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Commons Chamber

Volume 489: debated on Monday 16 March 2009

House of Commons

Monday 16 March 2009

The House met at half-past Two o’clock


[Mr. Speaker in the Chair]

Oral Answers to Questions

Work and Pensions

The Secretary of State was asked—

Jobcentre Plus

1. What assessment he has made of how Jobcentre Plus in Devon and Cornwall is responding to the increase in demand for its services arising from the recession. (263313)

Jobcentre Plus in Devon and Cornwall continues to perform well despite rising work loads. New jobseeker’s allowance claims are being cleared within target. Jobcentre Plus is increasing staffing and ensuring it has the office and infrastructure capacity it needs to respond to the current economic situation.

I thank my right hon. Friend for that reply, which certainly chimes with what district manager, Phil Weeks, told me when I met him recently. However, given the pressure and the great need among our constituents for the service, is my right hon. Friend absolutely confident that there are sufficient resources for us to be on the front foot not only now, but during the forthcoming, important months?

Yes, I think I can give my hon. Friend that assurance. We are recruiting 6,000 extra people for Jobcentre Plus, 4,000 of whom have already been recruited. Thanks to that and the work that Jobcentre Plus staff are doing, we are processing claims in 10 days, compared with 13 days two years ago, and performance is up, even though more work is going through. I am sure that my hon. Friend will join me in thanking Jobcentre Plus staff for all the work that they are doing.

Given that, within Devon and Cornwall, unemployment has risen faster in my constituency than anywhere else, I have visited staff at my local Jobcentre Plus, who are doing a fantastic job. However, is there any possibility of reopening Jobcentre Plus in Paignton? Frankly, the Torquay centre is becoming overwhelmed with the ever-rising number of people out of work.

If there are specific issues in Torquay, I am happy for the hon. Gentleman to write to me about them. Overall, however, we believe that the system is performing well—phone calls are being answered in a minute, and we are processing people’s claims faster than we were when unemployment was low. The key is for us to make sure that the system is flexible enough to respond to the high level of claims. We must also bring in extra help. We are, for example, bringing in extra training at six months so that people do not go from being short-term unemployed to long-term unemployed if they can get back into work with that extra help. I am glad that the hon. Gentleman has congratulated Jobcentre Plus staff and I shall pass his words on to the chief executive.

Order. The right hon. Gentleman’s constituency is a bit far north of Devon and Cornwall, but we will hear what he has to say.

Does my right hon. Friend agree that one of the problems facing Jobcentre Plus in the south-west, as elsewhere, is the lack of jobs to offer claimants who want to work? Is he not disturbed, as I am, that up to last month the Government allowed in 150,000 skilled workers on their work permit scheme without those jobs having been tested and advertised first in the Jobcentre Plus network in the south-west and elsewhere? Will my right hon. Friend contact the Home Office and the Treasury this day to get that rule changed so that no one from the rest of the world is allowed to work in this country on a skilled-work permit until the jobs have been advertised in Jobcentre Plus?

We have already said that that is exactly what we are going to do; jobs at tier 2 will be advertised in Jobcentre Plus. However, it is important that we recognise two things. It is now harder for people to find work and there are fewer vacancies, so we need to provide people with more help. However, we should also say that we should not give up on the notion of people finding work; more than 200,000 people left JSA last month. We need to recognise that times are tougher and to make sure that we do not give up on people, but help them get work—by providing them with more help, rather than cutting it.

I add my thanks to the hard-working staff at Plymouth Jobcentre Plus, many of whom are my constituents; they are coping well with the current crisis.

With the benefit of hindsight and given that unemployment in Plymouth has risen by 53 per cent. in the past 12 months, was it not a crass error of judgment to close Plympton jobcentre? That has simply added more pressure to staff in the centre of the city.

Not at all. We wanted to modernise the service and we would have done that whatever the level of unemployment. We merged Benefits Agency and Employment Service offices so that when people sign on, they have to look for work as well. That process was recommended and praised by not just the National Audit Office, but the Chairman of the Public Accounts Committee, who commended the modernisation as a model big public sector project of its kind. The modernisation has been done precisely to improve the service for people, and it has improved.

In Plymouth, we are processing claims in 10 days, which is a significant improvement on two years ago. We are able to do that because of the modernisation programme, which has made the system more efficient and released resources so that there can be more front line advisers and we can give better help to people. I would have thought that the hon. Gentleman’s party supported efficiency, but obviously it does not.

Many of my constituents claim child benefit through their local Jobcentre Plus office, but they report delays of three to four months in processing claims, which has a knock-on effect on many other benefits. What can the Secretary of State say to assure those people that there will be joined-up thinking across Departments and local authorities to ensure that people get the support, whichever Department it comes from, exactly when they need it?

The hon. Lady makes an important point. She may know that we have been conducting a pilot with the Local Government Association and Her Majesty’s Revenue and Customs to look at how we can provide a single place for claiming benefits from HMRC, housing benefit and benefits from us. That has been so successful that we are now rolling it out around the country. She makes exactly the right point: people should have a convenient service whereby they can go into Jobcentre Plus and claim all those benefits in one place.

Jobseeker’s Allowance

2. How many jobseeker’s allowance claimants there were in (a) the UK and (b) Reading, East constituency at the latest date for which figures are available. (263314)

In January 2009, there were 1,282,645 jobseeker’s allowance claimants in the UK and 1,585 in Reading, East constituency. Those numbers are based on seasonally unadjusted figures.

I thank the Minister for that answer. Will he ask his colleague, the Secretary of State, to guarantee two things when he visits Jobcentre Plus in my constituency tomorrow? First, will he guarantee to its hard-working staff that Reading jobcentre will not join the 38 jobcentres that have been closed by this Government? Secondly, could he explain to my constituent, Chris Richman, why he may soon be able to claim £300 for a new suit for an interview but is refused an advance of the travel costs to get to an interview?

I am sure that my right hon. Friend will get the same warm welcome at Reading Jobcentre Plus as I did when I was there quite recently. I gave the assurance then that not only would it remain open but that it, along with all the others, will get what it needs in terms of people, as well as other resources, to carry on doing the splendid job it is doing. On the hon. Gentleman’s second point, I therefore assume that he is against what we have announced on the £300.

On yesterday’s “Politics Show”, my right hon. Friend the Secretary of State was asked whether he could live on £60.50 a week jobseeker’s allowance. I can tell him that it is almost impossible for someone to do that if they are feeding themselves properly, paying their utility bills, especially throughout this winter, and have commitments such as direct debits or standing orders for contents insurance. A close member of my family is on jobseeker’s allowance, and if I were not topping it up—indeed, almost doubling it—he would not have a decent standard of living. I plead with my right hon. Friend the Minister to consider raising it when Budget time comes around.

We have already announced that jobseeker’s allowance will go up in April; I am not sure if it is by 5 per cent. or 6.3 per cent. As my right hon. Friend said yesterday, very few people are required to live on jobseeker’s allowance alone; with a combination of other benefits, they will always be getting significantly more than that. I take my hon. Friend’s point, none the less. We have modernised and put efficiencies into the Jobcentre Plus network to try to get people back into work at the earliest opportunity.

The average age of engineers on the London underground is now 58. I have a large number of automotive engineers on my patch who have just been made redundant at prodrive—excellent guys with good engineering skills. What will the Department for Work and Pensions do with the Department for Innovation, Universities and Skills and other Departments to try to ensure that where skills that are needed in one part of the country are available in another part, there is a match-up? At the moment, London Underground appears not to be able to recruit new engineers. It seems daft that we have very good young automotive engineers in one part of the country, yet we are preparing for the 2012 Olympics in London, including work on Crossrail, with an average age of 58 on the London underground. Why cannot we use engineers from the west midlands here in London?

I am sorry if I looked perplexed, but the hon. Gentleman is down to ask Question 11 and I was not expecting him to jump up quite so readily. He has now missed the excellent answer that I had for him on his own question.

Through what we are doing with DIUS and other Departments, and with Train to Gain, we are considering precisely that sort of skills mismatch in various parts of the country. To be perfectly fair to him, the Mayor of London, whose name escapes me for the moment, announced recently that efforts are being made to join up what is being done in recruitment and apprenticeships to the greater advantage of not only the London labour market but those beyond. However, the hon. Gentleman makes a perfectly reasonable point, and I shall certainly take it up with the Mayor of London next time I see him.

It is very sad that in the face of the world recession, unemployment under this Government has now reached the level that it was at in 1997 when they came into power. Will my right hon. Friend assure me that this Government will not abandon the International Labour Organisation measure of unemployment, and will not seek to cook the books on unemployment statistics, which the previous Government did on 19 occasions?

If I had the time, I would go through the 19 times when the previous Government cooked the books. We have recognised the ILO’s figures and what they measure, and we are quite happy on a month-by-month basis to take full account of those figures as well as the JSA claimant count, which clearly measures something entirely different.

The Minister will be well aware, as is every jobcentre in the country, of the real pressure that is being put on front-line staff. That makes the ill-advised programme of cuts that we have seen very ill thought through. Reports are circulating that people are being taken away from other areas, such as disability and child maintenance benefits. Will the Minister assure the House that those people will not suffer to plug the jobseeker’s allowance gap?

As part of the overall rationalisation and greater efficiency of Jobcentre Plus, and in the context of everything that the Department has done, more and more staff were going to be moved from those areas to the front line anyway. That will not in any way damage the integrity of the front line in those services. I can give the hon. Gentleman that assurance, but I shall take his point about ill-advised closures with the fatuity that was implied in it.

The unemployment rate in North-West Leicestershire has risen quite substantially in recent months. From a rate of 2.5 per cent., which put us in the lowest quartile of UK constituencies, it has risen by 40 per cent. to 3.5 per cent. That has included the closures of United Biscuits at Ashby and, worryingly, the long-standing firm of Pegson in Coalville. Will the Minister be willing to see me to discuss that run-down of staff, which includes their transferring to the firm’s country of ownership? I want to check that the firm is operating within EU guidelines.

The Secretary of State has kindly invited hon. Members to a seminar next week on the personalisation of the welfare system. What personal service can jobseekers expect, given that even after the current round of recruitment there will still be 10,000 fewer people working in jobcentres than there were four years ago, with rapidly rising unemployment?

But with more and more on the front line doing precisely what my right hon. Friend the Secretary of State suggests—providing a greater personalisation of service, focused on the individual. Given the hon. Gentleman’s question, my only point about the seminar is that he should attend it and listen.

I have been contacted by a constituent who is concerned that the announcement of a Government package to help senior executives who have lost their jobs to get off jobseeker’s allowance and back into work indicates that we are not concerned about other people who have lost their jobs. Will my right hon. Friend reassure me that we will make equal efforts to help anybody who has lost their job in the current downturn to find work again?

As was rather implied by the last question, we are seeking to personalise the service more to each individual. If there are gaps because of what the current recession has presented us with, we will seek to fill them. It is new to have executives coming through the system, and Jobcentre Plus needs to respond to that. However, we respond to each and every individual in their own terms.

Just as important, from my perspective, are those who up until now have been very successful in work. When people present at the jobcentre having been successfully in work for 15, 20 or 25 years, they need to be treated very differently in the initial encounter from someone who presents there regularly. I can assure my hon. Friend that we seek to provide the best service for each and every person who presents to Jobcentre Plus.

On 25 November, the Secretary of State said that

“we are today announcing a moratorium on Jobcentre Plus closures”.—[Official Report, 25 November 2008; Vol. 483, c. 620.]

Does the moratorium still stand?

It is a funny sort of moratorium on Jobcentre Plus closures that allows jobcentres to continue to close. When the Secretary of State announced that moratorium, people assumed that it meant that no more jobcentres would close, but jobcentres in Orpington, Brixton and Feltham are closing. The one in Orpington will close on 1 April. People will have to travel to Bromley, where the jobcentre is already struggling to cope with the numbers. There are queues and people are getting only a three-minute interview with a personal adviser. Moreover, the Government will have to pay to extend the jobcentre in Bromley to cope with the increased numbers. Are the Government genuinely that incompetent or do they just take people for fools?

There is only one fool in the room. The right hon. Lady’s predecessor said on 25 November:

“Guess how many they were planning to close next year? Three. Some moratorium.—[Official Report, 25 November 2008; Vol. 483, c. 622.]

The hon. Member for Epsom and Ewell (Chris Grayling) knew in November that those three jobcentres were already scheduled for closure and not among the 25 that were announced as part of the moratorium. He got it in November; we are now in March—give her a bit of time and the right hon. Lady will get it, too.

Pensioners (Living Standards)

3. What additional steps the Department has considered taking to support pensioners who are dependent on interest from their savings accounts to maintain their standard of living; and if he will make a statement. (263315)

As well as protecting pensioners who are savers by preventing the collapse of the banks, this year we also added £60 to pensioners’ Christmas bonus, increased winter fuel payments and tripled cold weather payments.

I thank my right hon. Friend for her answer. She is right—we have done quite a bit for pensioners, but many still have problems with their savings. In some cases, with interest rates going down, savings will not match the needs for which they have to pay. What do the Government intend to do to help those people? Is there more in the pipeline for them? Will she assure me that, even though half do not pay tax, the rest will be looked after, and that we will ensure that they do not suffer, especially towards the end of the year when winter approaches again?

I understand my hon. Friend’s concern. Obviously, we all feel sorry for people who are affected by the economic downturn. I confirm that half the pensioners who are over 65 do not pay tax. We have taken a series of measures to get real help to people now, when it counts. That is why we focused especially on the extra money for the winter fuel payments and the Christmas bonus. Although last year approximately £8 million was paid out in cold weather payments, the figure this year is £209 million.

Is the Minister satisfied and happy about the balance between the pain that borrowers endure and the pain that savers suffer during the recession?

As I said, we have tried to get help to pensioners, especially through the extra winter fuel payments and the Christmas bonus. Compared with 1997, when the Government came to power, the average pensioner is about £1,600 a year better off and the most vulnerable pensioners are about £2,200 better off. If we had continued with the 1997 Tory Government’s policies, we would spend £13 billion less on pensioners.

There has always been a mismatch between the assumed income that pensioners can receive from their savings and the interest that they could receive. Now that interest rates are so low, has the time come for the Government to re-examine pensioners’ assumed income from their savings? Obviously, there is no way in which they will get the assumed amount.

My hon. Friend is talking about the 10 per cent. rule—the social tariff. The Conservative Government introduced tariff income in legislation in 1987. It was never linked to interest rates; an assumption was made about a sum that could reasonably be expected to contribute to weekly income. Instead of assuming £1 for every £250, as the Tory Government did, we assume £1 for every £500. In addition, under the Conservative Government, no savings over £6,000 were allowed. We have raised that so that there is no limit on the amount of savings people can have if they are to access savings credit.

May I join the Minister down memory lane? Does she remember these words:

“The current system penalises pensioners who have prudently built up capital…by assuming pensioners get unrealistically high returns”?

She should recognise them, because they were in her Government’s consultation paper in 2000. Will she now revisit that unfair rule, which is causing extra hardship to hundreds of thousands of pensioners who have been prudent enough to save during their working lives?

I am not sure whether the hon. Gentleman was in the House when the regulations were introduced or whether he opposed them under the previous Conservative Government. I do not remember that, so perhaps he will correct me if I am wrong. We felt that the previous system was unfair, particularly the £6,000 cut-off point, at which no savings were taken into account, so we ignore the first £6,000 of savings. We ask people to contribute a small amount above that, but we have also made the rules more generous than they were under the previous Conservative Government.

What does my right hon. Friend say to pensioners who had low incomes during their working lives, who put something aside for a rainy day and who use the interest on savings to make essential repairs, but who otherwise live a hand-to-mouth existence? How is she promoting all the work that she says she is doing to make them feel that it is not as unfair as they feel it is?

One of the things we have done is raise personal allowances for older people, so that more than half of all people over 65 do not pay any tax. In addition, through the pension credit system we have tried to target money on the most vulnerable—those who perhaps saved a little bit, but who were penalised under the previous Government because of the little bit of money they had saved. We have changed the system so that it does not a punitive effect on the very people whom my hon. Friend talks about.

Jobseeker’s Allowance

4. How many claimants of jobseeker’s allowance there were in (a) the UK and (b) Clwyd, West constituency on the latest date for which figures are available. (263316)

In January 2009, there were 1,282,645 jobseeker’s allowance claimants in the UK and 1,403 in Clwyd, West constituency. Those numbers are based on seasonally unadjusted figures.

The Secretary of State may know that the Indesit-Hotpoint factory in Bodelwyddan, which employs 305 people, is due to close at the end of July. That will be a serious blow to an area with very little other manufacturing industry. The factory union has arranged an advisory day on 22 May, with a view to helping the workers deal with the financial consequences of the closure. Will the Secretary of State encourage the local Jobcentre Plus office to attend the event to give the workers the benefit of its experience and as much advice as possible in dealing with this severe blow for them and their families?

Yes, I am aware of those redundancies. I believe that we are still in the 90-day consultation period. I will ensure that we attend as part of the rapid response service. We will also want to work with the union and the Welsh Assembly Government, who have a good scheme—the ProAct-ReAct scheme—to ensure that we can get help that enables people to get back into work as quickly as possible.

The hon. Member for Clwyd, West (Mr. Jones) makes a perfectly reasonable point. One of the difficulties in our area is that the travel-to-work area crosses the Welsh border and reaches into Chester and my constituency. Will my right hon. Friend ensure that, in engaging with the work, the DWP takes into account the travel-to-work area and ensures that advice is given that crosses the border properly?

Yes; indeed, I met the Secretary of State for Wales and the First Minister recently to do exactly that, because the Welsh Assembly has some devolved responsibilities in this matter. We want to ensure that the offer that we have in place is seamless across the border. There are some differences between the Welsh schemes and our schemes, so that will be a challenge, but we are working closely together to do exactly what my hon. Friend wants.

The claimant count in Clwyd, West has gone up by 40 per cent. in the last year and the number of vacancies posted has gone down by two thirds. The same figures pertain to my own Caernarfon constituency. Is the Secretary of State aware that the director of CBI Wales, David Rosser, said on Friday:

“We believe the Welsh Assembly Government’s response to the credit crunch has been the quickest and most comprehensive of any devolved government in the UK.”?

What lessons can the right hon. Gentleman’s Department learn from the success of the Labour/Plaid Cymru Government in Cardiff?

I thank the hon. Gentleman for that unusually friendly question. I can reassure him that we have learned directly from the ProAct-ReAct scheme. We think that this is the right approach, bringing about at its heart extra training opportunities and extra employment subsidies. That is exactly what we have done with our six-month offer, which will come into force in April, as the hon. Gentleman knows. We are working closely together and I hope that that will be to the benefit of the hon. Gentleman’s constituents and all the people of Wales.

In response to a question put by my right hon. Friend the Member for Maidenhead (Mrs. May) in last Tuesday’s unemployment debate, the right hon. Gentleman said that the Government were still committed to rolling out the flexible new deal on 1 October. On the same day, however, the Minister for Employment and Welfare Reform said that the Government still aimed to do that, but acknowledged that, given the time slippage and delay in the Government’s issuing of contracts, there were concerns about whether bidders would be able to hit the timetable. Bidders have been asked to indicate in their tender submissions whether they can hit it, but given the Minister’s acknowledgement of these concerns will the Secretary of State tell us about the Government’s contingency plan?

We are still committed to October. In the same way as Jobcentre Plus had to amend its proposals in the light of the downturn, so must our providers. The reason the hon. Gentleman is raising questions about delivery is to distract from the fact that he will be cutting £2 billion from the employment budget, just on employment benefit—

It is not nonsense; it is the truth. The Conservatives have a policy of opposing the fiscal boost, so they need to own up to the consequences, which will mean cutting help for people just at the time unemployment is rising. We will not repeat that mistake, which was their mistake in the ’80s and ’90s.

Departmental File Stores

5. Whether agency workers are used by Capita for its contracted work in his Department's file stores. (263318)

Agency workers are employed by Capita for contracted work at all Department for Work and Pensions file stores. The number of agency staff employed can vary according to the specific project activities required by DWP. Capita undertakes strict security verification checks on all employed staff. DWP and Capita both take the handling and security of all data extremely seriously, and we have robust procedures in place that we review regularly.

Ten million files are in the file store in my Pendle constituency, so I want the Minister to reassure me that no one handling the sensitive files has a criminal record. I also want him to tell me that he does not take everything on trust from Capita, but that the Department carries out spot checks in the file store— because my spies are everywhere!

Right, well, we know where one of them is, anyway. I can assure my hon. Friend that DWP continues to review the processes. He wants to be certain that proper procedures are in place regarding the files in the office in his constituency and in others throughout the country. We are about to undertake a further audited internal review, in which we will look at security infrastructure processes, staff recruitment—both permanent and casual—security checks and procedures for staff training and compliance and monitoring processes. I am happy to meet my hon. Friend—and he can bring along his associates if he wishes—to discuss the outcome of that review. We take it seriously; it is ongoing; and I would be happy to discuss it when it is completed.

Citizens’ Pension

7. If he will consider the merits of introducing a pensions system in the UK based on the principles of the citizens’ pension system in New Zealand. (263320)

We did consider it, but, like the Pensions Commission, concluded that because of the complexity and expense that its introduction would involve, it was not the right approach for the United Kingdom.

Given that the Minister has ruled out the citizens’ pension on the grounds of its extraordinary cost, does she agree that it is pure fantasy politics for the Liberal Democrats to pretend that it is a feasible alternative?

I thought it was the Conservatives’ policies that were fantasy, but I am happy to describe all the Opposition parties’ policies as fantasy land.

The obvious problem with the Liberal Democrats’ policy is that it rules out the possibility of conveying help to the most vulnerable people. Without any element of means-testing, it is very difficult to help those people. I agree with the hon. Gentleman that, once again, the Liberal Democrats have come up with an idea that is no solution. It represents, perhaps, the same level of thinking as that of their leader, who believed that the basic state pension was £30 a week.

Even given the introduction of personal accounts, a fair amount of evidence is emerging to suggest that in the next generation and the generation after that, significant numbers of retired people will be living in poverty. Is my right hon. Friend aware of that, and has any research been carried out that might lead to action that ensures that future generations can live in dignity?

I am sure my hon. Friend will know that as a result of the pension reforms that we are introducing, some 9 million people who have not been able to gain access to second pensions will have that access because of automatic enrolment. Let me also draw his attention to a European Commission report published last week, which stated that while in 1997 pensioner incomes in this country were 15 per cent. below the European average, they are now 9 per cent. above it.

Jobseeker’s Allowance

8. How many jobseeker’s allowance claimants there were in (a) the United Kingdom and (b) the South-West Hertfordshire constituency on the latest date for which figures are available. (263321)

As I said earlier, in January 2009, there were 1,282,645 jobseeker’s allowance claimants in the UK and 1,006 in the South-West Hertfordshire constituency. Those numbers are based on seasonally unadjusted figures.

Given the OECD’s prediction that unemployment in the UK will rise higher and faster than that in any of the other G7 countries, does the Minister believe that the UK economy was best placed to withstand a recession?

We are not in the game of making predictions about unemployment. There are many forecasts about where unemployment and, indeed, the economy may well go, but our job is to ensure that there is help and support for each and every person who is unemployed. In that context, the Jobcentre Plus network is very well placed.

Both the Minister of State and the Secretary of State have referred several times today to the ProAct scheme, which helps to subsidise wages and training in many companies in Wales but is not available to companies in England. Will the Minister, or indeed the Secretary of State—we have worked together well on other occasions—agree to meet me, and other midlands Members of Parliament, to discuss how the scheme could be extended to England so that we can reduce the number of people claiming jobseeker’s allowance and keep people in work?

If the hon. Gentleman chooses to visit his local Jobcentre Plus on 6 April, he will see that the scheme is part of the six-month offer.

Evidence from all quarters now suggests that there are many more jobseekers than there are vacancies advertised in jobcentres or vacancies in the economy as a whole—not least in the Secretary of State’s own constituency, where there are 18 jobseekers for every vacancy in the jobcentres.

I welcome the fact that Ministers have now given up on the complacent assertions that they were making until recently about the number of vacancies in the economy. I include the Secretary of State, who was making such assertions until very recently. Now that those Ministers have woken up to the reality that is faced by so many of our constituents who are having to visit jobcentres, may I invite them to give jobseekers the best possible opportunity to fill vacancies by making available to them the personalised employment programme that we have said should be provided at a much earlier stage in the handling of a claim than it does under the Government’s plans?

My right hon. Friend the Secretary of State and I are more than aware of the reality facing people in this country. If there is any complacency, assertion and smugness, it resides on the Opposition Benches, whose Members indulge in fantasy politics and put no money up.

Mortgage Repayment Assistance

10. What steps his Department is taking to help people who have lost their jobs as a result of the recession to meet mortgage repayments. (263323)

From 5 January, we have doubled to £200,000 the size of the mortgage on which support for mortgage interest—SMI—is paid, and we halved to 13 weeks the length of time people need to wait to qualify. While it is too early to have precise figures, our latest estimate is that this should help prevent about 10,000 repossessions per year.

Will my hon. Friend look again at the people who are entitled to claim SMI? It is linked to income-based jobseeker’s allowance, whereas most of my constituents who lose their jobs are on contribution-based JSA and, as a result, are under real pressure and are losing their homes. Will she instead consider that it might be linked to the tax credit system, so that more help can be given more effectively to my constituents who face losing their homes?

My hon. Friend is absolutely right to raise this issue, and we will, of course, evaluate and review the SMI package in due course. It is worth making it clear that people can receive SMI even if they are on contribution-based JSA, if they are single and meet the qualifying criteria for income-based JSA in terms of the level of savings and so on. However, I suspect my hon. Friend refers to situations when somebody is part of a couple, in which case she is right as the remunerative work rule means that it is long held that they cannot access income-based benefits of any kind if their partner is working more than 24 hours per week. It is precisely to help and support this type of family in such circumstances that my right hon. Friend the Minister for Housing will shortly be introducing the mortgage support scheme.

In Wellingborough, there has been a 100 per cent. increase in unemployment in the last year, and one of the practical results that have been reported back to me is that many people are not getting their redundancy money quickly enough, so that they are unable to keep up with their home mortgage payments. Does the Minister think there is some merit in the Department for Work and Pensions taking over responsibility for redundancy payments?

The hon. Gentleman is always keen to quote figures from his constituency, but I do not doubt that the schemes we have introduced will support his constituents as well as people throughout the rest of the country. I am happy to look at what the hon. Gentleman has suggested, but it is also important to say that, by working together through the lending panel with banks and building societies, we are able to establish better codes of practice, so that lenders give more discretion to those having to pay their mortgages to ensure that, unlike in the ’80s and ’90s, people do not end up unnecessarily losing their homes.

Pension Credit

12. What estimate his Department has made of the amount of pension credit unclaimed by residents of Merseyside. (263325)

Estimates of the amount of unclaimed pension credit are not available at regional level. In Merseyside, there are 88,410 households—107,670 individuals—in receipt of pension credit.

I thank the Minister for that answer. A constituent of mine was refused pension credit on the not unreasonable grounds that he was in prison. However, he has never committed an offence or been convicted or gone to prison in his life. Does this not show we have some way to go in administering this scheme, or that we simply do not know who is in prison?

Obviously, the hon. Gentleman’s constituent would not have been very pleased to be accused of being in prison if he was not. However, we have been able to ensure that the targeting of pension credit has become increasingly successful. Of course we regret any errors, and I am sure the hon. Gentleman will pass our apologies on to his constituent, but, in general, I hope he will realise that pension credit has helped millions of very vulnerable pensioners, particularly since this Government came to power.

Jobseeker’s Allowance

13. What targets apply to Jobcentre Plus for the time within which jobseeker’s allowance claims should be processed. (263326)

Jobcentre Plus has a target of 11.5 days average actual clearance time in which to process new claims for jobseeker’s allowance. Jobcentre Plus is continuing to meet the challenges it faces and is currently meeting this target within 10.1 days.

I am very happy to give the hon. Gentleman that information in writing. He will be interested to know that that figure is three days better than it was two years ago thanks to the £1.5 billion of efficiencies that we have released through our modernisation programme, which his party opposes. I know that he is the Parliamentary Private Secretary to his leader—perhaps he should send him one of his e-mails and say to those on his Front Bench that he is committed to £1.5 billion on top of the £2 billion that they will not support.


We have already taken steps to strengthen and protect the private pensions system to ensure that people can continue to have confidence to save for their future. In addition, under our pension reforms, employers will automatically enrol an estimated 9 million to 11 million eligible workers into a workplace pension from 2012.

Actuaries calculate that changes announced by the Prime Minister in his first Budget as Chancellor in 1997 have cost pension funds £100 billion, which is equivalent to £4,800 for every person with a pension, and there are also the deductions from pension credit payments that were discussed earlier. Is it any wonder that the savings index is as low as it is? It is historically low. Does the Minister agree that we have to get people saving again if we are to help get this country out of recession?

Yes, it is important that people save. Pensions in particular are one of the best ways of saving for security in retirement. However, under this Government, we have a Pension Protection Fund that provides a safety net for 12 million members of defined benefit pension schemes. We have the financial assistance scheme and the pensions regulator, which reduces the risk of problems arising in pension funds in the first place. None of that existed under the previous Conservative Government.

Topical Questions

The continuing responsibility of my Department is to ensure that people get the support they need to get back to work quickly. We are investing now so that those who have lost their jobs do not fall into long-term unemployment and so that those who have been out of the labour market for a while can be helped by the measures in our Welfare Reform Bill.

What progress is the Secretary of State making in promoting public procurement of Remploy products? In the factory in my constituency, a small band of very vulnerable people are left with very little work and the South West of England Regional Development Agency feels that a national approach would be more appropriate.

I am grateful to the hon. Lady for her question. She and I debated Remploy, and her factory in Poole in particular, in Westminster Hall. She will be aware that the regional development agencies, led by the Northwest Regional Development Agency, are developing and putting in place regional showcases where they invite local employers and businesses from the public sector to procure the many products that can be made at Remploy factories. Locally, we can all make a contribution to encouraging our public sector bodies to procure products from Remploy factories. Nationally, I am leading a cross-cutting Government committee on national procurement and I expect to make some positive announcements on that front very soon.

T2. Bearing in mind the cost to the Department’s budget of alcohol misuse, including the loss of working days, will the Secretary of State say what his response is to the recent proposals from the chief medical officer, including those on the minimum pricing of alcohol? (263339)

Clearly, I was asked about the overall policy yesterday. We made it clear that we would be sceptical about proposals that punished the majority for the sake of an irresponsible minority. We are taking powers in the Welfare Reform Bill, so that in future we can require people who have problems with alcoholism to take up treatment as a condition of their benefits. I am sure that my hon. Friend will support those proposals tomorrow.

T4. Blind people in Kettering and across the country would like to know when Her Majesty’s Government will make them eligible for the higher rate mobility component of disability living allowance. (263341)

I am grateful to the hon. Gentleman for asking that question. We debated this during the Committee stage of the Welfare Reform Bill, and there will be an opportunity to do that tomorrow. Interestingly, although there was a contribution in the discussions from the Liberal Democrats and from my hon. Friend the Member for Glasgow, North-West (John Robertson), who tabled an amendment on this issue, there was a lack of any response whatsoever from the hon. Member for Forest of Dean (Mr. Harper) on whether he agreed or did not agree. I think that the hon. Member for Kettering (Mr. Hollobone) needs to have a conversation with his own Front Benchers.

T3. Although I am not in any way downgrading the extent of the recent problems, one of the positive things happening in Gateshead is that Jobcentre Plus is working very closely with the local council, the local college and the regional development agency. Is that being replicated across the country, and do we have enough resources to make sure that jobcentres can work with these people to try to limit the damage? (263340)

Yes, that absolutely is happening around the country, and where we have funding that we can devote to, for example, training people before they are employed, we are keen to do that and to expand it. Indeed, the regional Ministers, of whom the Department for Work and Pensions is blessed with three, are playing a key role in making sure that exactly that integration is happening in regions around the country.

T6. Given the current economic situation, which obviously has nothing to do with the Government’s stewardship of the economy, does the Secretary of State think that it will still be possible to get 1 million incapacity benefit claimants back to work? If not, what sort of figure does he think is doable, and in what sort of time frame? (263343)

That is our aspiration. It has always been a stretching goal, and the reason we wanted such a goal was to make it necessary to have a fundamental reform of the welfare state to get to that point. That is exactly why we want to have re-testing for everybody who was on incapacity benefit, why we have abolished IB and replaced it with employment and support allowance, and why we have the measures in the Welfare Reform Bill, which will be discussed tomorrow. Unfortunately, the hon. Gentleman’s party is not proposing to support them. It wants to posture and to oppose measures that are supported by both David Freud and the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith). The Conservatives still have time to change their policy before tomorrow and to show that they are serious about welfare reform. Somehow, I doubt that they will.

As my right hon. Friend knows, the very first “Communist Manifesto” stated that we would give work to those who can and benefits to those who cannot. What it missed out was those rascals who will not work—those whom people in my constituency describe as those who have never worked or wanted to. Can my right hon. Friend reassure me and my constituents that the Welfare Reform Bill will tackle those individuals, and not those who genuinely need benefit?

Absolutely—anybody who is defrauding the benefit system is taking money from people who genuinely need it, which is exactly why we have halved fraud over the past 12 years and why we are taking measures to crack down further on people who defraud the system in the Welfare Reform Bill, which will be discussed tomorrow. As my hon. Friend knows, right from the first Labour MP’s speech in this House—that of Keir Hardie—we have argued for the support to get people back in to work, but also for making sure that they should have the obligation to do so. That is what tomorrow’s Welfare Reform Bill does, and it will make a genuine difference to reducing child poverty and to increasing employment all around the country.

T7. As the pension uprating is always based on the September inflation figures, and given that, as the Secretary of State will be aware, most economists believe that there will be negative inflation by this September, what will happen to pensions? (263344)

Of course, we do not speculate on Budget questions. What I can tell the right hon. Gentleman, which is a fact, is that we brought forward the uprating to this January by having the £60 bonus. His party opposed that. It should apologise to pensioners around the country, because it wanted to deprive people who needed it of that £60.

I know that my right hon. Friend is aware of the issues affecting the ceramics industry. What plans does he have to visit Stoke-on-Trent to talk to workers about what more can be done to help get them into work, and what more he can do at Cabinet level to try to get the investment in tableware and in bricks that could be part of the regeneration that we need for the country as a whole?

My hon. Friend may be glad to know that I plan to visit the area shortly to follow up on a conversation that I had with the general-secretary of the Unity union. It is pioneering an approach whereby it brings together its own money for investing in training with money from the regional development agency and from Jobcentre Plus, to make sure that we can give people help even before they are made redundant and to get them back into work as quickly as possible. I know that this is a vital industry in my hon. Friend’s area and that she has campaigned long and hard for it. I will continue to work with her on doing that.

T8. With the evolution of the Child Support Agency, does the Minister agree that when maintenance calculations are drawn up, a parent in receipt of a company car should be treated on the same grounds—on the same level of benefit—as a parent who receives money in lieu of a company car? (263345)

The hon. Gentleman makes a valid point, and this issue, too, was discussed in the Welfare Reform Bill Committee. This depends on why the individual is receiving payment in the form of a company car, and each case will be different. If someone is doing so to reduce his child maintenance liability to his children, that should be taken into account, because every parent’s first financial responsibility should be to their children.

This Wednesday marks the 10th anniversary of the Government’s commitment to abolishing child poverty. Will the Minister reassure the House that despite the economic downturn, we will not depart from that ambition and we will do all we can to ensure that we meet our targets?

When the Conservatives ran this country, child poverty doubled—we turned that around, and I am proud of the fact that 600,000 children have been lifted out of poverty since 1997, with a further 500,000 children due to be lifted out of poverty as a result of policies that are being implemented. We want to go further, which is why my hon. Friend is right to raise this issue and why we will be legislating this year to eradicate child poverty in this country.

T9. I am told that the other week all the jobcentres in my constituency had only a dozen or so jobs available, yet many hundreds of local people were looking for work. What do Ministers propose to do—rather than just say—to help those people back into work and to stem the rising tide of unemployment in Essex? (263346)

The hon. Gentleman is right to say that it is harder for people to find work, which is why from April we will be bringing in extra training for people, helping people to set up companies and introducing recruitment subsidies to persuade employers to take on people who are in danger of becoming long-term unemployed. That policy will be introduced in April as a result of the £2 billion that his Front-Bench team opposes. Real help requires real money, and without the money, which his Front Benchers oppose, that help would not be made available in April. He should be lobbying his Front Benchers and telling them to reverse their policy, because it is the wrong approach—it is the one that they had in the 1980s and 1990s and that failed so miserably.

Can the Minister tell the House why, thus far, the Government have not supported the proposals to make blind people eligible for the higher rate mobility component of disability living allowance, as exemplified in new clauses 10 and 4 to the Welfare Reform Bill, which we will debate tomorrow, that were tabled by my hon. Friend the Member for Glasgow, North-West (John Robertson)?

I am grateful to my hon. Friend for raising this matter, which we debated in the Welfare Reform Bill Committee and will debate again tomorrow. On his specific question, we need to establish a time when we can afford to make provision for this particular benefit—[Interruption.] I am always reassured when talking about finance to see my right hon. Friend the Chancellor appear. We will need to examine this carefully, because we need to be able to provide the funding not only for this year, but for many years to come. We are working closely with the Royal National Institute of Blind People and we are grateful for its input. As I say, this is about affordability—that is the primary reason for our approach—but we hope to be able to do it when resources become available.

T10. The Secretary of State will know that young people are particularly vulnerable during a recession. I know that the Department is helping apprentices who are at risk of redundancy in the construction industry, but what steps is he taking in other sectors, particularly in respect of the 115 apprentices who lost their jobs at Woolworths? (263347)

We want to make sure that apprentices can finish their apprenticeships whatever sector they are coming from, and we believe that the rules allow people to do that, because apprentices normally train for fewer than 16 hours a week. We are committed to ensuring that even if they are training for longer than that, they can continue to finish their apprenticeships, because they have made a real investment in their own skills and we want them to benefit.

What discussions will the Secretary of State have with staff at Luton Jobcentre Plus about reviewing the benefit entitlements of the Islamist extremists who so disgracefully disrupted the Royal Anglian Regiment’s homecoming in Luton last week, given that, self-evidently, they were not available for work?

The benefit entitlements of any individual are determined by Jobcentre Plus, but I share the implied anger in the hon. Gentleman’s question at the disgraceful protest by these individuals. We will take up the question of how such demonstrations will be policed in future with Bedfordshire police and the Association of Chief Police Officers.

The direct payments to carers initiative has been very useful in many ways, but what is the position of people whose spouses are in the final stages of dementia and who do not want to be bothered with the forest of administration and paperwork that is associated with that initiative? The alternative is a high charge from the local authority to do it on their behalf. I wonder whether my right hon. Friend would discuss that serious dilemma with me, and especially a specific constituency case that cropped up this very weekend.

I am happy to do that. My hon. Friend knows that nobody is required to use the direct payments service. If people are happy with the service that they get from their local authority or health service, they can continue with it, but the right to control—which is in the Welfare Reform Bill for consideration tomorrow—is important because it gives people the ability to spend the money as they see fit if they are not getting the service that they want or if they think that they could improve on it. I trust that my hon. Friend will support us on that tomorrow, as he will support the whole Bill.

G20 Finance Ministers’ Meeting

With permission, Mr. Speaker, I wish to make a statement about the meeting of G20 Finance Ministers and central bank governors held on Friday and Saturday, to prepare for the meeting of leaders and Finance Ministers in London next month.

Since November, when the G20 last met in Washington, we have seen a collapse in international trade—a much deeper and more widespread economic downturn—with every country in the world affected. In October, the International Monetary Fund was forecasting world growth this year of 3 per cent. Now it is predicting negative global growth for the first time in 60 years.

At the meetings, it was clear that every G20 country was determined to act together to restore growth and take steps to restore bank lending, as well as prepare for recovery. There was unanimous recognition, too, that we must take action to help emerging and developing economies deal with this global downturn. We agreed on the following.

First, to support our economies, we agreed that we must take whatever action is necessary, for as long as it is necessary, to boost demand and support jobs. Many countries have already taken substantial steps to support their economies. The IMF calculates that, in the United States, this year’s fiscal stimulus is worth 3.5 per cent. of GDP; in Germany, 3.2 per cent.; in China and France 2.6 per cent.; and here too, our fiscal stimulus is 3.4 per cent. of the economy. We agreed that we should be ready to do more if necessary—not all countries in the same way or at the same time, but whatever is needed to deal with today’s problems and prepare for recovery.

Secondly, to support people and businesses, it was recognised that it is essential to restore bank lending. It was agreed that countries need to consider the full range of options available, including liquidity support, recapitalisation, and dealing with assets for which there is no market or whose value has fallen significantly. On dealing with these assets—something that we, America and other countries are already doing—while there is no single solution or overnight fix, we developed a common framework, so that countries can use the full range of options when dealing with the immediate problems in their banking systems.

Thirdly, on monetary policy, we welcomed recent reductions in interest rates, and G20 central bank governors made a commitment to maintain lower rates for as long as is needed. That is important, as it sends a clear signal that central banks all over the world will keep interest rates low to support economic recovery. It was agreed that central banks can also use measures other than interest rates, and that is why the Bank of England, the US Federal Reserve and the Swiss Central Bank are currently putting money into the economy through their credit easing programmes.

It was also agreed that the financial supervisory and regulatory regimes need to be strengthened, both nationally and internationally. There is significant consensus emerging, here and across the world, that we need to reform the system of banking regulation. That is why I asked Lord Turner, when he became chairman of the Financial Services Authority in the autumn, to come forward with recommendations on how to strengthen our regulatory regime. He will publish his proposals this week. I expect his overview of the system to cover four broad themes: first, capital and liquidity rules; secondly, remuneration and the links to risk management; thirdly, how better to anticipate risks to the wider economy presented by problems in the financial sector; and, fourthly, rather than our abolishing our single regulator, how the FSA can be strengthened to regulate large complex institutions.

It was clear at the G20 meeting that financial regulation in most countries needs strengthening. In particular, all important financial institutions should be regulated, including those hedge funds that are systemically important. Wider regulation must be complemented by strengthening prudential oversight in looking not only at individual banks, but at how they contribute to wider risks to the economy. In future, banks throughout the world must have sufficient reserves at all times, and regulators need powers to ensure that banks do not over-extend themselves.

We must also improve international co-operation, building on the 25 supervisory colleges set up since last year to supervise banks that trade across the world. We also need a joint international early warning system that will enable us to deal with emerging problems sooner. That means working within the European Union and recognising the need for co-operation, which we have been demanding for some time, while recognising the essential role of national regulators.

We also agreed a range of other measures on international banking supervision. All credit rating agencies need to be regulated. There needs to be full transparency of off-balance sheet exposures. Accounting standards need to improve. Regulation will cover payment and bonus systems. We agreed that tax havens must be opened up, and we welcomed recent announcements by Switzerland, Hong Kong, Andorra and Singapore that they will share tax information according to OECD guidelines. Here at home, we expect banks to comply fully with their tax obligations, and I can tell the House that I have asked Her Majesty’s Revenue and Customs to publish shortly a draft code of practice on taxation for the banking sector, so that banks comply with not just the letter but the spirit of the law.

The World Bank currently estimates that 129 developing countries, many of them in sub-Saharan Africa, are facing financial shortfalls, and up to 90 million more people could fall into poverty as a result of this global crisis. We agreed that we must minimise the impact of the crisis on developing and emerging economies, many of which—they include India, Indonesia, Turkey and South Africa, for example—were represented at the G20. We agreed that that would require a very substantial increase in resources for the IMF, and that the development banks have the capital that they need. Agreement on total levels of support will need to be reached next month.

We remain committed to fighting protectionism and maintaining open trade and investment. That is essential if we are to avoid a prolonged downturn. It is also imperative that the international institutions reflect the reality of the day; the IMF and the World Bank were set up 60 years ago. Once when we talked about the global economy, we meant the west and Japan, but not any more. For example, China is already the world’s third-largest economy. Emerging and developing countries need to be at the top table too, so we agreed that the next review of IMF representation should be concluded by January 2011, while World Bank reforms must be completed by next spring. We welcomed the recent decision to extend the Financial Stability Forum to cover all G20 member countries.

The G20 leaders and Finance Ministers will meet again in three weeks’ time. We must seize the moment to make a real difference, supporting our economies, dealing with the banks’ problems, and preparing for recovery. Ours must be a time for renewal to tackle the downturn and build a more sustainable future. I commend this statement to the House.

I thank the Chancellor for his statement, and we look forward to the Prime Minister giving a similar statement on the day after his G20 meeting. The meetings are an important opportunity to work together to tackle the financial crisis, and to try to prevent it from happening again. Of course we must send the clearest possible signal that globalisation is not on the retreat, but surely the Chancellor must share some of the quite widely felt disappointment about the fact that the Finance Ministers’ meeting this weekend did not produce more concrete proposals and ducked some of the most difficult issues.

Let us take international trade first. The communiqué says—the Chancellor repeated this—that all countries

“commit to fight all forms of protectionism and maintain open trade”,

but I am sure that he remembers that in the last G20 meeting in November, something almost identical was said. Since then, of course, the US Congress has introduced the “Buy American” programme, the Indians have increased agricultural tariffs, and our own Prime Minister has gone around talking about British jobs for British workers. Has the rest of the G20 given up on the prospect of putting further pressure on America and India in particular to try to conclude the Doha trade round this spring, which would provide the greatest stimulus of all? If completing Doha is out of their reach, what about at least trying to freeze tariffs at their existing level, rather than allowing them to increase, as current trade rules allow.

On the reform and financing of international institutions, again I fear that the communiqué ducked some of the toughest issues. For example—again, the Chancellor repeated this—it says that IMF resources should be increased “very substantially”. The communiqué issued after last November’s G20 meeting said almost exactly the same thing. Perhaps the Chancellor could say something about how much the increase should be, and who exactly is going to pay for it. Would it not help if western powers such as Britain had the courage to give up some of the power that we have at the IMF so that countries such as China, Brazil, India and South Africa have a much greater say, instead of putting it off until 2011? Did he note that the Brazilian Finance Minister said this weekend that his country

“will only agree to increase capital to the IMF after reform is carried out because there is still an imbalance in our participation”?

Should that imbalance not be resolved?

We see the same fudge on future financial regulation. I am delighted that there is now growing agreement on the need for counter-cyclical capital requirements, which I am sure the Chancellor remembers we proposed more than a year ago. Promised future action on the credit rating agencies, off-balance sheet vehicles, stronger macro-prudential regulation, tax havens and bankers’ bonuses is all welcome if it actually takes place. Indeed, the British Government can provide unique advice on off-balance sheet accounting. It is a shame that the Prime Minister, in the 10 years in which he turned up to G20 Finance Ministers’ meetings and other such meetings never proposed any of those things. It is striking that the Chancellor still defends the system of regulation that his predecessor put in place in 1997, as it has so palpably failed.

One thing that I concede that the Prime Minister talked about during those years was an early warning system. Given that the early warnings issued in 2003, 2005, twice in 2006, and early in 2007 by the IMF about Britain’s housing bubble and Government debt levels were completely ignored by the previous Chancellor, how does the current Chancellor plan to make sure that his early warning system is listened to in the Treasury?

Finally, I am pleased that the communiqué talks about the need to constrain leverage and the need for fiscal sustainability. I just wish that we could have some of that in Britain. The outspoken comments of various European Finance Ministers and the German Chancellor this weekend exposed the transparent attempt by the Prime Minister to secure some international cover from the G20 for his attempt to create domestic political dividing lines. It turns out that they do not all agree with the Prime Minister that countries such as Britain that are running huge budget deficits can afford yet another round of debt-funded spending splurges. Indeed, the Chancellor is busy briefing newspapers such as the Financial Times that he does not agree with the Prime Minister on this, either, which should make putting together next month’s Budget quite a challenge.

It would help if we started with a consistent Treasury definition of the size of the existing fiscal stimulus that he put in place. Today, he said that it was 3.4 per cent. of our economy, but in his pre-Budget report speech to the House he said that it was around 1 per cent. of our economy. Will he clear up exactly what the definition of the fiscal stimulus is in the Treasury? Did not Chancellor Merkel sum up the choice facing the Government when she said this weekend:

“If we want to make a real impact, you really must implement the package first before you talk about the next step”?

That is spot on. Months after Government schemes have been announced in a blaze of publicity and cheered by that lot on the Labour Benches, almost none of them has been implemented. The working capital scheme has not provided credit to a single business; the homeowners mortgage support scheme has not helped a single home owner; the Department for Business, Enterprise and Regulatory Reform is blaming the Treasury and the Bank of England for the fact that the car manufacturers scheme is not up and running; and no one has ever heard again of the national internship scheme. We will return to those issues when we debate the wider economy later this week, and I urge the Chancellor to turn up to that debate so that he does not just do statements and debates on international issues, but answers for his policies on the domestic economy as well.

We want the G20 to take action, but that means confronting the difficult decisions on trade and finance, not ducking them. I sincerely hope a great deal more progress is made in the next couple of weeks. If it is not, the Prime Minister’s claim that he is fashioning a “grand bargain” will look a little over-ambitious, and he will have to return to the real world and confront his failures here at home.

I look forward to debating the economy with the hon. Gentleman when we debate these matters on a Government motion at the end of the month and no doubt on many occasions in between times.

The hon. Gentleman raises a number of points that it is important that we deal with. First, I welcome what he says about resisting protectionism. I agree that we would very much like to see the Doha round completed. We have raised the matter with both the Americans and the Indian Government. We believe that a deal is within our reach, but it is important that countries engage in that. That would send a powerful signal to the whole world that Governments are serious about resisting protectionist calls at present and breaking down barriers in the future. We have raised—I personally have raised it with my US counterpart—the need to make sure in everything we do that we do not end up, intentionally or unintentionally, with protectionist measures, which would be hugely damaging, as we have seen in the past.

The hon. Gentleman is right to raise the question of the IMF resources. He asked why we agreed that the conclusion should be reached by 2011, which is two years away, as he said. The reason is practical experience. Simply to reach the agreement arrived at last year took several years of negotiation. What I want to avoid—what we want to avoid—is any delay in giving the IMF extra resources to intervene early and decisively when necessary. If we hold that up while we have arguments about the constitution and representation, people will not forgive us. When we realise that the countries badly affected by the downturn include many emerging economies, the urgent need for the IMF to have additional resources becomes clear. The hon. Gentleman asks who will contribute. Those discussions are continuing.

On financial regulation, I agree that we all need to learn from what has happened. It is important not only that we have a financial regulatory system that deals with institutions that have not been regulated up to now, such as hedge funds and credit rating agencies, but that we ensure that the system takes account of what is happening internationally. It is important that individual national institutions react when they detect that things are going wrong. That is one of the reasons why, for example, I want our regulators and other regulators to have back-stop powers to stop banks that are overreaching themselves exposing to risk not only the bank itself, but the wider system.

It is necessary, as I pointed out in the pre-Budget report, that we support our economy now, but it is also necessary to ensure that what we do is sustainable and that in the medium term all countries live within their means. There was a recognition at the weekend that that is necessary.

I disagree with the hon. Gentleman in his conclusion, which seems to be very much the conclusion that he reached last November. Faced with a choice between doing everything we possibly can to support our economy now or standing back and letting recession take its toll, he still believes that the do nothing approach is right. I think he is wrong on that and out of touch, especially when we consider that in the United States, Germany, France, Japan, China and countries across the world, there is a commitment and an acknowledgement that those countries cannot stand by, as Governments did in the 1930s, do nothing and let recession take its toll. That is a price that we are not prepared to see paid.

I thank the Chancellor for sending me his statement.

I represent an party that is internationalist, so I naturally welcome efforts to save the world, but saving the world does start here. Many of the activities discussed at the summit could be much better dealt with at a UK level. First, may I ask the Chancellor about tax avoidance and tax havens? The Government have had 12 years to identify many of the problems in this area, especially as many tax havens are in British dependent territories. Why did they not move on that problem earlier?

I welcome the Chancellor’s comment in his statement that he will produce a code of conduct on tax payments by British banks, but why can the Government not simply stop tax avoidance in banks that are being helped by the British taxpayer? Can he confirm that RBS has stopped its tax avoidance activities? Can he answer the question that I put to his Financial Secretary last week, which is whether Lloyds, now it has been rescued, has agreed to stop some publicly identified tax avoidance devices carried out on a large scale? Since the Chancellor is negotiating with Barclays on its tax avoidance activities, some of which I put into the public domain—indeed, I sent details to the Inland Revenue—can he make it clear that any assistance under that insurance scheme will be made absolutely conditional on Barclays stopping its tax avoidance activities?

There are clearly international regulatory issues, but the most important of them should surely be dealt with domestically. The Chancellor identified the most important issue in his statement: what he calls the regulation of large, complex organisations. Is not Britain in a unique position among the other countries at the G20 summit, in that three of the five largest banks in the world are British and are becoming the responsibility of the British taxpayer? They are so large because they combine British retail, high street operations with what have come to be called the large international casino operations, much of which are centred on investment banking.

There is a fairly wide cross-party consensus on this matter. It has been expressed in the Chancellor’s party by the Chairman of the Select Committee on Treasury, and Lord Lawson made a good statement for the Conservatives this morning on the problem, advocating a reform that splits the banks into their respective component parts. Why is it then that the Prime Minister, two weeks ago, quite specifically ruled out reforms of this kind—the so-called Glass-Steagall reforms? Why cannot the Government have a more open mind? Are they over-dependent on the advice of investment bankers?

Will the Chancellor follow up his comments on monetary easing and the joint approach to credit expansion? Why is it that in Britain, the Government and the Bank of England are following a pattern of buying up gilts, which drives down the yields on gilts and causes serious problems for pension funds and pensioners trapped in compulsory annuities, while in the United States corporate bonds are being bought up? Why is there such a big divergence in how these two important countries are pursuing the same policy? Is there some reason for it, or has it just happened by accident?

My final point relates to the wider global picture. I totally endorse the comments that the Chancellor and the shadow Chancellor made about the future of world trade and trade negotiations, but can I ask the Chancellor what was done at the summit about the collapse of trade credit, which is the counterpart of the collapse of credit insurance in our own economy? That, rather more than protectionist measures, explains the downward spiral in world trade.

The hon. Gentleman raises five separate questions, and I shall try to deal with them.

In each of the Budgets since 1997, we have introduced measures to cut tax avoidance. By its very nature, tax avoidance must be dealt with all the time. As we close one loophole, there are those who will seek to find others, which need to be closed down. It is important to have a code of conduct partly, as the hon. Gentleman says, because of the very complexity of banking and the way in which investment banks and others have sometimes sought to develop instruments in order to avoid paying taxes. That has, in itself, posed a systemic threat to the system, which is one of the reasons we need a code, so that people abide by the letter and the spirit of the law. That is very important. I cannot talk about individual institutions because the principle of taxpayer confidentiality is important, but I think that given that the public are supporting the bank system, they would expect banks to be prepared to abide by that code. Our intention is to produce a draft code, probably at the time of the Budget, and then to consult with a view to getting it introduced as soon as possible.

The hon. Gentleman asked about regulation, and he is absolutely right that there is now a consensus. Ironically, there was a consensus 10 years ago, when he himself was also talking about light-touch regulation. It is important now that people see that our regulatory system recognises the reality of the fact that we are the home regulator to some very large institutions, which could bring a lot of wealth into this country; they certainly provide a lot of employment. However, it is important that the regulatory system should be up to the mark and take account of developments today and in the future.

The hon. Gentleman asked about the Glass-Steagall split. The last time that he raised the issue, I said that it would have more strength if the problem had simply been confined to the investment banks. It was not: retail banks in this country and others got into trouble as well. There are arguments for what the hon. Gentleman said, and they need to be looked at, but I am not sure whether a 1930s-style solution is readily transmissible into what is needed in the early part of the 21st century.

In relation to quantitative easing and what the Bank of England is doing, I should say that the Bank is also buying corporate bonds, which we regard as important. The hon. Gentleman will know that in the letter that I sent to the Governor of the Bank of England earlier this month authorising him to undertake these activities for monetary purposes, I said that I wanted us to maintain the purchase of corporate bonds.

Finally, yes, the question of trade credit was raised at the weekend. It is an increasing problem, although I suspect that it will have to be dealt with country by country rather than our trying to find a simply international solution. The hon. Gentleman is absolutely right: trade credit is a problem not just for large companies but for small ones as well. That is why we are seeing what we can do in this country to try to get that insurance in place.

I assure my right hon. Friend that on this side of the House we congratulate him on the leadership that he has shown in these matters. Furthermore, we commend his stamina and cool in the face of the diabolically difficult and complicated problems that confront the whole world economy at this point in time. That all stands in marked contradistinction to the do nothing approach of the Conservative party.

The Chancellor mentioned Lord Turner’s report, which is awaited with great anticipation on both sides of the House. Will my right hon. Friend pay particular attention to part 2, which deals with bonuses and remuneration linked to risk management? Might there be a chance of our finding in the report a solution to the Sir Fred Goodwin pension issue?

In relation to RBS, I said that UK Financial Investments, which holds shares on behalf of the bank, is discussing with RBS how that problem might be dealt with. I also said that there was widespread agreement in the discussions at the weekend. In the past, a lot of Governments said that the payment of bonuses and incentives was a matter for the individual banks. There is now a recognition that in many cases that distorted the activities of the banks so that they got into more and more risky areas, and the staff involved were very heavily rewarded. That did not just bring down one or two banks, but had very severe and substantial effects on the wider economy. As the Financial Services Authority recognised last year, and as other countries increasingly recognise, as they did this weekend, we need to make sure that we take action so that such distortion of behaviour does not happen again.

Is the Chancellor working towards a pan-European banking regulatory regime, with statutory authority within the United Kingdom?

The hon. Gentleman will be aware that Jacques de Larosière has prepared a report for the Commission. It raises a number of issues that we need to discuss, because we recognise that most of our banks will trade across the European Union, just as many EU-based banks such as Banco Santander and Deutsche Bank trade in this country. Therefore increased co-operation and making sure that there are similar rules within the European Union is important.

However, as I said in my statement, we have to be clear about who is responsible for the regulation of individual institutions. I therefore think that national regulators will continue to have a very important role. My view is a pragmatic one—what works and is effective is important, and we should not get too hung up on the theology of these things. It is important that we continue to talk and see where we need to co-operate and concentrate within the home state.

It was reported in The Independent on Sunday, and possibly elsewhere, that there were quite serious differences of view with Chancellor Merkel about the fiscal stimulus. My right hon. Friend read out the figures for the proportions of GDP that different countries are committing, but if wide differences did open up, that would be very unfair, particularly on those countries that had a bigger fiscal stimulus and took more of the burden of reflation. Could he elaborate a bit on what differences there were?

The agreement that we reached was signed up to by all 20 Governments, including the German Government, who were well represented at the meeting at the weekend and signed up to the same communiqué as everybody else. It is perfectly fair to say that whatever Governments do, they should ensure that they do it quickly and that it is implemented. However, it is also important that we recognise that as the situation continues to develop—remember that we have seen over the past few months a series of figures which show that there is a continuing deterioration in Germany, and in other countries too—it is absolutely necessary that each and every one of us should not only sign up to ensuring that we implement what we have announced but do whatever is necessary to ensure that we support our economies, come through this and get into recovery far more quickly than would otherwise be the case.

The Chancellor talked about everyone essentially agreeing on the same plate about all the proposals. However, is not the reality that many other countries—Germany, Canada, and others besides—believe that Britain is entering this in a worse state than any of them and do not wish to be driven by the British to give them cover for a panic set of measures? Does he not accept that that is why the Germans are critical and he has to make a very bland statement at the Dispatch Box?

I never cease to be amazed at how the right hon. Gentleman, who has spent most of his career here getting about as far away from Europe as he possibly can, seeks to pray in aid the Germans when he wants to make an opposite case. The answer to his question is no, he is not right at all.

I welcome what my right hon. Friend has said about the emerging consensus on the reform of banking regulations. Does that consensus extend to abandoning the old Basel approach to banking regulations—in particular, the internal risk-based approach? On lessons being learned, is there a sense that aspects of the wholesale abolition of credit controls and the big bang in the City in the 1980s might have been unwise?

I think that there are lessons to be learned in respect of a whole lot of reforms that have been made over the past 20-odd years. In relation to the Basel process, I would say two things. First, the models that we have adopted in relation to how banks are regulated obviously need to be looked at again. Secondly, the Basel process, which, among other things, governs the amount of capital that banks need to hold, should certainly be looked at, because the rules tend to exacerbate an already difficult situation, and that needs to be dealt with urgently. It is unfortunate that the Basel process took 10 years to reach fruition, and the year in which it was implemented was probably the worst possible year in which that could have happened. Therefore, this needs to be looked at again, and urgently, and it is not altogether clear that the Basel process is capable of doing that at the present time.

If banks can be criticised for taking over other banks without undertaking due diligence, how much more culpable are the Government, who spent a vast amount of public money undertaking commitments that they do not fully understand? Will the Chancellor undertake that no further public money will be spent unless there is first a careful analysis of the assets and liabilities to be taken over?

If I had followed that advice last October, when I was confronted with the imminent collapse of the banking system, and said, “No, I’m not going to do anything for several months while I carry out some due diligence”, we would have been left in absolute chaos. I agree with the hon. Gentleman that when we take on guarantees, as we have done in relation to RBS and the Lloyds group, which we announced a couple of weeks ago, there needs to be proper diligence. Perhaps he will understand that that is why there was a gap between my announcing the principles of the scheme on 19 January and its implementation. That delay was condemned by many of his hon. Friends. If he is saying, “Yes, you’re right—it is necessary to carry out due diligence”, then I agree with him on that point.

Was there any discussion of capping interest rate charges, as they do in France and Germany? It is a waste of time for us to put money into people’s pockets when there are store cards and bank cards and when National Provident is charging interest in excess of 183 per cent. and rising, even though the Bank rate is 0.5 per cent. That is a big issue, and I wonder whether there was any discussion of it.

Individual credit cards and store cards were not discussed, but of course the general problem of credit and the burdens faced by people in all the countries that were represented were discussed. We need to ensure that when people take on obligations they are treated fairly, that they can afford to meet those obligations and that the repayment rate is realistic and fully understood.

I noticed that the Chancellor said in his statement that we should ensure that banks do not over-extend themselves. Will he now accept that the big mistake that Lloyds TSB made was to over-extend itself when it took over HBOS?

As I have said before, that decision was taken by the shareholders of both Lloyds and HBOS—[Interruption.] Opposition Members can groan, but I was recently reminded of the fact that the shadow Chancellor made his position clear last October, which I had forgotten. He said:

“I spoke to both of the chief executives today of the two institutions and made it clear the Conservatives support what they’re trying to put together”.

Obviously, as on so many other things that the Tories have said, they changed their mind when it became inconvenient. In response to the hon. Member for Glasgow, East (John Mason), that decision was taken by the shareholders of both institutions.

The Conservative party is, of course, in government—in Canada, which is a member of the G7 as well as of the G20. In relation to the question asked by the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith), can my right hon. Friend confirm that Jim Flaherty, in his federal budget in Canada on 21 January, announced plans for a fiscal stimulus amounting to 3.2 per cent. of GDP in the next two years? That comes from a Conservative Government, unlike the do nothing Conservatives here.

My hon. Friend is quite right that Jim Flaherty and Mark Carney, the governor of the central bank in Canada, were very clear that Governments have a duty to support their economies. But then I have always found that the knowledge of the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) of things beyond the shores of this country is somewhat hazy.

Will the Chancellor now answer the shadow Chancellor’s point about all these new initiatives? Could he give us one example of a scheme announced since Christmas that is actually helping businesses in our constituencies—a scheme that has been announced and is actually working?

Yes, I am very happy to. For example, the scheme to allow businesses time to pay their tax is now helping about 85,000 companies. There are other examples: the VAT reduction is in place, the reduction in basic rate income tax will come in in April, and many schemes have been implemented and are helping people. When the hon. Gentleman asks about such proposals, he must reflect on the fact that he opposes each and every one of them. If the Conservatives had had their way, not one of them would have been in place, because they were not prepared to put a single penny piece towards ensuring help for people and businesses in this country.

I very much welcome my right hon. Friend’s statement, especially the recognition of the impact of the recession on developing countries, where 7 per cent. year-on-year growth is needed to make any inroads into poverty. What concrete commitments were given by the G20 partners to support developing countries and to follow the notable lead that this country has given in tackling world poverty?

My hon. Friend is right that that is important. That is why we got a commitment to increase the IMF’s resources substantially. I do not think that that commitment would have been readily forthcoming a few weeks ago. It has taken some time not only to persuade countries that we need to increase those resources substantially, but to gain recognition that that means that people need to step up to the plate and produce the means of doing so. I am hopeful that we will be able to complete that process in the fairly near future. It is totally unacceptable simply to stand by and see maybe 90 million people go into poverty because of what is happening. That is another example of why countries need to do something, and why doing nothing is morally wrong in this case.

What, if any, should be the limit on the amount that the UK Government print and borrow to avoid a run on the pound, a debt crisis or a trip to the international moneylenders?

If the right hon. Gentleman is referring to quantitative easing, he knows that I set out limits in the publicly available exchange of letters between me and the Governor of the Bank of England the week before last.

I managed, with impeccable timing, to leave the Treasury Committee just when things started to get interesting. However, when I served on it, I asked regulators whether they could analyse and measure the risk in a system—not only systemic, but institutional risk. They assured me that they did that, but it is now obvious that they did not. How can we ensure, when people with PhDs in mathematics—the rocket scientists—devise new derivative instruments and other products, that some of the regulators can do the same and know what they are up to?

I am not sure whether we need more rocket scientists; sometimes we need to apply plain common sense. Adair Turner’s recommendations will be published on Wednesday, and I hope that they will provide a firm basis on which we can build. As I have said previously, we will publish a White Paper, setting out the Government’s intentions for legislation and other matters, at the time of the Budget.

To revert to what my hon. Friend the Member for Tatton (Mr. Osborne) said about reform beginning at home, when the Chancellor lectured his colleagues on the evils of the off-balance-sheet mentality, did not the slightest blush colour his cheek as he remembered how the Government treated the private finance initiative? What sort of moral example does he think that that set financial institutions?

If I were the hon. Gentleman, I would not make too much of that. I think that he was in government when PFI was invented.

The Chancellor mentioned quantitative easing in his statement. What steps is he taking to ensure that banks that are beneficiaries of that scheme make additional liquidity available to Britain’s businesses at, importantly, a price they can afford?

As the right hon. Gentleman knows, the lending agreements into which we have entered are either those in which we have put more capital or those to which we have made more money available through the insurance scheme. The Bank of England’s scheme for credit easing is part of its monetary policy and does not, therefore, have direct lending agreements tied to it. Of course, if that much more money is in the system, it should help with the amount of money that is available for lending.

In view of the universal criticism of the expensive VAT cut in this country, will the Chancellor say how many other members of the G20 have followed or plan to follow the Government’s path in that direction?

As I have said many times—I said it again on Saturday—we have not sought to tell each country that they must do one specific thing. Each country must make its own decision. We have a range of measures, including VAT reduction, cutting the basic rate of income tax and introducing infrastructure projects such as home insulation, as well as measures to help business. Each country must do what is right, but it is important that they do something. The hon. Gentleman is entitled to make his criticism as a debating point, but he should remember that his party is against all the measures—it would do nothing.

Will the Chancellor add to his earlier comments about the regulation of credit rating agencies? Standard & Poor’s and Moody’s have a stranglehold on the rating business and freely gave triple A ratings to sub-prime debt structures. Has any consideration been given to promoting a European champion on credit rating agencies, or perhaps even to introducing a public sector provision on rating agencies?

I have to tell the hon. Gentleman that there was not a discussion about the creation of a European credit rating agency. However, his general point about the need to supervise properly those agencies that already exist is important, not only because their determination can be pretty important, but because we need to deal with conflicts of interest where agencies approve a scheme in which they have a direct financial interest. That is clearly unsatisfactory, given the importance and the nature of such agencies.

May I reinforce the point made from the Liberal Benches about the desirability of separating the functions of an investment bank from those of a retail bank, which is also a point that the noble Lord Lawson made this morning in the Financial Times? The Chancellor was, I thought, not very enthusiastic about that, but would he consider publishing a Green Paper setting out the arguments on both sides? Alternatively, perhaps he could appoint a royal commission to look into the matter, because it is a matter of major importance and the arguments need to be properly articulated.

I agree with the right hon. and learned Gentleman: there is an argument to be had. I made the point to the hon. Member for Twickenham (Dr. Cable) that it is not the case that deposit-taking institutions here have avoided trouble, and investment banks are the sole source of it. It is rather more complex than that. There are arguments about whether we need separate degrees of regulation within institutions that might be involved in both deposit-taking and investment activities. Indeed, I suspect that there are also arguments about what the capital adequacy ought to be in relation to both of those.

I certainly do not want to stifle argument. All I was saying to the hon. Member for Twickenham (Dr. Cable) was that I am not yet persuaded that what has been proposed is the right thing to do. The situation is rather more complex than it was when Glass and Steagall sat down to draw up their Act. However, it is important that we use this opportunity to have a debate. My only caveat is that we do not have an unlimited time to do that. Given the length of time that it takes to change the law here or anywhere else, people would want the confidence that we were dealing with the problems and that we had a clear way forward.

Does the Chancellor accept that the system whereby everybody urges ever bigger bail-outs from everybody else is regarded by the public with some bemusement as well as fear, because they know that they are going to have to pay everything back? Does he understand that in the real economy, firms—particularly small firms—are on the receiving end of a completely inappropriate degree of interference from the public sector, by way of regulations, rules, taxes and directives, which prevent the real economy from earning its way out of this recession? Did he discuss that with his colleagues at the G20 or does he have a do nothing policy on that aspect of the economy?

While we are in humility mode, the right hon. Gentleman will no doubt remember that throughout the passage of the Financial Services and Markets Act 2000, hardly a speech went by when he did not call for light-touch regulation. Like everybody else, I think that we can learn from experience. We are intervening to support the banking system not to help the banks, but because businesses and individuals would have lost substantial sums of money if we had not done so. People would have lost their savings and businesses could not have accessed money, which would have been disastrous for our economy. As for the smaller businesses sector, it is important that we think long and hard before imposing regulations and that, if we do impose them, we are clear that there is a clear economic or social benefit arising from them.

It seems that Lord Turner may have started his review of the regulatory structure with one hand tied behind his back by the present Chancellor and the other tied by his predecessor. Would that be because the Chancellor, as architect of the existing Financial Services Authority, does not want to recognise that any of the plans were perhaps at fault? The regulator has acknowledged that it fell down in its first review of a high-impact firm. Why, therefore, has the Chancellor told Lord Turner not to look afresh at regulation, but just to bolster up failed plans?

I do not think that I said anything of the sort to Lord Turner. Knowing Lord Turner, I do not think that he is the sort of person who is ever likely to do anything if he feels that his hands are tied. He had a free hand. He was asked to look at what he thought needed to be put right. When we see his recommendations, I am sure that the hon. Gentleman and others will find that.

Does the Chancellor of the Exchequer understand the remoteness of the G20 process to the average British taxpayer? Last week the Government-financed regeneration of Kettering town centre ground to a complete halt because the Royal Bank of Scotland, which is now 70 per cent. owned by the taxpayer, pulled the plug on a local construction firm, which put loads of people out of work and meant that construction came to end. Does grand summitry not stand in sad and sorry contrast to the inappropriate banking decisions taken every day by now almost nationalised banks?

As the hon. Gentleman will appreciate, I am not aware of the circumstances of the construction company to which he refers. If he writes to me about it, I will certainly look at it, but he will appreciate that whether or not the state owns a significant shareholding in it, a bank has to reach a judgment about whether something is a good risk on a commercial basis. I am in no position to pass comment on the particular case, as he knows. Banks have to make commercial decisions and evaluate the risks to which they might be exposed irrespective of whether they are in public or private hands.

The public will welcome the fact that the Chancellor went to the G20 meeting, but they will find it very strange that he is unable to attend the House of Commons this Wednesday, when we have the first full-scale debate on the economy—and only because Her Majesty’s Opposition have called for it. Would the public be right in thinking that the Chancellor is running scared?

I may be wrong, but I believe that I have given more statements to this House as Chancellor than many of my predecessors. I am always happy to engage with the Opposition, not least because I am engaging with a blank sheet of paper.

Points of Order

On a point of order, Mr. Speaker. I seek your guidance on how I can ensure that Ministers respect statements that are made in this House. On 27 January in a Second Reading debate on the Welfare Reform Bill, I said that

“we Conservatives support this Bill”.—[Official Report, 27 January 2009; Vol. 487, c. 203.]

Yesterday on the “the Politics Show”, the Secretary of State for Work and Pensions, with reference to the Welfare Reform Bill, said:

“the Bill we want to put through on Tuesday will do that, and the Tories oppose it”—

a view that I believe he repeated in Work and Pensions questions this afternoon. How can I ensure that Ministers respect statements made in this House and do not make such inaccurate statements that are designed to mislead the general public?

I must tell the right hon. Lady that I have no control over what Ministers say in this House, so it is not a matter for me. It seems to me, however, that she has put the matter on the record and put the record straight.

On a point of order, Mr. Speaker. Last Thursday I attended a meeting in this place about Des Warren and Ricky Tomlinson, who were jailed in the early 1970s for their trade union activities. Some 60 people were at this demonstration, and many of them were wearing T-shirts displaying the slogan “The Shrewsbury Two”, as those two people were commonly known. Sadly, the vast majority of those individuals were told to take their T-shirts off when they came into this place. Is that a practice that you are aware of, Mr. Speaker, or has something new happened recently?

I am well aware of the story of the Shrewsbury pickets. It was something that I was involved in. [Interruption.] Perhaps I should put that another way: I listened to their case when I was a shop steward. The dress code of individuals visiting the House is varied, so I see no reason why these people’s T-shirts should have been taken from them or why they were told to remove them. I will look further into the matter and see what I can find out.

Industry and Exports (Financial Support) Bill

Second Reading

I beg to move, That the Bill be now read a Second time.

It is important that the UK emerges from the global downturn rapidly and strongly. The Government have responded and will do whatever it takes to ensure the stability of the financial system and to provide real help to people and businesses during these difficult economic times. However, we cannot secure recovery without willing the means, and this short Bill gives the Government the necessary flexibility to provide further support to industry.

The Bill makes two small but important amendments, to the Industrial Development Act 1982 and to the Export and Investment Guarantees Act 1991 that will help to strengthen the provision of support for businesses.

The first clause proposes to amend the cumulative limit on financial support that may be provided under section 8 of the Industrial Development Act 1982. That provides the legislative power for Government to provide selective financial support to businesses. However, just to avoid any doubt, I would like to make it clear that increasing the section 8 financial ceiling does not in itself authorise any actual expenditure.

The precise purposes for which assistance may be used are set out in the Act. They include promoting the development, modernisation or efficiency of an industry; the creation, expansion or sustaining of productive capacity in an industry; promoting the reconstruction, reorganisation or conversion of an industry; encouraging the growth of an industry; and encouraging the arrangements for ensuring the orderly contraction of an industry.

The Act does not include support that is provided under the auspices of the designated assisted areas, which is covered by section 7 of the same Act, or assistance for certain sectors, notably banking and insurance, which are covered by separate legislation. The scope of the power under section 8 is nevertheless wide, and has been used as the legislative basis for a wide range of programmes of support for businesses that have been introduced since 1982. They include enterprise fund products such as small firms loan guarantee schemes, regional venture capital funds and early growth funding; enterprise capital funding; the Phoenix fund; support for the post office network, such as the urban post office reinvention programme; and the new programmes of assistance that we have announced to give business additional support during the current economic downturn, including the enterprise finance guarantee scheme, capital for enterprise, and support for the automotive sector.

A couple of automotive firms in my constituency are experiencing significant problems. One of the questions arising from the training packages that we have put together is whether there is some form of wage subsidy to help those undergoing training who are already on short-time working. Would the Bill enable us to proceed with such a scheme if the necessary funds were available?

As I have said, a wide range of support for industry is available under this part of the Act. My hon. Friend will be aware that we are already supporting industry by means of new flexibilities in the Train to Gain programme operated through the Department for Innovation, Universities and Skills, and there are separate funding arrangements for training support governed by votes in Parliament.

My hon. Friend will know that the problems of the midlands van company LDV are becoming particularly acute, and may not be covered by the £1.3 billion that he says will be available for green investment in the motor industry. Can he assure Labour Members—indeed, all Members with an interest in the area: I do not think his own constituency is so very far away—that LDV’s case will, if necessary, be treated separately from the £1.3 billion green initiative?

As my hon. Friend will know, we recently announced the provision of £2.3 billion in loan guarantees and exceptional-need loans under the automotive assistance programme to support automotive companies and companies in their supply chain. That potentially includes support for a wide range of companies.

My hon. Friend mentioned the case of LDV in Birmingham. As he knows, the company has been making a loss for a number of years. We understand from discussions between LDV and officials last Wednesday and Thursday that the management buy-out is proceeding. At present the company is owned by a Russian firm called GAZ, which is responsible first and foremost for the workers at Washwood Heath, who have given the company loyal support for many years. It really must be the responsibility of GAZ to give the company enough support to ensure that it is viable in the future. We have given LDV support and encouragement to enable it to proceed with its application for financial assistance through the European Investment Bank.

This is clearly a critical time for the company. We made it very clear that without significant further material support from GAZ, its parent company or from another investor, we would find it difficult to justify providing any further assistance, on top of the £24 million we provided to LDV at the time of the takeover by GAZ.

This is a critical time, and although losses have been made at LDV, I understand that it has a very convincing five-year recovery programme and a plan for a management buy-out that is quite far advanced. Can the Minister at least promise us that before the company is forced into receivership, or some other form of inactivity, he would agree to a meeting with a delegation of west midlands MPs to hear their case—and perhaps we could have such a meeting earlier rather than later?

As I have said, my officials have had a number of meetings with LDV on its financial situation, and I do not think it is as straightforward as my hon. Friend pretends, but I am always happy to meet Members who are representing their constituents’ interests, and I will be happy to meet my hon. Friend and my west midlands colleagues.

While this appears to be a very simple Bill to enable the Government to spend more money on our industrial sector, the details are a little unclear to say the least. Will the Minister therefore tell the House which bits of the financial help to be given specifically to the automotive sector will be coming out of the pot that this Bill provides for, and which bits will come out of the EIB, as encouragement has been given to apply to it for money, too? Where will the money for the £23 million green car initiative come from, for example? If the Government are so minded, could these provisions also be used to help car companies with their loan books by giving a spur to people to take out loans to buy new cars?

I can confirm that guarantees offered by the Government under the automotive assistance programme would have as their legislative authority the increase in spending proposed in this Bill. I hope that things will become clearer to the hon. Lady after I have explained the situation in a little more detail.

The 1982 Act set the cumulative ceiling for support that could be provided under section 8 at £1.9 billion, increasable by up to four affirmative orders not exceeding £200 million each. The overall ceiling in the original Act was therefore £2.7 billion. That was subsequently revised by the Industrial Development (Financial Assistance) Act 2003, which raised the initial limit to £3.7 billion, increasable by up to four affirmative orders not exceeding £600 million each, to an overall limit of £6.1 billion. We have already debated the second order under the 2003 Act, and will shortly be introducing the third and fourth orders. By doing so, we will ensure the necessary legal headroom is in place to ensure the ongoing delivery of existing programmes and the package of new initiatives that we have recently announced to provide real help for businesses in the current economic climate. I can therefore confirm that all existing and recently established schemes can be delivered under the limits established by the 2003 Act.

However, scope to introduce any future support for business will be severely restricted, as we estimate that current schemes covered under section 8 will take us close to the £6.1 billion ceiling. Given the unprecedented global economic conditions we are facing, it is important that we maintain sufficient flexibility to bring forward further support if that is required. The first clause of the Bill therefore seeks to amend the limits in the Act, raising the initial ceiling to £12 billion, increasable by four orders of up to £1 billion each to an overall limit of £16 billion.

We recognise that this is a significant increase, so I would like to make three points in relation to it. First, the nature of business support has changed over the past few years. There has been a shift away from programmes based on grant funding, with greater emphasis now placed on support in the form of loans or guarantees. We believe that that form of support provides good value for money for the taxpayer in the long term, given that the loans will be repaid over time and that only a proportion of the guarantees will ultimately need to be met. However, the full amount secured against public finances counts towards the section 8 limit. As a result, headroom is consumed at a higher rate than under grant-based interventions. As loans are paid back and guarantees lapse, pressure on headroom will reduce. None the less, in the current economic climate we need to maintain sufficient flexibility to respond to the challenges ahead and we believe that the £12 billion ceiling represents a sensible limit at this time.

Secondly, I can reassure the House that although we are raising the ceiling to £12 billion, that is broadly equivalent as a percentage of GDP to the figure in 1982. My final point in this regard concerns parliamentary oversight and scrutiny of support provided under section 8. Although we are proposing an increase to the ceiling, we are not proposing any changes to the threshold at which individual offers of assistance under section 8 are subject to the approval of the House. That threshold, fixed by section 8(8), remains at £10 million. The aim of the new subsection is to ensure that Parliament has the opportunity to consider larger cases of assistance to industry.

I can also confirm that any future orders to increase the limit would need to be agreed through an affirmative order, as is currently the case. We will also continue to publish the annual report setting out our expenditure under section 8 of the 1982 Act. Aside from the financial limits, all other aspects of section 8 and the wider Act remain the same. I can also confirm that the Bill has no regulatory impact on business and that a copy of the regulatory impact assessment was placed in the Library.

The experts in the automotive industry who have been referred to by several right hon. and hon. Members are anxious about the apparent contradiction on whether scrappage is involved in discussions leading up to the Budget. I do not want the final details, but given the importance of vans, can the Minister, as both a Business and Treasury Minister, tell the House whether the Government are considering a scrappage proposal and what progress has been made?

The hon. Gentleman has been a Member of this House long enough to know that Ministers do not comment on what will or will not be in the Budget or on discussions leading up to the Budget. He will be aware of the automotive assistance programme, which is a major programme of investment support to the industry. One of my major priorities as a Minister is to ensure that that scheme provides support as quickly as possible. The hon. Gentleman will be aware that we had a seminar with the banking industry and automotive companies last Wednesday that explained in more detail how the scheme operates. It is open for business now and we are encouraging businesses that qualify to make early applications, which we will endeavour to analyse speedily so that we can look to provide support. We recognise that it is important that we provide support to the industry at this time.

Clause 2 proposes a small amendment to the Export and Investment Guarantees Act 1991. The Act governs all of the work of the ECGD—the Export Credits Guarantee Department—which is Britain’s official export credit agency. The vast majority of industrialised countries have export credit agencies. Broadly, their role is to support exports by providing insurance against non-payment, for example, if importers go insolvent and cannot pay their suppliers or if the importing country runs out of foreign exchange and cannot pay its international debts. The situation is the same for ECGD, and I believe that its role is of increasing importance in the current economic climate. It assists the export trade of British suppliers of goods and services.

ECGD’s remit is to support exports of capital and semi-capital goods and services. That usually means big-ticket exports such as civil aircraft, oil and gas production equipment and services and telecommunications. Often, the buyers of such equipment require medium or long terms of credit. Typically, a civil aircraft is repaid over a 12-year period. Much of ECGD’s business involves its giving guarantees to banks, which make loans available to foreign buyers to purchase UK goods and services. Some Members may recall that ECGD used to support other exports normally sold on short terms of credit. Those exports were raw materials, light manufactured components and consumer durables, which account for the majority of UK trade. That part of ECGD’s business was privatised in 1991 and since then providing trade credit insurance has been the responsibility of the private sector.

ECGD is 90 years old this year. It was set up 1919, after the first world war, to help re-establish trade. It was the first export credit agency in the world, and in these challenging times the support that it can give to industry and exporters underscores its importance for the British economy today. It is an independent Government Department that reports to the Secretary of State for Business, Enterprise and Regulatory Reform, and its role and purpose is established in law. ECGD’s power to support exports is contained in section 1 of the Export and Investment Guarantees Act, and it is that Act that this amendment Bill addresses.

ECGD’s primary power to support exports in section 1 of that Act states:

“The Secretary of State may make arrangements under this section with a view to facilitating, directly or indirectly, supplies by persons carrying on business in the United Kingdom of goods and services to persons carrying on business outside the United Kingdom.”

However, there is a problem with the word “facilitating”. The point is that ECGD cannot be said to have facilitated exports if those exports have already been supplied. However, with changing business practices, ECGD has been increasingly asked to support exports that have, in whole or in part, already been supplied by the time it is able to take a decision on providing its support for the exports in question.

There are a number of reasons for that. First, changes in the way contracts in the high-value capital goods markets are managed often mean that requests for support are simply made later these days. Often, it is buyers or overseas project sponsors who approach ECGD for support, not the exporters. Buyers seek ECGD support after they have procured the exports, and some may already have been supplied.

Secondly, at the same time as these changes were happening across the world, ECGD’s decision-making processes were changing to implement wider Government policy on corruption and on social and environmental impacts. These are mandated by ECGD’s business principles. They involve rigorous due diligence, which can delay ECGD’s ability to make a decision until supply has commenced. This amendment will allow ECGD to provide its support for supplies that have already been made.

Last year the Environmental Audit Committee issued a report on ECGD and sustainable development, which recommended that

“No offer of support should be made, whether actual or provisional, until ECGD’s Business Principles Unit has completed its assessment”

of the project to which the exports are destined.

That referred to ECGD trying to overcome the timing difficulties that I have just explained. ECGD would, before the supply was completed, make an offer to issue a guarantee after completion, conditional on satisfaction of its environmental criteria. The EAC was concerned that these offers of support could weaken ECGD’s environmental scrutiny. I do not agree that they did, but I am happy that the Bill will allow ECGD to give effect to that recommendation, as well as solving the problems for British exporters, without any dilution whatsoever of ECGD’s business principles or the due diligence it undertakes.

Without this change, British exporters will continue to face the risk of being discriminated against by overseas project sponsors because ECGD cannot give the type of support those sponsors want. Other export credit agencies in competitor nations do not have the same difficulties. Few, if any, are bound by state legislation and none of ECGD’s major counterparts has the same difficulty in supporting exports that have already taken place.

In the current economic circumstances, extra support for British exports is highly important. Over recent months, ECGD has, not surprisingly, received a vast increase in interest in its support and in applications for its assistance. Rather than giving extra support, if this amendment to ECGD’s Act is not made, ECGD support will often have to be reduced. ECGD is complaining about the difficulties that ensue when it can give no certainty of its support. The CBI, the British Bankers Association and the British Exporters Association have lobbied intensively. They argue that without the change, the UK’s competitiveness will be adversely affected. I agree with them, and that is why we are introducing this clause, which will help to maximise support for industry through ECGD at this difficult time.

We face a unique set of challenges. Together, the measures proposed in this Bill form an important part of the response needed to ensure that businesses have the help they need. I commend the Bill to the House.

I thank the Minister for his opening remarks. I have some sympathy with him because, as a Minister in both DBERR and the Treasury, he has the unenviable task of defending not one, but two dysfunctional Departments.

The Bill substantially increases the limits of Government financial support for business and exports—first, as we have heard, to £12 billion and then, potentially, to £16 billion. These are substantial provisions, reflecting the severe economic climate. We agree that business urgently needs practical help, but our concern is that these good intentions will not become the practical aid that business seeks. I say that because, to date, this Government’s record of financial support for industry has largely been one of talk, not action; it has been a story of half-baked ideas badly implemented, and it has resulted on numerous occasions in confusion and anger among the very people whom Ministers claim they are trying to help. Ever since the fall of Lehman Brothers in September and the collapse of world markets in the autumn, the need for urgent action has been clear, to enable working capital to reach real businesses. That is why last November the Conservatives set out a plan for a national loan guarantee scheme of some £50 billion for viable businesses of all sizes and all sectors—clear, easy to access and simple to understand, it could underpin conventional bank lending.

I wish that the Government had done what they often do in these circumstances—stolen our policy and claimed it as their own. After all, we see that all too often, yet on this occasion the Prime Minister has been deaf to good advice. Despite promises made last November, it was not until January that the Government’s schemes were finally announced and even then—in the opinion of business—it was clear that they were half-baked. Let us consider the capital for enterprise fund, which is worth £75 million and is intended to provide equity funding to small businesses. When it was first announced last November, the Department said that it would

“be ready to start investing by the end of January 2009”.

January came and went and the snow fell in February and thawed, yet there was still no news and no investment, so last week, in the middle of March, as spring approached, I inquired exactly how much had been invested. I naturally assumed that the sum might have been £10 million or £15 million, but the people who run the scheme—Capital for Enterprise Ltd—told me that in fact not a single pound has been invested in any business.

What about the working capital scheme, which was announced on 14 January? We were told then by none other than Lord Mandelson that it would be the centrepiece—the linchpin—of the Government’s policies. It was to provide up to £10 billion in Government guarantees to underwrite bank lending and to be available from 1 March. That date came and went, so on 4 March we asked the Leader of the House when the scheme would commence. We thought that if we were lucky, it would be this month, but, who knows, it might begin on 1 April—how appropriate that would be. She could not say, and although I realise that she and Lord Mandelson are not exactly bosom buddies, surely between them they must have some idea when this scheme might actually start.

One scheme is up and running: the enterprise finance guarantee scheme, which is worth £1.3 billion and is intended to underpin lending to small firms. On Friday, the Minister for Employment Relations and Postal Affairs, whom I am delighted to see in his place, gave us a remarkable two-hour oration, during which he confirmed that 26 applications had been approved. There was another hour to go before he finally sat down, but what he did not tell us was how many firms had actually got the money; perhaps the Minister here today could complete that speech in his reply.

Part of the problem is that when Ministers make their announcements, they often have not really worked through the details—indeed, in some cases, they have not even cleared the schemes with the European Commission, as they are meant to do—and meanwhile, our competitors are stealing a march on us. For example, by last Christmas, the Germans, French and Americans were all ready to act. In Germany, some €2 billion has been extended to industry; in France €6 billion; and in America, some $17 billion was on hand for its car industry. The question that British businesses put to me—and I hope that the Minister will reply when he responds to the debate—is “Why is it that, under this Government, British businesses are the last to get the help that we need?”

The answer may in part be the fondness that the Prime Minister—who, after all, was once Chancellor—has for tinkering and meddling, and creating myriad complex schemes that prove so confusing in practice. Thus we have the working capital scheme; the enterprise finance guarantee scheme; the capital for enterprise fund; the transition loan fund; the European Investment Bank’s supported loans scheme for growing firms; the EIB-backed automotive industry loan scheme; and the £l billion non-EIB-backed, automotive loan scheme. Each of these schemes has different eligibility criteria and different rules. These in turn need different forms and different sets of business data.

So the problem is that businesses are unclear about what is available, what they can apply for, and which scheme is best for them. They are not the only ones. Most of the banks tell me that they have yet to receive the detailed terms and conditions for many of these schemes, so that they can brief their high street branches—

Well, that is the evidence in at least 100 letters that my office alone has received. When our constituent businesses go to their bank, they are told that it does not have the information and that the staff have not been briefed or trained. We are left at best with confusion and, at worst, with no help at all.

Let us take for example a small touring company based in Suffolk. It applied for help under the enterprise finance guarantee scheme to consolidate its overdraft, to release funds to advertise during the critical winter months. Despite the fact that the business was advised by Business Link that it was eligible—indeed, it was in the statement issued by Ministers—its high street bank turned it down. The result of that conflicting advice is that five staff have lost their jobs and there is real pressure on the firm’s finances. The managing director said

“what a joke this scheme link have no idea what the banks want out of this scheme…all of these big shouts by the Government about placing money out there to help small business is all just’s a disgrace”.

That managing director is not the only one who is rightly upset. The FSB has just conducted a survey of its members. Six weeks on from the launch of the enterprise finance guarantee scheme, the majority of its members say that the banks are still not using it. It is no wonder that three quarters of the FSB members surveyed said they had no confidence in the Government’s economic policies.

The gap between Ministers’ good intentions and their actions has, sadly, been evident for some time. Thus, in the last 12 years they have overseen the creation of some 3,000 business support schemes, only recently realising that that creates waste and is confusing for many businesses. In his opening remarks, the Minister mentioned the regional venture capital funds. When they were established, we were told that they were vital to plug the gap in which the private sector would not invest. I agree that there is a gap in equity funding for smaller enterprises, but what is not clear is why that state-backed scheme, led by the regional development agencies, is the best way forward.

The latest figures show that some £250 million has been allocated to that scheme alone in the English regions. However, the value of the investments actually made was only £126 million, half of the available total. What happened to the other half? Did the demand that Ministers predict not exist, or were requests simply strangled by the scheme’s red tape?

As the Minister said, the second clause of the Bill specifically seeks to expand the funding provisions for exporters and would make some important technical changes. Something certainly needs to change when it comes to the balance of trade, because under this Government our balance of trade was nearly £40 billion in the red even before the recession.

In more recent months, there was initial hope that the huge drop in the value of the pound—a drop of some 25 per cent.—would have helped to boost exports. However, the latest figures for January show that, while the volume of goods exported to EU countries rose, this was outweighed by a 16 per cent. plunge in exports to non-EU countries. The result that month was a net trade loss of £7.7 billion. It is clear that the UK needs significantly to strengthen the volume, and indeed the value, of its exports.

In November, the Chancellor announced an extra £1 billion in his pre-Budget report to help small and medium-sized UK exporters. It was to be delivered by the Export Credits Guarantee Department in conjunction with the banks. It was to have been a temporary facility providing smaller exporters with better access to short-term working capital. Of course, the intentions sound good, but it has been difficult to find out what progress has been made, although we looked quite carefully. Finally, yesterday I was left to check the latest information from the ECGD. Perhaps I should share with the House what its website says:

“The scheme is at an early stage, and there is no set timetable for its implementation.”

Is it really the case that four months after a £1 billion scheme, meant to help people in this recession, was announced by the Chancellor of the Exchequer at the Dispatch Box, no timetable has been set for its implementation? I hope that the Minister who replies to the debate will answer that question directly. If there is a set timetable, why does the Department not know, and if there is not a set timetable, what on earth have Ministers been doing?

Let me turn to the main export credit scheme—the fixed-rate export finance scheme. I apologise for the endless litany of alphabet soup that the schemes seem to generate. That particular scheme is meant to be wound up in eight months’ time, yet despite having planned the scheme’s replacement since December 2007, Ministers are seemingly unable to explain to exporters how the new scheme will work. The Under-Secretary of State for Business, Enterprise and Regulatory Reform, the hon. Member for Dudley, South (Ian Pearson), rightly said that exports are crucial, so can he tell me why it is that, just eight months before the introduction of a new scheme, when companies inquire they are not able to learn the details of the scheme that will replace the current programme? After all, many contracts that are being negotiated now will run way past December. When will businesses have an answer?

A number of Members of this House have rightly raised the subject of the automotive industry, which has often been at the heart of the question about financial support. Car registrations have been falling for many months. In February, they fell again, by another 22 per cent. I had to double-check whether there was meant to be a decimal point in the middle of that, but the figure really is 22 per cent. for a single month. Meanwhile, in response, manufacturers have reduced production; indeed, many have suspended it. Thousands of people have either lost their job or face redundancy in the coming months. We should not forget the long supply chains in this sector that serve manufacturers here and abroad; the Minister rightly mentioned them. What they all need is clear and decisive action.

In January, Ministers set out their plans for the sector. Sadly—I draw no comfort from this—the industry said that the plans were incomplete, had not even been authorised by the European Commission, and often completely failed to address the question of car sales. Quite rightly, the industry has continued to press Ministers to get them to spell out exactly what their package means in real money.

As the Minister mentioned, last Wednesday he hosted a summit at which we were offered more details of the £2.3 billion automotive loan schemes. We welcome the news that Jaguar Land Rover is to get up to £27 million in support of a new, lighter vehicle. However, even that modicum of good news was overshadowed by a spat between Lord Mandelson and the Bank of England about who was, or was not, to blame for the long delays. How frustrating that must be for the junior Minister; he was able to push forward an initiative, but it was completely driven off the front pages by his own boss.

While some Ministers are passing the buck, the car sector is becoming ever more frustrated. On a recent visit to the midlands, I talked to representatives of the industry there, and I have to say that in their responses, they were overwhelmingly negative towards the Government. Why, they asked, did they not even get a statement of aid until January, when car sales had been plummeting for at least four months before that? Why, in January, were the schemes not worked through, as they were in France and Germany? Why did it then take another month for basic EU approval to be sought and secured? Their concerns did not end there. In January, instead of being promised a package to aid the credit arms of car firms, we were promised that a junior Minister had been—I will get the phrase right—

“tasked to draw up a plan”.

It seems that the same Minister doubts the need for such a plan. Lord Davies was reported in the Financial Times last week as saying that credit insurance problems would solve themselves as corporate lending picked up. That is not the view of the CBI or the FSB. Indeed, the federation said that Lord Davies was “unrealistically bullish”. The British Chambers of Commerce went further, and highlighted industry-wide difficulties with credit insurance. It said of the Minister for Trade and Investment:

“It’s very complacent to say that everything will sort itself out”.

That is not the message that should come from the Dispatch Box. Perhaps in his reply to the debate, the Minister can put things straight. Will he specifically tell us, either now or in his reply, whether the Government will introduce a plan to tackle credit problems, or is the Government’s plan on this issue simply to do nothing?

May I just return for a second to what the hon. Gentleman was saying about the German guarantees that have been put up of about €2 billion? He may be more up to date than I am, but the last time I heard about that, at least half that amount, although allocated by the German Government in their interest, and probably quite rightly, still had not been cleared by the European Commission?

My understanding is that most of that sum has been cleared and delivered, certainly according to the reports that I have read. That represents a sharp difference in that our Government have only just obtained permission from the European Commission to propose guarantees.

That is the whole point. The Germans have made the allocation, have said that they are going to do it, and have guaranteed it. Months ago, they did that for Opel, and announced €1 billion before the end of last year. It certainly had not been agreed at that point, but they went ahead, and they have done so again. I still do not think that the position is clear. We have rightly announced it, and we will be ahead of them in getting clearance this month.

Clearance is one thing, but delivering it to businesses’ bank accounts is the critical point. That is the difference between the Government and the French and German Governments.

The Bill seeks to provide the Government with the ability to extend financial support for industry to up to £16 billion. In such difficult economic times, we recognise the need for such additional powers and while, quite rightly, we shall scrutinise each policy, we will not oppose the measure today. Our concern, as I have tried to explain, is about how Ministers implement their powers, as their record is one of press releases, not practical action. It is a tale of dither and delay, of bold promises and timid deeds. I have no doubt that Ministers mean well and wish to help, but my fear is that the gap between their rhetoric and reality is one through which hundreds of firms, and thousands of jobs, could yet be lost.

The Bill is the most recent in a long line of attempts by Government to give industry a shot in the arm. Unfortunately, the well-meaning but incompetent doctor has yet again missed the vein, plunging the hypodermic containing life-giving fluid into a part of the economy where it will do no harm, but from which it will fail to flow through to the main body of the ailing economy, where it is most needed.

We have a problem, because while the Government are applying a poultice to the sick body of the economy, the banks have applied a tourniquet, preventing the flow of cash through the economy that would nourish and enrich it, and enable it to stagger back to its feet again. The Liberal Democrats will not oppose the Bill today, because we recognise that it includes measures that will help, but we regard it as a wasted opportunity. It is not as if not enough people are trying to tell the Government what they could and should be doing. Over the past few weeks, I have been doing a bit of research in my constituency. I have been talking to businesses big and small, and trying to find out how they are faring and what the Government could do to improve the environment to enable them to survive.

The first thing that the Government should introduce in the Bill is some form of support or regulation of trade credit insurance. Withdrawal of trade credit insurance is what eventually did for Woolworths. Trade credit insurance insures a company when it has extended credit to another against the risk of not getting paid. If a company has its trade credit insurance withdrawn, other companies become nervous about trading with it because the message given out is that that company is risky to trade with.

A profitable retail company in my constituency has had its trade credit insurance severely reduced just at the time it wants and needs to expand. Its suppliers right down the supply chain are having their trade credit insurance cover reduced or even withdrawn, sounding a death knell for many. When a successful company that has no record of financial problems is growing, why would anyone want to reduce its trade credit insurance? The insurer told that company, “Oh, it’s not you personally; you’re just operating in the wrong sector.”

Trade credit insurers have been described as organisations that are willing to lend an umbrella only when the sun is shining. I would not go quite that far, but it is clear to me that something needs to be done, and fast, to stop perfectly good companies going to the wall for no reason.

Will the hon. Lady confirm that the problem with trade credit insurance is that it is a private monopoly? There are so few companies operating in the field that once a firm has lost trade credit insurance with one insurer, it is virtually impossible to get it from some other company. That is at the root of all the problems.

Indeed. I am grateful to the hon. Gentleman for that intervention. He is right. Once a company has lost trade credit insurance, the possibility of gaining it from another organisation is very low indeed. For months, hon. Members in all parts of the House have been asking for Government action on trade credit insurers. When will the Government take action to ensure that such insurers stop turning the tourniquet even tighter on business?

Regulation is another issue of great concern to business. As with taxes, everybody moans about it, but most of us recognise it as a necessity—most, that is, except the Conservatives, who have called for less regulation, including of the banking and investment sector. Nevertheless, the imposition of new regulations at a time of economic crisis can be very unhelpful.

I am sure that the hon. Lady would want to be accurate. To be clear, the Conservative party has just published a report on banking regulation and believes that a great deal of reform is needed, including much tougher regulation, to prevent systemic risk in banking. Elsewhere in the economy, which is being held back by an awful lot of heavy-handed red tape, we agree with light-touch regulation, as indeed do the Government.

I am delighted to hear that the Conservatives have changed their attitude towards banking regulation. In the past they have done a great deal to try to introduce lighter-touch regulation of banking. I accept what the hon. Gentleman says about other forms of regulation. In that we share a common approach.

Many companies are focused completely on the day-to-day cash flow management of their businesses. Instead of reviewing their cash flow every quarter or every month, they are now doing so every week or even every day. They do not want to have their eye taken off the ball by having to contend with new regulations. If they do not give all their emotional energy and attention to managing today, there may not be a tomorrow in which such regulations can take effect.

A particular concern to potential investors in this country is the propensity of the Government to make decisions and regulations retrospectively. We saw an example of that on 28 January in the Westminster Hall debate on retrospective business rates, concerning the retrospective levying of business rates on struggling port-based firms. Clearly, more regulation is needed in some sectors, such as banking and trade credit insurance, but in other areas the Government could take their foot off the pedal and delay the introduction of some non-vital regulations. My second question for the Minister is this: will the Government impose a moratorium on the implementation of non-essential regulations until the economic situation improves, and will they give some heart to potential investors in this country by publishing a statement of intent showing that they do not intend to impose any further retrospective legislation?

The Bill will amend section 8(5) of the Industrial Development Act 1982 and section 1(1) of the Export and Investment Guarantees Act 1991. Section 8 of the 1982 Act seems to be the Heineken of industrial financial help, reaching parts that other industrial financial assistance cannot reach. Such assistance has to benefit the UK economy, or any other part or area of the United Kingdom, which is a pretty wide definition. It has to be “in the national interest”—well, obviously—and it has to help when assistance cannot be appropriately provided in any other way.

The Bill raises the ceiling under which financial assistance can be given from the current maximum of £6.1 billion to a potential total of £16 billion. That is a lot of money, and I look forward to hearing from the Minister why that amount of taxpayers’ money was deemed appropriate. Another £10 billion has been added; it is a nice round figure, but what justification is there for it? The figure of £16 billion represents £26,000 for every man, woman and child in this country. The Independent today has done its sums and calculated that, due to the recession, the personal cost of the downturn for every single British citizen is now £40,000, which is a lot of dosh. We must be sure that money is spent wisely where it really will make a difference.

The amendment of the Export and Investment Guarantees Act 1991 will widen the definition under which assistance can be given to exporters under the export credit guarantee scheme. The CBI welcomed that measure because it will support transactions where goods have already been exported, such as where early shipment was required before an export guarantee department decision on cover was made. The CBI says that

“enactment on this amendment will assist exporters in a clear and practical way and should assist in retaining jobs in the UK.”

If it is good enough for the CBI and for the British Bankers Association and other groups, as the hon. Member for Hertford and Stortford (Mr. Prisk) mentioned, it is good enough for me.

How effective has the plethora of Government announcements been so far? The Forum for Private Business says that the Government should not just assume that under the enterprise finance guarantee scheme, the problems of smaller business have been sorted, and that they must consider the looming problems of the cost of finance, business rates and late payment. Can the Minister say just how many companies have benefited from the enterprise finance guarantee scheme, the working capital scheme and the capital enterprise fund? We heard from the hon. Member for Hertford and Stortford that no money has yet come through for the latter two schemes. Will the Minister be able to demonstrate that any of these funds are making a material difference, or with regard to the vast majority of companies are the Government just tantalising and teasing business with promises while little or no real money is flowing through?

The Government have ignored simple, effective and relatively inexpensive Opposition proposals, such as the Small Business Rate Relief (Automatic Payment) Bill, a private Member’s Bill introduced by the hon. Member for Mid-Worcestershire (Peter Luff) only two weeks ago. I will not rehearse the arguments about that, but the Government have ignored that open-goal opportunity to help the smallest businesses that are least well informed about the help that they are already entitled to.

Some lenders, such as lease financiers, are simply not covered by the enterprise finance guarantee scheme, although 750,000 small businesses rely on lease financing. There is no safety net for those smallest of lenders, which nevertheless play a vital role in helping the smallest businesses as well as larger ones. Will the Government consider providing assistance for lease financing, along the lines of the enterprise finance guarantee scheme?

The opportunity to deal with the nefarious activities of serial liquidators has also been missed. Such parties trade, run up debt and then liquidate a company, leaving suppliers in the lurch, only to set up again the next day under a similar name. Those people cynically drag down good companies, and their activities are downright theft. If any director were required to register in a simple register of administrations, that would enable a quick search to determine how many times an individual had bumped their company. That would protect good companies against directors bent on a course of exploitation of the trust and good will of others. Will the Minister consider the possibility of creating such a register?

In conclusion, I should say that the Bill is a missed opportunity. Industry needs an environment in which it can not only compete, but continue to operate. It needs cash, but despite all the announcements that have been made thick and fast in the past few months in committing billions of pounds of taxpayers’ money to prop up a banking system so sick that it is haemorrhaging the blood transfusions that we are administering, vital support is still not making its way to the real wealth creator—industry itself. Taxpayers’ money is flowing all right; it is flowing into the coffers of the banks and into an interminable black hole.

My hon. Friend the Member for Twickenham (Dr. Cable), the Liberal Democrat shadow Chancellor, has been like a seer; he was sending out warnings to the Government years before the crisis that we now face finally arrived. He predicted that the grand edifice of the banking economy would turn out to have been built on sand, and that we would need to nationalise Northern Rock. He has watched the Government pandering to the banks like an over-indulgent auntie to spoilt and uncontrollable nephews and nieces, asking them please to share out nicely the pile of sweeties that they have been given and becoming mystified when they are not good children who do as they are told.

We now have a majority shareholding in Lloyds HBOS and the Royal Bank of Scotland. My hon. Friend the Member for Twickenham is saying to the Government that it is time to take firm action and make the children share out the sweeties. It is time to nationalise the failing banks and ensure that cash goes not into the greedy mouths of the banking industry, but right to where it is needed—the hard-working companies that are struggling to survive.