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Volume 504: debated on Wednesday 27 January 2010

I have been asked to reply.

As the House will know, my right hon. Friend the Prime Minister is in Northern Ireland, where talks are ongoing to secure agreement on the devolution of policing and justice powers. The Prime Minister will make a written statement to update the House later and place it in the Library of both Houses.

I am sure the whole House will wish to join me in paying tribute to Rifleman Peter Aldridge from 4th Battalion the Rifles, serving as part of 3 Rifles Battle Group, and acting Lance Corporal Daniel Cooper from 3rd Battalion the Rifles, who have died in Afghanistan. They were both heroes who displayed extraordinary courage, spirit and absolute commitment to the tasks that were before them and their colleagues, who, along with their families and friends, will remember them with great, great pride.

May I join the Leader of the House in paying tribute to those who have lost their lives in the service of their country? Is she aware that the compensation paid by the Ministry of Defence to the families of those killed in action is then taken into account when calculating benefit assessments, with the result that some families receive no compensation at all and others are actually left worse off? Will she look at that as a matter of urgency to see what can be done to put it right?

The Ministry of Defence has been very concerned indeed to ensure that we support those who have been injured in the line of service. The Secretary of State for Defence produced a Command Paper that particularly addressed the issue of support for veterans. There has been a big upgrading of the compensation scheme and a further review of the scheme is under way. The Secretary of State for Defence has been working closely with the Secretary of State for Work and Pensions on this.

Q14. Our economy will rely increasingly on export-oriented manufacturing industries. Toyota, Rolls-Royce, JCB and others employ about a third of the work force in my area in high added-value manufacturing. What can the Government do to improve the performance of our exported-oriented manufacturing sector, to make it more successful in future for the benefit of us all? (313315)

We recognise the importance of manufacturing in South Derbyshire, where between them the aerospace, automotive and railway sectors in the area directly employ more than 32,000 people and account for more than £10.3 billion of economic output. My hon. Friend strongly supports manufacturing in his area, and we have an advanced manufacturing package of support for skills and a manufacturing advisory service. We look forward to strong growth ahead in this sector.

We wish the Prime Minister well in his endeavours in Northern Ireland because we all want the devolution of policing and justice to be completed and progress in Northern Ireland to continue.

I join the Leader of the House in paying tribute to Lance Corporal Daniel Cooper and Rifleman Peter Aldridge, who have joined the lengthening list that is read out in the House of members of the armed forces who have died serving this country.

On that subject, we welcome the appointment of a new NATO civilian representative in Afghanistan, and the fact that it is the current British ambassador to Afghanistan, Mark Sedwill, whom we all hold in very high regard. Are the Government confident that his work will be closely co-ordinated with that of the United Nations so that, this time, military gains will be followed by effective reconstruction?

Indeed, and I thank the right hon. Gentleman for his commendation of that distinguished diplomat. It is precisely to support that work that the conference is to be held in London to look at taking forward issues on Afghanistan. There are 70 countries attending, as well as the UN Secretary-General, Ban Ki-moon.

Looking ahead to that conference tomorrow, should we not recall the lessons of the previous Afghan conference in London in 2006, which set dozens of extremely ambitious objectives for Afghanistan, most of which have never been met? Do the Government agree that, this time, the conference should focus on realistic goals that can be delivered, concentrating on improved governance and reintegrating former Taliban members? Will the Government seek regular reviews of the progress made, including at the conference proposed for Kabul in a few months?

Of course, we are looking to ensure that we play our part so that, in Afghanistan, we have the right military action to tackle terrorism, we support the Afghanisation of the armed forces and the police services, and we have economic and political development. I would have thought that the right hon. Gentleman would take the opportunity to support the work that will go on tomorrow instead of simply carping.

The right hon. and learned Lady should know the position. Immediately after Question Time, my right hon. Friend the Leader of the Opposition and I will visit President Karzai to push forward exactly the same agenda as the Government, so there is no need to make party political points about that important subject.

Doubtless, President Obama will mention Afghanistan in his State of the Union address tonight, but he is also expected to talk about reforms to the regulation of the banking system. No country was left more exposed to the failure of the banking system than the United Kingdom. President Obama has called for retail banks to be prevented from getting involved in large-scale proprietary trading. Why are the Government not supporting the President’s proposals enthusiastically and working with him to realise them?

We are working very closely internationally, including, of course, with President Obama. The United States has different structures and different problems in its banking system, which the US Government are seeking to address. We have been addressing the problems in our banking system, and it is important that we all work together internationally to ensure that we can deal with the problems that have so affected all our economies.

Well, of course it is important to work together internationally, but the Prime Minister said that he did not envisage a

“divide in future between… retail and corporate deposit taking… and investment banking and trading conducted at an international level.”

That is the Prime Minister’s stated position, which is very different from the President’s, and I put it to the Leader of the House that the Prime Minister is probably wrong.

Let me ask about something else for which President Obama has called. There is a clear case for a levy to compensate taxpayers for what happened in the past and what may happen in future. Is it not time to work with the President on agreeing the sort of levy that he proposes and drop the Prime Minister’s Tobin tax on transactions, which has been rejected throughout the world and was ridiculed yesterday by the Governor of the Bank of England?

We have never argued for a one-size-fits-all solution, with every single country taking the same action. We have always agreed that all countries should work together—whether in the G20 or the European Union—to tackle the global economic crisis. We agree with President Obama and just about every other country in the world that we need a fiscal stimulus to support the economy in recovery. The only people who seem to disagree with that are the official Opposition.

President Obama has just announced a freeze on spending in the United States and the UK Government have just raised the rate of VAT, which is hardly a fiscal stimulus. The Governor of the Bank of England said that President Obama’s proposal is much more serious than the Prime Minister’s Tobin tax. In fact, the Governor said that he could not think of anyone internationally who was enthusiastic about the Prime Minister’s idea, so let me ask about a third aspect of banking reform.

There is a growing consensus that only central banks have the authority, ability and know-how to maintain proper supervision of the banks. The Prime Minister took that power away from the Bank of England in 1997 and created a system that failed. Given that countries such as the United States and Germany want their central banks to have more responsibility for banking supervision, will the Government now change their policy and adopt that approach?

Obviously, what America has been doing is dealing with a very fragmented system of regulation, which involved no fewer than eight regulators. We have already rationalised the system of regulation. What is important is that the organisations have the right powers within the right framework, and that is what the Financial Services Bill and other measures are determined to ensure. The Conservatives said they wanted less regulation when they were in government, so it is good to hear that they are supporting firm action to tackle irresponsibility in the markets.

It was the Prime Minister in 2007 who trumpeted his record—as he thought of it—of deregulation in the City and said we could look forward to a

“golden age for the City”

from then on. Is it not clear that the Prime Minister was wrong and is wrong now on the system of financial supervision, wrong on the Tobin tax, wrong to build an economy based on debt, and wrong not to back the United States on banking reform? Are not those failures just another part of a miserable record, in which we have the biggest budget deficit in peacetime history, the largest bank bail-out in the world, the deepest recession since the 1930s and the weakest recovery in the G20? Does the right hon. and learned Lady think it is time to back some of the United States’ proposals to sort out the banks in future?

We have helped the economy through the recession and supported the recovery. When the right hon. Gentleman was in government and sitting in the Cabinet, there were double the number of repossessions; when he was in government, there were three times as many bankruptcies; and when he was in government in a recession, there were four times as many job losses. I have to say that his reversing is even worse than mine. We are building up Britain, and the Conservatives are trying to talk it down.

Could the Leader of the House have discussions with her colleagues in the Treasury and the Department for Transport to ensure that we get a decision on the high-speed rail link this side of the general election, and that, when we get that decision, Birmingham and the west midlands get the links they deserve?

We are very strongly supporting investment in our rail system, which is part of our economic infrastructure, and we will make sure that those decisions, in support of manufacturing and the economy in Birmingham, are reached as soon as possible.

May I add my condolences for the loss of Lance Corporal Cooper and Rifleman Aldridge?

May I congratulate the Leader of the House on her foresight in establishing the National Equality Panel, which reported today? It helpfully reminds us that after 18 years of Conservative Government, inequality had widened and reached the level described in the report as “shocking”. Will she explain why now, after 12 years of Labour Government, income inequalities are the same—still shocking—wealth inequalities in shares and property are worse, and, as we discovered on Monday of this week, child poverty is growing?

I join the hon. Gentleman in thanking Professor John Hills and his panel for the important report by the National Equality Panel. The hon. Gentleman is right to say that the report states that under the Conservatives—[Interruption.] Under the Conservatives, inequality widened, and as a result of the effect of this Government’s policies, most particularly on tax and benefit, the growing inequality has been stemmed. We have also tackled poverty, especially child poverty and pensioner poverty, but we think that inequality, which persists and can be handed down the generations, matters for the individual, for opportunity, for the economy and for a more peaceful society, so we are determined to do more to tackle it.

Well, the Government may be determined, but the brutal truth is that economic inequality is getting worse. Part of the problem is the failure to reform the unfairness of the tax system. We all understand why Conservative Governments might wish to give top priority to rewarding the wealthy, but why have the Labour Government given overriding priority to cutting the tax rate that wealthy people pay on their capital gains to a lower rate than the tax paid by working people on their earnings, and why have they left wholly unreformed a property tax system under which ordinary families pay the same amount of tax on a modest family house as billionaires pay on their multi-million pound mansions?

The hon. Gentleman is simply wrong in what he says about the report’s findings. It says that over the 13 years that we have been in government the effect of our tax policies, combined with our benefit policies, has been to narrow inequality. We have tackled poverty, in particular pensioner poverty and child poverty. One thing that would not help those on low and modest incomes would be the savage cuts proposed by the hon. Gentleman’s party.

The threat of the third runway at Heathrow continues to blight my community. Although a compensation scheme has been introduced that will protect the homes of some residents, many residents are excluded from it. It also does not cover people such as the local shopkeeper, the hairdresser and the publican who live above their premises and who will lose their homes and their livelihoods. Will the Leader of the House facilitate a meeting between local MPs and Ministers to discuss what compensation can be provided to those people?

I would certainly be happy to suggest that the Secretary of State for Transport meet my hon. Friend and other hon. Members to discuss these important issues.

Q2. Tens of thousands of people dead, a whole region destabilised, no mythical weapons of mass destruction and this week we learn of the dubious and questionable legality that took us into the war in Iraq. Does not the Leader of the House in her quieter moments and in her heart of hearts believe that her Government led us into this disastrous and immoral war on the back of one of the biggest deceits in political history? (313302)

These matters, which were debated and decided on in this House of Commons, are now the subject of the Chilcot inquiry. It is choosing the evidence to be brought before it and that it requires to be examined. It is independent and I suggest that we thank it for its work and await its report.

Q3. Last week, Woodhey high school in my constituency was named as one of the country’s top performing schools for sustained improvement in GCSE results. That follows £8 million of investment in new facilities. The other schools in Bury, North are awaiting their capital investment. What would be the effect on school standards if the Government’s only policy were to cut the deficit further and faster than ever before? (313303)

I agree with my hon. Friend that education is important, not only for every individual to achieve their potential, but to ensure that we have a dynamic economy. I am delighted that Woodhey high school has seen such a big rise in its results, not only last year but in the last three years, and I join him in congratulating the school. Those results are due to the hard work and dedication of the teachers and pupils, but they are also thanks to the extra investment we have put in. We will continue to sustain and support investment in education.

Q4. The Business Secretary once famously remarked that Labour was intensely relaxed about people getting filthy rich. Is the right hon. and learned Lady equally relaxed about how the Prime Minister’s predecessor has decided to go about it? (313305)

We have asked the National Equality Panel to look at how we can ensure that we help social mobility and—[Interruption.]

We are determined to ensure that there is social mobility, and one of the important findings of the NEP report is that more unequal societies have less social mobility, which is why we are determined, with Government action, to continue to support policies that spread fairness and equality.

Q5. Will my right hon. and learned Friend join me in congratulating the Coalfields Regeneration Trust on rebuilding mining communities devastated and broken by the Tory closure programme? Is she aware that the renewal programme in mining communities has been carried out by creating 90,000 places in education and training and rebuilding 2,200 facilities in the communities? Will she urge— (313306)

Will my right hon. and learned Friend urge her colleagues at the Department for Communities and Local Government to—

I will support my hon. Friend’s urgings to my colleagues in the Department for Communities and Local Government, and I am delighted to join him in congratulating the Coalfields Regeneration Trust on its first 10 years of operation. I know that he has worked with fellow MPs in former mining constituencies to ensure significant regeneration in these areas, which face such challenges, particularly after the devastation of the Tory years.