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Commons Chamber

Volume 487: debated on Thursday 12 February 2009

House of Commons

Thursday 12 February 2009

The House met at half-past Ten o’clock


[Mr. Speaker in the Chair]

Business Before Questions

Manchester City Council Bill [Lords] and Bournemouth Borough Council Bill [Lords]

Motion made, and Question (15 January) again proposed,

That the promoters of the Manchester City Council Bill [Lords] and Bournemouth Borough Council Bill [Lords], which were originally introduced in the House of Lords in Session 2006-07 on 21 January 2007, may have leave to proceed with the Bills in the current Session according to the provisions of Standing Order 188B (Revival of bills).—(The Chairman of Ways and Means).


The debate stood adjourned; to be resumed on Thursday 26 February.

Canterbury City Council Bill, Leeds City Council Bill, Nottingham City Council Bill and Reading Borough Council Bill

Motion made, and Question (15 January) again proposed,

That the promoters of the Canterbury City Council Bill, Leeds City Council Bill, Nottingham City Council Bill and Reading Borough Council Bill, which were originally introduced in this House in Session 2007-08 on 22 January 2008, may have leave to proceed with the Bills in the current Session according to the provisions of Standing Order 188B (Revival of bills).–(The Chairman of Ways and Means).


The debate stood adjourned; to be resumed on Thursday 26 February.

Oral Answers to Questions


The Chancellor of the Exchequer was asked—

Departmental Holdings (Banks)

1. What expenditure his Department incurred in acquiring its holdings in Royal Bank of Scotland plc, HBOS plc and Lloyds TSB plc; and what the monetary value of those holdings was on the most recent date for which figures are available. (256282)

Under the recapitalisation scheme that I announced on 8 October, the Government invested £19.97 billion in the Royal Bank of Scotland group and £16.96 billion in the Lloyds banking group, which was formerly Lloyds TSB and HBOS.

I think that the Chancellor forgot to answer the second half of the question; anyway, I will press on. What is the total exposure that British taxpayers face, both direct and contingent, as a result of the purchase of the bank shares, the provision of loans and the offer of guarantees? Chancellor, can we have a straight answer this time? Can we have the figure, and can you tell us how much of our children’s future you are gambling?

Order. The way in which the hon. Gentleman addresses the House is out of order; he knows that. I have had to say that to other hon. Members. We have got to stick to the rules.

At each stage, I have set out to the House what the Government propose to do and what the cost is. In relation to the purchase of a shareholding, the Government purchased shares, and that came to a total of £37 billion. That was part of the recapitalisation process. I have to tell the hon. Gentleman that that part of the Government’s proposals over the past few months was supported by hon. Members on both sides of the House. It was recognised as being absolutely necessary to recapitalise the banks because we were within hours of the banking system collapsing last October; that is why we did it.

The hon. Gentleman asks about other measures that we have put in place—for example, the special liquidity scheme, which I announced in April last year and of which the Bank of England reported last week that about £185 billion has been taken up. That has been more than covered by the collateral lodged by banks, which is over £240 billion, and in addition the Government charge fees that total about £2 billion for that. That is just one example of where we have given guarantees that are just that—guarantees, not money that is being paid out at the moment. I believe that the range of measures that we have taken—other countries around the world have done the same or similar—was absolutely necessary. What I really find surprising is that having supported us last October the hon. Gentleman is now attempting to run away from the decisions that we all took then.

With taxpayers now holding a majority stake in Lloyds, which Her Majesty’s Revenue and Customs is investigating for double dipping and tax avoidance via Cayman islands companies—biting off the hand that feeds it comes to mind—will the Chancellor of the Exchequer say what access the Government had to Lloyds’ books before pumping in billions of pounds of public money and whether any condition, such as an end to all tax avoidance activity, were attached to our cash being used to save a bank that has so successfully shifted the tax burden from corporations on to small businesses and families?

Let me make a couple of points to my hon. Friend. First, as he is no doubt well aware, because this matter is currently before the courts there is a limit to what I can say. As a matter of general principle, Ministers do not normally comment on the individual circumstances of any taxpayer, corporate or individual, for perfectly good reasons. However, I can say to him that the so-called double dip scheme was shut down by the Government in 2005. In addition, anti-avoidance measures that we have introduced have saved the taxpayer about £11 billion over the past couple of years. On top of that, from 2004 schemes of this sort have had to be reported to HMRC to ensure that if there is abuse or if any measures that are being taken have unintended consequences that are harming the taxpayer, action can be taken very promptly. That will remain the case. At each Budget, I will ensure that if there are loopholes that need to be closed, we will take the action necessary.

Can it really be right that the body looking after the taxpayer’s interest in these two banks should be chaired by Mr. Moreno, who appears to have been heavily involved in tax-dodging in Liechtenstein? In the interests of getting a consensus behind United Kingdom Financial Investments, is the Chancellor wise to proceed with that appointment?

The hon. Gentleman will be aware that following Sir Philip Hampton’s appointment to chair the RBS board, I asked Mr. Moreno to take his place as acting chair. I will make a decision on the permanent replacement in the near future. I agree with the hon. Gentleman that we should take a firm hand on tax loopholes and on people not paying the tax they should, and I hope that he will have a word with one or two prominent Conservative donors who do not choose to pay their taxes in this country.

Using generally accepted accounting principles, how much has the nationalisation of the banks added to the national debt?

As I said to the hon. Member for Wellingborough (Mr. Bone), we have reported all the potential and actual exposures in relation to the purchase of assets or the guarantees, and we will continue to do that in the normal way.

Is it not becoming increasingly clear to the Chancellor that the ferocious resistance of the management of these banks to the Government’s full takeover of them, albeit on a temporary basis, is motivated by a desire to protect bonuses and salaries, to resist write-downs and loss declarations and to protect cynical tax avoidance schemes? When will the Government avoid this farcical and completely ineffective arm’s length management arrangement?

I do not agree with everything that the hon. Gentleman says. First, I believe that it was necessary to take Northern Rock into public ownership on a temporary basis, but I do not believe that we should seek to take over banks as a matter of course. They are better being commercially run, and I think that the hon. Gentleman and I would both agree that the Government cannot be in the business of running these banks in the long term. However, disclosing the nature and the extent of losses, and providing a greater degree of transparency, is absolutely necessary and we will continue, especially as we work out the insurance scheme of the assets, to ensure that people completely understand the nature of the liabilities that the banks have entered into.

I think that the answer to my hon. Friend the Member for Sevenoaks (Mr. Fallon) means that the Government are about to lose their second key banking adviser, but may I ask about the resignation of the first? Are we really expected to believe that when the Prime Minister appointed Sir James Crosby to the board of the Financial Services Authority, and when the current Chancellor promoted him to the job of deputy chairman in 2007, neither of them had any idea that they were appointing someone whose business model at HBOS was being investigated by the regulator whose board they were appointing him to?

As the Prime Minister has just told the Liaison Committee, Sir James’s appointment in 2003 was made on the recommendation of a selection panel that followed an open competition, and that panel, which was chaired by the senior official then responsible for banking regulation, Sir James Sassoon, recommended the appointment of James Crosby. At that time, there was no reason to question that appointment. With the benefit of hindsight, many people now make claims about what they say they knew at that time, but the then Chancellor followed the proper procedures and followed the advice, and he had no reason not to make the appointment.

The FSA has said that in 2002, and subsequently, it drew attention to a number of concerns, as it did with several other organisations. In terms of the law, the way in which the FSA supervises any bank, let alone this one, is a matter for it. Neither the subsequent investigation into the allegations made against James Crosby, nor the concerns that it had, were reported to the Treasury. I would not expect them to have been, given the information that I have from the chief executive of the FSA at the moment.

Either the Chancellor knew what was going on and did nothing, or he was entirely ignorant, and neither is much of a defence. Is not the net closing in on the Prime Minister and the Chancellor? Their accomplices are resigning, their alibi that no one knew what was going on has been blown apart, and their fingerprints are all over the mistakes that were made during the age of irresponsibility.

Is there a coherent view in the Cabinet about how long this recession will last? We know what the Treasury’s forecasts are, and we know what the Chancellor says about the economy recovering halfway through this year, but today the Health Secretary has said that we need to be ready for two years of recession. Is the Health Secretary expressing the collective view of the Government on this issue?

In relation to the FSA, the hon. Gentleman’s claims are frankly ridiculous. Appointments were made in the normal way, which is a great deal more open than for some of the appointments that were made in the past. At the time, there was no reason not to accept the recommendations in relation to Sir James Crosby.

On the broader economic picture, as I have said to the House on a number of occasions, there has been an extremely sharp downturn not just in this country but in countries right across the world, and we can see the effects of that. I am clear, though, that if we had followed the hon. Gentleman’s advice and done absolutely nothing to prevent the full effects of the recession from being felt, the impact and the long-term damage to this country would have been substantial. I believe that the action that we have taken is not only justified but will ensure that this recession will be shorter and less painful than would otherwise be the case. I am sorry that the Conservative party continues to take the view that there is absolutely nothing that they are prepared to do to help people and businesses in this country.

Is the Chancellor aware that the most delightful thing about this episode is that most bankers naturally represent the Tory party? I am quite enjoying the spectacle of these Tories liaising with bankers one day and attacking them the next. As a socialist, I think that at the end of the day we might see a better banking system and, next time, put some socialists on the banks. The other thing that has emerged is that the Tories are complaining about tax avoidance, and they are people who, over the years, have been experts at it.

Short Selling

2. What discussions he has had with the Financial Services Authority on its decision to lift the ban on short selling in the financial markets; and if he will make a statement. (256283)

The UK tripartite authorities—the Treasury, the Bank of England and the Financial Services Authority—are working closely together to ensure the stability of the UK financial system. The FSA, as an independent regulator, reviewed its ban and decided not to maintain it. It stands ready to reintroduce the ban should circumstances require it.

I thank my hon. Friend for that answer, but the FSA has let the public and business down, and it acts like a toothless tiger. It is time that it got tough. The only time that it got tough was on short selling, and what did it do? It withdrew the ban. The time has come for the Minister to introduce strong regulation and make the FSA use it, because the people of this country would not forgive it if this were to happen again. Let us get tough and take action now.

I understand what my hon. Friend says about tough regulation, but I have to say that there is no evidence that hedge funds and speculators are short selling and driving down the stock of banks at the moment. There is a short selling disclosure regime in place, whereby if short selling transactions reach 0.25 per cent. they must be disclosed. All the evidence that we have at the moment shows that there is no significant short selling activity in bank stocks. Of course the FSA, as the independent regulator, will continue to monitor the situation and stands ready to reintroduce a ban if it is necessary to do so.

The Minister is distancing himself from the decision to lift the ban, so why did he take the credit when it was imposed?

I am not distancing myself from it at all. I am just making it clear that the FSA is an independent regulator and takes its own decisions, although it works closely with the other tripartite authorities, the Bank of England and ourselves in Her Majesty’s Treasury. As the hon. Gentleman will know, in addition to the current temporary disclosure regime, the FSA is proposing greater transparency in short selling more generally. We believe that that is important and can help to protect all UK firms, not just those in the financial sector. A discussion document was issued just over a week ago on this issue.

In his discussions with the FSA, will my hon. Friend ask for an explanation of why the building societies pay 15 per cent. of their pre-tax profits into the Financial Services Compensation Scheme while the banks pay only 5 per cent.? Will my hon. Friend meet colleagues and representatives of the building societies?

My hon. Friend refers to the Financial Services Compensation Scheme. We consulted on the rules over a couple of years, and the scheme was introduced in April 2008. I remember that, at the time, the building societies said that they wanted to be in the same category as the banks for deciding the rate that they pay for their protected deposits. They might have changed their minds since, and they will want to take that up with the FSA as an independent regulator, but I am always happy to meet my hon. Friend to discuss any problems.

I agree entirely with the hon. Member for Chorley (Mr. Hoyle). Is not short selling an immoral and corrupt practice that makes no positive contribution to the creation of wealth? There should be a permanent ban on it.

Perhaps we should demystify short selling a little. I do not know whether the hon. Gentleman buys goods over the internet, but if one buys books, hi-fi equipment and televisions, they are often bought from a supplier who does not have the goods, but makes a commitment to get them from a purchaser. That is short-selling activity. We believe—and the markets understand—that short selling can help facilitate price discovery, which is important for valuing companies fairly, price efficiency and liquidity in the market. However, we need to ensure great transparency about the matter. We do not want to go back to the days of George Soros, speculation, and major runs on companies and countries. That is why the disclosure regime is important.

Banking Industry

3. What recent assessment he has made of the effectiveness of steps taken by his Department to recapitalise the banking industry in the last six months. (256284)

The action we took in October prevented the collapse of the banking system. That, together with the measures that I announced in the pre-Budget report, continues to support businesses and families in this country.

I thank my right hon. Friend for that reply. Given the amount of toxic debt in the system, will he consider creating a public-private investment fund, designed to remove toxic debt from financial institutions’ balance sheets? Or perhaps he favours the Credit Suisse model of banks creating internal hedge funds in which they put their toxic debts to pay directors’ bonuses.

My hon. Friend is right that different solutions are being developed across the world to deal with the basic problem, which is that far too many banks have assets that either turn bad or have clearly reduced in value because of the economic downturn.

The new United States Administration have proposed the first suggestion that my hon. Friend made—a joint venture by Government and the private sector—although the details have still to be worked up. I said on 19 January that, in this country, we wanted to develop an insurance scheme, whereby the Government could provide back-stop insurance for some assets. That would remove some of the uncertainty in the system, which holds back banks’ ability to lend to businesses and people in this country. I also said that we have not closed our minds to the creation of a so-called bad bank. Indeed, we did precisely that in the case of Bradford & Bingley—we split the bank between the part that took deposits, which is still viable and was sold to Santander, and the long-term liabilities, which have been kept and run down. There are a variety of solutions to the problem.

The main problem, as I said in reply to the hon. Member for Twickenham (Dr. Cable), is that we need to get banks to realise and disclose the extent of the liabilities as soon as possible. Until that uncertainty comes out of the system, banks will continue to be reluctant to lend to each other and to their customers, not only here but throughout the world.

The proper test of the effectiveness of the recapitalisation scheme is the willingness of the banks to continue viable lending. Unfortunately, the failure of that willingness has led to a viable, profitable, long-term and well respected company in my constituency having to declare 1,000 job losses, 400 in my constituency and in that of the Health Secretary. That is a failure of the recapitalisation regime, of the credit guarantee regime and of the Treasury, in not intervening. Will the Chancellor undertake now to intervene in the case of the finance company Cattles, to ensure that the credit guarantee scheme underpins it?

There are two issues there. First, I do not agree with the right hon. Gentleman in relation to the recapitalisation scheme that I announced in October. It was there primarily to stop the banking system collapsing. That was the scheme’s purpose, and it was supported by all parties in the House at the time. I appreciate that since then it has been convenient for his party to run away from that, but that is why the scheme was there. In relation to his general point about lending, he is right that the crucial thing is for us to try to get lending going as quickly as possible. The recapitalisation was of course necessary, because if there were no banks, there could not be any lending. That was the first stage. The measures that I announced in January are designed to do more to get lending going.

In relation to Cattles, I am aware of the problem, which has been raised with me by other hon. Members in the House. In relation to the credit guarantee scheme, that is available to banks. That is what it was set up for and it has been run by the Bank of England. I am aware of the Cattle scheme and I will continue to keep the House informed on it.

Is my right hon. Friend aware that when the Conservative party was in power, unemployment in my constituency was 20 per cent.? Today it is less than 3 per cent. During that time we were told that high unemployment was a price worth paying and that if it was not hurting, it was not working. Is it not the case that today we are trying to prevent that scenario?

My hon. Friend is quite right. Yesterday’s unemployment figures surely demonstrate the need to do more, not less, to help people who lose their jobs. The lesson from the 1980s is that the Government waited almost two years before they started to introduce any help, and most of that help was aimed at people who had been out of the labour market for some considerable time. As a result of that delay and doing nothing at that time, a whole generation of people was written off, and many of them never went back to work again. My hon. Friend and, I suspect, hon. Members in most parts of the House will have personal experience of knowing people who were in precisely that position.

That is one of the reasons we set up Jobcentre Plus. We set it up in the good times, when unemployment was falling rapidly. We have given Jobcentre Plus more resources, in order to help people. Even today, the majority of people get back into work within six months of losing their jobs. We will continue to ensure that we put more money into the system to help people get back into work. There are nearly 500,000 vacancies in the economy. There are jobs; it is our job to match people up as soon as we can, preferably before they leave employment, in the event of being made redundant, and help them get back into work as quickly as possible. That is another example of where the Government can make a difference for the good.

A moment ago the Chancellor told my right hon. Friend the Member for Haltemprice and Howden (David Davis) that the primary purpose of the bank bail-out was to prop up the banks, but that is not how he described it when he made the announcement last October. He defined the criterion by which the effectiveness of that intervention was to be measured in these words:

“The purpose of these proposals is to get lending started again and to get the economy moving forward.”—[Official Report, 8 October 2008; Vol. 480, c. 280.]

Since then, survey after survey has shown that lending has dried up, and the published data show that the economy is shrinking. In the Chancellor’s own definition, has the bail-out not been a failure?

No, and the hon. Gentleman well knows that what he is saying is absolute nonsense. The primary purpose of our intervention last October was to stop the banking system collapsing. Indeed, that is why he and his hon. Friends on the Front Bench supported us, so it is no good their now saying that they were not in favour of it and would have done something different. Of course, if there are no banks in the first place, there will be no lending, so propping them up was a precondition of getting lending going again. That is no more than a statement of the obvious.

Since that time, there has been a substantial downturn of economies, not just here but in every country in the world. We can see that in all the forecasts and in all the figures that we know about at the present time. That is all the more reason for us to ensure that we get lending going again and help to fill the gap that has been left by foreign banks withdrawing from lending, not only in this country but in other parts of the world. It is also all the more reason for the Government to step in to help to support businesses and families.

That approach is supported right across the world, and the Conservatives are virtually isolated as far as that is concerned. It has been backed by the independent Institute for Fiscal Studies—which is often favourably cited by the Conservatives when it suits them—and, even yesterday, the Bank of England’s inflation report made the case that if Government support comes through, it will make a substantial difference to the position that would otherwise be the case. We are clear that supporting the banks and supporting our economy are absolutely essential, and I am sorry that the Conservative party cannot bring itself to give that support, because it is pretty essential for the future of our country.

Regional Development

4. What assessment he has made of the effect on the economy of EU regional development aid drawn down in the last 12 months; and if he will make a statement. (256285)

The UK has already benefited to the tune of more than £5 billion in the 2000 to 2006 round of programmes. Final applications under the scheme are still being dealt with, and they are likely to increase that figure further.

In that case, why did Treasury Ministers turn down the offer of an extended package of European regional aid to all the UK’s poorest regions as part of an EU fiscal stimulus package? I note that Treasury Ministers accepted an extension to the regional aid package for Scotland, Northern Ireland and Wales, but failed to take up the offer of the package of support for the UK’s poorest region—Cornwall.

As the hon. Gentleman will be aware, the Department for Communities and Local Government looked in detail at the possibilities, to determine whether the package would have a beneficial impact on the UK, including Cornwall. Having looked at the offer from the EU, the Department concluded that it had come too late and that it was too inflexible, in practice, for many programmes to be able to qualify. It would also have incurred significant extra cost and diverted resources from other key programmes. However, there are still applications in the pipeline for Cornwall—including grant funding to support the transition of Newquay airport from military to civilian use—which, if agreed, would increase the European regional development funding awarded to Cornwall county council from £11.7 million to £14.4 million.

In the past, did not North Yorkshire and Yorkshire and Humberside get substantial amounts of money from EU regional development funds? That money is no longer available, yet we are now funding huge cohesion funds for other European countries. Will the Minister stand up for the regions of this country to ensure that we get our fair share?

The hon. Lady will be aware that we support substantial investment in the UK regions. Clearly, the criteria for EU help for particular regions changes over time, which reflects the changing positions in the regions, not only in the UK but across Europe. She will know, as a fellow Yorkshire MP, that we have seen substantial growth and investment in the Yorkshire economy, and that the Yorkshire regional development agency, which gets substantial investment from the Government, has been critical in helping to support Yorkshire businesses through the downturn and through the pressures that we face. That is the kind of investment in the regions that we never had in the past, and there is a substantial difference between the way in which we are responding to this downturn and the way in which the Conservative Government responded in the 1980s.

Fiscal Policy

5. If he will take steps to ensure that his Department’s fiscal policy prevents women from being disproportionately affected by the recession. (256286)

We believe that it is right to try to support everyone through the difficult times, and that includes looking at the different impact of problems on women and men through the recession. The £60 pensioners’ increase in January and the bringing forward of child benefit will particularly help women and families.

Like many seaside resorts, my constituency has an above-average number of women in employment. Sadly, a high proportion of them are the main breadwinner. That is why this is an important issue for my constituency. The TUC has said that “creative means” will be required to protect women’s jobs and to increase the opportunities for new vacancies. What creative means does the Minister have planned to ensure that jobs for women are protected or created?

The hon. Gentleman is right to say that we want to support jobs, and people, through this. That includes, for example, the fiscal stimulus—cutting VAT and putting billions of pounds into the economy to help us through. Had that been done by the then Government in the early ’90s, it could have helped to protect 300,000 jobs. The fiscal stimulus is hugely important, as recognised by Governments across the world. It is about helping to support jobs, and it is unfortunate that other parties have not supported it.

In looking at reports suggesting that the recession has impacted particularly on women’s employment, is my right hon. Friend concerned about the very many women who work, often part time, on the front line in the financial services industry and who do not get bonuses and are on modest salaries? I speak as a woman who has sat through many hours listening to male bankers talking about the crisis that they precipitated, so does she agree that a bit more diversity on the boards of these banks might actually help to improve the quality of the decision taking?

My hon. Friend is right. Investigations have been launched, as she will know, to look at issues around diversity in the City and the way in which men and women have been paid, including bonuses, in the financial services industry. It is also, I think, important to recognise that there may be differences in the impact on employment. So far, unemployment over the past 12 months has increased by less for women than for men at the national level, but there are very wide variations at the regional level. My hon. Friend is also right to highlight the importance of looking at part-time employment. It is also the case that the tax credit system might help some people who see a cut in their wages, for example, as it can help to cushion them from the impact of what might otherwise be difficult circumstances.

I received an e-mail on this issue this morning from a constituent who strongly suggested that the bonus culture in some financial institutions—I do not mean at the top, but much lower down—has an inherent tendency to discriminate against women who, as a result, tend to suffer from lower pay and are more likely to be chosen for redundancy. In looking at the bonus culture, will my right hon. Friend ensure that we focus not just on what happens at the top but on how it works down throughout these organisations? Changing the boards in the way my hon. Friend the Member for Northampton, North (Ms Keeble) suggested might provide a way of ensuring that this matter is taken seriously by the banks and other financial institutions.

My hon. Friend makes an interesting point about the way in which performance-related pay or different bonuses may be decided on and raises questions about whether there might be discrimination or unfairness as those decisions are taken. It is thus right that, in addition to looking at how to prevent an unfair bonus culture that overly rewards excessive risk across the financial sector, we should also look at whether any discrimination is taking place. My hon. Friend may be aware that my right hon. and learned Friend the Minister for Women and Equality has instigated work in this area.

Global Economic Situation

6. What discussions on the global economic situation he had with Chinese Ministers during the recent visit of Premier Wen Jiabao to the UK. (256287)

The talks on the economic crisis with my right hon. Friends the Prime Minister and the Chancellor addressed preparations for the London summit, avoiding protectionism, moving towards a low-carbon economy and reform of international financial institutions. Both countries aim to double UK exports to China over the next 18 months.

Given the importance of the relative slowdown of the Chinese economy, was the opportunity taken to discuss with China the scale and nature of its financial stimulus package and its likely speed of effect so that it improves the Chinese economy and, with it, that of the rest of the world?

Yes, that certainly was discussed. My hon. Friend knows China extremely well, so he will know that it recently became the world’s third largest economy. It is going to be one of the fastest growing this year, but it has been deeply affected by the crisis, and some 20 million migrant workers have returned home after losing their jobs on the east coast. I was in China last month for the G20 preparations and I discussed with officials and others in Beijing what was happening in the Chinese economy. I can say to my hon. Friend that China will be a key participant at the London summit—committed, with others, to a successful outcome, which is so important for China as it is for the rest of the world.

The Government tell us that their growth forecasts are dependent on international co-operation with China and elsewhere. They also claim that other countries are following the United Kingdom’s lead in economic policy. If that is the case, presumably the Minister will stand by the pre-Budget report’s forecasts on growth—or does he agree with most commentators, including the Governor of the Bank of England, the Secretary of State for Health and the Secretary of State for Children, Schools and Families, that the recession will be much deeper?

As the hon. Gentleman knows, we will publish updated forecasts at the time of the Budget, as normal. They will include a full assessment of developments and prospects for the United Kingdom and the global economy.

Just a couple of weeks ago, the Institute for Fiscal Studies said that

“our central forecast is that the UK will avoid deep and prolonged recession thanks to the enormous monetary and substantial fiscal stimuli already announced.”

We are taking the action that is needed domestically, which contrasts with the do nothing policies of the hon. Gentleman’s party.

The globalised neo-liberal economic model has proved to be inherently unstable, and has brought mass unemployment to China as well as elsewhere in the world. Did my right hon. Friend discuss with the Chinese the possibility of a fundamental reorganisation of the world economy, perhaps on Bretton Woods lines, and did he read Anatole Kaletsky’s article in The Times on Monday, calling for what he called a “paradigm shift” in economic arrangements?

There are lots of interesting ideas around at the moment. What I can tell my hon. Friend is that, as I indicated earlier, the reform of international financial institutions was one of the topics discussed by my right hon. Friend the Prime Minister with Premier Wen in London, and it is certainly one of the topics being considered in preparation for the London summit. I think that we shall need to see some significant changes.

What steps is the Minister taking to work closely with the Chinese businesses based here in England—both large and small—which will play an important part in ensuring that we retain the links between our two countries, not just now but in the decades ahead?

The hon. Gentleman has made an extremely good point. The United Kingdom economy benefits substantially from Chinese investment in the United Kingdom; I believe that we are the biggest recipient in the European Union. We also have the China-Britain Business Council, which does important work. The relationship is very important to us economically, and also, as Premier Wen emphasised, very important to China.

Banking Industry

7. What assessment he has made of the effectiveness of internal risk rating as a basis on which to operate international banking supervision. (256288)

Internal risk models for United Kingdom banks are required to be approved for use by the Financial Services Authority. Internal risk rating is complemented in the Basel II framework—and, in EU law, the capital requirements directive—by a requirement for supervisors to undertake supervisory reviews of the banks’ risks and make appropriate adjustments as required. The framework also incorporates a third pillar: disclosure of key supervisory requirements of a bank to ensure market discipline.

Northern Rock’s banking practices were compliant with the Basel accords, so I think that this can be described as, in effect, a highway code written by boy racers. The system effectively hands all the risk assessment over to the banks themselves, and is fatally flawed as a result of being allied to a system of balkanised regulation. It does not need tweaking; it needs fundamentally changing. Will we try to get some proper, global banking regulation out of the G20 talks?

I think that the G10 regulators and people in the central banks who worked on Basel II will be surprised to hear themselves described as boy racers. They may be pleased to be regarded as so youthful. But I think the only boy racer when it comes to regulation is the shadow Chancellor, the hon. Member for Tatton (Mr. Osborne), given his earlier policy proposals in this context.

My hon. Friend has raised an important point about banks and their internal risk modelling, which must be approved by the Financial Services Authority. The Chancellor has been at the forefront of international discussions about future arrangements. We believe that improvements are needed to the Basel II process, and it will certainly be a major topic of conversation at the G20 Finance Ministers’ summit.

On two occasions, both the Prime Minister and the Chancellor have failed to express confidence in Glen Moreno, acting chairman of UK Financial Investments Ltd, the body entrusted with risk-managing our bank holdings. Can the Minister tell us when he will appoint a permanent chairman, and will he confirm that Mr. Moreno will not be a candidate?

I welcome the hon. Gentleman to the Dispatch Box for the first time, and I refer him to the comments made previously by the Chancellor.

The April 2007 Bank of England financial stability report documented a number of risk management weaknesses: weakened credit risk assessment; impaired risk monitoring; and over-reliance on risk assessments. It then glossed over those when it said that

“the growing use of credit risk transfer markets have increased the risk-bearing capacity of the system”.

That is incredible when one looks back at what has happened. Can the Minister instruct the Governor of the Bank of England to pay much more attention in future stability reports to explicit risks and far less attention to glossy commentary?

The hon. Gentleman served on the Banking Bill Committee, on which I led for the Government. Like me, he will be aware that statutory responsibilities are to be given to the Bank of England through the Banking Bill in just the areas that he is discussing.

Topical Questions

The Department’s responsibilities remain as I set out last December. With your permission, Mr. Speaker, I can tell the House that, following the meeting of the G20 countries in April, this year’s Budget statement will be on 22 April, when the House will have returned after its Easter recess.

Can the Chancellor say what estimate he has made of the number of firms and businesses likely either to cease trading or to go out of business as a consequence of the forthcoming 5 per cent. increase in business rates?

What I can tell the hon. Gentleman is that the measures we have put in place to support small businesses in relation to lending will help many businesses to deal with the costs they meet, in addition to helping them get through an extremely difficult situation—we will continue to do that. Other measures, for example, the empty property relief that I announced last November, will help people and businesses get through this difficult time. I will continue to keep under review, at the Budget and at other times, what else we can do to help small businesses.

T2. Talking of those measures that the Chancellor has mentioned, I understand that the time to pay initiative introduced by Her Majesty’s Revenue and Customs has been much appreciated by small businesses that have taken advantage of it. Does he have any figures that can objectively tell us what the take-up has been, and what the benefit has been to small businesses? (256308)

My hon. Friend is right to mention the very good response that there has been to this initiative. More than 60,000 businesses have benefited from the time to pay arrangements, including 191 in Derbyshire. In total, those businesses have agreed arrangements to spread tax payments worth more than £1 billion, so the scheme has been very effective. I know from what businesses have said to me and from what a number of Members of the House have reported to me and to other Treasury Ministers on behalf of businesses in their areas how successful and highly welcomed this scheme has been.

T4. Has the Chancellor exhausted his fiscal stimulus? If not, what is the limit of the stimulus that he intends to impose? (256310)

I thought that my right hon. Friend the Financial Secretary had just indicated one of the benefits that the fiscal stimulus has been giving to businesses in this country—£1 billion of help has been given to businesses. That is one example of the difference between a Labour Government who are giving that help and a Conservative party that is absolutely opposed to it.

T3. My right hon. Friend has brought forward much funding to enable public projects to progress in constituencies such as mine. Will he ensure that MPs are consulted when these public projects are brought forward so that we can ensure that they are in the best interests of our constituents, particularly where university funding is concerned? (256309)

My hon. Friend is certainly right to say that bringing forward increased public sector capital investment can help to support jobs in every constituency across the country—we think that it will help to support thousands of additional jobs. I am happy to talk to her further about what additional information she would like either from the Treasury or from individual Departments, which are, of course, supporting the major capital investment, not just across the higher and further education sectors, but across transport and other areas of infrastructure—it is all, sadly, opposed by the Conservatives.

T5. Among the poor judgments made by the Chancellor was that of asking Sir James Crosby to produce a report that recently concluded that the taxpayer should buy up the bad debts of the banks. Now that we know the level of complicity that Sir James had in producing those bad debts at his old bank, does the Chancellor still intend to press ahead with the conclusions of that report without question? (256311)

The hon. Lady is mistaken about what James Crosby actually proposed. He was not dealing with the question of the bad assets in the banks—that was being dealt with separately. He was asked to consider how to get mortgage lending going again—again, at the time, that was something that the Conservative party was in favour of. He suggested that the Government should underwrite some of that new lending. That has a great deal of merit, and it is something that I set out in the pre-Budget report. I am afraid that the hon. Lady was just plain wrong in what she said.

This week, one banker has described a salary of £1 million as “modest” and RBS has proposed obscene bonuses of £1 billion. Will the Chancellor now stand up for the taxpayers who own great chunks of the banks and demand a freeze on bankers’ bonuses?

The hon. Lady will be aware that when we recapitalised the banks in October, we imposed restrictions on the payment of cash bonuses to board members. I believe that bonuses should reward success, not failure, and many people who work for banks are not well paid in comparison with some of the people at the top. If the former work hard, they should be rewarded for doing so. I agree with the hon. Lady that people who are associated with the losses should not receive anything, and we must end the culture that has encouraged people to take reckless risks that the boards of the banks patently did not understand. It has had disastrous consequences for them, for this country and for the rest of the world.

This downturn affects the whole world, and does not that underline the importance of working with our partners in the European Union and other countries to stimulate demand? What action is being taken by EU members and other countries to address these pressing needs?

My hon. Friend is right. The co-ordinated European recovery plan, which was agreed by Finance Ministers and leaders in the EU, includes a fiscal stimulus of a similar size to the one that we pioneered in this country. Germany may have had a few words to say, but it has introduced the largest fiscal stimulus since the second world war, at €82 billion. The French have a €26 billion fiscal stimulus and the Spanish a €25 billion one. Even the Canadians, who used to be on the side of the do nothing party, have announced a $32 billion fiscal stimulus. Everyone is doing it but the Tories.

T6. Would the Treasury team confirm that, according to the pre-Budget report, our net contributions to the EU budget this year will be £2 billion, which will rise in two years time to £6.5 billion? Do they think that, in a recession, it is sensible for us to more than treble our contributions to the EU budget, especially when the European Court of Auditors has refused to sign off the accounts for 13 years because of the waste and mismanagement? Can Ministers think of a better way to spend that sum in this country in a recession? (256313)

The right hon. Gentleman makes some interesting points, but it is also important to remember that we are pioneers in ensuring that the EU budget is spent appropriately. We always raise that point in all the meetings that we have. I also note that €30 billion of the EU fiscal stimulus—which the Tories oppose, but which will help to revive all of our economies—will come directly from the EU budget.

Given the dreadful price paid by this country in blood and treasure after the previous surge of troops in Afghanistan in 2006, may we have an assurance that, before another surge is contemplated, we will have before us a full financial appraisal?

My hon. Friend will know that the Government remain committed to supporting our troops, who are carrying out an extremely difficult and dangerous task in Afghanistan. We believe, of course, that our contribution should be made alongside contributions from other countries too. This must be an international effort, and the burden cannot lie on the shoulders of a few. Our commitment to ensuring that we see the matter through with other countries remains as strong as it ever was.

T7. In her reply to the hon. Member for South Swindon (Anne Snelgrove), the Chief Secretary said that expenditure on public works would be going up during this vicious recession. In the current financial year, the Treasury will raise roughly £44 billion from the motorist. How much of that is being reinvested in the road network? (256314)

As the hon. Gentleman will know, we are increasing investment in transport and other infrastructure across the board. We are bringing forward capital spending on our transport infrastructure, and that is the right thing to do to support the economy at this time. The Opposition’s proposals would amount to a cut of £800 million in transport investment at a time when the economy needs it, in just two months’ time. I think that such a cut would be hugely bad for the economy.

On Monday, the Federation of Small Businesses said that the VAT cut had not worked. That is certainly what I am hearing from my local businesses. Denise Harrison, the owner of the small business Complete Image, pointed out that reprinting her price list would cost so much that lowering her prices would not be economic. When will the Chancellor admit that the cut was a gimmick? When will he come forward with proposals that would really help small businesses in my constituency and the rest of the country?

I do not agree with the hon. Gentleman. We cut VAT because that was the quickest way to put £12.5 billion into the economy. We are also reducing the amount of tax that basic rate taxpayers pay, and introducing measures to help families with children, and pensioners. It will all make a difference. The Institute for Fiscal Studies is independent of Government, but in its report a couple of weeks ago it said that the temporary cut in VAT that is now in place would be a more effective

“stimulus measure than its critics suggest.”

In addition, the forecasts in the inflation report that the Bank of England published yesterday made the point that the VAT reduction and the other stimulus that we have put in place, together with the effects of monetary policy and falling energy prices, will make a difference.

I know that many small businesses are finding it very difficult at the moment to make ends meet, and that many of their customers are cutting back on what they are doing. That is all the more reason, I would have thought, to support putting more money into the economy. We are putting something like £20 billion into the economy over the next year or so, and other countries right across the world are doing the same thing. It will make a difference. There is no quick fix or overnight solution, but the alternative—of doing nothing and letting the recession take its course—was tried in the 1980s and 1990s. It did not work then and it would not work now.

T8. Can the Chancellor please tell the House what the point is in having a Financial Services Authority at all if the Government were either unaware of its concerns about HBOS, or unwilling to make sure that action was taken? (256315)

I believe that it is essential to have an independent regulator such as the FSA. Indeed, the hon. Gentleman might do well to remember that it replaced some seven or eight self-regulatory organisations that, for example, manifestly failed to prevent the mis-selling of pensions in the late 1980s. That is why we set it up. The FSA has a responsibility to regulate the financial services industry. It routinely raises concerns about firms from time to time. It would not routinely report those concerns to the Treasury unless at that time it felt that there was a major systemic risk. Clearly, it did not feel that such a risk was evident when it carried out its investigations, because it did not report any suspicions to the Treasury at any point. However, I do not think that one can argue from that that there should not be independent regulation of the financial services industry. That position is just patent nonsense.

Has the Treasury made an assessment of the role and influence of external credit agencies in the analysis of financial regulation for our financial services industry?

Yes, we have, and I agree with the point that I think that the hon. Gentleman is getting at. Credit rating agencies are a useful aid to decision making, but they cannot be a substitute for decision making on the part of boardrooms. People need to decide whether a risk is good or not or, if there is a risk, how they are going to price it. To do that, they should, of course, refer to credit rating agencies but that should not be the last word. Other issues are involved, such as the conflict of interest that arises when credit rating agencies certify products in which they have a financial interest. However, these are all issues that we have raised at the Financial Stability Forum, because the problems need to be dealt with at an international level. They cannot be dealt with in any one country alone.

T9. What is the Minister’s latest assessment of the number of jobs currently being lost from businesses located in British ports, as a result of the appalling and wholly unjust decision to levy three years of business rates retrospectively on port tenants, many of whom are now being pushed to the brink of insolvency, as a result of their new and unexpected tax liabilities? (256316)

My right hon. Friend the Minister for Local Government has recently announced to the House, following our announcement in the pre-Budget report, an unprecedented period of eight years to pay back these liabilities, which are properly and rightly assessed, as happens routinely with all business services. There is an eight-year pay-back period; it is interest free; and it should offer a great deal of help.

Returning to Mr. Glen Moreno, does the Chancellor of the Exchequer not understand that it was a gross error of judgment to appoint that Liechtenstein-based banker, who specialises in tax avoidance, to look after taxpayers’ interests in our banks?

As I said earlier, Mr. Moreno is taking that job on an acting basis until we can appoint someone on a permanent basis, but the right hon. Gentleman’s protestations about tax dodging and people not paying taxes in this country when they should would have far more credibility—[Interruption.]

Order. Let the Chancellor answer. It may not be the answer that the right hon. Gentleman wants, but let him answer.

The Opposition do not want to hear the answer, because there are some uncomfortable truths—some of them sitting not very far away from this place.

Business of the House

The business for the week commencing 23 February will be:

Monday 23 February—Second Reading of the Apprenticeships, Skills, Children and Learning Bill.

Tuesday 24 February—Opposition Day (6th allotted day). There will be a debate on an Opposition motion. Subject to be announced.

Wednesday 25 February—Remaining stages of the Saving Gateway Accounts Bill.

Thursday 26 February—General debate on Welsh Affairs.

Friday 27 February—Private Members’ Bills.

The provisional business for the week commencing 2 March will include:

Monday 2 March—Conclusion of the remaining stages of the Political Parties and Elections Bill.

Tuesday 3 March—Motion to approve the draft Prevention of Terrorism Act 2005 (Continuance in Force of Sections 1 to 9) Order 2009, followed by Third Reading of the Corporation Tax Bill, followed by House Business.

Wednesday 4 March—Consideration of an allocation of time motion, followed by all stages of the Northern Ireland Bill.

Thursday 5 March—General debate on international women’s day.

Friday 6 March—Private Members’ Bills.

As the Chancellor has told the House, the Budget statement will be made on 22 April.

May I thank the Leader of the House for giving us the business? However, the truth is that very little serious Government business is being brought to the House, but massive issues of importance are being announced outside it. Can she explain, for instance, why the Secretary of State for Health seems to want to deny Members the opportunity to debate a key matter such as dementia? Moreover, we have been waiting for the child health strategy for five months. It is a very important issue, yet it has only been announced today in a written statement. Indeed, today, as we rise for a half-term break, we find that there are no fewer than 39 written ministerial statements published. Is she really happy with the practice of announcing them at one fell swoop just as people are about to disappear?

May we have a statement from the Chancellor on the extraordinary behaviour in front of the Public Administration Committee yesterday of the Economic Secretary to the Treasury, the hon. Member for Dudley, South (Ian Pearson)? His derogatory remarks to a member of that Select Committee, and his comments on Equitable Life, caused uproar. Once again, may I ask for a debate on Equitable Life, and the disgraceful way in which the Government are treating those who have lost their pension? How can the House be said to be doing its job properly when it establishes a system of redress and then wantonly ignores that system in such a callous and unpleasant way?

Likewise, if we believe in ourselves, we must seek to educate people about what we do here. Will the Leader of the House confirm that she will help the Youth Parliament to hold events in the Palace of Westminster to teach young people about the vital importance of politics and political engagement?

On Tuesday, we saw the spectacle of bank bosses apologising in the Treasury Committee. May we have a similar statement of apology from the Prime Minister? Yesterday we learned that officials at No. 10 are being instructed to compile a DVD of President Obama’s greatest apologies, to teach the Prime Minister how to say sorry. We very much hope that such a statement will be delivered to the House, and that he will practise properly in front of the mirror beforehand. Is it his intention, in that same statement, to confirm the status of Glen Moreno, who chairs the trust that holds the shares that bought the banks that saved the world, albeit, sadly, through tax havens in Liechtenstein? With Sir James Crosby being sacked yesterday, and Mr. Moreno being downgraded a few minutes later, is it now confirmed that Mr. Moreno is on the way out altogether?

May we have a debate on unemployment? The dire figures published yesterday, pushing against the 2 million mark, were a brutal confirmation of the Governor of the Bank of England’s assessment that Britain is now in “deep recession”. We also gained an insight into the nationality of those who are employed. We learned that in 2008, employment of workers born in the UK fell by 278,000, while employment of foreign workers rose by 214,000. Where does that leave the Prime Minister’s claim that he wants to create British jobs for British workers?

Finally, on stepping down from jobs, may we have a debate on political blogs? I am not sure whether the right hon. and learned Lady is aware of the blog of a Labour councillor from Hackney, who is convinced that he has a winning strategy for the Labour party. He has written what he calls his “unsolicited advice to Gordon”. He says:

“Harriet Harman has too many jobs and isn’t very good at hiding that she wants to add yours”—

that is, the Prime Minister’s—

“to the list. Removing her role as Party Chair will…remind her who is boss.”

So who is the boss? Who is wearing the trousers in the Labour party now? How many jobs does the right hon. and learned Lady hold, and is it not sadly the case that we have a crisis in the labour market, a crisis in the Labour party, a Prime Minister who will not apologise, and a Leader of the House who is unapologetic about wanting his job?

The hon. Gentleman raised a number of important points about our health strategy, child health, the dementia strategy and the importance of memory clinics; I will look at the forthcoming business of the House and see whether we have enough opportunities to debate those important issues, alongside the important issue of the economy, which I know the House wants to prioritise. Of course, the Conservatives have an Opposition day debate in the week in which we get back, so he could consider making the issue the subject of that debate.

The hon. Gentleman mentioned the 39 written ministerial statements that are being issued today. Something like 24 of those are spring supplementary estimates. It is custom and practice for the spring supplementary estimates to be given by way of written statements to the House. I think that that is perfectly in order. If he wants us to do things differently he is welcome to make suggestions.

We have already discussed the position on Equitable Life, which was set out by the Chief Secretary to the Treasury in an oral statement, and she was answering questions just this morning. We all share the view that those who have been the victims of gross mismanagement by the management of Equitable Life and who are not protected because of a failure of regulation are owed an apology, and there needs to be financial compensation or financial recompense. That will be taken forward.

The hon. Gentleman raised the question of the Youth Parliament. I agree with him: it would be right for the Youth Parliament of this country to be able to sit in the Chamber when the House is not sitting—obviously, not when the House is sitting, but in recess. We need to encourage young people to see our democracy at work and to imagine themselves playing a part in it. We tabled a motion that was before the House last night, and it was objected to. I ask the hon. Gentleman to work with me to persuade his right hon. and hon. Friends who objected. Their names are on the Order Paper:—

“Mr Christopher Chope

Mr Greg Knight

Sir Nicholas Winterton

Philip Davies

Sir Paul Beresford

Mr Humfrey Malins”.

I agree with what the hon. Gentleman said, so he should address himself to his Back Benchers.

The hon. Gentleman mentioned unemployment. We are extremely concerned about anybody who faces the prospect of losing their job, which is why we have taken all the action we possibly can to stabilise the economy in the face of a global financial crisis and to give as much help to businesses as we can. We have been prepared to see Government borrowing rise in order that we can defer tax requests to small businesses, and about 30,000 businesses have been helped by not having to pay their tax. The only way to allow them to do that is to allow Government borrowing to rise, so we have, as the Chancellor has just told the House, put potentially £12 billion into the economy through the VAT cut in order to keep the lifeblood of business flowing and protect people from losing their job.

When the dreadful blow happens and somebody loses their job, we have taken action to make sure that they do not have to lose their home. Again, that has meant extra public spending, and we have had to allow borrowing to rise to compensate for it—for example, by bringing forward the help on interest payments on their mortgage from 39 weeks to 13 weeks for those who lose their job. That all costs money, and we have allowed the public debt to rise to provide that help. We are concerned about unemployment, but instead of just saying we are concerned and wringing our hands, we are taking action on it and putting money behind it, compared to what the Tories would do—wring their hands and not put any money up behind it.

The hon. Gentleman talks about foreign workers, and I must take issue with him about that. We must be very careful not to overlook the role that migrants have played in the life of this country over the centuries. I will share with the hon. Gentleman some figures that I was reading this morning. The House should listen. The figures relate to the Queen Elizabeth II hospital in Welwyn Garden City. In the Welwyn Hatfield area 6 per cent. of the population are from black and Asian minority ethnic communities, but of the people who work in the hospital, 50 per cent. are black and Asian. Migrants to this country are more likely to be standing at our bedside saving our life than lying in a hospital bed. We must recognise the role in the economy and our public services played by people who were not born in this country. Indeed, many hon. Members were not born in this country, so I do not agree with the hon. Gentleman’s approach.

In conclusion, the hon. Gentleman made a load of snide remarks about the Prime Minister, and he made snide remarks about me, too. I am disappointed. I know my hon. Friends warned me, but I said the hon. Gentleman was different. They said, “He’s just a Tory. He’s the same as all the others,” but I said, “No, I think he’s different.” I even bought him a Valentine’s card, and I thought me might buy me, or rather get me, a little trinket from the Sultan of Oman. It is clear now that he is the same as all the others. He does not see things in the way that I do, and he does not believe in the things that I do—he does not believe in helping people, if they get into difficulties; I do. We started off well at the beginning of the year, but it’s over!

I endorse the shadow Leader of the House’s request that the Youth Parliament be able to use the Chamber for its meetings. Next week, during the recess, the Youth Parliament is holding a conference in London on concessionary fares for young people, and it is obviously sensible for that conference to be held in this Chamber while we are in recess.

In the context of the work of the Youth Parliament and the issue of engagement by young people, can the Leader of the House find time for a debate on youth affairs? Should we not have an annual debate on youth affairs? We have annual debates on fisheries and on Welsh affairs, but the number of young people in the United Kingdom is far greater than the population of Wales. Would that not be an important step forward in raising the profile of the issue of the disengagement of young people from politics? Young people in my constituency have been served excellently by our outstanding member of the Youth Parliament, Catherine Rawsthorne, who would be delighted to have the opportunity to speak in this Chamber.

I thank my hon. Friend for his support and for raising the good work of the Youth Parliament. Just as I have announced the annual debates on Welsh affairs and on international women’s day, the House may want to consider the idea of an annual debate on youth affairs to give a sharper focus to the concern across the House about youth affairs.

I certainly do not intend to be snide—these Benches are a snidety-free zone.

I want to pick up the point made by the hon. Member for Rutland and Melton (Alan Duncan) about written statements. The Leader of the House and her predecessor said that the House should not be bombarded with vast quantities of statements immediately before a recess. That used to happen before the long recesses, but now there are 39 statements before a one-week recess. It is not the fact that the statements have been made; it is the timing and the fact that they have all been released on the same day before a recess. That cannot be right; will she please look into the matter for us?

I mentioned the weather conditions last week. Snow in my constituency gave way to floods, and we experienced severe flooding before Christmas. It would be helpful, when people have recovered from the difficulties that they have experienced, to hold a debate in this House on the resilience of local communities to adverse weather conditions, how we can make better preparations, how we can properly assess risk and how we can enable local communities and volunteers to play a better part in dealing with adverse weather conditions. Can we have a debate on that?

Immediately after today’s statements, there is a debate on social security and pensions uprating. I suggest that we should also have a general debate on pensioners. A lot of pensioners are finding life extremely difficult at the moment with the return from savings down, pensions not going very far and difficulties with keeping themselves warm over winter and with council tax—there are a lot of factors. Before the 11 wasted years of Labour Government, the Prime Minister said:

“I want the next Labour Government to achieve what in 50 years of the welfare state has never yet been achieved—the end of the means test for our elderly people.”

Well that was another great success over the past few years. We should have a debate on the position of pensioners and how we can properly deal with people in old age.

Lastly, may we have a debate on the future of the British pub? It is a fact that 39 are now closing every week. Insolvencies in the sector have gone up by 45 per cent. in the last quarter. The Chancellor of the Exchequer is barred from practically every pub in the country; that is not surprising, given that his response to the crisis in the pub trade has been to increase beer and cider taxes—that is resented, to say the least. May we have a debate on what we can sensibly do to protect what is a key part of many local communities up and down the country?

I will look into this, but I think that I am right in saying that there is an expectation that we brigade the spring supplementary estimates and publish them at the same time, in a co-ordinated way, so that people know when to expect them. I think that there is a purpose in brigading them all together, and that that is why they have come out just before this recess. However, I will look into the matter. Obviously, if there is a proposal that the publication of the spring supplementary estimates be staged rather than being done at once, and if hon. Members want that change, we will consider it.

The hon. Gentleman mentioned the question of resilience to extreme weather conditions. The Secretary of State for Transport is considering our response to the snow, icy weather and floods and will issue a written ministerial statement about the lessons that have been learned from his review of the response all around England, Scotland and Wales. The draft floods Bill, on structural changes in how we deal with extreme floods, will be issued shortly and no doubt the hon. Gentleman could contribute to that.

The hon. Gentleman mentioned pensioners and whether we should have a debate on the effect of the economic recession—the global financial economic crisis—on those in retirement. By way of background, I should say that he should bear in mind that retired people—particularly older pensioners, the overwhelming majority of whom are women—have been the biggest beneficiaries. Their incomes have risen more than those of any other group in society, and quite right too. There was an appalling problem of pensioner poverty and many steps have been taken to address that over the years.

Having said that, I recognise that many pensioners are worried about not getting income from their savings and the fact that fuel bills are a disproportionately high part of their household budgets. We are trying to take all the steps that we can to give them the help that we can. Again, that has implications for public spending. That is why we are prepared to allow public borrowing to rise. If that means extra insulation, winter fuel payments and putting in £60 extra and bringing the payment forward to January for all pensioners, we are prepared to do it. I know that the hon. Gentleman and his party back us on that. However, it has implications for public spending and we are prepared to face up to them.

The hon. Gentleman also talked about the pub industry, and I know that there is a real problem. Pubs play a big part in community life in rural and urban areas, but as people worry about how the recession might affect their families, they start cutting back on going out and on outings. That is why we wanted to ensure that we were putting money directly into the economy in every way that we could. I am disappointed, therefore, that the hon. Gentleman’s party does not back the VAT cut. We will do everything that we can, through both the Department for Culture, Media and Sport and the Department for Business, Enterprise and Regulatory Reform, to help the pub trade.

May we have a debate on the powers contained in the Scotland Act 1998? My right hon. and learned Friend will be aware that this House is responsible for overseeing and administering parliamentary elections in Scotland. At the last parliamentary elections there, many of my constituents were encouraged to vote for a particular party on the basis that it would scrap council tax and introduce a local income tax. That party has now reneged on that promise. Does my right hon. and learned Friend agree that, given that, that party should return to the ballot box?

People in my hon. Friend’s constituency and throughout Scotland will have been able to see the cynical way in which the Scottish National party made promises about cutting council tax and the debacle that has now come about. As my hon. Friend knows, we have set up the Calman commission to look at the whole question of governance. I am sure that we will be able to take that matter forward.

May we have a debate on the cost effectiveness of park-and-ride schemes? Although they may be viable in a few large cities, I am increasingly concerned that in many towns they are a thorough waste of money and should be abolished. Just a fraction of the money saved could be used to provide free car parking. If we cannot have a debate on the issue, will the Leader of the House please pass on my comments to the Secretary of State for Transport and ask him to look at some of the smaller schemes to see whether we are getting value for money? I believe that we are not.

Many park-and-ride schemes help cut congestion and pollution; they work very well in some places, although the right hon. Gentleman says that in others they do not. Perhaps he could choose the subject for an Adjournment debate—or a debate in Westminster Hall, as other Members might want to share their concerns as well. There would then be a response from a Transport Minister.

I hope that the right hon. Gentleman will think again about the Youth Parliament. As Chairman of the Procedure Committee, he is a beacon of changing procedure in the House and a considerable advocate of modernisation. I am sorry that he cannot answer me now, but I hope that he will change his mind and let the Youth Parliament sit in this House.

My right hon. and learned Friend and the hon. Member for Somerton and Frome (Mr. Heath) have referred to the weather, which has been rather inclement in the past week, to put it mildly—we have been slipping and sliding all over the place. The situation was not helped by the fact that Gloucestershire county council seemed to run out of salt. Is that not worthy of a debate and investigation, not least because if the council had not invested its money in Icelandic banks, it could have put the money to good use on the roads? With that in mind, should we not also be considering what advice it received, so that we can see why it put the money into Icelandic banks?

The extreme weather conditions have underlined the importance of the work of local authorities and the co-ordinating role of central Government. The Prime Minister was right to point out yesterday that cuts in investment in local and central Government would have made those matters even worse. As I said, the Secretary of State for Transport is learning the lessons from all around the country, and I think that at the moment his plans are to issue a written ministerial statement. No doubt, however, he will review the findings and see how best to handle the issue.

Unfortunately, the Leader of the House was not at the Public Administration Committee yesterday, when the Economic Secretary to the Treasury, the hon. Member for Dudley, South (Ian Pearson), appeared before us. What he said was completely unacceptable. He lost his temper with an hon. Member of this House and gave no justification as to how the deregulation is going to work—

Order. I must interrupt the hon. Gentleman. I know that he does not intend to break any rule, but there is a tradition in the House that an hon. Member should be warned if his or her conduct is to be attacked in the House. We are talking about the business for next week, so we will leave the matter. It is clear that the hon. Gentleman to whom he has referred has not been notified.

Will my right hon. and learned Friend consider having a topical debate on the success of free pensioner travel and whether we could extend it to cover trains? Furthermore, could we extend it to the young people of this country, so that schoolchildren and students travel free, as pensioners do? There have been great benefits and the scheme has been a great success. The Government should be proud of it, and if it can be extended to other people, that would be even better.

That is a very good suggestion for a forthcoming debate, and I will consider whether it can be the subject of a topical debate.

I suspect that the Leader of the House is not aware of the huge concern in the agriculture industry about the forthcoming new regulation on the tagging of sheep. It has been shown to be ineffective; it simply does not work and it is very expensive. May we have a debate in Government time so that some of us who care about agriculture can address the issue and try to persuade the Government to seek a derogation, as other states are doing, when pointless regulation is imposed on their farmers?

I am aware that this is a matter of concern which has been the subject of national debate. Environment, Food and Rural Affairs questions take place during the week that we get back, and I am sure that the hon. Gentleman will look for an opportunity to raise the issue then.

When can we have a debate on how we restore the damaged reputation of parliamentarians? If the recent examples of alleged conduct by Members of both Houses are true, and within the rules, then the rules are defective and need to be rewritten. For a start, could we introduce a mandatory register of interests of lobbyists and put in the public domain the locations—not the addresses but the locations—of our main residences?

The possibility of a register of lobbyists was raised with and answered by the Prime Minister yesterday. The Minister for the Cabinet Office also talked about it yesterday. The Public Administration Committee has conducted an investigation into it and has made some recommendations that are being considered by the Cabinet Office, which will respond to that report. As for the rules about parliamentary allowances, we have just rewritten them, set up a new system of audit, and agreed a new, in-depth publication scheme. Some of the vagueness of the previous rules has been addressed in our new rules, which as far as the National Audit Office is concerned are firm and clear enough to be the basis of a full-scope audit.

The matter of second interests—outside financial interests—has been the subject of controversy in the House of Lords. My hon. Friend will know that that is the subject of an investigation by the Privileges Sub-Committee, as the Leader of the House of Lords announced. The House of Lords is concerned that there should be a means of disciplining, expelling or suspending its Members, which it does not currently have. I have been looking at our own Register of Members’ Interests, and I wonder whether we need to be more transparent about MPs who are earning money outside of their earnings as a Member of Parliament and whether we should publish more information about what that money is being earned for and exactly how much is being earned.

I fully support the Liberal Democrat shadow spokesman on the crisis facing pubs, and I hope that the Government will pay attention to that and come forward with some proposals, but may I press the Leader of the House on matters relating to pensioners, particularly those who rely, or have relied, on their investment income and savings to maintain a reasonable quality of life? Their financial position has been devastated in recent months. Could we have a debate on that, even a short one such as a topical debate, so that we can highlight the particular problems facing pensioners—the majority of whom, by the way, are women?

The hon. Gentleman’s question reinforces the point that we should perhaps look for an opportunity to discuss issues relevant to those in retirement—pensioners—such as travel and savings. That might be a subject for a topical debate.

My right hon. and learned Friend will be aware that there are still dramatic differences between the performance of schools, even in areas of similar social composition, and even in the case of the Government’s much-vaunted academies programme. May we have a debate in the Chamber on the matter of teaching methods and philosophies, which is at the root of the fundamental differences between the relative success of those schools? I have raised this problem in the House many times, yet we have never seriously discussed it.

I think that overall my hon. Friend will acknowledge that with more investment in schools, more teachers and more classroom assistants, standards have gone up, but obviously we are not complacent and want them to improve even further. Perhaps he might find an opportunity to raise those points with Ministers when we come to the Second Reading of the Apprenticeships, Skills, Children and Learning Bill, which is to be considered on the Monday that we get back.

Is the Leader of the House concerned about Members’ liability for negligence following the case of the hon. Member for Brentford and Isleworth (Ann Keen)?

Order. We had best be careful, because this matter could be sub judice; it is before the courts at the moment. I am looking into the matter, if that is of any help to the hon. Gentleman, but it is best not to discuss it on the Floor of the House. Hon. Members: What about the general issue?

Well, we will leave the general issue and that means that we are on safer ground.

May we have a debate in Government time about telephone charges in hospitals? Last week, I had the great honour of becoming a granddad for the first time. [Hon. Members: “Hear, hear.”] That joy was tempered by the fact that every time I phoned my daughter-in-law and my son at the bedside, the call was costing 49p a minute from a landline and much more from a mobile phone. This company is operating throughout the United Kingdom, and it is, frankly, ripping off hard-working families at a very emotional time. It is simply a licence to print money. Will my right hon. and learned Friend meet me to discuss this issue?

Perhaps I could suggest that my hon. Friend seeks a meeting with other hon. Members, because I am sure that this is a matter of concern more widely across the House; it is not only about phone charges but charges for TV and parking. It is an important issue, and perhaps he could have a meeting with a Health Minister and a Scotland Office Minister to address it.

Let me take this opportunity to congratulate my hon. Friend on becoming a grandfather and welcoming to the world Erin Molly Devine.

I welcome the Leader of the House’s response to right hon. and hon. Members who have been asking for a debate about pensions. Many of our constituents who have saved for many years are now finding it very hard to get by, with interest rates coming down as they have. Given that she has been responsive on that, may I appeal to her to be more responsive on the issue of Equitable Life? For years now, Equitable Life policyholders have been denied justice, and only recently have they got a grudging apology from the Government and a half-promise that there will be some kind of compensation in future. Rather than waiting for the random chance that this subject comes up at Treasury questions, will she make a commitment that before Easter, in Government time, on the Floor of the House, we will have a proper debate on what the Government are doing about it?

It seems as though there is a cluster of issues that I should look for an opportunity to fashion a debate around—from the dementia strategy raised by the shadow Leader of the House, to insulation and energy bills, transport, bus and travel passes for older people, the value of savings, and Equitable Life.

May we have a debate on the integrity of the internet? My right hon. and learned Friend will no doubt have seen press reports this morning that reveal that a few minutes after the end of Prime Minister’s questions yesterday someone attempted to interfere with the Wikipedia entry on Titian to make it retrospectively consistent with what their party leader had said a few minutes earlier. If the Conservative party is prepared to fiddle the figures with regard to the age of dead Italian painters, surely we cannot trust them on the economy either.

I was pleased to hear the Leader of the House intimate that she was considering a debate on pensions. Will she extend that to consideration of the public sector pensions problem, which is becoming an intolerable burden on the nation, especially for local government, where a quarter of all locally raised council tax is now used to support pension funds? Will she include that particular matter in the debate that she is thinking of having?

It looks as though it is expanding beyond a topical debate into a full-day debate. As well as public sector pensions, which is an important issue, I was thinking, as I listened to the hon. Gentleman’s comments, that there is an opportunity to discuss age discrimination and related provisions in the forthcoming Equality Bill. We have added to the list, and I thank him for his suggestion.

Just. [Laughter.]

I have a business question about next Wednesday week—that is original. The Government have announced that Northern Ireland legislation should go through all of its stages on that one day. I have protested about that practice time and time again to Secretaries of State and to the Leader of the House, and they look at me as if I am being unreasonable. They say that it is a one-off, but now it is happening again, and it is an abuse of this House. I hope that the Leader of the House will reconsider the matter, particularly as there are often statements on Wednesday, which further diminish the time available for such a debate.

The legislation goes to the heart of the political system of Northern Ireland by altering the d’Hondt system. I am not opposed to that, but it is a major piece of legislation and I am protesting about this myself and on behalf of colleagues from Northern Ireland. We should not push the legislation through all at once. We cannot get a copy of the Bill as far as I am aware, so we cannot even prepare and submit amendments. It is outrageous.

We want to ensure a full discussion, but we also want to ensure that the Bill, which is an important part of the Northern Ireland peace process, gets through the House as quickly as possible. My hon. Friend will know that the House of Lords Constitution Committee is looking at how we deal with emergency legislation—

It is time critical, and I hope that my hon. Friend will seek a meeting with the Secretary of State for Northern Ireland, who will explain to him why the matter could not be scheduled earlier because agreement had not been reached. The legislation has to be passed within a certain period of time so that the necessary action can follow. I have dealt quite closely with the Secretary of State for Northern Ireland on this matter because I know that the House does not want legislation to be rushed through unless there is a really good reason. Perhaps my hon. Friend and I could meet the Secretary of State for Northern Ireland to discuss the matter, and I am sure that he will be satisfied by what my right hon. Friend has to say.

May I say how delighted I was when the Leader of the House gave me such a splendid answer the last time I asked her a question? It was about the answers that Ministers should give in response to parliamentary written questions on ambulance trusts, and she said that it was quite unnecessary that we should have to use freedom of information requests to get information out of Ministers that they should give in parliamentary answers. I am now a little disappointed with her after I tabled a question to ask her

“what meetings she has attended with Mr Speaker on the arrest of the hon. Member for Ashford and the search of his office; what was discussed; if she will place”

copies of this material

“in the Library”.—[Official Report, 26 January 2009; Vol. 487, c. 67W.]

I got the answer that she has regular meetings with the Speaker. I do not think that that was a full and frank answer. Will she now give the House a full and frank answer and place the material in the Library of the House, or do I have to make a freedom of information request?

Order. I can assure the hon. Gentleman that he will not get anywhere with the Freedom of Information Act on that one. That is not a matter for the Leader of the House—[Interruption.]

Order. I hope that the hon. Gentleman is not challenging my ruling. It is believable, and he has no right to raise that matter at business questions.

When the House returns after our short recess, the new transitional Government in Zimbabwe will, we hope, be doing their work, and I am sure that I speak on behalf of Members of all parties when I wish Prime Minister Morgan Tsvangirai well in the task ahead. Will the Leader of the House ensure that the Foreign Secretary and the Secretary of State for International Development make a statement at an appropriate time? At some point, we have to make a judgment about lifting sanctions and, more importantly, about increasing aid. The Government have got it right by not doing so yet, but we need to be kept updated.

I know that the right hon. Gentleman and the hon. Member for Macclesfield (Sir Nicholas Winterton) have been asking for a debate on Zimbabwe for some time. I have had discussions on that matter and I have identified time for a debate not too long after we get back from the short recess. I hope to be able to announce it soon; I cannot give the House the exact date, but I am on it.

May we please have a full day’s debate, in Government time on the Floor of the House, on the relationship between Parliament and the Executive? Given that the scope of Government activity is greater than ever before, and that the operation of the 24-hour media is a fact of life, would the right hon. and learned Lady accept that the responsibility of this House to hold the Executive to account should be our single biggest and most pressing concern? We need to consider what reforms to the composition of Committees and the use of parliamentary time would enable us better to discharge that responsibility in the future than perhaps we do at present.

I agree with the hon. Gentleman about the general principles of the importance of our role, and I suspect that behind his comments of principle, he has a number of suggestions. Perhaps I could ask him to come and meet me and he can set out those suggestions in more detail so that we can talk them through.

The Leader of the House and all Members will be aware that the National Society for the Prevention of Cruelty to Children is currently waging a high-profile campaign on how we can better protect young people from harm. Given that we all agree that such concerns are of the utmost importance, can the Leader of the House guarantee a debate in Government time on the wider concerns so that individual issues can be addressed?

On the Monday we get back we have a Second Reading debate that relates not only to apprenticeships, skills and learning but to children, and perhaps the hon. Gentleman can outline the areas he is concerned about in that debate.

I am sure that the Leader of the House will agree with this point because she considers herself a champion of fairness and equality. May we have a debate in Government time on systematic and institutional discrimination against Christians? We saw last week the case of Mrs. Petrie who was suspended by North Somerset primary care trust and reinstated only after a media furore. This week, anti-Christian zealots in Devon are on the verge of suspending a lady who works in a school for defending her Christian beliefs and those of her daughter. Do fairness and equality apply only to people who are non-Christians in this country?

Fairness and equality should apply to everyone, and I suggest that the hon. Gentleman seek a Westminster Hall debate on the issues he raises.

When may we debate yesterday’s written ministerial statement on defence planning assumptions? Last month, we had the unedifying spectacle of delays to the carrier programme not being debated properly, or at all, in this House, and the Leader of the House commented favourably on our request that the matter should be brought before the House. I have to say that this is becoming something of a habit with Defence Ministers. Could she encourage her shy and retiring colleagues to come to the House to discuss these matters, which are of vital national importance?

We recently had a debate on armed services personnel, and we will shortly be having a debate on procurement for the armed services. We are phasing the carrier programme, which is very important, and there is no way the investment in procurement will be cut back. We have Defence questions on the Monday after the recess.

I think that we are pushing at an open door as far as getting a debate on the elderly and pensioners is concerned. The Lancashire Telegraph in my area covers Chorley and a number of other constituencies, and today it is launching its own campaign for the elderly, raising the profile of the problems that they face such as the recession, high energy prices and access to health care. The number of elderly people in east Lancashire who have died from respiratory diseases in the past six weeks has increased dramatically. Does the right hon. and learned Lady agree that an urgent debate, sooner rather than later, would allow the House to address such real issues?

The issues that the hon. Gentleman mentioned could certainly be included in the debate that I said I am considering and I congratulate the Lancashire Telegraph on raising those issues. That is why we have been so determined to press down food and fuel prices and to do everything that we can to help pensioners in difficult times.

Order. I say to the five hon. Members remaining that if they ask brief supplementary questions, I can take them all.

The right hon. and learned Lady would be disappointed if she did not have her weekly update on the farce over the port rating system. Could we have an early debate on Tuesday’s statement from the Department for Communities and Local Government that said that port owners must talk to their tenants or be faced with the prospect of empty premises and empty rate policies? That was the day after the Valuation Office Agency confirmed to MPs that port owners will continue to be rated on a different basis so that they would never face any such threat.

Unless I am mistaken, that matter was raised in Treasury questions this morning. I know that it is an issue to consider, and it is being kept under review.

May we have what I stress must be a general statement by the Leader of the House on the relationship between parliamentary privilege, parliamentary accountability and the separation of the powers that are due to politicians and those that are due to the judiciary? We understand that, not content with previously having ruled that MPs’ home addresses should be published regardless of security concerns, while jealously guarding the privacy and security of their own home addresses, judges in courts might now second-guess constituency cases. Given that even the most assiduous of MPs will always have a few constituents who will not accept that nothing more can be done for them, how appropriate is it that judges should second-guess our work? We are responsible to our electors for what we do and do not achieve on their behalf.

I thank the hon. Gentleman for his continuing work on Members’ home addresses. I hope that there will be agreement on that soon, so that electors can be satisfied that they know whereabouts candidates live without necessarily knowing the actual number of their flat or their street address, if the candidate does not want that known. He has done the whole House a service on that issue.

We are accountable to the courts in respect of criminal and contract law. If we breach a contract, we can expect to be taken before the courts, and we are accountable as employers under employment law. However, a duty of care to our constituents is set out in the code for Members to which we all subscribe. For that, we are accountable not to the courts but to our constituents at the general election. The courts can get on with criminal, contract and employment law, but when it comes to our duty to our constituents, we have to subject ourselves to the court of public opinion at general elections.

May we have a debate on the future of the Brigade of Gurkhas? I should declare my interest as, I believe, the only Member of Parliament who has served in the brigade. Many comments have been made about the plight of the Gurkhas, most of which have been ill-informed. My personal fear is for the brigade’s future. Given the Prime Minister’s commitment to British jobs for British workers, does the Leader of the House share my concern that, although the Gurkhas may have won their most recent battle against the Government, they may ultimately have lost the war?

There will be Defence questions on the Monday we return, during which the hon. Gentleman can seek to raise the matter. We are proud of the work of the Gurkhas and pay tribute to them for it. Their settlement is under review, and new guidance will be issued shortly.

May we have a debate on how rules are applied in the House? My constituents do not understand how some members of the Cabinet are able to prove that their main home is in their constituency by having Sunday lunch there, whereas another escapes investigation while claiming public money to pay for her main family home.

No one escapes investigation if there are justified grounds for complaint. The independent Parliamentary Commissioner for Standards will consider complaints and decide whether they merit an investigation. We have clarified the new rules, the House has agreed them and there is an independent element to the process. It does not help anybody if hon. Members make smearing comments about other Members without mentioning their name. It is absolutely clear to whom the hon. Gentleman refers, however, and I am disappointed about that.

May we have a debate about free speech and political correctness? It is reported in the paper today that a man who worked at a warehouse has been sacked for displaying a Daily Star poster saying “British jobs for British workers”. Is it not ludicrous that anybody could lose their job for displaying such a slogan, or does the Leader of the House believe that anybody who uses that slogan should be sacked?

I am delighted that the hon. Gentleman urges me to have a debate about political correctness. The answer to that might be yes, and I am sure that he will want to congratulate the leader of his party on insisting that a Tory candidate take down a nude pin-up that he was displaying in his office. I am sure that he agrees with his party leader about that.

royal assent

I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Act:

Banking Act 2009

New Trains (Investment)

With permission, Mr. Speaker, I would like to make a statement about new investment for our railways. The House will understand that, because of the significant and sensitive commercial nature of this announcement, it was necessary to make the information available to the markets in advance of informing the House.

Britain’s rail network has been a remarkable success story over the past 10 years. There are more passengers using our trains than at any time since the second world war—more than 1 billion last year. We have taken decisive action to remedy the failings of privatisation and put in place a stable structure for the long term. We have delivered, on time and to budget, the United Kingdom’s first high-speed railway line. As I announced to the House last month, we have set up a new company, High Speed 2, which has already started work on planning the new high-speed rail services to the west midlands, the north of England and Scotland.

To ensure that our railways remain resilient during the economic downturn and are well placed to support future economic growth, I am determined that we take the necessary steps now to invest in that critical part of Britain’s infrastructure. Our priority is to deal with overcrowding and increase capacity to meet future demand. That is why we are investing more than £20 billion in enhanced rail capacity and in new and improved trains to accommodate the record passenger numbers.

Britain’s £5.8 billion first high-speed line is now open, and from December this year commuters will be able to use high-speed rail services between London and Kent. Work has already started on the £16 billion Crossrail project, which will link the Docklands, the City, the west end and Heathrow. We are upgrading the Thameslink service, bringing more frequent and longer trains to commuters on that critical route, and passengers on the west coast main line are now starting to see the benefits of an £8.8 billion upgrade that has reduced journey times and delivered more frequent services.

I would like to inform the House today of what we are doing to invest in the next generation of long-distance trains, to make the UK a centre of excellence for European rail manufacturing. This morning, I announced to the stock exchange that a British-led consortium of John Laing, Hitachi and Barclays had been chosen as the preferred bidder for the contract to re-equip the east coast and Great Western main lines with new express trains. The high-speed trains that operate on those routes are up to 30 years old and although they have served passengers well, they now need to be replaced with more reliable, more efficient and greener trains that can carry more passengers.

I hope that the House will allow me to make a personal observation. My father, who worked on the railways all his life, was involved in the testing of the 125 high-speed trains as they were brought into service. I am delighted to have the opportunity to announce their successors today. They will have longer coaches, allowing up to 20 per cent. more seats on each train. Faster acceleration will allow journey times between London and major centres to be cut significantly, so a train leaving London will arrive in Leeds or Bristol 10 minutes sooner, Edinburgh 12 minutes sooner and Cardiff 15 minutes sooner. Faster journey times will mean that more frequent trains can be fitted on to the network, and improved reliability will mean that passengers face less disruption to their journeys. Moreover, the new trains will be up to 17 per cent. lighter than their existing counterparts, increasing fuel efficiency. Modern braking systems will further drive down energy consumption.

The contract, worth some £7.5 billion, is the biggest single investment in inter-city trains in a generation. It involves the construction and maintenance of up to 1,400 new vehicles. The first of those trains will enter service in 2013, and over the following years they will provide high-quality journeys to passengers between London and destinations across the UK, including Leeds, Newcastle, Edinburgh, Cambridge, Bristol, the Thames valley and south Wales. They will also be able to run on both electrified and non-electrified lines, which means that through trains will be able to run from the electrified to the non-electrified parts of the network. That is why I have announced, in parallel to the introduction of those trains, that we are developing plans for the electrification of the Great Western and midland main lines. That will allow us to deliver the widest possible range of high-quality services for passengers.

The announcement is good news for United Kingdom jobs, as well as rail passengers. As part of the contract, the winning consortium has agreed to make significant inward investment in the UK to construct a new state-of-the-art train assembly and manufacturing facility. I expect that nearly three quarters of the value of the order will be spent in the UK, benefiting the UK economy and providing UK jobs. The exact location of the new factory remains subject to further negotiation, but the company has confirmed to me that it will be in the east midlands, Yorkshire or the north-east.

In addition, new maintenance depots will be built in Bristol, Reading, Doncaster, Leeds and west London, with upgrades to existing depots throughout Great Britain. That means that new manufacturing jobs will be created and maintained in those regions, and that many more jobs will be safeguarded across the country in the supply chain. In all, I estimate that some 12,500 long-term jobs will be created or safeguarded as a result of today’s announcement.

As hon. Members know, Japan is one of the most advanced nations in the world in high-speed rail and new rail technology. Japanese trains have extraordinarily high levels of reliability and speed. Meanwhile, the rail industry is expanding across Europe—with countries such as France, the Netherlands, Germany and Italy investing in high-speed rail and new train fleets, and significant new opportunities in the countries of central and eastern Europe.

By bringing together UK and Japanese technology, design and manufacturing capability, we will give the UK an even stronger bridgehead into the fast-developing European and international rail markets—just as the entrance of Toyota, Honda and Nissan into the UK did with the automotive industry. That means that the UK will continue to develop as a centre of excellence in train manufacturing, enabling the country to become a key player, as what was once a domestic rail industry becomes increasingly international.

The Government’s investment in the UK rail industry means that, in addition to the announcement, orders for a further 2,200 train carriages worth more than £2.5 billion are already confirmed or in the pipeline. Today, I can also confirm that the Department is in advanced discussions with National Express East Anglia to provide 120 new carriages to renew and expand the train fleet operating on the West Anglia route between Liverpool Street and Stansted airport. The preferred bidder for those trains is Bombardier Transportation Ltd, which plans to assemble the new carriages in Derby, safeguarding jobs there.

A further order worth £400 million—as part of the fiscal stimulus package announced by my right hon. Friend the Chancellor of the Exchequer—will be awarded shortly. Again, Bombardier is well placed to win that. There is another £2 billion order for 1,200 carriages for Thameslink, for which a preferred bidder will be announced later in the year.

The orders demonstrate that the Government are prepared to invest, even in difficult economic times, in improving our national infrastructure. The announcement is genuine good news—for workers that up to 12,500 jobs will be created and safeguarded; for the economy that we are putting the UK back at the forefront of international manufacturing industry; for the regions that the Government are supporting significant inward investment, and for passengers that we are taking the steps necessary to improve their rail journeys.

I commend the statement to the House.

We welcome the prospect of new trains for the UK’s chronically overcrowded railways, but the Secretary of State needs to answer several important questions about his statement. However, first, I thank him for advance sight of it.

On the phasing of the project, how many trains will be delivered? On what dates and to which parts of the network will they be provided? When will the full roll-out of the inter-city express programme be completed?

The Government have been working on the project since 2004; why is it taking so long to deliver? Will the Secretary of State confirm that the 2013 phase will be testing only, so that there will be almost no benefits to the travelling public before 2015?

How much in total has been spent on consultants during the procurement process since the end of 2007, when the total was already a startling £6.7 million? How much would have been saved if the Government had opted for a more standardised, off-the-shelf train rather than setting down the very detailed and complex specification that they chose?

How much has been added to the cost of the programme because a decision has yet to be made on whether to electrify the Great Western line? Is the Secretary of State promising the delivery of the new trains on the Great Western line by 2015, even though the final outcome on electrification may not be determined by then? To what extent will costs consequently be driven up?

The specification in the contract for the bids was for trains that weighed 362 tonnes, yet the Hitachi bid, which has been accepted, is for 411 tonnes. The Secretary of State claims that that is substantially compliant, but was Bombardier disadvantaged by sticking more rigorously than Hitachi to the weight specification?

The Secretary of State says that 12,500 jobs will be created or safeguarded. Will he admit that the assembly plant to which he referred will assemble items manufactured overseas rather than being what is normally understood to be a manufacturing plant? Will he place in the Library a copy of the research that he has undertaken to substantiate his claim about 12,500 jobs? What is the split between the jobs that will be created and those that he believes will be safeguarded? Will he comment on Hitachi’s press statement today, which says that the new factory will initially employ only 200 staff, with the potential to employ only 500 staff in future?

Is the Secretary of State claiming that today’s announcement will safeguard jobs at the Bombardier factory in his Derby constituency? If so, how can the news that Hitachi, not Bombardier, has won the inter-city express programme contract possibly give that guarantee? How can the announcement that Bombardier might—I emphasise “might”—get the contract for extra carriages, reannounced yet again today, for Stansted Express give that guarantee of safeguarding jobs in Derby? Is not the announcement on Stansted Express and Bombardier simply a cynical attempt to hide the bad news for the train factory in his constituency?

The Government’s excessive micro-management of our railways is now holding up the process of delivering the extra rolling stock that passengers desperately want. We could have had extra Pendolinos on the west coast main line months ago, but Department for Transport dithering has held them up. The inaptly named Thameslink 2000 is now running around 15 years later than planned. Not one, not two, but three Secretaries of State for Transport have promised us 1,300 extra carriages, some of which were reannounced today, yet only four have been delivered. The Government’s complacency is unacceptable and today’s announcement will do little to reassure commuters who suffer daily from today’s desperately overcrowded railways.

I was grateful for what the hon. Member for Chipping Barnet (Mrs. Villiers) described as her support for the decision, but she spoiled the effect by her subsequent observations. I have read carefully the Conservative party’s proposals for the future of the rail industry. Nowhere does that interesting document refer to something that I thought the hon. Lady might mention today—Conservative party proposals to cut our transport budget by some £840 million. It might help us all to understand those proposals if the hon. Lady stated whether she intended to cut Crossrail or bus subsidies, or whether she would withdraw the concessionary fares scheme for the elderly and the disabled. An understanding of what the Conservatives intended to cut would put her proposals for railway transport into better context. The title of the Conservative document should have been “Mind the Gap”—the gap between Conservative theory and practice.

Order. May I say to the Secretary of State that that was a somewhat irrelevant preface? I want concise answers, as far as possible, and, of course, brief questions.

Clearly, my preparations for answering the hon. Lady’s questions were longer than they should have been.

I emphasise that the jobs are real jobs in the UK. I was interested in the hon. Lady’s failure to mention a word that I thought would feature in any spokesperson’s observations about a major commercial decision—“competition”. Nowhere did she mention the fact that such important commercial decisions are subject to competition, or that that is exactly how the issue was resolved. Bombardier is a great train maker. It has an order book of some 2,000 carriages, which, as I have indicated, will be added to by the announcement that I have just made, and it is bidding—with some prospects of success, I anticipate—for further orders in due course. That is important to the United Kingdom’s economy, as is the decision that I have announced today.

We anticipate that something in the order of 2,500 new jobs will be created, and that would have been the case whichever consortium had been successful. The contract is for both the construction and the maintenance of carriages. That means that a significant number of jobs will be created in the maintenance sector across the United Kingdom. It also means that jobs in the supply chain—the estimate is up to 10,000 jobs—will be protected and safeguarded, as they support the manufacture. Three quarters of the value of the contract will be spent in the United Kingdom. That figure means that the great majority of the benefit will be provided for United Kingdom jobs and the United Kingdom economy.

I welcome my right hon. Friend’s announcement and the investment that goes with it. May I suggest to him, as he knows the midland main line very well, that the welcome announcement about the completion of its electrification be accompanied by an announcement on the relevant rolling stock that he has announced for the east coast and Great Western main lines? The Meridian trains that are now being inflicted on passengers on long-haul journeys to Sheffield are appropriate for short-term sprints, but they are noisy, they vibrate, passengers cannot use mobile phones appropriately on them and they are not suitable for long-haul inter-city work. Given that, perhaps he could encourage the possibility of expanding manufacturing, so that we get not only a high-speed rail line but the high-quality rolling stock that we deserve.

I am grateful for my right hon. Friend’s observations. I am sure that others will have heard his words and will take appropriate note. For the reasons that he mentioned, I am particularly keen to see the electrification of both the Great Western main line and the midland main line, which is something that I announced to the House quite recently. The trains that are being procured as a result of the announcement that I have just made will have advanced technology, allowing them to operate on both the electrified and the non-electrified parts of the network. That means that they will be very flexible and will be capable of operating across our network. As my right hon. Friend will be aware, from time to time train sets are moved from one line to another.

The £840 million cut is one bit of transport policy not copied from the Lib Dems.

Let me express my disappointment that the statement was announced to the markets first. If the markets had to be told separately, they could have been told simultaneously. I resent the fact that, yet again, this House has learnt about such matters after the general public. We on the Liberal Democrat Benches welcome any new investment in railways, particularly in rolling stock and jobs. However, the Secretary of State will understand that there is some scepticism about his announcement, given the fact that of the 1,300 new vehicles announced in July 2007, and reannounced at regular intervals since, only 423 have so far been ordered, according to a parliamentary answer that I received only this week.

Will he also accept that the fact that we have such a desperate shortage of rolling stock—there is none spare anywhere in the country—is not a good reflection on 12 years of this Government? Is that dramatic shortage not a consequence of the Treasury-driven franchise arrangements, which until recently encouraged train operating companies to reduce the number of their carriages? In effect, what we have heard today is a U-turn.

Does the Secretary of State accept that the industry is dubious about the bi-modal train—jointly a diesel and electric train—that he appears to have settled on? The industry believes that it will push up costs and add weight unnecessarily to the vehicle, and that more flexibility would be provided if a locomotive were simply added at the point in the network where the electricity supply runs out and diesel traction is required. Is it not the case that, as a consequence, the vehicle that the Secretary of State is ordering is much more expensive than need be?

When will we have longer platforms in place to accommodate the new rolling stock that the Secretary of State has announced today? Can he also give details of the timings for the electrification of the midland main line and the Great Western railway? Lastly, to repeat the question that was asked but not answered a moment ago, when will all 1,400 trains—or, as the statement says rather carefully, “up to 1,400” new carriages—be in service?

Normally, the hon. Gentleman urges, encourages and exhorts me to spend more on railways, but I come to the House today with a £7.5 billion announcement on railways and I fail to detect a welcome from him or any sign that he thinks that this is a good thing. However, in the light of his previous observations, I will take it as read that he does think it a good thing. Today’s announcement is important for the rail network, for passengers and for the rail industry in the United Kingdom.

I am sorry that the hon. Gentleman made the observation about not informing the House. I followed a well established practice in the House of ensuring that sensitive decisions were communicated to the markets at their opening this morning. That is not an unusual practice when commercially sensitive issues are decided on. It is right that we should not affect the markets by, for example, coming to the House in the middle of the day when the stock market has been open for many hours. I know that the Liberal Democrats do not worry unduly about matters such as the commercial implications of these decisions. Nevertheless, they are matters to which responsible Governments have to have some regard.

I am not going to get into a debate with the hon. Gentleman about the advantages of bi-modal vehicles, although I could. One of the clear benefits is that, in order to operate electrically powered trains, not every part of the network—that includes, for example, maintenance depots—has to be electrically powered. His suggestion of fitting a diesel engine to the front has been done in the past. However, it slows things down and is rather wasteful—I would have thought that he would be concerned about the impact that such decisions have on the environment—and does not serve the purpose of a modern, 21st-century rail network.

I ask my right hon. Friend to ignore the hon. Member for Chipping Barnet (Mrs. Villiers)l; I would remind him that the Tories cancelled the high-speed train for the west coast main line. I am pleased that John Laing, which started as a small building company in my constituency, is playing a major part in the project. However, the reality is that we get new trains from various suppliers, yet in this country we still do not have an adequate test track. If we are not careful and if we do not get that test track, we will build the trains but send them to Germany to be tested. Will my right hon. Friend look at that?

My hon. Friend makes an extremely good point about testing. Providing space on the network for the kind of high-speed running that is required to test new vehicles is an issue when our existing network is so busy, so I will certainly look at his suggestion.

In agreeing with what the right hon. Member for Sheffield, Brightside (Mr. Blunkett) said about the Meridian trains on the east midlands line, when does the Secretary of State anticipate that the new trains will be available for that line, or is it a line that he just wishes to ignore?

As someone who travels up and down that line very regularly—even more often than the right hon. Gentleman, I expect—I do not think that anyone could accuse me of ignoring it. Although I have promised the House that I will always mention electrification of the great western line before the midland main line, I am nevertheless committed to the electrification of both. Therefore, I think that we will see significant changes on the midland main line in years to come.

Further to the point that my hon. Friend the Member for Carlisle (Mr. Martlew) made, the Secretary of State’s father probably tested the 125s on the test track in north Leicestershire. Can my right hon. Friend confirm that the east midlands location referred to in the statement is even more specific, in that it would be in North-West Leicestershire, close to the town of Ashby de la Zouch, where there is a well developed supply chain and a long tradition of high engineering skills, which spin off into Toyota, Rolls Royce, Bombardier, Brush in Loughborough and elsewhere? What influence will the Government have on the eventual decision and is it a commercial one only? Finally, will my right hon. Friend see me about the planning implications of the location of any manufacturing plant in or near Ashby, which, as things stand, is currently crowded in by all sorts of planning pressures?

I well understand why my hon. Friend would want to speak up on behalf of the benefits of such a major investment going to his constituency, and I would certainly be willing to meet him to discuss the proposals, although not to discuss any specific planning matters that are not part of my responsibility. I assure him that this will be a commercial negotiation conducted by the company. No doubt he will want to make representations to the relevant local authorities and, indeed, to the company itself.

The Minister will be aware from recent discussions that we have had, and from his recent visit to Crewe, that Bombardier is one of the largest employers in Crewe and that it continues to overhaul trains in this very difficult climate. Today’s announcement will be a huge disappointment to many of the workers at Bombardier, who, as recently as November last year, saw 45 of their fellow workers being laid off. In relation to the 120 trains, for which Bombardier is the preferred bidder, is it correct that up to 70 of them might be built in Japan? The Secretary of State said that another contract, for which Bombardier is tendering, will be announced shortly. When will that announcement be made? The biggest problem for Bombardier is the peaks and troughs between contracts, which mean that it cannot sustain a high-level, long-term, experienced work force at a time when those people so desperately need the work.

The hon. Gentleman is right to speak up for the interests of his constituents. As the child of a railway family, I probably spent more time than I care to remember sitting on Crewe station. Anyone who has travelled regularly on our railways will appreciate the splendours of that particular place. It is vital that we recognise that the announcement that I have made today will protect and safeguard jobs in the railway industry right across the United Kingdom, including, I believe, at Bombardier. Necessarily, a great railway company such as Bombardier will have wanted to win this particular contract. There has been a detailed, thorough and competitive commercial contest to determine how the orders should be set out.

Incidentally, I do not recognise the hon. Gentleman’s point about the prospect of some 70 trains being built in Japan, but I will certainly look at that. I do not see why Bombardier would provide that order to Japan. It is important to recognise that there is now a significant programme of orders in railways stretching forward, and that Bombardier is very well placed to win some of those orders.

This is a very welcome piece of news, and I am very appreciative. I know that all those who have access to the Great Western line stations will be very pleased indeed. They will not care who heard what when; they will just be pleased to hear this news. The improvements in reliability will be important to those who regularly use the railways in my region, as will the reductions in the duration of their journeys. May I, speaking as a geek—a railway person who, rather like my right hon. Friend, sat on railway stations as a schoolboy, in places such as Keynsham and Bristol Temple Meads—ask him whether the top speed on the Great Western network will be increased above the 125 mph limit that it has had for a long time?

I am grateful to my hon. Friend for his observations. These are exciting times for the Great Western line and, indeed, for passengers all down the line. We have announced a programme for electrification, and today’s announcement will provide for higher speed trains perhaps even going beyond the extent of electrification. The bi-modal nature of the trains—if I may out-geek my hon. Friend for a second—means that they will be able to go beyond the electrified part of the line and therefore provide excellent services well beyond the limits of electrification. I do not anticipate the maximum speed needing to be exceeded at present. As a result of the new trains’ lightness of construction, they will accelerate more quickly, which will reduce the time intervals between station stops. That will result in a significant improvement for passengers.

Having campaigned for them, I welcome the confirmation of the 120 new carriages on the West Anglia route. May I press the Secretary of State on two important delivery details? First, on rolling stock, when will the new carriages enter service? Secondly, a year ago—or possibly more—we were promised longer platforms and more track on that vital route. There have been a lot of delays and uncertainties about that. Will the Secretary of State confirm that the Government still hold that commitment, and tell us when the work will begin on the track?

I have made it quite clear that capacity constraint is an important part of the work that we need to do to improve our rail network, and there are some significant steps that can be taken. Today’s announcement on inter-city trains, which will have greater carriage capacity, will be part of that, as will the continuing work to lengthen platforms. The negotiations between the manufacturer and Anglia will proceed in relation to Stansted, and I anticipate that the carriages will be in service by 2011-12.

I thank my right hon. Friend for his statement, which is very welcome. May I just check that a single train travelling from, say, London King’s Cross to, say, Skipton will be able to change from electric to diesel power in that one journey? The reason why I ask is that the part of the Airedale line that runs from the constituency of the hon. Member for Shipley (Philip Davies) through Keighley and up to Skipton was electrified under the previous Conservative Government but, unfortunately, the cabling is such that if a 225—an electrified high-speed train—goes on to it, it drains the power from the whole line so that nothing else can use it. Up to now, therefore, trains going from King’s Cross to Skipton have to be diesel-powered 125s. A lot of my constituents will be pleased to hear that the one train that travels each way between Keighley and King’s Cross can be a fully modernised train that is much more comfortable than the 125s that we are using at the moment.

My hon. Friend is probably beginning to exhaust the limits of my technical competence in the details of electrification. I know that there are various kinds of electrification, but as I do not know the arrangements in and around her constituency, I will not tempt fate by either agreeing or disagreeing with her. I will, however, ensure that she is written to and that an explanation is provided.

Platform 20 at Waterloo is now available for domestic services, but I understand that the trains needed to run those services have not yet been ordered, even though the need for them was recognised two years ago. Will the Secretary of State confirm that the production lines for the class 450 Desiros have now, sadly, been closed, and that new orders cannot be delivered before 2011? Will he also confirm that the cost of those trains will now be 30 per cent. higher because of the collapse of the pound against the euro? And will he tell us whether we are going to get those trains at all?

I have consistently made it clear since getting this job that relieving congestion and improving capacity on our network is of paramount importance. Bringing into service the platform at Waterloo is part of that process, and the investment that I announced today is part of a much wider £20 billion investment in new rail capacity.

I welcome this news, which stands in stark contrast to the do nothing attitude of the Conservative party. May I point out to the Secretary of State, however, that high speed does not necessarily mean high quality? In the past year or two, the east coast line has seen job cuts resulting in reduced services for the people on board, so can we please be clear that, while high speed is good, other things also need to be put in place? Will he also have a word with National Express, which needs to get its act together?

Certainly, my emphasis has not been on speed itself, as I made clear in response to an earlier question. This is not simply about increasing the maximum speed; it is about improving reliability and efficiency and, crucially, about improving the experience of passengers in higher-quality vehicles. I therefore agree with, and welcome, my hon. Friend’s observation.

In his statement, the Secretary of State said that from December this year, commuters will be able to use high-speed rail services between London and Kent. That, of course, is literally correct, but high-speed locomotives are of little value if their progress is impeded by poor track, out-of-date signalling, bad bridges and level crossings. When may we expect that the line between Canterbury and Manston airport will be upgraded in every respect, so that we can take advantage of the possibilities for Manston to play its part in aviation in the south-east and so that commuters from east Kent can travel to London at something like the speed at which they used to be able to travel in 1927?

Well, I cannot remember what it was like in 1927, but I can remember what it was like under the previous Conservative Government. As someone who has always been a strong and consistent supporter of investment in the railways—I am delighted that I have the opportunity today not only to talk about it, but to provide it—I am determined to ensure that we improve the quality of our railways right across the country, including in Kent. The hon. Gentleman has been in the House rather longer than I have; I only hope that I can find an example of his referring to the appalling way in which railways were treated by the past Conservative Government.

My right hon. Friend will know that the city of Sheffield has a long history of manufacturing and that many of its people have skills in engineering. I understand that he cannot say anything more about the location of the manufacturing and assembly plant, but Sheffield would indeed be an excellent area in which to place it. Is he able to say a little more about the types of job that will be available and particularly whether there will be opportunities for younger people to get training, as in these difficult economic times opportunities for apprentices and others to come into industry are enormously important?