Wednesday 25 February 2009
[Mr. Edward O'Hara in the Chair]
Motion made, and Question proposed, That the sitting be now adjourned.—(Chris Mole.)
Let me begin by thanking Mr. Speaker for granting this important debate. Three weeks ago, in business questions, I called for an advertising campaign to promote inbound tourism to the UK and take advantage of the fall in the pound’s value against other currencies. I called for the launch of an advertising campaign in the eurozone and the United States along the lines, “Come to Britain for your holidays at 30 per cent. off last year’s price.” The Leader of the House encouraged me to apply for a Westminster Hall debate, which I did, and Mr. Speaker granted it immediately—a good thing too.
We need to debate this issue now because the recession that we are going through will be severe, but if we market the UK’s tourist attractions intelligently, tourism could do a lot to reduce its impact. In times of economic downturn, most people become nervous about their job or concerned about the future of their business, but the vast majority do not lose their job or business, and they still go on holiday. A recent VisitBritain survey on the attitudes of the British public on taking holidays in the current economic conditions has found that the majority see a holiday as a necessity, not a luxury. With the exchange rate being what it is, there are opportunities to attract more tourism from people in other countries—I hope that that will be the primary focus of the debate. Changes in the exchange rate have made Britain much cheaper to visit now than it has been in recent years. Similarly, there are also opportunities to persuade more British people to holiday in this country, because holidays in Europe will cost some 30 per cent. more this year.
The recession is not a home-grown one, like those in the ‘70s, ‘80s and ’90s, which were linked to runaway inflation or the lack of competitiveness of British businesses, particularly old-style industry. This is a truly global recession that affects people in all countries, certainly in the developed world. I spent last week, during the parliamentary recess, attending meetings of the NATO Parliamentary Assembly’s economics and security committee, which I chair, so I know that the problems that we face in the UK, and the sort of policy responses that we are developing, are mirrored in north America—in the United States and Canada—and in Europe. Our colleagues in those countries are doing similar things to us, and we all face similar problems. In a downturn, most people, even those who keep their jobs and whose income does not fall, look for ways of economising. That creates opportunities to promote the UK as a tourist destination for people in Europe and north America.
I shall go on to talk about international marketing, but first I should like to talk about my own city, because tourism is about the local tourist experience. When people remember a good holiday or day out, they think about having attended a football match or a brilliant concert, having gone to a memorable museum, or having visited a fantastic market, book fair or shopping centre. They think about a great pub or restaurant, or a particularly good hotel. Those are the things that people remember. The tourist experience takes place on the streets of my city and in the cities, towns, villages and areas of the countryside represented by other hon. Members.
I congratulate my hon. Friend on securing this important debate. Tourism is certainly as important in Oxford as it is in York. Does he agree that to enhance the experiences he has mentioned, there needs to be continual investment to upgrade facilities? According to the Federation of Small Businesses, both HSBC and Barclays are operating a blanket ban on loans for investment in the hospitality industry. Does he agree that that is disgraceful and that the Minister ought to take this matter up with her colleagues and get something done about it?
That is not only a disgrace, but extremely short-sighted, because, with investment, the hospitality sector can respond quickly to attract more customers and to grow businesses. I should think that those are exactly the sort of businesses that high street retail banks should consider investing in, because they can give a return in the current economic conditions. My right hon. Friend knows what he is talking about not only as a former Treasury Minister—indeed a former Cabinet Minister in the Treasury—but as the representative of one of the great international tourist cities of the world. I know that he is as proud of Oxford as I am of the city of York.
I am not suggesting for one minute that the right hon. Member for Oxford, East (Mr. Smith) is entirely mistaken. However, in my central London constituency—I hope to catch your eye later, Mr. O’Hara, because tourism is important here in London—I recently had a meeting with the small business bureau of Barclays bank. Its view is that it will continue to promote businesses in hospitality and other industries in central London. Perhaps the right hon. Gentleman was referring specifically to new business ideas, rather than to existing businesses. The message that I got from Barclays, at least, was that it is business as usual for its existing customers, and that it is doing its level best to promote customers who have a long-standing record with it and those who have an important part to play in the tourism trade, to which the hon. Member for City of York rightly refers.
That is welcome news up to a point. It is very good that the banks are standing by their existing customers, but I want to make the case for increased investment in and expansion of tourism. I hope that the banks will take serious commercial decisions, as they always do, without closing off opportunities for investment in particular sectors.
In light of what the hon. Member for Cities of London and Westminster (Mr. Field) has said about different criteria being applied, which may be the case, let me give more detail about the source of my earlier comments. A banking consultant recently told a meeting of the Oxfordshire Economic Partnership that he had been with Barclays the previous day and had been told that, whatever the Government did, Barclays had no intention of extending credit to businesses in the hospitality sector. I have heard the same about HSBC.
I should like to underline the importance of continuing investment and of having a high-quality product, because the most important marketing opportunity for tourism business is word of mouth. If people have good experiences, they will come back, and they will tell their friends about it. Some 80 per cent. of visitors to the City of York are return visitors. People do not return to places if they have had a poor time there or if they suspect that they would have had a better time elsewhere.
York is a special city, and is one of the great global must-visit destinations. We get 4 million visitors a year, 600,000 of whom come from abroad. Those visitors spend £360 million in the local economy, which is an increase in real terms of 77 per cent. since 1993. Tourism supports more than 10,000 jobs in York and, since 1993, there has been a growth of 27 per cent in that figure. Our top inbound markets are the United States of America and Germany, as well as the Netherlands and Belgium, because in north and east Yorkshire we are particularly well served by direct ferries from the low countries.
It is no coincidence that European countries with low-cost airline flights connecting them to the UK are places in which we market UK tourism; indeed, we need to market breaks in the UK in every region in Europe that is connected to the UK by low-cost airlines. For a long time, we have considered low-cost airlines to be a way in which British people can get a cheap break abroad, but aircraft can, of course, take people in two directions. We need to concentrate on marketing in the cities and regions served by those airlines, and doing so is particularly important to tourism in the regions because, although our scheduled airlines predominantly land in London, low-cost airlines serve regional airports.
Twenty years ago, tourism was not always universally popular in York. The hon. Member for Ryedale (Mr. Greenway) will know that people sent letters to the local paper in which they would moan that although the state of the streets was wonderful in the city centre and the tourist areas around High Petergate, the Shambles and the Minster, it was dreadful in residential areas. There is much less of that sort of criticism now and there is a better understanding that tourism brings jobs to York and boosts the local economy. Investment in tourism has made it more upmarket and wages have risen, in part because of the minimum wage, but also because of the commitment of employers in tourism to retaining staff whom they have trained.
Tourism is important to York not just because it brings in visitors who bring in the money that creates jobs, but because it improves the amenities that are available to local people. We in York now have better restaurants and pubs than 20 years ago. We have two theatres rather than one, two new cinemas, and more and better shops. Those improvements have been made possible in part because of the number of visitors to the city of York, but they also provide benefits to local people.
Tourism brings investment. I had a debate in Westminster Hall not long ago in which I sought to persuade the Minister’s predecessor, the Minister of State, Department for Innovation, Universities and Skills, my right hon. Friend the Member for Tottenham (Mr. Lammy), that we ought to receive some lottery funding to help with the cost of renovating York Minster’s great east window, which is a fabulous mediaeval work of stained glass. It is the biggest mediaeval stained glass window in the world and cost £52 to make 500 years ago—it was going to cost £42, but the craftsman completed the contract within budget and on time and got a £10 bonus. It will cost £30 million to restore, and I am pleased that the lottery provided a £12 million grant, which is one of the biggest grants that it has given in Yorkshire.
That £30 million creates local jobs for stone masons, glaziers, building contractors and scaffolders. Whenever money is invested in the tourist economy, jobs are created not only in the tourism sector, but in the local economy as a whole. Every meeting at York race course brings thousands of visitors to York. When Ascot race course was being redeveloped, York won the competition to host Royal Ascot and that earned an extra £29 million for the region from visitors who came to that event.
When the Minister is listening, I would like to put on the record my thanks to Yorkshire Forward and to the Government, who fund that organisation, for giving the promotion of tourism a particularly high priority. Yorkshire Forward recently decided to invest £30 million in the sector, which it has calculated will generate an additional £300 million increase in visitor spend in the region. My own city of York has benefited directly over the past six years from a number of tourism-related investments made by Yorkshire Forward. The tourism investment fund has paid for lighting schemes in York, interpretation of the bar walls—the city walls—and Patrice Warrener’s lighting of York Minster. Yorkshire Forward has also paid for the new visitor information centre at York station and is contributing to the cost of the new visitor information centre in Museum street in the city centre, which will open later this year. The support of Yorkshire Forward helped York to win the title of European tourism city of the year in 2007, and, of course, that organisation has supported tourism in other cities and parts of the region.
It is important to recognise that, as a tourism destination, Yorkshire as a whole is more important than the sum of its parts. York is a great city—and a great city to visit—but it is also a great base for visiting the north York moors, the Yorkshire coast, the dales or, for example, Pickering, which is represented by the hon. Member for Ryedale.
It is a wonderful place with a wonderful steam railway that is the best in the country.
People go to York to visit the whole county of Yorkshire, not just the city. Across the county, we receive more than 1.2 million overseas visitors who spend some £6.3 billion. The tourism sector in the region supports almost 250,000 jobs. A couple of weeks ago, I met Clare Morrow, who chairs the Yorkshire tourist board, and Gary Verity, its chief executive. They have ambitious new plans to market Yorkshire as a global brand. Yorkshire particularly benefits from being England’s biggest county and from having a clear county identity, which is more valuable than simply having a geographical identity as a region of England. There are many Yorkshire brands to promote, such as cricket, Yorkshire pudding and great local cheese—not just Wensleydale, although we should thank Wallace and Gromit for promoting one of the county’s great cheeses. We also have more independent local breweries than any other region in England.
In the past three years, the Yorkshire tourist board has set up a Yorkshire tourism network of six public-private partnerships of which Visit York is one. Its plans have won the support and confidence of Yorkshire Forward, which has increased funding for the tourism sector from about £4 million to £10 million a year. I thank Yorkshire Forward for that vote of confidence in tourism and for recognising the importance that tourism plays in the region’s economy. I also thank the Government for providing the funding for that.
Last year, the regional tourist board’s survey showed that Yorkshire is bucking the economic trend—indeed, the national trend. Although tourism numbers nationally fell at the end of last year, in Yorkshire they are still rising. There was an 11 per cent. increase in the daily spend of visitors in Yorkshire, a 49 per cent. increase in admissions to visitor attractions and a 21 per cent. increase in shopping. Some 96 per cent. of visitors to Yorkshire say that they would recommend it as a tourism destination to a friend. Some 88 per cent. said that they would visit it again within two years.
The Yorkshire tourist board is promoting the region strongly in four countries—Spain, Germany, the Netherlands and Italy—which are important inbound destinations for Yorkshire. In Spain, it is promoting Yorkshire under the slogan, “Are you ready to sin again?” as part of a marketing promotion based on the seven deadly sins. In the past two years, pride and envy have also been used as marketing metaphors in Spain. I am not sure when we will get around to lust, but I hope that it has the effect of continuing to increase the numbers of foreign visitors coming to Yorkshire.
I shall just say a few things to the Minister before I sit down. We are doing the right things in Yorkshire to promote tourism, but the Government could do additional things to help. They have put on the record their support for a third runway at Heathrow, and, as part of the package, they announced plans for investment in a brand-new, high-speed north-south railway line to connect the airport for the capital with the north of England. For us, that is more important than the third runway, and we are keen to see it developed.
We also want additional investment in regional airports. It is wrong for the UK to base its airports policy on a single primary national airport in the south of England. More use needs to be made of regional airports, but for that to happen there needs to be investment in infrastructure that connects the regional airports to the cities and tourist destinations in the regions that they serve.
We need greater investment through the Department for Children, Schools and Families in teaching foreign languages in schools so that it is easier to welcome visitors from abroad in their own language. I would like an even greater focus on promoting the regions as part of the Olympic offer in 2012. And, in the short term, I would like to see an increase in Visit Britain’s advertising abroad of the UK as a holiday destination. The exchange rate position gives us an opportunity to combat the recession with inbound tourism, and now really is the time for it to put everything that it can from its budget into advertising.
Pubs are going through a particularly difficult time. I have spoken with the Licensed Victuallers Association in York. With its support, I am doing a survey of the trading difficulties faced by pubs and clubs in my constituency, and I intend to write to the Department for Business, Enterprise and Regulatory Reform when I have received the results.
It seems that the attempt made by the previous Government to remove the stranglehold that brewers had over pubs by insisting that they divest their pubs to pub-owning companies has not really solved the problem, because it means that the pub-owning company is in a position to know what the pub landlord’s turnover is. A normal entrepreneur who rents a shop seeks, by improving marketing and the quality of their products, to increase turnover and profit, and if they do well through their entrepreneurialism they have a better income. If a pub landlord improves the food or décor of a pub, the premises landlord knows what his turnover is—that is part of the terms of the lease—and is able to adjust the terms at reviews to claw back whatever gains the pub landlord has made through his own entrepreneurial flair.
That relationship is different from the one between most premises landlords and owners of small businesses. DBERR ought to look at it and find some way of regulating the rents that people pay to ensure that the pub company gets a fair return, of course, but also that the entrepreneur who runs the pub gets a fair return. That is important for those who run pubs and for the tourism offer of a city such as York.
I agree entirely with the hon. Gentleman’s point about the pub industry, but Members should reflect that there was an opportunity to toughen the legislation relating to big pub companies. In the last Parliament, we had a debate on the beer orders that were brought in by the Conservatives to give greater flexibility to pubs, and the response of this Government was not to toughen the legislation but to do away with it, thereby making the situation that the hon. Gentleman describes even worse.
That was a back-handed way for the hon. Gentleman to say that he agrees that it is time for the Government to review the legislation. He said that it was time a few years ago, so certainly he would agree that it is time now, given the current economic conditions.
Let us be positive and work together on this. Given current economic conditions, it is time to look at the regulatory regime surrounding the pub trade. That is important, and if we do not do it, we will continue to lose pubs.
This will be my final point to the Minister, because I know that other hon. Members want to contribute. I understand that she has to fight a battle with the Treasury to gain money for the tourist authorities in the UK, whether national, English, regional or local and that there are always competing demands for cash. I put this on the record, because I do mean it when I say that I thank the Government. Because of their stewardship, regional development agencies and the policy framework under which they operate were established. The RDAs consider tourism to be an important part of the local economy and are investing more in it.
Because of the change in exchange rates we will have a window of opportunity over the next year to attract more people to the UK and, hopefully, to establish long-term patterns of more people from other countries visiting the UK, and we will miss that opportunity unless Visit England and, in particular, VisitBritain, with its external marketing responsibility, have the resources to exploit it. I hope that the Minister will take a message from me and the others who contribute to this debate to the Treasury, so that when it considers measures to stimulate the economy in difficult circumstances, it will see tourism as a sector that ought to be stimulated.
I congratulate the hon. Member for City of York (Hugh Bayley) on securing this important debate. He told us about elements of the machinations by which he was able to acquire such an important 90-minute slot. I hope that he will forgive me if I focus most of my comments on tourism in my own constituency and the nearby area, which I believe the Minister knows extremely well. I believe that she still has a house in the Soho part of my constituency.
I thank the hon. Member for City of York for his interesting comments. It is often easy from the London perspective to think of our city being the capital not just of this country, but almost of the world, and not to appreciate the broad range of tourism opportunities that are available so close to his beloved city of York.
I am fortunate enough to represent a constituency that, as well as including the financial and political heart of our country, houses some of Britain’s most iconic buildings, many of its historical and cultural gems, and a selection of the country’s best shopping and entertainment hubs, some of which are perhaps slightly too lively for many residents of Soho. The Minister has never pestered me directly, but I am sure that she writes letters to herself, in her role as Minister with responsibility for such matters.
The list of attractions in my constituency is breathtaking: several royal palaces, including the one that we are in at present; three royal parks; several major galleries; Westminster abbey; St Paul’s cathedral; and all the joys of the west end, which include Trafalgar square, Chinatown, famed shopping streets and luxury hotels such as the Savoy and the Ritz—a true embarrassment of riches in many ways.
The vibrancy of the central London area, the sheer number of fantastic places to visit and the fact that anyone can feel at home walking through the streets of London ensure that our capital city draws visitors from around the globe. Unsurprisingly, London is the No. 1 destination for international travel, each year welcoming more overseas tourists than any other city in the world. In 2007 alone, 25 million overseas and domestic tourists flocked to the capital, and we have had two consecutive years of record spending by overseas visitors, bringing in a colossal £8.2 billion to the UK economy. The health of the tourism market in London, which is the gateway to the UK as a whole, is crucial to the wider UK tourism industry.
However, because tourism represents 10 per cent. of the capital’s gross domestic product, there is growing apprehension that any decline in the tourism sector as a result of the recession could hit London hard. Unfortunately, it is difficult to grasp the full picture on the number of people who visit the capital, as we have only UK-wide figures from the international passenger survey. However, the number of overseas residents visiting the UK in the three months from October to December 2008 was down 12 per cent. compared with the same period in 2007.
I should say that anecdotal evidence from my constituency is, thankfully, rather more mixed than that stark statistic might present. Indeed, at the end of January, I attended the Regent Street Association’s annual luncheon, expecting the retailers on that famous London thoroughfare to be rather gloomy about the economic situation. Not so. Shops along the street had been pleasantly surprised by their final-quarter 2008 performance, which was buoyed by a huge uplift in foreign visitor numbers owing to the weakening pound. In December 2008, sterling was, on average, 26 per cent. weaker against the US dollar and 20 per cent. weaker against the euro compared with 12 months previously.
I do not wish to be complacent, but it is right that I put on the record the context of London’s tourism trade, particularly the retail offering for high net worth individuals, because I have an appreciation of many other high streets across the capital city. I look to my hon. Friend the Member for Orpington (Mr. Horam), because I am sure that Orpington high street has had difficulties for some years, not just because of inbound tourism, but because of the emergence of the Lakeside and Bluewater out-of-town shopping centres.
I am grateful to my hon. Friend for taking the trouble to mention my constituency. In that context, the outer London scene, which he mentioned, has some iconic buildings. There are some wonderful buildings in central London in his constituency, but in outer London we have, for example, the home of Charles Darwin. It is the 200th anniversary of his birth this year, and the 150th anniversary of the publication of his great book, “On the Origin of Species,” so I thank the Minister for the Government’s efforts to make his home a world heritage site.
I know London very well and love it very much, and not for nothing is the main road into Down called Single street. It is a rather small street, so I hope that not too many tourists will take their cars into Down from Orpington, otherwise there will be problems afoot, I suspect.
Amid all that, there is little doubt that 2009 will be a relatively tough year, so I am keen to know what the Minister will say about the contributions that she will hear from Members representing various parts of the UK. For a start, it is likely that corporate entertainment and international business travel will be pared back. There is an especial concern also about the capital’s exposure to the US market, which remains far and away the UK’s biggest source of visitors.
Visits from north America in 2008 were down 13 per cent. compared with 2007, and a sharp downturn in the US economy, rising unemployment there and the lowest recorded levels of US consumer confidence are likely, I fear, to ensure that the number of visits continues to fall. There is also concern about the exchange rate. There has been a depreciation during the past year, but the situation may change through 2009, and there could be a large reduction not just in visitor numbers, but in absolute spend.
The Minister will appreciate, and Members from all parts of the House will know, that we live in volatile times, so it is hard to tell whether more domestic visitors will in the coming months spend time in London and the UK, rather than going abroad. Preliminary research indicates that most UK residents regard their main summer holiday—normally abroad—as sacrosanct, in which case domestic visitors may choose to drop their breaks in London or, indeed, other parts of the UK to preserve what they regard as their main holiday.
Visit London—the official visitor organisation for the capital, and part-funded by the Department for Culture, Media and Sport, the Mayor of London, the London Development Agency and London’s councils—has been undertaking some quite aggressive marketing campaigns to promote the capital internationally. In December, a four-month drive was launched to stimulate visits to London. At a cost of £3.25 million, the campaign is expected to deliver £70 million in economic benefit to the capital. Money assigned to promoting tourism traditionally provides good value, and tourism is one of the industries in which a relatively modest investment can provide solid economic returns in a short period. As part of the Mayor’s recovery plan, alongside that of central Government, Visit London has tried to capitalise on the opportunity of the favourable exchange rate as a valuable promotional tool, and, if there is any new Government funding, it should be concentrated on responsive campaigns. I hope that the Minister will bear that in mind.
In the longer term, Visit London looks towards the London Olympics, which are now only three and a half years away, in the summer of 2012. Surprisingly, when one considers that the Government sold the games to the public as a way to draw money into the capital from international visitors, there seem to be no specific plans to provide funds to help to realise the tourism benefits of the games. It is estimated that such benefits could be worth £2 billion, with the games representing a once-in-a-lifetime opportunity to market and promote London and the UK to emerging markets, such as China and India.
There is also great enthusiasm among those in the tourism sector for a re-examination of immigration arrangements. There have been recent increases in visa fees, and some visitors are aggravated by having to purchase a separate visa for the Schengen area. Visit London also believes that a capital investment in an international convention centre, which has been in the offing for many years, would create jobs and benefit London’s economy in the long term, particularly as the organisation believes that, on tourism, one of London’s saving graces could be its hosting of many conferences, fixed-term annual congresses and sporting events.
In an economic climate that is undoubtedly worsening rapidly, it is essential that we continue robustly to promote our capital city. London drives the UK’s visitor economy to a large extent, and, where it succeeds in attracting visitors, the rest of the country will, I hope, benefit. But, while the picture is mixed in the capital, with some areas of the industry upbeat about their prospects, there is no room for complacency. In this sector, over many others, a little investment can go a long way, and we should play on London’s myriad advantages as a fantastic, diverse and exciting city to keep it as the jewel in the crown of a thriving British tourism industry.
I congratulate the hon. Member for City of York (Hugh Bayley) on having prompted this important debate. My remarks will be slightly polemical and may contrast sharply with those of the hon. Member for Cities of London and Westminster (Mr. Field), although I agree with both hon. Members that inbound tourism is essentially a good thing. The balance of payments is helped enormously. It is one of the few real exports that we have left and it is helped by the falling pound. However, I want to make a general point about the marketing of UK plc. Many of the brochures and films that I have seen, especially abroad, have overwhelmingly been London-centric. “Come to the UK” has been synonymous with “Come to London”, with Edinburgh thrown in because they have quaint Scottish ways up there, along with Stratford-upon-Avon, because everybody abroad knows about Shakespeare, so it is thought important to include that town, too. Much of the rest of the country, however, misses out on any international promotion.
The pressure, which has been evident today, is to get people to visit London. Most of the resources go to marketing the London offer, and the hon. Member for Cities of London and Westminster laid out very well how successful it has been. The evidence is there: people tend to visit London in very large volumes. London is a fantastic place, however; I am not saying that it is not. It has history galore and architecture—a fantastic number of great buildings, so many that, in some cases, they do not even have names. It also has royalty, entertainment, the west end, culture, museums, galleries and sport. It has famous football teams such as Chelsea, Arsenal and Leyton Orient, although I must note that they have not yet achieved the same level of international success as certain teams in the north-west. London also has a superb transport system and access, so I do not deny that London is a world-class destination, because it is. However, it is not the UK, just as Madrid is not Spain, Paris is not France and New York is not the USA. The UK has other gems, but they are undersold.
I accept that other cities do not compare with London’s scale, resource and range of attractions. Manchester, Liverpool and York all have very good points, but, criterion by criterion, they are not in the same league as London. But the UK is not all about cities. For example, it has a fantastic coast, which was brilliantly depicted in a recent BBC series—such a good series that it is doing a second series. I must say, however, that the BBC’s metropolitan elite needed some persuading to embark on the first series, because they did not think that it would achieve the success that it has. The UK also has a varied countryside. It is not often recognised that the one thing people notice when they come to this country, particularly if they come from the Mediterranean area, is how green and pleasant it is and how varied it is. But that is not given much coverage in the brochures advertising this country. The UK also has cheaper places to stay than London. We have to take on board that not every person thinking of tourism in the UK can afford London prices.
There is an imbalance in the promotion of inbound tourism in this country. Let me tell a little anecdote as an example. My constituency is a fine Victorian resort, as I think hon. Members would agree, with better golf courses than London, healthier air and less snow. It is also the recipient of much recent investment and it has an exceptional coastline. In a foreign embassy a while ago, I picked up a VisitBritain pamphlet which was about the north-west, not generally about the UK, but I looked in vain on the map for my resort. The squirrel reserve down the road was there, as was a place called Oswaldtwistle, which has a loom of some note, but Southport was not there, which led me to believe that people in VisitBritain are not as clued up as they might be about the attractions of the wider country.
The hon. Gentleman might have expected that to be included. However, VisitBritain has since apologised for that culpable omission.
As the hon. Member for City of York has already mentioned, let us consider the painful debate and political turmoil about Heathrow this week in Parliament. The discussion in the Merseyside area is about why cannot we have more flights, why are flights withdrawing and why is John Lennon airport not doing better business. We want the planes that Londoners do not want and we can take them. But we cannot do so if tourists are consistently shepherded or dragooned to London, through London and via London. That is fundamentally not a good thing for British tourism.
When we return time and again to countries we do not always return to the same place. People travelling to Italy go to Rome, but they do not—
Every plane flying from Britain to north America takes off in London and flies over the north of England, probably almost directly over John Lennon airport. If they landed at that airport, half an hour of flying time and 400 miles-worth of fuel and pollution on the round trip would be saved. If a fast 200 mph railway line were built, people could still be in London within an hour. Does not the hon. Gentleman agree that we have to think of a national airport strategy, not just one for London and the south-east?
What the hon. Gentleman is saying is interesting. I was trying to massage together the words of my hon. Friend the Member for Cities of London and Westminster (Mr. Field) and those of the right hon. Member for Oxford, East (Mr. Smith), who is no longer in his place. The people who are having difficulty borrowing money—this is true in my constituency as well—are feeling a different influence from that felt in London. I wonder whether that reflects the different feeling out in the sticks, as people might say, from that in London.
We in the provinces suffer, at times, a different economic climate, but although we all have the same concerns about the dangers that may be presented by the economic climate to inbound tourism, there are also potential benefits. There is an opportunity here and something can be made of it if we get the marketing right.
Fundamentally, I am not making an anti-London point. It is a question of the balance of the offer. People who return time and again to Italy do not always return to Rome. Yes, they go to Rome, which is a fantastic city, as is London, but they also go to Florence, Venice, the Umbrian countryside, the Adriatic coast and the bay of Naples. If we could have a more diverse presentation of the UK to the world at large, we would all do better. That would be a win for London, because general tourism would go up and people have to go through London in most cases anyway, and other areas would benefit far more than they do.
I plead with the Minister not simply to look at the benefits of promoting tourism, but to look at the benefits of doing so in a thoroughly balanced, trans-regional way.
I congratulate the hon. Member for City of York (Hugh Bayley) on securing this debate. He is right on a number of counts. York is one of the great treasures of the United Kingdom, both in respect of its historic buildings and its tourism industry. In some ways, it is complemented by what is on offer in my constituency of Ryedale. People can seek solitude in York Minster, but they can do so just as easily in Rievaulx.
The hon. Gentleman is right to identify the fall in the value of sterling as an opportunity that Government ought to grasp. He is also right to say that some further investment in and marketing of the UK as a whole would pay huge dividends, not just for the tourism business but for many other businesses and for the Exchequer.
The hon. Gentleman mentioned shopping in York in his constituency, where I live. I was shopping in January during the sales with my wife, who is Dutch, and we could not believe the number of Dutch people buying stuff in the sales. Those people come over on the North sea ferries into Hull, spend a day shopping in York, spend all their money and then go back. I was told yesterday by my wife, who runs a successful inbound tourism operating business, which I will mention in a moment, that at a conference she attended yesterday she found out that the number of North sea ferry crossings from the near continent—Holland and Belgium—had already been cut by half because of the recession. That is a real problem.
I want to mention a couple of other interests that I have. For a number of years I have been a consultant to an organisation that is now called Eventia, which is the trade association for the meetings, events and incentive travel industry and, for some years, I have helped organise a major international politicians’ forum on this subject in Frankfurt, which has focused on ensuring that governments, at local, regional and national level, understand the huge potential economic value of the meetings sector. My wife Hanneke runs a successful inbound tour operating business, mostly bringing business, events and meetings into London—and into other parts of Britain, including York and Scotland—from the near continent, including Germany and Holland, and, we hope, increasingly from America.
I have to tell the Minister and say to the interested hon. Members present that the impact of the recession on this sector is becoming all too clear, as is obvious. Many events and meetings are being cancelled because people do not want to be seen having a good time. This is really stupid and short-sighted. The idea is that such events should be cancelled because there is a recession on, but that just makes it worse. There is a phenomenal infrastructure dependent on the inbound tourism industry and it is not just based in London, although it is particularly acute there. The infrastructure is also in York and Southport. For example, many of our universities market themselves as potential and real sites for meetings, and this happens. People hold meetings and events at university campuses during the university summer break. All of this applies, whether we are talking about Lancaster, Durham or London.
I have just been in the USA, hence my slightly darker colour. I am not sure if the Minister is aware that the US Congress is developing a policy that will inhibit companies in receipt of emergency funding from holding meetings and event activities to communicate with and motivate staff, as has been prevalent before. That is ridiculous. The sector’s professional associations in America have started a campaign called Keep America Meeting. I suggest that we should keep the world meeting, because tourism is a vibrant element of the real economy.
The hon. Member for City of York mentioned the problem with pubs, and the truth is that the hospitality industry in north Yorkshire is probably the area’s biggest employer. Even in my constituency, which is recognised as being one of the main agricultural parts of Britain, more people are employed in hospitality than in agriculture or even food manufacturing. It is vital to understand the impact of that.
Most Americans do not know what has happened to the exchange rate. I do not know how to get the message across in a marketing campaign, but they do not realise that the pound is now down to $1.40 or $1.35, and that there is an exchange rate boost for the dollar.
What do we need from the Government? First, we need renewed recognition of the sector’s value, and the opportunity that it creates for jobs, training, education and economic growth. Secondly, we must recognise that the sector is under threat. The Minister’s facial expressions show that she responds positively to the points that I have made. The hospitality industry across the board is under real threat from the recession, as is everyone else, but we must understand that it is no good having a beggar-my-neighbour approach and making an already difficult situation worse, because it is one of the sectors that can help to bring us out of recession. I have no doubt about that. We need more cohesion in policy-setting across Departments. Transport has been mentioned, and I would add the role of local government, and a greater understanding that the sector needs to work in partnership with local and regional government to deliver better facilities.
I take this opportunity to make a particular point about the necessity for a greater understanding of the impact of taxation. I do not expect the Minister to reply to this now, but she will be aware that many four operators make VAT payments under the tour operators’ margin scheme. However, thanks to the usual ham-fisted intervention of the European Commission, TOMS will change. The Treasury has sensibly postponed the change to January 2010, but when it comes in it will have a huge impact on the sector because, understandably, when businesses use hotels, transport and conference venues for meetings and events, they expect to get their VAT back, but they will do so only if they do not use agents or the organising sector. That needs attention.
I entirely support what my hon. Friend the Member for Cities of London and Westminster (Mr. Field) said about London’s need for a convention centre. I have made many speeches about that.
I turn my attention to what we need from the sector, and what it should do. It must recognise that even in these difficult times, the importance of investment remains critical. The hon. Member for Southport (Dr. Pugh) talked about the wonderful places that people may go to in Italy and France when they have been to Rome or Paris, but when they go to such places, they find extremely high standards. The American market will not tolerate low standards. Americans want five-star hotels and the sort of luxury that hotels in Las Vegas and Florida provide. We must ensure that money is available to the sector for such investment, but it must continue to invest in training and facilities. The Minister may speak about the importance of training people to proper standards. I am a member of the Sector Skills Council for Active Leisure and Learning, which is aware of the opportunities for training and upskilling of workers. That is critical, and we must encourage young people to consider the sector as a real career opportunity. Far too many of them think it is the last possible career, but that attitude does not prevail in other parts of the world.
I again congratulate the hon. Member for City of York on securing this debate. We must be positive and constructive, but the sector is under severe threat as a result of the attitude that people involved in hospitality and events are having a good time when others are being made redundant. That attitude only increases the number of people losing their jobs. We must reverse that, and I look forward with interest to hearing what the Minister says. This is the first time that I have had the opportunity of debating the matter with her. I also look forward to hearing what my hon. Friend the Member for Bournemouth, East (Mr. Ellwood) has to say, because he has the job of shadow tourism Minister, which I enjoyed for several years. It is one of the best Opposition jobs, and I hope that he will have the opportunity of doing it in Government.
I congratulate the hon. Member for City of York (Hugh Bayley) on securing this debate. He made some excellent points, and I agree with what he said about the pub industry and the airport strategy, which should be broader. He promoted City of York, as one would expect. Hon. Members also promoted Oxford, the City of London, outer London and the grandeur of Southport, which I know well. My mother was born there, and I spent many summers there as a child visiting relatives, but although it is said that there is sea there, I never saw it.
It would be improper not to mention my hon. Friend the Member for Bath (Mr. Foster), for whom I am standing in, because he would probably never forgive me if I did not give Bath a plug. It is, of course, a world heritage site, and a splendid city. Having mentioned that, it would be my own ruin if I did not mention glorious Devon, where I come from. Teignmouth, the small town that I live in, is a small part of my constituency and is famed for Keats and the computer designer, Babbage, and for being the home of Hornblower and Admiral Pellew. Very few hon. Members here will know that, and that is part of our problem in promoting tourism in the UK. We have opportunities, but we do not exploit them. I shall come to the reasons for needing extra investment.
The tourism industry has a turnover of £86 billion. It is the sixth largest industry in Britain, and approximately four times the size of farming. It employs 1.4 million people throughout the country, which equates to 4.3 per cent. of the work force. The overall industry, with the jobs that rely on it, represented a massive 8.2 per cent. of GDP in 2007. However, despite the tourism sector’s invaluable contribution, both present and past, the Government’s commitment to investment and support has been disappointing and has lacked consistency. The portfolio for tourism has been moved from one Department to another, and there have been eight Tourism Ministers in the past 10 years. I hope that the present Minister will remain in post for a long time.
In 2007, spending by domestic residents amounted to £67.6 billion, whereas spending by international visitors was £18.7 billion. Domestic tourism is responsible for nearly four-fifths of our national visitor economy, and we must not forget that when we promote our tourism industry. Many sectors of society benefit from tourism, apart from people who work directly in the industry, ranging from hoteliers to tour guides, and the benefits extend to our cultural and heritage sites inside and outside the capital city. We have superb cultural assets, some of the world’s best museums and galleries, and world famous heritage sites with spectacular and diverse landscapes, all of which create a sense of fulfilment and educational enrichment for visitors.
In a global economy dominated by multinational business, tourism is one of the few industries that can easily accommodate start-up businesses, allowing people to step on that first vital rung on the ladder to entrepreneurial success. However, British tourism can thrive only if the Government are prepared to invest more money in the industry, and VisitBritain, the body responsible for marketing Britain abroad as a tourist destination, has seen its funding drastically cut by more than £15 million for the period 2003 to 2010—I understand that that is at 2007-08 prices. That body needs greater investment, not less.
Britain’s share of the global market has declined from 7 per cent. of international tourist arrivals in 1990 to less than 4 per cent. in the past few years, and from 4.5 per cent. of international tourist receipts in 1990 to less than 3.5 per cent. last year. In the past 10 years, the UK’s tourism growth has continually underperformed against the global average, with the UK’s tourism deficit spiralling from £5 billion to £20 billion per annum and the UK’s share of global tourism falling by almost 20 per cent. and revenue falling by more than 25 per cent.
A world tourism and travel study has forecast that in the next 10 years, the UK tourism industry will be one of the worst performing in the world. The study predicts that out of 174 countries, the UK will experience the 10th worst level of tourism revenue growth. However, Britain is in a position whereby it can attract many more visitors if it adopts sound marketing strategies publicising our many attractions—whether in York, Oxford, Southport, Devon or the City of London—and emphasising that British tourism offers good value. One outcome of the credit crunch is the weakness of the pound, which makes Britain affordable to overseas visitors. That presents us with an opportunity to demonstrate to the world’s travellers that Britain is no longer an expensive destination and to reverse the trend that has seen Britain experience a 27 per cent. decrease in the number of north American visitors from 2007 to 2008.
VisitBritain can help to achieve that, but it needs sufficient funds to be able to exploit the opportunity. It is the main voice for promoting British tourism, and I urge the Government to reverse the funding cut to VisitBritain so that it can grasp the opportunity and in turn mitigate some of the worst effects of the recession.
The Olympic games will present London with a unique opportunity to market the city around the world as a tourist destination. So far, the games are estimated to be costing £9.3 billion. What are the Government doing to ensure that the full potential from hosting the games is realised with respect to promoting the tourism industry?
Christopher Rodrigues, the chair of VisitBritain, has already spoken of his concern regarding the lack of funding for the tourism legacy:
“We were guided by Government not to focus on the case for additional funding, but rather on identifying ways to improve the efficiency and effectiveness of the industry...We have respected that guidance, though we must point out that the plan for achieving the tourism legacy benefits of the London 2012 Olympic and Paralympic Games remains largely unfunded.”
The Department for Culture, Media and Sport 2012 tourism strategy, “Winning: a Tourism Strategy for 2012 and Beyond”, published in 2007, is as yet unfunded. It must be fully implemented and adequately funded as a priority. The strategy claimed that the Olympics could generate an estimated £2.1 billion in additional tourism benefits for the UK over the period from 2007 to 2017 and stated:
“We must use the 2012 Games as an opportunity to upgrade facilities and give tourists a first-class experience.”
The strategy seemed to suggest that the Government would put extra money towards marketing Britain as a tourist destination in the run-up to the games. That now appears extremely unlikely. Even when the former Secretary of State for Culture, Media and Sport—the current Secretary of State for Work and Pensions—announced the 18 per cent. reduction in funding for VisitBritain as part of the 2007 comprehensive spending review, he held the door open on the Olympics with this announcement:
“I recognise VisitBritain’s key role in delivering the 2012 tourism legacy and will review available resources for VisitBritain to work with the private sector as we get closer to the 2012 Games.”
That door seemed to be firmly slammed shut by this Minister when she told the House:
“I have no plans to provide additional funding for tourism in respect of the London 2012 Olympic and Paralympic Games in this comprehensive spending round.”—[Official Report, 26 January 2009; Vol. 487, c. 60W.]
That was reported in the Tourism Alliance January newsletter.
There is also cause for concern about the lack of preparation regarding applications for tickets, which I understand will go on the market in spring 2011. Little thought appears to have been given to how we promote Britain for when the tickets are on sale. There is little point in our having a big promotion in 2011. The promotion has to take place in 2010, so that when people are buying tickets, they buy the whole package and they do not just think that they will come to London, do the easy options and then go back again, or go to Weymouth and then go back again. If they are in Weymouth, how about going to Dorset? If they are in another part of the country, how about going to York, Oxford or some of the other places?
My hon. Friend makes his point and it is on the record. There are other issues, though. We need announcements on infrastructure and promotion. Stonehenge is essential. There must be progress in that respect. If we want more people to go to Stonehenge, we have to give them a first-class facility when they get there, but we are not doing that at the moment. If we keep delaying, it just will not happen.
It is time that the Government recognised the importance to Britain of tourism—in deeds, not just words—and appreciated how much Britain relies on tourism to support the economy. It beggars belief that at a time when the Government are spending billions of pounds of taxpayers’ money on boosting public expenditure to take the country out of recession, they turn their back on tourism—one of the industries with the greatest opportunity for growth. We might also consider, for example, promotion of lighter evenings. There are a number of things that the Government can do; they are not all cash-orientated. I urge the Minister, however, to revisit the decision to cut funding to VisitBritain—a vital organ in ensuring the success of our tourism industry.
I begin, like other hon. Members, by congratulating the hon. Member for City of York (Hugh Bayley) on securing this important debate. I am pleased that we are having it. We do not debate the issues of tourism enough in the House, considering the importance of the impact that Parliament has on our tourism industry. I requested from the Leader of the House an annual debate on tourism in the main Chamber, but I was denied. The Conservative party has now agreed to that proposal—should we win the general election—so I hope that we can regularly bring together Members of the House who have an interest in tourism.
I am slightly concerned that a number of Labour Members have suddenly brought up the issue of tourism in the last month or so. Perhaps I am being cynical, but I hope that that is not a Labour spin plot, possibly with the paws of Lord Mandelson on it, to take advantage somehow of what is likely to be an increase in domestic tourism simply because of the economic downturn. We are where we are today not because of Government, but in spite of Government. As we have just heard, this Government have made ruthless cuts to the tourism budget and carved up responsibility for tourism to the nine regions across the country. Our success as the sixth most popular country in the world for tourists has been achieved in spite of the legislation created here, not because of it, and that must change.
On a point of order, Mr. O’Hara. Is it entirely appropriate for an hon. Member, even one speaking from the Opposition Front Bench, to refer to a Minister of the Crown as having paws? There is an inevitable suggestion in that comment that the Minister is animal, not human.
The sense of humour of the hon. Member for Ealing, North (Stephen Pound) certainly brings an air of jollity to the situation, but unfortunately there is a serious aspect to what is being said and there is concern.
We have a confusing, overlapping and conflicting tourism structure. We have had 10 years of jobs for the boys because there has been no leadership in Parliament. The regional development agencies and other bodies that are, from the Government’s perspective, responsible for tourism have been able to introduce their own initiatives, which are not necessarily in tune, do not necessarily follow the same agenda and certainly do not spend money wisely. Under a Conservative Government, however, that will be no more—things will certainly change.
I will not give way at this stage, because I have other things to titillate the hon. Gentleman with, and I am sure that he will wish to react to them.
When I visit areas such as Yorkshire, the south-west, the north-west and the north-east, I find that there are nine different ways of promoting tourism in Britain; some are good and some are very bad, but nobody is joining everything together. VisitBritain has come out with a very critical report on what is happening. Finally, VisitEngland is being created, so we have one voice that can bring all these ideas together. We can ensure that there is better understanding of how to market Great Britain not only to the wider world, but to the domestic audience.
Unfortunately, we have come full circle in the 10 years since 1997—we have reinvented the wheel. If hon. Members are not aware of that, they should read VisitBritain’s report, which was issued about a month ago.
Not at the moment, because time is against me, and it is the Minister who needs to respond on these issues, not the hon. Gentleman. However, I will give way in a little while, because this is his debate.
Let me cite a couple of examples. In Boston, Massachusetts, we had six different offices representing RDAs promoting different corners of the UK, which is just madness. We have an overlapping, inconsistent approach to getting people to come to the UK and decide where they want to go. I am glad to hear that that has now stopped and that some of those offices have been closed.
Closer to home, another example came to my attention last week. Stonehenge is our premier outdoor attraction, but anyone who has visited it recently will be aware of the mess and misery at the visitors’ centre.
What are we doing to harness to the opportunity of the Olympics, which my hon. Friend the Member for Cities of London and Westminster (Mr. Field) so eloquently described? We are building a temporary site just for the duration of the Olympics at a cost of £20 million. That is after a £15 million feasibility study—a paper exercise—to work out what to do. So, £20 million is being spent on something that will simply be torn down after the Olympics. That is not a good strategy or a good approach to co-ordinating jobs. Where is the leadership from the Government to ensure that the agencies responsible for putting things together create something permanent so that we can celebrate our premier outdoor attraction?
I will not reiterate hon. Members’ praise for the tourism industry, although I agree with them. However, those in the industry look to us not just to praise them, but for support. They know that they are doing well, but they know, too, that they could do better if they had better support from us. It is we who have to provide that support.
It has been reiterated that the industry is worth £90 billion a year. It is also responsible for one in four new jobs created in the UK. In global terms, 30 million visitors come to the UK every year.
My hon. Friend the Member for Cities of London and Westminster makes the important point that London is an important attraction, but only one tenth of visitors to France and Germany go to Paris and Berlin, whereas half of our visitors come to London. We have to ask how we can not only continue to encourage people to come to London, but spread the wealth and tourism opportunities so that people visit other places across the country. We can put only so many people in Oxford street before it is no longer a pleasant place to be, and we need to address that.
As we have heard, tourism in Britain is unique, and we cannot replace it. Oxford is Oxford, and Bournemouth is Bournemouth, and we cannot replicate them in the far east, because they are special to the UK. That is why we can be proud of what we offer.
I am most grateful to the hon. Gentleman for giving way. If I understand him correctly, his criticism of the Government’s tourism policy is that it is fragmented and has too much duplication. As a Yorkshire MP interested in the promotion of Yorkshire, I think that it is a good thing that Yorkshire Forward has increased funding for the Yorkshire tourism sector from £4 million to £10 million. Is he suggesting that his approach would be to reduce funding for regional tourism promotion and to put it all into a central pot?
No, that is not what I am suggesting. The hon. Gentleman is trying to take me down a particular avenue, which would not be helpful at this stage. I am here not to divvy up the funds, but to say that we should have a co-ordinated strategy so that best practice in Yorkshire is shared with the south-west. Money in the south-west is spent at the headquarters, but it does not get to the tourist destinations, which is a scandal—it needs to change. Furthermore, Yorkshire might do some promotion, which might be mentioned in embassies around the world, but an hon. Member who was looking for their particular patch might not be able to see it because another part of Britain was being promoted. We need the co-ordination to deal with that, because it is not happening at the moment.
If the hon. Gentleman wants examples of where the Government are failing, let me give him some. I have mentioned funding. Devolution has caused complete chaos in our promotion of the UK. Transport has also been mentioned. I do not know how much influence the Minister has with the Department for Transport, but we must ensure that we have a co-ordinated system that allows us to link places of interest so that we can move tourists from one place to another.
The price of visas doubled overnight as a result of a Home Office directive. Again, how much consultation was there with the Department for Culture, Media and Sport? Very little. According to the Tourism Alliance, the consequence is that we are losing £160 million a year because the UK is too expensive and tourists have chosen to go elsewhere. VisitBritain has requested that the Government to look into something called the Schengen plus visa. At the moment, people can pick up a Schengen visa for €60 and visit 15 countries, but if they want to visit Britain they have to pay another £60, so they immediately dismiss the UK in favour of the rest of Europe. Will the Minister please look at the issue and tell us how we might be included in the scheme, particularly if that would attract the far east markets?
Another example is the measures that the Department for Communities and Local Government introduced on fire regulations. Those measures have hit hotels and bed and breakfasts, which now have responsibility for sorting out their fire regulations. Many decided that it was too much red tape and that they were going to close.
My hon. Friend the Member for Isle of Wight (Mr. Turner) mentioned local authorities, which have a huge responsibility for understanding what is happening in their areas. However, they are shutting their tourism offices and sacking their directors of tourism. Why? Because they can save £1 million by doing that and put the money into things such as wheelie bin collections, which allow them to meet targets and get financial rewards from the Government. Again, that is not a joined-up strategy. I see that the Minister agrees.
The Isle of Wight is one of the places where the local authority has decided to close its tourism offices and put services out to the private sector. It cannot be that a council washes its hands completely of anything to do with the tourism industry. A Conservative Government will link rates so that a proportion of them are kept locally. That will encourage local authorities to invest and take an interest in aspects of tourism. We will encourage all local authorities to adopt a tourism strategy so that they think about the issues involved, look ahead and talk to their neighbours.
I am embarrassed to say that Bournemouth borough council does not talk as much as it should to Poole, but anybody who visits the area is likely to go down to Sandbanks or to walk across to Christchurch to see the church there. There needs to be more co-ordination, which is where the leadership must come in, because the absence of leadership has meant that people are very much doing their own thing.
There is not time to go into the Olympics, other than to say that I posed a parliamentary question to the Minister to ask what money is being put in to take advantage of and harness the fantastic opportunity of the 2012 Olympics, when millions of people will be watching television pictures of Britain. Not one single penny is being put in. The Minister said:
“I have no plans to provide additional funding for tourism in respect of the London 2012 Olympic and Paralympic Games”—[Official Report, 26 January 2009; Vol. 487, c. 60W.]
I will not. The hon. Lady has just walked into the room.
Furthermore, we have not even touched on the fact that we have to deal with small businesses in the current economic climate. The VAT cut was simply a scandal; it has caused confusion for tourism operators, rather than helping them.
We touched earlier on the question of pubs. Duty was increased to compensate for the drop in VAT. VAT will go back up, but will duty on alcohol go down again? Absolutely not! That is one reason why pubs are being hit and are closing at the rate of 36 a week. I would like to see a reduction in corporation tax and a small-companies rate. I would also like to see a loan guarantee system that works, a six-month VAT holiday for small and medium-sized businesses, and a cut in national insurance. Such things would help the small businesses that make up our tourism industry.
There is much to be done, but it is not being done. We can certainly be proud of our tourism industry, but we should be less proud of what the Government have been doing to support it.
It is a pleasure to respond to the debate, which was initiated by my hon. Friend the Member for City of York (Hugh Bayley). I am glad to join him in highlighting the value that tourism brings to the national, regional and local economies. I am glad also to have had the opportunity of hearing from Members in all parts of the House about tourism in their areas. I particularly welcomed the contribution of the hon. Member for Ryedale (Mr. Greenway). Having been in my position, he knows some of the constraints, but he was right to say that it is one of the best jobs in government.
I believe that tourism is one of the best industries in Britain. It is our fifth largest industry, and many Members mentioned its contribution to GDP, the number of jobs that it supports and its general importance to our regional and national economies. As the Minister for the East of England, I understand how crucial it is that we co-ordinate the regional development agencies, and that we copy the best and get rid of the worst, which, as the hon. Member for Bournemouth, East (Mr. Ellwood) mentioned, we definitely have in some of our practices.
During the decade in which we have been in power, we have doubled central Government’s contribution to tourism. In 1997-98, under VisitBritain’s predecessor bodies, the Government’s contribution was £44.7 million; in 2007-08, it was £94.1 million, of which £50.6 million went to VisitBritain and £43.5 million to the RDAs. Why to the RDAs? As the hon. Members for Southport (Dr. Pugh), for Orpington (Mr. Horam), for Ryedale and others have said, we need to ensure that the RDAs and the regions themselves get their share of the tourist pot. The money that tourism brings into the country is vital. As many Members have said, it is one of the main ways in which we can work ourselves out of the recession. Like the hon. Member for Ryedale, I regret the slightly miserable attitude that we have at the moment.
As the hon. Gentleman says, it is a hair shirt attitude. We need to spend money to get ourselves out of the recession.
Overall, the public sector’s contribution to tourism is about £350 million a year, which is devolved to London and the various authorities in the regions. I am proud of the contribution that the Government make to tourism. I acknowledge that when times are good, tourism is easy to ignore. The industry gets on with the job, which it does extraordinarily well, and we are glad to reap the benefit. However, times are now immensely challenging for the industry and the country.
When I became a Minister in October last year, tourism was one of my top priorities. I have met the various trade organisations, which I am glad to say are represented here today; I have met the regional development agencies; and I am shortly to meet the RDAs’ heads of tourism. I wish to achieve more co-ordination, and to get areas such as mine to follow the examples set by Yorkshire Forward and the north-west, which have particularly good tourism elements.
The latest data paint a bleak picture compared with that of 12 months ago. However, despite the weakness of the pound—and despite what the hon. Member for Bournemouth, East said, the reduction in VAT has brought something of a retail revival to London and to Northern Ireland, where people are crossing the border in order to benefit from it—the number of visitors from the United States, the eurozone countries and the rest of the world is declining. That is why, on 8 January, at the beginning of what I knew would be a difficult year, the Prime Minister, the Secretary of State for Culture, Media and Sport and I held a tourism summit in Liverpool.
Why Liverpool? It was because Liverpool shows what can be done with good regeneration and with focused work on tourism. That focus was brought about by its being the European city of culture. Many of us did not easily put Liverpool and the title “European city of culture” together, but it has been a rip-roaring success, with the city attracting an extra 3.5 new visitors last year. It has vastly increased its tourism take, and more people are staying in its hotel beds. A record 1 million hotel beds were sold last year, and the average occupancy rate over the year reached an all-time high of 77 per cent.
I shall not give way as I have only four minutes left to answer the debate; I am truly regretful.
That example shows the vital role of culture. For instance, as the hon. Member for Orpington said, Darwin’s landscape laboratory is in his constituency. It also shows the role of regeneration. I am glad that Southport is one of the beneficiaries of the sea-change money provided by my Department: we put in a total of £45 million, of which Southport had £4 million.
My right hon. Friend the Secretary of State wants to see whether we can extend the city of culture experience to other cities in Britain. We have commissioned a feasibility study on having a four-year UK city of culture. There will be money attached to it, and I hope that my hon. Friends will consider it when the time comes. We have also laid out plans for a UK decade of sport, which we will be promoting with VisitBritain. We are fortunate that a great many sporting events will be occurring in Britain over the next 10 years.
The hon. Member for Teignbridge (Richard Younger-Ross) quoted me correctly, and with the Financial Secretary to the Treasury, my right hon. Friend the Member for East Ham (Mr. Timms), sitting next to me, I reiterate that statement: not in this spending round. However, I tell my right hon. Friend that that does not mean that I have given up. He should listen carefully to the last part of that statement. My right hon. Friend—it is fortuitous that he is here at the moment—is being lobbied.
Hull, in Yorkshire, is hosting the clipper round the world yacht race this September, and this is an Ashes summer, so Headingley will also play its part. That is part of what we are doing to showcase Britain as a good destination.
The DCMS framework review was initiated by the Department, not VisitBritain. It was part of the attempt to get rid of some of the diversification mentioned by the hon. Member for Bournemouth, East. We believed that such duplication was unnecessary, so we redirected money into other areas and to the regions. I am glad that the review proposed things that I am already doing, such as re-establishing the inter-ministerial group on tourism and setting up a tourism advisory council. I want to stay in touch with other Ministers, because tourism is delivered by about eight Ministries. We have to consider the product and the skills as well as marketing; without them, we could market for all we were worth but we would not get people to repeat their visits to Britain.
HMRC Office (Chorley)
I thank you, personally, Mr. O’Hara—the great man that you are—for allowing this debate. You recognise an important subject when you see one, and there is none more important than Chorley tax office and its potential closure. Of course, I also thank the Minister for giving up his precious time; I do not want him to be known as the Minister of death and doom, but as the Minister of good news, and hopefully at the end of the debate we will hear some. I think that he will be embarrassed by what has happened in Chorley and other offices in the area.
I am disappointed that we even have to hold this debate about Her Majesty’s Revenue and Customs office in Chorley and the mistakes that have been made—common sense says that its closure is not necessary and should be overturned immediately. The Minister may say, “Well, you would say that.” I would reply, “Common sense, prudence, and all the things that this Government claim to stand for, are the reasons why it should not close”. Prudence should be there for all of us. I hope, therefore, that the Treasury has readopted that prudence, common sense and justice. That is what we want for Chorley, and if he is up for that, Chorley will remain open. That is the question. I am sure that he will do his duty and do the best by the people of Chorley. We do not want a Government who are not working for the people of Chorley.
My hon. Friend is making a strong case for the well-run tax office in Chorley, just as there was a case for the well-run tax office in Accrington. Originally, Chorley was scheduled to remain open, as was Accrington tax office. Has he heard any reasonable explanation, either from HMRC, the Minister or his predecessor, why Chorley or Accrington tax office should close?
There is absolutely no good reason for closure, but there is good reason for them to remain open—it would save money.
My hon. Friend has touched on the nub of the matter. Our offices cost less than those in St. Helens and Blackburn. I could name another one—Bolton—but let us stick with the first two. What is between Chorley and Accrington? Some would say Blackburn, but of course St. Helens is there, too. St. Helens and Blackburn were down for closure, because they are inefficient offices and cost too much to operate. The statistics, figures and answers that we received to questions tell us that they cost more to keep open. In fact, St. Helens is an embarrassment to the Treasury—so much so that health and safety officers have concerns about using it. It is not fit for purpose. It was quite rightly down for closure, and yet somehow it has been reopened.
What is the magical factor in all this? The Blackburn office, in the constituency of my right hon. Friend the Member for Blackburn (Mr. Straw), is located on an industrial estate; it is a poor office in the wrong place, which is why it was down for closure. Accrington and Chorley were to remain open, because they are good offices with quality staff, offering quality services—Chorley is an award-winning office. It is a purpose-built tax office built in 1990, not some rundown relic. Why do the Government want to close a second-to-none, purpose-built, award-winning tax office with the best staff and best quality advice? I shall tell the Chamber what the problem is—political corruption. We must be honest. This must be down to political corruption. I cannot think of anything else. It is very strange. What do St. Helens and Blackburn have in common? They have Cabinet Ministers as Members of Parliament. There can be no other reason, and in the end, therefore, the poor Back-Benchers pay the price. What is going on is a disgrace, and the Government should apologise to my hon. Friend and myself.
Does my hon. Friend agree that the Government, particularly through HMRC and the Department for Work and Pensions, seem to be doing their best to make HMRC and DWP staff feel extremely uncomfortable. Is he aware that the staff in Preston have been given notice to clear out of their buildings, obviously to make way for the Tithebarn project, and have been given no indication of where they will be accommodated? Not only are their offices closing with no plans to reopen them and relocate the staff, but staff who will probably keep their jobs do not know where they will be in three years’ time.
I do not disagree with my hon. Friend. Preston is a great modern city, and the tax office employs many people. As he says, we know that Preston is being redeveloped, that the tax office will close and that staff do not know where they will be transferred to or where the office will be. Preston is only up the road from Chorley and across from the office of my hon. Friend the Member for Hyndburn (Mr. Pope) in Accrington. Why do the Government not use some common sense and plan for the people of Preston, so that they can keep Accrington and Chorley open. It would not be far to travel from Preston. It would put an end to the uncertainty hanging over the people of Preston.
We can do things by working together, but we need common sense. The Government should take it on the chin, recognise that they have made a mistake and put right this wrong. I know that my right hon. Friend the Minister is big enough and strong enough and has the ability to say, “We have got this wrong. We will look into it, and put it right.”
The hon. Gentleman, who has been waiting some time for this debate, is making an extremely strong case on behalf of Chorley tax office and others in the north-west, including Crewe, where the tax office has also been earmarked for closure. Does he agree that with the current deep recession it is the worst possible time to put such experienced people on the job scrapheap? The average work experience of staff in Crewe is 23.7 years. Furthermore, £21.5 billion of debt remains uncollected, and the debt management and banking business in Crewe is one of the most efficient at collecting such debt. Now would be the worst time possible to do away with that superb service.
Absolutely, and the closure might effect the ability of some to do so. Does my hon. Friend consider that during the consultation process the officials did not take into account the difficulties that people would face in having to move offices? The vast majority of the people affected are fairly low paid and have life balances to consider. Furthermore, we will lose staff with an average of 25 years’ experience. I do not think that officials took into account the life balances and difficulties that will be faced by many families.
My hon. Friend makes a very strong case about life balances. The Treasury claims to take those into account and to be a good employer. We have many fine words, but not much substance behind them. The Government and my right hon. Friend the Minister can provide that substance and take into account the points raised today. It is not his fault—the closures were decided before he took up his position—which is why I plead with him: he can be the man to save face for the Government by putting right this wrong. The mistake was made before he took up his position; I do not blame him, but I do charge him with sorting out the mess. What I am talking about is 77 loyal staff, 54 of whom work full time and 23 part time.
On 29 February, it was announced that Lingmell house would close following the HMRC north-west urban centre review. The local compliance corporation tax operation team undertook the process of identifying 15 centralised sites for its operations. It seems funny that the office was always told that it would remain open, which gave everyone else an advantage. If an office is not earmarked for closure, it cannot lobby. What will it lobby for? That is the problem. We were down to stay open. Those who were down for closure suddenly lobbied and used their political influence. Such was the strength of their lobbying that the offices that were not down for closure are now closed; it is an embarrassment. I know the Minister must be embarrassed by that. Those award-winning offices that were recognised for providing the best service were never meant to close. Suddenly, they are closing. Staff from other offices have channelled their efforts into taking all the best jobs and transfers that are available, and we are left in limbo. Do we really think that that is acceptable? Of course, we do not, and, quite rightly, there is embarrassment.
After that event, in November 2008, five of the 15 sites have been identified. Yet the remaining sites are still being determined. I wrote to the Financial Secretary to the Treasury to outline why Lingmell house would be an ideal location for one of those sites. Even then, I said that other work could be brought in to save the site, which is an area that I should like the Government to explore in more detail. Of course, we get the usual, “Sorry, we are not interested.” My arguments highlight not only why Lingmell house should not have been earmarked for closure in the first place but just what an asset the building could be for a centralised site for the future.
Let us look at the office’s location. The office is within five minutes of junction 8 of the M61 motorway, which provides access to the M65 and M6. It is a five-minute walk from the train station and an even shorter distance from the bus terminal. It is well placed to serve offices within Manchester and other cities such Preston and Blackburn and it is also within an hour’s drive of Leeds. Therefore, it is absolutely central to the north region let alone the north-west. Logistically, one could not find anywhere better. A person can drive into and out of Chorley, or they can get on a train. Yet we want to put more people into Manchester at a time when the Government are saying that they want a congestion charge because the city is so crowded. Why do we want to put more offices in there? Come on, let us go outside the cities and look for regional offices. It is that easy connection between the train and the bus to Chorley that would stop the number of cars coming in from the constituency of my hon. Friend the Member for Preston (Mr. Hendrick). This issue affects not just the constituents in Chorley but those of my hon. Friend the Member for South Ribble (Mr. Borrow). We have seats all around Chorley that benefit because people all live locally, and that is the advantage of this proposal.
I congratulate my hon. Friend on the tremendous work that he has done in this field. A possible solution that has been suggested to me by staff working in the Lancaster tax office is to find new work, such as dealing with tax credits, because there are problems even with Preston. All the Lancashire MPs should meet the Minister to consider whether work can be spread around the region, which could save jobs, rather than forcing people to travel into Preston.
My hon. Friend is being characteristically generous to the Government by suggesting that alternative employment is being offered in Manchester. Some of the alternative employment is in Bootle, which is almost impossible to get to from his constituency in Chorley, and from mine in Accrington.
I agree with both those points, and I will touch on them later. There is other work to go around, and we have also asked whether tax credit work can be put into Chorley.
There is also the standard of accommodation. Our purpose-built office could not be better. It was constructed in the 1990s purely for the tax office. It is one of the newest HMRC offices in the north-west. In fact, a penalty must be paid by HMRC should it vacate the office before the end of its fixed-term contract. I will return to this matter a little later because it is important to get the message across.
Preston and Blackburn are the closest offices to Chorley that will remain open. Offices in Burnley, Accrington, Southport, St. Anne’s, Blackpool, Lancaster and Barrow will close. Those offices were staffed primarily by clerical grade staff. The creation of a corporation tax base in Chorley could accommodate the large number of surplus staff within the north-west. I hope that the Minister is taking this on, because, logistically, the office is central for everyone.
Staff at the office feel that they were deprived of a fair and formal consultation period. Therefore, giving consideration to such a proposal would begin to redress their grievance. I must emphasise the deep frustration of staff at the site who feel that redeployment to other sites around the region is simply not practical. Indeed in response to my parliamentary question on 17 March, the Minister stated that staff at Chorley may be transferred to offices in Bootle, Manchester and Salford. How can any of us get to Bootle? None of those centres is as conveniently located as Chorley. If someone lives in Chorley, it is extremely difficult—if not impossible—to travel to Bootle unless they have a car. Moreover, HMRC is rightly proud of offering flexible working hours and part-time employment. I find it extremely hard to understand how such flexibility can be achieved if someone lives in Chorley and has to work in Bootle. In fact, it cannot be achieved. That is why we want to see substance and not just fine words. It takes 45 minutes to travel to Bootle in a car. To get there on a train from Preston, Chorley or any of our areas is virtually impossible.
I met staff at HMRC in Chorley and they were rightly concerned about the closure and their own future. In particular, they were worried about the lack information available. At this difficult time, people find it impossible to make plans if they do not know whether they will be transferred, or whether their office will stay open. Come on, let us rethink the plans.
The Public and Commercial Services Union has also expressed its concern about the closure programme, saying the ability of the Department to collect revenues and provide tax advice to the public and local businesses would be completely undermined. The Minister may say that we can have a little part-time office, but that is not acceptable.
Access to tax advice to communities across the UK will be damaged by the proposals, hitting businesses and the public in rural towns. Chorley is home to the Tenon Group, which is one of the biggest accountancy firms in the country and is listed on the stock market. We have hundreds upon hundreds of accountants and businesses that operate out of Chorley. Chorley is the 34th richest constituency in the country in terms of disposable income and is home to the 54th richest constituent in the country, and his business is based in Chorley. Therefore, closing the office would be complete madness. I say to the Minister, please reconsider the plans.
In a letter from the Treasury, a previous Minister stated:
“HMRC business units can operate more effectively by co-locating teams in a smaller number of locations”.
That is fine. Let us look at some other locations, which the Minister did in the first place. He thought that that was right at the beginning, so how can it be wrong at the end? Is he telling me that his officials are completely bonkers? Is he saying that they made the wrong decision in saying that Chorley should remain open? I believe that the officials are not bonkers. They are absolutely right because they knew that it was the right office to remain open. The only people who did not agree with that were friends in higher places with greater influence. The officials got it right and they are not bonkers, but I am concerned about political interference.
Given that the Chorley office is the least costly office to run—it costs only £203,739.32 per annum—surely it makes more sense to keep it open. It is less expensive to keep open than the offices in St. Helens and Blackburn. That is the reason why it should not close. There is so much more that we can say. I know that the Minister will want to come back with some positive news. I do not believe that he will let my hon. Friends down once again. Once you have been shafted, you do not want to be shafted twice. Please, do the right thing. I cannot stress enough that something smells unhealthy here. Your top officials and your team went out to look at every office—
Okay. I agree with you, Mr. O’Hara—I do not want to be downwind of the smell that has been created.
Officials who took the right decision and did the right planning said, “Chorley, Accrington and other offices are in the right place, providing the right business with high quality.” Those officials got it right, so what has changed? If the office costs less to run and has the best staff, what could have changed anybody’s mind? It is logical not to close the award-winning, purpose-built office that officials say should remain open.
We come back to what I said earlier: something about this is very questionable. What influence and undue influence was exerted to close Chorley and Hyndburn, and to allow Blackburn and St. Helens to remain open? How much will the Minister have to spend on those offices to make them fit for purpose? They were not fit for purpose, and they are still not. I say to him: please go away, take another look at the matter and come back to us. We will not go away. We will quite rightly pursue the Treasury for the truth, openness and transparency that we deserve. We expect to see all the letters, notes and e-mails that have been sent over the closures. It is only right that we should.
I would take the better option, which would keep everybody happy and put some of the spare capacity work—tax credits and other things—into the offices. Finally, we should start with Chorley and look at the other offices after.
I welcome the opportunity to debate this matter with my hon. Friend the Member for Chorley (Mr. Hoyle) and others. They take a keen interest in the question of the future of office locations, but my hon. Friend made quite a serious charge, in a characteristically robust way, and I hope to persuade him that it is wholly mistaken.
My hon. Friend knows that we are requiring Her Majesty’s Revenue and Customs to increase its effectiveness at the same time as making substantial efficiency cost savings. Those savings broadly equate to a reduction in staff of about 25,000 between 2004 and 2011. When HMRC was created in April 2005, the two former revenue departments had around 105,000 staff and two separate office networks in nearly 600 office buildings throughout the UK. There is an obvious imperative for rationalising the office network. HMRC estimates that as a result of new ways of working together and the expected reduction in staff, it will be able to release up to 40 per cent. of its office space by 2011-12. That is driving the process. Of course, it means that some difficult decisions have to be made.
Given the shortage of time, I will go straight to the question of Chorley. Chorley was reviewed as part of the Preston-Blackpool area, taking account of planning for all the offices in the north-west—we heard about one or two of them in the debate. The decision to consolidate work is based on HMRC’s strategic business requirements in the area, which arise from the drive to improve customer services and efficiency, and to vacate surplus accommodation.
I accept that such decisions are often finely balanced, but HMRC has suffered enormously from the uncertainty over the matter for quite a long period. As my hon. Friend said, the decision was announced almost exactly a year ago. The very worst thing that we could do now, especially in the interests of the staff who have been affected, would be to say, “We’ll look again at the decisions.” We will not be doing so, and we need to proceed with the decisions that have been made.
The Minister says that everything is set in stone, but the Government have reviewed Wigan and it will stay open another year, so his time scale is slipping. He also ought to take account of the uncertainty of closing the office in Preston because of redevelopment. Other offices are needed. Surely we should keep the purpose-built office in Chorley because the Preston office is going to be demolished, although it is not his fault that it is being developed.
That was not known when the announcement about which offices would close was made—the expectation is that Chorley will close towards the later part of 2010. None the less, it would be damaging for the organisation and the staff who have been affected by the uncertainty for me to give any suggestion that the decisions will be revisited.
The Preston-Blackpool area has 14 offices and 3,300 staff. HMRC expects its staff requirement by 2011 to be about the same as now. Unlike a lot of other areas, we are not expecting a drop in overall staff numbers in the Preston-Blackpool area, which is good news for those who work there for HMRC.
Initially, as has been said, the proposal envisaged retaining Accrington, Southport and Cop Lane—one of the seven buildings in Preston—but vacating the office in Blackburn. However, more detailed feasibility work during and after the consultation period suggested that a number of changes would produce a better overall result for the business. The main change was that local compliance decided that, rather than moving away from Blackburn, it made more sense to build up the team there—it already had some 80 staff in Blackburn—and pull out of the other locations where it had fewer staff. There were 30 staff in local compliance in Accrington and 35 in Chorley—there are currently 29 in Chorley—so it made better business sense for local compliance to bring people together in Blackburn, where it had a larger presence.
The number of staff in Accrington is 112 and the total in Chorley 77. Will the Minister consider the economic impact of taking that number of white collar jobs out of towns such as Chorley and Accrington in the middle of a recession? Will he at least consider a moratorium until we are coming out of the recession?
No. I need to put some points on the record in response to my hon. Friend the Member for Chorley, and I have not been left with a great deal of time in which to do so.
There were changes to proposals for offices in or around urban centres across the whole north-west. For example, Bolton is to be retained because customer operations and local compliance both decided that it was the best available fit with their strategic plans. The driver for the decisions announced a year ago was that the local compliance operation had a much larger group of staff in Blackburn than in the other two locations. In Chorley, the staff total is currently 66, the second largest group being customer operations. However, for optimum efficiency in customer operations, groups of at least 100 are necessary, so Chorley was always going to reduce in size even on the basis of the original proposal.
My hon. Friend asked about the financial penalties incurred by leaving Chorley early. I am assured that HMRC will incur no such penalties, because of the structure of the agreement with the landlord.
My hon. Friend made his disagreement with HMRC’s decision to vacate Chorley clear, perfectly properly, and others expressed disagreement with other decisions. However, we need to move to new business operating models, most of which depend on bringing larger teams together in a smaller number of locations and introducing new ways of working. That has driven the decisions. HMRC has to use its resources to good effect, but that does not mean that it simply has to look at the running costs for particular buildings and choose the cheapest. Rather, it means looking at what buildings will work best for its business overall.
We are not proposing any reduction in HMRC jobs in the area compared with the current arrangements. The question is how those people can be provided with accommodation to do the most effective job possible. At the end of the programme—
I am delighted to introduce this Adjournment debate on an issue of great importance to my city, the council tenants whom I represent and those around the country who, in my opinion, are being systematically mugged in one way or another by the Government as a result of how the housing subsidy works.
I pay tribute to those constituents of mine and council tenants who presented a petition signed by some 5,500 people to the Prime Minister this morning. Later this evening, I will present to the House a further petition on behalf of council tenants in Portsmouth. Both those petitions ask the Government to take action. The promised review is one thing, but the attitude of Ministers when the matter is debated or questions are asked in the House does not make it sufficiently obvious that there will be a change that will benefit my constituents, who see and will continue to see much of their rent go elsewhere and be retained by the Government.
Some 200 councils retain council housing. The housing revenue account subsidy system currently takes money from about 150 of those local authorities and gives money to 50 other councils. In this financial year, 2008-09, the amount paid by those 150 authorities exceeds the amount received by the other 50 by some £200 million. In 2009-10, the excess, estimated to be some £300 million, will be retained by the Treasury, often to meet other, non-council spending needs. It is effectively a tax on council tenants, some of the poorest and most vulnerable people in the country and in our individual constituencies.
In my case, the facts speak for themselves. In the current year, tenants in Portsmouth will lose some £4.6 million to the Treasury, and large increases are expected over the following years. Our council rents have risen. Realistically, our council rents would have increased this year by 7 per cent. We were able to hold them at 5 per cent. only by using balances that could otherwise been used to benefit housing in Portsmouth.
If that £4.6 million were available, it would have addressed a number of the issues and policies that the Government want local authorities to tackle. It would have been good for the local economy. The money could reasonably have been expended on local builders to refurbish and renew existing housing stock. It would also have provided the local authority with the ability to build much of the housing that we need. If things continued according to the present trend and if we were able to retain the money, by 2013 the local authority in my city would be able to provide more than 1,000 new homes, but we will not be able to do so, because we are continually robbed and penalised.
Portsmouth is by no means the worst example. For every pound spent in the Waverley council area, 49p goes back to the Government to be redistributed or held by the Treasury. The council itself is in an extremely precarious situation. It has a long housing waiting list, and it is bottom of the league for fit homes. Why is that? Because it cannot invest the money.
The hon. Gentleman will be aware that the all-party group on council housing, of which he and I are members, is taking evidence today in various rooms in the House which will shortly be submitted to the Minister for Housing. Does he agree that, on the scale of what he is describing, about £200,000 is being taken each hour from capital receipts or housing rent? That is about £300,000 during the period of this debate, £5 million a day and £1.8 billion a year. Those are extensive resources that are urgently needed by people hanging on by their fingernails as far as local authority-owned stock is concerned. It is all part of some subtle, or perhaps relatively unsubtle, coercion to get stock transfer under way. Does he agree?
I agree entirely. I can quote once again from the experience of my local authority. In 10 years, we will not be able to afford to maintain our housing stock. We will not be able to continue being a housing authority, despite the fact that on two occasions council tenants in the city of Portsmouth and in the Havant district, where Portsmouth also has housing, have rejected a stock transfer. They do not want it. They trusted the local authority. I speak as a politician who has spent most of my political life in opposition, but I can say with all honesty that all three political parties that have run Portsmouth have always treated housing as a high priority. The Conservatives, Labour and the Liberal Democrats have always given it priority, shown faith in council tenants and tried to deliver a fair rent. They have always tried to play the game for their council tenants.
I congratulate the hon. Gentleman on securing this extremely important debate. He mentioned Waverley, a council that I share with my hon. Friend the Member for Guildford (Anne Milton), and which is playing a leading part in the campaign. Does he agree that poverty is poverty whether it is in an affluent area or in an otherwise deprived area, and that it needs to be treated as such? Does he also agree that the current system creates extraordinarily perverse incentives? A council that reduces its housing debt and crime and vandalism on its estates has its subsidy reduced, which means that it can spend less money on raising the standard of homes that desperately need repairs.
I agree entirely. I had the pleasure yesterday of meeting the chief executive of Waverley council, who put a persuasive case on behalf of her local authority. What happens in that local authority and others makes double jeopardy look like a fairly even-handed approach. They are punished time and time again, not just once or twice but on three or four different levels.
I congratulate the hon. Gentleman on securing this debate. Does he agree that a number of councils—I cite Guildford, in my constituency, as one of them—do not yet recognise the problem? The matter has come to the fore because of the decent homes standard. In Waverley, on whose housing stock considerable sums need to be spent, they are acutely aware of it. However, for many other councils paying a similar subsidy, it is not quite up there in their heads yet, because they have not yet had to spend as much money on repairs as they will in time.
The hon. Lady makes an excellent point. Sadly, it is not unique. I think that all 150 councils currently being punished in that way could echo her sentiments.
I remember that when I was first elected to the city council in Portsmouth, it had 30,000 council houses. We now have about 13,000. The majority of the houses sold were the easy-to-maintain three and four-bedroom homes. We are left with the blocks built between the wars and in the late ’50s and early ’60s, which are the most difficult in which to secure and maintain a decent living environment. At a time when we need to be spending money on that sort of thing, our residents and tenants are denied the opportunity for their homes to be put in good order.
The hon. Gentleman is being most generous in giving way. Castle Point council tenants are effectively being hit by a double whammy. First, they are paying higher rents than they should; secondly, they are being denied reinvestment in their local area and in repairs and maintenance to their housing stock. Does he agree that in the current economic crisis it would be wise for the Treasury to reverse its policy and leave the money locally? Locally, it would be spent more effectively to help us to help people in poverty and build our way out of the recession.
The hon. Gentleman always makes useful interventions in debates in this Chamber. His point, once again, is made on a solid foundation. It makes sense to keep the money locally, give a boost to the local economy and deal with the issues that the Government want us to deal with. The Government seem blind to the link between higher rents and increases in the amount of housing benefit paid. Generally, across the country, at least 60p in every £1 of rent paid is effectively paid by housing benefit. Forcing up rents may generate income to the Department for Communities and Local Government, but 60 per cent. of that money will be lost through the increased amount of housing benefit that will be payable by the Department for Work and Pensions. Furthermore, some tenants will be forced to claim housing benefit, with all the extra stress and complex disincentives to working that result from that.
The Government take 75 per cent. of the receipts from every right-to-buy sale of a council home through the rent rebate subsidy limitation, and they do not meet the full cost of housing benefit for council tenants. Taking that money together with the housing revenue account subsidy, in the four financial years from 2005-06 to 2008-09, the Government have taken more than £30 million out of the council housing stock in Portsmouth, which is a staggering amount of money. I am grateful to the treasury and the housing departments in Portsmouth for supplying those figures. Again, that is not an exaggeration; it is fact. Sadly, that situation is not unique to Portsmouth—it is a nationwide problem, and many other local authorities are similarly affected.
I was interested to read the brief that the Local Government Association supplied for this debate. It is not often that members of the LGA galvanise themselves into taking a common approach, but on this issue the LGA has a purposeful campaign and a solid position, which I, for one, welcome. I hope that the Government are listening to those at the sharp end of delivering decent homes for people to live in. There is a need to satisfy the increasing demand for housing and to rekindle enthusiasm for council housing. I am proud to say that I was brought up in a council house in Portsmouth. It did not do me any harm—at least, I hope it did not, but others might have a different opinion. I had a rather large extended family, so I expect that many of my neighbours felt that we would have been better off living elsewhere. Antisocial behaviour orders were not in force then; I am not sure that we would have qualified for one of those, but there might have been a suggestion that we would.
I believe that council houses and the Parker Morris standards changed the way in which members of my generation grew up, as we were able to do so in decent homes. It was to the great credit of the Labour and Conservative Governments of those days that they saw in the Parker Morris standards. That was something to be proud of. I remember joining a local authority nearly 40 years ago and thinking how important it was to give people the same opportunities that I had. Many houses in Portsmouth were way below what was a reasonably acceptable standard for people to live in, and it was only through the determination of my predecessor councillors and my peers in the ’70s that the programme continued and people were given that opportunity. I regret that so few houses like that are now built to satisfy the demands of families in cities such as mine.
If the existing arrangements remain in place, collective payments to Government from the paying authorities will exceed £1.2 billion over the next 30 years. That is a phenomenal sum, so we have to be cautious about allowing those arrangements to remain. People will not sit back and allow the current situation to go on. Why should the council tenants of Britain be punished unfairly in that way, and be condemned to live, or to continue living, in properties that the Government know should be subject to improvement under the decent homes criteria? If we do not have the money to do that, we condemn people to go on living in that sort of environment.
What are MPs and local authorities doing collectively? I am delighted to say that my colleague, the hon. Member for Havant (Mr. Willetts), is an enthusiastic supporter of this issue, and I am sure that he would have joined us today if he could have done so. He has a huge number of Portsmouth residents in his constituency, living in what was once the largest council estate in Europe, so he knows, from first-hand contact with his constituents, of the pressures that result from their having to pay council tax to one authority and council rents to another, both of which have great problems delivering the services that ought to be expected in local authority areas.
The good news is that there has been a campaign across the country to show the Government the strength of feeling on this issue, and we have presented 5,500 signatures to Downing street today. Some of the people responsible for gathering that petition are listening to the debate—eagerly, I expect—hoping that the Minister will indicate that some good news is coming. They did not simply take pieces of paper on to the street for people to sign. They sent cards to people, which they filled in and sent back, so this has not been a hit-and-miss, Mickey Mouse petition that anyone could sign whether they were a council tenant or not. All 5,500 signatories are genuine council tenants from the city of Portsmouth, and that gives strength to the campaign. In some local authority areas—other Members are submitting similar petitions to Downing street today—more than 50 per cent. of tenants have signed up to the campaign. That is not easy to achieve, and I am proud that tenants in Portsmouth have led the campaign both locally and, to a great extent, nationally, and have tried to get it recognised.
I am grateful to my hon. Friend for giving way. It is good to see him on the Floor of the Chamber, for a change, instead of in the Chair. Does he agree that while all local authorities, whether they are run by Liberal Democrats, by Conservatives or by Labour, see housing as a priority, the Government unfortunately do not do so?
It is sad to hear any Member say that, but I agree with my hon. Friend to a certain extent, because a real passionate desire is needed. The hon. Member for Great Grimsby (Mr. Mitchell) has made it his life’s work to try to rekindle enthusiasm for housing and to get the message across, but I sometimes wonder whether he is banging his head against a brick wall.
On that point, and in picking up the point made by the hon. Member for Manchester, Withington (Mr. Leech), while I have certainly made representations to Ministers on many occasions about housing supply, it is absolutely ludicrous to conduct a debate on this issue that simply fails to recognise the investment that has come with the decent homes initiative in the past decade and the total transformation of the quality of housing stock. If we are going to be honest about housing in the round, we at least have to recognise those points, do we not?
I do not have a problem with that. However, the situation that we face today in my city is as bad as the one that we faced at the end of the second world war, when a third of the properties were either demolished or totally uninhabitable. The housing waiting list is as long today as it was then, although we have built 30,000-odd council properties. We have begged successive Tory and Labour Governments to do something about this, but they have flatly refused to listen to our pleas that they should provide decent homes for people. I do not decry the fact that lots of money has been put into housing, but this is about council tenants’ rents being misappropriated, and taken from them and given to others in cities that have not been as prudent in caring for their housing estates as Portsmouth has tried to be. That is unfair. Why should those who have tried to do their best for tenants have to pay a penalty now, because others chose not to, or because they did not put their rents up when the thing to do was to keep rents low and choose not to service needs? [Interruption.] The hon. Member for Regent's Park and Kensington, North (Ms Buck) shakes her head, but if she looked at the facts, she would see clearly that some local authorities have refused to deal with many of the problems on their estates and with ageing properties.
I am saying that we are forced to put rents up in cities such as mine, while not providing our tenants with the service that we ought to provide, because other local authorities and councillors have taken soft options in the past by not putting rents up to the same level as we did and not looking after their properties. Why do those 50 councils have to be subsidised by my council tenants? Will the hon. Lady explain why the repair lists in some of those cities are so dramatically high that the Government will not bail them out, although they are forcing council tenants elsewhere to do so?
Part of the problem is that the housing revenue account and the formula for working out what subsidy should go where is very complex, and it is partly based on historic debt. My council is one of those in receipt of subsidy but, nevertheless, I believe that such a subsidy should come from general taxation and those who can afford to pay, not from poor people living in Portsmouth, Cambridge, Waverley or anywhere else.
I agree entirely, and I am happy to know that a representative of one of the receiving authorities is keen enough on this matter to say just that. We need change, which leads me to the issue of what we want. Our key aims are to achieve a fair and locally controlled system of housing finance, and doing so would require the following action: the abolition of the housing revenue account subsidy system; the abolition of the rent rebate subsidy limitation arrangements; all receipts from right-to-buy sales retained by the local authority; rents controlled locally; and all rents retained by, in our case, Portsmouth city council and the housing revenue account. If those changes were to happen with effect from April 2010, it would be of dramatic benefit to those on the waiting list and to existing council tenants. If we do not make those changes, the situation will simply get worse.
How would those changes help the Government meet their aims? They would lead to the poor and vulnerable in our society being treated fairer and better, which I think everyone would agree is important. There would also be savings for the Department for Work and Pensions and better employment prospects for tenants, because they would not be forced into the benefits system by higher rents. The city council itself could finance the building of 1,700 to 1,900 homes over the next five years, which would help meet the desperate need for social housing at affordable rents and help to offset the effects of the recession by maintaining local jobs in building and related industries. Local decision making would empower councils to tailor solutions to local problems and enable them to work with tenants to plan long-term investment in council homes. In addition, devolving power to local councils would stimulate and strengthen local democracy.
Is that too much to ask? Is it really too much to ask from a Government who claim that they care about people on council waiting lists? Is it too much to expect a Government to respond to the known needs of a huge number of people in this country? Is it too much to want to have better and newer homes for people to live in and for children not to be condemned to live on the 20th floor of a high-rise building with nowhere to play and no safe spot, except the corridor in the hall where their flat is? Is it not right to want older people who under-occupy properties to be given a viable alternative so that they can move out of a three-bedroomed home into a decent property? We would love to be able do that in Portsmouth. We have a large number of under-occupied properties, but we face a problem if we expect someone to move out of a three-bedroomed house when we offer them a tenement that does not even have a lift.
If we want people to cease to under-occupy properties, we must use our imagination and deliver for those people the sort of properties in which we would want to live if we had to give up a home with a garden to go elsewhere. These are challenges for all of us, and they are big challenges for local authorities. Local authorities—mine included—could do a lot more if we were able to use the money that we collect from our tenants in the local area. That would satisfy many of the Government’s ambitions.
I am disappointed and dispirited. As someone who is still a member of a local authority after 38 years, despite the worst of the Thatcher era when Mrs. Thatcher did her best to deliver the killer blow to local authorities, in my experience it has never been more difficult to try to bring council properties up to a higher standard. The opportunity to build council houses should be given to local authorities again, so that they can actually do it.
The hon. Gentleman is making a characteristically passionate and persuasive argument. Should we not reach the conclusion that although the Government have had well over a year to enact and publish the housing revenue account subsidy review—we understand that that might be done by the end of spring—they are really using the HRA subsidy system as a weapon to force local tenants into using registered social landlords across the country? That might be appropriate in some cases but not in others, and such a policy has been driven by the Treasury.
I am afraid that I came to that conclusion some time ago. As I said in relation to my own area, if this situation continues, in the next few years it will be impossible for our tenants to remain under the auspices of the housing department of Portsmouth city council. I am disappointed that that might be the case. It would be a tragedy in the short and long term if that were to happen and people lost the democratic option that the Government offered them. They would be forced into a solution that they have repeatedly refused to go along with because they chose and voted with their feet to stay with Portsmouth, rather than take the other options available. If they were forced into such a solution by the sheer economic mayhem that the Government have created in relation to housing finance, it would be unforgivable and completely unnecessary.
It is not right that people should continue to be robbed in such a way. The Government should be prepared to write to every individual council tenant who has had their rent taken in this way and explain to them in simple language why this is happening and why they are being forced to pay more. Will the Government do that? I think not. They will pass the blame on to local authorities. On this occasion, the buck stops with the Minister. I am delighted to see him here today and I will be even more delighted if, when we have finished our debate today, he gave some good news to those tenants sitting in the public gallery and the countless millions of council tenants across the country who are badly served by this system. Those people are literally being mugged every week by a system that they do not understand. As my hon. Friend the Member for Brent, East (Sarah Teather) said, very few people in local government and, indeed, in Government understand the housing finance situation.
When the chief executive of Waverley council invited the Department to her local authority to explain how they could get the decent homes scheme working, it refused the challenge. When we asked it to explain how the subsidy worked and why we were being punished in such a way in Portsmouth, it was difficult to get a coherent answer from the Department. Why should local authorities be put in such an unenviable position and, more importantly, why should council tenants?
I congratulate the hon. Member for Portsmouth, South (Mr. Hancock) on instigating this debate. The subject is important and affects many people who, as he rightly said, are on the lowest incomes and sometimes live in the poorest housing conditions. Like my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck), I straightaway make the caveat that council tenants now live in much better conditions than they did in 1997 because of the great success of the decent homes programme.
I want to say from the start that when I asked my hon. Friend the Minister about the matter in the House a few weeks ago, I had the clear answer that the Government are now, in principle, in favour of changing what I think everyone now accepts is a flawed housing revenue accounts and housing subsidy system. I welcome the working group that has been set up and that will, I hope, report shortly. This problem does not merely affect those tenants whose houses are directly managed by local authorities; it also affects tenants of arm’s length management organisations. Their houses are managed by an arm’s length company, but the housing funding still essentially rests with the local authority.
If all we were doing today was agreeing that the Treasury should not make a profit out of council house tenants, we could have a simple system—we could alter the figures in the current arrangements and that would be that—but that is not the difficulty. The Treasury certainly should not be making a profit out of council house tenants, but there are other problems. I want to go through the problems as I see them and explain how they affect my constituents, particularly tenants in my constituency.
Historically—certainly when I was chairman of housing in Sheffield back in the 1980s—one could relate services to rents and explain to tenants on a yearly basis how much their rents were going up and what impact on services that would have. There were options: one could consult tenants and ask for their opinions and, hopefully, reflect those opinions in decisions. That cannot be done now because we have separated the delivery of service from the charging of rents. That is fundamentally unhelpful in a democratic society.
In the past, one could even relate an individual tenant’s services to the rents that they paid. We had a system of points-based rents in Sheffield, where points were given for certain attributes of a house. If the tenant asked the authority for a new central heating system, the authority put it in and charged extra rent on the points-based system. Tenants thought that that was great, because there was individual choice. The Government are, in essence, in favour of choice for consumers in the health service and in education. That kind of choice ought to be available to council tenants as well, but it cannot be provided under the current system.
As has rightly been said, the current system is inexplicable. It is inexplicable to tenants—they cannot understand it. I would guess that most councillors and MPs, and probably even some Ministers, do not understand it either. Any system that is inexplicable is a bad system.
Organisations cannot plan. Sheffield Homes is looking to the future and is having to take precautionary steps towards making people redundant because it cannot be sure what its financial position will be in one, two or three years’ time. It is essential to plan ahead for investment in housing. That is fundamental to a successful housing service and delivering quality for tenants, but it cannot be done easily.
It must be nonsense that rents are in any way determined from the centre. I can just about understand the principle of bringing rents of different organisations in an area into line, but if there is a principle here—I am not sure that there is—surely it pales into insignificance compared with the complications of trying to enforce it. Therefore, we must get away from that idea and accept that rents may be different in different areas for similar houses, where one is managed by a registered social landlord and another is managed by an arm’s length management organisation or a local authority.
I accept that guidelines are used to try to fix rents from the centre—the figure this year is 6 per cent.—but the reality is that those guidelines, which are based on finances dictated from the centre, certainly push organisations, councils and ALMOs in that direction.
I will briefly throw in a party political point. It is disappointing that Sheffield council has pushed Sheffield Homes into a 6 per cent. rent increase but given it only a 2 per cent. increase in its revenue this year, which is half what the ALMO needs to keep services going. It is also disappointing that the council began with a commitment that decent homes work carried out to properties in Sheffield would be done to the same standard throughout the programme, from beginning to end. The new Liberal Democrat council has just cut back on those standards, so many people who get work done in the last two years of the programme will have it done to a lower standard. That is a party political point to match some of the ones that were made earlier.
Of course, there is new build—I accept that. The current arrangements in the housing revenue account mean that councils can actually lose grant for building homes. I accept that the Government have gone some way towards redressing that and have said that if organisations come forward and request a social housing grant, the funding can be kept outside the housing revenue account system so that there will not be that impact if they seek to build new homes.
However, this is not just a Government issue. Given the effects of the current financial circumstances on housing generally, we will not get new building of council homes off the ground, even if the social housing grant is increased to a much higher percentage, unless local authorities are prepared to put land in for free to make the system work. That goes right across the board, but some councils clearly are reluctant to do that. They have a role to play as well.
There are clearly problems with the current system, and a system that has that many problems really is not fit for purpose in any shape or form. Perhaps that is why the Government’s working party has been going on for so long: the real difficulty is that we can all say what the problems are—they are easy to define—and we can have aspirations as to how things might change, but it is not as easy to say exactly what kind of system can be developed for the future that will meet the various needs that we can all identify. We will not solve the problems in this debate.
The hon. Member for Portsmouth, South highlighted the problem of authorities receiving subsidy through the system, perhaps from other councils. Perhaps that is unfair, but the fact is that they do. If we were simply to tear up the system and say that money would not be transferred from one authority to another, some tenants would find themselves in difficult circumstances. It is not the authorities that I am particularly concerned about, but the tenants.
I share with enthusiasm many of the points that the hon. Gentleman has made, but I would be grateful if he told me why—in his opinion as a former housing chairman and someone who knows this subject, like others in the Chamber—it has taken so long for people to recognise the stranglehold that the policy has had on local authorities’ ability to deliver what the Government and their citizens want, which is better and more affordable housing. Why has it taken so long to get to this point?
As I cannot answer that question, I will wait for the Minister to respond to it. The Government have acknowledged for the past two years that there is a problem. Perhaps they were a little late in coming to that view. Other people have been campaigning on the issue for slightly longer—I have raised it on many occasions, privately with Ministers and in debates and questions—but at least we have got to a point where the Government recognise the problem. We now have to try to shape the debate and influence the final outcomes.
Dealing with the problems of authorities that are in subsidy will be very difficult, but we are on the Minister’s side in the negotiations that he will have to have with the Treasury. Certainly a situation in which subsidy goes to the Treasury from council tenants collectively is unacceptable, but to introduce a new system and make it work, some Treasury subsidy will have to go into housing at a fairly early stage. I know that that will be difficult, but I am not sure that we will be able to make any new system work otherwise.
I know that other Members want to speak, Mr. O’Hara, so I shall conclude, as the hon. Member for Portsmouth, South did, by trying to develop four principles that I would like to see in any new system. First, there must be that essential link between an ALMO or a local housing authority and their tenants. They must be able to have meaningful negotiations about the rent and services in an area. It is essential that the two are related, and any system that does not allow that to happen cannot be correct.
We have to accept that it is fundamentally wrong that the Treasury should receive subsidy from council tenants collectively. That cannot be right, and the Treasury will have to accept that there is an enormous feeling of resentment across the board, across all political parties and, quite rightly, from council tenants who feel that they are subsidising other services on a national level.
However, I also ask the Minister—this relates to individual local authorities that do not always behave very well in this regard—please, will he tighten the guidelines for local authorities so that they say that money collected from rents has to be spent on services received by tenants, not on subsidising community services in general, which benefit everyone? That happens up and down the country.
In my authority, community wardens are very popular. They are funded by Sheffield Homes, but they do not benefit council tenants only—they benefit the whole community. The maintenance of grass verges and open spaces, and the cutting of shrubs on what were council estates, benefit many people who are not now council tenants, but the funding often comes just from tenants’ rents. We must tighten up on the guidelines to ensure not only that the Treasury nationally does not get subsidy from council tenants, but that local services that benefit the whole community are not subsidised by council tenants alone. I would like the Minister to have a look at that as well.
Finally, there probably will have to be a short-term transitional arrangement to change from the current system to a new one, but, please, do not allow that arrangement, with all the normal damping and tapers that are associated with two systems, to go on for a long time. The current system is complicated enough. To put transitional arrangements from that system on to a new one will make things so complicated that even the two people who understand the current system will not understand the new one. Yes, we probably will have to have transitional arrangements, but they should be kept very brief so that we can get to a new system based on the principles that I outlined.
I congratulate the hon. Member for Portsmouth, South (Mr. Hancock) on securing this debate. I hope that he will forgive me if I focus most of my comments specifically on my area, in the way that he did in respect of Hampshire, although he strayed across to the Surrey border in some of his early comments.
The hon. Member for Sheffield, Attercliffe (Mr. Betts) summed up one of the core problems: there is a sense of injustice about how the system works. One of the difficulties with trying to draw a line under the past and bring in an entirely new system is that, almost inevitably, there will be significant losers as well as gainers. For those losers, if there are to be transition and damping arrangements, much of the good that comes into place is undermined. There are some big concerns about how precisely we should go forward.
The hon. Gentleman was a leader of a local council. I suspect that he was being modest when he suggested that many of us do not have too much of an understanding of the system. As he will know, however, there is all too often a system to be played not only in relation to housing, but across the range of council services. There are individuals at the highest levels of local authorities who understand exactly how those mechanisms work and can ensure that they operate in the best interests of their local authority, and that is nowhere more apparent than in the housing sphere.
The issues that I hope to raise in the few minutes during which I will address hon. Members are slightly different from some of those that have been raised, and they obviously focus very much on my own local authority in City of Westminster. For some months, news coverage of the housing market has been dominated by talk of falling—falling house prices, falling mortgage rates, falling levels of interest for prospective buyers—but that has not been the case with social housing. While the Government appear to be throwing everything but the kitchen sink at helping the often hapless home owner, they have quietly pushed through some quite significant rent increases. Come 1 April, those increases will hit many tens of thousands of council tenants in London, at the very time when they are being squeezed hardest by the recession.
Will the hon. Gentleman, as a prelude to the remainder of his remarks, recognise that Westminster council has the second-highest rent in the country? Does that not reflect the considerable leeway that local authorities have been given over the years to set their own rent levels? Did not Westminster choose to increase rent levels consistently and dramatically during the 1980s and 1990s, which is precisely why we now have the problem that I am confident he is about to describe?
The issue of council rents goes back to the point about how we ensure that we have a fair system. The hon. Member for Sheffield, Attercliffe talked about the Treasury giving subsidies, and some phenomenal subsidies are given to the council rented sector. That has been the case since time immemorial, and it is very difficult to row back from that position.
I accept—this relates to some of the issues in my constituency that I want to discuss—that central London is in an exceptional situation in many ways. However, the difference between the rent for those who live in social housing and council housing, or arm’s length management organisation housing in the case of CityWest Homes, and any market rent is colossal. Understandably, that causes dismay and irritation among those who are not particularly well paid, but who are none the less well paid enough and in stable enough employment that they cannot get into social housing, even though they cannot begin to think about getting on the housing ladder or paying anything like a market rent to live in the centre of London.
In many ways, as we can see from the interest in the Chamber today, some of the Government’s proposals for rents have the makings of a repeat of the 10p tax band fiasco. For those with short memories, the Government hoped to grab the headlines through populist handouts in the 2007 Budget and conveniently to disguise the fact that the abolition of a 10p tax band would mean that the poorest were worst off.
As has been said, the formula for calculating social housing rents is set by central Government. As a result of linking that formula to the retail prices index figure from September 2008, when inflation was at a peak of 5 per cent., the Government are intent on imposing rent increases of 6 to 9 per cent.—by any measure, well over double the current rate of inflation. That works out at a rise of at least £300 a year in the rental bill of the average tenant—at least in Westminster. What is more, tenants in such properties tend to be on fixed incomes because they are pensioners, disabled—either in full-time or part-time work—or just above the benefit threshold. They will be the people who have to find the money by taking their already stretched household budgets back to the drawing board.
It has often been complained—I have some sympathy with the Minister’s situation in this regard—that councils have no flexibility to set their own rents under the current system. I can see that it would be difficult to have a free-for-all. To be absolutely candid, the fact that there are now considerably more Conservative and Liberal Democrat councils than there were perhaps 10 years ago means that we hear this klaxon voice in a way that we did not then. However, as the Minister is aware, London’s local authorities will be forced to impose rises on their tenants or suffer the financial consequences if the formula is not adhered to.
Eight local authorities in the capital—Westminster, Kingston, Southwark, Harrow, Hillingdon, Camden, Brent and Hounslow—oppose the proposed rise and have lobbied the Minister for Housing by sending her a cross-party letter to try to change her mind. My own local authority in City of Westminster has spearheaded the campaign and would like the Government to take a more reasoned approach, keeping any rent rises to an absolute minimum. It believes that the Government should look again at the formula that they use to calculate rent or consider further Government assistance for tenants to mitigate the impact on local authority budgets if Ministers insist on pressing ahead with these inflation-busting increases.
At this point, it is worth mentioning the fact that, should the housing revenue account subsidy system remain unreformed, a 6.2 per cent. minimum increase has already been allocated for the financial year 2010-11.
It is clear that inflexible, centralised control of the rental system is not working, particularly here in the capital. Aside from imposing rent increases on vulnerable tenants in the most difficult of times, it fails to cater for a significant number of people who are, as I said, too poor to buy, but too rich to rent socially.
Earlier this year, I secured a debate in this Chamber on the problems facing London’s housing associations during the economic downturn, as the Minister will know because he responded to it. One of their complaints, which came through loud and clear, was about the inflexibility of the social rent structure, and I want to highlight that concern again.
I accept that wealth disparity has afflicted London since time immemorial. Other London Members in the Chamber—whether from Brent or Kensington—will know that there has been much more polarisation in the relatively short time that we have been Members of Parliament than there was before, and I have certainly seen that in my eight years in the House. There continues to be huge demographic change, and those on middle and low incomes—in the capital, that can mean those who earn well over double the national average wage—get pushed out of area. That includes many families who have lived in our vicinities for generations.
My local housing associations are eager to use their resources to cater for that low-to-middle income group, but the rigidity of the rental system means that they cannot get the most out of their housing stock. In exchanges in the House, I mentioned the example of the housing arrangements of an elderly constituent who passed away last year. She had lived as a secure tenant in her home on the Peabody estate on Wild street in Covent Garden since 1986 for a rent of £75.50 a week, which included services. The estate is moments away from the glitz and glamour of the Covent Garden piazza, and the market rent for the flat would be about £320 a week, which is roughly four times the amount that she was paying. The flat is now being re-let at £116 per week, including services, to a tenant with support needs.
So, the typical difference between the social and market rents in my constituency is often £200 a week, or £10,000 a year. Although that is an extreme example, there will be similar examples of that huge disparity throughout London. What happens to those who fall between the two extremes—those who do not qualify for social housing, but who cannot realistically afford the cost of market rents in central London? At two thirds of that cost, the gap is huge and getting bigger, and we need to find some middle ground.
Housing associations are frustrated that the income that they receive from renting a property in London often barely covers the maintenance costs and that the rental income from a four-bedroomed house is only slightly more than that from a two-bedroomed flat. The same applies when we look at the differences in rent for a zero-carbon home and an old, inefficient property. None of that makes sense.
I appreciate that other hon. Members wish to speak, so I will bring my comments to a conclusion. The current centrally imposed national rental system simply does not and cannot work for London tenants. I suspect that that is an issue not just for the capital, and we have seen it in Portsmouth and other parts of the country. If the proposed rent rises go ahead, they will serve only adversely to affect tens of thousands of council tenants at a time when the Government purport to be doing all they can to mitigate the impact of recession.
Would the hon. Gentleman mind agreeing with me on the issue of rents and subsidy? Is he aware that Westminster council delivered a letter about rent increases to every tenant? That letter included a form of words that suggested that Westminster tenants were contributing to a national pot that was being redistributed across other parts of the country. Will he take the opportunity to agree with me that that is untrue and misleading? Westminster council has enjoyed a cumulative total of £115 million in positive subsidy in the past year, including just under £7 million in positive subsidy in the current year. An attempt to claim that that rent increase is because tenants’ rents are being exported to other parts of the country is simply a lie.
I cannot agree entirely with the hon. Lady. I do not deny that Westminster council has been a net beneficiary of significant subsidy over many years, but we now have a hybrid arrangement, for reasons that have already been pointed out, and are looking for a final arrangement with the social housing fund. A certain amount of cost subsidy is going from Westminster to other parts of the country from the current rents on the basis that has been mentioned, so I do not think that it has been misleading to other tenants.
I know that the hon. Member for Stroud (Mr. Drew) wishes to speak, so I will bring my comments to a close. Many Members across the House would like the Government to look again at the impact of what is and has been a pretty inflexible and centrally controlled system, particularly for those in the capital who remain locked out of the hugely expensive private market. If the Government do not do so, they run the risk of repeating the 10p tax fiasco and penalising the most vulnerable in our communities at a time when those folk are the most in need of a helping hand.
I am delighted to take part in the debate and strongly congratulate the hon. Member for Portsmouth, South (Mr. Hancock) on securing it. I also congratulate him on choosing today for the debate, because some of us on the all-party group on council housing have been listening for several hours to evidence from tenants from different parts of the country, including Birmingham, Norwich and Reading, and also from Stroud, and some of my constituents are here to listen to the debate.
Had the Minister managed to pop into that meeting, he would have heard tenants express a mixture of mystification and anger over the rent situation that they face. There is one thing worse than hearing from me today, and that is hearing from my hon. Friend the Member for Great Grimsby (Mr. Mitchell), who chairs that all-party group and is stuck in that meeting taking evidence to the very end, and I pay tribute to him for what he has done.
The campaign is not recent and has been running for more than a decade. Alan Walter and all those who support Defend Council Housing deserve our support and congratulations for keeping on with the campaign. We think that we are beginning to win not only the arguments, but the outcome, because there needs to be change. I will not speak for long because I want to hear the excellent things that the Minister has to say about solving the problems.
I wish to make three underlying statements on the essence of where we need to go on that. First, I wish to warn against disaggregating the housing revenue account, which Defend Council Housing is also against. It is tempting to say to the councils that are in surplus that they can keep the surplus and that the Government must somehow, magically, find solutions for those that are not in surplus, but there are two problems with that: as a socialist, that is not how I would like to see things go, because those mainly urban authorities deserve support; and more particularly, there is a danger if that does not work out that those involved will be picked off one by one. I have experience in that area and led the campaign, with the tenants who were present today, against the large-scale voluntary transfer, which I thought was the wrong approach at the wrong time, and we won that ballot overwhelmingly, as several others have done. We should not, however, be penalised because we saw the genuine, democratic right of those authorities to choose what they wanted, which is local authority housing. The good point that came out from our meeting today was that we saw how much people want to remain with the local authority. That is not a negative, but a positive.
Secondly, there will have to be a write-off of debts, and I make that point loud and clear because the Exchequer Secretary to the Treasury has just entered the Chamber. There is no way of avoiding that, but would it really be a write-off of historical debt, because many of us—although not all—would argue that council housing has paid for itself many times over? That is the only group being asked to pay off historical debts, as we do not ask for payback from housing associations, or from those in the private rented sector, even though the money ends up with the landlords, or from owner-occupiers who have received subsidies to pay off historical debts. Why then are council tenants being picked on? It is grossly unfair and unjust and we need to do something about it.
Thirdly, we need total transparency, and we must always argue for that. If it does nothing else, it will explain what really goes on. I can make accusations about the local authority in Stroud, which has filched about £5.8 million by taking it out. It could be argued that that was for the benefit of tenants, but it was of course for the benefit of everyone else as well. How is it that we really do not know what the figures mean? That might be because some of us are not so bright or good at calculating those things, or perhaps it is because the matter is so complex that we do not know whether the audit trail leads to central Government, local government or, as many of us presume, a mixture of the two. We need to have clarity, because we will not sort the mess out until the figures are explained to everyone completely overtly.
I will make several other points quickly because we will soon move on to the winding-up speeches. I am worried about the way in which we handle this in relation to older residents living in sheltered accommodation. There is now even less clarity about that, in part because we now have two different finance streams, the normal housing revenue account and the supporting people budgets. As we know, sheltered housing is changing the fundamental basis of what it is there to do, so I appeal to the Minister that we need not only to solve the big problem, but to solve the problem at a micro level. We do not want to disadvantage one group of tenants, even if we can solve the bigger picture. I am aware of the anger over that, and the Minister will have to take my word on that because I, like him, have been meeting tenants over decades. The Government cannot ignore that any longer, and they cannot pretend that a review is the answer until such a review comes up with radical solutions on how to deal with today’s problem. Today’s problem is multi-faceted and is not only about those people in council accommodation whom we want to look after.
I pay tribute to the Government for the decent homes standard, which has dramatically improved the stock, as my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) has said. However, we know that the money is beginning to run out and is certainly getting caught up in the argument over rent increases. It is no good saying to people that a 6 per cent. rent increase can be justified, even if some of the money is being used to improve the standard of housing, and too often it is not. As the hon. Member for Portsmouth, South has said, it is a double bind, because tenants are not only paying more, but getting less for their money. That is not fair and we cannot allow it to happen.
With regard to knowing where we go from here, we need to understand that the reality of the situation is that if we do not fix what we have at the moment, we can never talk about building again. A Damascene conversion would not be a moment too soon. If the Government are saying that part of the solution to our housing problems is that we have to build local authority housing again, despite those who ask why we went through all the arguments of why that was not the right way to go, let us congratulate them and get behind it.
This issue transcends party politics, because if we do not do that, today’s crisis will become tomorrow’s catastrophe. I welcome the fact that we are now seeing that as a solution, rather than as a problem, but we need total transparency on the figure and we need to ensure that the will is translated into action. More particularly, we must recognise that the people who have suffered have done so for too long and that it is about time that we listened to them and dealt with what they are saying to us, because what they are saying to us is right.
I congratulate my hon. Friend the Member for Portsmouth, South (Mr. Hancock) on securing this debate. It is timely, because, in the past two weeks, most council tenants will have received next year’s bill and realised that their rent is going up. This is a time when most people are thinking hard about the services that they receive from their local authority. The figures that my hon. Friend gave were stark, with £4.6 million lost this year to the Treasury, and he spoke about how it will have an impact on the ability to refurbish stock as well as to build. I congratulate him on being able to collect 5,500 signatures, which is a great achievement and testament to the strong feeling in many areas of the country. People think that the money they are spending is going to their own housing, but it is going into Treasury coffers or to fund refurbishment elsewhere.
My hon. Friend also made the point that if authorities were able to keep that £4.6 million, they would be able to build 1,000 new homes by 2013. If we were to apply that throughout the country, it would go some way to meeting the targets that the Government have set councils. Currently, they are simply unable to meet them. The hon. Members for Guildford (Anne Milton) and for South-West Surrey (Mr. Hunt), who represent the Waverley area, are not in their places, but I, too, was lobbied by Waverley council yesterday, and it is doing a good job of bringing the issue to people’s attention. It is worth repeating that for every pound spent, 49p goes to the Treasury, which is an incredible rate of taxation. There are very few other areas in which one would expect poor people to pay such a high marginal tax rate, yet poor tenants pay 49p in every pound of rent straight to the Treasury.
Several hon. Members mentioned the perverse incentives of the current housing revenue account system, and that was a point well made. My hon. Friend also noted that the issue is not just about rent, but about receipts from right to buy, and, when we add the money up, we find that a large amount leaves local housing finance every year.
Many hon. Members made the point that the current system is complex, as I did when I intervened on my hon. Friend. Part of the problem is that many subsidy issues are based on historical debt and on a complicated calculation of what the Government think an area may need. For many councils, the notional debt that is used to calculate the formula for housing revenue bears no relation to the actual debt, so the financial model is very complicated. The hon. Member for Sheffield, Attercliffe (Mr. Betts) made the point that, as a first principle, the Treasury should never make a profit out of poor tenants. The Government’s review seems to have been going on for absolutely ages, and I hope that the Minister will say when it will finally report. When it does, I hope that the second point that the Minister will accept is that poor tenants in one area should not subsidise poor tenants in another. Poor tenants who are in council property are poor wherever they live. It does not matter whether they live in Brent, Portsmouth, Kingston or Cambridge, they are all in the same position, and the people who should subsidise local repairs and rebuilding out of general taxation are people like me, who can afford to pay their taxes, not people who live in social housing.
The hon. Member for Cities of London and Westminster (Mr. Field) made the point well that the Government are forcing rents up. The guideline rent formula sets rents at RPI plus 1 per cent.
The Minister shakes his head, but any council will say to him that, if they do not follow the guidelines, they suffer the financial consequences. The whole HRA system is predicated on the Government’s starting model, which forces councils to put rents up on average by 6.2 per cent. However, the retail prices index has fallen through the floor since rents were set in September, meaning that many council tenants pay substantially higher rents than one would expect for the inflationary average. Throughout the country, council tenants are falling into severe arrears: 40 per cent. of council tenants in London are in arrears, and that is a shocking figure; nationally, the figure is one in three. Some 80,000 tenants in London are in arrears, and 11,000 of them have been threatened with eviction, underlining the point that the rent increases are felt very keenly by people on very low incomes. This is a story about what is happening to the working poor, because those who are in full receipt of housing benefit do not have any difficulties with the rent increase; it is about what is happening to people who are on a low income but in work. The Treasury keeps so much of that rent that it amounts to a tenant tax.
The hon. Gentleman is correct. I have seen many people, not just in council properties but in private rented accommodation, who work, but the rate at which housing benefit falls off makes it difficult for them to sustain work. People get trapped in a situation whereby it is better for them not to work, and that is very distressing for people who may have worked all their lives but live in accommodation that is too expensive to afford if they do not receive housing benefit.
The clear conclusion that everybody has reached is that we need to reform the HRA system.
Before my hon. Friend finishes her speech, I must put the record straight. As much as I would like to claim credit for the petition that was drawn up by people in Portsmouth, I cannot; it was produced and worked on by the tenants themselves, and it is to their great credit that they sustained their effort over such a long period—individually approaching tenants—to get so many signatures. I should love to take the credit, but I cannot, so I congratulate them on their efforts.
I am sure that those who collected the signatures will be grateful for my hon. Friend’s words.
The clear conclusion, which I am sure the Minister will agree with, is that we need to reform the HRA. We have had this debate on the Floor of the House many times, and he has said, “We will reform the housing revenue account system,” but the question is when. I fear that the Government will just tinker with it. The Minister for Housing recently announced that councils would be allowed to keep receipts from right to buy for new properties, and may be able to keep rents for new properties that they build; however, that will make absolutely no difference to overall housing finance for most councils. If the Government are to reform the system, they will have to do a root and branch reform: they will have to give councils the right to keep their right-to-buy receipts and rent in full, and we will need a system in which any required subsidy is provided centrally through general taxation. Only then will we have a system in which the finances are stable enough for councils to plan. If they cannot plan, there is no way they can borrow. The current situation, notwithstanding the need to borrow to build, creates chaos in the running of any housing department, so I hope that the Government will take that point seriously, because 1.7 million families are on the housing waiting list and we desperately need councils to build new homes. They cannot do so under the current system. It is no good the Government saying that they have given councils the permission to build new homes, because, in effect, they have shackled them so that they cannot possibly do so.
I add my warm congratulations to the hon. Member for Portsmouth, South (Mr. Hancock) on securing this important debate, and I echo his comments about the patron saint of council housing, the venerable hon. Member for Great Grimsby (Mr. Mitchell), who is not in his place to share his views, as he often does. The importance of the debate lies in its background—the Government’s lamentable record on housing. That is why it is important that we address the key issues that hon. Members have raised today.
As the hon. Member for Brent, East (Sarah Teather) said, in 1997 just over 1 million people were on the housing waiting list, but now there are 1.67 million—as of 2007—which is an increase of 64 per cent. As of March last year, 78,000 people were in temporary accommodation, which is almost double the number in 1997. This is a significant problem. We are not discussing an arcane academic issue. Where there is consensus, it is on the basis that we need transparency, openness and a focus on local people making local decisions. As I mentioned in my intervention on the hon. Member for Portsmouth, South, it might be appropriate for tenants to wish to move over to a registered social landlord or to remain with their local housing provider—the district, borough or city council—but it is for local people to decide. I have made it clear that the housing revenue account, as it is presently constituted, is being used as a weapon to force people to move to registered social landlords. There is not a level playing field. The perversity and unfairness of the HRA is evident from the remarks made by hon. Members.
It is important to have some historical context here. The housing revenue account was established in the way that it was, under a Conservative Government, because historic debt levels needed to be serviced at that time. That situation does not obtain at present and the Government cannot make that case today.
I agree with the argument made by hon. Member for Stroud (Mr. Drew) on disaggregation; he took issue with the hon. Member for Portsmouth, South who holds the opposite view. Disaggregation as it was practised in the 1980s was about wealthier Conservative councils in the south of England effectively making payments based on housing need, demography and social factors to—generally speaking—Labour-voting areas in the north of England. That was probably right then, but the degree of complication is such that it cannot be justified at the moment, because everyone feels that they are getting an unfair deal.
Before the hon. Gentleman moves on, would he care to remark on the fact that the history of rent increases over the last 10 years, and in the previous 10 years, shows that they were significantly higher in real terms under the previous Government than they are now and that, by and large, they are significantly higher under Conservative councils than under Labour councils?
I do not have the figures, so I cannot agree or disagree. I would probably beg to differ on the latter point. There is a causal link with rent, in terms of rent increases in the 1980s and ’90s, because Labour councils generally did not run their housing stock well and therefore had a larger level of debt and needed to raise rents accordingly.
May I just make some general points about where we agree? The Government have to make the case for 75 per cent. of capital receipts from right to buy being remitted directly to the Treasury. They also have to make the case for only one third of the rent rise being remitted back to repairs and maintenance in the current financial year. Figures published by reputable organisations show that the sum for management, maintenance and repair of council housing stock is effectively underfunded by approximately £2.3 billion at present.
The Minister may laud the decent homes standards, but the money is running out, as the hon. Member for Stroud, who is not in his place, said. The Government had an opportunity at the end of last year to put the money that they used for the £12.5 billion VAT cut into, for instance, facilitating the use of 9,000 empty housing association properties at the end of November 2008 or assisting local councils directly in building council houses. In passing, Dover district council, a Conservative council, chooses to build council houses, notwithstanding the Government’s rules.
The other perverse effect, which was mentioned by the hon. Member for Portsmouth, South and my hon. Friends the Members for South-West Surrey (Mr. Hunt) and for Guildford (Anne Milton), is that good councils that seek to improve the quality of tenants’ lives and the housing stock are being discriminated against and efficiency is punished by the present system. A wider point, which has been revealed by the report produced by Professor Hills at the London School of Economics, is that although there was once a variety of tenure and employment, now only 22 per cent. of people of working age in social housing in this country are working. It cannot be right that that kind of segregation has developed and been allowed to flourish under this Government.
I should like to speak specifically to the issues raised by the hon. Member for Portsmouth, South. He rightly mentioned the failure to meet and fully fund housing benefit costs. That should be an integral part of the review. While I am at it, I should like a definite undertaking today from the Minister about when the review will be published. He has alluded to it in the past, in parliamentary answers, saying that it will be later in the spring. We were told on 31 March 2008, when discussing the Housing and Regeneration Bill on Report, that the report on the review was coming along and that it would be published. However, we are almost a year on and it has not happened.
The hon. Member for Portsmouth, South talked about the quality and type of houses that could be built. I feel duty bound to say that the Government’s regional spatial strategies and their flawed density targets mitigate against building houses. So people are forced, given the situation with registered social landlords and the small number of council houses, to build flats, which is not appropriate.
The hon. Gentleman calls for the abolition of the HRA subsidy, as it now is. I do not agree with him on that. In fact, I take the view advanced by the hon. Member for Stroud.
The hon. Member for Sheffield, Attercliffe (Mr. Betts) made an astute point, saying that the lack of long-term planning in the housing revenue account subsidy system makes it difficult for local housing authorities to plan ahead.
All I want is clarification. I am not quite clear what the hon. Gentleman’s policy is. Is he saying that he wants to change the HRA system? He said that he does not agree with disaggregation. Does he agree with me that the subsidy should be funded through general taxation? I am not clear what the Conservatives’ position is.
The hon. Lady, from a sedentary position, says “no change.” We have yet to see the Government’s proposals and we will comment when they are published.
My hon. Friend the Member for Cities of London and Westminster (Mr. Field) made the astute point that the situation with rents and the 6 per cent. average council property rent rise could be another 10p tax debacle. We know that the rate of council rents was set on historic data in respect of the inflation rate from September 2008.
Flawed data, indeed.
My hon. Friend also made a sensible point about wealth disparities. The hon. Member for Brent, East will also know, because she comes from the same neck of the woods, that that is an important issue that the Government need to look at.
Finally, the hon. Member for Stroud—
The hon. Gentleman must wait with bated breath for the housing Green Paper that the Conservative party will produce soon. He must contain his excitement, but I have no doubt that he will give that Green Paper a robust analysis when the time comes.
Obviously, there is great unhappiness at local level—that has been reflected in hon. Members’ comments today—about the operation of the housing revenue account. There is consensus that there should be clarity, transparency and, above all, alacrity. The Government have had a huge amount of time to get it right. They originally said that would happen in 2010, and they are now saying that it will be in 2009. It is important that local people make local decisions, because what is appropriate for one group of people in Portsmouth will not be appropriate for another group in Sheffield, Attercliffe, Hartlepool and other areas.
This has been a useful debate. The mood of the House is such that I think the Minister will take away our request that the review be concluded quickly, and I hope that he will answer the specific points that have been made by hon. Members today.
It is a pleasure to serve under your chairmanship, Mr. O’Hara, and I congratulate the hon. Member for Portsmouth, South (Mr. Hancock) on securing the debate. As has been mentioned, we often see him in your place in the Chair, Mr. O’Hara, and it is refreshing to see him change his role and come down into the bear pit to debate among us.
As the hon. Member for Peterborough (Mr. Jackson) said, this has been an important, timely and interesting debate on ensuring that the rents paid by people living in council housing are fair. That is vital to help to secure a fairer society so that people who need assistance with their housing needs can look to their local council to provide it at a cost that is lower than the market rate and affordable to them.
Several hon. Members have mentioned the Government’s role in setting rents for local authority tenants, and I want to clarify that. References have been made to the Government imposing high rent increases on tenants. The hon. Member for Cities of London and Westminster (Mr. Field) said “imposed” and “pushed through”, and the hon. Member for Brent, East (Sarah Teather) said “forced”. I completely and utterly disagree, and that is emphatically not the case. Setting rents for council house tenants is a matter for each local authority. Guideline rents for local authorities form part of each year’s housing revenue account subsidy determination to make assumptions about a local authority’s income and its entitlement to subsidy, but we do not and cannot force a local authority to set a specific increase in rents.
Setting rents, particularly deciding the annual increase in rents paid by tenants, remains absolutely a matter for the local authority. That is not something that the Government can dictate or impose.
I am interested in the Minister’s words in confirming that. Last year, Westminster city council’s housing panel said specifically that it is a decision for Westminster city council to decide rents, but that position has completely changed in the past 12 months. Will he confirm that there has been no change in Government policy since the council admitted that it was its prerogative to determine rent levels?
No, I disagree with that. Local authorities have considerable autonomy. They set their own rents, and that is a matter for them. We do not impose rent levels. This year, they have set rents at below guideline rents, which indicates that they can decide individually what to do. That is precisely the policy that has existed for some years, and I cannot reiterate it strongly enough. That is categorically the case, not as we have heard in the debate.
The Minister is exaggerating local authorities’ autonomy because, as the hon. Member for Brent, East (Sarah Teather) said, there would be a black hole in their budgets, not least when there has been so much passporting. I am not trying to make a narrow party political point, because passporting and local government lack of financial discretion came in well before 1997, and I accept that. None the less, the Minister must accept that, given the constraints on local government, the reality is that if councils do not impose rents at the Government’s guideline levels, they will be in dire financial straits, and that applies to many local authorities throughout the country.
I disagree with the hon. Gentleman, and I am pleased that he has given me the opportunity to clarify a matter of debate between him and my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck), who pressed him on Westminster city council’s subsidy to other parts of the country.
I shall talk about the determination of general subsidy that local authorities provide to the Treasury and which flows back and forth, but first I want to highlight for the hon. Gentleman an answer that I gave to my hon. Friend two weeks ago. She asked
“how much (a) Westminster City Council and (b) CityWest Homes contributed to the housing revenue account in each of the last 10 years; and how much they are expected to contribute to it in (a) 2008-09 and (b) 2009-10”.
My answer was:
“Westminster city council has been a net recipient of housing revenue account subsidy in each of the last 10 years. The authority does not contribute surpluses for redistribution elsewhere and we expect this to continue to be the case in 2009-10.”—[Official Report, 10 February 2009; Vol. 487, c. 1839W.]
In the remaining time, I want to respond to the important point about how council housing is financed. The hon. Member for Portsmouth, South used words such as “mugged” and “robbed”. I tend to use more balanced language, but he is right that more than £200 million this year has flowed from local authorities’ housing revenue account subsidy to the Treasury, although that must be set in a slightly wider context and I am conscious that an excellent Treasury Minister, the Exchequer Secretary, is sitting beside me.
First—this is important—the Treasury is spending around £5.9 billion on housing this year, which far exceeds the amounts that are going back to the Treasury through the HRA subsidy system. Secondly, and also importantly, in recent years, the Treasury has pumped considerable amounts of money into the HRA system: around £54 million in 2007-08, around £42 million in 2006-07, and almost £208 million in 2005-06. One narrow year cannot be used to provide a definitive statement or a comprehensive view.
I understand that it is necessary to review how council house funding is provided and I shall describe what the Government are doing, but first I give way to the hon. Member for Portsmouth, South.
It is not just one year; it is successive years. It has happened in the past, and it will happen in the future, unless the system is changed. Is the Minister really saying that there is a justifiable case for council tenants in one part of the country having part of their rent taken as tax and given to the Treasury so that it can redistribute it? Why? Is he saying that he is convinced that that system should persist? His hon. Friends certainly did not share that view.
The hon. Gentleman cannot infer from my comments that I agree with that. I understand the tone of the debate. The Government know that the HRA subsidy system is unfair, complex, difficult and, in response to a point made by my hon. Friend the Member for Stroud (Mr. Drew), has no transparency. The important point about rents paid and services provided locally cannot be established, and we must do something about that. The levels of management and maintenance also need to be addressed.
My Department is carrying out a fundamental review of council house funding in conjunction with the Treasury to promote fairness and accountability, and to provide a sustainable and long-term future for council house funding. That is essential. Local authority housing is an important part of the housing offer for this country. It has served us well for about half a century, and we want it to have a key role in the 21st century. I am confident that the review will provide a long-term sustainable future for council house funding.
I am pleased to serve under your chairmanship, Mr. O’Hara. I thank Mr. Speaker for the opportunity to debate bingo taxation. I know that other hon. Members are concerned about the issue, as they have bingo clubs in their constituencies, and I will be happy to take interventions later, but I want to make some progress with my speech first, if they do not mind.
Danny La Rue 52, two fat ladies 88 and legs 11 could be a thing of the past if Her Majesty’s Treasury gets its way. Almost time for tea 83,000 people are members of Mecca bingo club in Acocks Green, which is in Yardley. It is one of one little duck two bingo clubs in Yardley and man alive five bingo clubs in Birmingham. The problem is that the Government uniquely hit bingo with rugby team 15 per cent. VAT and 15 per cent. gross profits tax—a cumulative tax rate of buckle my shoe 32 and a quarter per cent. That compares with only one 15 per cent. tax on other forms of gambling. Bingo is uniquely hit by extra taxation.
The Budd report in 2001—the gambling review report—identified bingo as the softest form of gambling. After all, who has heard of gangsters sending out enforcers to get payment of bingo debts? However, in the past six years, more than 100 clubs have closed and more than 3,500 jobs have been lost, and hundreds of thousands of people no longer have a local bingo club. The taxation seems to me and many others a deeply unfair system and, if it is allowed to continue, it will lead to the threat of further job losses, the closure of more clubs and the loss of an important social amenity for millions of people throughout the country. That would be a tragedy, as bingo clubs are more than just a soft gambling pastime. They are a meeting place for friends in a safe and secure environment and a community hall or club for many elderly people—but not just elderly people; there are many younger people as well.
Politicians on both sides of the House—more than 200 MPs have a bingo club in their constituency—support the scrapping of double taxation. During the past year and a half, MPs have signalled their dismay at the continuation of double taxation by signing a number of early-day motions in support of the bingo industry, two of which I tabled. It is for those reasons and more that I believe that VAT should be removed from bingo, as that will help to secure the future of one of the most popular indoor leisure pastimes. Interestingly, I have received more communications on this issue than on any other in my constituency.
In the past few years, many hon. Members on both sides of the House have tabled written questions asking the Chancellor of the Exchequer to explain his fiscal policy on licensed bingo clubs and the basis for his decision. I could happily list the many replies that the Minister and her predecessor have given, but they are all similar in one respect—as is usual for the Government, they fail to answer the question. For example, I asked the Chancellor about removing VAT from bingo. The Minister replied:
“The Government take all relevant factors into consideration when establishing and maintaining fair gambling tax regimes.”—[Official Report, 12 February 2009; Vol. 487, c. 2140W.]
I suppose that that is better than saying that it is too expensive to answer the question. The phrases “relevant factors”, “specific circumstances” and “specific factors” are the most commonly used defence by the Treasury, but it never explains what it means. Will the Minister take the opportunity presented by this debate to tell me what the “relevant factors” are? Will she explain why she thinks that it is a “fair gambling tax regime” and why bingo has to be subject to double taxation? I would also like to know why after six years of protest from MPs on all sides, the Government refuse to accept that bingo is taxed too heavily.
Another issue that is raised time and again by the Treasury is that the root of bingo’s problems is not fiscal and that other factors such as the smoking ban have had a significant impact on bingo. It is worth noting that it has never been claimed that double taxation is the industry’s only problem. I agree that the smoking ban has had an impact on the industry, as it has in other areas, but the ban was not opposed by the industry, which actively supported the Government. However, the key point is that although the smoking ban had a negative effect on our nation’s bingo clubs, it has no bearing on the fact that those clubs remain subject to a burdensome system of taxation that is more severe than that applied to betting shops, casinos, online bingo, online casinos and poker, online betting, football pools and gaming machines.
Indeed, if one examines the changes made to the football pools in 1995, 1999 and 2002, one sees that the tax burden was reduced through changes to the rates of duty. The Government’s stated motivation for making those tax cuts was not that tax was “at the root” of the pools industry’s problems, but that it was necessary to help the pools to recover from external factors. Let us compare that with the situation in which bingo clubs are closing over time, with a number of job losses. The Minister may remember that she was instrumental in bringing about those changes, but she appears to have changed her tune now that she is in office. Will she explain why the football pools qualified, yet the bingo industry does not?
One important factor that needs to be addressed is the Government’s assertion that changes in pay-as-you-earn or corporation tax within bingo are assumed to be offset elsewhere in the economy, as recorded in a letter to the hon. Member for Sunderland, South (Mr. Mullin) from the Minister. In other words, the Treasury believes that any loss of employment as a result of the closure of bingo clubs—because of double taxation—is automatically compensated for by job creation elsewhere. I am shocked by that assertion. Surely in these difficult economic times, we need to help our businesses. To assume that more jobs will be created is extremely naive.
The hon. Gentleman compares bingo with other forms of gambling. I must admit that I am not a great enthusiast of gambling generally, but the largest bingo club in the UK is in my constituency. On the question of fairness, does he agree that even if there was an interplay with PAYE, that would apply to other forms of gambling and the key issue is the unfairness of the way in which bingo is treated compared with casinos and other forms of gambling?
Indeed. There is an inequitable relationship and it is clear that the courts have taken the side of the bingo industry where relevant. It is as if the Government have it in for bingo. It is very difficult to accept from a commercial angle, which I come from historically, that there is a rational argument for what the Government are doing. Is the Minister aware of the positive effects that tax reform would have for the Exchequer and therefore the taxpayer through the preservation of the broader economic contribution from bingo clubs, including other sales and corporation taxes, local business rates, income tax and national insurance?
I congratulate my hon. Friend on securing the debate. Does he not agree that unlike casinos and whatever else, bingo halls are very much the preserve of the working class, particularly many women, for whom they are a safe haven and provide the chance to have an evening or afternoon out with friends? The closure of many bingo halls, as has happened in Rochdale, impacts on their ability to go somewhere where they can enjoy themselves.
It does seem sometimes that this Government do not listen to those people whom one would describe as working class. Although a wide range of people go to bingo halls—they are not all elderly; many younger people go to them, too—it is perhaps predominantly working-class people who go to them. As usual, however, the Government are not interested in the concerns of the working class.
I congratulate the hon. Gentleman on the work that he has put into the protection of bingo clubs, including the Mecca bingo hall in Crewe. Its 33 employees deal with 2,500 visits on average a week and it has 12,500 members. Perhaps more importantly on the issue of taxation—this is where the Government need to think about whether they are cutting off their nose to spite their face—that single bingo hall brings the Exchequer £1 million of taxation a year and if the Government let the number of bingo halls continue to slide at the rate that they are, they will end up with no taxation.
The hon. Gentleman is entirely right. The fact is that bingo, in common with any industry that employs people, pays other taxation. The issue is that, uniquely in gambling, bingo is subject to two levels of taxation, so economic activity is being reduced. It is a strange argument from the Government. They have been encouraging the more dangerous, more risky, forms of gambling, to which people get really addicted and then find that their finances suffer as a consequence, while penalising what is probably the most anodyne form of gambling that one could find—it is organised at times in Methodist church halls. The Churches are organising bingo, yet the Government see it as an evil monstrosity that all these working people are enjoying themselves playing bingo and want to tax it out of existence as they do with other things that they seem to have it in for.
It would be wrong of me not to mention a positive step that has been taken by the Department for Culture, Media and Sport. The increase in B3 gaming machines from four to eight assists bingo clubs, and it will go some way towards helping the industry, which welcomes the measure. However, it is sad that that should have been achieved through gaming machines rather than by reducing taxation on the underlying activity. It is a bit like offering a crutch to someone you have kicked, and it does not address the underlying problem of double taxation. The Government would appear to agree with that point, as the Department has called for tax reform on bingo.
The explanatory memorandum to the Gambling Act 2005 (Gaming Machines in Bingo Premises) Order 2008 contains what I think may be DCMS’s first public announcement that it supports calls for the removal of VAT. It states:
“The consultation produced 12 other proposals for assisting the bingo industry. The most popular of these was removing VAT on bingo participation. This is a matter for Treasury but DCMS continues to put the case for this reform.”
That seems to show a division at least within the civil service. Given that the Department responsible for the industry is supportive, that the bingo industry is supportive and that the Treasury has been prepared to make concessions on tax—for instance, with football pools—why is the Treasury now ignoring all calls for support and reform?
Members who are aware of bingo’s taxation problems will know not only that the current situation regarding VAT on bingo participation fees is unfair and anomalous but that the growing legal precedent confirms that the position is in contravention of the European Union’s VAT legislation. The recent VAT and duties tribunal ruling in favour of the Rank Group Plc with regard to interval, or mechanised cash, bingo games confirms the position. Given the discriminatory system of double taxation and the weight of recent legal rulings, it is difficult to see why the Government are resisting calls for its removal.
Since the VAT and duties tribunal ruled that the tax system was illegal, a large part of the industry no longer pays VAT on interval bingo. The cost of ending double taxation on bingo may now be as little as £10 million. That could be funded several times over by the anticipated benefit to the Exchequer of recent proposals to increase stake and prize levels on gaming machines. Will the Minister enlighten us?
Does the hon. Gentleman agree that the amount of money involved is quite small? He mentions £10 million. The Government seem to have been able to find money for the banks and for boosting the economy in other ways. At a time of financial problems, we need to boost the economy. Would not that be a good use of a small amount of money, as it really would boost the economy?
I would understand the Government’s position if they continually had to provide a subsidy, but their policy on bingo is likely to undermine their revenue take. By maintaining excessive taxation on bingo, they are shutting bingo halls and thus losing the business. Either consciously or unconsciously, Government policy is closing an important sector. The sector does not have many voices speaking for them in government, because it provides services to the working people of this country, and those people are generally not heard by the Government. The Government have decided to go in hard against an essentially harmless form of gambling that is predominantly enjoyed by the working classes. I agree with the hon. Gentleman that it is a relatively small sum of money, and it is counter-productive for the Government to maintain dual taxation.
Finally, I thank my Liberal Democrat parliamentary colleagues for trying to amend last year’s Finance Bill and calling for a review of bingo tax. Unfortunately, that was not forthcoming. I hope that the Minister now recognises the political support, and the valuable contribution that bingo makes to communities across the country. I look forward to her response. I hope that she realises the great support for the bingo industry on both sides of the House, and that she will impress on her ministerial colleagues and the Prime Minister the valuable commodity we have in bingo, both socially and financially. I thank Mr. Speaker again for allowing me the opportunity to speak on a subject that is important to many of our constituents. It should be remembered that 200 Members of Parliament have bingo clubs in their constituencies.
I congratulate the hon. Member for Birmingham, Yardley (John Hemming) on securing this debate. I am glad to have the opportunity to continue this important discussion on the taxation of bingo clubs.
The Government work hard to take on board the views of all interested parties, and we continue to engage closely with the Bingo Association. That close working relationship enables us to keep abreast of developments in the bingo industry, so that we can respond to any challenges that the industry may face in a fair and appropriate manner. The Government made no change to the taxation of bingo in last year’s Budget year. We looked carefully at the evidence provided by the Bingo Association on the state of the industry, but our assessment remains that tax is not at the root of its problems and that altering the tax regime would not be appropriate.
I am happy to tell the hon. Gentleman that the level of taxation for bingo is about the average for gambling. He said that bingo is unique in having double taxation. That is not true; amusement machine licence duty and VAT is also paid on gaming machines. Bingo’s effective rate of taxation is not the 32 per cent. that he cites, but is between 24 and 25 per cent. That is about the average for all methods of gambling, with the exception of betting, which has a slightly different history. Given the way in which all gambling industries work, we do not believe that bingo is out of line.
The Bingo Association has always vehemently objected to what it calls double taxation. As I said, it is not unique to bingo, yet the hon. Gentleman asserts that it is. That is not true, so we must agree to disagree with the Bingo Association in our Budgets and pre-Budget reports. We spend a great deal of time exchanging information and having meetings; indeed, I have met the Bingo Association and many hon. Members concerned about the implications for the industry, particularly for bingo halls and other premises in their constituencies.
That does not mean—this is a familiar experience for me as Exchequer Secretary—that those with whom I engage in the run-up to pre-Budget reports and Budgets always agree with the Chancellor’s decisions. I suspect that it is in the nature of those interrelations that there may be disagreement on the particular issues that have been raised. In my experience, people almost always wish tax to go down rather than up; and if it goes up they do not like the result. However, I pledge that we will continue to work closely with the Bingo Association and other interested parties to consider the situation that they find themselves in when pursuing their business, and to do what we can to assist them.
Evidence shows that the industry’s problems, including club closures, stem from a combination of factors, including increased competition from the wider leisure sector and changing public tastes in leisure activities. Those are long-term trends, and they predate the implementation of the Gambling Act 2005 and the smoking ban in 2007. As the hon. Member for Birmingham, Yardley said, the smoking ban has had an effect. I would be the first to acknowledge that, as I have in many meetings with the Bingo Association; indeed, I thank the Association for being so supportive of the smoking ban. That acknowledgement is there for all to see.
Hon. Members will be aware that bingo in licensed premises is subject to bingo duty at 15 per cent. of gross profits. In addition, most participation fees for bingo are subject to VAT at the standard rate. That is what the Bingo Association and the hon. Member for Birmingham, Yardley object to. On a comparable basis, however, the effective rate of taxation on bingo is broadly consistent with the rate on gaming machines, casinos and the national lottery.
As recently as 2003, the current system of bingo taxation replaced a much more complex regime, under which effective bingo taxation was considerably higher, at 35 per cent. That reform clearly represented a substantial cut in tax liability for the bingo sector, but ever since, it has continued to make vigorous representations to cut the effective rate even further. I would expect it to do so, and we are happy to keep all factors under consideration as we look at the structure of tax on all forms of gambling in the run-up to each pre-Budget report and Budget. I expect to see the Bingo Association again, as I have done prior to previous Budgets.
A particular issue that is often brought to my attention is the rate of bingo club closures across the country. Information recently provided by the Bingo Association suggests that 25 clubs closed in 2008, compared with 37 in 2007. Obviously, club closures are alarming, especially for those individuals and communities closest to them, but closures do not represent a new trend or a fault with the current tax treatment of bingo. In fact, an average of 17 clubs closed every year between 1994 and 2004, highlighting the long-term structural changes that have affected the sector.
As Members are no doubt aware, Her Majesty’s Revenue and Customs is involved in a legal dispute over a breach of fiscal neutrality, to which the hon. Gentleman referred. The fact that the dispute is ongoing means that it is inappropriate for me to discuss in detail issues relating to fiscal neutrality. I merely note that an appeal has been made against the initial court decision. The appeal is due to be heard in March and a conclusion is expected between May and June.
Since the reform of bingo taxation in 2003, the Bingo Association has lobbied the Government for the removal of VAT on bingo participation fees. We do not believe that that would solve the industry’s problems, and it would cost tens of millions of pounds, which would have to be recouped elsewhere. As I have mentioned, the bingo sector is taxed broadly in line with comparable sectors. I thank the hon. Gentleman for his generosity in commenting on the changes made in social legislation—a part of the law for which the Department for Culture, Media and Sport has immediate oversight—which has made it easier for bingo organisations to operate. He also mentioned the additional allowance of B3 gaming machines, which was announced by my DCMS ministerial colleagues on 4 February. As everyone knows, a reduction in the standard rate of VAT was announced as part of the fiscal stimulus in the previous pre-Budget report.
The point of using taxation as a fiscal stimulus is an important one, especially at this time. The Chancellor felt it worth while to cut VAT generally by 2.5 per cent., which costs about £12 billion. Does the Minister agree that if it would boost the bingo industry—she might not be convinced that it would—it would be worth while cutting VAT on bingo? It would cost relatively little and help bingo clubs.
Bingo participation fees cannot be removed at a relatively small cost—it would certainly be much higher than the £10 million mentioned by hon. Members today. In any Budget-making process, a balance must be struck between cutting taxation and getting revenue in, as all hon. Members know. We could always cut VAT on one particular form of gambling over another, but we would have to justify doing so and think about how to recoup the money. In the run-up to Budgets, those decisions must be balanced.
My hon. Friend the Member for Birmingham, Yardley (John Hemming) mentioned that the Government have changed the rules on gaming machines. Does the Minister accept that any loss of income from reducing VAT on bingo halls is likely to be offset by the increased revenue from the additional prize money now allowed on gaming machines?
No, because the changes to gaming machines that the DCMS has introduced do not bring in extra revenue. The machine licensing duty is a flat rate, not a percentage, so it does not bring in extra revenue.
There is a positive side to the bingo reforms that the Government have introduced, even if the Bingo Association, and those who support its view on so-called double taxation, do not approve of the current tax regime. The hon. Member for Birmingham, Yardley courteously mentioned that in his speech. We have talked about the increase in B3 machines and the reduction of VAT, which is part of the temporary fiscal stimulus. However, there is also the issue of category C machines, which the DCMS is looking at, and on which it hopes to make some announcements in due course. Of course, the reforms in the Gambling Act 2005 abolished the requirements for 24-hour membership of bingo clubs, which makes it easier for them to attract new users to their clubs.
Much of this comes down to a discussion of facts and assumptions. Will the Minister release the basis upon which the Government make their calculations, so that we can identify where the discrepancies are between that which the bingo industry understands to be the case and that which the Department thinks to be the case?
The hon. Gentleman is asking whether we can release details about the way in which we cost potential Budget decisions. We can certainly give broad ideas, and I have had this discussion with the Bingo Association on many an occasion. According to our calculations, it always massively underestimates the costs of the tax changes that it suggests. In fact, prior to the last Budget, we discussed the cost of removing bingo participation fees. The costs that the association quoted were similar to the figures mentioned by the hon. Members for Crewe and Nantwich (Mr. Timpson) and for Birmingham, Yardley. We calculate that the costs would be far higher.
I have discussed that with the Bingo Association. We cannot release tax returns that might involve commercial and confidential issues, which is the difficulty with doing in detail what the hon. Gentleman just suggested. However, I am happy to explore whether we could hold an official meeting so that we can take the Bingo Association through some of the details of the costs, which would fall short of creating difficulties of confidentiality and so on. I am happy to see whether that is possible and to contact the Bingo Association, with the aim of trying to secure a more coherent debate about the cost of the measures that it is suggesting. Over the past year, we and the association have been completely at odds on the cost of what it is suggesting. When I say that it will cost much more, it merely asserts that it would not. That is a fairly unproductive use of the inevitably limited time that we have before a Budget to bring about some coherence. I am happy to do that, however, if the hon. Gentleman thinks that it would be of assistance.
No—I am quite happy to hold a meeting with the Bingo Association to look at its figures, but I did not say that I would give the hon. Gentleman the run of the Treasury to decide what he thinks of the figures. He should take my offer in the spirit in which I intended it, rather than push his luck beyond what I can agree to.
It is clear that the bingo industry faces a challenging environment, in which it must react to the smoking ban, the implementation of the Gambling Act and the wider structural changes that have led to the long-term decline of the bingo sector. On top of that, it must manage any issues exacerbated by the current economic climate. However, I hope that the bingo industry will continue to engage with us in a sensible way over potential future reforms in the way in which it has done in the past.
I am grateful to have the opportunity to raise this issue today. Such a debate is timely not only because of the current situation but because of the information that I bring following the all-party group visit to Gaza last week.
For the sake of clarity and the avoidance of doubt, let me explain the trip. On 15 February, I was part of an all-party group that entered Gaza via the Erez crossing at the north-east of the strip. The attempt to enter began at 9 am and was eventually successful in the late afternoon. We left on the afternoon of 17 February, having spent two nights in the area. I am grateful to my hon. Friend the Member for Birmingham, Northfield (Richard Burden), who led the delegation, and to my hon. Friend the Member for Battersea (Martin Linton) and to the hon. Member for Brent, East (Sarah Teather). I am sure that my hon. Friend the Member for Manchester, Central (Tony Lloyd) and the hon. Member for Kingston and Surbiton (Mr. Davey) would be here in the Chamber today if they could because we were all so profoundly shocked by the things that we saw.
The trip was funded by the Welfare Association, which is a respected non-governmental organisation and charity that is in receipt of Government funds, including £300,000 under the current emergency aid programme. It was efficiently organised by the Council for Arab-British Understanding. Our tours in Gaza were supervised by the Welfare Association or the UN. I want to be as clear as possible about the brief of the visit, which was exclusively humanitarian. We were there, in part, to see the aid projects that the British Government have funded.
I am aware that my hon. Friend the Minister also made a visit to Tel Aviv and Jerusalem on 18 January, on the day of the ceasefire, and that a substantial aid package of some £27 million has been announced by the Government. I do not wish to assume a lack of knowledge by the Minister, but I hope that, at least in my preliminary comments, I can talk about the situation in Gaza from the point of view of an eye witness. I can also talk about the testimonies of eye witnesses to the bombardment of Gaza. Such testimonies may indicate the scale of the problems and the difficulties that present themselves to the delivery of aid. The first and most obvious of those is that it is still difficult to get in and out of Gaza, because of the border restrictions imposed by the Israelis, let alone to bring relief to 1.5 million people.
At the time of my hon. Friend’s visit, it was the end of 23 days of the worst violence that has been seen in the Gaza strip since 1967. By conservative estimates, it left 1,285 people dead, 82 per cent. of whom were civilians. If one excludes police officers from that figure—and I do not see why we should—civilians accounted for 70 per cent. of that number, 22 per cent. of whom were children. Some 4,336 people were wounded in the attacks, 43 per cent. of whom were women and children. Most of those injuries were not minor. They were serious injuries that require, in some cases, amputations and long and complex medical treatment. That is leaving aside the trauma and the psychological effects that many have suffered as a result of living in a very confined position. Many people describe Gaza as “the world’s largest prison”, and there was no route of escape during the intensive bombardment. About 2,500 homes were destroyed.
We visited Beit Hanoun and Izbet Abd Rabo and saw for ourselves entire villages that had been destroyed. At Abd Rabo, 5,000 people had been made homeless in one village and 200 killed. The whole civil apparatus of Gazan society has been destroyed: 60 police stations, 30 mosques and 29 schools. More than 120 commercial buildings have been completely destroyed and 200 partially destroyed. I stood in the ruins of the Parliament building—the Legislative Council—and wondered what the purpose was of destroying Gaza’s newly democratic institution. When we asked why such acts of wanton destruction had taken place, we always heard that it was for the Israelis to explain.
We visited four hospitals, which had come under varying degrees of attack, at al-Quds, al-Wafa, al-Hilal and al-Awada. I do not wish to go into detail about the degree of criminality involved because it is perhaps not a matter for this debate, but it may be for another debate. None the less, it is important to bear in mind the enormity of the offences that have been committed by the Israeli defence force—or Israeli occupation force—during this time.
According to the human rights organisations that we spoke to, including the Palestinian Centre for Human Rights, which is a widely respected organisation, such actions may well amount not only to war crimes but to crimes against humanity and to ethnic cleansing. The organisations spoke about the targeting of civilians in their homes, the use of civilians as human shields, the killing of people in cold blood and the targeting of medical staff. I have already said that the overwhelming majority of people killed during the attack were civilian, and also that entire areas were razed to the ground. I raise such points, because they emphasise the difficulty that the Government will face when they have to deal with the Israeli authorities over the supply of humanitarian aid. Moreover, such points are relevant because although we have no new Government in Israel at the moment, we are anticipating a Government who are far to the right of the Government who led the invasion and who may, unfortunately, include racist and fascist elements.
It is now more than five weeks since the end of the Israeli invasion. Does my hon. Friend not think that it is a great shame that the intense humanitarian need that we saw all too vividly in Gaza should have to wait so long before the crossings are fully open? Does he not think that it is incumbent on all parties concerned, particularly the Israelis but also the other parties to the agreement, to do everything that they can to open those crossings? The Gazans should not have to wait for the Israelis to form a Cabinet—that could take months—nor should they have to wait, however long it takes in Cairo, to find a complete settlement between Hamas and Fatah. The needs of the Gazans are immediate. The crossings must be opened as soon as possible so that their humanitarian needs can be met.
My hon. Friend anticipates what I was about to say and the questions that I was going to pose for the Minister at the end of my remarks.
The political context is inseparable from the humanitarian context in that sense. We were privileged when we reached the west bank to meet the Prime Minister, Salam Fayyed, and the chief of staff to President Abbas, Rafiq Husseini. The clear message from the Palestinian Authority is that it is difficult to negotiate with the Israelis at all at the moment, because of the Israeli attitude and the Authority’s weakness and disorganisation. The Palestinians are concentrating on Palestinian unity, which is long overdue, and external aid, both material and in terms of pressure on the Israeli Government, to achieve what my hon. Friend suggested.
I shall give two examples of the problems with aid, although I do not imagine that my hon. Friend the Minister underestimates them. We visited al-Wafa hospital. It is not an emergency hospital, but a hospital for elderly people and for rehabilitating people with long-term problems arising from strokes, comas and so on. It is an extremely impressive institution. Two new blocks costing $5 million had just been built—one by the Welfare Association and one by the Kuwaiti Government—and were due to open on 1 January. However, they were shelled almost into destruction. Certainly, they will need $2 million or $3 million to renew the buildings. Part of the hospital was funded by the Department for International Development. The gardens around the hospital, which were well laid out as part of the rehabilitation features, were paid for by DFID—there is a plaque proudly displayed on the wall to that effect.
We were in the surreal position of being shown around the gardens by local people, who pointed out where white phosphorous had landed and burnt into the ground. They showed us lumps of it. Four weeks after they landed on the hospital, those lumps were still smoking, and they would still burst into flames when poked or prodded. The Government ought to take up with the Israeli authorities the arrogance and disregard shown in that action.
We also visited the United Nations Relief and Works Agency warehouses in the centre of Gaza city. As was well documented, the warehouses were bombed by the Israelis, who must have known from their global positioning system co-ordinates exactly where they were. Phosphorous bombs and heavy ordnance—fortunately, in one case, the ordnance did not explode—were landing next to fuel tankers that were there to supply fuel to the people of Gaza. The fact that the Israeli defence force and the Israeli Government are prepared to do that says more about the scale of the task we face in dealing with them than I can.
As my hon. Friend the Member for Battersea said, the problem of access is not new—it does not date from 27 December, but at least from the election of the Hamas Government. The response to years of telling the Palestinians that they had to adopt democratic standards seems to be to bomb their Parliament building. There have been two years of an almost complete blockade in which, ironically, the only way that Gaza continued to function, if it did at all, was through the tunnels under the Egyptian border. The tunnels are now not only being bombed, but policed by the Royal Navy to ensure that materials do not get through. Of course, the policing is designed to stop arms supplies, and that is a necessary pre-requisite to peace, but disarming both sides, too, is a pre-requisite to peace. However, that puts the cart before the horse, which is an apposite analogy, given that a lot of the transport in Gaza is horse and cart because of the lack of fuel—
Donkey and cart, as my hon. Friend has corrected me. To close the tunnels before opening the borders has simply reduced the people of Gaza to an even more parlous state than they were in before.
We visited the Qattan centre in Gaza city, which is a fantastic children’s centre. Any Sure Start project would be green with envy if it saw its facilities, but it serves more than 12,000 children and was three or four years behind its building schedule—fortunately it escaped bombing—because it has been impossible to get building materials such as glass or concrete over the border. We also visited the al-Moghraka sewage works and proposed water treatment plant. We did not see the plant, because it has not been built. The money is there—again, it was provided by the Welfare Association and the European Union—but the materials cannot be transported into the country. The consequence is that conditions are completely unsanitary. Sewage frequently floods the streets and fields, and it contaminates the water supply. It flows out into the Mediterranean, where the restriction on fishing means that virtually anything caught off the coast is inedible. That is the heritage from which the bombardment came.
As has been indicated in the debate, that makes the opening of the crossings the number one priority. The last week for which I have figures, which is only up to 18 February—I am again grateful to the PCHR, which documents such things—show that some materials and food containers are coming through the Kerem Shalom crossing; some fuel is coming through the Nahal Oz crossing; and a few containers of seed and fodder are coming through the Karni crossing. However, that represents a fraction both of the need and of the materials that were passing into Gaza before the election of the Hamas Government. Opening the crossings is a sine qua non of dealing with the current situation.
I hope to give my hon. Friend the Minister a chance to reply, but also to be precise about the issues that the Government need to address. First, we all agree that the crossings have to be opened, but how will that happen? Secondly, how is the aid that has been promised going to be delivered? I know that some of it has been delivered, but some of it still has to be delivered. Thirdly, how is Israel going to be made to live up at least to some of its international responsibilities? It seems to pick and choose when it wishes to adhere to those responsibilities. We must also include the question of reparations. We should surely look to the Israelis to pay for the wilful damage to United Nations and British Government property, and that of non-governmental organisations, leaving aside any question of criminal culpability.
In the longer term, there is clearly a much more serious and difficult problem in relation to the reconstruction of Gaza, to which the world has essentially turned a blind eye since the Israeli troops withdrew four years ago. The UK Government should take a lead on coming up with a game plan to deal with the problem. It seems to many informed observers—people who are much more informed than me—that the Israelis have a strategy to bomb or starve Gaza back into the stone age. The rationale is that Israel does not see Gaza as part of a one or two-state solution in the middle east, but as something to be parcelled off and got rid of, and to be entirely fenced off from the rest of Palestine.
The people of Gaza are not going to put up with that. I was privileged to hear a very passionate speech from the Palestinian ambassador last night at a meeting in the Palace in which he noted that Palestinians’ impetus is to get into, rather than out of, Gaza. The activities of the Israelis are proving counter-productive. They bolster support for Hamas and Palestinian resistance, and make the peace process much more difficult. They are also making the process of reconstruction more difficult. Only the international community can do something about it, and the Government have a substantial role to play. I hope that the Minister, notwithstanding the difficulties of the situation, will be able to give me some comfort in his response.
I congratulate my hon. Friend the Member for Ealing, Acton and Shepherd’s Bush (Mr. Slaughter) and thank him for bringing us together to debate UK aid to Gaza, and for his extremely valuable insights on the humanitarian situation there, following his recent visit along with our hon. Friends. I enjoy reading his blog and the Gaza diary on his website, which gave an accurate reflection of his visit.
I welcome the other colleagues who were also present at the last Westminster Hall debate on aid to Gaza and the occupied Palestinian territories, which took place in January. I pay tribute to their commitment and dedication to the issue.
I am pleased to have the opportunity to update the House on this important subject and on the events that have taken place since that debate. As my hon. Friend so graphically described, the humanitarian situation in Gaza remains extremely grave. Some 1.4 million people—that is, nearly the entire population—still depend on some form of humanitarian aid. Scheduled power cuts of six to eight hours occur in most of Gaza every few days, and unscheduled power cuts continue. Some 50,000 people are without running water, and a further 100,000 receive running water in their homes only every seven to 10 days. About 21,000 homes were destroyed or badly damaged during the conflict. The United Kingdom focuses on alleviating suffering and helping to rebuild the lives of those devastated by the conflict.
As hon. Members will be aware, the UK has pledged nearly £27 million for the relief effort in Gaza. Of that, we have spent more than £15 million. When I last spoke to the House on the issue, I explained how the UK was rapidly spending the money that it had pledged, including funding for the United Nations, the International Committee of the Red Cross and non-governmental organisations, which are providing food, shelter, safe drinking water and medical treatment, as well as providing for the clearance of unexploded ordnance.
Since that debate, new commitments have included almost £1 million to Mercy Corps to provide shelter and emotional support to children and young people traumatised by the conflict; more than £660,000 to Islamic Relief for psychosocial support, house repair and emergency school rehabilitation; more than £420,000 to Handicap International to provide emergency medical care for 21,000 extremely vulnerable people; £340,000 to UNICEF to co-ordinate the effective provision of emergency water and sanitation; and £1.5 million to the World Food Programme for distribution of food vouchers.
I am pleased to report that the money provided by the UK is having an impact on the ground. For example, our funding to Oxfam has helped to provide tens of thousands of ordinary people in Gaza with essentials. Every day, Oxfam water tankers distribute drinking water to as many as 60,000 people in the worst affected parts of north Gaza, and since the end of January, Oxfam has provided hygiene kits to 2,100 families.
Our funding has helped Handicap International to open three new support centres in Gaza where people with injuries and disabilities can go for treatment. Handicap International has also provided four hospitals with 71 pieces of equipment—including wheelchairs, crutches and walking frames—to help those with injuries. The contribution of the Department for International Development to the Mines Advisory Group has helped it to clear unexploded ordnance from all United Nations Relief and Works Agency schools, allowing 220,000 children to return to school.
Those are only a few examples of the difference that UK aid is making to the lives of ordinary Gazans. None the less, there are still many more people to reach. If humanitarian workers do not have adequate relief items, safety and access to those whom they need to reach, they cannot do their job. The issue of access was raised in the previous debate and by my hon. Friend in this debate. I remind the House that it was a problem long before the current crisis. It is imperative that action be taken. The borders must be opened. We need to find a solution urgently so that Palestinians living in Gaza can get the help that they need in a way that also addresses Israel’s security concerns.
Access for people and humanitarian supplies must be increased to meet the genuine humanitarian needs of the people in Gaza. The UN has said that only 20 to 25 types of relief item are getting into Gaza, out of 4,000 different items needed. Items turned away include school textbooks, dates, plastic bags used by the UN to distribute food aid and even equipment used to store medical vaccines. In addition, the UN estimates that 450,000 litres of fuel are needed daily to operate the Gaza power plant at full capacity. The Israeli Supreme Court has ruled the daily humanitarian minimum to be 314,000 litres, yet since the ceasefire, only about 260,000 litres have entered Gaza, resulting in continuing scheduled and unscheduled power cuts.
Access for humanitarian personnel is also problematic, as my hon. Friend has highlighted in his comments and on his blog, although there is some anecdotal evidence that the situation is improving. However, since the cessation of hostilities, the Israeli authorities have allowed only limited numbers of international aid workers into Gaza. Of 178 requests to enter Gaza submitted by international NGO staff members in January, only 18 staff members were allowed in by the end of the month.
We are continuing to press at the highest levels for increased access. During my visit to the region last month, I spoke with Isaac Herzog, the Israeli Minister responsible for co-ordinating the relief effort, and pressed for increased access. That led to a public Israeli commitment to facilitate access for 500 aid trucks a day in the near future. The Foreign Secretary has also discussed access with Israeli Foreign Minister Livni, and our Prime Minister has written to the Israeli Prime Minister, Ehud Olmert, on the same matter. We are in regular discussions with our partners in the US and UN on how access can be improved. It will be vital to see progress on the issue before the international conference on Gaza reconstruction takes place next week in Sharm el-Sheikh.
To address my hon. Friend’s point about tunnels and access, we have made it clear to Israel that closing the tunnels without opening the crossings will do nothing to help Israel’s security concerns about arms smuggling through the tunnel regions. We have also made it clear that the opening of the Karni crossing point, with its conveyor facility, is vital to allowing wheat flour across in sufficient volumes to meet the staple food requirements of the people in Gaza.
How we take forward the reconstruction of Gaza is critical. Fully rebuilding Gaza will take time, money and commitment from everyone involved. It will also take courage on the part of the Israeli and Palestinian leaderships. The first stage of the process is early recovery, which includes rehabilitating water supplies and sewage facilities, repairing and reopening schools, and moving people from tents to permanent housing. The Palestinian Authority estimates that that will cost $1 billion.
The international conference that I mentioned will be a first and welcome chance for donors to discuss the opportunities and challenges for an early recovery programme and, importantly, to make their pledges. In the longer term, full reconstruction will be needed. The World Bank, the European Community and the UN will take the lead on a full needs assessment in Gaza, working closely with the Palestinian Authority. Donors will need to provide funding. We would, of course, welcome an Israeli contribution to reconstruction in Gaza.
On the breach of international humanitarian law, I remind my hon. Friend that the UN Human Rights Council, in its resolution of 12 January, decided to send an international fact-finding mission to investigate violations of human rights law and international humanitarian law by Israel in Gaza. We will consider the results carefully—
Sitting adjourned without Question put (Standing Order No. 10(11)).