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Commons Chamber

Volume 501: debated on Wednesday 25 November 2009

House of Commons

Wednesday 25 November 2009

The House met at half-past Eleven o’clock


[Mr. Speaker in the Chair]

Oral Answers to Questions


The Secretary of State was asked—


Scotland and the UK are ahead of most of Europe on broadband availability. However, we recognise that some people still have problems accessing broadband, and that is being addressed through the “Digital Britain” White Paper.

I thank the Secretary of State for his answer. Is he aware of the particular difficulties in rural areas? I carried out a survey in my constituency recently, and on average 11 per cent. of those who responded said that they had difficulty receiving broadband. In Millport, the figure was 30 per cent. What can the Government do to intervene and ensure that the problem is addressed quickly?

My hon. Friend has raised these issues regularly and campaigned on them, and she is right to draw out the point about people who are locked out of digital broadband for reasons of geography or income—whether in Millport, which I regularly enjoy visiting, or anywhere else throughout Scotland. We are determined that at least 90 per cent. of the country should have access to super-fast broadband, and I am happy to have more discussions with my hon. Friend about how we can ensure that that target is hit in her constituency.

Does my right hon. Friend agree, however, that Ofcom is perceived as a toothless tiger that requires more powers? I have campaigned on this issue with my hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne), my right hon. Friend the Member for Kilmarnock and Loudoun (Des Browne) and, indeed, my hon. Friend the Member for North Ayrshire and Arran (Ms Clark). In a letter I received from Ofcom, the regulator states:

“Ofcom does not have the power to mandate ISPs”—

internet service providers. Surely that power is overdue, because otherwise, many of my constituents, along with those of my colleagues, will continue to receive a poor broadband service.

My hon. Friend makes some very important points about the decision-making powers and architecture that will ensure we achieve 90 per cent. broadband penetration. We are trying to ensure that the market provides most of that, and we expect that up to two thirds—60 to 70 per cent.—of homes will be able to access super-fast broadband through the market. However, the Government will have to do additional things, and my hon. Friend can make the case for giving Ofcom additional powers; but, again, we are absolutely determined that no one be excluded for reasons of geography or income.

Is the Secretary of State aware of The Press and Journal report today that, according to the Top 10 Broadband website, broadband speeds in Aberdeen and Inverness are running at about half the rate of Glasgow and Edinburgh, and that BT does not know why? Will he undertake to find out why, and recognise that high-tech global industries operate out of Aberdeen and need to have the same access as the best in the UK?

The right hon. Gentleman, also, makes a really important point, and the issue of access to broadband for business and domestic users is crucial. The figures that I have show, however, that despite that worrying report in the newspaper, Aberdeen is ahead of most Scottish cities. The fact is that less than half of people in Dundee and Edinburgh have access to super-fast broadband, and less than one third have access in Glasgow. Aberdeen is in a much stronger position, but we are determined to ensure that there is universal access in Aberdeen and beyond.

What can the Government do to help or compel BT to upgrade exchanges, especially in rural areas, to ensure greater broadband penetration for the islands of Scotland in particular?

I recently had the opportunity to visit the Western Isles, Orkney and Shetland, and the people there raised those issues with me. It is important that there be an upgrade for copper and wire networks, but the Government are also committed to a 50 per cent. levy on those with BT lines—[Interruption.] I mean a 50p levy. [Interruption.] That is the tax at some point in the future. There will be a 50p levy on those throughout the United Kingdom with a BT fixed line, and rural areas and island communities will benefit from that.

I wish to take the positive message from the Secretary of State today. I had an open meeting in Lanark last week with voluntary organisations and small businesses in my constituency, particularly those in the Clyde valley, so his statement today will be good news, but we should roll out the programme as quickly as we can.

My hon. Friend makes the point that, for many people throughout Scotland and the UK, access to super-fast broadband is about a way of life. A decade or so ago, such infrastructure and technology was a luxury; today, it is increasingly a necessity. It is crucial that no one, for reasons of geography or income, be locked out of those changes.

People Trafficking

2. What recent assessment he has made of the extent to which people are trafficked between Scotland and England. (300125)

That is rather disappointing. The Barnardo’s report, published last week, highlights the number of young people who are trafficked within the United Kingdom for sexual exploitation. Will the Minister urge a further review, so that more can be done to protect those vulnerable people?

The hon. Gentleman rightly raises a subject of great concern across the United Kingdom. I can assure him that there is close co-operation between all the police forces, including those in Scotland; of course, this is a devolved function of the Scottish Government. There is a national referral mechanism that is tracking child trafficking. Glasgow is one of the 13 pilot areas that have been taking part in that project, and we will have further information on its success later next year. The Government give the highest priority to tackling this invidious crime and to ensuring that we arrest the perpetrators as soon as we possibly can.

Is my hon. Friend aware of the TARA—trafficking awareness-raising alliance—project in Glasgow, which so far this year has taken 44 women trafficked for prostitution into care and is looking after them with the support of the Government and the Scottish Administration? Will she ask the police forces of Scotland to act on the Bill passed just two weeks ago, which makes it a crime to demand, ask for or seek to pay for sex with any woman who has been trafficked or coerced? In other words, it is now the male punters who are responsible, and they must be brought before the courts and named and shamed to slow down this disgraceful traffic.

My right hon. Friend rightly refers to the very good work carried out by the TARA project over several years. The law on prostitution is different in Scotland, but that does not mean that colleagues in Scotland are not deeply concerned about the issues surrounding prostitution, particularly trafficking. I can assure him that local authorities and the police in Scotland are working very hard on that matter.

TARA in Scotland has seen a dramatic rise in the number of sex-trafficked women seeking its help. Sadly, the experience of large sporting events shows that the 2014 Commonwealth games could bring many more. Will the Minister ensure that her Government work closely with the Holyrood Government to share the experiences of and lessons from tackling this problem at the Olympics, to ensure that we minimise this horrible crime during the Commonwealth games?

The hon. Lady raises a genuine issue of concern which I share. There is already close co-operation between those organising the Commonwealth games to be held in Glasgow and the Olympic games to be held in London, and I am sure that the lessons learned about how we tackle this problem will be followed by colleagues in Scotland.

Nuclear Waste

4. What recent discussions he has had with the First Minister and Ministry of Defence officials on the storage of nuclear waste from the decommissioned nuclear submarines moored at Rosyth; and if he will make a statement. (300127)

Our Office is in frequent contact with the Ministry of Defence, and the MOD is in regular contact with Scottish Government officials regarding this issue. No decisions on siting have yet been taken either for submarine dismantling or for waste storage.

The hazardous life of some forms of plutonium exceeds a quarter of a million years, so thousands of generations of people in Ayrshire, Fife and Caithness may have to live with the presence of a toxic nuclear dump on their doorstep. Do these intolerable risks not show that the Trident programme should be abandoned, not salami-sliced, and the £100 billion saved invested in more socially useful projects in Scotland and the rest of the United Kingdom?

I can assure my hon. Friend that the MOD is committed to a safe, secure and cost-effective solution regarding dismantling submarines. The radiological risk to the general public is assessed as extremely low and it will remain so—but we are committed to ensuring that there is a full public consultation at national level with all areas that may be identified as potential sites.

The patience of people in West Fife is wearing thin, because we have had these submarines for 25 years and we lost the Trident refuelling contract in the ’90s. We want rid of these submarines, and we want rid of them now. Will the Minister tell the Defence Secretary that when she next meets him?

I think it important to say to the hon. Gentleman that we must take care to have a full assessment of and full consultation on the various options for dismantling and storage. We are committed to carrying this out during 2010, and the MOD will take notice of any concerns raised by local communities.

In advance of the Scottish National party’s publication of its independence White Paper next week, we should acknowledge the contribution to the Scottish economy made by the British submarine base at Faslane. Does the Minister agree that an independent Scotland would have a minimal defence capability and that the 3,000 jobs linked to that base would be put immediately at risk?

I am sure the hon. Gentleman will have heard the recent comments of Mr. Jim Sillars regarding current SNP defence policy. It is clear that the cost of independence to Scotland in jobs would be extremely high, and that many skills would be lost as a result.


5. What recent discussions he has had with ministerial colleagues on the level of employment in Scotland. (300128)

I have regular discussions with ministerial colleagues about employment in Scotland and will be co-hosting Scotland’s first ever jobs summit on 11 January in Easterhouse in Glasgow.

What proportion of those in employment in Scotland are paid out of the public purse, either through local, devolved or national Government? Are there any implications in that for a vibrant and dynamic Scottish economy?

The hon. Gentleman is of course welcome to attend the jobs summit in Easterhouse in Glasgow. I am sure he would be like a fish in water there.

The Scottish and UK Governments employ a substantial number of the work force in Scotland, who do a remarkable job, particularly at a time of recession, when they provide support to those who are vulnerable. I pay particular tribute to the staff of Jobcentre Plus, who at a very difficult time are providing real support to those who need it during the recession.

When my right hon. Friend speaks to his ministerial colleagues, will he ask them whether they will apply to the European Union globalisation fund, which is now being provided just to respond to the current economic downturn? For example, Ireland has just had £36 million, and it is about to move 500 jobs at Bausch and Lomb from West Lothian to Waterford in Ireland. Surely when we are losing jobs, we can also apply to that fund for money for Scotland to support employment there in the face of the economic recession.

Order. We really must have questions that are questions rather than the pursuit of Adjournment debates.

My hon. Friend raises some big issues. Of course it is essential that we do all we can to support people through this recession, and our tax system remains internationally competitive. Although we can learn individual lessons from other countries, I do not think the UK or Scotland would be well suited to following exactly the economic model of Ireland—or Iceland.

My right hon. Friend might be aware that Prudential has regrettably announced this week 60 job losses at its site in Stirling. However, Capita and Prudential still contribute approximately 2,500 private sector financial jobs to the Stirling area. In his discussions at Scottish, UK and international level, will he highlight the fact that the city of Stirling has a lot to offer the financial services industry, as we seek to re-establish credibility in that marketplace?

My right hon. Friend is right to remind the House that amidst all the understandable talk about an impending recovery, the recession is just starting for many people who have perhaps lost their jobs over recent weeks, or for small businesses that continue to struggle. That is why we are determined to do more. I know she is a doughty fighter for the city of Stirling, and there is a huge amount to be optimistic about there, as there is across the whole of Scotland. Although of course Scotland faces real difficulties at the moment, I remain entirely optimistic that we will get through this recession strongly.

Is the Secretary of State aware of the recent Fraser of Allander Institute report that estimates that over the course of this year there will be 130,000 net job losses in Scotland, and which warns that the Scottish economy may not even come out of recession in the final quarter of this year? In those circumstances, does he believe that his colleague the Secretary of State for Work and Pensions was right to describe last month’s job figures as “welcome news”?

It is always welcome news when people get back into work, and that is the point my colleague the Secretary of State for Work and Pensions has made. As people in Scotland and across the UK look towards Christmas and are increasingly concerned about how they will pay their bills or afford a good Christmas for their family, it is essential that we continue to do everything we can, aside from party politics, to get those folk back into work. That is what the Labour Government are determined to do.

Complacency is bad enough from the Secretary of State for Work and Pensions; from the Secretary of State for Scotland it is unforgivable. That same report points to the role of the Royal Bank of Scotland and HBOS in bringing Scotland’s economy out of recession and states that as taxpayer-funded banks, they have to be prepared to lend more to small and medium-sized enterprises. What is the Secretary of State’s Department doing to ensure that the taxpayer, having paid the piper, is now going to get to call the tune?

I suspect that that supplementary question sounded better in front of the mirror this morning than it did in the Chamber.

We are doing everything we possibly can to get Scotland and the United Kingdom through this global recession. We want to ensure that the newly unemployed do not become the long-term unemployed, which is why the new investment in Jobcentre Plus, the support for the long-term unemployed and the targeted measures in the parts of Scotland that are suffering most are the right things to do.

May I be the first to congratulate the Secretary of State on being named best Scot at Westminster? I am sure the Prime Minister is delighted.

Month after month, Scottish unemployment rises; month after month, the Scotland Office issues a statement distancing the Government from responsibility, invoking global factors; and month after month, that looks less credible. If the Government’s economic policies have been right for Scotland, can the Secretary of State explain to us why the US, France and Germany have all returned to growth, but over the same period Scottish gross domestic product has continued to fall? Given that unemployment lags behind growth, are we to assume that Scotland will suffer further from Labour’s legacy of rising unemployment for many months to come?

I thank the hon. Gentleman for his best wishes on my award. It was a very long shortlist, but I noticed he was not on it. I would nevertheless like to welcome the newest Member to the House, my hon. Friend the Member for Glasgow, North-East (Mr. Bain).

On the hon. Gentleman’s substantive point, there are a quarter of a million more people in work in Scotland today than when his party left power, but we are determined to do an awful lot more. The worst thing we could do is follow the prognosis of Conservative economics in the midst of this recession.

The Secretary of State’s monologues about history are almost as predictable as those press releases on unemployment from the Scotland Office. We want to talk about the present. There are 270,000 people in Scotland on incapacity benefit under this Government. That cannot be justified—when will he take steps to get these people re-tested? All those found to be either ready to work or ready to prepare for work should be given support by specialist organisations; instead, they are ignored by his Government. When will he put that right?

We introduced the Welfare Reform Act 2007, which ensures that we provide new support to those on incapacity benefit, particularly those who experience fluctuating mental health conditions, and especially women in their 30s and 40s, in respect of whom there is an additional trend that is worrying for us all.

However, it is nauseating to listen to the hon. Gentleman lecture us on incapacity benefit. We are doing everything we can to support those people in getting off that benefit. The fact is that when his Government were in power, they manufactured the unemployment figures by deliberately taking people off unemployment and sticking them on to a life of dependency on incapacity benefit, for which they will never be forgiven.

Future Jobs Fund

Future jobs fund vacancies are available in every local authority area in Scotland. To date, 44 bids have been approved in Scotland, offering almost 7,000 jobs.

Between them, North Ayrshire and East Ayrshire councils have secured more than 500 jobs for young people over the next 18 months through the future jobs fund. The Tory-nationalist coalition in South Ayrshire council, on the other hand, has secured none at all. What can the Secretary of State do to put the maximum pressure on councils such as South Ayrshire to allow young people to participate?

My hon. Friend raises a really important point, because we need to support young people who have recently lost their jobs so that they do not spend six months or a year out of work. It would be unforgivable if local authorities did not provide that degree of support, so I will find ways to raise her concerns with South Ayrshire council. However, it is important that we provide that support for the long-term young unemployed and those who are middle-aged in particular problem areas across Scotland.

Given the Secretary of State’s recent decision to reject the QinetiQ proposals for upgrading the Ministry of Defence ranges on Benbecula, is he confident that there will be no job losses on the Hebrides ranges for the next three years? [Interruption.] If he cannot be confident of that, will he ensure that the future jobs fund will be applied to the islanders of North Uist, Benbecula and South Uist? [Interruption.]

Order. Just before the Secretary of State answers that question, may I reiterate the appeal that I make every week for a decline in the number of private conversations? I say this to the hon. Member for West Chelmsford (Mr. Burns): every week he indulges in these conversations, every week it is very tedious and every week it is not necessary. Let us have an end to it.

I am aware that the hon. Member for West Chelmsford (Mr. Burns) does not have much interest in Scotland or Scottish questions, but the decision that was taken about saving the ranges on the Uists was very important. Again, it shows the benefit of Scotland being part of the United Kingdom. We remain committed to those firing ranges on the Uists, but we have to ensure that they attract new business and that we achieve diversity in the economy in the Western Isles, which is important to their future.


7. What recent discussions he has had with ministerial colleagues on the effect on the tourism industry in Scotland of proposed changes to the furnished holiday lettings rules. (300130)

The Minister will be aware that many groups, including the Association of Scotland’s Self-Caterers and the Federation of Small Businesses Scotland, have raised concern about the impact of the proposed abolition of furnished holiday letting relief. Alternative solutions have been proposed that would be tax-neutral and support the industry. Will she urge the Treasury to look again at this matter to avoid serious damage to the economy in many areas of rural Scotland, including mine?

As the hon. Gentleman will be aware, the current rules were understood not to comply with EU law, nor were they fair to other residential landlords. It is also likely that if we had kept the rules as they stood, it would have had a negative impact on tourism, both in Scotland and the UK. There are only 60,000 individuals in the UK claiming this benefit, but there were 15 million overnight tourist visits in Scotland last year, so we consider that the change will not have any major impact on tourism.

The biggest barrier to tourists visiting holiday homes in Scotland is the lack of a proper transport infrastructure. Will my hon. Friend join the Scottish trade unions and business leaders in calling on the SNP Administration at Holyrood to reverse the decision to cancel the Glasgow airport rail link?

As my hon. Friend might suspect, there is only one Glasgow MP who does not support the rail link to the airport, the creation of 1,300 jobs or the ambitions of the city for the future. I deeply regret the decision and I hope that it will now be reconsidered.

Economic Inactivity

8. What recent discussions he has had with the Secretary of State for Work and Pensions on the level of economic inactivity in Scotland. (300131)

I have regular discussions with the Secretary of State for Work and Pensions on the level of economic inactivity in Scotland.

Office for National Statistics figures show that the number of people in Scotland becoming economically inactive rose by 20 per cent. more than the UK average. Why is Scotland so much worse?

Scotland is better off because it is part of the United Kingdom. The four nations of the UK are stronger together during this recession than would otherwise be the case, and most people in Scotland now accept that. There are 250,000 more people in work in Scotland than when the hon. Gentleman’s party left power, and his party has not been listened to on this recession in Scotland because of how it behaved while in government during the last recession in Scotland.

Does my right hon. Friend share my anger at the Opposition for refusing to vote for any support that we give to the unemployed in Scotland, and for the abandonment of people in the 1980s and 1990s that this Government reversed in 1997?

It is clear that the Labour Government are doing everything that we can to get people through this recession. It is also clear that we cannot stop every job being lost—that is the unavoidable and harsh reality of the world economy these days—but we can do everything possible to get people back into work so that they never suffer from long-term unemployment. That is why the measures we have taken are so important, and the blocking of those measures by the Opposition has been so unforgivable.

Rail Services (Economic Impact)

9. What discussions he has had with the Secretary of State for Transport on the effect on the Glasgow and Lanarkshire economy of future provision of rail services to the west of Scotland operated by East Coast. (300133)

Does the Minister agree that the airport rail link, while desirable, is a luxury at present, but the East Coast link is essential to Glasgow’s economy?

The hon. Gentleman might wish to follow the example of the newest Member of the House, my hon. Friend the Member for Glasgow, North-East (Mr. Bain), in agreeing with the business community in Scotland that the Glasgow airport rail link project is not only desirable but affordable and will create 1,300 jobs. The hon. Gentleman seems to have no interest in that whatsoever.


10. What discussions he intends to have with ministerial colleagues on the recommendations of the Commission on Scottish Devolution. (300134)

I have had many discussions with Cabinet colleagues during preparation for the Government’s proposals for the future of Scotland within the United Kingdom, and with your permission, Mr. Speaker, I will make a statement on that this afternoon.

My right hon. Friend is about to make a statement to the House and I do not wish to steal his thunder, so I merely ask whether the commission’s report is the outcome of diverse national conversations.

The commission’s report is the work of months of research and evidence and is based on the support of the Scottish Parliament. The process is supported by the Labour party, the Conservative party and the Liberal Democrats. Only one party stands outside the consensus, and unfortunately the Scottish National party Government continue to boycott the entire process.

Prime Minister

The Prime Minister was asked—


Before listing my engagements this week, I am sure that the House will wish to join me in paying tribute to Sergeant Robert Loughran-Dickson from the 4th Regiment Royal Military Police who has died in Afghanistan. The debt of gratitude that we owe to him is permanent, and we send our sincere condolences to his family and friends. He, and the sacrifice he has made, will not be forgotten.

All of us will also want to pay tribute to Police Constable Bill Barker, who tragically died in Cumbria in the course of duty, serving the community to which he was so committed. We remember those individuals who lost their lives during the recent floods. Our thoughts are with their families and friends, and all those affected by the serious flooding. They will have our support now and into the future. Let us as a House also pay tribute to the emergency services, armed forces and all organisations doing an outstanding job working round the clock to help those areas of our country affected by the floods.

May I begin by associating myself with the Prime Minister’s comments about the death of Sergeant Loughran-Dickson in Afghanistan?

As the Prime Minister said, in the past week we have witnessed appalling flooding in Cumbria and near-misses in many other places, including in my constituency. We know that the emergency services are providing excellent support now, but will he reassure the House that help will be available for as long as needed to get people back on their feet and to help prevent flooding in the future?

I am grateful to my hon. Friend, who has taken an interest in such matters over many years. The floods were the worst that we have seen. It was a terrible time, as I found out, and as many others in the House also found out when they visited the area. I pay tribute to the local MP who has done so much to comfort and help people.

It might be helpful if I update the House on what is happening and assure people that our support will continue right throughout the troubles facing the area. Some 39 bridges remain closed. We are examining the possibility of a temporary bridge and temporary station, and this morning, a team of military engineers is assessing the possibility of a temporary pedestrian bridge across the River Derwent. The Department for Transport will fund bridge and road repairs. I believe that 40 people are still in rest centres. Consultations with the insurance industry are taking place to ensure that people can return to their homes or have, as a result of action by the council, alternative accommodation. The Flood and Water Management Bill, which deals with some of those issues in the longer term, will come before the House before Christmas. Let me praise all the emergency services that have done so much to help people in this time of need.

May I join the Prime Minister in paying tribute to Sergeant Robert Loughran-Dickson, who was killed in Afghanistan last week? As the Prime Minister said, our thoughts should be with his family. I also join him in paying tribute to PC Bill Barker, who died in the line of duty protecting the lives of others from those dreadful floods in Cumbria. As the Prime Minister also said, PC Bill Barker was part of an extraordinary effort by emergency services and voluntary groups such as Mountain Rescue, which worked day and night to keep people safe. As the Prime Minister and I have seen, the community spirit shown by residents in dealing with the floods is a real inspiration.

As has been said, one of the biggest issues is the state of the bridges in Cumbria. Communities have been cut in half and trips to school that used to take five minutes now take an hour and a half. The Prime Minister spoke about what is being done on a national basis, including mobilising Army resources, and about plans for a temporary bridge. How quickly could that temporary bridge be put up to help families come together?

I am grateful to the right hon. Gentleman for all that he has said about the whole range of emergency services on which we depend. It is at times like these that we realise the importance of all the public and voluntary services that help our country. As I said, we are examining whether a temporary bridge could be put across the River Derwent. As he knows, we are also looking at how we can fund and finance the construction of a temporary rail station that will allow transport in the area. I believe from the information that I have had that that could be done fairly quickly, but we await the report of the military engineers who are working with the local authorities as we speak this morning. I hope that the Secretary of State for Environment, Food and Rural Affairs will be able to give further information this afternoon. Let me say absolutely that the costs of those repairs will be met by the Department for Transport.

People will be very grateful for that answer and that assurance about the funding. With Christmas coming, it will be incredibly hard on those families who cannot get back into their homes. Whether it is contacting the insurance companies so that they pay out quickly, contributing to the community fund, which is set up in cases of hardship, or contacting public and private landlords so that empty homes are made available, can the Prime Minister assure us that everything that can be done will be done to help those families in the run-up to Christmas?

The Minister for Regional Economic Development and Co-ordination met the Association of British Insurers yesterday. She received a full assurance that insurers would act quickly on all claims that were being made to them, particularly those claims that required the provision of emergency accommodation during a period when people are out of their homes. Obviously we hope that people will get back to their homes as quickly as possible.

We know that the insurance industry will act for those people who have claims that allow the payment of money for temporary accommodation, but in those circumstances where the local authority has to act to provide accommodation for people, it will do so. The right hon. Gentleman will recall from being there yesterday that a large number of the people affected were very elderly people who live in accommodation for the elderly. We are determined to ensure that the provision of alternative accommodation is up and running and able to meet their needs as soon as possible. It is true that it takes time when houses are flooded for people to get back into them, but we are doing everything in our power to get people back into their homes as quickly as possible. I have also talked to the leader of the council, Councillor Jim Buchanan, who has satisfied himself that we are doing what we can.

I am very grateful for those answers, and people in Cumbria will be too.

Let me turn to a completely different subject, one that I raised two years ago. I asked the Prime Minister about the extremist group Hizb ut-Tahrir and why, despite an explicit promise by Tony Blair that it would be banned, it still has not been banned. Hizb ut-Tahrir’s constitution states that non-Muslims are “combatants in the battlefield” and that their

“blood is…lawful…as is their property”.

Although he has not been able to ban Hizb ut-Tahrir, can the Prime Minister at least assure me that this extremist group has not received any public money?

I am not aware of Hizb ut-Tahrir receiving any public money. If the right hon. Gentleman has evidence of that, perhaps he will give it to me.

Well, I will not only give it to the Prime Minister, but my hon. Friend—[Interruption.] What is extraordinary is that my hon. Friend the shadow schools Secretary wrote to the Prime Minister’s right hon. Friend the schools Secretary a week ago about the issue. Let me draw the Prime Minister’s attention to the fact that two schools have been established by an extremist Islamist foundation, the ISF or Islamic Shaksiyah Foundation, which is a front organisation for Hizb ut-Tahrir. The ISF has secured a total of £113,000 of Government money, some of which was from the pathfinder scheme, whose objective is meant to be preventing violent extremism. Can the Prime Minister explain how that completely unacceptable situation came about?

I am happy to say that this will be looked into in every detail. I am told that the two schools that the right hon. Gentleman referred to have been inspected. I will look at the results of those inspections and write to him. We are dealing with grants of £113,000 of public money, as he said, and two schools that I do not know the names of, and I shall look at this matter very carefully.

I am grateful for that, but there can be no doubt that the organisation that I mentioned is a front organisation for Hizb ut-Tahrir. Two of its four trustees are members of Hizb ut-Tahrir, and the head teacher and proprietor of one of the schools—a school in Slough—are members of Hizb ut-Tahrir. I find it hard to understand why the Prime Minister does not know about that, given that we were asking—[Interruption.]

Order. Government Back Benchers are becoming far too excitable today. The Leader of the Opposition must be heard.

Given that the Opposition have been asking questions about this issue in Parliament for almost a month and that the shadow schools Secretary wrote to his opposite number a week ago, how can the Government have an anti-extremist fund that results in a Labour local authority handing out money to extremists? This is a school set up by extremists, passed by Ofsted and approved by the Charity Commission, but in receipt of public money. Does not that prove that we need a much bigger inquiry into how things like this can happen?

Let me say that everything that the right hon. Gentleman has said will be investigated in great detail. Let me also say that the letter written by the shadow schools Secretary a few days ago will be replied to. Let me also say—let us be clear about this—that the vast majority of Muslims in our country are part of the law-abiding majority of this country. I do not want it to be said that those people who are citizens of our country who hold the Muslim faith are to be held responsible for acts of terrorism. Where there is abuse, it will be investigated. In the case of Hizb ut-Tahrir, we have investigated and looked at it. It is not a proscribed organisation and if the right hon. Gentleman has new evidence that should make us proscribe it, we shall look at it again. As far as the two schools are concerned, they will be properly inspected and every argument the right hon. Gentleman has made will be looked at closely, but he would not expect me, without looking at the evidence, to draw early conclusions.

The Prime Minister talks about investigating Hizb ut-Tahrir. This is an organisation that said Jews should be killed “wherever you find them”. That is what that organisation says. Let me ask the Prime Minister about another organisation because there is a sense that this Government have just not got a grip on the issue of Islamic extremism. Take the group Islam for the UK. The leader of this group, Anjum Chaudri, claims that the 9/11 bombers were “magnificent” people

“carrying out their Islamic responsibility”.

The group has apparently called for

“blood on the streets of London and New York”.

When the Prime Minister replies for the last time, perhaps he can tell us why this group has not been banned as well?

Is it not the case that people will see that we have a Government who say they want to prevent extremism, yet their money is funding extremists; that we have a Government who say we should not have extremist-led schools, yet we have those schools? Above all, when is the Prime Minister going to tell us how he is going to get a grip on this issue?

To proscribe an organisation, we need full evidence and that evidence needs to be looked at in detail in the cold light of day, and I think the right hon. Gentleman may regret some of the remarks he has made this morning. As to our activities against terrorism in this country, we have doubled the security staff available to deal with terrorism; we have doubled the number of police who are dealing with potential terrorist incidents; we have put 100 people into prison since 2001 as a result of terrorist acts; we are monitoring very closely people who enter this country, including through the use of the identity card that foreign people coming to this country have to hold; and we are using the DNA database to check up on people, much against the advice of other parties. We are doing everything in our power to deal with the terrorist threat in this country and I thought it was a matter of all-party consensus that proscription should be on the basis of evidence, which was clearly proven, of advocating violence. That is the position that both parties accepted; that is the position that we will continue to follow.

Does my right hon. Friend agree with the comments of the chief inspector of constabulary today that it is time to reassert the principles of the traditional British model of approachable, impartial and accountable policing based on minimum force for major public order events such as the G20?

I absolutely agree that it is important that policing is of the best. Where mistakes are made or where there are question marks, they have got to be answered. We have procedures for doing so. I know that the events at the G20 caused a great deal of anger and sadness for people when we had the casualty. It is very important that we take the action that reassures people that policing will always be fair.

I would obviously like to add my own expressions of sympathy and condolence to the family and friends of Sergeant Robert Loughran-Dickson of the Royal Military Police, who tragically died serving in Afghanistan last week. I also add my tribute to PC Bill Barker, who lost his life in the line of duty dealing with the terrible floods in Cumbria. Our hearts go out to his wife and four children. At such times we all remember that it is the brave men and women of our emergency services who keep us safe when it really counts. We thank them for it.

It is vital that the Iraq inquiry, which started its work this week, is able to reveal the full truth about the decisions leading up to the invasion of Iraq. Will the Prime Minister therefore confirm that when Sir John Chilcot and his colleagues come to publish their final report, they will able to publish all information available to them, with the sole exception of information essential to national security?

I have set out a remit and brought it to the House of Commons. Sir John Chilcot has been given the freedom to conduct his inquiry as he wants. He has chosen to invite people to give evidence, and he will choose how to bring his final report to the public. That is a matter for the inquiry.

As I think the Prime Minister must know, the matter is not just for the inquiry, because his Government have just issued a protocol—I have it here—to members of the inquiry, governing the publication of material in the final report. If he reads it, he will see that it includes nine separate reasons why information can be suppressed, most of which have nothing to do with national security. Outrageously, it gives Whitehall Departments individual rights of veto over the information in the final report. Why did the Prime Minister not tell us about that before? How on earth will we, and the whole country, hear the full truth of the decisions leading up to the invasion of Iraq if the inquiry is suffocated on day one by his Government’s shameful culture of secrecy?

That is not what Sir John Chilcot has said. The issues affecting the inquiry that would cause people to be careful are national security and international relations. As I understand it, those are the issues referred to in the protocol. I believe that Sir John Chilcot and his team are happy with how they are being asked to conduct the inquiry.

Q2. Britain’s top bankers rewarded their own financial greed and incompetence with large bonuses, while imposing huge banking charges on those who, because of need not greed, often went into the red. I am sure that many Members were dismayed at today’s Supreme Court judgment. What will the Government do to ensure fairness for ordinary people—ordinary customers—within the banking system? (301118)

My hon. Friend is absolutely right to raise the anxieties that people have had about the system of bank charges in our country. Although the court judgment has not upheld the case of the Office of Fair Trading, it is right that we examine how fairness can be applied in all cases to people who are banking customers in this country. As far as the banks that we are responsible for at this moment are concerned—Northern Rock, HBOS Lloyds and RBS—we have asked them to review their overdraft charges over the past few weeks in order to be fairer to their customers, and they have done so. Under the Financial Services Bill, which is now before the House, a damages fund will have to be set up by banks to deal with complaints by customers of overcharging. There is now the possibility for class actions to be taken in court, which could not happen before, so that a group of customers can take banks to court. There is now power given to the Financial Services Authority, for the first time, to impose settlements on banks to repay customers they have overcharged. The proposed legislation will strengthen the rights of customers, as we have sought to do over the past two years, so that they get a fairer deal from the banking system, as they should, in this country.

I deal with the issues as they arise, and I do so as best I can. I believe that, over the recession, we have dealt with the issues in a far better way than we would have done had we followed the advice received from the hon. Gentleman’s party.

Q3. How important is the work of the North-west Regional Development Agency in delivering investment to business, science to Daresbury, and the successful “capital of culture” year to Liverpool as part of the city’s ongoing regeneration? One of the biggest mistakes that could be made would be the abolition of the regional development agencies in our country. In every region of the country the business organisations, the small business organisations, the engineering employees and the local authorities say that the RDAs are doing a job that helps their businesses through a recession and creates new job opportunities for people. I think that the Conservative party would make a terrible mistake if they decided, in an act of vindictive ideology, to abolish development agencies.Q4. The Government have compiled a secret list of sites in Argyll and Bute where they are thinking of dumping nuclear waste from old submarines. There is widespread opposition to the proposal in Argyll and Bute, and many communities fear that they are on the secret list. Will the Government publish that list of secret sites today, so that a public debate can take place? I have followed this issue over the 26 years for which I have been a Member of Parliament, and it has been an issue for all those years. The question is where nuclear dismantling should happen, and where the nuclear waste from submarines should be placed in this country. It is right to consult MPs—as the hon. Gentleman has been consulted—and local representatives on the issue, and I understand that the Ministry of Defence is talking to MPs and elected representatives in the areas where there are potential sites. This is not happening behind closed doors. Members of Parliament are being asked for their views on these very matters. On the subject of tackling radicalisation, does the Prime Minister agree that in all such cases it is important that we listen to the Association of Chief Police Officers? If an organisation is proscribed, however much we may abhor its views—and we do—it will stay on the right side of the law, because such organisations are quite clever in that way. The danger is that proscription will merely create a recruiting sergeant, and possibly also lead to a judicial review. Should we not listen to ACPO before deciding whether to proscribe organisations of this kind, and should not the right hon. Member for Witney (Mr. Cameron) do likewise? My hon. Friend brings a great deal of experience to the issue, and he is absolutely right. Any decisions about proscription should be made on the basis not of a few exchanges in the House of Commons but of a detailed assessment of what is right and what is wrong, and part of that involves taking police evidence into account. As my hon. Friend says, we must not get into a position in which the decisions that we make act as a recruiting sergeant for militants in this country. We are taking every action that we can to deal with the terrorist threat in this country, and I think that, on an all-party basis, we should be united in saying that we are doing what we can to ensure that the al-Qaeda threat—[Interruption.] The shadow Chancellor is saying something about money. We have doubled the amount of money being spent on security. That would not happen under a Conservative Government, because they would not be prepared to make the funds available. Why, when we are dealing with the issue of spending, do they persist in their policy on inheritance tax—[Interruption]—whose beneficiaries resemble the Leader of the Opposition’s Christmas card list? Q5. Unlock Democracy has proposed the establishment of a citizens’ convention to consider a renewal of faith in the House and in Parliament. Is the Prime Minister willing to support that, and if a private Member presents a Bill to that effect following tomorrow’s ballot, will he give it Government time? I welcome the report from my hon. Friend the Member for Cannock Chase (Dr. Wright) on the reform of this Parliament. It is right for us to consider how our Select Committee system can be reformed so that it is better in the future. It is also right for us to consider how non-Government business is dealt with, and how we can improve the workings of the House. I believe that there will be a warm welcome for some of the proposals in the report.As for the question of our House becoming more open to the views of people outside, the hon. Gentleman is absolutely right to suggest that we need to consult widely. The Youth Parliament met here only a few weeks ago, and we will continue to have an outreach to members of the community. That is essential in a modern-day participatory democracy.Q6. I thank the Prime Minister for his words of comfort and encouragement to the people of Cumbria today, following last week’s devastating floods. In 2005 my constituency was flooded, and the Government were very generous in providing resources for flood defences. It will cost £40 million just to rebuild the bridges in west Cumbria, and probably the same amount to rebuild the roads. Will the Prime Minister assure us that he and the Government will be able to help? The people of Cumbria cannot afford to pay that bill. (301119)

My hon. Friend is absolutely right—100 flood protection schemes have recently been brought in. One of them is for Carlisle, where £40 million is being spent to make sure there is proper protection against the floods that did so much damage the last time, and I understand that in the recent times about 3,000 properties were prevented from being flooded as a result of those new flood defence arrangements. We will look at what we have done. I have said already that the Environment Agency budget and the other budgets for dealing with flood defences will rise to £800 million in 2010-11. That is a sign of our commitment to making sure the whole country is best protected against flooding.

Q7. Is the Prime Minister aware of his schools Secretary’s pre-Budget statement to the annual Youth Justice convention two weeks ago protecting the youth justice budget for the next two years? If that is true, what cuts will be made to accommodate that cross-departmental commitment? (301123)

It is the hon. Gentleman’s party that wants to cut massively public spending, and it wants to cut it this year and next year. In fact, it is the only major party in Europe that wants to withdraw the fiscal stimulus now when it is absolutely necessary to keep the economy moving forward. If I were him, I would be asking the Leader of the Opposition why his policy is so designed to cut money from policing, education and all the services that the public depend upon now.

Q8. May I congratulate the Prime Minister on his early decision to attend at Copenhagen, a lead that has now been followed by 60 Prime Ministers and Presidents from around the world? When he is in Copenhagen, will he seek to harness that high-level attendance to ensure that the best possible package of clean development funding is on the table in order to secure the sign-up of developing countries to a workable climate change agreement? (301124)

I praise my hon. Friend for the work he has done in promoting a climate change agreement, and the work of Members of all parties who want to see success at Copenhagen. I will go to the Commonwealth conference this week to try to build a consensus between richer countries such as Australia and ourselves and some of the poorest countries in the world on how we can finance climate change for developing countries as well as developed countries. If we are to get an agreement to cut emissions in some of the poorest countries in the world, it is absolutely essential that we get an agreement on finance. I hope all parties here will support the British proposal for $100 billion of funding for climate change in 2020 as a result of the contributions of the European Union, America and some of the other richest countries in the world. We will do everything in our power to secure a climate change agreement in Copenhagen.

Whatever our individual positions on Afghanistan, it is very important that there is clarity regarding the mission. The Prime Minister has said we are in Afghanistan to protect British people against terrorism, yet, almost in the same breath, he threatens to pull out of the country if President Karzai cannot clean up his corrupt Government. These are contradictory messages that are sending out mixed signals. Can the Prime Minister now square that circle?

We are in the country because of the threat to Britain. It is a threat that has been seen over eight years as a result of projected and actual terrorist offences in our country, three quarters of which come from Afghanistan and Pakistan, and mainly the borders of Pakistan. That is why we are there—to protect the streets of Britain. I was right to ask President Karzai to give us assurances about how, in his second term, he would tackle corruption. He has now announced an anti-corruption taskforce. I gather that 12 people were arrested yesterday from within the core administration. At the same time, I have asked him to appoint district and regional governors who are free of corruption and who will deal with the problems in hand, as Governor Mangal is doing in Helmand province, and President Karzai has agreed to do so. By his speeches, President Karzai has met the tests I have set him, and we have now got to see them being met in the delivery. I believe that next week we will see the American Government and the rest of NATO coming together in a strategy that will mean that we have sufficient forces to create the space for a political solution in Afghanistan that will make our streets safer. It is as clear as that.

Q9. The Prime Minister will be aware of the warning from Sir Hugh Orde, the top cop’s top cop, of the dangers of and widespread unease about the investments in police commissioners. Can the Prime Minister tell the House whether this Labour Government will ever allow the police to be politicised, as the Conservatives propose? (301125)

The operational independence of chief police officers is and has been, and should continue to be, an important constitutional principle. It must be clear that chief officers—and chief officers alone—are responsible for running their force. I believe that the Leader of the Opposition should immediately withdraw his proposal, which would mean the politicisation of the police and which has been criticised by the chairman of Association of Chief Police Officers in the past few days.

In March, when the Lord Chancellor talked out my private Member’s Bill to end the discrimination against Catholics in royal marriages and against women in the line of succession, he said that the Government recognised that this discrimination should end. Can the Prime Minister confirm that he is, as the Lord Chancellor said, ready to consult the relevant Commonwealth Heads of Government this week and that he is confident that we will then be able to sort this out, so that the all-party—

The Act of Settlement is outdated, and I think that most people recognise the need for change. Change can be brought about only when all realms where Her Majesty is Queen make a decision to change, not just by the United Kingdom. That is why it is important to discuss this with all members of the Commonwealth, including countries such as Australia and Canada. That is the process that will be undertaken in due course.

Q10. Is my right hon. Friend aware of the growing evidence, including in the recent report “Northampton Families and the Recession”, to show that as a result of the recession, women are doing more of the breadwinning and men are doing more of the caring? What further measures will his Government take to support the flexible working arrangements needed for today’s working families? (301126)

There are about 500,000 more families receiving working tax or child tax credit as a result of the help we are giving in a recession. People in this country have to make a choice: do we want to help families and help children through these difficult times or do we want to cut inheritance tax for the wealthiest people in this country? I think I know what choice the people of this country are going to make.

Indemnity to Bank of England

Mr Speaker, with permission, I should like to make a short statement on the emergency liquidity assistance provided by the Bank of England to the banking system.

One of the functions of central banks is to provide emergency liquidity to banks when it is necessary to do so. Lender of last resort facilities have been a feature of the banking system for many years, because there will be times when an individual bank or, as we saw last year, several banks find it difficult or impossible to raise the funds they need from the market. It is therefore essential that the Bank of England has the power to lend to individual banks facing such temporary liquidity problems. It is important, too, that the Bank of England can do so effectively. Inevitably, on occasion, that means that the Bank has to be able to do so without disclosing its operations.

Disclosure of individual operations could lead to a loss of confidence and exacerbate any short-term liquidity problems. That was exactly the problem we saw with Northern Rock in September 2007. It was a problem recognised by the House, and by the Treasury Committee in its report on Northern Rock—it recognised that some operations needed to be kept confidential.

Early in 2008, we consulted on proposals to facilitate limited disclosure of the provision of emergency liquidity to ensure that such assistance could be made effective. Following that, the Banking Act 2009 provided an end to automatic disclosure of liquidity assistance by the Bank of England. This enabled the Bank to decide the most appropriate way in which to make disclosures to the market. The Financial Services Authority, too, has said there may be good reasons for delaying disclosure of emergency liquidity operations.

Twelve months ago, we faced a situation in which the world banking system was on the brink of collapse. No one should underestimate the gravity of the situation that we then faced. Protecting retail depositors and maintaining financial stability was essential. That was why I said in my statement to the House on 6 October 2008 that the Governor had made it clear that

“in these extraordinary market conditions, the Bank of England will take all actions necessary to ensure the banking system has access to sufficient liquidity”.—[Official Report, 6 October 2008; Vol. 480, c. 21.]

That was what we did. The Governor’s decision to make emergency liquidity available was quite right and we supported it.

Yesterday, the Governor of the Bank of England told the Treasury Committee that the Bank had extended such emergency liquidity assistance to the Royal Bank of Scotland and HBOS in the autumn of 2008. He told the Committee that in most cases confidence can be best sustained if the Bank’s support is disclosed only when the conditions have improved to a point where the disclosure itself should not be a cause for disturbance. However, he said that, as stated in his report, it is the policy of the Bank that such assistance should be disclosed once the Bank considers that the need for confidentiality has ceased.

The Governor’s judgment is that now that RBS has signed up for the asset protection scheme and Lloyds Banking Group has embarked on its alternative strategy for capital raising, there is no longer a need for the assistance to remain secret and it is now appropriate to disclose details. I agree with his judgment.

As the Governor said, from 1 October 2008 the Bank provided liquidity to HBOS, and from 7 October to RBS. Use of the facilities peaked at £36.6 billion for RBS on 17 October and £25.4 billion for HBOS on 13 November. The total use of emergency liquidity assistance across both banks peaked at £61.6 billion on 17 October. At that point, the two banks concerned provided the Bank with collateral—including residential mortgages, Government debt and personal and commercial loans—totalling in excess of £100 billion. The banks were charged fees for the use of the facilities. The RBS facility was repaid in full by 16 December 2008, and the HBOS facility by 16 January 2009. There has been no cost to the taxpayer.

By that time, the Government’s recapitalisation of the banking system was in place. That, alongside other action such as the credit guarantee scheme, stabilised the banking system. Because of the scale of these liquidity operations by the Bank of England compared with the size of its balance sheet, I granted an indemnity in October 2008 to cover potential losses in respect of further lending. The indemnity was provided for actions taken by the Bank of England from 14 October 2008 for a period of two months. In return, the Bank of England paid the Treasury a commercial fee totalling £18.9 million.

In my view, it is essential that the Bank has the discretion to provide emergency liquidity assistance when it judges it necessary to do so. Over the past year, we have had to provide extraordinary support in what are extraordinary times. I have kept the House informed with numerous statements and made it clear that we would do whatever it took to stabilise the banking system. As a result, no savers in UK banks or building societies have lost money.

Inevitably, some of the support had to be provided on a confidential basis—something that most people recognise. The judgment on when it is the right time to disclose such operations is a fine one, but I support the Governor’s decision to disclose the information yesterday. I commend the statement to the House.

Let me start by making it absolutely clear that we support the actions taken by the Bank of England to maintain financial stability. I completely agree with the Chancellor that, as a general principle, the central bank must be able to carry out its lender of last resort function with the discretion that it deems necessary to preserve the financial system. Its ability to do so will remain under the reform structure of financial regulation that we intend to implement.

As the deputy governor, Paul Tucker, said yesterday in his evidence to the Select Committee, these loans were a classic lender of last resort operation. So, we support the principle of covert lending operations by the Bank, but of course we also have a responsibility to ask questions on behalf of the taxpayer once the details of such operations are quite rightly made public. I shall therefore first ask the Chancellor specifically about his role. He said that he authorised the indemnity, but will he confirm whether his authorisation was sought for the loans made by the Bank of England, and indeed its operation?

The Chancellor made this statement because the hon. Member for Twickenham (Dr. Cable) and I put in to ask an urgent question. Surely the Chancellor himself should be the person who initially informs Parliament of operations on this scale, particularly when there are very large taxpayer indemnities that he signs off. It has, of course, taken more than a year for the existence of these loans to be disclosed. What discussions has the Chancellor had with the Governor over the last 12 months about whether the disclosure could have been made earlier? In particular, once the Government had declared their intention to insure the assets of both banks in January this year, what did the right hon. Gentleman consider to be the remaining risks that would have resulted from the disclosure of the loans at that time?

My second question is partly to do with the issue of timing. Is the Chancellor personally satisfied that the Lloyds shareholders were given the maximum possible amount of information about the financial health of HBOS in advance of the merger of the two banks? Was the loan to HBOS fully repaid by the time of the merger in mid-January? What legal advice did he receive about the level of disclosure required, and is he expecting any legal challenges from shareholders?

Thirdly, as the Chancellor implied in his statement, the Banking Act 2009 removed the requirement for the Bank of England to publish a weekly balance sheet. Was the existence of the loans a motivating factor behind that change, which was of course proposed at the time that the loans were in existence? Is it desirable that the Bank essentially has no requirement to publish regular information about its balance sheet? Does he agree that that at least needs to be kept under review?

The sheer scale of the loans—they are more than the entire schools budget—raises the question of how the two banks were allowed to pursue funding models that left them so close to collapse in the first place. Does not that illustrate yet again the total failure of the tripartite system of regulation created by this Government? Does it not underline the need for fundamental reform to put the Bank of England back in charge of banking supervision? That argument is now explicitly supported by Jacques de Larosière, the architect of the European changes, and it is driving reforms in Germany, Belgium and America. Indeed, President Obama’s economic adviser Austan Goolsbee said this month that separating bank supervision from central banking can cause one to

“get into a ‘left hand doesn’t know what the right hand is doing’ kind of problem in a crisis”.

When asked to cite an example, he singled out the UK, saying that the divided regulatory system had caused “a lot of problems”, yet the Government’s proposed Financial Services Bill, which we will debate in a couple of days’ time, does absolutely nothing to address that flaw at the heart of the regulatory system. We all know why—it was designed by the Prime Minister of this country.

Finally, I should like to ask the Chancellor about something else that the Governor of the Bank of England said to the Treasury Committee yesterday in his comments on Britain’s credit rating. When asked whether Britain was at risk of a downgrade, the Governor of our central bank said:

“The longer there isn’t a credible plan that sets out what action will be taken on the debt, the more”

there is a risk to that credit rating. Does the Chancellor agree that the only possible interpretation of those remarks is that the Governor does not think that there is currently a “credible plan” to deal with our budget deficit? Why is the Chancellor taking these risks with Britain’s credit rating?

The hon. Gentleman raises a number of matters, some of which are very important. I should like to deal with them, but I shall begin with a general point. He remarked on the state of RBS and HBOS, and no one could disagree that what the banks did was to get themselves into a situation where eventually they collapsed. However, his points about our regulatory system simply do not hold water, as banks right across the world got into trouble. Lehman Brothers was regulated by the American authorities, as were the other American banks that went down. The hon. Gentleman mentioned Germany, which has also seen banks go down. There was a problem with regulatory systems right across the world, and to suggest that the problem was somehow specific to us simply does not hold water.

I want to make another point about the American regulators. The problem for the Americans is that they have seven or eight different regulators. The Obama Administration are trying to get around it by establishing some sort of council to bring them together. We have only three organisations responsible—the Bank of England, the FSA and the Treasury, which will always be involved where public money is.

If the hon. Gentleman thinks for one moment that merging the work of the FSA and the Bank of England, under which the Bank would be responsible for interest rate policy, macro-prudential supervision and the individual supervision of everything from large banks such as HSBC to an independent financial adviser in Ullapool—doing all that at the same time—he is asking for trouble. The disruption would be tremendous. He should think long and hard—my guess is that he is—about whether he would ever see that policy through in the way that he originally announced it.

The hon. Gentleman asked some important questions, which I would like to deal with and on which I will do him a little more justice. First, he asked an important question about disclosure. The House will remember that during the period of Northern Rock, there was pretty much unanimous agreement that the Bank’s inability to act in a confidential way was in itself destabilising. Indeed, the hon. Gentleman wrote to urge me to do something to make it less obvious that the Bank was engaged in such operations, and I agreed with him. The Banking Act 2009 means that the Bank has the discretion as to when it discloses what is going on.

That discretion lies with the Governor of the Bank of England. It ends the obligation to do a weekly return in which, if one looked at it closely, one could see what had been going on. At a time like last year, if people had realised the extent of what was necessary on a day-to-day basis simply to keep banks open and their cash machines operating—if that had been disclosed at the time, with all that turbulence—far from reassuring people, it would have made a difficult situation much, much worse. I think that the hon. Gentleman agrees with that proposition. That was why we changed the law in the Banking Act—to try to make sure that there was not the exposure that we had in relation to Northern Rock.

It is for the Governor to decide when the information is disclosed. His judgment was that now we have RBS in the asset protection scheme—that agreement was finally signed just this week—and Lloyds is pursuing its alternative action, and with that water between us and the turbulence of last year, it was safe to disclose this information. As I said in my statement, the judgment will always be a fine one, but that was his judgment and I agree with it.

The hon. Gentleman asked the important question, in relation to Lloyds, of what was said. The legal responsibility to shareholders lies with the board of directors of a particular institution. In November 2008, when Lloyds published its pre-merger statement, it said:

“The HBOS Group expects that it will substantially rely for the foreseeable future on the continued availability of these government sponsored arrangements, including central bank liquidity facilities (such as those offered by the Bank of England)”.

It put that statement in. It is for the directors of that bank, properly advised, to decide what they disclose, but I can tell the House that the directors of Lloyds were told by the Bank of England of the nature and extent of the operations, so they knew them at the time. The facilities were repaid at the beginning of January, as I said in my statement. I believe that the final vote taken by the HBOS shareholders took place at the end of January 2009.

For the sake of completeness, the current Lloyds prospectus in relation to its raising money on the markets at present discloses that it is receiving money, and the amount that it is receiving through the credit guarantee scheme, so it is telling prospective investors what the position is. That is the position in relation to Lloyds.

The hon. Gentleman asked about the indemnity. Of course, because of the size of what was going on in 2008, I had to indemnify the Bank of England. It has a limited balance sheet, but I felt it was my clear duty. Perhaps not at the time, but looking back, people will think we had to take this action, otherwise we would have been faced with a much more difficult situation.

On the hon. Gentleman’s final point, both of us will be at the Dispatch Box tomorrow afternoon, and I intend to return to the wider economy at that stage.

We all accept that the intervention had to happen and that it was right in principle to have confidentiality. That confidentiality has to be balanced against accountability to Parliament for the expenditure of very large sums of money. The question is why only yesterday it was judged sufficiently safe for the public and Parliament to be given the information. Why, for example, were we not told about it on 7 March, when those banks entered into the asset protection scheme, or in the Budget a few weeks later? If there was still some major doubt about the stability of the banks, why was that not revealed a month ago when the Chancellor made a statement on the completion of the asset protection scheme? Why was Parliament not told then? Why has he waited so long to give us this information? One has to note, as the shadow Chancellor did, that yesterday’s announcement occurred not in Parliament but in the middle of a statement from the Governor. That statement was a devastating indictment of the Government’s policy of not splitting up the banks, and this announcement was hidden in the middle of it.

My second question is about the Chancellor’s clear statement that there was no cost to the taxpayer. Is that true? My understanding of the lender of last resort facility is that it carries a commercial rate of interest, but my understanding of these loans is that there was no interest involved. Will he clarify the position on this? If there was a concessional element to the lending, that would mean that a very large public subsidy was involved, even though the loans were repaid. A very large risk was taken with taxpayers’ money, and there was an enormous potential cost. We need to be absolutely clear that that cost was paid for by the banks. Will the Chancellor clarify what the interest rates actually were?

My third question is on the link with Lloyds. The Chancellor has just brought the historical record up to date by reading out what was said by the directors at the time. Indeed, he is quite right to say that there was a general warning that continuing liquidity was required for HBOS, but was it not clear on 1 October, when HBOS became the first bank to require major liquidity help—indeed, half the major package was for HBOS—that this was a can of worms, and that the situation was far worse than had initially been believed? That has been made clear in his statement today. Would not the correct course of action at that time have been to take HBOS into full public ownership in the way that Bradford & Bingley was taken in? Instead, the Lloyds shareholders continued to be encouraged in their belief that this takeover should take place.

My final question is this: are there any other loans that we do not know about? Can the Chancellor give us a categorical assurance that no other financial institutions have outstanding records of loans that have taken place in this emergency about which he has not yet told the House of Commons?

I am sure that, when the hon. Gentleman has time to reflect on what he has said, he will agree that his last question was really ridiculous. No Chancellor of the Exchequer or Governor of the Bank of England is going to provide a running commentary on what they may or may not be doing, for perfectly obvious reasons that I would have thought even the hon. Gentleman would recognise. In fact, he did recognise them when Northern Rock was at the height of its difficulties. His question was just plain daft.

I can tell the House that, to a large extent, because of the action that we and the Bank of England have taken, the banking system is now far more stable than it was. We have got through many of the difficulties that we faced, and we are working our way through others. Only by taking that decisive action were we able to do that. I appreciate that the hon. Gentleman has the luxury of being a commentator, as opposed to someone who actually has to do these things, but speaking from the other side of the fence, I can tell him that, because of the action we have taken, the banking system is now far more stable, not just here but in other countries as well.

The hon. Gentleman went back to the question of Lloyds. I will not read out what I have already said, but the directors of Lloyds clearly have an obligation to their shareholders, and they clearly had an obligation in anticipation of their takeover of HBOS. It was for them—properly advised, as I said—to disclose what they needed to in the prospectus. As the hon. Gentleman knows, there then followed a vote by the Lloyds shareholders and a vote by the HBOS shareholders. Both those votes were overwhelming. It is for the members of the Lloyds board itself to decide what to disclose to their shareholders, and there are all sorts of legal considerations that they have to take into account. It is for them to be satisfied that that was the case.

I really do not accept the hon. Gentleman’s argument about splitting the banks. We discuss this at just about every statement and Question Time, and I refer him to what I have said on previous occasions. He should bear in mind that Northern Rock was a narrow bank—a classic retail bank—and it got into deep trouble. At the other end of the scale of exotic activities, there was Lehman’s, which did not take a single deposit. It, too, got into terrible trouble. The US authorities at the time did precisely what some people suggested and let it go down. We do not have to speculate about what happened: it brought the entire system down at the same time. I disagree with the hon. Gentleman on that matter.

Order. Many right hon. and hon. Members want to take part in these exchanges, and I would simply remind the House that we have a further statement and the continuation of the debate on the Loyal Address to follow. I therefore issue my usual appeal to all hon. Members that each of them should ask a single, short supplementary question, and I ask the right hon. Gentleman on the Treasury Bench to provide us with an economical reply.

At the time of Northern Rock, the Governor came before the Treasury Committee and said that his inability to ensure lender of last resort facilities on a confidential basis was a grievous omission. It is therefore important to remind ourselves that discretion has to be given to the Bank of England and to the Governor in relation to all these issues. There is a separation between the Bank and politics, but the Chancellor knows—as he said in his letter to me yesterday—that emergency liquidity assistance was advanced to HBOS and RBS in October. Was that decision a short-term notice, or part of a long-term contingency plan? Was any consideration given to the right of the Lloyds TSB shareholders to have that information disclosed to them?

My right hon. Friend asks me about the decision, and I think that, at the time, the Governor was of the view that we had to provide emergency liquidity assistance. I therefore had to indemnify the Bank for that. Let us remember that the decision related to banks in general; it was not about a specific institution. At that time, we were seriously concerned about the banking system as a whole. This was not about an individual bank, although subsequently—this is obviously how the system works—the Governor had to form a view about HBOS, as he did about RBS. However, my decision—his decision—was taken in relation to the general principle, and that was why we took it.

I should have said to the hon. Member for Twickenham (Dr. Cable) that, yes, RBS and HBOS did pay a fee in respect of the facilities that they got.

Chapter 5 of the Treasury’s own document “Managing Public Money” says that when indemnities are given by the Chancellor and full disclosure is not possible, he should write in confidence to the Chairman of the Public Accounts Committee immediately to explain what has happened. Will the Chancellor now explain to the House how this procedure was followed at the time?

The hon. Gentleman is quite right: there are long-standing provisions that require that, when the Government take on a contingent liability, we write to him in that way. He no doubt forgot to mention that I have written to him on numerous occasions for very obvious reasons, drawing his attention to contingent liabilities. This particular issue of lender of last resort facilities was actually carried out by the Bank of England, however, and not by the Government. When Parliament decided—pretty much unanimously—that the Bank should have discretion as to when to report, it clearly had in mind that there would be times when it would be dangerous to report exactly what it was doing, because to do so might destabilise the system. So there is a distinction between the emergency liquidity assistance provided by the Bank—which is provided for in the Banking Act 2009, although its origins date back to long before that—and the normal procedures that we have, which we have followed at every single turn.

It is plain that the workers and shareholders of Lloyds were mugged. Does the Chancellor agree that all those who were knowingly party to the mugging should go, if they have not gone already?

I am not sure that I accept the general premise underlying my hon. Friend’s question. I have said on a number of occasions—today and previously—that the responsibility to shareholders lies with the board of directors, who are there to represent them, and I have read out to the House what they said in the prospectus that they published last November.

Will the Chancellor confirm that neither the amount nor the scale of these loans was reported properly on page 19 of the HBOS prospectus or on page 33 of the Lloyds prospectus, or reported fully in the Bank of England’s report and accounts? If shareholders cannot trust a prospectus, and if the public cannot trust the Bank of England’s accounts, who can they trust?

The prospectuses issued by HBOS and Lloyds are a matter for those banks, and the hon. Gentleman needs to direct his question to the directors who were responsible at the time.

On the Bank of England, I assume that the hon. Gentleman was at the Treasury Committee sitting yesterday, where I think the Governor made the point that he was of the view, when his report was published, that those operations should remain confidential, so he exercised his judgment to withhold the precise nature of what was being done. However, by yesterday, he had judged that the time was right to reveal what had been done. I refer the hon. Gentleman to what I said earlier: it is always a fine judgment on the question of when to make such information available. Had the information been released prematurely and had it caused further problems in the banking system, I am sure that he would have been the first to jump up and complain about it.

Does my right hon. Friend agree that, if the Governor had not had the courage to take the action that he took, instead of sitting here nit-picking about the timing of the announcement, we could have been contemplating the collapse of the banks and the devastating consequences for our constituencies? Will my right hon. Friend therefore congratulate the Bank on having had the courage to put up the money, get it back with fees and charges and protect the national and public interest?

The reason why all central banks throughout the world have the power to provide emergency liquidity assistance is obvious: there will be times when a bank or several banks get into difficulties. However, the system will work only if central banks are able to carry out such operations, where appropriate, confidentially. Of course, once the crisis and the difficulties are over and the system is stabilised, the central bank can disclose what it has done, but, as countless debates in this House have reflected, the need for that facility is beyond question.

In the post-mortem on Northern Rock, it became clear that the impediment to covert intervention was disclosure requirements not on the Bank of England, but on the company concerned. Would that still have been true if such covert intervention had been contemplated in the instances under discussion?

No, I do not think that there was any difficulty in operating the support for RBS and Lloyds. There was, as the hon. Gentleman knows, a lot of debate about the precise strictures on Northern Rock, and whether a particular European Union directive was a problem, and we are pursuing that. However, I have never taken the view that that was the major problem. Northern Rock appeared then to be an isolated case, although it was clear to many that it was not. The major problem at the time was that, despite the Bank’s provision of lender of last resort facilities, far from reassuring people it had the opposite effect. However, I do not think that the European directive was ever the major sticking point, but we are pursuing the matter.

I, like my hon. Friend the Member for Northampton, North (Ms Keeble), congratulate the Bank and, indeed, the Chancellor on the speedy action that they took 12 months ago. There is a danger, 12 or 13 months after the event, of trying to second-guess judgments that were extremely difficult at the time. This morning, as I listened to Radio 4, I thought it faintly bizarre that one criticism of the whole effort was that it had been kept confidential, and that not even Robert Peston had managed to find out the information. Does my right hon. Friend share that thought? I congratulate those who maintained that confidentiality over the past 13 months. Perhaps we could have a little more of it.

In the Chancellor’s answer and supplementary answer to my hon. Friend the Member for Twickenham (Dr. Cable), he mentioned the fee that was paid, but he did not address the interest rate. Was it a commercial rate of return, or was there an element of public subsidy?

The fees are meant to reflect the cost to the public purse. At the time when such work is done, it has to be done very quickly, so the arrangements are not like a normal commercial loan. However, the most important thing is that the money was repaid, and it was fully covered.

I congratulate the Chancellor on an excellent statement and on his firm grasp of complex issues. However, what advice would he give to a constituent of mine—a small business person—who phoned me this morning and said that he employs 30 people and has done everything that Lloyds has asked him to do, yet there is a danger to his company because the cash-flow problem is simply not being dealt with? He congratulates the Chancellor, as I do, but wonders why the Chancellor’s policy of extending the commitment of the banks to small businesses appears in this case not to have been applied.

As my right hon. Friend knows, part of the arrangement with Lloyds and RBS is that we have lending agreements. I am not familiar with the individual circumstances of the company to which he refers, but I strongly advise him to take the matter up, as I do, with the person who is responsible for, in this case, the bank’s Scottish operations to see whether it can be resolved. I have found that that can be fruitful, at times, although I should not want anyone to think there are not any difficulties even for my constituents.

I think that Lloyds staff would no doubt have a view on that matter, but the key thing is that the shareholders of those banks decided whether they wanted to go ahead with the merger. The responsibility for passing information to shareholders and prospective investors lies fairly and squarely with the boards of directors of both banks.

Will the Chancellor confirm that at no point did he instruct or advise the Governor not to disclose before yesterday? When did the Chancellor become aware of the Governor’s decision to disclose?

The Governor and I have many discussions about a wide range of matters, as the House will know. However, it is quite clearly for the Governor to decide whether those operations are necessary—especially at that time, the end of 2008 and the beginning of this year. Of course, we talked about those things regularly, and it was for him to decide when he decided to make the disclosure.

I need to write to the hon. Lady. My recollection is that the bonuses for that financial year would have been announced subsequent to that, but I do not want to mislead her. Bonus payments are generally announced in spring, and that would have been after the payments were repaid.

On the hon. Lady’s general point, I must say that there is not a bank in the world that does not owe a great deal to taxpayers throughout the world, because, if they had not stepped in, every single bank would have been affected—not just those that we had to support directly. If we had not stepped in, the banks that we are discussing would have gone down, and the wider problem for all of us is that the situation would not have stopped there: it would have brought down the rest of the banking system and large parts of the economy. No Government could possibly have contemplated that.

Covert lending is one thing; encouraging a bank to merge with a recipient is quite another. Surely a merger without complete information, but with a gargantuan loss of shareholder value, should simply not have been allowed in those circumstances.

As I said, the decision to go ahead with the merger was eventually taken by the shareholders of both Lloyds and HBOS. They had a vote, and the obligation, as the hon. Gentleman well knows because I can see it from his smirk, lies fairly and squarely with the directors to tell the shareholders what they know.

Order. I say to the hon. Member for Beverley and Holderness (Mr. Stuart) that I have been good to him: I have got him in—he has asked his question. He must listen to the reply.

I am not so sure that the hon. Gentleman is interested in the reply, but as I said earlier the Lloyds directors were fully aware of the circumstances in relation to HBOS. They were told by the Bank of England.

I will be good, Mr. Speaker. The Government have thrown billions at the banks while the banks have hardened their attitude enormously to small business, to the point where they refuse to extend overdrafts and force expensive loans on small businesses, which do not want them but have no option but to take them. Will the Chancellor look into that business and come back to the House to tell us that he has changed what is an unsatisfactory process for small businesses?

I suspect that we will have ample opportunity to return to that tomorrow afternoon on the last day of the debates on the Queen’s Speech. Let me just make a general point. Yes, over the past 18 months or so we have had to put a substantial amount of money into the banking system. However, I remind the hon. Gentleman, and the House, that the exceptional liquidity assistance was repaid. As for the other schemes, fees are charged for the credit guarantee scheme, and the money has to be repaid under the special liquidity scheme. Ultimately, of course, we will get back the money that we have put into RBS and Lloyds when we come to sell those banks at whatever time is appropriate.

Will the Chancellor of the Exchequer publish now or in future the rate of interest charged, and if not, why not?

I am happy to discuss further with the Governor of the Bank of England what further information we can put before the House. The general point of importance is that when these facilities are provided the banks have to lodge collateral, they have to pay a fee, and we get the money back.

The Chancellor knows that over the past year I have repeatedly asked him about the true level of indebtedness of the United Kingdom. He also knows that the Office for National Statistics itself has had some difficulty in obtaining the figures; I have raised that issue with him. Would he be good enough to tell me whether the ONS was informed at the appropriate time about the matters that he has raised today? Has it been given the truth, in line with its new independence under the Statistics and Registration Service Act 2007, on which we wholly rely; and has it raised any matters of concern, as it is entitled to under the Act?

The ONS’s concern is about how the banks in which we have shareholdings should be accounted for in the national statistics. The hon. Gentleman is well aware of the conclusion that it has reached. The responsibility for loans of this nature is properly a matter for the National Audit Office, as well. Between all the public authorities, I hope that there will be sufficient examination and disclosure of what is going on. Now that the situation has stabilised, I think there is no difficulty in explaining to people exactly what happened. Indeed, there is everything to be said for doing so, especially for those people who thought at the time that we were doing things that were precipitate or that we perhaps did not need to do. I am afraid that just over 12 months ago we were faced with a quite extraordinary set of conditions that required very dramatic and unprecedented action.

I think that the whole House recognises the importance of the Bank of England’s acting as lender of last resort to ensure the liquidity of the banking system. However, does the Chancellor accept that that then places an obligation on these banks not to cause liquidity problems for their customers by the unilateral withdrawal of overdraft and loan facilities or unexpected changes in those conditions? What price has he sought to extract from the banks for this continued level of public support?

I updated the House in my statement at the beginning of November. In view of what Mr. Speaker said, I am not going to repeat that, but I urge the hon. Gentleman to look at it. In it, I set out what the arrangements were and what the banks were paying. I agree with him, and with other hon. Members who have raised this, that there is still a particular problem with small businesses getting funding; that is something that we are pursuing.

On the particular cases, I strongly advise him, as I advised my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr. Clarke), that it is well worth taking the matter up with the bank concerned; sometimes matters can be resolved, sometimes not. There is a general problem in this regard. In the case of HBOS customers, for example, there is no doubt that that bank’s pricing policy caused it massive problems in not reflecting the true cost of making the loans. Obviously, I do not know what business or bank the hon. Gentleman is referring to, but I strongly advise him to pursue the matter with the bank concerned if he has not already done so.

The Chancellor chastised the hon. Member for Twickenham (Dr. Cable) for asking questions about what other secret arrangements there might be, and suggested that he should be more than a commentator—he may well be so in the next Parliament. Does he think that in the context of the real drama that occurred 13 months ago, it would have been better if Lloyds Banking Group had used the asset protection plan instead of going to equity holders, whose confidence would have been shaken by the fact that they were not properly advised of the bank’s circumstances?

The asset protection scheme was not announced until the middle of January, which is of course after the events that we are talking about. The exceptional liquidity assistance had to be provided for at the time. It started as we were working up the capitalisation scheme and then putting it in place, so it predated the asset protection scheme. Had the asset protection scheme been in place and operating, the situation might have been different, but I do not think that anyone would be in a position to say that.

Does the Chancellor have a view about how much the taxpayer, and the country, can be allowed to guarantee to banks—that is, how much the country can afford in current circumstances?

I am quite clear not only that what we did last year was right but that we could afford to do it. I am afraid that the hon. Gentleman must ask himself another question. We saw what happened in America when the then American Government let Lehman Brothers go down—it resulted in the American banking system, and very soon the rest of the banking system, going down too. [Interruption.] If the hon. Member for Tatton (Mr. Osborne) wants to discuss my phone call, I will happily discuss it with him, but I am very glad that I did not take on the responsibility for an American bank; otherwise, I suspect that he would have a lot to say about it.

In the Chancellor’s statement, he says that £100 billion was taken in collateral by the Bank in support of these massive loans. Will he publish the document supporting that collateral and put a copy in the Library?

We accept that in the short term confidentiality is a good thing that gives confidence, but in the longer term openness gives confidence as well. In future, will the Chancellor encourage the Bank of England to report as soon as loans have been repaid?

I refer the hon. Gentleman to what I said earlier. The judgment for the Governor has to be when to disclose, and he has to take into account all the appropriate circumstances, not only in relation to when the loan is to be repaid. The hon. Gentleman will recall that at the time when these loans were being repaid—either side of Christmas and the new year last year—there was a great deal of turbulence in the system as a whole, which is why the Governor understandably decided that he thought he should let matters stabilise. The hon. Gentleman will no doubt want to reflect on this: the key thing is that we had the resources of the Bank of England, and therefore the UK Government, to intervene to deal with two Scottish banks that had got themselves into terrible difficulties. That has certainly given most people in Scotland pause for thought—it is time that the nationalists thought about it as well.

Scotland’s Future in the UK

With permission, Mr. Speaker, I would like to make a statement on Government plans about devolution in Scotland: for a stronger Scotland in a stronger United Kingdom.

Devolution has proved itself to be the right form of governance for Scotland. Scots know that as part of the United Kingdom we have the best of both worlds. First, Scots are proud of the Scottish Parliament and the way that it allows them to find what the late Donald Dewar called “Scottish solutions to Scottish problems”. Secondly, the economic events of the past year demonstrate again the added strength of being part of the UK, the fifth largest economy in the world. While Britain brings strength to Scotland, Scotland brings breadth to Britain.

The White Paper that we are publishing today takes forward the recommendations from the final report of the Commission on Scottish Devolution; again, I would like to put on record our thanks to Sir Ken Calman and his commissioners. On 15 June this year, I welcomed the commission’s report on behalf of the Government. I pledged to take the recommendations forward, with consensus and momentum. That is why we established a cross-party steering group. I thank representatives of the Labour party, the Liberal Democrats and the Conservative party in the House of Commons and in the Scottish Parliament for working together on that group.

The commission concluded that devolution has been a “remarkable and substantial success”. It brings government closer to the people of Scotland and secures Scotland’s position within the United Kingdom. In order to refresh the settlement, the commission made recommendations in three distinct areas. First, it recommended that closer working was needed between the UK Parliament and the Scottish Parliament and between the UK Government and the Scottish Government. Secondly, it recommended that a new, more accountable means of financing devolved spending in Scotland was needed, to strengthen the financial accountability of the Scottish Parliament. Thirdly, it recommended that while the division of responsibilities between the UK Parliament and the Scottish Parliament works well, some changes could be made in both directions to further strengthen the devolution settlement. The Government agree with the commission’s conclusions, which were based on a wealth of evidence.

I turn to the first of those recommendations. Scotland has two Parliaments—this Parliament, which remains an important symbol of the UK and continues to have vital daily relevance to Scotland, and the Scottish Parliament at Holyrood, which has firmly established itself over the past decade in Scottish hearts and minds. The commission recommended that the two Parliaments should examine how they work together in the interests of Scotland and the UK. Many of the recommendations are first a matter for you, Mr. Speaker, and for the Presiding Officer in the Scottish Parliament, and I have had the opportunity to meet you both separately.

The core of the commission’s recommendations is about funding for Scotland. Under this Government, public spending across the UK increased in real terms by 42 per cent. in the decade after 1997. The Barnett formula meant that Scotland got the same per-head increase over that period. The commission recognised the benefits of that funding mechanism and how it had given the Scottish Parliament a good start, but 10 years on, it recommended a new deal on funding, retaining the stability and fairness of the block grant while improving accountability.

Since the first day of devolution, the Scottish Government have been accountable for how they spend taxpayers’ money. Under today’s proposals, they will also be held to account for how they raise it. We will give the Scottish Parliament greater freedom, but also the responsibility, to set the level of income tax in Scotland. In future, the size of Scotland’s budget will be down to decisions made in Scotland. In addition to new tax powers, we will give the Scottish Parliament new powers and responsibilities on capital borrowing. We will also devolve stamp duty land tax, aggregates levy and landfill tax, and we will keep the commission’s recommendation about air passenger duty under review.

While we rightly celebrate today the strength that the Union of the United Kingdom provides, that unity does not mean uniformity. So in addition to a new deal on funding, we agree in principle to devolve new powers to the Scottish Government and the Scottish Parliament. On the power to regulate air weapons, the Government have kept controls under close scrutiny and there are encouraging signs that recent changes are having an effect. However, the Government agree in principle to devolve the regulation of air weapons to the Scottish Parliament.

We will also devolve the power to set the drink-drive limit. We believe that there are benefits to having a single drink-drive limit in place across Great Britain, but there are no overwhelming reasons why the limit should not be devolved. Additionally, the Government will ensure that Scottish Ministers have the power that they need to determine the national speed limit in Scotland, along with their existing broad powers to determine speed limits.

Elsewhere we will take the opportunity, as the commission recommended, to reserve powers to the UK Parliament where experience has shown that a common approach across Britain or the UK works better. For example, we will reserve the regulation of all health care professions to ensure a consistent regulatory regime across the country.

The full package of proposals is set out in the White Paper that we are publishing today. We will continue to take our plans forward with consensus and momentum, and we will introduce a Scotland Bill as soon as possible in the next Parliament to introduce the Calman package. We will phase in the new financial arrangements carefully, and we plan to have the changes in place during the next term of the Scottish Parliament.

Support for Scottish devolution remains strong in Scotland and elsewhere in the UK, and so does support for the Union of the United Kingdom. The plans that the Government are setting out today will create a stronger, more accountable Scottish Parliament within the framework of the United Kingdom. That strength through unity is a great asset, and today is an important step in building a stronger Scotland and a new deal for devolution. I commend this statement to the House.

I thank the Secretary of State for his statement, for the advance notice of it and for the extent to which both he and his predecessor have engaged with fellow Unionist politicians in Scotland during the Calman process. I also put on record my thanks to the commissioners for their work. The Conservatives fully supported the setting up of the commission and have played a full part in its work.

I look forward to reading the White Paper, but does the Secretary of State concede that the timing of it so near an election inevitably means that the issue will have to be revisited by the next Government? Does he acknowledge that his Government’s White Paper should not bind any incoming Conservative Government? Conservatives accept that the Scottish Parliament needs to be more financially accountable, that the devolution settlement needs to be tidied up and that Westminster and Holyrood need to start working constructively together for the good of Scotland and Britain, but we will ensure those things through our own White Paper, not this Government’s proposals launched in the dying days of this Parliament. Will the Secretary of State welcome that commitment and undertake to continue in the spirit of Calman, on the basis of consensus and momentum, regardless of who is in government, and resist the temptation to play party politics with such an important issue as Scotland’s constitution?

Will the Secretary of State acknowledge that the guiding principle in deliberations on the Calman process has been, and must continue to be, securing Scotland’s position within the United Kingdom? Is he as heartened as I am by recent polling in Scotland that demonstrates that there is very little support for separatism and an independence referendum? Does he accept Sir Kenneth Calman’s view that the establishment of better working relationships between the British Government and the Scottish Government and between the Parliaments here and at Holyrood must be in place to underpin every other recommendation in his report? Given that most of the measures to improve relationships do not require any legislation, can he tell us what he will do to re-establish the good will between Westminster and Holyrood, which appears to have ebbed away?

Whatever differences we may have with the Labour Government about how to take forward the Calman recommendations, may I invite the Secretary of State to agree with me that they are as nothing compared with the divide between us and the Scottish National party? We are Unionists; they are separatists. We are in the mainstream of the constitutional debate; they are on the extreme.

However, does the Secretary of State also agree that there are no grounds for complacency? The Calman commission contrasts markedly with the so-called “national conversation”, whose main participants appear to be insomniac cyber-nats. Is it not the case that the work of the commission, not Mr. Salmond’s publicly funded, self-indulgent chit-chat, will endure and form the basis for taking—

Order. I appreciate that the hon. Gentleman is in the midst of his rhetorical flow, but I appeal to him to remember that when he is referring to a right hon. Member of the House, he must do so with respect to the constituency rather than by name.

Is it not the case that the First Minister of Scotland’s publicly funded, self-indulgent chit-chat will not survive? It is the work of the commission that will endure and form the basis for taking forward the devolved settlement in Scotland for the benefit of the people of Scotland and Britain.

I agree with one of—[Interruption.] I apologise to you, Mr. Speaker, for the hullabaloo and noise in the Chamber, but you will be aware that when these debates take place and Scottish MPs get together and argue so passionately on Scottish issues, it is a bit like watching a family argue.

I agree with one of the main points that the hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) made, which is that the recent polling evidence is pretty clear—most Scots are fiercely patriotic and love Scotland, and like ourselves believe in Scotland and have a great sense of our history and our future, but they have dual identity and also have a belief in being part of something bigger. That unites most Scots and people across the rest of the UK. I got in trouble for saying this some time ago, but I happen to believe that the Scottish Government made quite a good start after they were elected with the energy and excitement that took them over the finishing line. However, like most people in Scotland, I am starting to believe that they are a novelty that is wearing off.

On the points that the hon. Gentleman made—[Interruption.]

Order. I recognise that the exchanges at this stage are relatively good natured, and that there are many smiles on faces and so on, but I say to the hon. Member for Perth and North Perthshire (Pete Wishart) that I think he is setting a bad example. If he were in a school class, he would be in some danger of detention. I do not want to see that.

The five SNP Members—the other one is up the road—continue to shout across the Chamber, but most people in Scotland have stopped listening to them, regardless how loud they shout. The by-election result in Glasgow showed that absolutely conclusively.

However, on the substance of the points raised by the hon. Gentleman, most Scots want to see this Parliament and the Scottish Parliament working much better together and the UK Government working much more closely with the Scottish Government. I suspect that at local level, they would like to see Members of Parliament, Members of the Scottish Parliament and local councillors, of all parties, particularly at a time of recession, working together and trying to set aside, where they can, partisan divides. That is why it is pretty disappointing that, when there is a raft of proposals about better working relationships—we are interested in taking them all forward and working through them—the Scottish Government have just flatly refused to accept two thirds of them.

That is probably because they are not really interested in embedding the working relationships between the UK and Scottish Parliaments in the medium term, because they want to rip Scotland out of the UK. As the hon. Gentleman alluded to, it is important to have a greater sense of teamwork, which we have had through this process, with Labour, Liberal Democrats, Conservatives, and business and trade union leaders, involved in the Calman process and the steering group.

Finally, much of the hon. Gentleman’s speech was—[Interruption.] Much of it was humorous rather than informative. We look forward to hearing the detail of his response to the White Paper once he has had the chance to read it in greater detail.

I, too, thank the Secretary of State for his statement and for advance sight of it prior to coming to the Chamber. I also place on record my party’s gratitude to Sir Kenneth Calman and the members of his commission for their very substantive and substantial piece of work. I should also place on record some recognition of the contribution of the Secretary of State’s predecessor, the right hon. Member for Kilmarnock and Loudoun (Des Browne), who was instrumental in introducing this process.

On the substance of the White Paper and the Secretary of State’s statement, I am completely in support of the Government’s position, which is of practical as well as constitutional significance. For those in Scotland who want a new Forth bridge, for example, and who see it as vital to Scotland’s economic future, there is now no barrier to its delivery. If the Government in Edinburgh want to delay it further, they will have to blame themselves rather than looking south of the border.

However, I must ask the Secretary of State what his White Paper really adds to the process apart from further delaying implementation when there is consensus, and giving the Conservatives an opportunity for the sort of backsliding that we have just seen. I listened to the hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) speaking about producing another White Paper the other side of a general election, and I could almost hear the ghost of Sir Alec Douglas-Home speaking prior to the 1979 referendum. He promised that we would get something better from the Conservatives, but they betrayed us after the 1979 election, and they would betray us again tomorrow given half a chance which, fortunately, they are unlikely to get.

May I also remind the Secretary of State that Calman was established because we wanted to make the UK work better? In order to do that, we must now move forward with the work that Calman acknowledged needed to be done, and we must find a needs-based formula to replace the Barnett formula. When will the Secretary of State and the Government understand that serious threats to the future of the Union, which exist, can come from the south as well as the north of the border?

I thank the hon. Gentleman for his kind remarks about the process and his gracious comments about my right hon. Friend the Member for Kilmarnock and Loudoun (Des Browne). The whole House acknowledges the phenomenal amount of energy that he put into the process. I also thank the Scottish Parliament which, of course, initiated the whole process, despite the Scottish Government not participating.

I am not going to referee the disagreement between the Liberal Democrats and the Conservatives. I am determined simply to try to find a common purpose, maintain consensus and drive forward with momentum.

The hon. Gentleman is right to say that there is now a new capital borrowing power from the national loans fund. That has been demanded in Scotland and it is right that after the Calman commission recommended it, the Government are now committed to it.

The hon. Gentleman and the House will be interested to know that Sir Ken Calman made 63 recommendations. Twenty-one were for the Parliaments, but 42 were for Her Majesty’s Government, and we are committed to taking forward 39 of them. We have been very clear about this: it is our intention to introduce a Bill, as soon as possible in the next Parliament, to put those measures in place during the next Scottish Parliament. I think that that will be welcomed across Scotland.

Finally, on the hon. Gentleman’s point about the time scale, Sir Ken Calman himself said that

“it is…a package of 63 recommendations which hang together.”

It is our intention to deal with them as a package in a Scotland Bill early in the new Parliament.

Order. Many Members are hoping to catch my eye, and they will be aware that the debate on the Queen’s Speech will continue after the statement. I therefore ask for a single, brief question and a similar response.

Does my right hon. Friend the Secretary of State agree that both the constitutional convention that established the Scottish Parliament—at least, it built the momentum for its establishment—and the Calman commission brought consensus within Scottish politics? The results of the convention and the commission are due to the dedication, commitment and hard work of the people who participated. The one constant that was absent from both processes was the Scottish National party which, when it comes to the crunch, is more interested in what is important for the SNP than in standing up for Scotland.

My right hon. Friend is absolutely right. The constitutional convention that brought about the Scotland Act 1998 was boycotted by the SNP, and the Calman commission, which has brought about this White Paper, has been boycotted by the SNP. As she said, the fact is that the SNP is so obsessed with breaking up Britain by ripping Scotland out of the heart of the UK that it refuses to find common cause with anyone else across the whole of Scotland. That obsession is increasingly a minority sport in Scotland.

I entirely agree with what the Secretary of State just said. I warmly welcome the Unionist consensus that has brought about this excellent report from Sir Kenneth Calman and the greater accountability that will flow from it. However, does the Secretary of State agree that there is a danger that a consensus of the left—the Labour party, the SNP and the Liberals—would be likely to bring about an increase in taxes under the plans for greater accountability, whereas what Scotland really needs for economic growth and an increase in jobs and prosperity, is a Government who, when fiscal ability allows, will cut taxes? The only Governments who ever promise to do that are Conservative Governments.

The hon. Lady is right in some respects, but she is wrong to describe the SNP as a party of the left. It is a party of all things to all people, depending on which part of Scotland it is seeking votes from. The quasi-revolutionary party seen in parts of Glasgow is different from the small-c conservatives seen in Perthshire. Nevertheless, she is right about one thing: the Scottish Parliament is currently responsible only for spending money and there is an accountability gap. We want to right that and complete Donald Dewar’s unfinished business by having a greater degree of accountability in Scotland for money that is raised in Scotland.

Does my right hon. Friend agree that devolution ought not to be about simply moving powers from one institution to another, but about empowering the people of Scotland in their local communities? We should be much bolder than we are about removing powers from this place and from the Scottish Parliament to ensure that local communities, councils and health authorities are empowered to meet the needs of the people of Scotland. Now is the time to do that, given that the wheels are now well and truly off the nationalist bandwagon.

My hon. Friend is right. We are doing what will work best for Scotland and the UK, which is why we would have powers in the House of Commons on health care professionals and we also want unified arrangements on charity law and insolvency. My hon. Friend has played a pivotal role in bringing about this process, and it is right that we should extend devolution beyond the Scottish Parliament into local communities to people and their families. That is why the future jobs fund is so important: it is about local communities, the voluntary sector and local authorities working together in a team approach to get families through this global recession.

I thank the Secretary of State for the advance copy of his statement. I note how pleased Labour and Conservative MPs have been to agree with what he has said so far.

I am pleased that there is a growing consensus that normal nations should make decisions for themselves while working closely with their neighbours and friends. The best future for Scotland is guaranteed with the full powers of independence, and the people should be able to decide that in a referendum. We should bring that referendum on.

There is cross-party consensus that we should devolve decision making on air weapons, the drink-drive limit and the speed limit. Given the agreement of the Scottish Government since June to implement these measures immediately through statutory instrument, why are they being put off by Whitehall until after the election? What explanation will the Secretary of State give to the mother, father and family of a victim who could have been saved from harm, but was not because the UK Government did not act for a year?

I am not sure that that contribution was worth waiting for. The issue of air guns, for example, will require more than a press release. It is much more difficult to write and pass a law than it is to write a flimsy, superficial press release for media consumption. We have moved considerably on air guns and the UK Government have changed their view, but making that happen will require primary legislation in the House of Commons, which is much more complicated that issuing a simple nationalist press release.

The problem for the hon. Gentleman and the SNP is that he always behaves like a nationalist and never behaves like a patriot. A nationalist puts the SNP first, but a patriot puts Scotland first. That is the difference between my party and his, and why Scotland is increasingly turning its back on the SNP.

I congratulate my right hon. Friend on his approach to the Calman commission. It is exactly what was envisaged by those people involved in the constitutional convention. Does he share my view that this is a coherent package of measures that includes evidence supporting the assignment to the UK Parliament of those measures that should be so assigned, and that it should be delivered as such?

My hon. Friend is right. Unlike the half dozen or fewer SNP Members, she is not interested in playing these nationalist games of pick and mix. We are doing what is right for Scotland, and strengthening it inside the UK. When Sir Ken Calman proposed changes in the reservation of powers on insolvency, charities and health care professionals, we were attracted to the idea of a UK-wide position in those areas, and we have said so in the White Paper. We were less attracted to the food labelling proposals, for good reason.

Most Scots know that they get the best of both worlds through having a Scottish Parliament and a UK Parliament. They get a strong, patriotic and important Scotland inside the fifth largest economy in the world, and they will continue to celebrate that. We are stronger together, and we would be much weaker apart, as the economic circumstances of the past year have proven conclusively.

The biggest threat to the UK does not come from Scotland, but from England. If the Secretary of State does not do something to stop Scottish MPs voting on legislation that applies only to England whereas English MPs have no decision-making influence on Scotland, or something to make the funding formula fairer to England, the threat to the UK will come from England.

Knowing the hon. Gentleman as I do, when he talked about the threat to the Union, I expected him to say that it came from the European Union. People across the UK know about our shared heritage. We share these islands and we have so much in common. We are fiercely defensive and supportive of each other. We have together achieved so much over the decades and I believe that our strongest and best days lie ahead of us. We need to ensure that the Scottish Parliament has additional powers, but I hope that his constituents will be reassured by the fact that this is not about additional money for the Scottish Government. It is about additional accountability and the holding to account by the people of Scotland of the Scottish Government not only for what they spend, but for how the money is raised. That is an important constitutional innovation.

On a practical point in connection with the drink-driving limits, is it not imperative that if a variant were introduced, both Administrations—in Edinburgh and here—should work together to prevent motorists from becoming confused?

My hon. Friend is characteristically correct. There is an attraction in having similar or the same drink-drive limits across Great Britain, but based on the evidence provided to Calman, we have decided that there is a case for devolving that power to the Scottish Parliament. It would have to think very carefully about introducing a different limit for Scotland and the possible consequences, but it will be for it to decide ultimately. We joust across party divides on such matters and the SNP may be many things, but it is not foolish. It knows that if it were to introduce a different drink-drive limit, it would have to have some degree of co-operation, education and information for drivers and police forces, especially in those areas just north and south of the border.

Despite all the noise in the Chamber, there is a cross-party consensus and even the SNP Members are behind these proposals. The Bill would get a smooth passage through this House and the other place. I cannot understand why, when the practical benefits would include the funding of the Forth crossing, we cannot just get on with it. We would be right behind the Secretary of State.

I thank the hon. Gentleman for his interest in this and his commitment to the package that we unveiled today. As Sir Ken Calman has said, this is a package of 63 recommendations which hang together. We intend to take forward 39 of the 42 that apply to the Government. On the question of the Forth road bridge, there is a deal on the table. The Scottish Government have unprecedented flexibility, not matched in any other Department in Whitehall or other part of the UK Government, and £1 billion that would help to make the Forth road bridge a reality. Unfortunately, for reasons of ideology, they are turning their back on that unprecedented deal. They have the constitutional right to be wrong, but it is not too late for them to change their minds.

Does the Secretary of State agree that, for the sake of Scotland, it is a pity that the SNP did not support the Calman commission, and that we should now have an end to the constitutional wrangling when the proposals are put into effect?

My hon. Friend is on the money again when it comes to such issues. The SNP has set its nationalist face against sensible, radical reforms entrenching Scotland within the United Kingdom. She is also right that, as important as the measures that we announced today are, our biggest priority is to get Scotland through the recession and to work with people who are out of work to get them back into work as soon as possible. In publishing the White Paper, seeking a consensus and driving momentum, I want to return soon to getting Scotland back to work in this recession—because that is the public’s obsession in Scotland, even if it is not the SNP’s.

Is the Secretary of State aware that the Constitutional Affairs Committee’s report on devolution 10 years on is in line with the Calman recommendations, but warned that the stability of the Union was threatened by the fact that the governance of England had not been addressed and that it was still governed in a relatively centralised way by what is supposed to be the Government of the United Kingdom?

The right hon. Gentleman speaks with authority, through his Committee work. As he knows, of course, we have devolved powers across the United Kingdom—to Northern Ireland, London, Scotland and Wales. That has not always been to our political advantage, as Scotland—and currently London—shows, but it was the right thing to do. Our unwritten constitution has never been a precise settlement, and today is an important step towards ensuring greater accountability. When we have closed the gap in the Scottish settlement and completed Donald Dewar’s unfinished business, the Scottish Government and Parliament will have to take annual tax decisions. Instead of blaming London or Britain—bizarrely, in the light of events over the past year—people in the Scottish Parliament will have to look in the mirror when it comes to Scotland’s future and the size of its budget.

I thank my right hon. Friend, his predecessor, my right hon. Friend the Member for Kilmarnock and Loudoun (Des Browne) and my constituent Sir Kenneth Calman for their work, and I am sure that my predecessor, Donald Dewar, would have been most pleased with what they have come up with. However, will they reconsider some of the reserved issues, such as energy, on which Scotland will miss out on billions of pounds of investment in areas such as Hunterston and Torness, where no one is allowed to build nuclear power stations because of some stupid, idiotic rule brought in by the Scottish Government?

I am happy to pay tribute to my hon. Friend’s constituent, who has done a remarkable job over the past few months, and I am honoured to pay tribute to the late Donald Dewar who did so much to bring about the institution of the Scottish Parliament. He served with enormous distinction as the first First Minister of the Scottish Parliament.

The SNP is wrong on nuclear power stations, but again—I return to this point—the constitutional arrangements enable it to be wrong. My hon. Friend’s frustration about its nuclear policy is a stronger argument for changing the Government in the Scottish Parliament than for changing the devolution settlement, and I am confident that most people in Scotland agree with that.

Recently, a Government Minister, Lord Bach, praised the Isle of Man as beneficial to the UK’s economy. The Isle of Man has about the population of Paisley, but has far more independence and autonomy. Why can Scotland not have the powers and autonomy of the Isle of Man?

I mean no disservice to the places that I am about to mention. Previously, the hon. Gentleman has taken us on a virtual tour of the world, although he did not mention the Western Isles. We have heard that Scotland would be wonderful if only it could be like Iceland, which tragically—I do not celebrate this—is in search of an economic purpose. His party has compared Scotland to Ireland, which technically is in depression—as a Murphy, I take no comfort in saying that Ireland is in real difficulties. Now the SNP is saying that it is a nationalist cause to be like the Isle of Man. No disrespect to the Isle of Man, but Scotland’s future does not lie in being like the Isle of Man. This is another example of the SNP putting its obsession before our country. Most Scots will want their country to be not like Iceland, Ireland—despite our respect—or the Isle of Man, but like Scotland: a proud, equal part of the United Kingdom, which is the most successful union of nations that this world has ever known.

Improved intergovernmental and inter-parliamentary relationships are necessary for good governance of my constituents. However, does the lack of co-operation by the SNP with the Calman commission put that in jeopardy; or does it simply place the SNP in jeopardy?

My hon. Friend is right that one of the dangers here is that the Scottish Government—[Interruption.].

I hope that I can reassure you, Madam Deputy Speaker, that hon. Members were shouting not at me—I hope—but at the five across the way.

My hon. Friend is right to say that some of the measures are jeopardised by virtue of the minority Scottish Government continuing to be dogmatic and boycotting the process. They went AWOL on the constitutional convention and were AWOL on the Calman commission and the White Paper. However, the majority view in Scotland will force them to change their mind, because the belligerent obsession with breaking Scotland out of the United Kingdom and holding the immediate referendum is supported by about one person in eight—even fewer than the SNP got in the by-election in Glasgow, North-East.

I think that there is a consensus in the House that devolution is important and good for the people of Scotland and the other regions of the United Kingdom that have it. We, in Northern Ireland, would love to have the luxury of the Scottish people of being able to elect our own Government without enforced power-sharing. However, is it not important that no action be taken to break up the unity of the United Kingdom of Great Britain and Northern Ireland?

I will not second-guess the devolution settlement in Northern Ireland. I have enough complications being Secretary of State for Scotland, so I will not intrude on the challenges facing, and fascination of being, the Secretary of State for Northern Ireland. However, the hon. Gentleman’s central point is correct: by all tests of logic and economic rationale, Scotland, Northern Ireland, Wales and England are stronger for sticking together. Look at what has happened over the past year. We can dispute whether we got each policy right, but it is certainly the conviction of the majority of people in all parts of the United Kingdom that over the past year we, on these islands, have been better for sticking together and getting through the recession. With one exception, regardless of party politics, most of us know that we will get through the recession, partly because of the strength that the United Kingdom gives us.

Does the Secretary of State agree that the announcement of the Government’s commitment to the policy on devolution means that the next general election in Scotland will effectively be a referendum between, on the one hand, separation, isolation, job losses and misery and, on the other hand, strengthened devolution, continued shipyard orders, happiness and joy?

Believe it or not, but that is the hardest question that I have had to respond to all day. We have a big choice to make over the future constitutional arrangements in Scotland. The majority of Scots are on one side—of strengthening the Parliament—and the SNP is on the other side. It is entitled to be there, but ultimately the next election will be a two-horse race in Scotland—it is the same two-horse race in the rest of Great Britain—between the Labour and Conservative parties. Increasingly, the SNP is a sideshow in the two-horse race, and most people in Scotland know that.