Business, Enterprise and Regulatory Reform
The Minister of State was asked—
Enterprise Finance Guarantee Scheme
The enterprise finance guarantee, launched on 14 January, is open to businesses with a turnover of up to £25 million. It is too early to predict how many loans will be made under the guarantee to firms with a turnover between £20 million and £25 million.
Mr. Pelling: Initial experience in my constituency suggests that we are encountering a problem that often arises when any public policy limit is set. That is, economies of scale mean that banks are very keen to serve businesses with a turnover of between £20 million and £25 million. If that turns out to be a general trend across the country, what can be done to ensure that businesses with a smaller turnover will also benefit from this policy initiative?
We want all businesses with a turnover of up to £25 million to benefit from the Government’s enterprise finance guarantee and the other schemes and bank lending that are available. Under the enterprise finance guarantee, companies will be able to borrow anything from £1,000 to £1 million. There are generous repayment terms, and loans can be repaid over up to 10 years. The hon. Gentleman may be aware that only today RBS-NatWest has announced £3 billion in extra funding for small and medium-sized enterprises through new regional funds. Significant support packages are available now, which can be accessed though Business Link. The Government are providing real help for business now, and that is what the business community needs to help it through these difficult times.
I know that small and medium-sized businesses in North-West Leicestershire will welcome the launch of the enterprise finance guarantee. However, my constituent Mr. Evans, who has also read the helpful document “Real Help Now”, says that he has been left totally confused. He said:
“My bank (HBOS) has told me they are still in the dark about the government’s plans and have asked me for yet another business plan and projections (I submitted these only in November).”
How confident is the Minister that individual branches of the banks will be informed about the Government’s proposals as rapidly as possible? It does not seem that the information is necessarily percolating down from the top levels of those organisations.
Nineteen banks and financial institutions are already participating in the enterprise finance guarantee, so I would be surprised if lending managers at national and regional levels are not aware of the scheme and of what is on offer. The scheme was launched on 14 January, so it is still relatively new, and I know that the banks are looking at their communication strategies to make sure that the information is available at the lending level. The scheme is clear, it is open for business and doing business now, and it comes on top of the other lending that is also available in the economy. If my hon. Friend gives me the details of the specific problem that his constituent faces, I shall make sure that it is investigated.
Can the Minister say to what extent today’s very welcome announcement from RBS-NatWest depends on the enterprise finance guarantee scheme? I share the reservations expressed by the hon. Member for North-West Leicestershire (David Taylor). The Forum of Private Business says that the scheme is not working effectively and that bank managers do not know about it. In my constituency I have a very worrying case in which a man has been made ineligible for the scheme by the arbitrary behaviour of another bank. There are real questions about the scheme that need to be addressed urgently.
We will investigate any problems that the hon. Gentleman says have been encountered, but I ask him to bear in mind the fact that the scheme was launched on 14 January. It is open for business now and is providing real support. There may be some teething problems at an individual banking level, but that might be expected with any scheme. Some companies will be turned down because they do not meet the criteria, but the business community as a whole has welcomed the flexibility to get a loan of between £1,000 and £1 million, with a 75 per cent. Government guarantee. I am surprised by the hon. Gentleman’s comments about the Federation of Small Businesses; we are happy to work with it to make sure that the scheme is effective. It is properly designed, and it is open for business. It should be welcomed by the Opposition, as it provides support for the business community.
In his reply to my hon. Friend the Member for North-West Leicestershire (David Taylor), the Minister said that the scheme came on top of the finance already available—but does the Minister think that the banks are playing ball? A small business—well, it is not actually that small—contacted me: RBS has found any excuse to restructure its loan, and has charged it 1 per cent. for doing so. It is a profitable business that is looking to expand, but it finds it very difficult to get what would, in normal circumstances, be classed as normal finance. It feels that it is being taken for a ride by the bank.
Obviously, I cannot comment on those individual circumstances. On the general situation, hon. Members will be aware that through the lending panel, we are monitoring lending by the major banks extremely closely. A lot of lending into the banking system by foreign banks has disappeared, so there is a credit crunch affecting the UK economy. Our major banks are continuing to lend, and we continue to push them to make sure that they do, which is why I welcome the announcement by RBS-NatWest today. Obviously, we expect normal commercial loans to have been exhausted as a possibility before companies are eligible for schemes such as the enterprise finance guarantee scheme; that is the right thing to do when providing a taxpayers’ guarantee. The schemes are up and running. They are working, and they are providing real help for business now.
Is the Minister aware of an unintended consequence for leasing and asset finance companies that results from subsuming the small firms loan guarantee scheme within the enterprise finance guarantee loan scheme? As only six banks are offering the guarantees, such companies are no longer able to offer bank loan guarantees to their customers. Will he look into widening the availability of the scheme to leasing and asset finance companies?
More than six banks are offering the scheme. If the hon. Lady contacts me with specific details about finance and leasing companies, I shall be happy to consider them. We have made initial deals with banks to offer the enterprise finance guarantee, and we have brought on board more lending institutions, so the problem that she mentions may already have been solved, but I am happy to look at the detail.
When Lord Mandelson announced the scheme, he said that it was “going live today”, and the Minister has just said that it is open for business—but does he not realise that he is lucky if he has found a small business that is aware of the existence of the scheme, and very lucky if he has found a bank that believes that it is operating the scheme at local level? Instead of producing a series of measures in a panic-stricken way, as the Government have done in recent months, would it not have been better if they had speedily adopted our policy of a £50 billion loan guarantee scheme for businesses of all sizes, and had shown some competence in getting it into practice at the speed required?
No, it would not have been a good idea to implement an uncosted, untargeted scheme. What the Government have done is to introduce the enterprise finance guarantee, which is specifically targeted at companies with a turnover of up to £25 million. The right hon. and learned Gentleman will be aware of the working capital scheme that we are also introducing. It will provide working capital support for businesses in the economy. That will apply to a portfolio of companies with a turnover of up to £500 million. That is real support for business, and it is working. We need to do more to market existing products to the business community. I would like to think that the right hon. and learned Gentleman and I shared an interest in wanting to do that, and in wanting to get the maximum possible publicity for the real support available to companies to help them through the recession.
The Minister has heard from Members in all parts of the House about the concern that banks are failing to provide help for SMEs. Is he really satisfied that the banks have taken on board their duties to help put the scheme into action? All Members have heard evidence from companies: banks have failed to advise them of the scheme, and failed to help them to access it—and those are the very banks that the country now largely owns. When will the Government make the banks undertake what is necessary to make sure that the schemes actually work for small and medium-sized enterprises?
The hon. Gentleman has heard about the RBS-NatWest scheme that has been announced today, and he will be aware of schemes that were announced before Christmas, through which the major banks are continuing to provide finance to small and medium-sized businesses. He also ought to know what we have done as a Government, moving from the small firms loan guarantee scheme, which was a very small scheme targeted at fairly marginal businesses with a turnover of up to £5.6 million, to the enterprise finance guarantee, which takes all companies with a turnover of up to £25 million and provides far bigger and more flexible loans. We need to make sure that that information gets out and is used by companies that want to have discussions with their banks. I know of many cases in my constituency where companies are aware of the scheme and are talking to their banks. I expect that the lending figures for companies participating in the enterprise finance guarantee will quickly start to build strongly. After just over two weeks, we think a good start has been made and we expect to see significant progress in the use of the scheme in the future.
The Government support the rights of labour mobility that go with European Union membership. We supported the European Commission’s proposals to ask its group of experts to examine the operation of the posted workers directive and to ask social partners at European level to discuss the implications of recent European Court judgments. The posted workers directive operates throughout the EU and the recent report from the European Commission showed that there were 47,000 UK posted workers in the rest of the EU—three times more than the 15,000 posted workers from the rest of the EU working here in the UK.
The posted workers directive is, of course, the problem. The court ruling has brought it into disrepute, with subcontracting companies playing worker against worker, which is why we ended up with the strikes this week. Is it not time the UK put workers rights in the EU as No. 1 on the agenda, and made sure that we lead the field in ensuring that the rights of those workers are looked after?
I understand what my hon. Friend says, but I am not sure that the recent court judgments are relevant to the unofficial strike action over the past weeks. Those judgments are essentially about pay and about the capacity of trade unions to take industrial action in support of collective agreements. We have been told that all subcontractors on the site at the Lindsey oil refinery are required to pay according to the industry agreed rates. ACAS will test the veracity of that claim, but that is what we have been told, so whatever this week’s dispute was about, it does not seem, on the face of it, to have been about a race to the bottom in terms of pay.
Is not the recent industrial unrest a direct result of the Prime Minister’s call, from weakness, for “British jobs for British workers”? In answering the hon. Member for Glasgow, North-West (John Robertson), would it not be more honest for the Government to admit that the Prime Minister could never deliver on that promise? He is legally bound by EU law, which the European Commission has no intention of amending at all. What other way is the Minister finding through this terrible dilemma of serious industrial unrest, up against a legal prohibition on anything serious being done to remedy it?
I do not accept the right hon. Gentleman’s premise. Everyone in the House wants to see British workers having jobs, and we want them to have the skills and training necessary for that. However, we do not want to forsake a relationship whereby half our exports go to the rest of the EU, half of our inward investment comes from the rest of the EU, and 3 million to 3.5 million—one in 10—of the jobs in this country are in some way associated with trade with the rest of the EU. It is not inconsistent to support that and also to support skills and training for British workers for the jobs and industries of the future.
Given that the dispute at the Lindsey oil refinery seems to have been resolved, I would like Ministers to consider some of the wider issues underlying it. If terms and conditions are equal and there are no differences in pay, will the Minister and his ministerial colleagues look into why British firms are losing contracts, and why they are not winning the contracts when they compete against European firms? We need to establish that if we are to get to the real reason why the dispute occurred.
My hon. Friend raises an important question, and I know that she has been very close to this issue and taken time to establish the facts. The question that she poses is a good one. If the issue was not about pay, what, in the competition for the contracts, may sometimes mean that UK firms lose out? That does not mean that every time a non-UK firm wins a contract some rule has been broken or we need a change in the law. There could be other reasons. My hon. Friend has asked an important and pertinent question.
The Minister will be aware of the Bill that I introduced a couple of days ago on this issue. It supports, of course, the notion of fair movement, but it also supports free movement and fair provision for services and workers. Is he aware that in several other member states, parallel legislation already prevents social dumping, precisely because there are circumstances in which a correction is needed? Will the Minister be good enough to answer the question that I now have on the Order Paper? It is about ensuring that we bring in domestic legislation to ensure fair and free movement, and that we look after British workers as well.
I believe in fair and free movement, and the Government have introduced many important employment rights for UK workers in the past decade. I hope that the hon. Gentleman will agree that it was a step forward for the employers in this situation to agree on guidance, which states:
“Always consider whether there are competent workers available locally. If there are, it is good practice for the non-UK contractor to explore and consider the local skills availability and to consider any applications that may be forthcoming.”
Two important things were required to end the dispute. One was that there should be a fair chance for UK workers. The other was that no Italian worker who was here legally should have to be sent home; I am glad that that too was supported by the trade unions in this situation.
If the Government want to ensure that we do not have another situation such as that at Lindsey or anywhere else, the truth is that we need, among other things, to enact the Temporary and Agency Workers (Equal Treatment) Bill in total. That would ensure that middlemen and agency operators were not allowed to pick up about 25 per cent. of the earnings from foreign labour. Once we do that, we can stop the Lindseys of the future and deal with the matter in the Common Market as well.
I do not believe that agency workers were a factor in the Lindsey dispute. My understanding is that in that particular part of the construction industry the workers are directly employed by the subcontractors on the site. I have also been told that the subcontractors all have to pay the agreed rates. However, I agree with my hon. Friend that it was right to reach an agreement on the agency workers directive which suited the UK labour market. We did that on the basis of an agreement between the TUC and the CBI which was then reflected in the text of the agreed directive. The Government will bring forward a consultation on the implementation of the directive here in the UK.
More than 16 jobs will be lost as a result of the recent awarding of a specialist vessel requirement Navy contract in the Falklands to a Dutch company with a Filipino crew, instead of to the Scottish company that has provided the service successfully for 27 years. As there are serious questions about the tendering process, with correct procedure not having been followed, will the Minister ask his colleagues in the Ministry of Defence to investigate the circumstances of this case?
Does my hon. Friend accept that it is not protectionist to insist on minimum pay and working conditions for British workers in competition with foreign workers? In that context, and in terms of the posted workers directive, can he insist that the European Commission gets a move on with its review? Will he also look at the British angle of this, which is that the current minimum standard is the minimum wage, but that we could move the standard up to nationally agreed collective bargaining regulation?
I believe—or at least, I have been informed—that the agreed collective bargaining rate applies in this case, and that therefore pay was not an issue in this dispute. As for the European Commission’s proposal to examine the operation of the posted workers directive, the UK Government supported that when it was discussed in December.
The Government have a variety of measures in place to encourage consumer demand. Within the Department, among other measures, we are conducting a wide-ranging review of the effectiveness of the consumer protection regime. That is one of a number of measures that will assist in giving consumers renewed confidence. We will announce the outcomes of the review in due course.
As my hon. Friend will recognise, the VAT cut, and other questions around taxation, are very much a matter for the Treasury, so the Treasury will review the effectiveness of that measure. However, it is interesting to note the support from several bodies that could in no way be described as friends of the Government all the time—the Institute for Fiscal Studies is one, and the Society of Motor Manufacturers and Traders is another—but that welcomed the impact of the cut in VAT, as indeed have a number of retailers. Perhaps that is because it represents the largest single tax cut for some 20 years. It is also just one of a number of areas about which the right hon. and learned Member for Rushcliffe (Mr. Clarke) disagrees with his shadow Chancellor.
Is the Minister aware of an example of a case in which the Government are actively suppressing demand—a case about which I wrote to the Secretary of State on 10 December? I have not had a reply, despite putting down parliamentary questions. Eighty jobs in my constituency are threatened because the Government have changed the regulations, making it more difficult for foreign airlines to have their pilots trained on simulator training equipment in a company in my constituency. Is not that an example of the Government speaking with one voice and acting in another way?
If the hon. Gentleman had written to me, I would, as he knows, have been very happy to reply. I do not know what has happened in the particular case that he refers to. He has clearly written to the Department, and I will chase up a response for him as a result of his question.
My hon. Friend is right to say that consumer demand can suffer when people are the victims of scams. He may not be aware that the Office of Fair Trading and the Trading Standards Institute have just launched an effort to make people aware of the risks of scams—scams awareness month. I pay tribute to the all-party group on consumer affairs and trading standards, which supported the OFT and the TSI in launching that month’s-worth of awareness-raising activities just this week. It is one of a number of measures, alongside investment in scam-buster teams and teams to deal with illegal money lending, through which we are seeking to crack down on the rogues who want to exploit vulnerable consumers at this time.
Given the universally held view at home and abroad that the VAT cut has been ineffective in stimulating demand, what assessment has the Department made of the effect of the VAT cut on slumping car sales in this country?
With all due respect to the hon. Gentleman, I do not think that his view of the VAT cut is shared abroad or at home. The only place where that view is held is among the ranks of the Opposition. He would do well to review what the Institute for Fiscal Studies said about the VAT cut, and the comments of the Society of Motor Manufacturers and Traders. He might also wish to review the comments that the shadow Business Secretary made before the VAT cut was introduced.
Has my hon. Friend seen the important article by Professor Thomas Piketty, France’s leading economist, praising the VAT cut as a way of increasing demand across the economy, and suggesting that it should be applied across Europe? It is only the economic illiterates surrounding the new shadow Business Secretary who believe the opposite. Will his Department look at the example of Germany and France, which are offering scrap-and-build incentives whereby people bring in their old polluting cars and buy new ones?
I hope that my right hon. Friend will forgive me if I concentrate on reading the Harrow Observer and the Harrow Times. I will, however, rush to dig out the article to which he refers. I suspect that the comments he mentions are just one indication of the considerable support that exists for the measures that my right hon. Friends the Chancellor, the Prime Minister and the Business Secretary have taken to restimulate demand in the UK economy and lead efforts to boost consumer demand. The VAT cut, the fiscal stimulus package and the increase in incomes that pensioners will see in their bank accounts are all examples of the measures that we have taken—measures that the Opposition continue to oppose.
We have already announced support for businesses, including the automotive supply chain, through the enterprise finance guarantee and the working capital scheme, and helped to secure €8 billion for the sector through the European Investment Bank. Last week we announced a £2.3 billion package to support lending to the automotive industry, and work is under way with the European Commission to ensure that we can move forward on these measures as quickly as possible.
We have been in discussions with Jaguar Land Rover for a period of time. We are certainly aware of the company’s situation, and we have been supportive by encouraging it to go to the European Investment Bank for finance. The measures that we announced last Tuesday will provide guarantees for any loan that JLR secures from the EIB, but the company has other requests and we will continue our dialogue with them. The key thing to stress is that we are talking about taxpayers’ money, and we need to ensure that that money is used in the most effective way possible. We will continue to do that.
The announcement of aid last week came four months after the Minister first promised to help, but even today, as we learn that car sales have fallen again, the industry still does not have the details it needs to plan. There is no plan to help with consumer demand and loans, and the Government have now admitted that they have not even cleared their plans with the European Commission. Given that most of our competitors have already injected finance into their car industry, what is the problem? Do not Ministers understand the urgency, or is it just a matter of incompetence?
The hon. Gentleman ought to welcome the fact that we have announced a £2.3 billion package of loan guarantees to the industry. May I provide some of the details that he seems studiously to ignore? We will be guaranteeing EIB loans of more than £200 million for non-investment grade companies, which we need to do to ensure that they can get access to the necessary finance, as soon as those loans are approved. We will also guarantee up to £1 billion of new lending to companies looking to borrow more than £5 million. That will sit on top of the enterprise finance guarantee scheme that we have already announced, which we have talked about this morning. We hope that it will be open for business as quickly as possible.
I expect the state aid process to take days rather than months, and we will report on its progress. In the meantime, we are contacting all the companies in the automotive supply chain with a turnover above £25 million that could take advantage of the scheme, and talking to them about their requirements. We are getting on with the process of discussing what sensible lending might be made available to them now, rather than waiting for EU state aid approval.
DBERR has been in contact with more than 200 of the UK’s largest corporations and business representative bodies. Additionally, we have brought forward more than £66 billion of payments made by central Government Departments, launched a series of cash flow management guides to ensure that business has access to the very best information and supported the launch of a new prompt payment code by the Institute of Credit Management.
I thank the Minister for that answer. We clearly have to recognise that if large companies do not pay quickly in this crisis, they will force their supply chain out of business and lose out in the long run. Is it not crucial, given the balance of power between the large companies and the small companies trying to enforce payment terms, that there is more external intervention? To that end, does he support the call by the Federation of Small Businesses for Companies House to be given more resources to name and shame companies that do not register their payment terms with it?
Yes, it is important that big companies look to do what they can to support their supply chain during these difficult times. In the automotive industry, for instance, I am aware of a number of car manufacturers actively working with their supply chain and paying earlier than they normally do. Particularly in a time of lean or just-in-time production in the supply chains of the automotive industry and many other sectors of our economy, big companies have a direct interest in ensuring that small companies continue to survive. Many of them are already taking action to do that. Of course, the action that the Government are taking to stimulate credit in the economy will also help those small businesses.
Does the Minister accept that the Government’s efforts to promote prompt payment by large corporations will be severely undermined if they cannot put their own house in order? Will he therefore promise to investigate reports that many NHS trusts are failing to pay their contractors and suppliers within 30 days—far beyond the 14 days that the Government have promised?
I will certainly ensure that the Department of Health is aware of the concerns that the hon. Gentleman expresses. We have made a prompt payment commitment right across government, and we expect it to be delivered on. Inevitably, there may be some situations in which queries are made about invoices and judgments have to be taken about whether payment should be made, because we need to protect taxpayers’ money. We want to ensure that payments are made properly and promptly, and I will happily ensure that his comments are passed on.
My Department is focused on helping business through the current economic downturn and ensuring that British business is in the best place possible to take advantage of the upturn, when eventually it comes.
A small business in Borough high street in Southwark, which has been trading for 12 years, making a profit and paying all its bills, was recently 12 days late in paying its tax and liabilities. It paid them on 30 and 31 December rather than 19 December. On 31 December, it received a letter from Her Majesty’s Revenue and Customs stating:
“Your case will be referred for enforcement action…if payment is not made immediately.”
Will Ministers talk to their colleagues in the Treasury and the Revenue to ensure that they are understanding of the difficulties when payments in make payments out a bit more difficult?
I am happy to ask HMRC to consider the case that the hon. Gentleman raises. As the Chancellor announced in the pre-Budget report, businesses have the capacity to ask for more time to pay tax during the current period, and some 30,000 businesses have taken advantage of that capacity in recent months. Her Majesty’s Revenue and Customs is aware of the problem and understands the difficulties of business in the current period.
I thank my hon. Friend for that question. Nissan is an important part of the north-east regional economy, with one of the most efficient plants in the whole of western Europe. Like other car companies, Nissan is going through major problems because of the current lack of demand for cars.
My hon. Friend is right to highlight the importance of the future. Nissan is interested in producing a new generation of electric vehicles and we have been in direct discussions with the company about that. We would like the vehicles to be made in the north-east and we will continue to have dialogue with Nissan about the matter.
The process for people expressing an interest in Royal Mail is open and we have not reached any conclusion so far on the prospective partner. We believe that it is in the interests of Royal Mail to partner with an experienced network or postal partner that has gone through the experience of change in a network operation of the sort that Royal Mail runs.
As the theme of these questions has been a series of pronouncements and commitments given by the Government and questions about dithering and failure to deliver, was the Minister surprised to hear the Chancellor of the Exchequer, when giving evidence on Tuesday to the House of Lords, openly debating what form his latest big announcement might take, and whether the Government were switching from insurance of toxic debts in the banks’ balance sheets to a possible bad bank solution? As it is widely known that Baroness Vadera, a colleague in the Minister’s Department, is mainly in charge of the banking packages, will he get across to her the need for urgency, efficiency and some competence in delivery, and stress to her that British business cannot afford further delay and uncertainty before credit is got flowing properly again to businesses of all sizes?
We fully understand the depth of the current crisis, which is why we have been active, first on recapitalising the banks and then on taking a greater share of risk in lending. The whole world is going through the downturn and Governments have to act to try to restore confidence and lending. That is precisely what we are doing.
I have to contrast our actions with the Conservative party’s approach. In the words of Professor Paul Krugman, the Nobel prize winner:
“It’s pure Herbert Hoover… In fact, it reminds me of Andrew Mellon”—
Hoover’s Secretary of the Treasury,
“who said the”
“response to the Depression should be to ‘liquidate labor, liquidate stocks, and liquidate farmers’.”
That is what the Nobel prize-winning economist thinks of the Conservative party’s approach. Ours is much more in tune with the task in hand.
I understand the question that my hon. Friend raises. Given the economic circumstances, banks must realise that there are huge public sensitivities about the issue. The public expect restraint. They also expect that if any bonuses are to be paid, they should be paid on the basis of achievement, not past failures.
Perhaps I can encourage the hon. Gentleman. British Ministers have taken construction companies on a series of international trade missions, helping them to win contracts abroad, not just in European countries, but in Asian countries, Gulf countries and so on. The details of those visits are public—questions have been asked about them—and some of the contracts that have been signed are public as a result. We will continue to work with the construction industry. Indeed, my hon. Friend the Under-Secretary of State has already met the construction industry and he will continue to do so.
I am sure that my noble Friend Lord Carter will listen carefully to my hon. Friend, who raises an important point in general. As we go through this downturn, we must also look to the industries of the future. The communications revolution and good broadband access throughout the country are critical to our country’s economic future. That is why they are such a high priority for the Government.
It is important to recognise that there has been some recent public concern about the use of pre-pack administrations. We will always keep Government policy under review, and that includes the Enterprise Act 2002. Issues have arisen with some pre-packs, but there are also some advantages to pre-packs in terms of maintaining employment. I understand the comments that the hon. Gentleman makes and we will look at the matter closely.
It is the job of administrators to act in the best interests of creditors. It is also the job of the administrator to ensure that where a company can continue as a going concern, it does so. There are some lessons we might want to learn that have arisen from recent administrations. Sometimes the communication between the administrator and trade unions that have approved negotiating rights with companies has not been satisfactory. There have also been some suggestions that in some administrations there has been a rush to move towards liquidation without allowing sufficient time to explore other options. Again, that is something that we are actively looking at.
The hon. Member for Middlesbrough, representing the Church Commissioners, was asked—
In the final few months of 2008, the commissioners established two new mandates with funds raised from UK equity sales in the first half of the year. They were an active global equities mandate and an unconstrained mandate, which invests in a mixture of equities, bonds and cash, as determined by the manager. Both mandates added value in the final quarter of the year and delivered positive returns in a difficult environment.
Obviously some sagacity has been shown in taking money out of equities. I am aware that an important paper is to go to the General Synod this month on the implications of the financial crisis and the recession. Will the management of the funds continue to protect assets and assist the Church in its ministering role?
The hon. Gentleman is perfectly right, in the sense that the Church looks at the long term and at inter-generational fairness. The commissioners, in common with similar funds, have been affected by the global economic downturn, but we are not speculating on figures. The audited results will be published in our annual report, but the latest actuarial advice that we have received, which fits in with the hon. Gentleman’s question, is that we will be able to meet our 2008-10 expenditure plans, and that because of the way in which we smooth our non-pensions expenditure, we expect to maintain these distributions in cash terms into 2011 and 2013, further falls in the market notwithstanding.
I know that the Church Commissioners have regard to an ethical dimension in the investments that they make. In view of the General Synod’s discussions next week on the Church’s response to the financial crisis, will my hon. Friend ensure, through his good offices, that that ethical dimension is maintained, even in these difficult circumstances, when there is always an idea that it might be possible to make a quick buck? The Church should remain above all those elements and ensure that it learns lessons from the General Synod’s discussions next week and builds them into its future investment programmes.
I am grateful to my hon. Friend for that question. We look forward to that debate in the General Synod. In my Father’s house are many mansions, and next week there will be many aspects to the debate on the Government’s economic policy.
On ethical investment, I can assure my hon. Friend that the two new mandates are not permitted to engage in short selling, but they do have the ability to invest in instruments to protect funds under their management against adverse currency movements. There are no positions in hedge funds or direct exposure to sub-prime assets. Ethical investment has been the cornerstone of the Church of England’s Commissioners for many years, I think going back to the 1940s.
Public Accounts Commission
The Chairman of the Public Accounts Commission was asked—
Following a competition in 2006, the Commission appointed Tenon for three years, with the option of two one-year extensions. The Commission has been satisfied with Tenon’s performance and has decided to exercise the option to extend the appointment for a further year, to July 2010.
Tenon has made a number of important recommendations on, for example, business reporting arrangements, the management of fee income and how to deliver work programmes in the most effective way. With all the recommendations accepted, its work has ensured that the National Audit Office, working with the Public Accounts Committee, continues to be a world-class operation that delivers a £9 saving for every £1 spent. That means that £656 million is delivered back to the taxpayer every year.
Are we not back, however, to the central dilemma of Plato’s “Republic”: quis custodiet ipsos custodes? Who should audit the auditors? Have we not got a cosy cabal between Tenon and the NAO? Tenon failed to detect—or overlooked or declined to report on—the gold-plated, fur-lined expense arrangements of the former Comptroller and Auditor General, Sir John Bourn. What confidence can we have in its forensic ability to report on the things that matter in relation to the operation of the NAO?
As the hon. Gentleman knows, we have now put in place a completely new governance structure for the National Audit Office. For the first time, there will be an independent chairman working with the Prime Minister. We have appointed Sir Andrew Likierman, who is probably the country’s leading expert on resource accounts, to be the chairman of the NAO, and he will lead a board that will directly oversee the Comptroller and Auditor General in terms of his expenses and all the things that the hon. Gentleman has mentioned. At the same time, the board will ensure that the Comptroller and Auditor General continues to be fully independent in delivering value-for-money reports. We have also, with the Prime Minister, appointed Amyas Morse—a first-class appointment—who will deliver the kind of improvements that the hon. Gentleman wants.
Electoral Commission Committee
The hon. Member for Gosport, representing the Speaker's Committee on the Electoral Commission, was asked—
The Electoral Commission informs me that where malpractice has been exposed, it discusses lessons learned in detail with the electoral registration officers. More generally, the commission issues guidance to all electoral registration officers on suggested approaches to adopt in compiling and maintaining complete and accurate registers. This guidance reflects lessons learned from instances where there has been evidence of malpractice.
I thank the hon. Gentleman for that reply. There is a particular problem in my constituency, where a criminal case has arisen that is being dealt with in Reading court, and there has been an electoral case demonstrating that people are listed on the register who do not exist, but who have postal votes. I am profoundly concerned that when postal votes are issued, they last five years before they can be removed by the electoral registration officer, and if the person on the register does not exist, there is no way of confirming it. Will the hon. Gentleman discuss with the Electoral Commission whether there is something it can do in these circumstances to ensure that we avoid the fraudulent voting that has occurred in Slough?
The commission shares the court’s very serious concerns about the system of voter registration in Great Britain. Since 2003, the commission has called for a reform of the system to provide security where it is needed, which is at the point of registration, and it argues that a system of individual electoral registration with personal identifiers is needed to provide a secure foundation for both registration and postal voting.
What research has the Electoral Commission undertaken on the extent of fraudulent entries on the electoral register? I am thinking about not just the deliberate fraud that the hon. Member for Slough (Fiona Mactaggart) mentioned, but the overall accuracy of the electoral register throughout the UK. That seems to me to be a rather fundamental point as we approach a possible general election.
Malpractice has been the subject of a study and statistics are available. The amount of malpractice is in fact comparatively small, but it takes only a small amount of malpractice to create a great deal of suspicion and concern about the system generally. The United Kingdom is one of only two countries in the world to have a system of household registration, which, as the hon. Member for Slough (Fiona Mactaggart) pointed out, provides an opportunity for the head of the household or anyone who interferes with the post to carry out such fraud. The other country that has a system of household registration is Zimbabwe.
The hon. Gentleman knows that I agree with the Electoral Commission about the need for personal identification, but I think that the point made by the hon. Member for Slough (Fiona Mactaggart) about the integrity of the electoral register is extremely important. The issue is not just fraud, but one of attrition, as to whether the electoral registers are kept up to date when people die or move away, for example. What research has been done on that aspect, and what guidance can be given to electoral registration officers to ensure that they keep a fully up-to-date and accurate register, which is essential?
Recent legislation has given the Electoral Commission power to issue more guidance to electoral registration officers, and the commission is taking that power. The commission feels strongly that the best way ahead is through individual registration, and its call has been backed by the Committee on Standards in Public Life, the Parliamentary Assembly of the Council of Europe and, most recently, the Slough electoral petition, in which Richard Mawrey, QC, called for immediate reform of the voter registration process to remove opportunities for electoral malpractice.
The hon. Member for Middlesbrough, representing the Church Commissioners, was asked—
Church of England officials have been meeting officials from the Department for Culture, Media and Sport and other Government Departments. Those discussions seek, among other things, to identify national, regional and local sources of funds and ensure that the provision of community services in church buildings qualifies for these sources of funding on an equal basis as in respect of non-church buildings.
I understand that the heritage grant is to be reduced this year, and that the funding of churches and church repairs is reaching crisis point. There has been a spate of thefts of lead from roofs, and churches must pay VAT on repairs. They have thousands of pounds’ worth of commitments and very little by way of grant. What can the hon. Gentleman do, as a matter of urgency, to ensure that the largest possible heritage grant is available for the restoration of churches?
I am grateful to the hon. Lady for raising a matter that is extremely important to the Church. We continue to monitor the heritage fund grant because we are constantly hearing that it may be reduced.
The hon. Lady is, of course, aware of our own efforts and campaigning to ensure that VAT on church repairs is effectively reduced to 5 per cent. She is right to say that we need to inject value into our church repairs. At least £925 million will be needed over the next five years to repair listed places of worship in England, most of which will be raised by congregations and local communities. The hon. Lady’s efforts, and the efforts of the House, to maintain pressure on the Government are most welcome.
I estimate that the new charge—and, where applicable, highways drainage contributions—will cost Church of England churches and cathedrals about £15 million or more. Let me add by way of a statement that I consider the new charging regime to be unfair to the churches, small sports clubs and voluntary organisations that enrich our communities. Ministers are considering how to respond to these concerns, and we await their response with interest.
I think that the churches, charities and sports organisations await a ministerial announcement not just with interest but with anger. I wrote to the Minister responsible on 19 December, and his office has informed me today that I should receive a reply to my letter in the next few weeks. Would it not be better if the Second Church Estates Commissioner had a word with Ministers to ensure that they reach some conclusion about the need for new legislation—not just tinkering with guidance notes—before the Church of England debates the matter in our Synod next week?
I am grateful to the hon. Gentleman for writing to the Minister personally.
A great deal of pressure has been exerted on the Government, not only by the Church but by the Scout Association, which has campaigned on the issue. Only yesterday a petition from former sports stars Brian Moore and Mike Gatting outlining the impact on sports clubs was received by the Under-Secretary of State for Environment, Food and Rural Affairs. The pressure is on the Government, and what we want is for the Government to respond. If I may use a biblical phrase, let me say: those who have ears, let them hear.
Is the hon. Gentleman aware that this matter arises from a rather misguided decision by Ofwat, with which I have been in correspondence for well over six months, and that, as is clear from that correspondence, the individual water companies still have a degree of latitude that would enable them to exempt churches?
The hon. Gentleman is right, in that the matter lies with Ofwat; and therein, I suspect, lies the dilemma of Ministers. How do they intervene with Ofwat? How do they intervene on behalf of the Church or in relation to the Scouts Association? How do they intervene on behalf of all the small concerns that are the lifeblood of our country and act in their interests? That is a dilemma for the Government to which they should respond and on which they should reach a conclusion that is favourable to the Church’s interest and also robust. We want no tinkering with the system and no filibustering here or there; we want a clear decision that is in the interests of the organisations to which I have referred.