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Commons Chamber

Volume 490: debated on Thursday 26 March 2009

House of Commons

Thursday 26 March 2009

The House met at half-past Ten o’clock


[Mr. Speaker in the Chair]

Business before Questions

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

Resumption of adjourned debate on Question (15 January),

That the promoters of the Manchester City Council Bill [Lords] and Bournemouth Borough Council Bill [Lords ], which were originally introduced in the House of Lords in Session 2007-08 on 22 January 2007, should have leave to proceed with the Bills in the current Session according to the provisions of Standing Order 188B (Revival of bills).


The debate stood adjourned; to be resumed on Tuesday 21 April at Seven o’clock.

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

Resumption of adjourned debate on Question (15 January),

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


The debate stood adjourned; to be resumed on Tuesday 21 April at Seven o’clock.

Oral Answers to Questions


The Chancellor of the Exchequer was asked—

Credit Insurance

1. What assessment he has made of the effect of the availability of credit insurance for industry on the prospects for economic recovery. (266523)

About 20 per cent. of lending between businesses is generally covered by trade credit insurance. There is evidence that credit insurers are withdrawing insurance as part of the credit crunch, which is increasing the risks for those companies that use it, and the Government are in discussion with trade credit insurance companies about ways to give business more support.

Welcome as it is to learn from the Chief Secretary that the Government are in dialogue about this subject, I ask her to consider the situation of a small company in my constituency. The premium for its trade credit insurance has risen from £7,000 to £21,000 a year, and that is unaffordable. It had hoped that in the light of the announcement by the Under-Secretary of State for Business, Enterprise and Regulatory Reform, the hon. Member for Dudley, South (Ian Pearson), that the Government were working on a scheme to underpin trade credit insurance, something would have been announced by now. When will the Government formally address this problem and provide these companies with the help they need?

We are looking at this issue, and the right hon. Gentleman is right to raise it. Much of the market is not covered by trade credit insurance, but this is a real pressure for those businesses that are, which includes many small businesses. He will be aware, however, that there is a private trade credit insurance market, and it is also important to ensure that we protect the taxpayers’ interests. He is calling for more action, and I respect that position and think it right that we try to do more, but he should also be prepared to put money behind that, and that is something that his party has persistently refused to do.

May I remind the Chief Secretary that in November I wrote a letter to the Chancellor and Lord Mandelson after discussions with Marsh insurers about credit insurance, and the situation is still precarious, so I think further negotiations need to take place in that area? Dare I also mention the remarks of the Governor of the Bank of England to the Treasury Committee the other day? He said that he would not rule out targeted measures, whether in terms of the labour market or corporate credit. I think targeted measures are still necessary in terms of corporate credit.

My right hon. Friend is correct to say it is right to support the economy at this difficult time. That means providing support for businesses to deal with the pressures they are facing as a result of the global credit crunch, and particularly also support for those who are losing their jobs. That is why we are putting more than £1 billion of additional funding into, for example, helping those who are losing their jobs—investment that, sadly, is continuously opposed by the Conservative party.

For many world-class textile businesses in my constituency, the lack of credit insurance is now a very serious issue. In addition to the monitoring that the Chief Secretary is doing, will she look at the increasing amount of information that we are getting to the effect that the banks are restricting their own facilities and their lending to these companies because there is no credit insurance, which means these businesses are now feeling a double whammy from which they are getting no relief at all?

The hon. Gentleman makes an important point, and that is exactly why we are in detailed discussions with the trade credit insurance companies, and also why we have been setting out a range of measures with the banks to support increased lending. The global credit crunch means there has been a big drop in foreign bank lending, for example, in the UK. Nevertheless, it is right to do everything we can to increase lending and support, which is why we now have legally binding commitments with the banks that have signed up to the asset protection scheme, in order to increase lending this year by tangible amounts.

Does my right hon. Friend agree that dialogue is not enough? There are good firms in our region that will be going out of business if we do not get help to them soon. The textile industry in Yorkshire particularly needs help, and it needs it now—if these businesses are supported for six to nine months, they will survive and flourish. We must do something quickly.

My hon. Friend will be aware of the range of additional support that we have already provided for businesses, because it is right to do so to get them through the credit crunch. For example, 90,000 businesses are now benefiting from being able to defer their tax payments to the tune of more than £1.7 billion. That has been opposed by the Conservatives, but also £350 million of loans—

Order. The right hon. Lady has made mention of what the Conservatives are doing in every one of her replies. I do not want that; what I am looking for is a ministerial reply.

Waste Disposal

2. What discussions he has had with the Secretary of State for Environment, Food and Rural Affairs on the implications of Government policy on the private finance initiative for contracts for waste disposal. (266524)

Government policy, as announced on 3 March, is to ensure that vital infrastructure projects proceed as planned, supporting jobs in the economy and preparing for full recovery. In total, £13 billion of public investment in procurement will be safeguarded by the Government’s action. That protection will ensure the future of a broad range of public infrastructure projects, including £3.5 billion of waste treatment and environmental projects.

But is this—a time of credit crunch and the most severe recession that this country has ever faced—the best time to be inviting private finance initiatives? Why are the Government hiding behind private finance and why are public authorities having to explain what the benefits of energy from waste and other forms of incineration are? Why cannot the Government come out fighting with their own financing of these initiatives and explain to the public what the benefits or disbenefits of these initiatives are?

The announcements we made on 3 March will ensure that temporary problems experienced in the debt market will not put at risk £13 billion of vital investment in infrastructure, which will lead to the building of new schools and new hospitals, as well as jobs in waste procurement. I am not sure whether the hon. Lady is arguing that we should just abandon that and lose all the economic activity, jobs and support that goes with it—it sounds as if she is.

Why are the Government not open about the level of public sector finance initiatives, which should now be included in the national debt? If they were more open about that, we could see exactly the extent to which they have mortgaged our future.

To the extent that public finance initiatives have helped to increase and renew our infrastructure, they are to be welcomed. The hon. Lady knows that that is about 10 per cent. of capital investment, and that it has created jobs and new buildings. In fact, we have mended not only the roof, but the whole inside of the building, which was crumbling when we inherited it in 1997. Public investment is a good thing. It has completely renewed our infrastructure, and that means that we have modern and more efficient, effective and productive infrastructure for the future. I would have thought that she would welcome that.

Is the Minister aware that there is a new waste disposal unit in Bolsover, on the old Coalite site? It is doing exceptionally well; there were queues there on Sunday. I propose that the shadow Business Secretary get hold of the Tories’ inheritance tax plan and dump it in the waste disposal unit at Bolsover.

Our ability to deal with the complex problems caused by waste gets ever more sophisticated; my hon. Friend has come up with an intriguing new way of recovering energy from waste.

Credit Provision

3. What further steps his Department plans to take to encourage banks to provide credit to businesses. (266525)

The Government will continue to take whatever action is needed to maintain the stability of the financial system and to kick-start credit in the economy.

There has now been a credit crunch in the economy for 18 months. The Government have introduced a great many measures, but is there any evidence that they are working? Has not all the extra liquidity that the Government have thrown at the banks been insulating them from the need to make the changes to and the clarifications of their balance sheets? Is it not the case that they will not start lending to each other until they trust each others’ balance sheets, and that the Government have not actually forced them to come clean about what is on their balance sheets?

The restoration of trust in the banking system is essential; it is a precondition of fixing the problems in the wider economy, here and across the world, and it is absolutely necessary. The second thing to say to the hon. Gentleman is that it was necessary, as I believe most people accept, for us to recapitalise the banks in October. It was also necessary to go further than that and to help to deal with the problem that we face of these banks having on their books assets for which there is no market or whose value has been much reduced. That is why we introduced the asset protection scheme—the United States Government have announced something similar in its intent earlier this week, and other countries are doing that too. We have to make sure that we fix the banking conditions, because that is a precondition of sorting out the wider problems in the economy. Our approach is having an effect and will continue to have an effect. There is no overnight fix, but we are doing the right things to get lending and credit flowing in the economy, as well as supporting the wider economy and protecting jobs.

Does the Chancellor accept that some people are finding a significant difference between the headline funds that the banks announce are available to support businesses and the amount of credit actually facilitated? We have banners in banks in Northern Ireland saying, “Lending isn’t ending”, but the message from business is, “Credit? We can’t get it!” That comes from sound, reliable businesses. Will the Chancellor seek a report from the lending panel on what exactly is happening with the banks in Northern Ireland in terms of support for business?

Yes, and we will continue to do that. I can understand the frustrations of businesses and individuals when they find that a credit line that was available is no longer available, or that the price being charged has increased. Our objective in everything we are doing to support the banking system is to get credit flowing in the economy again. As I said a moment ago, that is essential. We will continue to monitor what banks are doing. There is some evidence that in several cases credit is now available, although as we continue through one of the severest downturns we have seen—the House will have seen the figures from Japan and Germany earlier this week, which show a significant downturn—it is necessary that we maintain the course that we have set and do everything that we can to get credit flowing again. That is very important.

Nobody doubts the Chancellor’s commitment on this issue, but in drawing parallels with the US recapitalisation, will he accept that because their preference stock was at 5 per cent. while ours was at 12 per cent., US banks have an incentive to rebuild their businesses, whereas British banks have an incentive to minimise their exposure to Government recapitalisation?

I am not sure whether the hon. Gentleman has noticed, but in the past six weeks we have converted the preference shares that we held in the RBS Group and the Lloyds Group into ordinary shares, because they needed the additional capital. The Financial Services Authority’s requirements were quite clear about that. I welcome what the hon. Gentleman says about supporting the banks, but what we are doing in supporting the banking system is complemented by what we are doing to support the wider economy.

I know that there is a difference of view about whether there should be any fiscal stimulus, but a substantial amount of money has gone into the economy, on which the Governor of the Bank of England fully agrees with us. I also agree with the Governor that it is necessary to continue to take action to support our economy. In particular, it is necessary to do everything we can, when people face losing their jobs, to get them back into work. That is one of the big lessons that people should have learned from what happened in the 1980s and 1990s.

Will my right hon. Friend consider placing a cap on interest rate charges for credit? For some store cards, interest is 26 per cent. APR and some companies charge as much as 182 per cent. as legalised moneylenders. That is obscene at a time when interest rates are below 1 per cent.

I do not think that a generalised cap or Government regulation of interest rates would work. I have great sympathy with what my hon. Friend says about the very high interest rates imposed by some unscrupulous lenders, and I know that he has done a great deal to try to address those problems. People have to remember, however, that if we impose controls and try to restrict lending, it comes at a wider cost to individuals, businesses and the economy. It is important to tread the fine line between sufficient public regulation, supervision and controls to protect the public interest, and stopping the flow of credit on which everything in our economy depends.

The minutes from the Bank of Japan tell us that Japan’s quantitative easing programme was expected to encourage the banks to provide more credit to business, but the evidence is that bank lending reduced over the period of quantitative easing. What can the Chancellor say today to give us more confidence that the UK’s version of printing money will have the right result and encourage the banks to provide more credit?

Quite simply, in the 1990s Japan did not address the underlying problem in the banking system. It did not put in enough capital and did not deal with the assets that had gone bad, and until one addresses those problems anything else that one might do will not have the full effect that is hoped for. The Japanese are now quite clear about what went wrong in the previous decade and that is why most countries are now at pains to avoid it. The very fact that Japanese exports have gone down by nearly 50 per cent. demonstrates the extraordinary circumstances that we face. When a country such as Japan is facing such problems, there is all the more reason for us not only to take action to deal with the bank problem and to sort that out, but to take whatever action is necessary to support the economy through fiscal stimulus. We have given the Bank of England additional fire-power to put more money into the economy, because that is essential if we are to protect jobs in quite extraordinary conditions across the world.

I am quite clear that banks should not be lending to businesses when underlying weaknesses are not being properly addressed. However, it seems to me that in my constituency at least many decent businesses, without underlying weaknesses, are told when they apply for credit that they have to cover that advance many times over—sometimes twice—with securities. I believe that the banks have to take some of the risk themselves, rather than trying to transfer the whole amount to small business owners, who have wives, families and so on to keep. It is quite unrealistic to expect that level of cover from ordinary small businesses when advancing credit.

If my hon. Friend would let me have a note of some of the problems that his constituents have encountered, I would be happy to look at them. I agree that as part of the process of restoring trust in the banking system we have to be clear about banks’ responsibilities as well as the responsibilities of individuals and businesses. If someone takes out a loan, they have to be clear that they can repay it. Equally, banks have to be responsible in their lending and ensure that they are realistic and reasonable about the conditions that they impose. That is very important and it is all part of restoring trust in the system, which I regard as absolutely essential.

Does the Chancellor agree that with the declining prospect of growth in the economy, the banks are faced with an inevitable deterioration in the quality of their loan books, so that far from increasing their loans to businesses, they are likely to be seeking the whole time to increase their capital? How will that problem be overcome?

The hon. Gentleman raises a quite reasonable point. All over the world, we have this problem. We need to ensure that banks strengthen their capital position, because in the long term that is essential. Of course, if banks did that and there was no other intervention, there would be less credit in the economy and the economy would shrink further. The result would be that the bank assets that are currently impaired would become even worse. That is why we have not only taken action to recapitalise the banks—in the case of RBS and Lloyds Group we have put additional capital in—but put in place schemes such as the credit guarantee scheme, which is working very well, the special liquidity support system, which has provided liquidity for the banks, and, in addition, the asset protection scheme, which, as I have said, will go down a similar road to the scheme in the United States. I am sure that the hon. Gentleman recognises that, as he is in a minority in his party in that he sees the point and the reason behind Government intervention in such extraordinary circumstances. Government intervention is absolutely necessary to complement the process that he and I agree has to take place if we are to maintain credit in the economy.

The simple way to get the banks lending to business again is the Conservatives’ national loan guarantee scheme. Yesterday, in Prime Minister’s questions, the Leader of the House criticised the scheme, claiming that there was no money behind it. The Chief Secretary said much the same thing a few moments ago. For the record, will the Chancellor confirm what the Economic Secretary told the House about the Government’s guarantee schemes on 14 January? He said:

“We expect the measures to be run on a break-even basis”.—[Official Report, 14 January 2009; Vol. 486, c. 220.]

He said that for a very good reason, because the premiums that are being charged are expected to cover the losses. There will be no additional cost to public expenditure from those schemes. Is it not the truth that the Government’s only sustainable objection to the national loan guarantee scheme is that they did not think of it first? British businesses are suffering because the Prime Minister puts his political sensitivities ahead of their business needs.

With your forbearance, Mr. Speaker, I think that I can answer that quite shortly. When the loan guarantee scheme was announced by the shadow Chancellor, he said that

“it does not add to public expenditure” —[ Official Report, 18 December 2008; Vol. 485, c. 1228.]

On 11 March, the shadow Business Secretary said, with exemplary candour, that

“the taxpayer will take some of the hit.”

How on earth does one square the Conservatives’ position that they would spend nothing extra with the fact that this scheme, even if it were workable, would cost the taxpayer money? That just shows the nonsense of the Conservative position.

Equitable Life

Sir John Chadwick has begun the work that the Government asked him to undertake on aspects of the ex gratia payments scheme that was announced by the Chief Secretary to the Treasury on 15 January. The Government will keep the House updated and report back on progress at regular intervals.

The Government’s position has been described as

“shabby, constitutionally dubious and procedurally improper”.

It is clear that the parliamentary ombudsman does not think that injustices will be fully remedied. What assurances will the Government give that my constituents and other Equitable Life policyholders who have clearly suffered injustices will get justice delivered with speed, clarity and transparency?

I am very disappointed that the Public Administration Committee should choose to obscure the real help that it accepts the Government’s payments scheme will deliver under extreme headlines, seemingly driven by an uncritical acceptance of the findings of the ombudsman’s report and by its unjustifiable and irresponsible characterisation of the manner of the Government’s response. [Interruption.] As a Government, we do not depart lightly from any of the ombudsman’s findings, but—[Interruption.]

The Government do not depart lightly from any of the ombudsman’s findings, but in such an important and complex case we have a clear duty to the taxpayer to ensure that our response is informed by a proper and comprehensive consideration of her report. That is what we have done and, as I have indicated previously, we want to move forward with an ex gratia payment scheme just as quickly as possible. We are talking to Sir John Chadwick about the advice that he is providing.

Is the Minister aware that he has just made one of the most shameful statements to have been made from that Dispatch Box in many years? He has rubbished a Committee presided over by one of his own greatly respected colleagues, and discounted the unprecedented second letter from the ombudsman that we all received this week. He has had no support from the Benches behind him, as not a single Labour Member has risen to echo his words. He should be deeply ashamed of himself, because he is bringing the Government and the whole system into disrepute.

I have a lot of respect for the hon. Gentleman, who has a very long track record of upholding standards in this House, but we have departed from the ombudsman’s findings only where we have clear and cogent reasons for doing so. We have applied scrupulously the terms of the Parliamentary Commissioners Act 1967, as interpreted by the Court of Appeal in the Bradley judgment. For no other reasons have we departed from those findings. I have to say that I remain very disappointed indeed that the PAC does not appear to have understood some of the arguments that we have made to it.

May I associate myself entirely with the words of my hon. Friend the Member for South Staffordshire (Sir Patrick Cormack)? I think he speaks for many people in the House, including many of the silent Back Benchers behind the Minister. What is the Minister now saying to all of our constituents? They are not unreasonable, and do not necessarily expect to get a share of the £4 billion that is being proposed, but are the Government simply waiting for many constituents across the country who relied on Equitable Life literally to die before there is any chance of getting any money on their behalf? Does he not find that a disgraceful state of affairs?

No, we are not saying that. We are saying that we want to move forward with introducing an ex gratia payment scheme as quickly as possible to help those who have suffered disproportionate impact as a result of losses through Equitable Life. We shall continue to do that. The fact that we have a disagreement with the Public Administration Committee will not deflect the Government from moving forward with all speed and providing a remedy for Equitable Life policyholders who have suffered disproportionate impact.

Order. Condemning the Minister’s reply is not what this is about—it is about asking a supplementary on the subject. I am sure Sir Nicholas Winterton will be able to do that.

I hope, Mr. Speaker, I do not let you down.

Is the Minister not aware that the way that Equitable Life policyholders are being treated is viewed—by the public, and not just the policyholders themselves—as another example of the way the Government treat people who have been responsible and prudent? Here are people who have tried to save for their retirement. The reports produced by the ombudsman have, in a way sadly, been critical of the Government, so is it not time that the Government speeded up the process to help people such as those who are losing out from virtually negative interest on their savings under the credit crunch, and to give them the benefit of their prudence and responsibility?

The ombudsman herself admitted that the issue was not clear cut. The hon. Gentleman will be well aware of the findings of the Penrose report, which said that the company was largely responsible for the demise in the situation. We will continue to move ahead with all the speed we can. We have asked Sir John Chadwick to provide us with advice; we want to introduce a scheme and we want to make sure that we can offer a remedy to Equitable Life policyholders. There is a technical dispute between the Public Administration Committee and the Government, because we clearly do not agree with its report and we shall respond in due course.

That was an extraordinary attack on an Officer of the House and a Committee of the House, and the Minister’s comments will be noted across the country. They typify the Government’s approach to the whole issue. At every step on the way, the Government have sought to block, frustrate and delay justice for Equitable policyholders. On Saturday, The Daily Telegraph nailed them completely. An early draft of the Treasury response to the ombudsman’s report said:

“Sir John will aim to provide his final advice to Government by June 2010.”

Is it not time for the Government to stop their shabby treatment of policyholders and give them a clear timetable for justice?

I and the Government have every sympathy for Equitable Life policyholders who have suffered genuine losses as a result of the failure of regulation, for which we have apologised. I have still not heard an apology from the Opposition for the period when they were responsible with regard to public bodies. Let us be clear. We have said all along that it is not normal practice for the Government to compensate for regulatory failure, and that is not the response just of this Government—it has been the response of successive Governments.

With particular regard to the date the hon. Gentleman gave, let me be very clear in response: we have said that we want Sir John Chadwick to advise us as quickly as possible and we want to make sure that we can introduce a payment scheme and make payments as quickly as we have the evidence, but we are talking about spending taxpayers’ money, and we have to have regard for the public purse. We have to do the right thing in the right way, and we will do that as quickly as possible.

Economic Growth

Well, a lot of jobs will be lost between now and then. Over the last several weeks, since the recession began, 6,500 jobs in east Lancashire have gone, and the chamber of commerce predicts that another 5,000 jobs will go. In my constituency, between Fort Vale Engineering, Fraser Eagle and Ultraframe, 200 jobs have either gone or are under threat of the axe. Will the Chancellor tell us how many jobs he believes will go in east Lancashire simply because of the business rate increase now facing many small to medium-sized enterprises? Does he not see the absurdity of pumping huge sums of money into the banks that will then have to be borrowed by some of those small to medium-sized enterprises—if they can do so—simply to pay for the business rate increases he is imposing on them?

The hon. Gentleman said that he was concerned about people who lose their jobs, and he is right to be concerned about them. That is why we have allocated just over £1 billion to the Jobcentre Plus network to help people who lose their jobs to get back into work as quickly as possible. It is still the case that most people who lose their jobs manage to get back into work within three months. Of course, that means spending money—something that he and his colleagues are against. I am aware of the concerns that have been expressed about business rates, but again, what the hon. Gentleman is asking for involves spending money, and his Front-Bench colleagues give the distinct impression that they would not spend any more money at all.

The Chancellor mentioned unemployment; in my constituency, it has risen by 18 per cent., according to the last set of figures. There are very few jobs advertised in the jobcentre, and there are 21 jobseekers for every job that it advertises, so my constituents will be looking very closely at the Budget. Did the Governor of the Bank of England not let the cat out of the bag when he pointed out that our fiscal position is so bad, our debt so high, and the Chancellor’s inheritance from his predecessor so bad, that the Chancellor’s hands are tied, and he will not be able to deliver a substantial fiscal stimulus in that Budget?

That actually was not what the Governor said. Indeed, he made the point, in his evidence to the Treasury Committee, that he thought that measures to help people get back into work were a good thing, and ought to be supported. The point that I was making—I will make it to the hon. Gentleman as well—was that if we are to help people get back into work and retrain, and if we are to help them match with jobs in the economy, it will mean spending money. The lesson from the recessions of the 1980s and 1990s is that if we do not spend the money—if we do not intervene for two or three years—an entire generation will effectively be wiped out. We must avoid that at all costs. That is why the Governor and I are totally agreed that the stimulus that I announced last November was necessary. That is why both of us agreed, at the G20 meeting of Finance Ministers and central bank governors a couple of weeks ago, that we needed to do whatever was necessary, for as long as is necessary, to support the economy.

Of course, as I have said on many occasions, substantial sums of money are being put into the economy through the measures that I announced in the pre-Budget report, and through the additional fire-power that I have given the Bank of England to get credit going in the economy. Both those things are absolutely essential, and we have to make sure that they work their way through. As the Governor himself said—and I agree—we also have to make sure that, if it is necessary, we continue to do more when it comes to measures such as putting people back into work. It is nice to have the support of the hon. Members for Ribble Valley (Mr. Evans) and for Forest of Dean (Mr. Harper); perhaps they could have a word with their Front-Bench colleagues.

May I agree wholeheartedly with what the Chancellor said? I was on the Treasury Committee when the Governor said the words that my right hon. Friend has just repeated. May I commend to my right hon. Friend the submission produced by Professor “Danny” Blanchflower and David Bell of Stirling university, which puts forward suggestions to address youth unemployment? In the summer, 700,000 young people will leave school and university; we need to tackle those numbers. Will my right hon. Friend look at the report, because it suggests good ways of tackling the problem of growing youth unemployment?

I have indeed seen Professor “Danny” Blanchflower’s suggestions, and I have spoken to him as well. [Laughter.] Rather than laughing about the matter, most people in the House ought to be concerned, at a time when we can see that the unemployment figures have been rising, that we do everything possible to get people back into work. The lesson from the past is that that is necessary not just for the long-term unemployed. It is especially necessary for young people, to ensure that they get back into the workplace as quickly as possible. However, I repeat that it means that at some stage we have to be prepared to spend the money to back that up. My view is that it is money well spent, because the cost of doing nothing, which is what the Opposition urge us to do, would be far, far greater.

One consideration is the dramatic drop in world trade over the past six months. What action will my right hon. Friend be taking at the G20 to try to reassure the international community, so that we can get world trade moving again?

I agree with my hon. Friend. The fall in world trade is one reason why industrial production is falling. It is interesting that, in the exchange of letters that I had with the Governor of the Bank of England, he made the point that in 54 of the 57 countries for which we have data, falls in industrial output were seen over the last quarter of 2008. That has had a devastating effect on economies, particularly in the far east.

We need to make sure that we get world trade going, which is why the resumption and conclusion of the Doha round of trade talks is important—and that will feature next week at the G20. It is also necessary for countries around the world to do everything that they think is right and appropriate to boost their own economies. Nobody is saying that they need to turn up next Wednesday with a budget on the table, but we are saying that if countries act together the effect will be far greater. When recession is affecting or threatening countries across the world, the need for countries to act together is essential, which is why next week is an important step along the way.

Why did it take the Governor to warn the Prime Minister that this country simply cannot afford to borrow any more money? Why does the Chancellor not stand up for taxpayers’ interests, resist the banging on the wall from his neighbour next door, and start the long haul of getting our public finances under proper control?

I would say two things to the hon. Gentleman. First, the International Monetary Fund noted in its recent report that many countries entered this problem

“with greater fiscal space to expand”.

It noted that Canada, China, France, the UK and the US were such countries, so we are in a place where we can provide help for the economy. To put it another way, if we had not done so—if we had taken £20 billion out and withdrawn the power that we have given to the Bank of England to ease credit—the effect on the economy would have been absolutely harmful and very damaging, especially to jobs and the future prosperity of businesses.

I made the point in the pre-Budget statement last year that, just as it is necessary to support our economies now, all countries need to live within their means over the medium term. That is why I announced measures to raise money in the pre-Budget report. It is important—and no one should be in any doubt about this—that, yes, we need to take measures now, as I have said, as the Governor has said, as the Prime Minister has said, to support our economy, but all of three of us have also made the point that it is necessary to make sure that in the longer term we have a sustainable position and that all countries live within their means. That may mean making some hard choices, but it is necessary.

My right hon. Friend is well aware of the difficulties. He has heard about manufacturing in Lancashire, and we have just lost more jobs at Leyland Trucks. We ought to look at how we can protect manufacturing for when the economy goes into growth, and the best way of doing so is through a short-term working subsidy. Will he look at that, and if he is looking at how we can fund it, he can always end the VAT cut early so that that much-needed measure can put the impetus back into manufacturing?

I agree with my hon. Friend that we need to do whatever we can to protect jobs or, where jobs are lost, to get people back into work. I also agree that it is necessary as far as possible to do what we can to help where we think that businesses have a viable future. I do not agree with the point that he made in relation to VAT, but I do not think that he expected me to do so.

Earlier this week, the former Cabinet Minister, the right hon. Member for North Tyneside (Mr. Byers), said that the VAT cut had “run its course” and should be reversed. Does the Chancellor agree?

No, I do not, because I think that putting £12.5 billion into the economy and doing it immediately was necessary. We are also—and I am grateful to the hon. Gentleman for allowing me to say this—taking other steps that will help the wider economy. Basic rate taxpayers will see a reduction in their tax, starting on 6 April. We have increased child benefit for the oldest child, and for other children as well. We have brought forward, too, a payment of £60 for pensioners, and the state pension itself will go up in April, so we are taking a range of measures to help. As for VAT, perhaps the hon. Gentleman should have a word with the shadow Business Secretary, who supported the reduction in VAT. Increasingly we are hearing a lot more sense and a lot more experience from that direction than we are from the shadow Treasury Front Bench.

Automotive Industry

6. What recent discussions he has had with the Secretary of State for Business, Enterprise and Regulatory Reform on assistance for those on short-time working in the automotive industry. (266529)

The tax credit system is particularly effective in delivering immediate help to families whose income falls—for example, as a result of short-time working. We have worked closely with the Department for Business, Enterprise and Regulatory Reform on the Government’s automotive assistance programme.

In a previous exchange, my hon. Friend the Member for Chorley (Mr. Hoyle) mentioned the need for wage compensation for those on short-time working. In Stroud we have worked up quite a sophisticated training package with both Delphi and Renishaws, and I thank the South West of England Regional Development Agency, Gloucestershire First and Unite trade union for that. The missing link is the need to recognise that people are putting their own time and money into the training package. If the Government could provide some additional funding for that, that would be important. I know that there is a paper before the Cabinet. May we have some clarity and some progress on this?

I am grateful to my hon. Friend and he is right to draw attention to the range of measures that are in place to support the automotive industry. I point out to him again the benefits of the tax credit system—for example, for someone who is earning £400 a week, with two children. If their income falls by £40 a week, perhaps as a result of short-time working, the tax credit award could well go up by £15 a week. So there is real and immediate help from the tax credit system to people in the position that my hon. Friend describes. We are looking at other options. We are looking, for example, at the possibility of a wage subsidy scheme that we have seen elsewhere, to see whether that could add to the real help that we are already giving. The car industry is making good use of the Train to Gain support of up to £100 million, which my hon. Friend mentioned. We are giving the help that is needed.

Topical Questions

My right hon. Friend will be aware of the crisis that is facing pubs and clubs throughout the country. My constituency cannot be any different from anywhere else, and every week a pub or a club is put under pressure. When reviewing the Budget, will the Chancellor look into the duties placed on pubs, as opposed to the loss leaders in supermarkets, and consider the possibility of changing the duty on draught beers, ciders and lagers, which could help them? Will he also take a good kick at the breweries and tell them that they should reduce the rates that pubs have to pay?

My hon. Friend raises an understandable concern for pubs throughout the country. He will know that the number of pubs in this country has been declining pretty steadily over the past 20 years or so. He is right to say that there are many factors that influence the price of beer that the customer pays in the pub. That depends not just on duty but on charges made, in many cases, by brewers that are tied. I met representatives of the brewing industry and the industry generally fairly recently to discuss these matters and, as ever, I will keep them under review.

I notice that in previous answers the Chancellor has avoided directly addressing the comments of the Governor of the Bank of England to the Select Committee on Tuesday. The Governor said:

“the fiscal position in the UK is not one that would say, ‘Well, why don’t we just engage in another significant round of fiscal expansion?’”

In one word, will the Chancellor tell us whether he agrees with the Governor of the Bank of England—yes or no?

As I have said on a number of occasions this morning, the Governor and I are in complete agreement in relation to the fiscal stimulus that I announced in the pre-Budget report last year. We are in complete agreement about the declaration that we both signed up to at the G20 meeting in Horsham a couple of weeks ago, when we said that countries needed to do whatever was necessary for as long as necessary. I also agree with him when he says specifically in the same evidence to which the hon. Gentleman refers that he would not rule out targeted and selected measures that help people faced with unemployment, something that the hon. Gentleman has turned himself against. The difference is not between me and the Governor—far from it. It is between me and the hon. Gentleman, who opposes doing anything to help people in these unprecedentedly difficult conditions. It is he who has the problem, not us.

The Chancellor knows full well that the question is about a potential second fiscal stimulus in the Budget which the Governor of the Bank of England was warning against and on which the Chancellor has yet to express a view. Is it not a defining moment in the history of the Government’s handling of the recession when the Governor of the Bank of England pulls the rug on the entire fiscal approach pursued by this Government? We have the truly humiliating position of a Prime Minister lecturing Latin American economies about fiscal probity while the Governor of the Bank of England cuts up his credit card back home. Can I ask the Chancellor again, very specifically, does he agree with the Governor of the Bank of England that

“the fiscal position in the UK is not one that would say, ‘Well, why don’t we just engage in another significant round of fiscal expansion’”?

If there is no agreement between the Chancellor, the Governor of the Bank of England and the Prime Minister, what hope is there for any confidence that the Government can pull us out of this recession?

As ever, the hon. Gentleman is talking nonsense and he knows it. I have made it very clear—and the Governor and I have discussed this on many occasions—that it was and remains necessary for us to take the action necessary to protect jobs and get credit flowing again in the economy. The hon. Gentleman opposes that. I believe that it is right, because I believe that the Government should be in the business of helping people through what is an unprecedentedly difficult period.

In relation to this country’s position, the International Monetary Fund itself, as I said, has noted that we and other countries were able to put in place a stimulus. It called for countries to take action together. We have done that, but again it is something opposed by the hon. Gentleman. He has absolutely no policies, prescriptions or suggestions as to how we should deal with these things. Indeed, the only policy that he has, in relation to inheritance tax—a policy that he claimed was funded—was undermined yesterday when the shadow Business Secretary, someone who does have experience, said that he had no idea how much money could be raised by the proposals. Is that not another example of experience on the part of the Business Secretary triumphing over the youthful impetuousness that we see opposite?

T2. My right hon. Friend will be aware that the Financial Services Authority’s compensation scheme has refused to recompense the charitable scheme of the Christie cancer hospital in Manchester for the £6.5 million that it lost when the Icelandic banks crashed. Will it be possible to urge the FSA to look once again at the unique position of charities—not, I recognise, only one charity? They are not equivalent to local authorities or individuals, but represent the many small donations of thousands upon thousands of individuals. (266549)

I fully understand my hon. Friend’s point about the Christie hospital and a number of charities. Many people have spent hour after hour, day after day and week after week raising money for an extremely worthwhile cause. I want to say two things to my hon. Friend. The first is that clearly there are lessons to be drawn in relation to our ability to regulate branches of banks that are supervised in countries where the regime perhaps leaves something to be desired. The second is that we are very conscious of the position of charities. My right hon. Friend the Minister for the Cabinet Office has been looking at the matter, and charities—including, I think, representatives from the Christie hospital—met the Economic Secretary earlier this week. Indeed, they are also due to meet the Prime Minister shortly. We will continue to see what we can do. I understand my hon. Friend’s point about charities and the differentiation that can be made for at least some of them and the larger local authorities, which might reasonably be assumed to have greater knowledge of how the system operates.

Given the excitement over the Governor’s comments, yesterday was a very good day to bury bad news. Can the Chancellor explain the comments reported from a Treasury spokesman yesterday? The spokesman said:

“The asset protection scheme and the code of practice on taxation for the banking sector are separate issues.”

That completely undermined the original terms of that arrangement, which required the full disclosure of all tax opinions. It suggested that the private banks had now won their battle to obtain support from the taxpayer under the asset protection scheme while continuing arrangements of large-scale tax avoidance at the expense of the British Government and maintaining intact their tax avoidance departments.

I do not know the quote that the hon. Gentleman is referring to. There are two distinct issues here, are there not? First, there is the asset protection scheme, which is designed to get credit flowing again and to ensure bank assets. As I said earlier, it is similar to the sort of thing that America and other countries are doing. There is a separate issue about the payment of tax by all companies, but the banks in particular. Both are equally important, because it is important that people pay what is due. On the hon. Gentleman’s general points about yesterday, as I said to him before, I believe that what we are doing is absolutely right, not just for banking but more importantly for the wider economy.

T5. Now we know that the former directors of the Royal Bank of Scotland spent much of their last weekend in office plotting how to double the size of Sir Fred Goodwin’s pension, is there not a more powerful case for some fiscal tightening over Fred’s pension pot? Could the Chancellor give the House an update on the Government’s efforts to scrutinise in fine detail the nature of that pension? (266552)

I said some time ago that UK Financial Investments Ltd., which holds our shareholding, and RBS are investigating that matter, with the lawyers looking at the position, and I have nothing further to add.

It is important that we deal with the problems that we have inherited, but it is also important that, at all times, we look forward. We have to ensure that we put RBS and, indeed, the Lloyds Group and any other bank in which we have shareholdings, on a proper and firm footing—that we rebuild them with the eventual aim of returning them to full, proper commercial operation, because that remains our intention. It is important that we keep our eyes on that and recognise, in RBS’s case, that its new management are taking a different approach and doing what is necessary to repair the damage that has been done—and they will have our full support in doing that.

T3. Does the Chancellor recall that last November my right hon. Friend the Leader of the Opposition and my hon. Friend the shadow Chancellor warned that if the Government pursued reckless levels of borrowing, the question would stop being one of how much the Government want to borrow from the markets and become one of how much more are the markets prepared to lend to the Government? Is it not now clear that those warnings have been fully vindicated and that the Government have reached the limits of trying to borrow their way out of the recession? (266550)

I do not agree with the hon. Gentleman. As the Leader of the House said yesterday, the head of the Debt Management Office said a few weeks ago that one must always be careful about reading too much into one particular auction. The hon. Gentleman may not know this, but today’s gilt auction, which concluded less than an hour ago, was fully covered. I would be cautious before saying what he said, which suggests that there is something to be said for thinking before one speaks.

Will the Chancellor liaise with the Secretary of State for Work and Pensions to ensure that the hard-working staff at our Jobcentre Plus offices, who are delivering real support to people who are becoming unemployed, have the resources made available to enable them to continue to do the job that is needed and to work as hard as they are doing?

I support what my hon. Friend says and offer my congratulations on the superb work that Jobcentre Plus staff are doing. They not only have, unfortunately, a higher number of inquiries to deal with, but are getting their average time in dealing with them down and managing to ensure that more people return to the labour market faster. The rate of getting people back into jobs in the current recession is 60 per cent. after three months, whereas in the last recession, when Jobcentre Plus was not properly funded, it was 45 per cent. Jobcentre Plus staff are doing a magnificent job, and we are relying on them to get people back into work as quickly as possible. We will provide them with the resources to do that; the Conservatives voted against it.

T4. May I take the Chancellor back to his answer to my hon. Friend the Member for Hammersmith and Fulham (Mr. Hands), and draw his attention to a notice in the window of Lutterworth Motor Spares in my constituency that went up in December? It says:“Thanks Darling! The Chancellor has gifted the nation a reduction in…VAT…Hurrah!...Yippee!” That is the employment of something called irony, which entails a certain amount of ridicule. Could the Chancellor tell my constituent, Mr. Baxter, and all the other small traders who have seen no change or benefit to their sales, why the VAT reduction was not an extremely expensive waste of time? (266551)

I gathered that it was meant to be ironic—I think that I got there before the hon. Gentleman felt it necessary to make the point. It would be nice to be appreciated in his constituency, but that is clearly not the case in one part of the high street.

My decision to cut the rate of VAT, which puts about £12.5 billion into the economy, will have an effect. It is not just there for one month, and it was not just there for Christmas. It is there for a 13-month period, and it has to be seen alongside a range of other measures: reducing tax for basic rate taxpayers, help for families and pensioners, and measures to bring forward construction. The difference between the hon. Gentleman and me is that I believe that Government have a duty to help the economy—and should do so—through times such as this, and he does not think so. The country will judge, but the lesson from the ’80s and ’90s is that if you do nothing, you will pay a heavy price.

Can I ask the Treasury what is being done to encourage the Financial Services Compensation Scheme to redress the imbalance in contributions from the banks, at 5 per cent., and from the building societies, at 15 per cent.?

T7. The Chancellor of the Exchequer said in an earlier answer that he thought that the monetary policy being pursued would lower the cost of credit in the economy, but can I draw his attention to the fact that if, for example, someone wants to buy a motor vehicle, they will pay between 7 and 9 per cent. interest, while credit card rates are between 18 and 20 per cent. and mortgage rates, if one is lucky, are about 4 per cent.? When will the effect of the lower base rate reach the consumer in a way that will help to kick-start the economy? (266554)

The right hon. Gentleman should know, as he was a Treasury Minister during the last recession, that there is a difference between the Bank of England’s base rate, what is charged for lending and what banks offer savers. Some banks are trying to offer a higher rate to savers, which in turn has to be paid for by a higher rate for borrowers. In general, low interest rates benefit people, such as those on tracker mortgages and so on, and many are seeing the benefit of lower rates. However, as I said earlier, the key is to ensure that we have sufficient credit, and credit at a price that helps the economy, which is what our measures are geared to do.

The Government are helping small companies in the area of taxation by making it easier for them to have a credit arrangement for tax payments. Could my right hon. Friend consider extending that assistance into the area of the status of certain companies, such as gross payment status? A company in my constituency is about to lose that status, which will put a considerable financial burden on them in the credit crunch.

My hon. Friend is right to draw attention to the effectiveness of the time-to-pay arrangements that Her Majesty’s Revenue and Customs has put in place. With agreements reached very quickly, £1.7 billion of tax has been deferred so far, and a large number of businesses have been able to continue when they otherwise might not have done. I would be happy to talk to him about the issue in his constituency, and look at the idea that he suggested.

T6. Thank you, Mr. Speaker. I thought that I might have been too short to be noticed. The Chancellor is responsible for ensuring value for money in public services, so what lessons does he intend to learn from the £1.4 million that has been “completely wasted”, in the words of the principal of Dunstable college, on a new build project that was encouraged by the Learning and Skills Council over many years? That money could have been spent on students, and FE colleges up and down the country are in exactly the same position. (266553)

The hon. Gentleman will be aware that there have been problems with the Learning and Skills Council and the decisions that it has taken at regional and national level. That is why the Secretary of State for Innovation, Universities and Skills has asked for a detailed inquiry and has been taking action, and why he is looking at areas that have been put in the position of having to consider their local colleges. The hon. Gentleman will know also that we have substantially increased investment in FE colleges from a baseline of zero—there was previously no money allocated for such additional capital expenditure. We are very clear that we need to keep investing in new facilities for FE, and I will certainly pass on his concerns about that college to my right hon. Friend the Secretary of State.

I have made it clear on a number of occasions this morning that the difference is not between me or the Prime Minister and the Governor. The difference is between those of us who do and those of us who do not believe that we should be supporting our economy, jobs and increasing credit to businesses and individuals. The difference is that we are taking action; the Conservatives would do absolutely nothing.

Business of the House

The business for next week will be as follows:

Monday 30 March—A general debate on Africa.

Tuesday 31 March—A general debate on the economy.

Wednesday 1 April—Second Reading of the Geneva Conventions and United Nations Personnel (Protocols) Bill [Lords], followed by a motion relating to the Non-domestic Rating (Collection and Enforcement) (Local Lists) (Amendment) (England) Regulations 2009.

Thursday 2 April—Motion on the Easter recess Adjournment.

The provisional business for the week commencing 20 April will include:

Monday 20 April—A general debate on defence procurement.

Tuesday 21 April—Consideration in Committee and remaining stages of the Industry and Exports (Financial Support) Bill, followed by:

The Chairman of Ways and Means will name opposed private business for consideration.

Wednesday 22 April— My right hon. Friend the Chancellor of the Exchequer will open his Budget statement.

Thursday 23 April—Topical debate: subject to be announced, followed by continuation of the Budget debate.

Friday 24 April—Private Members’ Bills.

I thank the Leader of the House for giving us the forthcoming business. I thank her also for her thorough answer to my question last week about NHS trusts replying to Members’ letters. It is encouraging that we can sometimes work together constructively on issues that affect all hon. Members and, more importantly, our constituents.

May I, however, protest that convention has been discarded by the Government’s somewhat offensive decision to stick a topical debate in ahead of the second day of the Budget debate, which is traditionally opened by the shadow Chancellor? Will the right hon. and learned Lady undertake to reverse that unacceptable decision?

The draft National Assembly for Wales (Legislative Competence) (Housing) Order 2009, which would affect the right to buy in Wales, was laid before the House on 3 February and was down for scrutiny on Monday 23 March. That scrutiny did not take place. I would like to ask the Leader of the House why not and when the order will come to Committee. Even better, will she allow it to be taken on the Floor of the House?

Yesterday, the Government promised that there would be an announcement on the inquiry into the Iraq war on 31 July, a full 10 days after the start of the summer recess. Quite simply, that is not acceptable. Will the right hon. and learned Lady undertake to give us a statement on the remit and intent of that inquiry before we rise for the summer?

Once again, I stand here to request an urgent debate on Equitable Life. On Monday, the parliamentary ombudsman launched an excoriating attack on the Government’s contemptuous treatment of her recommendations, and today in Treasury questions, the Economic Secretary compounded that by treating policyholders and this House with utter contempt. Because the Government’s response has been, as the ombudsman put it, a betrayal of justice, and they have ignored her recommendations, she has decided for the first time ever to invoke powers to produce a follow-up report. When will we have such a debate, and when will the people affected be compensated?

Citizens advice bureaux are performing an invaluable service for the millions of people who are suffering grave financial difficulties in the recession, and we should do everything we can to support them. Instead, the Government’s new network of community legal advice centres is squeezing out CABs and forcing them to make damaging cuts at exactly the wrong time. May we have an urgent debate on the Government’s decision to tender legal services in that way, so that the House can put a stop to the callous destruction of CABs?

May we have a debate on the work ethic of Members of Parliament? Last week, we heard complaints from the Labour Chief Whip that at least 5 per cent. of his own MPs were completely idle. [Hon. Members: “Where are they?”] Well, exactly. Today, the Government have lost three votes in the Apprenticeships, Skills, Children and Learning Bill Committee, because Labour MPs, including a Minister, did not even bother to turn up. In the interests of value for money, which the public expect, may I invite the Leader of the House—I hear calls for this from behind me—to list the 5 per cent. by name?

When it comes to performance, perhaps the right hon. and learned Lady will agree to be more forthcoming than she was at Prime Minister’s questions yesterday. She refused to answer three questions from my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) on what the Government thought about the Governor of the Bank of England’s warning about a second fiscal stimulus. It has now become apparent that the Government’s entire economic argument has collapsed, to the extent that The Independent has today called the Prime Minister, “A haunted Prime Minister, marooned on his fantasy island”. In a further fantasy, the Secretary of State for Children, Schools and Families has told the New Statesman that he wants to be Chancellor and Labour leader.

May we at least hope that the Prime Minister and Lord Mandelson can make the most of their visit to Brazil? [Interruption.] It is not where the nuts come from that matters: it is the nuts we send there who worry me. It could, after all, be the right hon. and learned Lady’s “Evita” moment.

There is one little ray of sunshine. At last, one Minister has begun to take our advice and started making an apology. We are told that the right hon. and learned Lady got into a bit of a mess about whether the actor who plays Tony Blair, or Tony Blair himself, is the better looking. We have heard the words of her apology, “Tony, you are still the fairest of them all.” One can but imagine his reply, “You know, I was a marvellous Prime Minister, but I got out in the nick of time.”

The shadow Leader of the House has complained that we have scheduled a topical debate for Thursday 23 April, when otherwise there would be continuation of the Budget debate. I am happy to accept his protests. That business was only provisional, so I will amend the business and make sure that there is a full day’s debate on the Budget opened by the Opposition, who choose the topic.

The hon. Gentleman asked about the draft National Assembly for Wales (Legislative Competence) (Housing) Order 2009. We will make sure that it is properly scrutinised. The process is new, and we need to get it right.

The hon. Gentleman also asked about the Iraq inquiry. There was a debate about that, and I have nothing further to add in business questions. Nor do I have anything further to add to what Treasury Ministers said about Equitable Life.

I will raise with the Justice Secretary the hon. Gentleman’s questions about citizens advice bureaux. The Government have strongly supported their work, which is even more important to help people who find themselves in difficulties because of the downturn.

The hon. Gentleman said that our economic argument had collapsed. Well, that is not the way everyone sees it. The former Tory leader of Thurrock council, Councillor Terry Hipsey, expressed a rather different view when he said:

“I’ve spent the last two-and-a-half years trying to keep this dysfunctional Tory group of Councillors together. Recently, after having some time to reflect, it has become clear to me that this group—and the Conservative Party more widely—are incapable of making the changes necessary to take Thurrock forward.

I’ve been increasingly impressed with the group of Labour councillors”.

He went on to say that because of the excellent work of the local Labour Members of Parliament, my hon. Friends the Members for Basildon (Angela E. Smith) and for Thurrock (Andrew Mackinlay), and because of the work of the Prime Minister, he had decided to join the Labour party. We welcome him.

The hon. Gentleman raised the subject of the work ethic. I think that his point about value for money was very important. It is the case that 60 per cent. of Conservative Members have second jobs. That is why I think that the public will greatly welcome the fact that the Prime Minister—

Sixty per cent. of Conservative Members have second jobs, and I do not think that that is value for public money.

The hon. Gentleman raised questions about what he described as manoeuvring. He mentioned a number of Cabinet Ministers, but I think that the manoeuvring on which he ought to be focusing is that of the shadow shadow Chancellor against the Leader of the Opposition. I think that it is a case of Hush Puppies on the Leader of the Opposition’s lawn.

The hon. Gentleman also mentioned my unfortunate gaffe in relation to Michael Sheen. Let me say that I think that he is an excellent actor, who is clearly capable of covering a diverse range of roles. He brilliantly played a socialist, Brian Clough. He also played the Prime Minister, Tony Blair. He is a great credit to his native country, Wales.

One of the many tasks that take up the time of Members of Parliament is handling constituents’ worries about the way in which their benefits and tax credits are processed, and generally dealing with Government bureaucracy. May I urge the Leader of the House to call a debate on the Department for Work and Pensions report, published today, on how jobcentres and other organisations deal with customer complaints?

I think that the Public Accounts Committee report—I am grateful to my hon. Friend for drawing attention to it—reflects a big improvement in jobcentres and the way in which those claiming benefits are dealt with. Obviously the Government will reflect on the report, but it should also be pointed out that, against a background of increased work for jobcentre staff, they are providing a much better service. I pay tribute to them for that.

I previously welcomed the two days allotted to the Report stage of the Coroners and Justice Bill, but last week’s timetabling was a disgrace. None of the clauses relating to the reform of the coronial system were reached; nor, indeed, were the clauses relating to the law of homicide. The Government literally got away with murder.

May I draw the attention of the Leader of the House to another problem? It relates to the Committee considering the Apprenticeships, Skills, Children and Learning Bill, which was mentioned by the hon. Member for Rutland and Melton (Alan Duncan). Setting aside the Government’s difficulty that only six of their 12 MPs on the Committee bothered to turn up—I would love to have heard the conversation between the Deputy Chief Whip, the hapless hon. Member for Brent, South (Ms Butler) and the Under-Secretary of State for Innovation, Universities and Skills, the hon. Member for Birmingham, Erdington (Mr. Simon)—126 clauses and 20 new clauses remain to be considered by a Committee that has only three sittings left. Some clauses may not be considered either in Committee or on Report.

I have a revolutionary suggestion for the Leader of the House. We should do something that is normal in another place and that used to be normal in this place: we should not have a restrictive timetable, and we should let this House scrutinise the Bill properly and fully. If there are difficulties later, the Government can react to them, and if there is a need to shorten speeches, no doubt you can intervene, Mr. Speaker, but the House should have its say on that important Bill, which would be welcomed by all.

Most Members are aware of the difficulties caused by endemic AIDS, tuberculosis and malaria in much of the developing world. The Global Fund to Fight AIDS, Tuberculosis and Malaria has been set up to deal with those issues. May we have a debate on the workings of the fund? The UK has a relatively good story to tell—quite properly, we have taken the lead—but there is still a shortfall between the fair share of the British contribution and what is actually being received by the fund, which is desperately short of cash. May we in this House consider how we can better help people suffering from those awful diseases in other parts of the world?

May we have a debate on the misuse of powers granted by this House to combat terrorism and serious crime? We heard a chilling report today about the number of local authorities that use surveillance powers for trivial purposes, and we hear repeated reports about the police using the Terrorism Act 2000 for inappropriate purposes, whether it is questioning 2,000 people at train stations—train-spotters are apparently a threat to the state—photographers taking pictures of London street scenes, anglers who make the mistake of fishing at night, or the hon. Member for Hayes and Harlington (John McDonnell) attending the House of Commons. Those cases involve misuse of those powers. May we have a debate?

Lastly, I do not know whether the right hon. and learned Lady has a Facebook account, and I do not know whether she has been poked recently—Facebook users know what that means—or whether she has been asked to intervene. My Facebook friends are very upset at Home Office plans to snoop on sites such as Facebook, Bebo and MySpace. May we have a debate on that disproportionate and unnecessary extension of state powers, which leads us, despite it being 2009, inexorably to “1984”?

On the Coroners and Justice Bill, if we had not had a programme motion, we might have ended up with two days’ discussion of inquests in camera. Twenty-five Members contributed to the first debate, which is why time was squeezed for the important discussions on murder. Because so many Members wanted to contribute to the first debate, exceptionally we allowed two days. If we had not had a programme motion, we would have ended up with two days’ debate on the first question. The programme motion ensured that on the second day we discussed incitement to homophobic hatred and a Government amendment tabled in response to complaints from the Opposition and others about our data-sharing measures. We tried to be as helpful as possible. Even though we provided two days for debate, it was not possible to discuss all the issues when so many Members wanted to contribute on the first matter of inquests in camera.

We will make sure that the Apprenticeships, Skills, Children and Learning Bill is properly scrutinised.

On local councils and surveillance, local communities ask local councils to use CCTV to catch fly-tippers and stop illegal trading. Local communities ask for CCTV in shopping centres and their local areas, which has nothing to do with the misuse of anti-terrorism powers. Having said that, the Minister for Local Government has written to local councils reminding them that they should use their surveillance powers appropriately.

The hon. Gentleman asked about tackling disease in developing countries. He understands that we have increased the budget for developing countries to help to tackle disease. This Government played a leading role in the introduction of millennium development goals to deal with avoidable diseases, and we have worked to move up the international agenda tackling the problems faced by developing countries. Even in the midst of our preoccupation with the effect of the global downturn on this country, the Prime Minister has been sure to emphasise, through the work leading up to the G20, that we must act together internationally to protect developing countries from the downturn as well.

My right hon. and learned Friend will recall her comments about the problems facing charities such as Naomi House children’s hospice, which serves my constituency and those of many other hon. Members, following the collapse of the Icelandic banks. Will she prevail on her colleagues in the Treasury to find a way to include charities such as Naomi House in the Financial Services Compensation Scheme, as it was never the intention to exclude all charities from the scheme, particularly those that care for terminally ill children?

I reinforce the points that I have made about Naomi House providing an important service for families with children who need hospice care, and I know that my hon. Friend values that work. Naomi House was particularly unfortunate, because some 60 per cent. of its reserves were in one Icelandic bank. We want to ensure that the administrators ultimately cover all the deposits and that, ultimately, Naomi House gets its money back. However, that is not the point; the point is that Naomi House should be able to carry on doing its good work and extend it as planned. Last week, I spoke to the Minister of State, Department of Health, my hon. Friend the Member for Corby (Phil Hope), about the matter, and meetings are taking place between Naomi House and the local primary care trusts and strategic health authority. There is an absolute determination to support Naomi House’s work in the future, as well as to make sure that it and other charities get back all the money held in Icelandic banks.

May we have an early debate and a vote on Equitable Life? At Treasury questions, the Executive declared war on Parliament, when a Minister spoke in disobliging terms about an Officer of the House and the unanimous report of a Select Committee. Before the Government spend too much time on the Chadwick review, does it not make sense to ensure that that review has the support of the House of Commons?

I have nothing to add to what the Treasury Minister said, except to say that the matter can be raised in the pre-recess Adjournment debate. If the Opposition want a Minister specifically to respond to the point, they can raise the matter in an Opposition day debate.

The importance of hospice care has already been mentioned this afternoon. I know that my right hon. and learned Friend is aware of how much hospice care depends on voluntary donations by the public and corporate bodies. On Saturday, I will open the spring fair for the George Thomas hospice in my constituency. In these difficult times caused by the global economic downturn, donations from the public and corporate donors decline. When can we have a debate on that important subject and on ensuring that hospices can continue their work?

I hope that the spring fair for the George Thomas hospice goes well, and I know that my hon. Friend is a strong supporter of it. Perhaps we should have a topical debate on the effect on charities of the fall-off in charitable giving, particularly by corporate bodies, and discuss what our strategic response should be. I believe that all Members think that the work of the charitable and voluntary sector is very important indeed, and a debate might provide us with an opportunity to decide whether we are doing enough to protect it.

Now that the right hon. and learned Lady is taking an interest in the work ethic in this House, will she turn her attention to the work ethic of her fellow Ministers? In October, I wrote to the Economic Secretary to the Treasury on behalf of a constituent about bonuses paid by banks. As is my practice, I followed up with chaser letters, but to no avail, so we resorted to the telephone. On 3 March, my office phoned the private office of Lord Myners chasing a reply to my letter, only to be told that 900 letters were waiting to be signed by Lord Myners. When still no reply came, we phoned again on 24 October, and were told that approximately 950 letters were now waiting to be signed by Lord Myners. We have been invited to telephone his office yet again this afternoon. I wish the right hon. and learned Lady would do something about this.

I will follow that up. It is important that hon. Members are able to get letters from Ministers promptly.

Will my right hon. and learned Friend find time for a debate on the financial ineptitudes of shire county councils such as Kent, which invested £50 million of taxpayers’ money in the failing Icelandic banks? Does she agree with the Audit Commission’s findings published today, which label Kent county council’s actions as neglect?

It is very worrying that the Audit Commission has said that Kent county council did not properly check where the reserves were being put on behalf of ratepayers. I am sure that the Minister for Local Government will follow up this important point.

May we have a debate on the construction industry? The Government have said that the industry is important to provide economic stimulus; the Conservatives have said that no additional funds will be made available for that industry to provide that stimulus; the industry itself believes it can provide that economic stimulus. May we have a debate, so we can tell the industry what it can provide and when it can provide it, both as a short-term measure and a long-term strategy?

Such issues will be reflected in the economic debate next week, and in the debate following the Budget statement.

Is my right hon. and learned Friend aware that women working at the Driver and Vehicle Licensing Agency earn £5,000 per year less than men with very similar responsibilities who work at the Driving Standards Agency? Both agencies are part of the Department for Transport and both have Crown employees. May we have a debate on this matter?

I thank my hon. Friend for that question. There will be plenty of opportunity to debate this when we introduce the equality Bill. The reality is that women are not less committed to their jobs, or less qualified, less hard working, or less valuable in the workplace, but they are paid less. We need a strong equality Bill to make sure we strip away the secrecy that allows discrimination against women at work to flourish.

Is the Leader of the House aware that there is growing anger in East Yorkshire and across Humberside, and, indeed, elsewhere, over the behaviour of some private wheel-clamping firms? Does she know that although they have to be licensed, many of them still use threatening behaviour to extract exorbitant fines from unsuspecting motorists? If we cannot have a debate next week, will she ask the Home Secretary to expedite her review, so that we can soon have in place new rules to stop this licensed thuggery?

This issue was raised with me in the House, and I discussed it with the Home Secretary. I think she fully agrees with the points the right hon. Gentleman makes on behalf of his constituents and those in his region, and when the review finally reaches its conclusion I am sure he will not be disappointed with its findings.

I recall that at last week’s business questions three hon. Members raised the financial problems within the Learning and Skills Council. Since last Thursday, the chief executive has resigned and the implications of the financial misjudgments are now extending to other colleges that had in the pipeline not major capital projects but minor capital projects for which they could reasonably expect to receive a smaller contribution from the LSC. Will my right hon. and learned Friend find time for a debate, because it would enable us not only to remind the country that in the last year of the previous Conservative Government there was no capital budget for further education and that in the last three years of the previous Conservative Government a 7 per cent. annual cut in FE revenue spend was required, but to see exactly how the current Government can resolve this problem?

It is right to point out that under the Conservative Government the capital budget for learning and skills in further education was not mismanaged because there was no such budget. I think there has been mismanagement and, as my hon. Friend says, the chief executive of the LSC has resigned. At the request of the Secretary of State for Innovation, Universities and Skills, Sir Andrew Foster is conducting a review. I think it is likely that there will be an oral statement when the review is concluded, and Members will have a chance to hear from the Minister and raise points.

Members on both sides of the House have raised with the Leader of the House their concern about the iniquity of the surface water charges being levied by water authorities and water companies. In my own area, United Utilities has declared a temporary moratorium for village halls, Scout organisations, churches and sporting clubs, but will she find time for a topical debate, because this House has never decided that such charges should be levied, and in my view they are unfair and iniquitous and place burdens on organisations that clearly do not have the money to pay?

This is an important issue, particularly for village halls, Scout groups and churches. It might be worth while for the hon. Gentleman to raise it with Department for Environment, Food and Rural Affairs Ministers at oral questions next week.

May I return to the debacle over the LSC’s total mismanagement of the Building Colleges for the Future programme? It was discussed in a Westminster Hall debate yesterday that was so over-subscribed that many Members were not called to speak. That was not surprising given that 144 new college build schemes have now been put on hold, including the College of West Anglia scheme in the town of March in my constituency, which was linked to 270 new homes under the regional spatial strategy for Cambridgeshire, a new country park, a £500,000 business centre and significant transport improvements, not to mention a massive uplift in education provision for an area with performance indicators well below the national average. May we have a debate as a matter of urgency to explore the reasons behind this massive Labour Government cut in education spending, and to find a way forward for those colleges, which are now in truly parlous situations?

The hon. Gentleman ought to reflect on the fact that this is mismanagement; it is not a cut, as we have increased the LSC’s budget. We make no bones about the fact that there has been mismanagement by the LSC, but 261 college projects are going ahead, although in saying that I do not seek to minimise the problems for the 144 that are not. I know this is of concern to the House, because plans have been made and money has been spent in areas that were expecting the colleges to go ahead. I know the House will want to discuss this further. We will probably start with an oral statement, and then we will have to reflect on whether there needs to be a further opportunity for debate.

I know that the Leader of the House has already been asked to arrange a debate on Equitable Life, but will she use her good offices to see whether we can speed up payouts to Equitable Life policyholders? I ask that because there is not a constituency in this country that has not been affected.

I know that this matter was addressed by Treasury Ministers this morning, and I am sure that they, like my hon. Friend and I, and, indeed, all hon. Members, want the ex gratia payment scheme to come into effect as soon as possible. It should be a matter of priority that those who are in most difficulty receive payments first.

May we have an urgent debate on the tax treatment by HMRC of sporting stars’ testimonials? The committee representing one of my constituents has been trying to get an answer out of HMRC about the tax treatment of a sporting star’s testimonial. It is clear that HMRC deals with cricketers and rugby players differently, and that there is a massive amount of delay, confusion and disarray in HMRC on this matter. All that the committee that looks after the affairs of my constituent is getting from HMRC is confusion, delay and obfuscation. If we cannot have an urgent debate, will the Leader of the House urge Treasury Ministers to see me and members of the committee?

I do not know whether the hon. and learned Gentleman tried to put a question to Treasury Ministers, but if he did not manage to catch the Speaker’s eye earlier it would probably be a good idea for him to follow this up with a written question. In any case, I shall bring the fact that he has raised this matter to the attention of Treasury Ministers.

When the Leader of the House left Prime Minister’s questions yesterday, she missed three points of order made by my hon. Friend the Member for Moray (Angus Robertson), and the hon. Members for Meirionnydd Nant Conwy (Mr. Llwyd) and for East Londonderry (Mr. Campbell), which can be found at column 308 of Hansard. Each of them contradicted the statement she made yesterday that this Government were not cutting spending, as that is indeed their plan for Belfast, Edinburgh and Cardiff. May we have an urgent debate in Government time on the impact of Government cuts to the nations and the Province, and will she lead it so that she can, at least and at last, bring herself up to speed with Government policy?

I am up to speed with Government policy, and I know, as the hon. Gentleman does, that the Barnett formula applies to Scotland. I can also tell him emphatically that of course we are not cutting spending in Scotland and Wales at the very time when public spending is more important, as the country faces this global economic crisis—it is absolutely not the case that we are cutting spending now, in a recession. He is referring to the determination to ensure that across England, Scotland and Wales we get better value for public money spent. In Wales and England, a commitment has been made to secure 3 per cent. more efficiency in how public money is spent, but the Scottish Executive want to sign up to only 2 per cent.—that is 1 per cent. less than in England and Wales. They should be prepared to show as much determination to ensure that public money is well spent as their counterparts in England and Wales, and they should not peddle the myths that we are cutting money to Scotland and that I do not know what I am talking about, as both of those are wrong.

May we have a debate on regional development agencies? The south-west’s RDA is putting more money into Swindon, Bristol, Exeter and Plymouth than it is into the rural areas. Somerset, which is a tourist destination, as the Leader of the House is well aware, is finding it harder—or impossible—to get decent sums out of the RDA, as is Bridgwater, which is the only industrial town in the south-west. Please could we look carefully at what is happening, because if this continues in this recession, it will be harder and harder for investment to come into our areas because of the RDA’s attitude?

The work of the RDAs is even more important as the country faces this economic downturn. Hon. Members surely wish to be able to hold RDAs to account for the balance of spending within a region, and the best way of doing that is by being on the relevant Regional Committee. Following the decision of the House, we are trying out Regional Committees only for the lifetime of this Parliament, so Conservative Members should at least try them. If, afterwards, they think that the Committees are a waste of time, they can say, “I told you so”, but they will not even try them. If they have these concerns, they should get on the Regional Committees and see whether they can help.

I think that when the Chief Whip said that he thought 5 per cent. of Labour MPs were not pulling their weight he was confused; what we have seen today is that about 5 per cent. of Labour MPs are pulling their weight—and that does include the Leader of the House. I hope she can use her weight to get a debate on the lack of educational psychologists in this country, particularly in Lancashire. One of my constituents wrote to me about the cancellation of an appointment with an educational psychologist. When I wrote to the county council, it said it was having great difficulty recruiting any educational psychologists. There is clearly a lack of them throughout the country, so can we have a debate on the issue?

I shall raise that point with my ministerial colleagues in the Department for Children, Schools and Families. I take it that my colleagues are happy to leave me to get on with putting to the House the business of the House while they work hard in their constituencies.

The Leader of House will have noted that Lord Myners responded in writing to the Treasury Committee admitting that he had—no doubt, mistakenly—given false evidence to it the week before and did understand and know all the details of Sir Fred Goodwin’s pension. In the light of that, should we not have a statement from the Chancellor, and should not Lord Myners be considering his position?

No, he should not. I did not watch all of Treasury questions, so I do not know whether this matter was raised. The focus of Ministers, particularly Lord Myners, in relation to Royal Bank of Scotland was on the fact that one of the biggest banks in the world was about to go off the edge of a cliff. His and our determination was to ensure that that did not happen, as it would have had catastrophic effects on all the staff in the organisation and on the whole banking system—in particular, on depositors. That was the main focus of his work, and it was the correct one. We are looking to see whether the pension arrangements really do hold water legally.

I wish to add to the calls for a debate on further education, as the crisis in funding is hitting my constituency hard. The Government’s response in yesterday’s Westminster Hall debate was shambolic, and the Leader of the House needs to intervene urgently so that we can get either the oral statement that she has talked about or a debate, including a response from the Secretary of State, so that colleges in my constituency can get the reassurance they need for the future.

I will undertake to listen with genuine concern to the points raised by Conservative Members on further education colleges in their constituencies if they will reverse their plan to impose £600 million of cuts. I am concerned about FE colleges, be they in my constituency or in the hon. Lady’s, but the fact is that her party’s plans are to cut £600 million off—

Order. Mr. Speaker has already given advice to the Government Front-Bench team this morning about referring to Opposition policies, so to be consistent I should restrain the right hon. and learned Lady at that particular point. While I am on my feet, may I also say that I want to try to call all Members, but it would be very helpful if the questions were brief and the answers equally concise?

Last week, the Leader of the House said that she took seriously the points I made about the need for this House to scrutinise legislation. May I suggest to her constructively—we recognise that two days were given on the Coroners and Justice Bill and more time was given in Committee—that the solution must be that discussions be held about whether programme motions can be negotiated and agreed and we, in turn, can agree to restrictions on the length of speeches on Report, if necessary? That would mean that everything we need to have debated could be debated, and everybody would win. Will she engage constructively in those discussions?

The Government Whips do engage in discussions with their opposite numbers, and we will always try to get as much scrutiny as possible. We did see whether changes could be made that would meet with approval from all parts of the House, but some Members wanted to spend more time discussing the inquests in camera issue whereas others wanted to spend more time discussing murder and assisted suicide, and it was not possible to reach an accommodation with which everybody agreed.

I welcome the fact that we are having an early debate on the economy, but I regret the fact that the Prime Minister will not speak for the Government. May I suggest that we rearrange the debate so that he can? Given the evidence of the chairman of the Financial Services Authority and the Governor of the Bank of England, it is plain that the Prime Minister has a huge personal responsibility for the economic plight of this country. Given that, to organise a debate without the presence of the Prime Minister is rather like organising a criminal case without the principal defendant being in the dock.

When making statements following international meetings, the Prime Minister deals extensively with economic issues, and he answers questions in the House every Wednesday.

Given that we have 80,000 prisoners in this country, that two thirds of them reoffend within two years of release, and that the whole system, including reoffending, costs £18,000 million a year, is it not time that we debated the Centre for Social Justice report “Locked Up Potential”, which calls for the scrapping of the three planned Titan prisons, for community prisons in their stead, and for an increased focus on education, training and rehabilitation?

That point was raised yesterday in Prime Minister’s questions, and I shall raise it with the Justice Secretary.

Last week, I asked the Leader of the House whether we could have a debate on the future of the Hemel Hempstead hospital. She said that I should have given her notice. I have raised the issue 25 times in business questions, and I would have thought that was enough notice. Since last week, the Highways Agency has put up new signs at junction 8 of the M1, displaying “Hospital A&E”. It is closed: will the Secretary of State for Transport come and explain why he is leading people astray?

I think that it is the Secretary of State for Health that the hon. Gentleman is after. Did the hon. Gentleman ask a question about this at Health questions on Tuesday? It is a matter for Health questions rather than business questions.

On Monday, the Prime Minister was slightly confused. When trying to dodge the Leader of the Opposition’s question about why the Prime Minister was not reporting to Parliament on the G20 summit, he said that the date of the summit had been arranged months after the Easter recess. In fact, the Easter recess was decided on 11 March this year, but the G20 was announced on 26 November last year. Can we get the Prime Minister to come this Thursday to report on the G20 summit?

The Prime Minister takes his responsibilities to account to the House very seriously. I do not know the exact numbers, but I think that he has made more statements to the House than most other Prime Ministers—I will look up the figures. No doubt the Prime Minister will want to account to the House in respect of the G20 summit.

A number of local authorities have been found by the Audit Commission to be financially negligent in their investments with Icelandic banks, including the London borough of Havering, which is noted for its financial probity. May we have a debate on the exact nature of the warnings that were given, where the information came from and how it was communicated, because this will be a matter of great concern for local taxpayers?

It will be a particular concern to the seven authorities that were mentioned, and perhaps that is an issue on which hon. Members could apply for a debate on the Adjournment.

Our suspicion that the disgraceful curtailment of debate on the Report stage of the Coroners and Justice Bill on Monday had more to do with chicanery over the issues of assisted suicide and murder than anything else was confirmed by the fact that the following day, at 11.20 am, we received a wodge of letters from the Under-Secretary of State for Justice, the hon. Member for Lewisham, East (Bridget Prentice), the Minister on the Bill, answering a variety of questions asked in Committee—on which I served—about the coronial system. Ministers replied after any opportunity to debate the matter in the House. Does the Leader of the House agree that that is an appalling waste of ministerial time, and what can she do to ensure that it does not happen in future?

I have looked, in some detail, into how we could have ordered things differently—[Hon. Members: “More time!”] Well, we had two days on Report, which was exceptional. I will look at the issue again to see whether any lessons can be learnt, but I ask hon. Members to recognise that there was no chicanery. We have no interest in anything other than proper scrutiny of the Bill. I cannot see how we could have tried harder to reach agreement, but I will look at that again.

Further to the question asked by my hon. Friend the Member for North-East Cambridgeshire (Mr. Moss), is the Leader of the House aware that the College of West Anglia was planning not only a new campus in March, but a £100 million-plus new campus in King’s Lynn on a brownfield site, on which depended new houses, business units and a new city academy? What does she say to those colleges that have spent large sums preparing such plans? May we have a debate and a confirmation that if those plans are cancelled, the colleges will get their money back?

We await Sir Andrew Foster’s report. The Secretary of State will report to the House and there will then be announcements and an opportunity to discuss how we go forward beyond what is clearly bad mismanagement.

The Leader of the House will know that many Members of Parliament have had many letters from constituents about Equitable Life. My right hon. Friend the Member for North-West Hampshire (Sir George Young) mentioned the comments by the Economic Secretary. In my right hon. Friend’s polite way, he described them as disobliging remarks about an Officer of the House. Does the Leader of the House agree with the Economic Secretary? If she does, does she not think that that is in conflict with her position as Leader of the House and guardian of the rights of Members?

I did not hear what the Economic Secretary said, but I was present when the Chief Secretary made her statement. She acknowledged that there had been errors in management of Equitable Life that went back to the 1980s; that there had been regulatory failures for which apologies were owed and had been given; and that although there was no legal obligation to pay compensation the Government were determined, exceptionally, to make payments in recompense and a system for doing so was being established.

May we have a debate on the NHS’s recruitment priorities? I recently attended No.10 Downing street with an excellent organisation called to complain about the lack of midwives, and many of my constituents still find it very difficult to find an NHS dentist, but last year the NHS recruited an extra 9.4 per cent. of managers. Surely the resources of the NHS should be directed at front-line care, rather than bureaucrats filling in forms to meet Government targets?

The Political Parties and Elections Bill is now before the upper House. The Leader of the House may be aware that two Liberal Democrat peers have tabled an amendment to strike out the new clause about confidentiality of candidates’ home addresses, which was included in the Bill after a free vote for Conservative and Labour Members, but a whipped vote against for Liberal Democrats. What would the Government’s attitude be in the strange event of the upper House deciding to overrule a free vote in the lower House about whether our home addresses have to be revealed when we stand for election—something that Members of the upper House, fortunately for them, do not have to do?

I voted for the hon. Gentleman’s amendment on a free vote. I assume that if the issue comes back to this House, it will be subject to a free vote again, and I would vote for it again. Our constituents are entitled to know whether candidates live in the constituency, but they should not necessarily know the flat number or road, so the amendment was a sensible one.

I am grateful to the Leader of the House for saying that the Apprenticeships, Skills, Children and Learning Bill will receive proper scrutiny. I would be grateful if she explained how that will happen.

To return to the issue of Equitable Life, there was an extraordinary statement by the Economic Secretary earlier. The Select Committee has described the Government position as “morally unacceptable”. Surely it is cause enough for a debate in this House when the ombudsman and the Select Committee are in direct opposition to the Executive. The Leader of the House has so far ducked the question. May we have a debate—

Order. As the hon. Gentleman was the last to be called, I indulged him with two questions, but he is now pushing it.

Council Tax

With permission, Mr Speaker, I should like to make a statement on council tax in England and the capping action that the Government propose to take for 2009-10. Today, the Department has released figures showing that the average band D council tax increase in England next year will be 3 per cent., the lowest increase for 15 years. The average council tax rise for all households will be 2.6 per cent., the lowest ever since the council tax was introduced.

There are three reasons for that. First, Government funding for local services is rising by 4.2 per cent. in 2009-10—an extra £3 billion and the 12th successive annual increase above inflation for local government since 1997. Secondly, local authorities are taking seriously their responsibility to residents to tighten their belts and operate more efficiently. Thirdly, although I know local government does not like it, council tax capping helps concentrate the minds of councils. I have consistently said that we will take tough action when it is necessary to protect council tax payers against excessive increases—I said so to the House in November in my statement on the provisional local government finance settlement.

I therefore want to set out for the House the action that we are now taking. Our capping principles relate both to an authority’s council tax and to its budget requirement, which, broadly speaking, is the spending financed through the formula grant and council tax. I can confirm that our capping principles are that authorities’ 2009-10 requirements are excessive if they set a budget requirement increase of more than 4 per cent. for 2009-10 or a band D council tax increase of more than 5 per cent. For an authority that was set a notional budget requirement following capping action in 2008-09, these principles operate by reference to that notional budget requirement and a related notional amount of council tax calculated for that year. The principles are described in more detail in a report that I am placing in the Library of the House.

I realise—especially as I look around the Chamber—that not all Members will be familiar with the concept of a notional budget requirement. Put simply, it is one of our capping options. It involves the Government’s setting figures for an authority against which their future increases are compared—last year, those figures were equal to the caps that would otherwise have been imposed in year in 2008-09. The requirement puts a greater onus on authorities to control their budget and council tax the following year, as they are measured against the lower baseline.

Of the eight authorities against which we took capping action in 2008-09, four were set notional budget requirements. They were Bedfordshire, Norfolk and Surrey police authorities and Portsmouth city council. This year, two authorities have exceeded the principles I have announced. They are the police authorities of Derbyshire and Surrey. All other councils, police authorities and fire and rescue authorities have set increases within the limits I am confirming today.

Derbyshire police authority has increased its budget requirement by 4.99 per cent. and its council tax precept by 8.68 per cent. Surrey police authority has increased its budget requirement by 4.82 per cent. and its council tax precept by 7.07 per cent. compared with the notional levels set last year. I am disappointed that Surrey has set an excessive increase for a second successive year. This is the first time under current legislation that we have had to take action against an authority more than once.

Let me make it clear to the House that I am not announcing a cap on the council tax of Derbyshire and Surrey police authorities. I am starting a process that could lead to that. The authorities have a right under the legislation to challenge the proposed cap and to seek to justify their decisions. We will consider carefully all the representations the authorities may make before reaching any final decisions. Today I am writing to the chairs of the two police authorities confirming that I and my hon. Friend the Minister for Security, Counter-Terrorism, Crime and Policing will meet them personally to hear their case in person. After that, when we have considered any case made by the authorities, we can proceed either to designate—or cap—the authority for 2009-10, either at the level proposed today or at another level, or to nominate an authority, which means either capping the authority for next year, 2010-11, or setting a notional budget requirement for 2009-10 as the baseline for any future capping decisions.

Confirming a cap for this year would require the authority to re-bill residents for a lower council tax, with the cost falling on the capped authority. All authorities set their budget requirements and council tax in the full knowledge that excessive increases could lead to re-billing, so they can have no complaints about this.

The capping principles I have announced today are expressed in terms of band D council tax. That is because the band D amount that authorities are required to determine is set out by the legislation. However, the average household pays around £240 less than the band D amount and the increase for average council tax next year is 2.6 per cent, the lowest increase ever since the council tax was first introduced by the Conservatives in 1993.

I would like to end by looking ahead. Central Government funding increases, the concerted efficiency effort of many authorities and our commitment to tough capping action have resulted in some of the lowest council tax increases ever seen. Nevertheless, council tax payers will not be pleased to see that 86 authorities have set band D increases of more than 4.5 per cent., especially during this period of economic pressure all round, while 39 of these authorities have set rises of between 4.9 per cent and 5 per cent. Some suggest that that is because such authorities believe the Government have in place some standing 5 per cent cap. That is not the case. The Government have always been clear that our purpose when setting capping principles is to protect council tax payers from excessive increases. In the current economic climate, keeping council tax under control is more important than ever.

So I put all authorities on notice for next year. It would be a serious mistake for any local authority to assume that the principles I have announced today for this year are in any way a guide to the approach or the levels I may set in future years. I commend the statement to the House.

I thank the Minister for providing advance notice of his statement. As hon. Members will know, he is unfailingly courteous and he unfailingly manages to put the most outrageous spin on events in the most reasonable fashion.

May I ask the Minister to help me on a few matters? Is not the reality behind the Minister’s words and this year’s figures the fact that since 1997 council tax bills will have risen by £726 a year on band D, the band that is the basis of the statutory measure? Given that has happened across the board, in councils of all types and all political compositions, will the Minister accept that the Government must take responsibility for these hikes? Council tax bills are rising by £41 this April, compounding those previous rises. At a time when millions face losing their jobs or are suffering pay freezes, is that good sense? Is it sustainable that council tax bills are taking almost £120 from the pockets of families? Is it acceptable that council tax has gone up by an inflation-busting 105 per cent. on this Government’s watch? Is not the reality that the Government inherited a local government finance system that worked and that has at least been consistent—[Interruption.] I simply refer to a comment made by the Government in their 1998 local government Green Paper. It said:

“The council tax is working well as a local tax. It has been widely accepted and is generally very well understood.”

Of course, that was before the Labour party got its hands on it. The reality is that the Government have managed to break the economy and the local finance system as well.

I hope that the Minister can help me on a couple of other specifics. Is not the 4.2 per cent. figure that he uses less than the whole picture? It relates to an increase in all grants, whereas the increase in formula grant—the only area where local councils have discretion—is considerably less?

The Minister is right to say that the efforts of local authorities should be appreciated, but might not that be because the Conservative party controls more councils than Labour and the Liberal Democrats put together? Would he care to reflect on that?

Will the Minister confirm that one third of the basic state pension has been taken up in these council tax increases? Why has the proportion of pensioners claiming council tax benefit declined from three out of four to one in two on this Government’s watch? Why has the Audit Commission raised concerns about the method of funding distribution? It has said that

“grant redistribution…has led to some councils putting up council tax more than others.”

Does that not raise the suspicion of fiddled funding? Is there not a need for a clearer and more transparent basis for setting the criteria for formula grant allocation?

Can the Minister help me in relation to capping? Is he aware that the small print of the statistical release shows increases in parish precepts of 5.8 per cent., which come on top of the 8.1 per cent. rise last year and the 6.7 per cent. increase the year before?

The Minister referred to the increase in the grant for police authorities, and two questions arise from that. First, is there not a need for greater and more direct electoral accountability of police authorities? Secondly, is there not a need for a control that is more effective than the crude capping device? Instead of imposing a cap, would it not be better to give local residents the opportunity to decide in a local referendum?

Does the Minister regard it as acceptable that there is to be yet another council tax freeze in Scotland this year? It will mean that Scottish tax bills will be £265 less than in England, so might it not be time for the Government to adopt a policy of freezing council tax in England as well?

Will the Minister confirm whether the Government intend to carry out a revaluation after the next general election? He will know that the suspicion is that they do: if so, that will be a further council tax stealth tax. Otherwise, can he explain why the Valuation Office Agency recently renewed its contract with Rightmove, which allows it to plunder estate agency records to find out how many bedrooms, bathrooms and parking spaces each home has? If there are no revaluation preparations, why has the contract been renewed and public money spent on it? It was said to have been drawn up explicitly for a revaluation. I remind the House that the VOA is the same agency that made such a mess of the ports revaluation that we debated in this House only yesterday.

I hope that the Minister will bear it in mind when he answers those questions that the council tax is the most sneaky of the Government’s stealth taxes. It is cooked up in Whitehall, but it is councillors on the front line who take the flak and the Government hide behind them.

Despite the Minister’s courtesy and the reasonableness of his spin, today’s announcement means that families will have to pay an extra £40 a year in the middle of a recession. That demonstrates a serious lack of reality on the Government’s part.

I shall try to respond to the wide range of questions posed by the hon. Gentleman, but he can hardly say that the council tax is a stealth tax. Each year, the council tax settlement is debated and approved in this House, and the Minister in charge makes a statement, as I have done today. One of the difficulties is that the council tax is one of the most visible taxes, given the bills that residents receive.

At the outset, the hon. Gentleman asked me to make the case for the level of local government funding. Next year, there will be a 4.2 per cent. increase in the total Government grant to local authorities, which means that, for the 12th year in succession, local councils will get an above-inflation annual increase from this Government. The direct comparison is that they suffered a 7 per cent. cut in real terms in the last four years of the previous Conservative Government.

I did not want to make this debate political, but the hon. Gentleman asked me to say what the position really is. I can tell him that the council tax for the average home is £204 lower in Labour areas than in Tory areas, and £134 lower than in Liberal areas. The rise this year in Labour areas is lower than in both Tory and Liberal areas.

The hon. Gentleman asked about the grant distribution and pensioner take-up of council tax benefit. Both matters were debated last month when this House examined and approved the local government finance settlement.

Finally, it is true that we do not have the legislative powers to take action against excessive rises in parish council precepts. We expect parish councils to set their budgets prudently and to take residents’ views into account and to respond to them. However, if it is necessary to take further steps or powers to deal with parish and town council precepts that become excessive for local council tax payers, we will do just that.

I thank the Minister for giving me advance notice of his statement. He lauds the 3 per cent. rise in council tax as a success, but does he recognise that it is still higher than inflation—as it has been every year? Does he also recognise that council tax is felt more keenly than any other tax, because it is paid straight out of people’s disposable income? As he acknowledged, many families are finding it very difficult to make ends meet at the moment. If both partners lose their job, they receive council tax benefit to meet the cost of the tax, but does he accept that the family will get landed with a large and unaffordable bill if just one partner becomes unemployed?

Does the Minister also recognise that what is happening in many families is that, although people are not necessarily losing their jobs, their employers are cutting back on their hours because of the recession? In that situation, of course, there is no safety net. Does he thus accept that it is time that we completely reformed the system and introduced a fair tax based on people’s ability to pay?

Does the Minister also recognise that, in a recession, councils face both falling incomes and rising demand for their services? Their income streams from planning and leisure services, and even interest rates from investments, are all drying up, yet more and more vulnerable families, desperate for help, are arriving at their doors. In the light of that, will he commit to a moratorium on unfunded Government mandates to local authorities? Does he recognise that they will only make things worse?

I was aghast to hear the final sentence in the Minister’s statement. If he were really serious about wanting to keep council tax low for British families, he would set out the principles for capping—if capping is what he has to do—well in advance, so that councils can plan before they set their budgets. Instead, we go through the same macho charade every year: the Government threaten councils with draconian action but will not tell them what they need to do to avoid the penalty, and the inevitable result is that council tax payers pick up the bill for the cost of rebilling local residents. Worse, that approach destroys any constructive relationship between central Government and local government. It is high time that the Minister stopped behaving like a playground bully in that regard, and started behaving like a responsible partner.

I have not been accused of being a playground bully before, but I am glad to welcome the hon. Lady to the Liberal Front Bench for the first time in our dealings on local government.

I am not clear whether she is against council tax capping—

The hon. Lady confirms that she is against council tax capping but, combined with the increases in Government funding for local government funding, it is part of the reason why we have seen the lowest council tax rises ever in five out of the past six years.

The hon. Lady is against council tax capping, but she also wants us to declare well in advance what the level of cap will be. The effect of that would be that many councils would set their council tax up to that level. That is not a good way of dealing with the issue or of protecting council tax payers.

The hon. Lady is right about the pressures on local authorities. Like the Government, local government faces a demand for services as well as a reduction in some of its income streams. Most local councils have coped well over the last year, but it is clear that all local councils will have to do more this year to step up their drive to deliver their services more efficiently, as well as bringing in what may be necessary to support people through this difficult time.

On council tax and housing benefit, the hon. Lady is right that part of the consequence of the economic downturn is a bigger demand on front-line service staff who are trying to deal with and support people through the claims process. That is why we have allocated local councils an extra £45 million for that purpose.

Finally, for some time there has been a system in central Government such that if any Department places an extra responsibility or burden on local authorities to deliver services or to carry out functions they have not previously undertaken, it is the responsibility of that Department fully to fund them. It is my job as Minister for Local Government—whether or not I act as a playground bully—to ensure that other Departments fully fund any extra responsibilities they place on councils. That is precisely what we do at the moment.

Last month, the Conservative council in Bury set a council tax rise of 4.99 per cent. At the same time, it introduced several million pounds-worth of cuts, including promises to privatise the youth service and switch off street lights in the middle of the night. Two weeks ago, we learned that the council had turned down the offer of £8 million of grant from the Government to support the Building Schools for the Future programme in the coming financial year.

The good news is that as of yesterday the Conservative majority of one has disappeared after the arrest for blackmail of Councillor Peter Redstone, the former Conservative—

Order. There has been quite a long statement, so I hope we shall have a question. Has the hon. Gentleman formulated one in his mind?

I have formulated the question, Mr. Deputy Speaker. As Bury council now has no overall control, and in the context of the arrest of the former finance spokesperson, will the Minister look carefully at this year’s budget in Bury and the planning for next year’s budget too?

I have heard what my hon. Friend has said. It is clear that things in Bury have gone badly since Labour stopped running the council. From what he has told the House this afternoon, it is also clear that the council is looking for some soft targets to make easy cost cuts, which is in contrast to what many other councils are doing. They are giving priority to trying to protect and in some cases improve the services that people most need and, in particular, they are stepping up services and support for young people in our community. I am disappointed to hear that my hon. Friend’s council is not following suit.

With reference to the Minister’s proposals as they concern Derbyshire police authority, may I point out to him that the authority described its budget for this year as a standstill budget? If he decides that the authority has to reduce its expenditure, does that not mean that front-line services will fail? Will he confirm that Derbyshire is the fourth worst-funded police authority in the country and that if it was funded as well as the authority in the constituency of the Minister for Security, Counter-Terrorism, Crime and Policing, who is sitting next to the right hon. Gentleman on the Treasury Bench, it would not have the problems that required it to raise that amount of money? Will the right hon. Gentleman confirm that Derbyshire is the fourth worst-funded police authority in the country?

No, I will not, but I will tell the House that Derbyshire police authority is not just getting the 2.5 per cent. rise that all police authorities are guaranteed by the floor that my hon. Friend the Minister for Security, Counter-Terrorism, Crime and Policing is putting in place for funding. Instead, the authority is getting a 3.2 per cent. increase this year, which does not even take into account more than £14 million in specific grants and other funding that my hon. Friend has decided Derbyshire also needs to maintain its police services.

Derbyshire will have the chance to lay out its case. If the authority wishes, it can do so in person to me and my hon. Friend. After that we will assess the extent to which we may need to proceed, with the options I set out to the House, having started a process that does not impose a cap today but could in the end lead to that for Derbyshire and Surrey police authorities. If the right hon. Gentleman and other Derbyshire Members wish to make representations to my hon. Friend and me, we will consider having a meeting to hear them.

I welcome my right hon. Friend’s statement, but may I press him a little more on formula grant? It is essential that local councils provide services, where needed, for disabled people and vulnerable people, yet in Stoke-on-Trent we are not getting the amount of supporting people funding that we should have. I am afraid that that will have an adverse effect on the amount of extra money that the council will need to raise, so I should be grateful if my right hon. Friend will assure me that he will look again at how we can get the amount of supporting people grant from Government that they say we need.

I know how fiercely my hon. Friend feels about the issue and how much she is concerned about the services needed by many of the most vulnerable people in our community and in her city of Stoke. May I make three points? First, we have put in place a three-year funding deal for councils eligible for supporting people money. In part, that is to give those councils certainty about the income they will receive over that period so that they can manage their budgets better. Secondly, we have determined the amount of money for supporting people in Stoke in precisely the same way as for other areas. Thirdly, I am conscious of the case my hon. Friend makes and if she and either of her colleagues who represent the other two Stoke constituencies wish formally to see me or my fellow Ministers about the issue, we will happily set up a meeting and look at such representations as she may want to make.

The Government promised to bring in proposals for reform of the local government superannuation pension scheme by 1 March. What has happened to those proposals, and does the Minister accept that what he has been saying is far too complacent? Collectively, local authorities have record levels of debt and unsustainable pension schemes. There is tremendous resentment among ordinary council tax payers that they have to contribute four or five times as much to the pensions of chief executives on more than £100,000 a year than the chief executives themselves contribute.

I shall write to the hon. Gentleman, who has been reading too many lurid and badly based articles about local government pension schemes. First, there is a legislative and regulatory constraint on local government pension fund deficits being passed on to council tax payers. Secondly, from the beginning of the current financial year, starting last year, the reforms I have put in place in the local government pension scheme mean that employees are paying more and employers’—in other words, taxpayers’—contributions are capped. Beyond that, it is not right to use private sector pension scheme formulae as a comparison with the position of local government pension schemes. They are regulated differently and use different financial accounting methods. It is like trying to compare apples and pears.

Among the 86 authorities whose council tax increase has been between 4.5 and 5 per cent. this year is Slough, despite its having an excellent Labour council. The reason is that Slough has more people than was estimated by the Office for National Statistics. I am deeply concerned that we shall continue to be bumping at the top level of council tax increases, because on the basis of the three-year settlement, Government grant will not be able to meet the needs of Slough’s growing population. Can my right hon. Friend offer any comfort to my local council tax payers and my local council that they will have the services they need, properly funded, in future years?

The short answer to my hon. Friend is yes. Partly prompted by the case that she has made so assiduously in recent years, we now have a very detailed programme to improve population and migration statistics. We will make sure that those improvements take place, so that for the next spending review period, any decisions on local government funding, or other public sector funding that draws on those statistics, can be based on the improved population and migration statistics. She is right about the quality of her Labour council, which has a new leader, Rob Anderson. I visited the area several weeks ago to see for myself the innovation, the new services, and the serious way in which the council is going about not just managing the financial pressures that it is under, but making sure that it can improve services for people right across Slough.

The Minister will be aware from discussions that he has had with leaders of one of my local authorities and with me that what is excessive in percentage terms is not always excessive in cash terms. North Dorset district council continues to be one of the lowest taxing authorities for band D in the country, with a band D council tax of just over £100. I wonder whether the Minister could help a small local authority in my area with a very low band D council tax next year, by having a discussion, or asking his officials to have a discussion, with the council’s officials, so that we do not end up playing roulette with council tax bills, and so that the council is aware of the parameters within which it should be working?

I think that I can help in two ways. First, I can help by setting out, as I have done already, the funding that the hon. Gentleman’s council, and other councils, can expect from central Government for the full three years of this settlement period. That will mean that they know where they stand, and can plan and manage for that period. Secondly, I point out that the regional improvement efficiency partnerships are in place. They are led by local government experts and specialists in the field. They have the sort of expertise from which his council may well benefit, as it prepares to manage its services this year and plan ahead for next year. I will ensure that the regional partnership gets in touch with his chief executive and offers what help it can, as the council looks ahead to next year. If the hon. Gentleman wishes to make representations to me about the funding for his council in the third year of the three-year settlement, I will of course see him at the appropriate time.

May I say to my right hon. Friend the Minister how much I welcome the extra £3 billion for local authorities this year, but could he provide us with a little more information? Will he list for this House the total reserves held by every local authority, work out what percentage those reserves are of their annual net budget, and present that information in a league table?

We do not, at present, collect that information council by council, but we publish annually the reserves that local councils have in total. The last figures that we published put the figure at almost £14 billion. That is clearly part of the financial calculation and budget planning undertaken by all local councils. Particularly during this period of economic pressure, it makes sense for councils to look hard at the level of their reserves. Having sufficient reserves is necessary if there is to be prudential management, but the high level of reserves held by some councils might, in this period of pressure, be put to good use to maintain services and to keep council tax pressures down.

Many councillors and tax payers in Cambridgeshire and many other areas will listen with astonishment to the Minister bragging about an increase of 4.2 per cent. in central Government funding when they see that the figure for their council is closer to just 1 per cent. Is it any surprise that they will naturally conclude that many other authorities must be getting considerably more than 4.2 per cent.? They will not be surprised to hear the Minister say that Labour councils are levying a lower average tax rise, because it is quite clear that the Government look after their own. Counties such as Cambridgeshire, where Labour has no representation, get no money.

The hon. Gentleman has been around long enough to understand that we have a formula, which we consult on and debate in this House, for distributing funding to local councils. It applies equally across the country. He will also be aware that this Government introduced a system of floors. Without it, some of the councils that he may have in mind would, by rights, get less than they do. That floor is funded by taking the money off the rises for other authorities. He asks whether the residents of Cambridgeshire are aware of that; I ask him whether they are aware that his party plans, if it gets into power, to slash grants to local councils by £240 million from next month. That would, at a stroke, put an extra 1 per cent. on their council tax.

I note that in his inquiries about a possible capping of authorities, my right hon. Friend is including both the budget and the council tax levied by those authorities. Does he accept, however, that over a period of time, the axis of what people pay in council tax is increasingly becoming divorced from the measure of the band D council tax payment? Is he therefore looking at measures to provide, in future years, a more accurate depiction of what may be excessive council tax increases? As far as capping is concerned, does he accept that if the Opposition had their way—they want to freeze council tax for a period, and would apparently never change the basis on which council tax is valued or charged—council tax would be centralised to such an extent that local authorities would not even have the choice of whether to levy a low council tax or a high council tax?

My hon. Friend is right, in that what we have heard from the Conservative party is a con. It is a con in two ways. First, it is a con to suggest that it will be a freeze for all councils, as has been promised, because the freeze will apply only to those that join the scheme. Secondly, it is a con to suggest that somehow that will give more power and decisions to the local area, because the constraints will still be set at the centre. He asked me whether I am considering seriously some of the principles of council tax. I know that he follows the subject, and is a source of fresh policy thinking almost without compare in this House. I am seriously considering a set of suggestions, and am looking very carefully at the ideas that he has submitted. I have a good deal of interest in them, and look forward to discussing them with him.