ensure that no barriers are put in the way of the discussion that needs to take place.

Q6. I join those who have paid tribute to those service personnel who have lost their lives and been injured, and I speak particularly for Plymouth MPs when I say that our thoughts are with the close friends and family of Marine Mackin. The Prime Minister referred to the measures being taken now, including the VAT reduction, to give real help to my constituents, but can he assure the House that he will continue with the high levels of investment in schools, hospitals and infrastructure? (246431)

We are investing £10 billion more in the coming year than last year in public services. There will be more investment in our schools and our education provision than at any time in our history—this year and then next year. [Interruption.] The Leader of the Opposition says that there will be a lot less next year. Yes, there would be a lot less if he were in power, but the fact of the matter is that there will be a lot more as a result of the decisions that we have made.

There is clearly a philosophical difference here. We believe, at a time of difficulty, that it is our duty to help people and to help people get through a downturn. We believe that we have learned from the mistakes that the Conservatives made in the 1990s and 1980s about what it is right to do. We will not desert people at a time of need; we will invest. It is unfortunate that there is not an all-party consensus on that.

Q7. Several thousand people in Swindon are directly or indirectly employed by the motor industry. Much help has already been given by the regional development agency and the Government office, but what further plans does my right hon. Friend have to help this important industry during the global economic downturn? (246432)

My hon. Friend—who is the Member of Parliament for South Swindon—is absolutely right. Two issues face the car industry at the moment. One is a shortage—[Interruption.] Opposition Members laugh when we talk about the car industry. The first issue is a shortage of demand for cars; the second is the availability of credit for people buying cars. We have been talking to the various car companies and we will make announcements in due course, but those two problems must be dealt with. In terms of the car credit problem, which relates to loans for car purchase, this is basically a market that is outside the traditional banking industry, and we must look at what we can do to prevent it from freezing in the way other markets have. This is a detailed and technical question about how we can get help into the car loan industry, but we are looking at it very carefully.

Some firms in the car industry have already asked us about help with training skilled workers so that they can rebuild, and build, their skills during the period of downturn, and we are also prepared to provide that. In other words, we will do what we can to help.

Next week the new President of the United States of America will take office. What differences are there between him and the Prime Minister, apart from the Prime Minister’s having inadvertently said that he had already saved the world and the President’s having said that he needs to do so?

I am looking forward to working with President Obama. I also pay tribute to what President Bush has done—he was the first to recognise the importance of dealing with international terrorism after 11 September 2001—but a new Administration have policies for a fiscal stimulus, and that will help Northern Ireland as well as the rest of the United Kingdom. If all the economies can work together in co-ordination, the benefit of what we do individually can be magnified a great deal.

I believe that the work that the Obama Administration are about to do to build a stronger economy will be complemented by what we can do in Europe, and by what China and other countries can do. I believe that the consensus throughout the world will be not only that we needed to recapitalise the banks, but that we need the very fiscal stimulus that, unfortunately, not all Members can support.

Q8. The Prime Minister may be aware that DK Eyewitness, the world’s best-selling guide book publisher, recently declared Bristol one of the world’s top 10 cities to visit in 2008. He is more than welcome to check out its recommendation himself whenever he wishes. More important is the fact that our city has also been shortlisted for the title of European green capital of the year, and has been voted the United Kingdom’s most sustainable city. Does the Prime Minister agree with me, and with the people of Bristol, that green jobs and sustainable development are the way out of the present economic downturn? (246433)

I am grateful to my hon. Friend, and I look forward to visiting Bristol very soon. As for the environment, my hon. Friend is absolutely right. I believe that as we come out of this downturn, one of the triggers for further growth can be investment in the environment. We are going to invest in green and environmental technologies: on that we have an agenda in common with President Obama. I believe that when we meet at the G20 summit in April there will be general agreement that one of the ways in which we can increase demand in the world economy and create jobs for the future is by investing in our environmental industries, and we will certainly do that.

Businesses (Financial Support)

(Urgent Question): To ask the Parliamentary Under-Secretary of State for Business, Enterprise and Regulatory Reform if he will make a statement on the Government’s announcements today about their loan package to help improve business credit.

With permission, I shall give the House details of the business support measures that the Chancellor announced in the pre-Budget report in November, which are going live today.

The crisis in the global economy is above all a credit crisis. Many companies are struggling to finance themselves because of the crisis in the banks. Their business models are not flawed, but the credit crunch has drastically reduced the amount of capital available, and banks have tightened their lending criteria. Today’s package is designed to address the problem directly.

The support package that we are launching today builds on the commitments that we made in November’s pre-Budget report. It addresses the cash-flow, credit and capital needs of businesses. We are offering specific solutions, not a blanket subsidy; we are delivering real help, and targeting real needs. The package will make a real difference to business, while preserving value for money for the taxpayer.

First, the working capital scheme is a direct response to the constraint on bank credit available for lending to ordinary-risk businesses with a turnover of up to £500 million a year. The Government will provide banks with guarantees covering 50 per cent. of the risk on existing and new working capital portfolios worth up to £20 billion. The guarantee will secure £20 billion worth of working capital credit lines for companies, ensuring that they are safe from reduction or withdrawal. In addition, the guarantee will free up capital, which the banks must use for new lending as a condition of this scheme. This is lending that would otherwise not have been provided. No other proposed scheme of this kind would free up such additional capital or create new lending specifically for the use of UK companies. A charge will be made for the Government guarantee and although the risk will be relatively low, the Government will make prudent financial provision of £225 million in case of loan defaults.

Secondly, through a new enterprise finance guarantee we will support up to £1.3 billion of bank loans to companies with a turnover of up to £25 million. These will be smaller viable creditworthy firms that are struggling to access the finance they need because of the additional risk created by the downturn. Under the scheme, businesses will be able to borrow a maximum of £1 million, of which the Government will guarantee 75 per cent., to cover working capital or investment. They will also be able to convert their overdrafts into loans to free up their existing facilities. Banks will have to certify that each loan is additional to what they would otherwise offer. The scheme will operate on a first come, first served basis within the allocated proportion of the sum for each participating bank.

Thirdly, we are establishing a new £75 million fund to help viable small businesses with high levels of existing debt to raise long-term finance. The capital for enterprise fund brings together £50 million of Government funding with £25 million from major banks. Run by professional fund managers, the fund will provide equity investment to companies with viable business models that have exhausted traditional forms of finance. They will be able to use the capital to restructure their balance sheets and invest for growth.

Lastly, the Government want, if possible, to address concerns about the operation of credit insurance, which have emerged since the pre-Budget report. This insures suppliers of goods to other companies against payment default by those companies for the goods provided. As my right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform announced, the Government are discussing with trade credit insurance providers a Government scheme to help companies affected by reductions in their credit insurance. There will be a further announcement on this as we progress.

This overall package of measures offers not slogans, but real targeted help from today to those firms that need it most, while ensuring the banks are not insulated from normal commercial risk. It addresses the problem at the heart of the credit crunch: credit for viable businesses.

UK businesses are the backbone of our economy, so it is vital that the Government act now. We are absolutely determined to do everything we can to support viable companies through this global downturn, and I commend this statement to the House.

May I start by asking the Minister to apologise to the House for the way in which his Department has handled this announcement? It was leaked yesterday to a BBC journalist, it was followed up with interviews on the broadcast media this morning, and it was briefed out in a press conference from the Secretary of State, yet he and his Department intended to give only a written statement to the House. That is yet another display of this Government’s total disregard for proper parliamentary procedures, and Parliament will wish to express its displeasure at the contempt for it shown by Lord Mandelson.

We have been arguing for several months now that at the heart of this current recession is the collapse of credit. Companies of all sizes are experiencing significant difficulties, either as a consequence of the actions of the banks in protecting their own balance sheets or because credit insurers are withdrawing from the marketplace and breaking the payment chain. The CBI says that businesses will face the daunting prospect of refinancing £100 billion during this year. What number would the Minister put on the collapse in the volume of credit over the last year, and how does it compare with the figures the Government have announced today?

For the past few weeks the Conservative party has persistently called for the Government to adopt a big, bold and simple scheme which will open new channels of credit to help restore the flow of lending. Our national loans guarantee scheme would guarantee up to £50 billion of new loans to British business. It has been endorsed and supported by numerous commentators and trade bodies, but all the Government could do was rubbish it, yet now, today, they are announcing something based on it.

Can the Minister tell us how the Government will select the small firms that are eligible for the £1 billion of longer-term loan guarantees? Secondly, will the guarantees be available to foreign firms, or just to British companies? Thirdly, on what basis will the Government decide whether to buy the shares of a company? Fourthly, following the report in The Guardian today, will the Minister confirm that the £10 billion of guarantees for working capital will be self-financing, which is what we have argued for? Fifthly, what is there in the package for larger businesses, many of which are also our largest employers?

Today, redundancies have been announced at Jaguar Land Rover, Barclays and other companies, particularly in the retail sector. We are facing an explosion of insolvencies. Is not the package that has been unveiled today too little, too late and too complicated? The Government have spent months grandstanding and designing publicity stunts, during which time they have done absolutely nothing to help the 6,000 small firms that the Federation of Small Businesses says have gone under while we have been waiting for action. Now, they have announced a pale imitation of our proposals, which the National Institute of Economic and Social Research has said

“will look like another of the Government’s half-measures”.

The CBI says that the scale of the problem goes

“well beyond what the Government has announced today”.

How long must we wait for the bigger, bolder and simpler scheme that the Opposition have been proposing for months? Today, we have been given a small bandage for a massive wound to an economy that has been injured beyond measure by the irresponsibility of the Prime Minister.

First, may I say that I am pleased to see that the hon. Gentleman is still in his job? I had heard rumours that the right hon. and learned Member for Rushcliffe (Mr. Clarke) might be taking over from him—[Interruption.]

We have made a written statement to the House today, and I am very happy to answer this urgent question. We shall continue to keep the House informed, through debate and other means, about how we will roll out the proposals that we announced in the pre-Budget report and of other decisions that we make.

It is important to contrast our proposals today—a measured, well thought out package of measures comprising a working capital scheme, an enterprise finance guarantee and a scheme to help companies that need equity injection—with the Opposition’s untargeted and uncosted proposals. Our package of measures will be widely welcomed by small, medium and large firms.

The £1.3 billion package for small firms goes live today and, as I said in my statement, it will be made available on a first come, first served basis. The banks are participating fully in the scheme and have been given allocations. If businesses go to the Business Link website, they will find links that explain in more detail the eligibility criteria and how they can access the funding. That is a step change from the small firms loan guarantee scheme so that firms with a turnover of up to £25 million will be eligible. Companies with up to £500 million annual turnover will be eligible for the Government’s working capital scheme, which will operate on a portfolio basis. We will discuss with the banks the portfolio of assets that will form part of that. It is a crucial point that that turnover of up to £500 million includes a significant number of mid-cap companies. The scheme is not just for small companies.

I can confirm to the hon. Gentleman that the capital for enterprise fund will be run by professional fund managers who will make investment decisions in the normal way. It will be an important scheme for small businesses that need equity.

The measures that we are announcing today are effectively targeted and costed. I can confirm that on a prudential basis we have reached agreement that we will allow for £225 million to be made available in the case of loss. We expect the measures to be run on a break-even basis but we have looked thoroughly at the costs, unlike the Opposition, whose proposals are uncosted and untargeted and are not, we believe, the most effective way forward.

I know that many firms in my constituency will warmly welcome today’s announcement, but will my hon. Friend confirm not only that the help will be available from today but that all banks will be participating, so that we no longer have the spectacle of some fundamentally and absolutely healthy firms finding that their overdrafts are completely withdrawn or that credit lines continue to be made available only at excessive rates of interest, often with no notice at all provided by the banks to which they have been loyal customers?

As always, my right hon. Friend makes some very good points. It is important that all the major banks take part in the various schemes. We have certainly been in discussion with them all on those issues. On the issue of lending to small businesses in particular, she will be aware of some of the decisions that were announced as a result, I believe, of Government pressure back at the end of November and early December about maintaining available lending. It is not just about the banks that take part in the recapitalisation process. The other major banks are making strong attempts to do the right thing by small businesses.

As my right hon. Friend rightly says, there is an issue about the credit economy and about the price of credit, which is why we believe that the working capital scheme is an appropriately and effectively targeted measure that will help many businesses in this country through these difficult times. Over the next few months, businesses will be looking to renew their credit facilities. The fact that there is a Government guarantee for existing and new credit lines will, I am sure, be welcomed by companies and it should be welcomed by this House.

May I begin by saying that, given the scale and complexity of the measures that are being proposed, it would have been far more appropriate if they had been communicated to the House in a statement on the Floor of the House? In future, if the Minister has any further such measures to announce, will he do so in the usual manner of and make a statement to the House?

Is it not the case that the core issue for the economy remains the crisis of confidence in the financial system and the consequent inability of companies to gain credit? The proposals are designed to help alleviate that problem. I would welcome any well designed or thought through proposals, but it is somewhat difficult to know whether these proposals meet that test at this time and my fear is that they do not. The root cause of the problem in the financial system remains the uncertainty about the level of toxic debt in the banking system. It is like a gangrene in the financial body and until that gangrene has been amputated in terms of the loss of a nasty bank that uncertainty will remain. Our concern is that large liabilities will continue to be taken on by the taxpayer without proper quantification or clear strategic thinking. Do the Government not accept that such conflict is inherent in their instructions to the banks to maintain 2007 levels of credit while repairing their balance sheets? Those aims, frankly, are not compatible.

With regard to the working capital scheme, may I ask the Minister how the Government will ensure that those funds go to companies that actually need them—to companies that would not otherwise be funded in the normal way by their banks? Is there not a danger that banks will simply use the funds to lower their risk? How is there to be a proper definition of new lending? Will it simply be new lending to an existing company that would already have had it or will it be to a company that would not have got it, and how will that be quantified?

With regard to the enterprise finance guarantee, how will creditworthiness be rated and what will be the due diligence procedure? How will the Government ensure that finance goes to firms that need it rather than to those that would have received it anyway?

Lastly, I am happy to give a cautious welcome to the capital enterprise fund, as I have long believed that one of the barriers to growth for small companies has been the lack of affordable capital, but how will the capital be made available? The Minister said that it will come by means of equity and that the fund will be run by professional managers, but at the core are the terms under which the equity will be acquired. What is the internal rate of return that the Government will target for those fund managers? What thought have they given to making the funds available in that way?

Although I welcome the sentiment behind the proposals, I am unsure as to their practical effects and whether they will work. May I ask the Minister that at the earliest opportunity the House be given the chance properly to scrutinise what has been put forward and to debate it in a manner other than this?

As a Government, we are always prepared to see proper parliamentary scrutiny of Government decisions and I have no doubt that, subject to issues of commercial confidentiality, we shall want to make full information available.

We believe that today’s announcement is important. We have an effective package of measures that build on the work we have done so far—the recapitalising of the banks, the fiscal stimulus that has been announced and the discussions and negotiations we have had with the banks to make sure that those involved in the recapitalisation process continue to make lending available at 2007 levels, which the hon. Gentleman mentioned. All that is important. If he looks at the recent lending report produced by the Bank of England, he will see that the estimated net flow of lending to businesses for the whole of December actually picked up significantly compared with the previous month, but there are still issues, which is why the measures we have announced today are important.

The hon. Gentleman raised the issue of whether the working capital scheme would be additional. What we are doing, on a portfolio of companies basis, is seeking to agree with the banks a package of existing and new working capital credit lines, which we will guarantee as a Government. In turn, that will free up bank capital, and we have said that as a stipulation of participating in the scheme banks must use that freed-up capital to provide additional lending to businesses. That is something that will not be proposed in the Opposition scheme and is major additionality in the programme, which will, I am sure, be welcomed by the House.

The enterprise finance guarantee is targeted on creditworthy companies and because it is operated by the banks the process is that an individual company will apply for the scheme through its bank. Companies can get guidance from the Business Link website on how to go about the process but it will be up to the banks to apply due diligence in determining access to the scheme. I have already indicated the eligibility criteria in broad terms and more details are available.

Lastly, the hon. Gentleman mentioned capital for enterprise and I appreciate his cautious welcome for the scheme. It is targeted on smaller companies that need an equity injection that they cannot get through other means. It will be up to professional fund managers to determine the internal rates of return they might target and that is obviously a matter to which we shall return.

I welcome the statement made by the Minister. He mentioned fiscal stimulus. Is not that part of the package similar to the €50 billion that the German Government are putting into fiscal stimulus, the €26 billion in France and the $800 billion from President-elect Obama when he takes office? Building on the question put by the Liberal spokesman, is it not appropriate—as he said—to target during a recession so that the recession does not turn into a depression? Will my hon. Friend repeat the commitment that the Government have already given that they will do whatever it takes to avoid this recession turning into something longer and deeper, which apparently seems to be the wish of the Conservative Opposition?

My hon. Friend is absolutely right to point out that all other countries around the world are seeking to stimulate their economies. The fiscal stimulus we announced in the pre-Budget report is a measure that has been adopted by lots of other countries, including, most recently, Germany. The only party I am aware of that does not support fiscal stimulus is the Conservative party, and I have to say that the Conservatives are on the wrong side of the argument—

I think I must give at least one cheer for the package, because I am sure that it represents the first step on the Government’s journey to adopting the more ambitious proposals of my party, when the Minister will be forced to eat the unfortunate words he said about our proposals, which I fear misrepresent those proposals.

May I ask about the targeting of this scheme and existing schemes? Before my Select Committee this morning, the Secretary of State for Business, Enterprise and Regulatory Reform suggested that press reports that the funding would be targeted on specific sectors were wrong and that it would be available to all sectors. As the existing loan guarantee scheme is not available for the farming, transport, pub and post office sectors, for example, can the Minister clarify what the targeting—if any—of the scheme will actually be?

If the Conservative party wants to clarify its proposals I am more than happy to provide further commentary on them. At the moment they look to me to be uncosted, unfocused and poorly targeted and that remains my view, but until we see more detail, it is very difficult to say.

The working capital scheme is open to the non-financial sector and any companies with a turnover of less than £500 million. Details of eligibility for the enterprise finance guarantee scheme are on the Business Link website. It is a broader scheme than the small firms loan guarantee scheme, with which I know the hon. Gentleman is very familiar. I am sure that as Chair of the Select Committee on Business and Enterprise he will appreciate the fact that with the enterprise finance guarantee we are targeting companies with turnover of up to £25 million, which will bring in a lot more companies that badly need that loan assistance at the moment.

Could the Minister clarify when the funds will be available? I think he said that the £1.3 billion working capital scheme would be available from today, but can he tell us how long he expects that money to be available, given the number of firms that are likely to want to take advantage of it? Can he clarify when the enterprise finance guarantee fund will be available to business, and also the trade credit insurance scheme? It has come up in evidence to the Select Committee that many companies are concerned about trade credit insurance.

The enterprise finance guarantee scheme goes live today. We hope the working capital scheme will be up and running by 1 March. What is happening now is a process of detailed negotiation with the banks. They will be submitting portfolios of companies on which we will then provide the 50 per cent. guarantee. It is intended to last until 31 March 2010. We see it as a temporary measure to address the current global credit crisis. Of course, we will continue to monitor the situation and to see whether further measures need to be taken. Let us be very clear: we are providing a major Government intervention in the United Kingdom credit markets, as well as a major upgrade to the UK loan guarantee scheme. I am sure that businesses up and down the country will welcome that, and many will benefit from it.

Given the announcement by Jaguar Land Rover today, and the ongoing problem, will the Minister talk to the Secretary of State, and will they arrange to meet a small delegation to discuss the situation? There is a lot of concern in the west midlands, and in Coventry in particular, where the local newspaper has been running a campaign to give assistance to the Jag.

I am certainly happy to meet a delegation, and I will pass on my hon. Friend’s representations to the Secretary of State, who I know is a strong supporter of the car industry in the United Kingdom, and fully recognises its strategic importance to the UK economy. We have been in discussions with Jaguar Land Rover, and of course the redundancies announced today are regrettable. We see a major problem in the car industry right across Europe, and indeed worldwide. People simply are not buying cars, and that is threatening many car companies, not just Jaguar Land Rover. We need to look at what more we can do sensibly to support our car industry through this difficult economic time. Certainly, the package of measures that we announced today will be of benefit to the supply chain in the automotive industry.

In and around Cambridge, and in my constituency, there are a large number of biotech and high-tech research companies that need several years of up-front investment before a product is fit for the marketplace. That investment is, of course, now drying up—it has been doing so for some months. I am perplexed as to whether anything in the Minister’s package will help those businesses. If it does not, years of research and development, which in many cases could lead to health improvements or even life-saving products, will be completely lost. Will the package help?

I agree with the hon. Gentleman about the importance of the biotech industry to the United Kingdom. It has been going through difficult times. There are specific issues within that industry because of the long lead times before products get to market. Certainly, the biotech industry, along with other sectors of the economy, will be eligible for the working credit guarantee scheme. In addition, small companies that have a turnover of less than £25 million and meet the relevant criteria could benefit from the enterprise finance guarantee; that will obviously have to be decided on a case-by-case basis, after proper assessment. There is no reason why biotech businesses, and indeed businesses in other sectors of the economy, should not be able to take advantage of some of the support that the Government are making available as a result of these announcements.

May I say how much businesses in north Staffordshire will welcome the statement? It is important to get the overall policy, and the detail, right. The Minister says that the help will be given on a first come, first served basis, but will he accept that particular areas of the country, such as north Staffordshire, have a disproportionate number of job losses as a result of the economic downturn? Will he hold an urgent meeting with north Staffordshire MPs, the North Staffordshire chamber of commerce and industry, and the ceramics industry, so we can make sure that we take full advantage of this part of the Government’s overall package of available measures?

I am always happy to meet my hon. Friend and representatives from north Staffordshire. I am certainly aware of the issues affecting what might be called the A50 corridor, given the recent announcement of redundancies at JCB, the issues affecting companies at the other end of the A50 corridor, and the problems at Waterford Wedgwood, which were in the press recently, and in the ceramics industry in general. She will obviously want to advise companies in her constituency to look carefully at what is on offer as a result of the Government guarantees and the loan scheme. I am sure that there are companies in her constituency that would directly benefit from the measures that we are announcing—this is real help for businesses now. We need to get that message across, so that businesses apply for the real help that is available.

Small businesses have heard many fine words from this Government with regard to credit but have seen very little action, and frankly they are beginning to distrust whether anything will ever happen to help them. Will the Minister therefore tell us, in some detail, how he will assess and monitor the schemes, and how he will regularly report back to the House and the sector, to restore a little faith?

We will, of course, make sure that the schemes are fully monitored; the Government do that as a matter of routine, just as we are monitoring the lending of the banks, particularly the recapitalised banks. It is important to recognise that real help is being provided now. We should not forget that. That message needs to go out loud and clear to the business community. We will make sure that we report back to the House in the appropriate ways, through the normal channels, on the effectiveness of the programmes.

When I was the Minister responsible for small businesses, I successfully resisted attempts within Whitehall to wind up the small firms loan guarantee scheme, but I deplore the lack of basic understanding of how the scheme works shown by both Opposition Front-Bench spokespersons today. Will my hon. Friend point out to business and the public that while the extension will be welcome, and will help many companies, some of those companies—even those that, in other circumstances, would be successful—will go to the wall, and it will mean that tens of millions of pounds of Government money will have to underwrite loans when they are defaulted on? Will he ensure that his Department’s budget continues to have that money, and will he warn people that defending his Department’s budget is not one of the four priorities of the Conservative party?

My hon. Friend makes his points very well. Of course, he knows in detail how the small firms loan guarantee scheme works. It has been an effective policy instrument over a number of years. It was retargeted, in better economic times, on particularly small companies in a particular, small part of the market. It is wholly right that we should now focus on companies with a turnover of up to £25million, which significantly increases the number of companies that could benefit from the guarantees. Let there be no mistake: there are companies out there that will welcome the measures, because they need additional loan finance. We need to make sure that the Government get the marketing right, so that we can put those companies that need that finance together with the banks that can provide it, with the guarantees that are available from the banks themselves.

I, too, welcome the statement. The measure may be copied from the Conservative party, but that will not matter a great deal to the people who will benefit from it or to firms that find themselves in trouble because of an inability to borrow. There are three points that companies would make to me. First, any scheme should be simple, and companies should know who is and is not eligible. Secondly, it should be speedily applied when firms find themselves in trouble. Thirdly, it should be targeted at firms that are in genuine need as a result of short-term working capital difficulties.

Will the Minister give us an assurance about the eligibility criteria for the scheme? Will he assure us first, that it will be simple and transparent, and that firms will know when they are eligible; secondly, that it will be available quickly to firms when they find themselves in trouble; and lastly, that banks will not be able to use the scheme simply to replace their lending, rather than extending the money that is freed up to other firms?

The hon. Gentleman offers some good principles about how schemes should be designed. The enterprise finance guarantee and the working capital scheme are simple, transparent and targeted, and we believe that they will be effective policy instruments. It is important that businesses know that there is real help from today from the Government, through the banks, for those that have particular difficulties with access to loans and access to credit in the future.

The Government cannot help all businesses. What we can sensibly do is to consider what interventions we can make when we see major problems in the credit market and how interventions can be effectively targeted and costed. That is exactly what we are doing today. Over time we will see the measures producing significant benefit to many companies. We should not get hung up about where ideas come from. I would say that the Conservative proposals look very similar to the proposals that we announced in our pre-Budget report, but I do not want to play silly, party political games about this. People are interested in whether the measures will help companies and jobs for the future. People who are worried about their jobs and about the future of their business will welcome these steps, rather than get into some puerile debate about who thought up the idea first.

I warmly welcome the announcements that my hon. Friend has made today. My county has a large number of small and medium-sized enterprises. What will my hon. Friend do to ensure even access to and take-up of the schemes across the regions? How will he ensure that companies outside the south-east can get proper information and advice not just through a website but face to face, so that they know how to access schemes and which one is best tailored to suit their individual needs?

That is an important issue. We want to ensure equal access to the schemes right across the regions. It will be up to Business Link and the regional development agencies to help to promote the schemes. Chambers of commerce throughout the country will no doubt want to promote what is on offer, as will the CBI in the regions. Business Link will be one of the key means whereby companies can access information. A portal is available on the Business Link website, and most companies these days have access to the internet and will quickly be able to understand what is on offer. We need to monitor that regionally as well as nationally as we go forward, to ensure that companies that need support throughout the country are able to access it.

We heard mention of the German stimulus package. I have a copy of that document, “Entschlossen in der Krise, stark für den nächsten Aufschwung”, which details a €100 billion loan guarantee scheme, including, crucially, for large businesses. The document states that such a large scheme is possible because a large balance budget was built in the good years, unlike the situation in this country. The Germans really did fix the roof while the sun was shining. Can the Minister explain why his package is so small, compared with that on offer in Germany and compared with that offered by the Opposition?

Order. This may be an opportune time, at the start of the new year, to remind hon. Gentlemen, and hon. Ladies, of course, that brief questions often lead to brief replies. I can then call Members more quickly.

By way of a brief reply, my understanding is that the German scheme has a turnover limit of €500 million. I could be wrong about that, and if so, I apologise, but £500 million sterling for the working credit guarantee scheme covers pretty much 99 per cent. of companies in the United Kingdom that are potentially eligible for the scheme. The hon. Gentleman should welcome it as an important measure.

The Minister rightly recognises the redundancies announced today by Jaguar Land Rover as a result of reduced car sales. The Society of Motor Manufacturers and Traders has said that one of the reasons for the reduction in car sales is the absence of credit with which to buy cars. The announcement appears not to give people any hope that that credit will be available. Will the Government offer people any hope in that regard?

The hon. Gentleman knows that as a fellow west midlands MP, I have tremendous sympathy for those at Jaguar Land Rover who will hear today that they are being made redundant. We need to do all we can as a Government to make sure that they find jobs in the labour market again as quickly as possible. On trade credit insurance more generally or specifically for the motor industry, my right hon. Friend the Secretary of State has been actively involved in discussions about that. Officials are talking to the trade credit insurers and, as I indicated in my original comments, we hope to make a further announcement as things move forward.

Given that a significant proportion of previous lending volumes in 2006-07 was made by foreign banks and by non-bank lenders, how can we judge whether a £10 billion or a £20 billion scheme will be sufficient, when the Minister has not given us his assessment of the lending gap? Can he give us that figure?

The hon. Gentleman makes a key point when he refers to foreign banks and foreign bank lending. One of the significant things that has happened over recent months is that foreign bank lending in the UK has declined significantly. Domestic banks continue to show quite strong figures for lending, but overall there is a credit shortage. The hon. Gentleman will have seen some of the figures published by the Bank of England in its recent lending panel report. I do not need to elaborate as those are a matter of public record. It is important to recognise that this is a key issue. One of the features of our working capital scheme is that by providing bank guarantees as it does, it frees up some capital that will be reinvested in lending, providing additional capital to UK companies in the marketplace. That is important and it is something that the Conservative scheme, to the extent that I understand it, does not do.

Many small businesses in my constituency have always been frustrated by the fact that a lot of public money is being poured into the banks but that does not seem to result in a better credit situation for small businesses. Anything that the Minister can do to monitor what is going on and ensure that the scheme delivers extra money will be welcome. Specifically for the north-east of Scotland, will he work with the Department of Energy and Climate Change and the Treasury to see what else can be done for the North sea, where large investors have relied on the credit market? The Government’s policy is to bring in new entrants who have to borrow to invest in the North sea, and that market is drying up. If the small businesses do not have the custom of the large company, they are in just as much trouble as if they cannot borrow from the bank.

I take the hon. Gentleman’s point entirely. Other parts of Government are aware of the issues and are actively discussing them. If he wishes to talk to officials or other Members about that, I shall be happy to facilitate meetings.

The Minister may know that many hundreds of my constituents work for JCB and Wedgwood. It is therefore a matter of grave concern that the customers of JCB should have credit available in order to buy its superb machinery—the same applies, of course, to companies such as Wedgwood. Will the Minister guarantee—he is offering a lot of guarantees—that that credit will be made available to enable those incredibly good pieces of equipment to be produced and purchased? Will he also give me an assurance that I can come to any meetings that he holds with the Members representing Stoke-on-Trent or any other Members of Parliament whose constituents are equally affected?

I should like to place on the record my belief that JCB is a tremendous, well organised and well run company that is going through difficult economic times at the moment. It has done all it can to maintain employment among its work force, but the demand for its products is not there at the moment. One of the reasons for that has been a lack of credit, and I hope that some of the measures that we have announced today will help the potential purchasers of JCB machines in future.

The Government cannot run businesses; it is up to businesses themselves to make decisions about how they should right-size their business according to the economic conditions and their views about the future. Business people at JCB and in the automotive industry, the construction industry and other sectors of the economy have to make those sorts of decisions. We can, however, provide a sensible framework of support for viable businesses, to help them through difficult times. That is what we are doing today.

When will the Government wise up to the fact that the banking system is simply not working? Very often, larger companies’ deals are reneged on and banks are trying to foreclose on them. I do not know what world the Minister is living in, but it seems to me to be a parallel universe. What leverage do the Government have left over the banks to get them banking and lending properly again?

We are in regular discussions with the banks. The hon. Gentleman will be aware that through UK Financial Investments Ltd we manage an arm’s length interest in the banks that took advantage of the recapitalisation announced on 8 October. We monitor bank lending very regularly, and we have good dialogue and co-operation through the lending panel. He has to accept that the issue is not only about UK banks—banks worldwide have major credit issues. An adjustment is going on in our economy and the global economy. As a Government, we can take sensible measures to help companies and individuals through these difficult economic times—measures such as those announced today and those on home buyer support and other areas, to help people through difficult times.

In recent weeks, hundreds of my constituents have lost their jobs, and many more who work for perfectly good companies fear the same fate, because the businesses for which they work are effectively being throttled by the attitudes and approaches of the banks. In many instances, the basic trust between banks and businesses has broken down. Will the Minister assure us that he will do more than carefully monitor the situation, and actively manage things so that businesses that need the cash, get it?

We are actively intervening, and the measures announced today are major steps forward in providing credit support and loan guarantees to companies. We cannot manage every individual transaction—that would be complete nonsense, and neither the hon. Gentleman nor any other Member would sensibly suggest that. However, we are ensuring that there is a sensible framework of support and that a range of policy instruments is available through the banks to help companies facing problems at the moment. That is what we are doing, and we believe that it is the right policy instrument. However, we will continue to consider the situation and discuss matters with the business community. If more can sensibly be done, we will want to do it.

Bills Presented

Welfare Reform

Presentation and First Reading (Standing Order No. 57)

Secretary Purnell, supported by the Prime Minister, Mr. Chancellor of the Exchequer, Mr. Secretary Straw, Secretary Alan Johnson, Secretary Hazel Blears, Mr. Secretary Hoon, Secretary Ed Balls, Mr. Secretary Denham, Mr. Secretary Paul Murphy and Mr. Secretary Jim Murphy, presented a Bill to amend the law relating to social security; to make provision enabling disabled people to be given greater control over the way in which certain public services are provided for them; to amend the law relating to child support; to make provision about the registration of births; and for connected purposes.

Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 8) with explanatory notes (Bill 8-EN).

Coroners and Justice

Presentation and First Reading (Standing Order No. 57)

Mr. Secretary Straw, supported by the Prime Minister, Mr. Chancellor of the Exchequer, Secretary Jacqui Smith, Secretary Alan Johnson, Mr. Secretary Woodward, the Solicitor-General and Bridget Prentice, presented a Bill to amend the law relating to coroners and to certification and registration of deaths; to amend the criminal law; to make provision about criminal justice and about dealing with offenders; to make provision about the Commissioner for Victims and Witnesses; to make provision relating to the security of court and other buildings; to make provision about legal aid; to make provision for payments to be made by offenders in respect of benefits derived from the exploitation of material pertaining to offences; to amend the Data Protection Act 1998; and for connected purposes.

Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 9) with explanatory notes (Bill 9-EN).

Iraq: Future Strategic Relationship

I beg to move,

That this House has considered the matter of Iraq: future strategic relationship.

Our debate this afternoon is rightly focused on Britain’s future relationship with Iraq. As right hon. and hon. Members on both sides will be aware, in the past few days we have passed an important milestone. On 1 January, the Government of Iraq assumed full sovereignty for the whole country from the coalition. That is a truly remarkable achievement for a country that, at times, has looked at risk of being sucked under by a wave of terrorist extremism.

The termination of the security aspects of the chapter 7 United Nations Security Council resolution is not only confirmation of Iraq’s regained sovereignty, but evidence of its re-emergence as a new democracy—one that no longer represents a threat to its regional neighbours or its own people. That we have reached this stage at all is testament to the hard work, commitment and, above all, sacrifice of coalition service personnel and civilians, as well as to the service and sacrifice of the Iraqi security forces themselves.

I am grateful to the Secretary of State for allowing such an early intervention. We now have a timetable for withdrawing from Iraq, which is the right and proper thing to do. When will we finally have a timetable for an inquiry into the worst UK foreign policy disaster in living memory?

I do not accept the last part of the hon. Gentleman’s comments at all; I shall come to the first part in due course.

I am sure that hon. Members will join me in expressing our profound gratitude and admiration to all the British forces who have served in Iraq since 2003. In particular, I pay tribute today to the 178 UK personnel who have died on operations in Iraq and the many hundreds who have been wounded, many of them very seriously indeed. All of us in this place and, I believe, the vast majority of the people of Iraq will never forget their sacrifice in the cause of freedom and security.

We continue to work with the Iraqi Government to bring to justice all those responsible for illegal acts against British citizens, including those suspected of involvement in the murder of the six Royal Military Police in June 2003. I am very pleased that we have made progress on that investigation in recent months, and I hope to see further developments in due course. I stress to the House that we remain committed to doing everything that we can to secure the safe release from custody of the five British citizens taken hostage in May 2007.

A new chapter is now opening in our relationship with Iraq, and I want to begin with the issue of security. The security situation in Iraq has transformed over the past year. Today, violence across Iraq is at its lowest level since 2003. Although still capable of appalling atrocities, al-Qaeda in Iraq has suffered severely at the hands of both Iraqi and coalition forces.

A few moments ago, the Secretary of State mentioned terrorist extremism and he has just mentioned al-Qaeda. Will he admit to the House that al-Qaeda was not in Iraq in any substantial form before March 2003? A question has been put to him about an inquiry; there are huge questions to ask about why terrorism was allowed to grow after we went into the country. Why did we not have a plan for peace after the initial war? That is why the House is asking for an inquiry.

At the time of the military intervention in March 2003, we were grateful to have the full support of the Conservative party as Her Majesty’s Opposition. We never made the point—neither in 2003, nor at any other time—that we were intervening in Iraq because of al-Qaeda. The hon. Gentleman should remind himself of the reasons for British and coalition intervention in Iraq in 2003.

It is interesting to hear the grundling and grumping from Conservative Members when they get the whiff of opportunity. I am trying not to be partisan today, but I certainly will be if people want me to be. Personally, I do not want to be. We are always stronger as a country when we stand together and we did stand together in the face of an unspeakable and barbaric dictatorship. As I said, Iraq is now a democracy, and not a threat to its regional neighbours or its people. In intervening, we stood up for the authority of the United Nations and the UN Security Council resolutions.

I shall not give way to the hon. Member for Bournemouth, East (Mr. Ellwood), as I have just done so. I give way to the hon. Member for Kingston and Surbiton (Mr. Davey).

Can the Secretary of State confirm that, prior to the decision to go to war, the Government received from the British intelligence services information and judgments that if the war occurred terrorism in Iraq would increase?

I cannot confirm that, I am afraid. [Interruption.] Well, the hon. Gentleman asked me the question and I have given him my answer.

I entirely acknowledge that the Conservative party did indeed stand shoulder to shoulder with the Government. None the less, will the Secretary of State accept that he was slightly incorrect a moment ago when he said that the Conservative party had wholeheartedly and altogether supported the Government? Many of us abstained, as in my case, and, of course, quite a large number of Conservative Members of Parliament voted against the war.

The hon. Gentleman is responsible for how he votes in this House. He has drawn attention to his voting record on Iraq, and I am grateful to him for doing so.

I supported the war, and I have not demurred from that decision. Nevertheless, the point raised by my hon. Friend the Member for Bournemouth, East (Mr. Ellwood) is very relevant. I arrived in Basra a few weeks after the invasion and was asked in Anglo-Saxon terms by the general officer commanding, “Where the hell is DFID?” There was no plan to capitalise on the first 100 days, and many of the bloody consequences that we have dealt with stem from that early failure of lack of planning. Will the Secretary of State admit that that is an issue that we should explore, not least because we need to learn some lessons for Afghanistan?

I want to talk about an inquiry in a minute when I get to that part of my speech. I am grateful to the hon. Gentleman personally for the support that he has given and for the fact that he has been consistent in the views that he has taken on Iraq. Consistency in politics is a pretty good commodity.

I will give way to my hon. Friend in a second—[Interruption.] No, indeed, and I want to make this clear to my hon. Friend as well. I fully respect the views of all hon. Gentlemen and Ladies in this House about these issues. We are invited into this House by the electorate, we come here and we are entitled—in fact, it is our responsibility—to exercise our judgment in these matters. I have no criticism of people’s positions on this, but I am afraid that I have less sympathy with those who change their position at the whiff of political opportunism—I have no time for that whatsoever.

I thank the Secretary of State for giving way. What estimate can he give us of the number of civilians who have died in Iraq since 2003 and the number of Iraqis who are still in internal or external exile from that country? What investigations will the British presence and any other presence undertake into the effects of the use of cluster bombs and depleted uranium weapons on the people of Iraq for generations to come?

As my hon. Friend will know, I am not in a position to answer his question about the number of Iraqi civilian casualties. It has never been the job of the British military to quantify across Iraq the totality of civilian casualties. That is simply not a job we could do; first and foremost, it is the job of the Iraqi authorities. I am not going to stand here today and say that there have not been significant, appalling loss of life in Iraq since 2003. It has been an extremely difficult campaign, and the violence and terrorism that it has engendered have been significant—the point that I think that the hon. Member for Kingston and Surbiton was trying to make.

The purpose of this debate is to talk about the future relationship between the United Kingdom, and our allies and partners, and Iraq. I perfectly understand the desire of hon. Members in all parts of the House to go over the decisions that led up to the invasion of Iraq. The hon. Member for North Essex (Mr. Jenkin) referred to the role of other Government Departments in the campaign in Iraq. I am sure that when an inquiry is established, these are appropriate issues that can be looked at. I am not in a position today to say to the House when such an inquiry will be established—those are matters for my right hon. Friend the Prime Minister. I want to deal with that issue in more detail in due course.

In some of the interventions that have been made so far, it has almost been suggested that history began in 2003—yet before that time, the number of people who were being killed in Iraq was absolutely horrific. The story of 2,000 villages being wiped out in 1988 by the use of chemical weapons by Saddam Hussein is something that cannot just be ignored by this House. Admittedly, it was not the reason we went to war, but let us not pretend that history began in 2003.

The right hon. Gentleman has made the point much better than I have. I agree with his comments. That is not the reason we went to war— that is also very clear from the comments made by my former right hon. Friend Tony Blair in this House on many occasions, and by others since. We should not forget the past in Iraq. It is appropriate to remind ourselves in debates such as this about the legacy of Saddam and the brutal, murderous regime that he presided over. Iraq, in case there was any doubt about this in any part of the House, is a better place—[Interruption.] It is a better place without Saddam and the Ba’athist regime that he represented than it was with the Ba’athist regime. [Interruption.] As for the hon. Gentlemen who are grumbling away, I am sure that we will all have to put up with listening to their speeches in due course. The hon. Member for Carmarthen, East and Dinefwr (Adam Price) will have a chance to make his speech; I just want to get on with mine, if that is okay.

I want to start with the issue of security. As I said, the security situation in Iraq has been transformed over the past year.

The Secretary of State has drawn attention to the circumstances of Iraq under the reign of Saddam Hussein. Does he recall that in the Scott inquiry report, the learned judge who conducted that inquiry recorded the fact that within some weeks of the events at Halabja, the then British Government extended the amount of credit that they were willing to give to Saddam Hussein for purchasing British manufactures?

Indeed, I am aware of that. I am afraid that I do not accept responsibility for that; those were the actions of the previous Government, and, I have to say, not a very credible series of actions.

Today, violence across Iraq is at its lowest level since 2003. While still capable of truly appalling atrocities, al-Qaeda in Iraq has suffered very severely at the hands of coalition forces. Increasingly—this is the positive side of it—Iraqi authorities are able to deliver security on the ground with only limited coalition support. Coalition forces have trained and equipped more than 560,000 Iraqi security forces personnel since 2004, meaning that there are about four Iraqi security personnel for every coalition soldier deployed in that country. In parallel, the coalition has worked very closely with the Iraqi Defence and Interior Ministries to develop their capacity both to support the front-line security forces and to exercise effective oversight of them—something that is very important in a functioning democracy.

No one should be complacent, and we certainly are not, about the security situation across Iraq as a whole. Violence remains at an unacceptably high level in some parts of the country, and undoubtedly significant security challenges remain. However, I believe that there is now good reason to be optimistic about the future of Iraq. That is very much the mood—as I found for myself and other right hon. and hon. Gentlemen have too—in the city of Basra and in and around southern Iraq. The Defence Committee reported last July that the security situation in Basra was “a world away” from what it had been the year before. Very recently, the US ambassador in Iraq, Ryan Crocker, spoke of the situation in the south of Iraq as being “an extraordinary transformation”.

I saw that for myself during a visit to downtown Basra last year. The locals with whom I spoke were confident in the ability of the Iraqi security forces to preserve the peace that they now enjoy and were optimistic about the future. We should celebrate that. I believe that that sense of optimism is now widespread across Iraq. A few days ago, I spoke to the British commander in Basra, Major-General Andy Salmon, who is doing a fantastic job there—I hope that that is also the view of others in this place. He reported that morale among our military and civilian personnel in Basra is extremely high. It is high because they are confident that they will leave behind a positive and lasting legacy—not just of improved security but of increasing prosperity, about which I want to say more in a few moments.

Basra is now reaping the dividends of coalition strategy in southern Iraq. Since 2003, UK forces have worked tirelessly to provide security, while simultaneously developing the capacity of the Iraqis themselves so that progress can be sustained over the long term. We have trained more than 20,000 Iraqi soldiers since 2004: first, as part of building up the 10th Iraqi army division in south-eastern Iraq; and, since 2007, training the 14th division in Basra itself.

UK personnel have also helped the coalition to train Iraqi naval personnel and marines and more than 22,000 policemen. That long-term project to empower the Iraqis has proved instrumental in transforming the security situation. Only a year or two ago, as we all know, the situation was very different. Our presence in Basra—and I accept this—was acting as a magnet for militia violence and as a propaganda tool for extreme nationalists. We knew, as the Iraqi Government knew, that the British armed forces could not by themselves solve all Basra’s security problems. It was essential that the Iraqis took the lead. We therefore developed, in consultation with the Iraqi Government and our coalition partners, a strategy under which we made a calculation about the right moment for UK forces to withdraw from the centre of Basra—very much on our own terms and to our own time scales—and adopted a role of tactical overwatch. The Iraqi authorities were given control of security. As General Petraeus, who personally approved the strategy, said at the time, that was

“a positive step on the path to Iraqi self-reliance”

and it began rapidly to change the security dynamics in Basra. It is one thing for a nationalist Shi’a militiaman to aim his rifle and to shoot at a British soldier whom he perceives as an occupier; it is quite another for him to shoot a soldier wearing the uniform of his own country.

Prior to our withdrawal to the airport, can the Secretary of State give a categorical assurance that there were no discussions with Shi’a militias that, as a quid pro quo for our withdrawal, there would be no attacks on British troops?

There were discussions with local militia; of course there were, and we conducted those discussions openly and with the full consent and agreement of the Iraqi Government and our coalition partners. In counter-insurgency operations, as I am sure the hon. Gentleman would be prepared to accept—I hope that he would—there are times when we need to talk. That is inevitable if there is to be a sustainable long-term solution. I reject absolutely any suggestion that there was a covert agreement that unfairly favoured British security forces. That is not the case at all.

Could the Secretary of State explain why, if the British forces remained in overwatch once they withdrew to the airport, things had to be restored by US forces when the situation went bad?

That is not a full and complete description of what happened later in 2008, and I want to come to Operation Charge of the Knights in a few moments. I do not accept the fundamental premise of the hon. Gentleman’s comments because it rests on the assumption that British security forces took no role in that operation and, as he knows, that is not the case.

Does the Secretary of State not accept that when we made the accommodation and went back to the airport, we did not hand Basra over to the Iraqi Government or the Iraqi army? We handed it over to the Jaish al-Mahdi militia.

I do not accept that as a description either. I would be perfectly prepared to accept as fact the strength and activity of local militia groups in Basra. They were extremely active, and targeted their fire not only at us, but at Iraqi security forces. The point of the agreement, however, was to transfer security authority to the Iraqis. That is what we did, and we had to face, as the hon. Member for Newark (Patrick Mercer) recognised, a continuing level of insurgency in Basra. We addressed that together with our coalition and Iraqi partners.

I have given way to all of the hon. Gentlemen who are seeking to intervene. I hate to say it to the House, but I still have quite a long speech ahead of me. Given that all these issues can be fully aired and addressed in the debate, I would prefer to make a little progress with my speech.

Our withdrawal set the conditions for the Iraqi soldiers that we had trained to secure public support as the first step towards winning back their city from the militias. In March last year, Iraqi security forces surged into Basra, as several hon. Members mentioned, to tackle militia violence and influence. By devising and implementing their own solution, the Iraqi security forces had proved themselves capable of solving an Iraqi problem. During these operations, and contrary to a lot of highly inaccurate reporting, the UK met the Iraqis’ requests to provide close air support for ground operations. We provided aviation assets, artillery, logistics and medical expertise to support the operation of coalition and Iraqi forces. The US also played an important role, which I am happy and pleased to acknowledge, and allowed their personnel embedded with the Iraqi reinforcements that they were partnering in the north of the country to be redeployed to support their engagement in Basra. The end result of Operation Charge of the Knights represented a huge step forward: a secure and stable Basra. I hope that that is not in dispute. The success of that operation and the sustainment of the security gains it achieved are a vindication, not a contradiction, of the long-term strategy that we have pursued with our Iraqi partners.

General Odierno, the current US commander in Iraq, said after a recent visit that our efforts there offered a model for successful transition across Iraq, and said that Basra is the way forward. That success will provide the foundation for our enduring bilateral defence relationship with Iraq in the years to come. Looking to the future, negotiations to ensure a firm legal basis for our military presence in Iraq in 2009 were concluded successfully at the end of 2008 and the new legal basis took effect from 1 January.

I am quite concerned, and would like to ask my right hon. Friend whether I have got this right. I listened to the debate about Operation Charge of the Knights, and I believed that the Chief of the Defence Staff made it quite clear to us that our forces’ involvement in that episode was to help

“to improve the conditions in the city and set the foundations for future progress”.

I would appreciate it if my right hon. Friend would go back over that episode, and state whether I have interpreted Sir Jock Stirrup’s words correctly.

I am not entirely sure that I know the context within which the Chief of the Defence staff made those remarks, or the quote that my hon. Friend is relying on. I have presented a full and fair account of the operations that led up to Operation Charge of the Knights, and an account of the operation itself. It was an Iraqi-led security mission designed to deal with the security challenge posed by local militia groups in the city, and it was supported strongly by US embedded units and British forces in Basra. The purpose of the withdrawal into the contingency operating base in 2006 was as I have described.

I am hearing in the House today that British troops “eventually” got involved. As I understand it—and this was not just quoted in formal Ministry of Defence material I have read, but in an article in The Guardian on 18 December—it is clearly stated that the Iraqis drew up the plan with British prompting and help. I am sure that I have got this right, but I want it on the record. The focus of the plans was to contain the situation on the ground while the Iraqis grew their own forces to ensure that they could deliver whatever was required.

That I certainly can confirm. British forces were strongly in support of this operation and were keen to encourage the operation to begin. It is completely untrue to suggest, if anyone is doing so, that British military forces were reluctant to be involved in Operation Charge of the Knights or somehow did not support it.

With great respect to the hon. Gentleman, no. We are all looking forward to hearing his speech, but we will hear it more quickly if I can get on with my remarks.

Looking to the future, we have successfully reached an agreement with the Iraqi Government on the status of our forces, and I have arranged for copies of the new relevant texts to be placed in the Library. Many right hon. and hon. Members have expressed their wish for a public inquiry into the Iraqi war. As I said, my right hon. Friend the Prime Minister has reiterated our long-standing position that this is a matter we shall consider once our troops have come home from Iraq. That has not happened yet. We still have significant numbers of UK combat forces deployed in Iraq, and it is right that at this moment, our full focus remains on completing the tasks we have agreed with the Government of Iraq. We remain on track to complete those tasks by the end of May. I am delighted to report to the House that, as many hon. Members will know, Basra international airport was transferred to Iraqi civilian control on 1 January and is now a fully operational civilian airport. That is the culmination of an enormous amount of work by the RAF’s 903 Expeditionary Air Wing, and represents the completion of one of our key remaining tasks in Iraq. Meanwhile, the 14th division of the Iraqi army in Basra continues to make excellent progress, as do the Iraqi navy and marines, whom UK forces in particular are heavily involved in training at Umm Qasr.

During the Queen’s Speech debate on foreign policy, the Foreign Secretary confirmed that it was not the case that every single British troop would have to come home before an inquiry could be held. The Prime Minister said in his statement on 18 December that by 31 July this year, there would be fewer than 400 British troops remaining in Iraq. If that is the case, will that be the trigger for an inquiry? In the Secretary of State’s estimation, how few troops must remain before an inquiry can be called?

I shall not argue with any of the figures that the hon. Gentleman has used. My point is that we have 4,000 combat troops in Iraq, and they will be there for several months. There is no prospect of an inquiry starting while deployment continues at that level. As I have said, I am not here to make an announcement on the timing of the inquiry. Such an announcement will be made in due course, once the Prime Minister and ministerial colleagues have come to a decision about the right time for such an inquiry.


From the end of May onwards, as I have said, there will be a significant reduction in UK force levels as we move to a more normal defence relationship as part of a broad-based and enduring partnership with a democratic Iraq, in which I hope economic, commercial, cultural and educational relationships will come increasingly to the fore. UK military personnel who remain in Iraq after 31 July will do so at the request of the Government of Iraq, to deliver and support specific long-term training initiatives agreed between ourselves and the Government of Iraq. On the basis of our discussions with the Iraqi Government to date, I anticipate that those future activities will involve no more than about 400 UK personnel.

As we develop our bilateral defence relationship, our aim is to focus on key strategic areas for Iraq, in which UK personnel can bring particular expertise to bear and make a real difference. In particular, consistent with a recommendation by the Select Committee on Defence, we have offered to continue to provide maritime support and naval training. That will build on the impressive work done to date by the UK-led coalition naval training team, which has helped to develop a new Iraqi navy from the broken force inherited from the previous regime.

The Government have chosen as the title of the debate Britain’s “future strategic relationship” with Iraq. Will the Secretary of State confirm that in fact we will not have a strategic relationship with Iraq? A strategic relationship would normally imply an ongoing defence commitment or something comparable. There will be some support for naval training, but otherwise we hope that our relationship will be rather like those that we have with other countries in the region, such as Jordan and Egypt. Surely the use of the term “strategic relationship” simply does not describe what will exist after next June.

No, I do not accept that. I am only on page six of my speech, and I want to come to the other aspects of our relationship, including economic and political aspects. Together with the measures to be taken as part of our security relationship with the state of Iraq—I have not described all of them, as the right hon. and learned Gentleman will know—those matters will genuinely constitute a long-term strategic relationship with a very important partner nation in the middle east that has a regionally significant contribution to make across a wide range of subject areas. I therefore do not accept that what he has said is true.

I could go into other aspects of our military and security relationship if the right hon. and learned Gentleman would like me to, but it would not be true to say that the extent of our military engagement after July will be confined to continuing training with the Iraqi navy. We envisage an ongoing role in working with the Ministry of Defence to improve its capabilities and effectiveness. That is the Iraqi Ministry of Defence—the capabilities of my Ministry are fine and do not need any improvement. Another aspect of our relationship will be helping the Iraqi army to develop an officer corps, and working with non-commissioned ranks to improve the training and effectiveness of those very important people.

The right hon. Gentleman is, of course, correct that I have not yet heard the rest of his speech, but I have reread the statement that the Prime Minister gave to the House on similar themes on 18 December. He said that our relationship with Iraq would be

“the realisation of a normal defence relationship, similar to those we have with our other key partners in the region”.—[Official Report, 18 December 2008; Vol. 485, c. 1235.]

We do not have strategic relationships with other countries in the region; we have friendly, normal relations. I suggest again to the Secretary of State that a strategic relationship implies an ongoing, substantial commitment, such as the United States will certainly have to the overall defence of Iraq. As I understand, it is no part of the British Government’s policy that we should give long-term commitments similar to those being offered by the United States.

I have great respect for the right hon. and learned Gentleman, so I shall not make the point that we are dancing on pinheads in trying to define what we mean by “strategic”. I do not wish to respond to his point in that way. Clearly, we will not have the kind of ongoing military relationship that the United States will have with Iraq. That is perfectly true. However, considering the other issues that I shall come to, I do not believe that it would be wrong to describe our future relationship with Iraq as being of a strategic nature. It will be, and perhaps we can explore that in more detail during the contributions of other Members.

It seems to me that the right hon. and learned Member for Kensington and Chelsea (Sir Malcolm Rifkind) put his finger on a very important point. The reason why we may be indulging in semantics is that we are seeking a firm definition of what the relationship might be. The nature of it will determine what obligations this country might have towards Iraq. In the light of current public opinion on our commitment to Iraq, those obligations are clearly of the most significant public interest. The Secretary of State says that our relationship with Iraq will not be like that of the United States, but is he willing to be more definitive about its nature?

Well, I may have the chance to do that if I make a little more progress. The right hon. and learned Gentleman is another distinguished Member, and I suggest to him that we have forged a unique and distinctive relationship with Iraq, through some years that have been very difficult given the nature and strength of the insurgency of al-Qaeda, Sunni, Shi’a or whatever origin. I would therefore apply the word “strategic” to the relationship, which was forged in extremely difficult circumstances when the state of Iraq was under siege from terrorist violence.

The actions and interventions of the coalition forces ensured that we could get to this point, and that we could have such a debate about the future of the state. I suspect that many Members had written that off as impossible maybe only 12 or 18 months or two years ago. There is always a temptation in the House to rewrite history, and we all fall victim to it from time to time. We are very keen historians. However, I do not believe that it is fair or accurate to describe as a failure our relationship or the intervention and its consequences, as some have tried to do. If we have the courage to take the opportunity, we can build a strategic relationship and put behind us the disagreements that have bedevilled the debate about Iraq and the region. I am definitely on the side of those who say that we should do that.

The Government of Iraq have indicated that they would like to continue to receive other military training and education from the UK. I briefly described some aspects of that to the right hon. and learned Member for Kensington and Chelsea (Sir Malcolm Rifkind). We intend shortly to begin more detailed discussion to establish the precise scope of that future activity, but it will be broadly in the areas that I referred to a moment ago.

I turn to the developments in Iraqi democracy and politics, and I shall also come to Iraq’s economy and economic prospects. The Iraqi people have embraced democracy with enormous, and maybe not surprising, enthusiasm. The parliamentary elections in December 2005 saw a turnout of more than 80 per cent., and 2009, too, will be a year of elections, not tyranny, with both provincial and national elections scheduled. Provincial elections planned for later this month will provide Iraqis with the opportunity to hold local politicians to account, and give those who boycotted earlier elections and those who have now renounced violence an opportunity to participate in the political process. In Basra alone, an astonishing 1,272 candidates, including more than 300 women, have registered to compete for only 35 seats on the local provincial council—not like elections in my constituency.

Religious and ethnic minorities will be guaranteed representation on key councils across the country. Nationally, political debate is increasingly lively, with political parties beginning to move away from simple sectarian groupings and form alliances around specific issues. We should all welcome those developments.

Inevitably, there have been problems, but, encouragingly, they have been resolved through political dialogue—not through violence—such as the compromises to ensure the return of the Sunni bloc to Government last summer, and the hard-fought, but ultimately successful negotiations on the terms of the provincial elections law.

The Council of Representatives is maturing as a voice for the Iraqi people. Initially beset by problems of sectarian groupings and absenteeism, there is now an increasing understanding of its role and responsibilities. Significant challenges remain, but, as an institution, it witnesses more political debate and questioning than was evident under any so-called “parliament” in the days of the former regime.

We will continue to support Iraq’s political and economic development, including through our engagement with international organisations such as the United Nations and the European Union. I very strongly welcome the commitments that the EU made in November.

That leads me to economic regeneration and development. Iraq enjoys major oil and gas resources and a skilled and educated work force, which once placed it at the economic heart of the middle east. However, after decades of neglect, Iraq’s private sector is in desperate need of renewal to capitalise on the country’s huge potential and to bring jobs and prosperity to local people.

As the Defence Committee again observed,

“the UK Government has the opportunity to help Iraq realise and reap the benefits of its potential wealth”,

and that will continue to be a major objective of our future strategic relationship.

Why is the private sector the priority for the Government and the occupying forces in Iraq? The public sector has been devastated—by bombs and all sorts of destruction. Why, therefore, have a lop-sided policy for privatisation? Is not that old-fashioned and reactionary of the Government?

My hon. Friend makes a serious point, but let me make two or three comments. We are not talking about the Government’s policy—

I am describing the Iraqi Government’s policy to develop a more vibrant private sector. That is the Iraqi Government’s decision, not a judgment call by the British Government. Oil and gas reserves are significant, with assets in the north and south of the country. The Iraqi Government recently sponsored a conference in London to consider the role that international energy companies can play and the extent to which they can help the Iraqis develop a modern and effective oil and gas industry. Few people in the world today—perhaps my hon. Friend is one—believe that all that can and should be done only by state oil companies. That is not the British Government’s or the Iraqi Government’s view. The British Government’s role and objectives are to help support the Iraqi Government to develop those elements of economic policy. It is the Iraqi Government’s chosen path. With great respect to my hon. Friend, it is neither right nor true to describe coalition forces, who operate in Iraq under a UN Security Council resolution, as occupying forces. That is out-dated and inappropriate language.

We have already worked hard to renew vital economic and social infrastructure, stimulate economic growth and attract inward investment, which is necessary to secure the prosperity of the Iraqi economy.

I am sure that my right hon. Friend agrees that the ability of people from Iraq to travel internationally when developing trade links is important. May I therefore raise the problem of getting visas to the UK? For example, people in the Kurdistan region must go to Oman to get a visa. Given that the position in Iraq has improved so much, will my right hon. Friend examine the matter with his ministerial colleagues so that Iraqi people can travel and do business internationally in the same way as everybody else?

I am grateful to my hon. Friend, who was a Minister in the Foreign and Commonwealth Office, for making that point. The Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Harlow (Bill Rammell), tells me that the Foreign Office is looking to improve access to visas and the arrangements that apply, especially to those travelling from specific parts of northern Iraq. Perhaps he can develop that point in his response to the debate.

I pay special tribute to Michael Wareing and his work with the Basra Development Commission, which has successfully raised Basra’s profile through a series of investment conferences—most recently last month in Istanbul—and drawn up an economic development strategy. That will become the work of, and come under the ownership of, the Iraqis later this year. It also addresses specific problems, such as youth unemployment, and recently announced a pilot scheme to provide 500 young Basrawis with employment training through placements with local businesses.

The much-improved security situation means that international companies are now seriously considering investing in Iraq. That is a good thing. The UK has facilitated more than 15 investor visits to show international companies the opportunities available in Iraq. That has led to $9 billion worth of proposals being submitted to the Government of Iraq. The next step is for Iraqi institutions to take forward that work. We have helped create the Basra Investment Commission, the launch of which the International Development Secretary attended in Basra on 6 November. Once fully operational, the BIC will lead on promoting investment opportunities in the city, turning proposals—I hope—into jobs and wealth. The opportunities are substantial.

In addition to the development potential of Basra’s international airport, Umm Qasr is Iraq’s only deep water port. It is busier than ever, but antiquated equipment and methods mean that it does not yet achieve anything like its full potential. The UK and our coalition partners are working with the Iraqi authorities to develop the port, and it is one of the key areas in which international companies rightly look to invest.

Iraq has the third largest reserves of oil in the world, and the potential to be an extremely wealthy country. However, decades of under-investment under Saddam and the effects of corruption and sabotage have left Iraq’s energy infrastructure in a deplorable state. The Iraqi Government are now addressing that issue, looking to place major contracts with multinational companies to help repair and modernise equipment and to develop oilfields more efficiently, while ensuring that the Iraqi people retain ownership of their resources.

There are huge investment opportunities for UK businesses, and the Government of Iraq, from Prime Minister al-Maliki downwards, have repeatedly emphasised their strong desire for increased UK investment in Iraq. I greatly hope that UK companies will be quick to join the rush of those seeking to take advantage of these opportunities.

I have tried to describe the challenges that UK personnel have faced and overcome in southern Iraq. I cannot overstate the contribution of the UK’s armed forces, but the achievements in southern Iraq have not been the result of UK military efforts alone—the mission has been joint in every sense. UK forces have co-operated with the Iraqi security forces and our coalition partners. In a prime example of the comprehensive approach that we have tried to follow, the UK effort has been developed and supported across Departments.

Iraq’s future is now in Iraqi hands, and the continued development of a stable, prosperous and democratic Iraq remains vital to the UK’s strategic and national interests. Such an Iraq will promote stability and prosperity in the middle east and be a key ally in the fight against terrorism, and can make a major contribution to improved global energy security.

Our mission in Iraq has freed Iraqis from the oppression of Saddam’s brutal rule. It has empowered them to build their own democratic institutions and paved the way for a different and more positive future—for themselves and the region. I am proud to say that we are at the point of completing the UK mission. When we have done so, our forces can return home with their heads held high. However, their homecoming—warmly anticipated by their families and loved ones—will not be the end of our involvement in Iraq. We look forward to a long and fruitful bilateral relationship, covering the full range of co-operation and engagement, from security to economic, political to cultural: a relationship based on friendship and respect between Iraq and the UK, forged in exceptionally difficult times and now set to develop as a lasting legacy of the service and sacrifice of so many of the brave men and women of our armed forces, who have made all that possible.

The United Kingdom has paid a high price to remove Saddam and help to build a better Iraq. British forces have been in Iraq for 2,126 days. We have lost 178 of our brave soldiers, sailors, airmen and marines, and hundreds more have been wounded. The long-term psychological impact on the members of our armed forces is virtually unknown, and the British taxpayer has paid out more than £6.5 billion since the invasion in 2003.

But when we consider that steep price, we must not forget that under the brutal and authoritarian rule of Saddam Hussein, Iraq invaded three of its neighbours, fired Scud missiles at five of its neighbours and killed hundreds of thousands of its own citizens and Iranians with chemical weapons. As my right hon. Friend the Member for North-East Hampshire (Mr. Arbuthnot) has said, history did not begin in 2003. It is hard to believe that anyone still believes that the Iraqi people, the region or the world would have been better off with Saddam still in power. Yet those who believe that the invasion should not have taken place must believe that to be so—I do not believe that and never have.

The hon. Gentleman is detailing the price that has been paid, but is there not another price that has been paid by the people of Afghanistan? The west went into Afghanistan with a clear purpose and mandate and an important job to do, but then it took its eye off the ball and neglected Afghanistan, diverting resources to Iraq before finishing the job and leaving a high price to pay for the people of Afghanistan and for our troops who are trying to clear up the mess that we have left behind.

I will talk about Afghanistan in a moment, but if the hon. Gentleman is saying that the world community should have placed more emphasis on Afghanistan from the outset, he is correct. However, I do not believe that there was a choice between the two. Indeed, there is still a strong case for the international community to play a much greater role and to give greater commitment to the United Nations mission in Afghanistan, where there is much still to be done.

The sacrifices of our armed forces and our loved ones should not—cannot—go unnoticed, and our country and the people of Iraq owe them a great deal of gratitude and thanks. Our mission in Basra is coming to an end. When I met General Mohammed recently, he made it clear that the Iraqis no longer see a combat role for British forces. However, in what can be viewed only as a positive development, not only do the Iraqis want to take control over their own destiny, but they increasingly have the means to do so. The Iraqi security forces have significantly grown, and I have seen at first hand how the security situation has improved in Basra. When I was there only a few weeks ago talking to ordinary citizens on the streets and mixing with them freely, which, for the first time, I did without body armour, I found that the conversations and concerns have moved away from security and on to issues such as access to electricity, clean water, jobs and economic prosperity. That those people can think that way is the result of the hard work and sacrifices of thousands of British, American and Iraqi troops over a number of years.

Although the security situation has established the conditions for what will eventually be a total withdrawal—or an almost total withdrawal—of British forces from Iraq, the Government have a responsibility to ensure that they consolidate the recent success into a long-term vision. It is also vital to point out to the international community that a reduction in British forces in Iraq in no way means a British disengagement from the region. In particular, it would be very wrong for Iran to draw the conclusion that any UK troop reduction represents a change in British policy towards the threat that it poses to the region and beyond. The continued and highly valued role being played by the Royal Navy is testament to our continued engagement and interest in the region and its people.

I want to return to the hon. Gentleman’s first point, about the removal of Saddam Hussein, whom we all detested. However, notwithstanding that regime change was illegal, does the hon. Gentleman really think that it was worth while for 1 million people to be taken out with him, along with another 1 million people before that through sanctions, making more than 2 million people killed so that Saddam Hussein could be got rid of?

It is presumptuous if we think that we know what is good for the Iraqi people better than they do. It is clear to anyone who has been to Iraq and talked to the people there that those people believe that they are better off than they were under Saddam Hussein, because they have a chance to shape their own destiny in a way that they would have been perpetually denied under the authoritarian regime that existed previously. The Iraqi people know that they are better off, and I bend to their judgment on that matter. They are the ones who suffered under that regime.

There is one further point to be made about the withdrawal of British troops and its impact. Let me say a word of caution. No one in this country should believe that removing our troops from Iraq will in some way be a panacea for troop shortages in southern Afghanistan. Many people, including some commentators, seem to believe that a simple shift of British troops from Basra to Helmand is possible. However, for some very good military, logistical and welfare reasons, it is not as simple as that. Although reduced commitments in Iraq may relieve the overstretch of our forces to some extent, the key to alleviating the shortfall in manpower in the vital, if not existential, struggle for NATO in Afghanistan is for our European allies to contribute more troops and equipment to the fight in southern Afghanistan. As we have said so often in the House, it is not acceptable for all the countries to get the insurance policy when only a few are paying the premiums.

It is clear that our relationship with Iraq is changing and evolving, which is natural. That relationship can be viewed in a number of ways, as the Secretary of State said. It can be viewed as a commercial and economic relationship and as a military and political relationship. I want first to deal with the commercial and economic relationship, which the Secretary of State discussed. According to Iraqi Government officials, Iraq’s budget surplus was $72 billion in 2008 and is forecast to be $90 billion in 2009, which is a change from what we are experiencing in the United Kingdom. Needless to say, a lot of money is being awarded in the form of lucrative contracts for the reconstruction of Iraq.

Considering the Secretary of State’s previous incarnation in the Cabinet, I am compelled to ask where Britain plays a role in that process. When I visited Iraq recently, I was horrified to learn that the Department for Business, Enterprise and Regulatory Reform had a representative in the UK embassy in Baghdad until 2007, but that the post was cut in 2008 owing to “resource issues”. How short-sighted can we get? Our lack of trade presence in Baghdad means that we may have shed blood for Iraq but stand little chance of benefiting from the contracts flowing from Iraq’s fiscal surplus.

I found it rather pathetic that the FCO, the MOD and DFID were talking about pooling their budgets to get a trade representative in Baghdad because the Government would not fund one centrally, which was certainly the position at the end of last year. I am sure that when the Minister responds to this debate, the House will want an assurance that that is no longer the case, because it is unacceptable to hon. Members on both sides of the House.

There is a lot of potential for Iraq to become a regional financial and trading hub. We must do all that we can to help that become a reality, because, as the Secretary of State correctly said, a stable and prosperous Iraq is in all our interests. That is why we welcomed the Prime Minister’s announcement about the formation of a Basra Development Commission in October 2007, with one of its goals being to

“co-ordinate projects to strengthen Basra’s position as an economic hub, including the development of Basra international airport and the renovation of the port.”—[Official Report, 8 October 2007; Vol. 464, c. 24.]

The Prime Minister was referring to the port of Umm Qasr. I recently visited the airport, which is clearly ready for business. I also welcome the Secretary of State’s announcement that the airport was transferred to Iraqi control, on time, on 1 January.

There are currently discussions about building a new deep-water port near Basra. Such a facility in the north of the Gulf could be the starting point for goods to be moved overland by rail from Iraq to Europe via Turkey, offering an alternative to the Suez canal and the strait of Hormuz and reducing the overall time to transport goods to Europe, which would be a major strategic advantage for us in the west. There is also talk of creating an economic free zone around Basra like that found in Dubai. Those would be extremely welcome projects not only for the people of Iraq, but for the region and, I believe, for us. We need to know what the Government think they can do to ensure that those projects become a reality.

There is clearly a lot of reconstruction going on in Basra. When one visits it, it is not hard to imagine what a beautiful city it must have been and, almost by definition, could be again. There are plans to build a new bridge across the Shatt al-Arab waterway, which would drastically decongest the waterway and allow more shipping to get into the port. Wha