With permission, Mr. Speaker, I should like to repeat a statement being made by my noble Friend the Secretary of State for Business, Enterprise and Regulatory Reform in the other place about the industrial action at the Lindsey refinery and elsewhere in the country.

On Thursday and Friday last week, contract workers at the Lindsey refinery in north Lincolnshire and elsewhere took part in unofficial industrial action. That has been followed today with further such action at Sellafield power station and other sites around the UK. The stated reason for such action is said to be that a contract awarded at the Lindsey site to an Italian contractor, IREM, has resulted in discrimination against British workers through the exclusive employment of Italian and Portuguese workers. On the Lindsey site, the great majority of the workers are British. I understand that all the striking workers are from maintenance or enhancement projects on the sites; and as of this afternoon there is no disruption of production at any of the sites where this unofficial industrial action is taking place.

On Friday, my Department asked ACAS, the independent arbitration service, to meet the employers and the unions to examine the various accusations being aired and to establish the facts—we expect its report very quickly. ACAS was in touch with the parties over the weekend and I understand that the first meeting is taking place today. ACAS’s first responsibility is to report to us on whether laws have been broken; if they have we will take action. We are determined to see robust enforcement of the employment rights legislated for by this Parliament, and the fair and proper application of the European rules that govern the operation of companies throughout the EU and the mobility of labour, which has always been an intrinsic part of membership of the EU and has been supported by successive British Governments.

In a statement issued yesterday, the energy company Total, which runs the Lindsey site, said:

“It has never been, and never will be, the policy of Total to discriminate against British companies or British workers.”

It went on to say that it subcontracts on a fair and non-discriminatory basis and that the wage rates are the same as for equivalent jobs on the site.

Two key accusations have been made in recent days. The first is that the use of labour from overseas leads to an erosion of wages and conditions for all concerned because these workers are paid less than UK workers. The second is that there is discrimination in recruitment practice against British workers. The statement issued by Total last night confirmed that workers from overseas are paid at the same rate as other workers on site, and it further confirmed that Total does not operate any policy of discrimination with regard to tendering or recruitment.

The same rules apply here as with UK companies bidding for work overseas, and I would remind the House that there are some 300,000 UK companies operating elsewhere in Europe. Subcontracts can be bid for by UK or overseas-based companies. Of course, if an overseas company wins a contract it can use its permanent employees to carry out the work, but Total has confirmed that where new vacancies are advertised, it will work with subcontractors to ensure that UK workers are considered in the same way as anyone else.

The workers coming here from Italy and Portugal are protected by the EU posting of workers directive, which the UK has implemented fully. It guarantees those workers minimum standards, for example on pay and health and safety, and facilitates the free movement of services within the European Union—a vital market for British companies. In the case of the Lindsey refinery, we have been informed that all subcontractors adhere to the national agreement for the engineering construction industry, which governs terms and conditions, working hours and pay.

Membership of the European Union and taking advantage of the opportunities for trade presented by the EU are firmly in the UK’s national interest. Free movement of labour and the ability to work across the EU have been a condition of membership for decades. It is important that we respect and guarantee that principle, not least because it guarantees the right of hundreds of thousands of British workers and companies to operate elsewhere in Europe. It illustrates the importance of Europe to the UK that half our £370 billion of exports per year go to the EU, half our £315 billion inward investment comes from the EU and between 3 million and 3.5 million UK jobs are linked both directly and indirectly with our trade with the EU.

At a difficult economic time, we fully understand the anxieties that people have about their jobs. That is why we have been taking the measures that we have to support people through these difficult times. We strongly believe in fair opportunities for everyone in this country and in ensuring that British people have access to advertised job vacancies. It would be quite wrong, and indeed against the law, for companies to advertise vacancies and exclude British people from them. Equally, it would run contrary to the principles of the single market and harm British people working abroad if we were to exclude foreign workers from employment in the UK.

Of course, we understand the concerns of workers at a time of economic difficulty, and we have now established a mechanism through the ACAS process to examine those concerns. It is through that strong and independent process that we should proceed, not through the continuation of the unofficial industrial action that has been taking place. Our aim is to get through the economic difficulties that we face with Britain continuing as a great trading nation, with our companies able to operate worldwide and our workers equipped for the jobs and industries of the future. I commend this statement to the House.

May I first ask, for the sake of clarification, for reassurance that this is a statement of the whole Government, not just the Department for Business, Enterprise and Regulatory Reform, and that the Secretary of State for Health has now recanted and been enlightened, and accepts what has been said? Most importantly, will the Minister confirm with clarity whether the Government believe that the posting of workers directive is satisfactory and working fairly in our interests, or whether they are seeking amendments to it? That has been left quite unclear in all the interviews given by Ministers so far.

Does the Minister accept that all responsible people will agree with him that however aggrieved people feel, industrial action at power stations and oil refineries at the present time of national crisis is not the way to take forward any of their arguments? The unions should help to get people to desist from that. Does he accept also that we do not want to see riots in Italy about British workers there at a time when British companies are seeking contracts on the continent for their British workers to engage in employment there?

However, does the Minister also accept that understandable worries at the present time have been turned into direct action as a result of the Prime Minister’s irresponsible use of the phrase “British jobs for British workers”? Is it not clear that that phrase was populist nonsense at the time when he used it—it was part of some curious Britishness agenda, which I seem to recall he was pursuing for reasons of his own at the time—that he was concerned more with his job security than with anybody else’s job security in this country, and that we will all welcome the fact if he never repeats it, no Minister ever repeats it and no such irresponsible statements are made by any member of the Government at any time in the future?

I should take this opportunity to welcome the right hon. and learned Gentleman back to the Conservative Front Bench. He brings great experience to his role. I always feel that, particularly when we are discussing issues of European competence, he may have more in common with Labour Members than with some Members behind him, but we will see how the debate develops.

The right hon. and learned Gentleman asked a couple of specific questions. As I said in the statement, we have fully implemented the posting of workers directive. It has been in place for some years, and as for many such directives, the European Commission has established a group to look at its operation, and we will see if it makes any recommendations.

As for the statements of the Prime Minister to which the right hon. and learned Gentleman referred, never at any time has the Prime Minister said or implied that he or the Government are opposed to the free rights of British companies to operate throughout the European Union or of European companies to operate here in the UK. What the Prime Minister said, quite rightly, was that, as a country, we needed to do more to equip the British work force for the jobs, skills and industries of the future. That is precisely what we are doing. That is why, while apprenticeships declined when the Conservative party was in power, we will grow apprenticeships to some 0.5 million, and we will stand by our commitment to equip British workers for the future.

As I am sure the whole House can appreciate, I have spent the past few days taking part in many discussions about the situation affecting the refinery in my constituency. I welcome the promise that ACAS is now to be involved and will be meeting both sides in the dispute to examine the accusations that have been made on both sides. However, does my right hon. Friend appreciate that for skilled engineering and construction workers who are currently out of work, seeing contracts going elsewhere can be very toxic? What can he say to those people, of whom there are many in my constituency and others, who have such skills and who are out of work? What can be done to assist them to get jobs, which they so desperately want at the moment?

I know that my hon. Friend has been closely engaged with this issue in recent weeks, and that she is doing everything she can to help her constituents in a positive and responsible manner. On future employment, I would say two things to her. The first thing we have to do is maintain our investment in infrastructure, and not cut it, as the Conservatives would, and that means continuing with rebuilding our energy and transport infrastructure, and with other important projects of national significance. The other thing that will support employment for her constituents, and those of all hon. and right hon. Members, is for this country to maintain its positive stance as a positive member of the European Union, to continue to look outwards and trade globally, and, in so doing, to increase wealth for the UK and employment in the UK.

We welcome the statement, but it has been made necessary because of the reaction to the cynical and undeliverable statement by the Prime Minister at the Labour party conference in 2007 that there would be British jobs for British workers. That statement was as misleading as the Prime Minister’s other promise to abolish boom and bust. That economic failure caused the understandable anxiety in the country at the moment, with Britain plunging deeper into recession, unemployment soaring and the final hallmark of all Labour Governments—increasing industrial unrest.

Pulling up the drawbridge cannot be the right response. British companies and citizens benefit from the free movement of goods and services across the European Union. Does the Minister agree that many in Germany and France who see a falling pound feel it is unfair that British businesses are gaining a competitive advantage as a result of changing exchange rates? I agree with the right hon. Gentleman and accept his comments that all new jobs must be open to all workers and that employment law must be upheld, but does he agree that protectionism, whether it is being advanced by the new President of the United States or by isolationist right-wing commentators in Britain, would be ruinous for our country and must be avoided?

I appreciate the hon. Gentleman’s welcome for the statement and his positive comments on Britain’s role as a member of the European Union. I agree that unofficial industrial action is not the way to resolve the concerns that have been expressed. We have set up a process through ACAS, which will involve the employers and the trade unions, to air the concerns that have been expressed, and as I said, the statement issued last night by the energy company Total addressed some of those concerns.

The hon. Gentleman is right about protectionism. If we look at past history and the economic problems of the last century, we can see that a retreat from looking outwards and a retreat from world trade would indeed mean that protectionism became a sure-fire way of turning recession into depression.

Does my right hon. Friend accept that this is not an attack on the mobility of labour in the EU, but an objection to the fact that one contractor—the Italian contractor—is bringing in its entire work force of several hundred people for one particular contract? This is a plea: in all the other jobs that will come into being with the contract for the closure and reconstruction of the Lindsey oil refinery, preference should be given to British workers, and to local workers, in an area of high unemployment where the skills are available. As well as sending in ACAS, should not my right hon. Friend be convening a meeting in London of the big oil companies, contractors and unions to allay the workers’ fears for British jobs and to see that the posting of workers directive is working properly?

As I said, the vast majority of workers on the site are British. It is legal for a European company to contract for work and to say that it will use its permanent employees to carry it out. The issue of discrimination arises if new vacancies are advertised, and the statement issued last night by Total, which runs the site, made it clear that if new vacancies are advertised the company will work with all its subcontractors to make sure that UK workers are considered in the same way as anyone else.

Although this dispute relates to the employment of European workers under European law, about which little can be done—at least in the short term—does the Minister accept that the reason why it has had such tremendous resonance across the country is people’s concern about the huge flux of immigration into the UK in recent years, a large part of it from outside the EU, which has accounted for a majority of the new jobs of people of working age? Last year, the total number of work permits issued was a record, at about four or five times the level when the Government were elected, so can he assure us that from now onwards far fewer work permits will be issued and, in particular, that people for whom no job is immediately available will not be issued with work permits allowing them to come to the UK just looking for jobs as, extraordinarily, the Government now permit?

The issue at the Lindsey oil refinery, of course, involves European workers coming here, as I said, under the rules of labour mobility that have existed for some decades. The right hon. Gentleman asks about non-EU immigration; on that issue, the Home Secretary and my colleagues at the Home Office have set out the new points-based immigration system, which is intended precisely to gear our needs more closely to immigration from outwith the EU. I would also say to the right hon. Gentleman that immigration from outwith the EU has made a tremendous contribution to this country. That is true of my constituency, and I am sure it is true of many others.

Will the Minister use this opportunity to dissociate himself from the remarks made on this morning’s “Today” programme by the Secretary of State, who made what I thought was a rather silly comment implying that the answer to all the workers who are worried because they are not getting these jobs was for them to go off and get a job abroad?

I am afraid that I disagree with my hon. Friend; that is not what the Secretary of State has said. What he said was that the rules of trade across the EU benefit EU companies and British companies and that we, as a positive member of the EU, gain by that, which is why we do not intend to change those rules of open trade. He was certainly not harking back to comments made at another time about people getting on their bikes. That is not what he said or what he meant; it is a distortion of what he said.

May I congratulate the Minister first on not quite being able to bring himself to defend the Prime Minister’s cheap populism, and secondly on rightly expressing the importance of the free movement of workers within the EU, from which this country and British workers have benefited? If he wants to lower the temperature out there in British industry, however, may I commend to him the policy of having an explicit annual limit on work permits issued to those coming in from outside the EU, because that would do a great deal to restore confidence in the fact that our immigration system is actually under control, as opposed to the current feeling in the country that for years it has been out of control?

Once again, the hon. Gentleman tries to tempt me away from the operation of the EU rules, into a general discussion on immigration policy. I am not sure quite what cap or number he wants, but as I said, this Government have set out a points-based immigration system for non-EU immigration, which is aimed precisely at matching our needs to the flow of immigration from beyond the EU.

Will my right hon. Friend ensure that ACAS talks not just to Total, but to Alstom, the subcontracting company, which subcontracts again to another company? It is that company that is causing the problem; it has a record of trying to breach the national agreement in respect of agency workers. That loophole was closed through the agency workers directive, and it is critical in this situation that ACAS looks into what is happening with Alstom as well as with Total.

In the coming weeks and months, as this is resolved, and there is a procurement process involving millions of public opportunities, a corporate social responsibility clause should be agreed by the Government to ensure that subcontractors as well as main contractors work to the national agreement, and that there is a commitment to creating local jobs and services in these big contracts, so that communities benefit, not just big companies.

My right hon. Friend has tremendous experience in these issues and his words should always be listened to seriously. With regard to ACAS talking to Alstom, I am sure that it will talk to all the major employers in this field that it can. With regard to the national agreement, Alstom has informed us that it abides by the agreement, but that is precisely why we asked ACAS to look at the issue. A number of claims have been aired in the past few days, and it is right to get ACAS to take a dispassionate and impartial look at those claims, so that we can establish the facts.

To what extent have skills shortages contributed to the difficulty of filling those British jobs with British workers?

As the Prime Minister has said, we need to do more as a country to improve our skills base, but this is not just about the skills of individual workers, but about the companies that apply to do the work, some of which may do so with a permanent work force whom they deploy to do the work. It is not just about the skill of the individual worker, but about the whole package that a company brings when it bids for a contract.

I congratulate my right hon. Friend on the statement and his comments that he is determined to ensure the robust enforcement of employment rights in this country. Other hon. Members and I attended a meeting a few weeks ago at which we considered the economic climate in this country, in Europe and across the world. Comparisons were made with the difficulties that arose in Europe in the late 1920s and early 1930s in order that we may learn from history and ensure that history does not repeat itself. What we have heard in recent days worries me greatly. We all need to be very temperate in our language and ensure that we do not again see what happened in the late ’20s and early ’30s and play into the hands of and pander to the extreme right in any country.

I quite agree with my hon. Friend that we should not pander to the extreme right. He refers to history, and that is relevant on two counts. First, in response to an earlier question, a retreat into protectionism would be a mistake for us and for the rest of the world economy if it was repeated in countries elsewhere. He is absolutely right that, since the end of the second world war, the establishment and growth of the European Union has helped to ensure not only peace but far greater prosperity for its citizens, and we should seek to maintain that in the future.

The right hon. Gentleman opened his statement with some so-called statistics about the benefits of the European Union that, in my view, are at the very least open to debate. Does he not accept, as many trade union leaders believe, that there is problem with the labour mobility directives? The UK Government have not on all occasions stuck up for British interests. If he is interested in seeking to reduce tension on this subject, perhaps he will produce a balance sheet of the number of projects that UK companies are carrying out in France, Germany and Italy, for example, as against the number of projects that are being carried out by those countries in the UK. Perhaps that would give people the facts of the case. Will he do that?

I appreciate that for certain hon. Members any positive statement about the European Union can sometimes be difficult to digest. It is very clear that membership has been good for our trade and growth and for the other matters hinted at by my hon. Friend the Member for Dumfries and Galloway (Mr. Brown). The labour mobility rules have been part of the EU for decades—they have not been invented in the past year or two. Labour mobility—the freedom to work throughout the EU in different member states—is one of the basic conditions of EU membership. That is worth bearing in mind in the current circumstances.

My right hon. Friend will be well aware that two large liquefied natural gas terminals are being constructed in Milford Haven and that there are Polish and Portuguese workers on those sites, but that they are seen as being in addition to local and UK skilled Labour. Does he agree that something is seriously wrong if, in the case at Lindsey and other cases around the country, the national agreement is being abided by, yet local UK-based companies are not successful in their tenders? My hon. Friend the Member for Great Grimsby (Mr. Mitchell) suggested a meeting with all parties to consider the issue. It is absolutely essential that major clients, main contractors, the trade unions and the engineering construction industry sit down with the Government to work out why foreign companies are able to outbid British companies.

I must take issue slightly with my hon. Friend. What is important is an open and fair bidding process for contractors to win the work. We cannot put ourselves in a position whereby every time a non-British company wins a contract, we say that it is unfair. British companies are operating successfully throughout the rest of Europe and throughout the world. What is important is that the rules are applied fairly and properly.

I agree with my hon. Friend about dialogue and interested parties. It was for precisely that reason that, over the weekend, we established the ACAS process to examine some of the claims. Let us see whether the law has been broken. Let us see whether European rules have somehow been contravened. That is what ACAS is doing, and that is why the first meeting was held today.

It seems to me that much of this depends on Total’s statement and what has been said by its subcontractors. Are we expecting ACAS to audit the statement, or should other parties do it?

I believe that ACAS is the right body to examine the statement. I believe that it is perfectly capable and perfectly qualified to do so, and that it is respected by both employers and trade unions. That does not mean that we accept every statement made by everyone at face value. It was precisely in order to establish the facts properly that we asked ACAS to look into the issue.

The Minister may know that this morning, on a television programme, Derek Simpson said that the Prime Minister had had meetings regarding the three rulings of the European Court only about a month ago, and that some action was expected as a result of those discussions. He added, in reply to a question, that it appeared that that action had been dropped. Can the Minister tell us what action was proposed, and whether it was in line with what the Secretary of State for Health said on the programme yesterday?

Will the Minister also ensure that if it is impossible to overcome the European Court rulings—which we all know is the case—we will legislate in the House of Commons to ensure that we provide proper and fair treatment for the workers and trade unions of this country?

I am sure that the workers and trade unions of this country will welcome the hon. Gentleman’s strong support. I believe that he was referring to a series of European Court judgments issued over the past couple of years on pay differences between posted workers and workers employed locally. If the statements that have been made are true and, in the subcontracting cases that have been cited in recent days, the same pay rates apply throughout the site, it would appear that the issue of a race to the bottom in wages does not apply in this instance. As for the judgments themselves, as I have said, a European Commission body is examining the operation of the Posting of Workers Directive, and a social partners dialogue on the judgments is in progress at European level.

Does the Minister accept that there are some very nasty undertones to the discussions surrounding the disputes? In times of difficulty, the traditional role of the Labour party, the labour movement and the trade unions has been to oppose xenophobia and discrimination and to try to engender a sense of solidarity among all workers to enable them to face the difficulties together. Will the Minister convey the message that we want people to be united in the face of economic difficulties, rather than some turning against others on the basis of their passports or ethnicity?

I certainly agree that the rules of labour mobility, to which I have referred, and the rights to work across the EU have been in place for decades. I also agree, and have said, that workers from the EU and from outwith the EU have made a strong contribution. I understand that in times of economic difficulty there will always be heightened concerns about jobs. If those concerns include an allegation that the law or rules are being broken, we will look at them, and that is precisely what ACAS has been charged with doing. However, we will not turn our back on trying to reach out, trade openly and grow our wealth through our links throughout the world. We will take a positive stance on world trade and UK companies operating abroad, because that benefits our country.

Given the union complaint that it is the transport and accommodation of these workers that may be unfairly subsidised, will the Minister clarify the Government’s position? Is it that he wants to be sure that the directive is not being broken, or is he at all concerned to improve its working?

Our concern is twofold. First, we want to ensure that the domestic employment laws passed by this Parliament are properly observed and enforced. On that subject, we have put increased resources—for example through minimum wage enforcement—in place in recent years. Secondly, we want to ensure that the European rules that apply both to UK companies operating elsewhere in Europe and to European companies operating here in the UK are properly and fairly applied. In recent days, there have been allegations on both counts that that may not be the case, and that is precisely what we have asked ACAS to look at.

I agree with the Minister that right-wing anti-Europeanism and protectionism would be disastrous for British workers. Do I understand from his statement that ACAS will investigate the implementation of employment rights in respect not just of statutory minimum standards such as the minimum wage, but the national collective bargaining agreements that apply at all of those sites? The wages there are many times higher than the minimum wage. I still find it puzzling that European companies can bring their labour in, meet all the costs of accommodating and transporting them—both to this country and to and from work—and still claim to abide by national pay rates and conditions of service. That does not seem to add up, and I wonder whether the real answer to that puzzle is to be found in the fact that these subcontractors subcontracted all the way down the line to a point at which nobody really knew whether the workers concerned were being exploited or whether local workers were getting the justice and fairness to which they are entitled.

My right hon. Friend asks several questions, which I will try to answer. He asks about the national agreements setting standards that are higher than the basic minimum wage. He is right about that. Claims have been made that the subcontractors on the Lindsey site abide by the national agreement, and that is a legitimate issue for ACAS to look at. He mentioned the costs involved and I suggest that employers may not always choose the cheapest tender, and that speed or the overall package that a subcontractor offers may be strong factors. The statement issued last night said that the subcontractors did abide by the national agreement, and ACAS will doubtless examine that claim with the employers and the unions involved.

Is it not a sad fact that whatever changes the Government or the House may wish to make to the laws governing foreign contracts or the conditions attached to foreign workers, we are unable to make those changes because they are entrenched in superior EU law? Since that powerlessness is undoubtedly an element in the present frustrations, is the Minister aware that changes are on their way, because my right hon. Friend the Member for Witney (Mr. Cameron) has recently confirmed that it will be

“a top priority for the next Conservative Government to restore social and employment legislation to national control.”

The right hon. and learned Member for Rushcliffe (Mr. Clarke) clearly knew what was coming and thought that he had better get out before hearing that statement. If the time ever came when the Opposition were to get into power, I would be interested to see whether the right hon. and learned Gentleman would be able to support the policy that the right hon. Member for Wells (Mr. Heathcoat-Amory) just outlined. The right hon. Gentleman knows that the policy that he outlined—to resile from the European legal settlement that goes with membership—would end in a clash and that, ultimately, it would lead to withdrawal from the European Union. If that is his policy, he can defend it. I have set out a policy today of positive membership of the EU and positive trade throughout the EU that brings wealth and employment to our country. Although that can be difficult, it is not something that we will turn our backs on.

Will the Minister allow me to express my dismay at the way in which he has interpreted the law, which allows European companies to win contracts here and to put up restrictive barriers against employing local people? Can he assure the House that his interpretation is shared by the German, French and Italian Governments?

All the countries are signed up to the European posted workers directive. It is legal under the directive for a company to bid for work and to use its permanent employees as part of the fulfilment of that contract. That is not just a British right; it is part of the directive.

On a point of order, Mr. Speaker. I am sure that hon. Members will have noticed today’s inclement weather and the transport difficulties it has caused. We should be particularly mindful of the interests of those who work in the House, many of whom made great efforts to be here today and many of whom will have a very difficult journey home this evening. Accordingly, it might help if I notify the House that we intend to conclude our first debate at 6.30 pm this evening and the second debate at 9 pm to enable members of staff to get home safely.

That is very considerate of the hon. Gentleman. The staff of this House have, under very difficult circumstances, come in to look after the House and to enable the Chamber to sit. I am glad that hon. Members are thinking of the staff. I note that the Adjournment debate is very tight and that no one other than the hon. Gentleman who will promote it will be able to contribute, with the exception of the Minister, of course.

On a point of order, Mr. Speaker. In your statement on 3 December at the state opening of Parliament, you said:

“From now on, a warrant will always be required when a search…of a Member’s office, or access to a Member’s parliamentary papers, is sought.”

You went on to say:

“Every case must be referred for my personal decision, as it is my responsibility.”—[Official Report, 3 December 2008; Vol. 485, c. 3.]

However, in your statement made a week ago last Thursday you said that the police need only

“advise the Serjeant at Arms”—[Official Report, 22 January 2009; Vol. 486, c. 897.]

and that the Serjeant at Arms would then approach the Member concerned directly. First, why have you changed your view, if you have changed your view? I believe that colleagues would be far more reassured by your first statement than by the subsequent one. Secondly, if it is ultimately to be left to the Member concerned to decide what to do in such circumstances, that might place them under undue pressure. Surely matters of privilege should rest with the House as a whole, according to the statement made by Speaker Lenthall in 1642.

I am grateful to the hon. Gentleman for giving me notice of his point of order. In my statement on Thursday 22 January, I confirmed that, in relation to the visit to the office of the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski), the police officer exercised no compulsory powers to enter the office or to require any document to be supplied. It was not a matter that involved the seeking of a search warrant. I also confirmed that, in future, any police officer in the House seeking the assistance of a Member and the staff in a Member’s office must advise the Serjeant at Arms, who, in turn, will approach the Member concerned and obtain his or her consent before any action is taken. These requirements are separate from the procedure laid down in my protocol relating to circumstances in which the police seek to search a Member’s office under a warrant.

Further to that point of order, Mr. Speaker. I seek further clarification because my hon. Friend the Member for Ashford (Damian Green) has been approached by the Metropolitan police and asked for access to e-mails between him and me as Front Benchers of Her Majesty’s loyal Opposition. Has the Serjeant at Arms been notified of this, and does it come under your ruling that such requests will require a warrant and will be referred to you for your personal decision?

Is the right hon. Gentleman saying that, since the occasion on which the office of the hon. Member for Ashford (Damian Green) was searched, approaches have been made to the right hon. Gentleman and the hon. Gentleman to release certain information?

That is exactly correct. I understand that a request has been made for electronic communications—e-mails—between me and my hon. Friend, presumably relating to the time when he worked under me on the Front Bench of the loyal Opposition.

I thank the right hon. Gentleman for bringing this matter to my attention. This is news to me, and I will investigate whether the proper protocol and the procedures that I have laid down for situations without a warrant have been gone through. I will report back to the right hon. Gentleman and, indeed, the House.

Further to that point of order, Mr. Speaker. In your statement, and in the protocol, there is reference to search warrants. Will you take advice on whether—as has been indicated to me—the Police and Criminal Evidence Act 1984, on which any search warrant might be based, applies to this House, for the reasons that have just been given? Will you confirm that this is a matter for the whole House and, furthermore, that the Police and Criminal Evidence Act does not apply and that a search warrant issued under that Act would be void and invalid?

I will have to deal with that point of order in the same way; I will look into the matter and get back to the hon. Gentleman.

Further to that point of order, Mr. Speaker. I am glad that you are investigating this matter. When you have spoken to my hon. Friend the Member for Ashford (Damian Green), will you consider whether you and he should put in the public domain all the information that the police are requesting from Members’ computers that relates to other Members of this House?

The right hon. Gentleman knows that a resolution of this House says that, while criminal charges are proceeding, the matter should not be discussed—[Interruption.] Order. Mr. Penning, try not to do my job. We have just spoken a few minutes ago about how trade unionists should be trade unionists, and one thing that we do not do is try to do the Chairman’s job for him when we are Back Benchers. I was saying that there is a resolution of the House that deals with criminal proceedings, and that I am bound by that resolution. That is the spirit in which I reply to the right hon. Member for Hitchin and Harpenden (Mr. Lilley).

Further to my original point of order, and to the subsequent comments that have been made, Mr. Speaker, I am grateful for your clarification. With the greatest respect, may I put it to you that there are people outside the House who do not attach sufficient importance to what you have said? Until the House has debated these matters, and referred them to the Privileges Committee for proper consideration before bringing them back to the House to be resolved, we are pulling our punches and the police are failing to respect your word. That is a serious slight on this House.

My responsibility is to this House. What goes on outside the House is another matter.

I inform the House that I have selected the amendments in the name of the Prime Minister for both debates.

I beg to move,

That this House notes that the International Monetary Fund believes that the UK will suffer the worst economic contraction among advanced countries; notes with alarm that the Pre-Budget Report 2008 announced an effective 16.5 per cent. decrease in public sector net investment from 2012-13; further notes with concern that the Learning and Skills Council has decided to halt funding decisions for college rebuilding; expresses concern that there are currently 1.77 million people on the social housing waiting list, an increase of 100,000 on last year; further notes that only £400 million has been brought forward out of £8 billion to spend on social housing; notes how little investment the Government has made to ensure that homes are energy efficient and well-insulated; believes that the Government has neglected the current opportunity to invest in expanding the rail network; and calls on the Government to immediately bring forward funding for capital projects, particularly for schools, colleges, social housing, public transport and environmental works, all of which will create assets for the taxpayer and generate future income as well as countering recession in the short run.

The ministerial statement set out the chilling context in which this debate takes place. We are dealing with rapidly rising unemployment, much of it centred on the construction industry, and the situation is bitter and divisive. We shall try to suggest a positive approach to the problem through fiscal stimulus from capital spending.

I wish to make three simple points. First, fiscal stimulus is necessary, and the best way of providing it is through properly targeted public investment. Secondly, despite the Government’s claim to be bringing forward capital investment, that is not happening. There are severe problems in the public investment area, and the situation is complicated by the virtually complete collapse of private finance initiative projects. Thirdly, if we are to have public investment in an environment where there are growing anxieties about public debt, we need a mechanism for proper evaluation of such things in a way that does not happen now, because much of it takes place in the framework of the commercial secrecy that surrounds PFI projects.

Let me develop each of the points in turn. First, like most western Governments, we believe—and the Government say that they believe—in the need for a fiscal stimulus. Despite the severe financial constraints on the public sector, we believe that such a stimulus is right and necessary, and that the best way of bringing it about is through properly targeted public investment rather than, as has happened, the value added tax reduction. A few weeks ago, we proposed in the House that, assuming a belief in the fiscal stimulus, a much better use of that £12.5 billion would have been to introduce a series of public investment measures aimed at, for example, home insulation, social housing projects and public transport. We remain of the view that that would have been the correct way forward.

Why is public investment so important in a recession? Partly because it creates employment. There is a big opportunity cost to the alternative of not investing: people remain unemployed. Some 100,000 construction workers have already been laid off in this recession. The figure was 300,000 at the peak of the last recession in the early 1990s, and there is a reasonable expectation that the number of unemployed construction workers in this recession will be even bigger than that.

My hon. Friend is talking about the absolute importance of fiscal stimulus through capital investment. Does he share my concern about local authorities that put together capital programmes which rely partly on anticipated receipts on capital sales and the disposal of assets? Such local authorities are finding it increasingly difficult to make their programmes add up, as the opportunities for disposing of assets at a reasonable price dry up because of the recession. Does he agree that if the Government want the economic stimulus and local councils to deliver better street lighting, and improvements in schools and various other assets that councils hold on the public’s behalf, they need to find ways to bridge the funding gap to allow councils to make the capital investment today?

My hon. Friend makes a good point that I shall develop later. He is absolutely right that in the current environment trying to finance projects by selling off assets cheaply in highly depressed asset markets is not efficient, and that is one of the reasons why the Government’s own programmes are in considerable difficulty.

Let me finish my central point about the importance of public investment. Of course, it is important for employment generation, but it also generates an asset. If it is properly constructed, it generates a stream of income and environmental and social benefits. That is why we presented our series of proposals before Christmas.

My second basic point is that, despite the Government’s commitment in principle to accelerating public investment, a growing amount of evidence—anecdotal so far, but I hope that the Government will clarify the matter—shows that many of their enhanced public investment projects are not happening or are severely delayed. Let me enumerate some of the difficulties that we hear about from councils, parliamentary questions and elsewhere.

In the middle of last week, we heard about the serious problems that are beginning to arise with the large capital works programme for further education colleges and adult colleges. Two in my constituency are affected. Twenty-two advanced projects have been put on hold and a long pipeline of more than 100 others has been put into abeyance. There may be good technical reasons for re-examining the projects—for example, some depend on asset disposal, as my hon. Friend the Member for Sutton and Cheam (Mr. Burstow) said. However, many do not. The adult college and the tertiary college in my constituency do not have that problem, or the other problems that are supposed to be associated with the building programme, and cannot understand why the projects are being held up. They say that they may have to retender. The process will take a long time—they will have to renegotiate bank loans, which will cause serious delay. Some of the colleges, which are being held up by what appears to be merely a three-month delay, say that it will retard construction by up to two years. When they come on stream, the recession may have passed, though perhaps that is an optimistic interpretation.

I visited Bournemouth and Poole college on Friday to learn that a project of £150 million had to be divided in two. Half has been deferred for at least 24 months and half is faced with general uncertainty. Does my hon. Friend believe that the Government should give a clear explanation for the hold-up and the possible waste of money for up-front expenditure, and a timeline for tackling that? My local college has already spent £11 million and it is faced with total uncertainty and antiquated buildings.

My hon. Friend makes her point well. Indeed, hon. Members of all parties made similar points last Thursday during Innovation, Universities and Skills questions. The problem is not only wasteful and exacerbates delays, but it affects a specific form of public investment, which, as the Government have demonstrated, is of great benefit. The colleges that have been built in the existing programme have produced quick returns in accelerating apprenticeship training and other useful activities.

The only explanation for the circumstances that the hon. Gentleman describes is either that the Learning and Skills Council overcommitted and led people to believe in an outcome that was never on the cards, or the Treasury has put a stop on the projects and blocked the pipeline. The cause of the problem was not clear from Innovation, Universities and Skills questions. Will he speculate on the answer?

I do not know the answer. The Financial Secretary is here and I am happy to take an intervention from him, but I am sure that he will give a proper explanation in his speech. Having talked to my local learning and skills council, I have a sense of Treasury involvement, but I do not know whether it is exclusively responsible.

In addition to the problems that affect colleges, other bits of the advanced investment programme are running into difficulties. I was recently shown a summary of a meeting of council leaders in the south-west. It reported repeated appeals to the Department for Transport to say whether the advanced projects that the Government had flagged up would happen and simply never getting an answer. The projects are not moving ahead. If that is happening in the south-west, I am sure that it is happening everywhere else.

There are particular problems with social housing. In the past year, my colleagues and I have asked the Government about the obvious things they can do in the face of the collapsing housing market, such as investing in social housing, both in new build and in acquiring unsold properties. The Government have responded in a general sense, but only very little is happening.

The Government had approval, within the envelope of the spending review, to spend £1 billion on social housing. As far as we can establish, only a tiny fraction of that has been committed. One of the reasons is that public housing projects—social housing—whether undertaken by councils or by housing associations, depend on agreements with developers and section 106 money. Private development has largely ground to a halt and section 106 money is not available, so public sector housing is not proceeding either. We also know that many social landlords have collaborated with developers, and many of them overcommitted themselves with bank borrowing. There is about £50 billion of borrowing by social landlords—certainly by the registered social landlords. Many of them are now paralysed and unable to proceed with developments.

The ambitious targets for social housing are not being met at a time of growing housing need. Moreover, in the middle of a recession, one of the things that the Government concretely can do, and which we all agree is an imperative, is simply not happening. I would be interested to hear exactly what is happening on that front. We have repeatedly asked the Government. As far as we can establish, virtually no money is coming out of the appropriate Department to develop social housing when it is most needed.

The hon. Gentleman is advancing a sound case. Does he believe that because of the seriousness of the credit crunch and the financial crisis, there should be more genuine co-operation, contact and communication between the Government and the Opposition parties, to see whether there could be co-operation in bringing about a solution to the extremely serious problems that we face?

I am certainly up for constructive discussions. I was last invited into the Treasury in October. I always welcome a good chat with the Chancellor, and I am sure it will happen.

Over the past couple of weeks, Ministers, including the Prime Minister, have accepted the case that my hon. Friend makes and the need to get things going in the social housing, housing association and housing trust sector. Will my hon. Friend seek to elicit from the Government today a commitment, first, to draw down more money from the new Homes and Communities Agency—it says that it has lots of money that it is willing to spend, and that could plug the gap—and, secondly, to call in local authorities with a large social housing programme that is currently blocked, so that the money can be released? The sites are there, planning permission has been granted, and there are people queuing up waiting for the homes. Something could be done if the Government gave the matter urgent attention.

The idea of getting the councils in to talk to the Government about what can be done is right. It should also be possible to bring in some of the developers and get them to work together. There should not necessarily be a public/private sector demarcation. My hon. Friend is right. Although I think the failings are largely in the Government, they are not entirely in the Government. The new agency is probably highly conservative in its approach. I get a sense that it is reluctant, for example, to encourage the buying up of empty stock because it says that it is the wrong quality and cannot be used for public sector housing, so housing stock just sits there empty when many people are desperate. There is a conservatism and a reluctance to act across the board. If my hon. Friend’s suggestion is taken seriously, the Government should get all the parties round the table, bang their heads together and get some action.

Does my hon. Friend agree that a key barrier preventing many councils from investing in more social house building is the continuance of the housing revenue account system? While that is under review, should not everything be done to bring forward the review, so that we can see changes sooner rather than later?

I very much agree. Until recently, the assumption was that only housing associations should do social housing, but of course councils have a key role in that, and they cannot perform it while such an archaic and irrelevant formula persists. My hon. Friend is right about that.

My hon. Friend is right about everything he says, but is he aware that in Scotland the situation has been made even worse by rule changes imposed by the Scottish Government which require housing associations to borrow much more money from the private sector, so causing small housing associations in rural areas to have to suspend their house building programmes in many cases? Does he agree that the Scottish Government, as well as the Westminster Government, should be making changes?

Unlike Treasury Ministers, the Scottish nationalists are not here to answer for themselves, but we shall take it that my hon. Friend’s point is entirely correct.

My final point on the way in which existing programmes are not working relates to the developing PFI crisis. In the past six months, only one PFI project—as it happens, the M80 motorway in Scotland—has been able to proceed. All others have ground to a halt, as I understand it. The Financial Secretary shakes his head; if he can encourage us with some good news, I would be delighted to hear it. The PFI process is in considerable difficulty because commercial partners will not come forward, and the number of banks willing to participate has drastically contracted, mainly because of the credit crunch. It was always a rather questionable financial mechanism, and it is now in the deepest difficulty.

I have made several points about the difficulty that the Government are having in making capital investment take place. The problem is that the context is one of a crisis that is far worse than we knew it to be even three months ago. One of last week’s revelations was the fairly clear indication from independent outside bodies, such as the International Monetary Fund, that the crisis in the UK is significantly worse than that of almost any other developed country. It is worth reflecting briefly on why that is the case.

There are two major reasons why the British recession is likely to be much worse than in other developed countries. The first is that the bubble in the housing market and the growth of personal debt were more extreme than they were in almost any other developed country, except for Ireland and possibly Spain. The blame for that is quite widely distributed, but it is partly down to a failure of regulation: the deregulations of the 1980s and the liberation of the building societies that allowed them to become banks. It is partly due to failures by the Financial Services Authority, and partly due to a failure of monetary policy. Much of the responsibility for the failure to spot the bubble in the housing market lies with the Government, but also with irresponsible lending by the banking system. That was exceptional in the UK.

The second reason, and the full significance of this point is only now becoming fully apparent, is that Britain will suffer severely because we are host to some of the world’s largest banks. Of the largest five, three are in the UK, and they are ultimately the responsibility of the British taxpayer—not counting Lloyds HBOS, which is not far behind them. The City of London hosts those enormous, universal banks that are now in extreme difficulty, and the effects are rippling through our economy. That is happening because banks are rapidly—to use an ugly phrase—deleveraging, which is showing up in a contraction of credit to British companies, and because of the loss of revenue from the City on which the Government hitherto relied. A factor that has not yet come through, but which could be of enormous magnitude, is the big losses that the banks will accrue, much of which will end up with the Treasury. We do not know how much, but the amount will be large.

The context of the debate is one in which we understand that the recession in Britain could be much worse than it is everywhere else. Therefore, Government action, including fiscal stimulus, is all the more important.

I wonder whether the hon. Gentleman could give us a clear indication of the size of the fiscal stimulus for this year, and the next two full years, if he thinks that it is appropriate to announce it at this stage. The automatic stabilisers constitute more than 80 per cent. of the current stimulus package, given the fall in tax revenues and the rise in public spending, and less than 20 per cent. of the package will come from measures in the Government’s announcement.

Although £12 billion is a lot of money, the Government’s fiscal stimulus is not large in terms of the British economy. It is less than 1 per cent. of the economy, which is a much smaller proportion than in the United States. We have supported that measure, but we suggested a different mechanism for going about it.

A problem arises from the fact that we have growing budget deficits and growing public debt, which may have the effect of squeezing out any future public investment, which will be crucial in providing a continued fiscal stimulus.

The hon. Gentleman is very thoughtful on these subjects. Can he now say what is Liberal Democrat party policy? How big a fiscal stimulus is it recommending?

I do not think that that is the right way to approach the problem. There is a great difference between a public investment such as a stadium or sports arena, which provides no return, and a public investment in the form of, say, social housing, which generates a steady stream of income and is justified in economic terms.

How much?

Why have an artificial cap on sensible public investment that produces a return to society? It should be justifiable in its own terms. Capital rationing, which is the approach that Conservative Back Benchers seem to be advocating, is a narrow approach to a big problem, and that is completely wrong.