I welcome all Members to the first debate in Westminster Hall today. I am not sure whether the weather will deteriorate or improve, but for those who will have to go a distance, I hope that it will improve. As this is the last day before we break for the half-term holiday, may I express the hope that everyone has a restful and enjoyable time at home or in their constituencies? The first debate is to be initiated by someone who has come a very long way to be here—the hon. Member for Orkney and Shetland (Mr. Carmichael).

It is indeed a long way from Orkney and Shetland to Westminster, but as it affords me the privilege of serving under your chairmanship, Sir Nicholas, it is worth every inch of the journey.

I return this morning to a subject on which I have addressed the House on a number of occasions over the past nine years. It is a source of considerable and genuine regret that we have not made more progress on a public policy that brings with it one of the most significant burdens to life in island and rural communities. I shall confine my remarks this morning largely to the island communities, for reasons that I hope are so obvious that I shall not need to state them. It is plain from the geographical spread of the constituencies of Members here today that the problem affects communities in all remote and peripheral parts of the country, not only those that I represent.

My ask for the Minister this morning, as on previous occasions, is that if she cannot consider a derogation of fuel duty—I recognise that a substantial element of the cost of petrol is attributable to fuel duty—there may be a possibility of getting a derogation from European Union legislation to allow the imposition in some areas of a lower rate of duty, thus recognising that that there are market-based reasons for the higher prices.

The importance of the problem cannot be overstated. In communities such those that I represent, which are geographically substantial but with small populations that are spread very thinly, the use of the private car is not a luxury but an essential. It is also an environmental essential. If we had a fleet of buses running around the west side of Shetland to provide the required transport access to other parts of Shetland, they would effectively be running empty. Having smaller private cars on those roads makes environmental sense. Buses, with their emissions and their use of fuel, would be carrying air around the west side of Shetland or the remoter parts of Orkney. That makes no environmental sense. Although the mindset in many parts of the Government may be that the private car is bad for environmental reasons and should be pushed off our roads in favour of public transport, the private car makes good environmental sense in areas such as those that I represent.

Does the hon. Gentleman recognise that the bus service is either thin or non-existent in many rural areas? The car is therefore a necessity. He talks about taxation on fuel. Does he also recognise that the price of petrol is much higher in many rural areas than in the cities? It is not as though we are trying to give a tax advantage to those who live in rural areas; we simply want to give them a fair crack of the whip.

The hon. Gentleman says nothing with which I could disagree. Indeed, he leads me on rather nicely to the first point that I wish to bring to hon. Members’ attention—the prices being paid at the pump by my constituents in Orkney and Shetland. I checked these figures yesterday.

Lerwick is the largest town in Shetland, and the largest garages are able to provide the cheapest petrol. Pump prices there for unleaded petrol go from 124.5p per litre to 125.9p per litre. On other islands, including Unst, my constituents are paying 130.9p per litre. For reasons that I shall explain in a moment, the prices in Orkney are slightly lower. At most filling stations in Kirkwall, the pump price is about 120.9p, but in Westray, which has a fairly substantial island population in the context of Orkney, my constituents are paying 129.9p per litre.

I want to say a word or two about the structural market reasons why such variations should be the case. We have no supermarkets selling petrol in Orkney and Shetland. We do not have big retailers with the buying muscle of garages in the urban conurbations, which can get cheap fuel. One retailer on the west side of Shetland told my office yesterday that he makes only 6p per litre. He said that he could buy the fuel more cheaply at a petrol station in Aberdeen—at the retail price, including duty and VAT—than he can buy it from the wholesaler or distributor.

I congratulate the hon. Gentleman on securing this important debate. He will know that the price of fuel has been long-running sore. He touched on the price differential. Northern Ireland is the only part of the United Kingdom that has a land border with the eurozone. Filling stations in the border areas are finding it difficult; one can buy fuel a few yards down the road in the Republic of Ireland at 99p per litre, but it costs almost 116p a few hundred yards in the other direction. I trust that the hon. Gentleman will join me and include Northern Ireland in his debate.

Indeed. As a Front-Bencher, I am well acquainted with the situation that the hon. Gentleman outlines. For my constituents, it is particularly galling. His constituents look across the border to a foreign country; we look to other parts of the same country. The Treasury is not prepared to deal with that basic unfairness by treating my constituents in the same way as it would expect other constituents to be treated.

I accept what the hon. Gentleman’s feelings may be about fuel duty. Does he not accept that the oil companies have a responsibility in how they price petrol and diesel for rural communities? He has already indicated that one can buy fuel cheaper in Aberdeen at retail prices than one can buy it wholesale in Orkney.

I understand that there is a need for more responsible behaviour by the oil companies, particularly the wholesalers and distributors. I am not suggesting that the sort of difference that could be made by a duty reduction would be the silver bullet, but it could be part of a package that would make a significant difference. Moreover, it would be a useful way for the Government to send the message that it is time for the oil companies to smarten up their thinking. When one looks around the European Union, one realises that such behaviour is pretty well accepted there.

Let me briefly turn to how the extra costs of diesel and petrol and fuel duty have an increased impact on agriculture. The Minister will be aware that, since October 2007, the duty increases of 2p a litre have been applied across the board—to road fuels, rebated fuels or red diesel, biofuels and other domestic fuels—and that has affected the agricultural sector that relies on red diesel, because 2p as a proportion of the red diesel duty is significantly larger than it is on non-rebated fuels. Therefore, over the past six years, farmers have faced a red diesel price increase of more that 180 per cent., which has been driven not by increased oil prices but by the duty element. Such an increase is disproportionate, and for a community such as mine in Orkney and Shetland, which relies heavily on agriculture as the core of its local economy, the impact is particularly severe. If we add the peripherality of the area and the small size of the community market to the extra burden of fuel duty increases that have been imposed in a very crude way, we can see that the most fragile of economic communities has been put at the most substantial disadvantage.

The Government’s argument for increasing duty on red diesel was to combat oil fraud. I do not know how such a measure will combat oil fraud. I would have thought that raising duty increases the incentive for people to take a chance of putting red diesel in their tractor or private car. None the less, combating fraud seems to be the basis of the Government’s logic, but it is not as robust as we might expect from the Treasury.

I congratulate the hon. Gentleman on securing this important debate. He touched on the issue of fraud, and I can appreciate the extreme difficulties that come from rurality and peripherality. Does he agree that one of the issues in Northern Ireland is that Revenue and Customs has not been diligent enough in dealing with the oil that is illegally brought across from the Irish Republic to be sold in Northern Ireland and that hundreds of millions of pounds are therefore lost to the Treasury?

Indeed. As we scrutinise with ever-increasing rigour where money is coming from and where it is going to, such considerations will become more and more weighty. Indeed, the matter requires substantial attention.

The assistance that is given to island and peripheral communities in other parts of the European Union is an issue that has been picked up recently by my colleague, George Lyon, in the European Parliament. He put a series of questions to the EU Commission and was given an answer on 8 January that states:

“The Commission can, nevertheless, confirm that—on a different basis—in order to partially offset the additional costs of insularity”—

that could be put in better English and, being an islander, I do not like the term “insularity”—

“and thus geographical remoteness and difficulties of supply, France was authorised to apply a reduced rate of taxation to unleaded petrol used as motor fuel and consumed in the Corsican department. Moreover, at the moment of the adoption of Council Directive 2003/96/EC4—and for similar reasons as France—Portugal and Greece were authorised to apply reduced rates of taxation for fuel consumed in the Autonomous Regions of the Azores and Madeira and on some Greek islands. Concerning the details of the schemes, the Commission can inform the Honourable Member that in the case of Corsica, the reduction is 1 cent per litre. In the case of the Greek islands, the reduction can be up to 2.2 cents per litre. In the case of Azores and Madeira, the directive does not specify the amount of the tax reduction, however, according to the information available to the Commission, the degree of tax differentiations from the Portuguese mainland is 1.5 cents per litre (Madeira) and 3.8 cents per litre in the case of the island of Azores.”

I bring that answer to hon. Members’ attention because it is important for us to understand that the problems that are faced by our communities are not unique; they are shared by different communities in the European Union. However, they get very different treatment from their Governments than that which we have experienced.

I have asked Ministers in the past to consider such a derogation, and I make the same request of the Minister today. Will she consider setting up a pilot scheme to assess whether the Government’s concerns are legitimate, real and substantial—I suspect that they are not—or whether they are just an excuse for continuing to do nothing?

My hon. Friend will know that during excessive considerations of the Finance Bill, I proposed—or other colleagues did so and I spoke to—amendments seeking to achieve what he suggests. He will also know that, two years ago, I prepared a worked-up scheme that covered all the details. I sent it to the Treasury and had detailed correspondence with it on the matter. Can he explain why the Treasury, in the face of so much detail and so many clear-cut proposals, is adamantly and resolutely opposed to a scheme that would bring a little fairness to the islands?

My hon. Friend invites me to speculate. I will resist that invitation in the hope that we might get a proper explanation from the Minister when she replies to the debate. However, I shall briefly touch on some of the reasons that Ministers have offered us in the past for refusing the sort of derogation that I would like. I do that on doctor’s advice. My doctor tells me that I must avoid putting myself in a situation where I will suffer high blood pressure, because it is bad for my health. I should explain to hon. Members that nothing gives me worse high blood pressure than hearing Treasury Ministers using specious arguments time and again. In the past, my hon. Friend and others have demonstrated that such arguments were specious. It might seem to be a bit of a wheeze for those who write speeches for Ministers to come up with such arguments, but it demonstrates a quite reprehensible lack of respect for the people who elect me and my hon. Friends and for the problems that they face day in, day out.

The arguments that we have heard in the past are that the extra cost is down to transport. Hon. Members will know how much petrol costs in urban conurbations. They have heard the figures that I have offered today. We are talking about a difference of between 10p and 15p a litre. That is not a transport cost. The Treasury then tells us that, if we had derogation and a variable rate of duty in different parts of the country, people would drive from those urban conurbations to get their cheap petrol. It tells us something about how figures are added up in the Treasury that the people there think that petrol will still be perhaps 8p or 10p a litre more expensive in the communities that we represent, but that people will get in their cars and use petrol to drive to our communities to buy petrol that is still more expensive than they would get at home.

Does the hon. Gentleman accept that the situation is the same in the Isle of Wight, which is a considerably shorter distance from many urban conurbations than the Orkneys and Shetlands?

Indeed. I have heard the hon. Gentleman make that case in the past. That is why I hope that we could have a pilot project in areas such as ours, which are more easily defined. Someone might make this nonsensical argument—I hope that the Minister will not do so—that people will drive from urban conurbations to get cheap petrol. However, surely even the Minister will not stand there and suggest that somebody in Aberdeen will put their car on an overnight ferry to go to Lerwick to get cheaper petrol.

rose—

I have given way to the right hon. Lady once already, so I will not give way again. I would really like to make some progress and conclude my speech. Sorry.

I should like to thank the hon. Gentleman. This is a first-class debate on a very important subject. My constituency in Norfolk covers 1,200 square miles, a very large proportion of which is at sea level or below, and there is no chance that anyone will ever drive out from Norwich to try to get petrol in the fens—an area that, as I am sure he will accept, has not only deprivation but many people for whom a car is a necessity and not a luxury.

I am aware of the situation in the fens, not least that if things continue the way that they are going, the hon. Gentleman may one day join that elite band of island MPs. [Laughter.]

The final objection that we get from the Treasury is that different price trends are not restricted to neatly definable geographical areas.

I hope that the hon. Gentleman can relax and get his blood pressure down a little, while I make a short intervention. He is making a very serious point about the price differential, which has an adverse effect on the community that I represent, where people who face paying higher prices actually go out of the community, 30 or 40 miles down the road, to purchase their petrol. In addition, petrol stations in my area are not just suppliers of petrol; they are also often convenience stores, which close down as a result of people buying fuel elsewhere.

Doubtless in the past many of those petrol stations would have had post offices attached, too. That is how people make a business work in a small island community. The post office on its own, the petrol pump on its own and the shop on its own may not be viable businesses, but bring all three together and there can be something that functions. That is why those businesses are important.

I know that we have a Treasury Minister here today and I fully support what my hon. Friend is looking for, particularly for his community. However, should not the competition authorities be engaged with this issue, because the number of petrol stations in Scotland has gone down from 880 to 510 in the past 10 years? My hon. Friend has talked about Aberdeen, but part of my constituency has a Tesco that sells petrol at a price 5p cheaper than that of the Tesco at the other end of the constituency. Tesco has told me that there is no difference in the cost of providing that petrol; it is simply what Tesco thinks the local market will bear.

I agree absolutely with my right hon. Friend. I live for the day when the Office of Fair Trading might be persuaded to do the job that we set it up to do, which is to examine the market and take meaningful measures that might bring some relief to people such as my constituents. However, the OFT has always resisted the opportunity to do so.

My hon. Friend is quite rightly highlighting the problems in island communities. Exactly the same experience is replicated in my constituency in the highlands. However, does he accept—this point is important in terms of fairness—that these problems are exacerbated by the fact that areas such as the ones that he and I represent have significantly lower incomes than the rest of the country and the effect of the higher price is therefore magnified?

Indeed, and Orkney is one of the lowest-wage economies in Scotland, so a higher proportion of a smaller income is being spent on something that is really an unavoidable item of expenditure.

I have been trying for the past five minutes to make my very last 30-second point: I fear that the Minister will doubtless find it all too easy to say no to me; certainly, her predecessors have never had any difficulty in that regard. I hope that I am not boring her—I hope that we are not keeping her up. Perhaps she might listen to what she has heard about this problem from the right hon. Member for Stirling (Mrs. McGuire) and the hon. Member for Ynys Môn (Albert Owen). If she does not want to listen even to them, she might listen to Des McNulty, who is a Labour MSP, who said in a debate in the Scottish Parliament in April 2009, and I quote him verbatim:

“There is a genuine case for derogation for island communities, and I think that the case is winnable.”—[Scottish Parliament Official Report, 30 April 2009; c. 16948.]

We understand that because of the communities that we represent. Will the Minister and the Treasury please start listening and do something to address our needs?

May I make a plea to Members? Obviously, there will be many more interventions and a number of people have indicated to the Chair that they wish to speak. I should start the winding-up speeches at 10.30 am, to give the Minister sufficient time to reply to what is a very important debate.

I congratulate the hon. Member for Orkney and Shetland (Mr. Carmichael) on securing this very important debate. I know that he has been fighting for relief for rural, peripheral and, particularly in the case of his own constituency, island communities.

Ynys Môn, or the Isle of Anglesey, which I represent, is an island. It is on the periphery, but it is also connected to the mainland by two road bridges and one rail bridge. It is quite unique in that sense, but it still has many of the characteristics that the hon. Gentleman has talked about.

In many ways, I consider the Isle of Anglesey to be the heart and soul of the British isles, if we look at colleagues in the west, in Ireland, and indeed in Northern Ireland. However, it is a peripheral area that is difficult to get to. It suffers from a double whammy: there are the high fuel charges that the hon. Gentleman talked about and, in addition, my constituents do not really have an alternative other than to travel great distances to get cheaper fuel.

Also, the limited number of petrol stations—independent petrol stations and larger retailers—on the island is problematic. Because there is very little choice, the prices are kept artificially high by the market. Furthermore, to pick up the point made by the hon. Member for Ribble Valley (Mr. Evans), there is limited public transport, so the alternative for my constituents is just not there.

I want to make it clear that we are talking about not only Chelsea tractors; we are talking about ordinary family vehicles. We are talking about people who need their vehicles to go to work, to go to the shops, to take their children to participate in activities in the evenings and to go to the clubs that we all support.

There is a strong case to help peripheral areas by looking at the fuel duty, perhaps through a pilot scheme of some nature. It would be difficult to contain such a pilot scheme in the mainland, and I also understand that it would be difficult to contain in areas such as my constituency, where there is a land bridge. However, the issue needs to be looked at, because, as the hon. Member for Orkney and Shetland and his colleagues have said, a number of these peripheral areas have some of the lowest gross value added in the whole of the United Kingdom.

I am very well aware of the particular situation in the hon. Gentleman’s Ynys Môn constituency. My hon. Friend the Member for Orkney and Shetland (Mr. Carmichael) said that he would not want to speculate as to why the Treasury would resist this demand so strenuously. Does the hon. Gentleman think that Treasury officials in France and indeed in Greece are resisting a derogation so strongly, or does he think that they are trying to support their remote communities?

I am no expert on Greece or France, or on how people there conduct their internal lobbying. However, what I will say in honesty to the hon. Gentleman is that, to be fair to the Treasury, I lobbied against the vehicle excise duty that the Treasury was imposing. That crude mechanism would have hit not only the Chelsea tractors, but vehicles and motorists in my constituency. When I lobbied against it, the Treasury did listen; it modified the vehicle excise changes to help people in my constituency.

There is therefore a glimmer of hope there that the Treasury is indeed listening to Members of Parliament. I led a delegation to the Chancellor because I thought that that crude mechanism that the Treasury was bringing in for good environmental reasons—I must say that it was supported by many Opposition Members at the time—was imperfect and that it would hurt my constituents the most. I lobbied, the Treasury listened, and it did not impose that duty.

Older cars are essential for many people in my area because they cannot afford to change them, although the scrappage scheme has helped. However, those cars often use more petrol than smaller vehicles. The bad weather has shown that 4x4s are essential in communities in my area and that of the hon. Member for Orkney and Shetland. Such communities would grind to a halt without them.

We are being penalised for living further west. I have looked at websites that compare prices, and the eye-watering figures that the hon. Gentleman gave are not quite replicated in my area, but there is a huge differential. The further west people live in north Wales, the more they pay for petrol. In my home town of Holyhead, which is in the westernmost area, Tesco is the main retailer and there are few independents. It charges 114p to 116p per litre for diesel, and 112p to 113p per litre for the cheapest unleaded petrol. In Llandudno, which is 60 or 70 miles away, the price is about 110p per litre for petrol and 111p for diesel. In Chester, which is not a great distance away once one is on the A55, the cost is as little as 108p per litre—that is 6p cheaper. Many people commute to buy their petrol in Chester or Cheshire rather than helping the local community, because higher prices have been forced on their local areas.

Hon. Members have talked about the westernmost and the northernmost, so may I speak from the southern point of view? Simon and Sally Perry of VentnorBlog give regular updates on fuel prices in the local area. Local residents are able to save money by following their advice and finding the lowest local price for petrol and diesel. The village of Whitwell has a petrol station, albeit an expensive one, but no post office. The Government are making people go further away and taxing them on the extra cost of going there.

I thank the hon. Gentleman for that point, but the price of petrol is the fault not just of the Government, but of retailers, distributers and oil companies. He is right that businesses are decoupled. It is important to note that a petrol station and convenience store can be a great draw for customers to come to an area, and particularly for passing trade.

There are many retailers in north Wales, but they all charge more the further west they are, and that should be examined. The OFT has held a number of inquiries that have said there are no market failures, but that is blatantly wrong. It has only to check the websites or to go to these areas to see the day-to-day prices that people are forced to pay. I would like the OFT or another body to do another study to look at this live and topical issue that affects people today. Supermarkets say that they charge universal prices across the UK in their stores, but they do not do the same on their petrol forecourts, and that must be examined.

The hon. Member for Orkney and Shetland spoke about the impact on the economy, which it is important to consider. Tourism is a big trade in my area, as it is in many peripheral areas. Many people look at the websites and decide to fill up before they come into the local communities because they will get a better deal. People are voting with their wheels, which has a considerable impact.

The hon. Gentleman rightly mentioned the agricultural community, which is hit with a double whammy: not only does it pay a higher proportion of tax on red diesel because of the escalator, but people from agricultural communities have to travel great distances and so pay more for everyday activities through normal motoring charges.

The people of Ynys Môn whom I represent are concerned about the environment; they just do not have alternatives in many cases. Local government should consider this issue because there is no joined-up thinking. Many local transport schemes do not match. After school, many of the bus services finish so people travelling to sport or leisure centres and clubs in rural areas have no alternative to the private car.

Fuel prices are hurting ordinary families in my area and many other areas. The oil companies and the retailers are hurting ordinary families by adding extra costs. A crude fuel tax on top of that is making the problem worse. That started with the fuel escalator under a previous Government. That was stopped for a while and the fuel differentials moved a little in my area. The hon. Member for East Londonderry (Mr. Campbell) mentioned people crossing the border from Northern Ireland into the Republic. My constituency is only a few miles from the Republic of Ireland, and in the ’80s and ’90s, many people came over from the Republic and purchased petrol as they travelled through north-west Wales. When the escalator hit and the prices went up, the opposite happened. There is now a differential of a few pence, but passing trade still comes off the ferries and goes straight through to Cheshire to fill up with petrol.

I heard what you said, Sir Nicholas, and I will conclude my remarks because other hon. Members want to speak. The Minister is a reasonable person. As I said, the Treasury looked at the vehicle excise duty because of the impact that it was having in many areas, including peripheral and rural areas. I hope that she and her officials understand the strength of feeling in peripheral areas and islands across the UK because this is a real issue. It is hurting communities and ordinary families greatly. The Treasury was right not to put the fuel duty escalator in its Budgets straight away, but it has reverted to it. I hope that she and her officials will consider having pilot schemes in peripheral areas to try to create a level playing field across the UK.

rose—

Order. I make the plea again for speeches to be brief and succinct so that I can fit in all Members who want to speak.

Thank you, Sir Nicholas. I will be brief.

I congratulate my hon. Friend the Member for Orkney and Shetland (Mr. Carmichael) on securing this important debate. It is a subject that hon. Members from the highlands and islands have returned to again and again over the years and to which we will continue to return until we find a Minister who listens to our legitimate concerns, such as those raised by the hon. Member for Ynys Môn (Albert Owen).

I will begin by describing the experiences of people in my constituency. It is not an island constituency, but a large area in the mainland of the highlands. None the less, it is in a similar position to that described by my hon. Friend the Member for Orkney and Shetland. There is effectively a triple whammy that hits people in remote and rural areas: they have to travel longer distances; they face significantly higher fuel prices; and there are often little or no public transport alternatives. As has been said, for most people in such areas a car is a necessity, not a luxury. That could not have been demonstrated more clearly than by last month’s cold spell, during which public transport was badly affected, and if people were able to get around at all, it was only by using their own vehicles.

To those problems, I add the fact that incomes are significantly lower in the highlands and islands. The average income is about 85 per cent. of the Scottish average, which in turn is lower than the UK average. As well as spending a lot of money on petrol or diesel to fuel their cars, people in my constituency, by and large, spend much more money than people in the rest of the country on oil to heat their homes. That is yet another cost burden that benefits oil companies and oil distribution companies. People in my constituency, particularly those in the most rural and remote areas, are spending a greater proportion of their already lower incomes on running their cars and heating their homes. They therefore have a great deal less disposable income to spend on other things.

Of course, many things could be done to relieve that burden. I will talk about the fuel derogation in a moment, but first I suggest that investment in public transport could make a difference. Like many of my colleagues, I am deeply disappointed by the lack of progress that the Edinburgh Scottish National party Government have made on investment in public transport, particularly in the railways. It is deeply disappointing that no SNP Members are here to take part in the debate, when they claim to represent the whole of Scotland. This is an Edinburgh SNP Government, not a highlands and islands Government.

There are actions that can be taken. I was involved for many years in campaigning to persuade the Tesco store in Inverness to reduce its petrol prices to the level at the store down the road in Elgin, and we were finally successful only after we had held a meeting with the chief executive himself. However, the Government have by far the greatest power to address the issue, and the Minister should look at experience in other European countries. The European energy products directive allows a derogation to provide for a reduced rate of fuel duty in specific areas. Greece, France and Portugal have taken advantage of the derogation, and I see no legal or practical barrier preventing the UK Government from doing the same. The only barrier is the lack of political will, which, as my hon. Friend the Member for Orkney and Shetland said, stems from a complete lack of understanding of the way in which people are suffering.

My hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) has proposed an entirely workable scheme, and I proposed a similar scheme a couple of years ago, although it was not entirely the same. A scheme could therefore operate in a variety of ways, and all the Treasury’s objections have been answered by our proposals and by the way in which schemes have operated in the other European countries I mentioned.

Like my hon. Friends, I would support a pilot in island communities, which would demonstrate that a scheme was workable. The pilot could easily be extended to remote and rural parts of the mainland—anything to get the door ajar. I can see no practical objection from the Government’s point of view to a pilot in island areas. I spent the first few years of my life on the island of Colonsay, in the constituency of my hon. Friend the Member for Argyll and Bute (Mr. Reid), and such a community, or a similar community on Orkney and Shetland, would be an ideal place to demonstrate a scheme’s workability and social and economic benefits.

In the context of the recession, from which we are potentially only just starting to emerge, our proposals would also provide an economic stimulus to the islands and the remote and rural areas in which they were implemented, and I hope that the Treasury will consider them for that reason as well. Overall, the cost to the Treasury would be small, but the benefit to the communities affected would be enormous, as those of us who represent them know.

This issue is a critical test of the Government’s commitment to fairness. Applying a reduced rate of fuel duty, which is allowed by European law, to remote and rural parts of the country would demonstrate that the Government understand the importance of treating all parts of the United Kingdom fairly. This is, or is supposed to be, a British Government, and they should understand and be sensitive to the needs, demands and economic interests of all parts of the country, including the highlands and islands. I therefore hope—almost against hope, on the basis of previous experience—that the Minister will show more sensitivity and understanding and more of a willingness to grapple with these problems than any of her predecessors.

I thank the hon. Gentleman for his brevity.

Like others, I congratulate the hon. Member for Orkney and Shetland (Mr. Carmichael).

I represent a large rural constituency, although it is on the mainland. Even though my constituency is only the size of Luxembourg, unlike constituencies in other parts of Scotland, which are the size of Belgium, I have seen the pressure that the price differential has put on rural petrol stations. I do not totally blame the Government for that, and there are major issues for the oil companies to address. We are talking about people not just travelling 40 or 50 miles to fill up their petrol tanks, but filling up their tanks in hub communities throughout rural areas when they go to work or go shopping. That is where we see the serious knock-on effect.

I want to make one or two points to reinforce some of the arguments that have been made. The Office of Fair Trading—what a disappointment! It would not know a market failure in rural and remote communities if one came up and slapped it in the face. There have been two investigations, and I had issues with the OFT a few years ago about how the price differential was working in rural communities. The OFT needs to get out and about to understand exactly what is happening in some rural communities and to see how the oil companies are not helping matters.

I ask the Minister to look at the derogation. I appreciate that there are many practical difficulties with instituting a pilot in mainland communities, but I see no reason why it would not be possible to institute one in self-contained communities that can be reached only after a five-hour ferry journey or, in the case of Shetland, a 13-hour ferry journey. The Treasury would gain great respect in such communities if it looked at ways of assisting their economies. I hope that it will consider the pleas that have been made here and in the Scottish Parliament, including by my Labour colleague, Des McNulty, who was quoted by the hon. Member for Orkney and Shetland. I hope that the Treasury will look at ways of using existing legislation to manage petrol and fuel prices more equitably in remote and rural communities.

As has been said, we are not talking about vast drains on Treasury income or a massive raid on Treasury coffers. These are small island communities of 10,000 people or fewer. We are simply asking for a scheme to be considered in Scotland, Wales and other parts of the United Kingdom. If we cannot get a solution for my rural community, I hope that we will at least see some movement as a result of the debate.

I thank the right hon. Lady for her brevity.

I congratulate my hon. Friend the Member for Orkney and Shetland (Mr. Carmichael) on obtaining the debate. As he said, we have turned to this subject over many years and raised it repeatedly in debates on Finance Bills. It is a pleasure to follow the right hon. Member for Stirling (Mrs. McGuire), and I wholeheartedly agree with what she said about the need to reduce fuel prices in remote rural areas.

People living in remote rural areas suffer a triple whammy. They must, of necessity, travel longer distances, the price of fuel is higher than in urban areas and there is a lack of public transport alternatives. In the remote mainland part of my constituency, the price of fuel is usually several pence higher than in Glasgow, and the same is true on the Isle of Bute, but it is on the Atlantic islands that we see eye-watering differences from the price of fuel in cities such as Glasgow. On the larger islands of Mull and Islay, the price is usually about 15p a litre higher; on the smaller islands of Coll and Colonsay, which my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) mentioned, the price is often about 30p a litre higher. Those prices have to be paid by people going about their daily lives, as well as by local businesses, which means that the cost is passed on and reflected in the price of all commodities to local people.

There is an environmental argument for taxing fuel, but it works only if the tax persuades people to adopt an alternative form of transport, and there is no alternative in remote communities in the highlands and islands. There is no point in the council’s subsidising buses if they run around with only one or two passengers; in those circumstances, the car is a more efficient method of transport.

As well as paying a higher price for fuel, people in remote areas also pay more tax to the Treasury because VAT is a proportion of the price, and the higher the price, the higher the amount paid in VAT. One principle of taxation is that it should be equitable, but it is clearly not equitable that people in remote areas pay more tax on their fuel than people in the cities. It is perverse that people who have no choice but to pay higher fuel prices and who are often on lower incomes pay most in tax. We have raised that point in Finance Bills over the years, but Treasury Ministers have come up with arguments for why our proposals could not be accepted, so in response to those objections we have refined our proposals.

Two years ago, my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) submitted to the Treasury a detailed paper on the matter, which I believe was entirely watertight, and there was absolutely no reason why its proposals could not be implemented. The Chancellor, in response to a parliamentary question from my hon. Friend the Member for Orkney and Shetland, indicated sympathy with our position. Despite the watertight case we put to the Treasury two years ago, which it was unable to rebut, and the Chancellor’s words of sympathy, we appear to have made no progress over the past two years.

I want to endorse what other hon. Members have said this morning and suggest a pilot scheme on one or two islands. There is absolutely no possibility of people taking advantage of the reduced cost of fuel by travelling to an island on which such a scheme operates, as it simply would not be worth paying the ferry fare, and there is no possibility of fraud because an island is clearly separated from the rest of the country. The lower fuel duty would apply at petrol stations on that island and nowhere else, so there seems to be no possibility of fraud at all.

Does the hon. Gentleman accept that the highlands and islands are not the only remote and peripheral areas in the United Kingdom, and that areas such as Northern Ireland face many of the same problems?

The hon. Gentleman is perfectly correct, and I fully endorse what he has said. I propose that the pilot scheme should run on one or two islands, and once it has been proven to work, it could be extended to other parts of the country. I am absolutely convinced that such a pilot scheme would be workable. As we heard earlier in the debate, France, Greece and Portugal have tried such schemes on their islands, and it is perfectly compatible with EU law, so I urge the Treasury to look at how those countries have implemented the schemes, try a pilot scheme on one or two islands and, if it is successful, extend it to other parts of the country.

The SNP Government in Edinburgh have cut ferry fares to the western isles but have neglected the other islands of Scotland. I suggest to the Government here that they could be seen to be helping the islands of Scotland if they introduced a trial scheme on some of them. I suggest that the larger islands of Mull and Islay would be ideal for a pilot scheme. That would allow the Government to say to the people of Scotland that they, too, are helping the islands and that it is not just the SNP Government who are making an effort to help them. It must be said that the SNP Government have been of no help to the islands in my constituency, and are only of help to the islands in a constituency represented by an SNP Member.—[Interruption.] In response to all these sedentary interventions, I note that no SNP Members are present for the debate.

The SNP are partners of Plaid Cymru, and no one from Plaid Cymru is representing rural Welsh interests either.

That is correct. I urge the Government to adopt such a pilot scheme. In the short time left I want to refer to the OFT. The OFT carried out some inquires several years ago, but for some inexplicable reason found no market failure. I urge it to have another look at the matter, because there clearly is market failure. I hope that some action will be taken by both the OFT and the Government and that the Minister, when responding, will indicate a willingness to look at carrying out a pilot scheme on one or two islands, such as Mull and Islay, because it is a serious problem that needs to be addressed.

I can usually claim in debates to represent the constituency that is furthest away, but clearly my hon. Friend the Member for Orkney and Shetland (Mr. Carmichael) has that honour today, and I congratulate him on securing the debate. I will first pick up on the question of opportunity raised by several hon. Members, particularly the right hon. Member for Stirling (Mrs. McGuire). The OFT has conducted several inquiries on the matter in my part of the world, but the problem is that it has concentrated on whether there are anti-competitive practices between garages in one or two local towns and found, quite properly, that there are not.

The problem is that in large metropolitan centres, such as Edinburgh or Glasgow, a forecourt with eight to 12 pumps and a throughput of vehicles could have a cash profit per litre of as little as 1p or 0.5p, so there would be sufficient cash throughput to amortise across the fixed costs. A petrol station with two pumps in a remote village such as Durness, on the top west corner of Sutherland, however, will have one car stop every half hour and so will be forced to have a larger cash margin per litre to be able to survive. The right hon. Member for Stirling is right that there is something fishy going on further up the supply chain, and that is where the Competition Commission should be looking.

What is the problem? The problem is that my constituents regularly face a premium ranging between 9p and 14p over the national average, and I have looked at that several times over the past nine years. The scheme I proposed would have rebated around 3p—it might have been 2 points or 3 points, but of that order. Therefore, the idea that people would drive across a boundary 30 or 40 miles away to pay less for their petrol, which in the early years of my proposal is what the Treasury said would happen, as my hon. Friend the Member for Argyll and Bute (Mr. Reid) said, is ludicrous. In fact, a rebate scheme would counter that by enabling people to fill up nearer home, and reduce the incentive to go off to the supermarket in Inverness to fill up. It would therefore have the opposite effect, with regard to carbon, by reducing the amount of petrol or other fuel used and allowing people to fill up more cheaply.

The absolutely critical point is not just that there is a premium, but that there is no alternative, and there never will be on the north coast of Sutherland. There was a post bus, but it has been taken away. There is now no way one can get from the middle of the north coast to Thurso, which is an hour away, and back on the same day. It is simply not possible. Therefore, if one does not have a car, or some good friends to stay with overnight, one simply cannot go into Thurso to see a doctor or dentist, go to the shops or do all the things that are a requirement of ordinary life, and the key point is that there are no alternatives.

I support the call my hon. Friend the Member for Orkney and Shetland has made for a pilot scheme, because I really believe that that can work. It would be an easy and simple way of showing that the scheme can work, or showing that it will not work, if the Treasury are convinced that it will not, and that will help the argument for other areas. I support the concept of a pilot scheme, but I will continue to argue that it should come across to the mainland in due course.

I will not go into the details of the scheme I proposed, but if any Members have serious trouble sleeping, I can send them a copy of the lengthy document and allow them to study it. I have gone through it in detail in several Finance Bill debates over the years. Three years ago, the Financial Secretary at the time—the right hon. Member for Wentworth (John Healey), I think—infamously responded to the proposal by comparing what I was requesting with giving Londoners a rebate on duty on beer. That simply demonstrated a complete lack of understanding.

By contrast, we made progress with the Minister for Pensions and the Ageing Society, the hon. Member for Wallasey (Angela Eagle), who was in the Treasury at the time and was extremely sympathetic. I met her, and she went through the detail and corresponded with me. I thought that we had nearly persuaded her but then she was promoted elsewhere, so we were back at the bottom again.

The scheme is entirely workable and is permitted under EU law. It will not give cheaper fuel in remote areas but will simply give a little bit of an alleviation to a massive disadvantage. Frankly, my constituents cannot understand why a Government who were elected on a promise of looking after those in need simply ignore this obvious and unfair situation.

Before I call the Liberal Democrat spokesman, odd little noises have been interrupting our proceedings. I am advised that, because of our amplification system, digital telephones that are switched on might be contributing to the noises that are slightly annoying to me. If anyone has a digital phone, could they please switch it off?

Thank you, Sir Nicholas. I share your fondness for the old type of telephone that had a dial, as you knew where you stood on such occasions—[Interruption.] Appropriately, this is the first of the wind-ups in this debate.

I see from the Order Paper that today’s next debate in the Chamber is entitled “Revitalising Parliament”. I congratulate my hon. Friend the Member for Orkney and Shetland (Mr. Carmichael) on going a long way towards achieving exactly that goal with our first debate, which has been about fuel duty on petrol prices in remote and peripheral areas. Understandably, and quite rightly, he chose to address most of his comments to the particular concerns felt by people living in island communities, and those views were echoed by, among others, my hon. Friend the Member for Argyll and Bute (Mr. Reid) and the hon. Member for Isle of Wight (Mr. Turner).

Before I go into the more general disadvantages and difficulties faced by people in rural communities, especially remote rural communities, it is worth looking at the case for duty on fuel. I believe that most, or perhaps all, hon. Members would accept that there is a case for imposing duty on fuel. I can think of two reasonably compelling arguments why the Government would wish to carry on in that vein, and why all political parties share the view that it is appropriate to tax petrol.

The first argument is that the duty raises a considerable amount of revenue, and all of us who are concerned about achieving the proper level of funding for public services, such as the national health service and schools, realise that they have to be paid for and funded effectively. At present, this country is running a big public sector deficit. We are borrowing an extra £500 million every day, so everyone understands that it is extremely difficult for the Government to argue in favour of policies that would substantially reduce revenue.

The second case for having duty on fuel, which is often made and has been touched on already in this debate, is an environmental one. In most circumstances, it is true that the higher the price of a commodity, the less inclined one is to consume it. One can therefore drive down the consumption of environmentally damaging products by artificially increasing their price through taxation.

Having said that—this gets to the nub of the debate—one can do that only if there are alternatives, and that point was made well by my hon. Friend the Member for Argyll and Bute. To put it in economic terms, the price elasticity relating to demand for petrol is different in urban and rural areas. Under an economic model, one could double petrol prices in an urban area—I am not proposing this—and virtually wipe out private car use altogether, but if one were to double petrol prices in an area in which there is no alternative to driving a car, it would probably have a very small impact in environmental terms and on reducing car usage. What that would do, of course, is severely financially disadvantage people in isolated communities who have no choice but to drive.

This gets to the nub of the point that was made by my hon. Friend the Member for Orkney and Shetland when he introduced the debate on behalf of his constituents. In remote rural areas, there is a lack of critical mass to run an efficient and regular public transport system. In a city, where there is a density of population, one can run trains, underground trains and buses, and even turn a profit on their operation, because of the sheer number of people who wish to travel within a limited and confined space. However, if one were trying to provide a service on the islands of Scotland, or even in remote areas of England, Scotland, Wales or Northern Ireland, they would not have that critical mass.

Even if one were persuaded of the case for subsidising such services because of the lack of critical mass of population, there would be environmental as well as financial reasons for not doing so. My hon. Friend pointed out that it would be a bad use of public money, as well as environmentally disadvantageous, to run empty buses on the off-chance that somebody in a remote rural area might at some point wish to catch a bus.

Even in my constituency in rural Somerset, for example, it is possible to run a bus service out of Taunton through or near reasonably large villages such as Norton Fitzwarren, Cotford St. Luke, Milverton and Wiveliscombe. That route joins up several places with populations that are big enough to sustain a fairly frequent public transport service, but in other areas in which the critical mass does not exist, services are far more infrequent because the population is not there to sustain them.

A point that was made by my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander), among others, is that people in rural areas travel larger distances, and, of course, one’s fuel consumption is greater the further one travels. On average, those people earn less money than those living in urban conurbations, so even if they were to buy the same amount of fuel at the same price—typically they buy more fuel at a higher price—that would still consume a larger proportion of their overall income.

The transportation costs of fuel have been discussed in this debate, and I have had a look at those for the south-west of England. I am concerned—this point was touched on by my right hon. Friend the Member for Gordon (Malcolm Bruce)—that one of the cases made by the petrol companies does not seem to stand up to scrutiny. At one point, I asked them why petrol prices seemed to be higher in Taunton, which is on the M5 and a fairly straightforward place to reach using public and private transport, compared with large parts of south-west England, given that the transport costs must be lower compared with other areas.

I was told that the market was actually much more competitive than I fully understood, and that companies regularly looked at prices at the other outlets in Taunton before setting their own price. That struck me as a good description of an informal cartel arrangement. They were not trying to undercut their competitors or, if they were, they were trying to undercut them by a token amount. They were not trying to drive the price to the lowest point that the market would bear to achieve the maximum percentage of customers in the marketplace. There is a strong case for looking at the behaviour of the oil companies when it comes to setting prices.

To conclude, during our proceedings on last year’s Finance Bill, my hon. Friend the Member for Argyll and Bute proposed his rural fuel discount scheme. It was well thought through and built on work done by my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso). The idea was to give flesh to the proposal and assist the Treasury to bring it to fruition.

My hon. Friend the Member for Argyll and Bute did not specify in his proposal precisely what constituted a rural area or what the rebate level would be, but he put in place the legislative possibility of having a framework whereby the Treasury could run a scheme that would address all the points that we have been discussing this morning. Those proposals in turn were built on ones set out by members of my party in respect of the Finance Act 2007 and the Finance Act 2008. I understand that on all those occasions the Conservative party abstained, so I hope that its Front-Bench spokesman will say something rather more decisive and significant today. The Government, however, have dragged their feet on the matter. I hope that the Minister will at least say something encouraging about the possibility of running a pilot scheme in a confined area so that the Government can start to deal with a serious concern for my constituents and for people living in remote rural areas throughout the United Kingdom.

It is an enormous pleasure to serve under your chairmanship once again, Sir Nicholas. I congratulate the hon. Member for Orkney and Shetland (Mr. Carmichael) on securing this debate and on speaking with such passion and eloquence on a matter that is dear to his heart and which he has pursued over a number of years.

Several hon. Members have made it clear that there is significant concern in remote areas that fuel there is much more expensive than in most of the country. During this useful and informative debate, we have heard a number of explanations for why that is so, and concerns have been expressed about a lack of competition, principally in the supply chain. The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) made a point about the lack of customers for remote petrol stations and their need to deal with fixed costs with fewer customers. The lower density of population in remote areas means that petrol stations are some distance apart and might not necessarily experience some of the competitive pressures that would exist in urban areas, although a number of hon. Members said that that was not really the fault of individual petrol stations, as they were just placed in a difficult position.

One argument dismissed by the hon. Member for Taunton (Mr. Browne)—a number of hon. Members have expressed the same view today and in the past—is that higher petrol and fuel prices are essentially caused by the inherently more expensive transport costs in remote areas. Hon. Members argued strongly against that point.

A number of hon. Members have stressed that fuel costs are particularly important in rural areas because public transport is not available—and not practical in many cases—and it is necessary to travel further and longer distances to reach amenities and facilities. Consequently, car travel is much more of a necessity than a luxury in such areas, yet it is more expensive to travel by car. The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander), among others, made the point that such areas are often poor, so higher fuel costs have a disproportionate effect on those living in them.

At the risk of upsetting the blood pressure of the hon. Member for Orkney and Shetland, I shall cite some of the arguments that could be made against his suggestions, although many are weak and have rightly been pilloried during the debate. The argument that people will travel longer distances to fill up their car is particularly absurd in respect of islands, and even in certain mainland areas, so we can safely dismiss it. Any environmental arguments have been rightly dealt with. In remote areas, there is no choice regarding public transport, although higher fuel duty is often used as a means of persuading people to get off the roads and to use public transport. That is not a reasonable case in such circumstances, so the environmental argument is not particularly strong.

I shall touch on an argument regarding price variations throughout the country, although I will tread carefully in this area because if it is expressed in a particular way, it can cause concern. Clearly, fuel is more expensive in remote areas, but one could look at housing costs, which also vary throughout the country, as an example of something that is a necessity and not a luxury. Some areas are much more expensive than others. One counter-argument—

Will the hon. Gentleman give way?

May I just finish this point, because I want to set it out fairly?

An important distinction that could be made between housing costs and fuel costs is that tax makes up a large part of fuel costs—I do not know if the hon. Gentleman was going to make that point in his intervention. However, it is also fair to say that stamp duty land tax tends to exacerbate the cost for someone wanting to buy a house in a more expensive area. For example, in my county of Hertfordshire, the last time I looked, the stamp duty payable in respect of the average house price was £2,300. In some areas, however, the average house price is below the stamp duty threshold. Stamp duty therefore exacerbates the situation. There are limited things that we can do in the tax system to address this inequity, if one sees it in those terms—one could do something to help first-time buyers, for example—but there is more scope for doing something with fuel duty.

The hon. Gentleman makes a legitimate point. I commend him for approaching the argument with seriousness and respect, which I hope will be emulated by the Minister. We accept that there are issues to do with housing, including its availability, so we provide support for the housing sector through councils and housing associations. Surely the same principle should apply to transport where there is no other choice.

rose—

Order. Mr. Gauke, you have three minutes.

I will move quickly on, Sir Nicholas. I take the hon. Gentleman’s point; the issue is whether we can do something about it.

The evidence that was presented on European Union restrictions was interesting.

Regarding whether cuts in prices would be passed on to consumers, the hon. Member for Caithness, Sutherland and Easter Ross has suggested an audit procedure, although that would involve a significant administrative burden. It would be interesting to hear what the Government have to say about that, although I sound a note of caution. More widely, the Government have mentioned the administrative difficulty, but I hope that the Minister will elaborate particularly on moving the duty point from petrol distribution networks and oil companies to individual petrol stations.

In conclusion, hon. Members have raised a legitimate problem and, in principle, we have no objection to using fuel duty as a way of addressing it. There are various points that we need to understand. There needs to be an assessment of how much such a measure would cost and precise understanding of exactly why there is such a disparity. We also need clarity about applicability. We have heard various views about whether a reduction in fuel duty should apply to islands or more widely. There are questions to consider, such as what we mean by remote and peripheral, and hon. Members have done some work on these points.

We need to ensure that the fuel duty reduction is passed on to motorists and we need to understand the full administrative impact of any such proposals. Those are reasonable, practical points that need to be addressed. They might have been addressed in the past, but we hope that the Minister will respond to them and say whether there is a practical way of addressing the concerns that have been so eloquently set out this morning.

As ever, Sir Nicholas, it is a pleasure to serve under your chairmanship. I, too, congratulate the hon. Member for Orkney and Shetland (Mr. Carmichael) on securing this debate on an issue of great importance to him and his constituents. That has been borne out by the passion with which he and other hon. Members have spoken.

The Government recognise that fuel prices have risen in recent months, and we are sensitive to the impact of high fuel prices on people throughout the country, many of whom have few alternatives to driving. For people living in remote areas, including those in Scotland, road transport is particularly important.

My first point is that the principal driver behind the recent increases in fuel prices is not Government policy, but changes in the international oil market. Over the past two years, the price of a barrel of oil has varied between $42 and $132, and the price of fuel by more than 30 pence a litre. I understand the case that hon. Members have made today, and I, too, run the risk of raising the blood pressure of the hon. Member for Orkney and Shetland because I do not believe that it is appropriate or feasible to set a different fuel duty rate for rural areas. I will give three reasons.

First, it is important that the Government remain consistent with the principle of UK-wide taxation. Secondly, there would be many practical difficulties with pursuing a reduced fuel duty rate in reality. Thirdly, it is uncertain whether there would be any benefit at the pump. I will address those three matters, but I will not spend so much time on the first, as the other two are more pertinent to the debate.

It is a general principle of the UK tax system that excise duties are levied at the same rate for specific goods throughout the UK. We know that fuel duty is not popular with motorists, but it is important to support public finances, and thereby to protect stability, employment and growth.

That is not the case in principle. Air passenger duty is not charged on lifeline flights.

I could enter into a debate with the hon. Gentleman on that, but I want to respond to the specific issues that are pertinent to the debate, including the practical difficulties. A reduced duty rate in rural areas would require a derogation under the EU energy products directive, so a definition of a remote area would have to be submitted to the EU Commission, and we could not forecast the outcome of that with certainty. Even without that barrier, it remains unclear how remote rural areas could be defined satisfactorily.

Does my hon. Friend accept that although hon. Members representing mainland rural communities may have accepted some of the difficulties that she has identified, there are self-contained, sea-distant communities within the United Kingdom where we could pilot a derogation on fuel duty?

We would still have to ask the EU Commission for that derogation, and some of the islands represented here today would not be included. I do not want something that is perceived to be unfairness across the country to become an unfairness between remote areas.

There is a wide variety of fuel prices throughout the UK, not just in Scotland. For example, the current UK average petrol price is around 111.8p a litre, and AA figures show that in Scotland as a whole, both petrol and diesel prices were 0.7p a litre below that average in January. Even in the highlands and islands of Scotland, different fuel price trends are not confined to neatly definable geographical areas, and prices fluctuate continually. Even within rural areas, prices are neither straightforward nor static. Figures from the Petrolprices.com website show that in some highland areas, average fuel prices are currently at or just above the UK average, whereas in others, fuel prices are more than 10p a litre higher.

I recognise that in some of the most remote islands, prices may be significantly higher—for example, more than 123p a litre in Stornoway on the Isle of Lewis, Lerwick on Shetland and Brodick on Arran. However, in Portree on Skye, the price is 117p a litre, and in towns such as Invergarry in the highlands the price is 114.4p a litre.

Many hon. Members have spoken about competition, and mentioned the investigation by the Office of Fair Trading. Previous investigations concluded that those variations result from market conditions—for example, the cost of transporting fuel to those areas, and the fact that smaller populations mean fewer filling stations—rather than market failures. There may be a case for the OFT to investigate the matter again, but it is an independent body. With different price trends throughout the highlands, defining the boundaries of a low-duty area and setting the level of a duty reduction would be complicated.

The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) said that one option might be to use the eightfold urban-rural classification produced by the Scottish Government. That identifies areas with a population of fewer than 3,000 and more than a 60-minute drive from a settlement with a population of 10,000 as being “very remote”, but that criterion produces a region with highly irregular borders, and includes not just parts of the highlands and islands, but small pockets of the lowlands in the south-west. Those lowland areas, in Ayrshire, and Dumfries and Galloway do not seem to experience significantly above-average fuel prices. In addition, the eightfold classification would exclude the towns of Lerwick on Shetland, Kirkwall on Orkney and Stornoway on Lewis, which are all considered to be too urban to fall into the “very remote” category.

Even if we could modify the definition to exclude the lowlands and include all the islands, there would be problems due to the wide variety of fuel prices in remote areas. Prices vary even within islands, so any fuel duty discount might end up reducing some prices to below the UK average, while leaving others significantly above. The very remote region also includes some areas that are close to places where fuel prices are currently close to, or even below, UK averages. For example, the borders of the “very remote” region pass within 5 miles of Fort William, where current prices are only 1.1p a litre above the UK average, and within 5 miles of Oban, where current prices are only 2.1p a litre above the average.

A lower duty rate could offer incentives for new filling stations to be set up just over the border of the remote areas, where they might be able to undercut rivals in towns just a few miles away. That would distort the local fuel market, and encourage people to drive out of town to a low-duty filling station to fill up.

The introduction of lower duty rates in some areas would also create difficulties in ensuring compliance, and tackling the risks of fraud that would inevitably arise from having different duty rates on the same product. Fuel duty is currently collected by Her Majesty’s Revenue and Customs at the point of distribution—the oil refineries—with the cost being passed to retailers, and by retailers to consumers. Creating a reduced rate in remote areas might require HMRC to distinguish between fuels at the refinery, but that would risk creating significant potential for fraud, as has been the case with the red diesel used by farmers and in industrial processes.

Will the Minister give way?

I will not give way because I want to finish.

To avoid those problems, it would be necessary to operate a system whereby retailers charged a lower rate, and were then refunded by HMRC on part of the duty. However, that would impose significant additional administrative costs, not only on HMRC, but on fuel sellers in the highlands and islands.

That brings me to my final point about the uncertainty of the impact on consumers of any reduced fuel duty rate. For small forecourts with stretched margins, there is a real risk that the administrative cost associated with a reduced duty rate could outweigh the benefits of the rate. In the light of that, there would be no guarantee that the benefits of any fuel duty reduction would be passed on to consumers, rather than simply being absorbed into fuel sellers’ margins. It has been suggested that one way out of the problem would be for the Government to define the agreed margin that individual fuel retailers could employ each year, but that would clearly constitute a major intervention by the Government into the fuels market and would be contrary to the Government’s general policy of allowing free markets to determine prices. It is also difficult to understand why fuel sellers would choose to enter into such agreements with the Government over their margins.

I recognise the difficulties facing people who live in remote areas, and are dependent on their cars, but the proposed fuel duty reduction would be contrary to the principles of the UK tax system and, more importantly, would be almost impossible to implement in practice. There would be almost no guarantee—

Order. We have run out of time. We now move to our second debate. Will hon. Members who are leaving please do so quietly?

It is a special pleasure to serve under your chairmanship, Sir Nicholas. With your extended knowledge of this place, it is particularly appropriate for this debate to take place under your guidance. I am pleased to have secured the debate and grateful to colleagues who have come to contribute.

This debate could be seen as a curtain-raiser to the debate that will take place on the Wright report after the recess. The clear and helpful advice—perhaps even a stricture—given by the principal Clerk of the Reform of the House of Commons Committee, is that we should not pre-empt that debate. It is interesting to think about the history of this place, and that there is a clear rule against anticipation. That rule has obscure origins, and was there to protect other hon. Members. In the past, the organisation of the agenda of the business of the House was so chaotic that people would often try to pre-empt debates by tabling earlier Bills and motions. That rule against anticipation was reaffirmed by the Procedure Committee in 1907. I place that on the record in case people reading the debate in Hansard question why we were so careful not to mention the detail of the motions that will come before the House once we return from the recess.

The hon. Gentleman has proved himself to be an assiduous and good parliamentarian as well as a great constituency MP. He will know that our constituents are not interested in the arcane rules of this House; they want us to clean this place up and do it immediately. They are keen to learn not only about the input, and our expenses and salaries, but about what work we do for them. People are most concerned about the value for money that they get from their MPs. Will the hon. Gentleman be addressing that today?

I very much hope so and I am grateful for my hon. Friend’s kind comments. I was inspired by yesterday evening’s contribution by the hon. Member for Bethnal Green and Bow (Mr. Galloway) to what was otherwise an ill-tempered, disorganised and unfortunate debate. He offers a radical agenda for this place, and as he rightly said yesterday evening, the public are looking for a substantial change in the way that this place works.

rose—

I will probably not be as radical, although I am happy to give way.

I am grateful to the hon. Gentleman for giving way so early in his speech, and may I associate myself with the remarks that he made about your chairmanship, Sir Nicholas? I have served in Parliament alongside you for a long time, although you have served longer than I, and I think that you will not be in this House at least, after the election. That is a loss and it is a pleasure to appear—perhaps for the last time—under your chairmanship.

I am grateful to the hon. Member for Croydon, Central (Mr. Pelling) for securing this debate and for the ideas that we shared on the Back Benches yesterday evening. I wonder whether, through you, Sir Nicholas, I could ask the hon. Gentleman if, when he says, “this place”, it has to be this place. I have come to the conclusion that this place is a museum and would be better officially turned into one. It would be a popular museum.

The Olympic village in east London has lots of residential accommodation that could accommodate Members. I think that we should take a look at moving east and cleansing these Augean stables by sealing them and making them a monument to what was good and what was bad about this place.

I have used my discretion, and I think rightly.

I am pleased that you have done so, Sir Nicholas, and I would also have been pleased to concede time from my 15 minutes. I am grateful to the hon. Member for Bethnal Green and Bow, and I feel privileged that he has taken the opportunity to attend, as I know that he had other competing engagements this morning. I would like to strongly endorse what he has to say. I love this place; I have shown 2,000 constituents round the Palace of Westminster, and it is not a criticism of the Palace to say that I strongly agree with the hon. Gentleman’s proposal.

If we were based at the ExCeL centre, which is only two and a half miles away from the Olympic village, that would have a transforming effect on our ability to set our own culture, hopefully in a reforming Parliament after the next election. It would provide useful tied accommodation for Members of Parliament which, I presume, would be a little cheaper, and would underwrite what might be an unused facility once the Olympics are over. It would be marvellous if we could go there for the start of the autumn Session of 2012. It would also stimulate the local economy.

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Before I give way to my leader, I would like to say that when I sat on the London Assembly, we had the luxury of being able to set our own culture and procedures. Moving would also have that effect.

I thank my hon. Friend for giving way. It is a real privilege to sit in a Chamber with three hon. Gentlemen who I can refer to as my hon. Friends, even if I have taken a great deal of licence and talked about other people from other parties as my hon. Friends, because I genuinely believe that they are. I want to suggest something that is a little more practicable. I would hate to move out of this place, as although it is a museum, it is great to show people around. It is a museum, but it has a function.

I would like to make a concrete suggestion to my hon. Friend the Member for Croydon, Central (Mr. Pelling). Surely allowing more free votes in this place would curtail the power of the Whips, make hon. Members think about what they were voting on, and allow a Government of either party or colour to say that they were listening to the views of the people as expressed by their representatives.

I am grateful for my leader’s intervention. It is a sign that independent MPs think for themselves without necessarily agreeing on a particular policy beforehand. In a Parliament full of independent MPs, the advantage would be that a debate about such issues would be held in public—this is only one small issue. My view on moving away from this place is that we could still come here for the Queen’s Speech and important national ceremonies.

One of the constraints of this place is that our staff are in small, tiny rooms. Some rooms are larger than others, however, and in some ways the difference between tenancies could be seen as a reflection of the differences in British society. I sit in a fairly pokey little room in Star Chamber Court, but at least it has proximity to the Chamber. Our staffing would be much more efficient if we had modern, open-planned offices where resources were shared in such a way that there were a large number of people who were experts in matters such as migration or benefits. There would be huge economies of scale, and no doubt we would save significant amounts of money from the expensive running of Parliament.

Parliament needs radical change. People are, quite rightly, disillusioned with the way that Parliament is run. There is concern about expenses, and it is a scandal that some Members of Parliament have become millionaires off the back of publicly-funded speculation in the central London property market.

Much of what we have to say has its traditions in the Chartist movement or in the peasants’ revolt, which in many ways was a reaction against too heavy a hand from Government. We still see that, in that well meaning Government often intervene in such a way as to place real restrictions on civil liberties, and when the Executive come into this place and arrest Members of Parliament such as the hon. Member for Ashford (Damian Green).

I think that radical and important proposals should be made when this place is in crisis and when young people are going to the polls at the rate of only 40 per cent. There is a great danger that that will continue. I found yesterday’s debate about change to the electoral system most depressing; in fact, I found it so depressing that I walked out after three hours. The Government approach of being in favour of what they euphemistically call or what the Secretary of State for Justice called majoritarian structures is unfortunate, because of the situation to which it leads. At the last election, the Government secured 36 per cent. of the vote—4 per cent. more than the Conservatives—and had a very significant majority. There is no way that that electoral system can be said to speak for people. I believe in the first-past-the-post system and the value of constituency Members, but that can be combined with a list system. By abuse of the royal prerogative and by what Lord Hailsham would have called the elective dictatorship, we have ended up in a situation in which Government essentially take this place for granted. That is built on the first-past-the-post system.

I support the point sensibly made by the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) that it would be a natural evolution of this place—our processes have evolved over the centuries, so perhaps in some ways we can soothe those who think that this should be about not revolution but evolution—for it to change to one in which the Executive sit outside the Parliament. It would be far more effective if hon. Members themselves had the ability to legislate in the way in which Members of the US Congress do. We see what Members of Congress do in terms of boasting to their constituents about legislation that they have taken through. It is appalling that in the 1990s, private Members’ motions were dropped. It is no wonder that people think that Members of Parliament do not have much influence. Indeed, this place has been leached of power and influence.

In the TV programme “The Thick of It”, which is funny but unfortunately dreadfully true, Nicola Murray said about her ability to change things, “I am only a Cabinet Minister.” Nothing could have been truer. I am talking about the way in which power is so heavily concentrated not only away from this Parliament, but away from the Cabinet to what has been described as a presidential system. Harold Wilson was described in that way. We should recognise that that is the change that has taken place.

I can give an example. Yesterday, I was expressing concern about the small number of GPs who are available overnight to help the 370,000 people of Croydon.

Three.

There were three GPs; I am grateful for the prompt from my hon. Friend. The Minister’s response was, “I’m sorry. This is not my responsibility; it is a matter for the primary care trust.” I went to see a Pensions Minister about an appalling abuse of Allders pensioners and the response was like something from a new version of “Yes Minister”: “Of course I’m terribly concerned about this issue and I would be very happy to write a letter to the regulator, but you appreciate it would not be appropriate for me to be involved in this matter.” That is a tremendous leaching of power away from this place. Ministers are themselves elected and if they are going to stay in Parliament, they should have the confidence and the strength to involve themselves.

I am mindful that I am coming towards the end of my time. I shall make some final remarks and proposals. This place should be closer to the electorate. We should follow the Chartist idea of yearly elections—I am not saying that we should all serve just a one-year term; we should serve five-year terms—so that we are much closer to the electorate. One way of engaging, which could not be regarded as a gimmick because it would have a positive effect on the attendance of Members up until Thursday evening and would create a climax to the parliamentary week, would be to have Prime Minister’s Question Time at a time when people are more likely than not to be at home. It should not be at 12 pm. It should not take place on the basis of news management. It should take place at 9 pm on a Thursday, in the run-up to the political programmes on a Thursday evening on the BBC and, of course, after “Coronation Street”.

It is valuable to be able to ask positive and sometimes conciliatory questions of Ministers. A charming Labour Member of Parliament came up to me in the Tea Room and said, “You’re that chap who asked those tricky questions.” I do not ask those questions that are normally along the lines of, “Bearing in mind that you are complete rubbish, what do you think about this?” to which the response from the Minister is always, “Well, you were rubbish 10 years ago.” That gets us nowhere in terms of constructive debate. I tend to ask a more modulated question: “I concede that the Government are doing well on this, but they could improve on that.” I said to that Labour Member, “I’m just polite.” When we are polite, we get a reasonable response. This is about getting away from the partisan nature of this place. The charming Labour Member said to me, “No, you’re not polite; you’re just the smiling assassin.” I rang my office and said, “Should I put that on my CV?” and was told, “No way are you putting that on your CV. It’s not a credit to you.”

Nevertheless, we should get away from the partisanship of this place, and many independent Members within parties, including you, Sir Nicholas, have managed to do that over time. It is possible to do it within parties and it is important that we have that. We must recognise that it is good news sometimes when Members of Parliament dissent slightly from their parties. Such is the discipline these days, imposed by Tony Blair and by the right hon. Member for Witney (Mr. Cameron), that any slight variation from the theme is regarded as a terrible betrayal and is portrayed by the media as a maverick approach. It would do credit to this place if Members of Parliament had the confidence to stand up to the Whips, to deal with the wily ways of the Whips and to recognise that they should progress their careers not by being quiet or by the Gilbert and Sullivan approach of not thinking for themselves at all, but by saying that they speak out for their constituents and they serve their constituents, not a political master.

All hon. Members present are, in one way or another, independent or Respect Members, and we believe that independents can debate an issue without partisanship. It is possible to represent our constituents well in that way. In many ways, Parliament is a place of talking, and our constituents would expect us to talk for them and to have a radical agenda to transform this place so that we can regain the confidence of the British people. Otherwise, we will return to the approach of popular opposition to this place, with reference back to Chartism and peasants’ revolts. Parliament has always followed the best approach of recognising when there is upset and concern in the country and changing its procedures in an evolutionary, not a revolutionary way, so that we meet those concerns.

It is a pleasure to serve under your chairmanship, Sir Nicholas. As other hon. Members have said, you are a strong advocate for change in Parliament and I know that you have spoken on this subject on many occasions over the years. I congratulate the hon. Member for Croydon, Central (Mr. Pelling) on securing the debate, which was retitled “Revitalising Parliament”, and the other independent Members who have spoken in this short debate. It is an interesting group of Members to respond to.

An important reform that I should perhaps touch on at the start is the present Government’s suggestion of using Westminster Hall as a parallel Chamber for debate. The Select Committee on Modernisation of the House of Commons recommended establishing the use of this room as a second debating Chamber. That change was not supported initially throughout the House—I think that you, Sir Nicholas, did not support it at the start—but hon. Members have since admitted that they were wrong and that they see the use of Westminster Hall as an important and useful change. We should continue to consider the type of issues that have been discussed today and keep making progress

Let me turn to the points made by the hon. Members for Croydon, Central, for Castle Point (Bob Spink), for Bethnal Green and Bow (Mr. Galloway) and for Wyre Forest (Dr. Taylor). Constituents increasingly want to know what work their MPs are doing for them. The coverage of this place does not help with that, because just showing the Chamber all the time in the broadcast and media coverage does not help to show all the other work that MPs do. I am not lucky enough to be able to bring 2,000 constituents down to Parliament, because it is much too far for my constituents to travel from the north-west. Hon. Members whose constituencies are closer are lucky if they can bring thousands of constituents here.

There have, however, been a number of moves to take Parliament out of this place. The London Regional Select Committee, of which the hon. Member for Croydon, Central is a member, meets in various parts of London. For example, it met in Stratford, east London, on Monday, so things are happening on that front.

The hon. Member for Wyre Forest talked about allowing more free votes.

The Regional Select Committees are an excellent initiative by the Government, and it is a shame that not all parties participate. They are a good model for Parliament, looking as they do, in a cross-cutting way, at different Departments.

That is useful feedback. On the point about more free votes and curtailing the power of the Whips, it is difficult for me, as someone who was until recently a Whip, to hear what is often said about the Whips. There is a difficulty in striking the balance between the Government getting their business and their legislative programme through this place, and the need for Members to take part.

When identity cards were debated, an hon. Member—indeed one of the most independently-minded Government Members—said that if there had been a free vote, the measure would not pass. Looking at that from the other side, the Member was saying that he would vote for something in which he did not believe, and that he knew was wrong, because it was a whipped vote on an issue of great magnitude. Is that not one of the things that have brought this Parliament into disrepute?

As I have said, there is a difficult balance. I shall move on quickly, because a number of other issues were raised, but because there is such a difficult balance, we will end up debating the matter much more in the coming weeks.

The issues of staffing, offices, the way in which Members share resources and the need for open-plan offices were raised by the hon. Member for Croydon, Central. The central employment of staff has been looked at this year and, interestingly, Members have jealously guarded their right to employ their own staff and resisted any attempts at change or moves towards pooling. As the Independent Parliamentary Standards Authority takes on board many more issues and the independent regulation of this place, it should start to consider that matter. Certainly there are substantial costs. I have the substantial cost of running a constituency office away from here, and we must look at all aspects of that, including the possibility of sharing.

On yesterday’s debate about the voting system, it is important that Members on both sides of the House know that restoring trust and confidence is vital. It is important that a Member has the confidence of a majority of the constituents who vote. Last night we voted to have a referendum that would ask the electorate whether they wanted to change the voting system to the alternative vote. Admittedly, different views have been expressed this morning, as was the case in the Chamber yesterday, but we cannot have people being elected on 25 per cent. of the vote of their constituents, because that will not inspire confidence.

On the Executive sitting outside Parliament, the Secretary of State for Transport has suggested that meetings be moved to Salford which, as a Salford Member, I would welcome. The Cabinet has met around the country, most recently in Exeter, and it makes contact with local people, holds local meetings and gets a feel for the place, as well as having the Cabinet meeting.

I obviously did not express myself clearly enough. My point was about Ministers not being Members of the House—a bit like with Congress in the States and the French Assembly. Being on the road is worthwhile, but that was not my point. In many ways it would be better if the Executive sat outside Parliament.

The hon. Gentleman did express himself well; I am just saying that we have made a start.

There is no time to develop the idea of yearly elections, but as the hon. Gentleman and I were elected on the same day, I ask him whether we have enough expertise after a year here? Some Members have been in the House for quite a while, but after coming up to five years, I am only just starting to understand the process and procedures of this place.

I said that we would serve five-year terms, but that only a fifth of Members would retire every year.

That would still lead to a lot of churn, but it is an interesting notion. The idea of whether we have Prime Minister’s questions on Thursdays is also interesting, but I understand that setting the timetable for that session is a matter for the Prime Minister. The suggested time would be different, but the session would go back to where it used to be—it used to be held on Tuesdays and Thursdays.

The important theme of non-partisanship—not being partisan in every debate and on every issue—has emerged. Barack Obama talked about that this week. He has suffered the scars of trying to get his health care legislation through the House of Representatives and the Senate. The issue was also in raised in the Liaison Committee the other day. It behoves us all not to be smiling assassins but to be polite, and non-partisan when we can—the hon. Member for Croydon, Central makes a good job of that.

Moving quickly on, I want to touch on some successful changes. In 2007, there was a Modernisation Committee report on revitalising the Chamber. Now that we are so impatient for change, it is difficult to see that some things that have happened since then have been successful and are gathering pace. Topical debates and topical questions were introduced then, and the latter are proving to be very successful. Other matters that the Committee looked at to improve topicality, which was a big issue at the time, were urgent questions and debates. Mr. Speaker clearly now allows many more urgent questions and, with oral statements, there are now many more occasions on which hon. Members can question Ministers on urgent issues. We have had many highly topical sessions, on Haiti, Yemen, and salt reserves following the severe weather—that matter has come back to us this week—and we have heard oral statements this week about devolution in Northern Ireland, and, as the hon. Member for Croydon, Central mentioned, out-of-hours GP services. We are starting to get a better balance.

There have also been changes to how the Government are scrutinised. People might think that that needs to go further, but the Prime Minister now appears before the Liaison Committee, as he did most recently on 2 February. Interestingly, the Prime Minister said at that meeting that we need changes to make

“power more accountable to people, make people have a more direct relationship with their representatives and, of course, make the Executive give up some power it should not have to the House of Commons and to the elected authorities.”

That is a real statement of intent about where we should be going.

The hon. Lady is quite right to detail the good progress that has been made, but does she not concede that it is disappointing that the Government are not willing to release more time for Members to initiate their own legislative ideas? Would it also help the scrutiny process if we had a budget office that looked at Government performance, particularly their fiscal performance, at this difficult time? That is obviously another idea stolen from Congress, but it would boost the status of this place.

Those are all interesting ideas, and when we have the expected debate on 22 February, some of those ideas might come forward. We have more scrutiny of economic matters and there are many debates. Recently, we had a debate on the pre-Budget report for the first time. Of course, we always have a debate on the Budget itself.

I shall touch again quickly on the London Regional Select Committee because, like many other Committees, it does a good job. In fact, it was set up as recently as 15 December, and is now doing some excellent work looking into London’s population and the 2011 census. It has taken oral evidence, and we are all interested in the outcome and the forthcoming report.

We have seen a number of legislative and other changes, but perhaps the most important final matter to touch on is how the House engages with the public. That is changing, but we have much more to do. We have launched a new House of Commons website, and the UK Youth Parliament held an excellent debate in our Chamber on 30 October. Allowing the Chamber to be used by more members of the public, such as the Youth Parliament and perhaps an assembly of older people, is the right way to go, and it is done in the Scottish Parliament.

I look forward to the continuing revitalisation of the House and opportunities to debate the subject. It is very welcome that we have been able to hold today’s debate. We have a further major opportunity for such debate on 22 February. I shall not anticipate that debate, but one of the motions touches on petitions. The hon. Member for Croydon, Central currently has 29 petitions on his website, and I am sure that he will be interested in contributing to how we can make petitions and our engagement with the public much more important and effective—

Order. I am afraid that we have run out of time. It has been a most interesting debate; in fact, I think that it has been a unique occasion.

As ever, Sir Nicholas, I welcome you to the Chair.

It is interesting to note that we are discussing the governance and regulation of football on the very day when three clubs are appearing before the courts of our land in winding-up hearings. Portsmouth is a premier league club that has received lots of publicity. Cardiff City and Southend United are lower down in the football family, but they are nevertheless central to the interests of their supporters.

I want to establish today that football is the supporters’ game. It was built by the fans over the years, and it is the fans who have made all our clubs—from the international household names down to the smallest and seemingly least newsworthy. All are of tremendous importance to the communities and the people they serve. However, when we look at this great game of ours—a national and a global game; the beautiful game, as Pelé once described it—we have to set it in the context of the almost reckless level of management that we have seen in modern times.

I shall speak a little about two of England’s finest clubs, which between them can claim credit for the constant debate that I have with my hon. Friend the Member for Halton (Derek Twigg) about whether Liverpool or Manchester United are the most successful club in modern times. That does not matter today in a sense, because we can join with the supporters of both clubs. They would agree on almost nothing, but they would certainly agree that the crisis brought about by modern ownership risks the very existence of our football clubs, and that could be a tragedy.

Last Saturday was the anniversary of the Munich air crash. I am old enough to remember with awe and fondness those players who gave their lives for Manchester United. Their sacrifice lives on in the hearts of those who, tribally, are Manchester United supporters. I say “tribally” advisedly, because it matters so much to them. They have pride in the history of Manchester United, just as Liverpool supporters have pride in Liverpool, and the Portsmouth supporter has pride in Portsmouth. It is the same throughout our great footballing family. When Portsmouth played Manchester United last Saturday, the supporters of both clubs displayed the same green and yellow scarves. They had a common identity; they would have not agreed about the game that took place on that day, but they would have agreed that the reckless way in which those clubs have been managed is unacceptable.

The clubs might say that they treat their supporters as customers—to an extent that is true. However, ordinary supporters sometimes feel that, instead of being treated as customers or fans, they are simply mugs who are there to be milked with ever-increasing ticket prices and by the clubs finding even more ways to raise money. The reality is that, throughout the length and breadth of the football family, it is now seriously argued that the club model of football is a failed business model.

I am concerned to hear what the hon. Gentleman says about Southend United. May I advise him that I challenged the Government on the matter on 10 December 2007? In response, the Secretary of State for Culture, Media and Sport said:

“I know that the hon. Gentleman has asked about that before”—

a royal commission on football—

“but I do not think that the solution to the issues arising in English football is for politicians to step in”.—[Official Report, 10 December 2007; Vol. 469, c. 14.]

What has happened during the past three years to prompt the hon. Gentleman to think that the Government should now become involved?

Who said that it was not for politicians to step in? I do not think it was me. What I would say to my right hon. Friend the Secretary of State, who is a very good friend and a man of great credibility, is that the world has changed. The world that said two years ago that we should not regulate the banks is now regulating the banks. The world that said that we should not regulate manufacturing industry is now seeing the Kraft takeover of Cadbury. The world might be seeing the equation in a new light.

I congratulate the hon. Gentleman on securing this important debate. I am sure that there is nothing peculiar in politicians always wanting to support business, but these businesses employ many people. They employ not only the stars on the most significant sums a week, but ordinary working people. They, too, are important, which is why politicians should take an interest.

The hon. Gentleman makes an important point. That is absolutely the case. A football club represents something of enormous importance to its fans, but it is important also to the wider community in cities such as Manchester or Liverpool.

It is probably not well known that Manchester has the highest number of day visitors anywhere in the nation outside London, and one driver for that is certainly the Manchester United and Manchester City football clubs. People come from all over the world to take part in acts of reverence at Old Trafford or—I say with a certain degree of irony—at the City of Manchester stadium. Both are important for our city. Liverpool and Everton are both important for the city of Liverpool, and one could go around the whole footballing family and say the same thing. My hon. Friend the Member for City of Chester (Christine Russell) tells me that Chester City, which was once a Football League club in its own right, is in danger of being thrown out of the Blue Square league. That is a tragedy. It is unable to field a team because it has not paid the players’ wages for some weeks, and that is not untypical.

The hon. Gentleman is making some excellent points. My constituents largely support Southend United and they are watching the tragedy unfold before their eyes. They know that the taxman wants only a small proportion of the money that the club has received, and they wonder what has happened to the greater sum. They are looking for ways to control the problem and remove this self-inflicted financial crisis. Does the hon. Gentleman believe that limiting the amount that clubs can pay in salaries to a proportion of the club’s football-related income should be considered by the Football Association?

It is certainly a matter for consideration, but if the hon. Gentleman will bear with me, I shall come in a moment to some of the things that we ought to consider. Without Government intervention, we will not see the kind of action that could help Southend and the rest of the football family.

York City football club was almost brought to its knees by the poor business decisions that were made by its owners when it had a traditional private company structure. However, a supporters’ trust that received assistance from the Department for Culture, Media and Sport helped to rescue the club. Does my hon. Friend see a good case for supporters having seats on the boards of such companies so that people with the best interests of the club at heart are following the financial transactions being made by the board?

My hon. Friend probably remembers York City beating Manchester United—it is going back a week or two.

I certainly do.

My hon. Friend, as a Liverpool supporter, perhaps remembers that better than I do.

The York model, like the model at Exeter City, with supporters taking over the clubs, has worked. I shall come later to the role of the supporter but the fans are central to the future of football. They built the clubs, and they are the future of the clubs, so a proper role for the fan is fundamental.

The fact that we have already had a geographical tour of the nation is interesting, because this issue will be dismissed by some who will say, “Why are parliamentarians talking about football?” Does football matter when we could be debating the global financial crisis or the success of the national health service and all the things that you, Sir Nicholas, believe in as passionately as I do? Actually, football does matter. It matters to hon. Members on both sides of the House and to the people whom we represent.

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It also matters to the people of Portsmouth.

How does the hon. Gentleman envisage us changing the way in which football clubs are viewed? They are seen in regulatory terms as a financial institution, rather than as a cultural and sporting asset to any city or town in which they are located, which is how most of us in the Chamber see them. That is the mentality that we must shift, and Government have a role in ensuring that that shift comes into play.

I wonder whether the hon. Gentleman will allow me to make a bit of progress, but I will come on to those issues because they are central to what we are discussing.

We are now dealing with a failed business model. It is one that has seen many of our clubs—from the large to the smaller—soaked in debts to such a level that they are put at risk. Let me refer to Liverpool football club, which was taken over some years ago by its present owners. The owners made quite extravagant promises about building a new stadium, but they have in fact spent the past three years trying to repay the interest payments on the debt that was accrued.

I am sure that my hon. Friend is aware of the absolutely massive opposition to the current Gillett and Hicks regime at Liverpool. Given the amount of money that is involved in the top football clubs, the situation becomes dire if anything goes wrong. Promising to do something and not delivering on it is one thing but when big amounts of money are involved in football, the impact can be massive.

However, smaller clubs such as Runcorn, which will shortly move to a new ground, are just as essential to the game. Although we should concentrate on some of the concerns around the big clubs, we need to consider seriously the whole issue of football and its importance to this country.

My hon. Friend is absolutely right, and that is central to what I want to get across. It is about the whole of football. Yes, it is about the big clubs such as Manchester United and Liverpool, and my hon. Friend is right to say that the sheer volume of debt that has been dragged into those clubs puts their very basis at risk. However, the same applies to the minnows—I do not use that word dismissively—in football, which are absolutely vital to the long-term future of our national game.

In the context of Manchester United, may I just say that their support base is aggrieved? Last Saturday, tens of thousands of the 75,000 supporters were waving green and yellow flags—as my right hon. Friend the Member for Sheffield, Central (Mr. Caborn) is demonstrating—to show their unhappiness, anxiety and concern about their club, which was once free of debt. The takeover by the Glazer family in May 2005 cost £810 million. Of that, some £540 million was in loans. In the period since the takeover, £340 million has left the club to service the debt that was brought in to finance that highly leveraged deal. That is a preposterous amount of money to be leaving a club such as Manchester United, even though the club, along with Real Madrid, lays claim to being the biggest or the second biggest sporting venture on the globe. That money has been put in week after week by supporters and customers.

Last year, Manchester United reported a profit of £32 million. Only the sale of Ronaldo for £80 million—he was clearly an asset, but I was not necessarily sorry to see him go, given the saga that took place—turned a loss of £48 million into a profit of £32 million, and arguably that was in the most financially successful playing period in English football in recent times. I do not say this with any happiness, because it is clearly a very unhappy situation, but the situation has become even more perverse, with the club floating a bond of £500 million to retire some of the debts. We are told that as a result of that, and of the commitments that have been made, the Glazer family can take £172 million out of Manchester United next year, which is a phenomenal amount of money for a club with a sales turnover of £280 million. Such figures do not add up in the long run. It might be that the Glazers have a cunning plan, but nevertheless I must say to my hon. Friend the Minister that we now need transparency at club level to ensure that the supporter knows what is going on.

If there has been a failure at club level, there has also been a failure at league level. We see so many clubs—the ones that we have already talked about up and down the country—in difficulty, and that is felt at a national level. A sad reality is that it makes economic sense for clubs to scour the world looking for nearly-ready talent to come into our game, rather than putting the money into the development of the next generation. That is why the smaller clubs matter in football. Clubs such as Chester City and Stockport County were the feeders for the bigger clubs, and then the bigger clubs were feeders to the even bigger clubs.

I entirely support my hon. Friend in his efforts to get a new framework that will give greater protection to football supporters.

Order. Will the hon. Lady address the Chair? I am getting on, and my hearing is not quite as good as it used to be.

I apologise, Sir Nicholas. Before Christmas, I wrote to the Football League after a meeting with the administrators of Stockport County. Basically, I was seeking assurances about the release of the club’s share of media funding. When I read the response from the Football League, it was very clear to me that there is very little flexibility in the rules and regulations that govern the operation of the Football League. Does my hon. Friend agree that it is essential for clubs such as Stockport that we have a review of those regulations and rules to ensure that the Football League operates in the wider interest of the public and of football supporters?

I agree with my hon. Friend. Let me turn to the regulatory framework, which simply does not work. Whether we talk about the Football League or the premier league that have commercial interests or the FA that supposedly takes the high-order view of the global interests of the game, I regret seeing clubs operating by standards that do not work. When the FA wrote to me in preparation for this debate, it said that it has made great progress in recent years, working alongside its professional game partners to ensure collectively that the football authorities provide the right balance of regulation and incentive to ensure the sustainability of football clubs. If that is the case, where have the FA been in recent times? An FA that is so complacent is an FA that is not fit for purpose, which is why we need external regulation.

I am grateful to my fellow United supporter. I have been following his arguments very carefully and find that I agree with them. United’s competitors are not York City or Southend or even really Portsmouth. United’s main competitors are Real Madrid, Barcelona and Bayern Munich. We need a level playing field for international competition, and that is the responsibility of FIFA and UEFA, and they should introduce regulations to ensure transparency and to limit the amount of debt, and that would stop leveraged buy-outs, as happened to Manchester United.

My hon. Friend anticipates part of what I am going to say. He is absolutely right: if we do not have an international dimension to all this regulation, we fail our national game, because there is no doubt that at every level—not just the top level—the interrelationship of clubs across Europe and around the world matters. Even in the lower leagues in England, we see players being drawn in from south America or Africa. Our game is global at almost every level and that is why we need to internationalise the regulation.

At no point would I argue that there is no room for debt in football. Debt is probably a necessity when clubs—whether Runcorn or Liverpool—are looking to develop new stadiums. It is quite possible that the introduction of some debt is legitimate. I am also not arguing against foreign ownership and least of all against foreign players coming into the English game. There are good examples of foreign owners. Randy Lerner at Aston Villa is an American and he has shown a real commitment to the game of football, to Aston Villa and to all that the club means to the people of Birmingham and beyond.

However, we must now have something that begins to bear down on the excesses that have taken place in football. My right hon. and hon. Friends in government—our Ministers—have a responsibility to look seriously at the Government’s role. We can no longer accept a hands-off approach from central Government. Football is our national sport and an international issue, and if we are taking this argument into Europe and around the world, we need the Government to be behind it, as they are, for example, rightly behind the campaign to bring the World cup to England in the years to come.

We need to look at establishing some principles. We need to say that the development of the national game is vital, so that any strategy for football must look at the game as a totality and not just at the individual clubs. We must look at the need to develop home-grown players and at how we bring those players through the system. We also must look at the role of the supporter. My hon. Friend the Member for City of York (Hugh Bayley) raised the issue of the supporter, and we have to put the football fan at the centre of the football family.

There is a paradox: 10 years ago, the football taskforce produced a very sensible report. Its majority report made very sensible recommendations; yet a decade on, we are still waiting for their implementation. In fact, the all-party group on football, which includes a number of Members who are in Westminster Hall today, including my hon. Friend the Member for City of Chester, made very sensible recommendations a year ago about the future of football. In that sense, there is nothing new in what I am about to say. However, what is frustrating is that we have seen so little action on this issue, although football is now arguably in a state of financial crisis.

We have to put the Football Association back in charge of football. However, it must be an FA that, first, is not cowed by the money in the premier league or the Football League and, secondly, does not express the complacency that I evidenced earlier and begins to say that it will stand up for the stakeholders in modern football.

We have got to give some reality to the question, “Who is a fit and proper person in the game of football?” With Portsmouth, for example, nobody even knew who the owners of the club were, never mind whether they were fit and proper people to be in football. Clearly, the concept of a fit and proper person is way beyond not only the ordinary supporter but the wider stakeholders in football. Within that concept, we have to include the idea that financial stability and credibility is part of that matrix of fitness and properness. That financial stability and credibility must include the capacity to absorb debt, or rather not absorb debt, into the club. There is nothing anti-capitalist in this argument—I say that for the benefit of my hon. Friend the Member for Hayes and Harlington.

You were taking me with you. [Laughter.]

Only because I want to appeal to the global audience.

The NFL—the National Football League in America—regulates American football and has very strict limits on the amount of debt that clubs can take on board. Frankly, if that is good enough for the Americans in this sporting context, we ought to learn at least some of the lessons from the United States and impose them over here.

The hon. Gentleman mentioned American sports. Would it not be better perhaps for the premier league to copy what is done in America, by sharing revenue among clubs to ensure a healthier and more competitive league system?

Many of these ideas obviously ought to be on the table. I can think of arguments for and against such revenue sharing; as a Manchester United supporter, my instinct is to say no to it. However, the reality is that football needs to see itself as a totality. No one club can compete against itself. I am sure that I will not be popular in my own constituency for saying this, but if Liverpool FC was to go out of business, it would actually not be in the interests of Manchester United or Manchester City, because we need quality teams to play against, however frustrating it is on those occasions when the wrong result emerges from those contests with Liverpool FC—they emerge less now than they did previously.

Another issue is almost bizarre, and I ask my hon. Friend the Minister to look at it. Tax relief is available for those who buy football clubs with leveraged bids. It is preposterous that we are allowing rapacious corporate raiders to come in and use tax relief as a way of gearing their acquisition of otherwise financially sound clubs. Quite frankly, we ought to get rid of that tax relief in this industry.

Across the board, let us go back to the football taskforce and its majority report and to the all-party group on football’s recommendations. Let us consider those recommendations and that report quite seriously, and let us begin to say that we will implement them.

I want to conclude with a couple of specific propositions. We have got to look at the models for protecting supporters’ interests that exist elsewhere. In Germany, for example, a club’s supporters have the golden share, which prevents abuse by the German football clubs against the interests of their natural support base. That makes a real difference. Germany has bigger crowds and lower ticket prices than this country does. Ticket prices come up, time after time, among ordinary fans here, because they feel that they are being ripped off.

We also need to look at the Barcelona model or, if people prefer, the John Lewis model of share ownership, which establishes ownership among the ordinary supporters. [Interruption.] I will not venture further down that path. However, it is important that we look at the different models that exist.

Whatever happens, we must ensure that the supporter can be included. I was once a shareholder of Manchester United; that shareholding was liquidated, under company law, when the present owners took over the club. I had a nominal shareholding as a matter of tribal loyalty or tribal support, not because I wished to take over the club or run it.

You had shares? Why did you not vote?

I once had shares. Of course, they have now gone, because they have been liquidated and that has applied across the board. So we must find a way of involving the fans in the governance and running of the clubs and the leagues.

I want to finish on a very personal level. I mentioned the Munich air crash before. I can remember the impact on the city of Manchester when those young men died—at the time, when I was a boy, they were men to me. It had a profound effect on a city such as mine. That memory is still strong and vivid, and it is not a memory just for one generation; it is carried down culturally from one generation to the next. The same would apply to people in the cities of Liverpool, York or Portsmouth, or wherever.

Actually, I am one of those people in Manchester who has always watched both football clubs; I watched Manchester City as well as Manchester United. I can talk about City players from the past such as Johnny Crossan and not just the famous City players such as Lee, Bell, Young and Summerbee.

In the end, football does matter. It is about our tribal identities. That can be bad, in the worst excesses. But football is the beautiful game; it is the game that ennobles people if it is played in the right way, and it is the game that is about giving entertainment but also values if it is played in the right way. Most of us grew up thinking that those role models—the captain of England, when it was Bobby Moore or Billy Wright—were sterling people who had values that carried us through in life.

I look back to that older generation who gave me those values, and I am grateful for that. We should not put that at peril by saying that football is only a commodity to be bought and sold; if we do so, I am afraid that we betray this beautiful game of ours, and we betray the heritage that we ought to hold precious.

I have spoken at length; I hope that other Members might have the chance to speak.

rose—

Order. Clearly, a number hon. Members would like to catch my eye and I would like to fit them all in. I intend to call the Front-Bench spokesmen shortly after 3.30. We therefore have just over half an hour for all Back-Benchers who wish to get in. If anyone can guarantee that they will talk about Macclesfield Town football club, I assure you that they will be called.

I am a lifelong supporter of Bury football club, which beat Macclesfield Town only last night to record a sixth consecutive victory. I was not going to bring up that sore subject.

I congratulate the hon. Member for Manchester, Central (Tony Lloyd) on securing this extremely timely debate. This very day, the futures of Portsmouth, Cardiff City and Southend United are being debated in the courts. I welcome the opportunity to discuss the state of our national game and its governance and regulation. I have a keen interest as a lifelong fan and follower of football, and as a member of the all-party football group, to which the hon. Gentleman referred. I represented the Conservatives on our reports on the game’s governance in 2003 and on the finances in 2008-09.

I have long argued that the sport is too loosely regulated, perhaps in the self-interest of the top premiership clubs that have a global reach. One difficulty with trying to empower the Football Association is that the premier league will not have it.

As the hon. Gentleman rightly said, many people claim that politicians should not interfere in the running of our national game. However, in my view, it is perfectly legitimate for us to debate the issue. Tens of millions of pounds of public money have been spent over the past 25 years on repairing football stadiums since the Taylor report. Football plays an important and significant role in the local economies of numerous towns up and down the country. Furthermore, it is an integral part of British culture and remains a highly successful export.

Live coverage of English football, predominantly of premiership games, goes out literally worldwide, attracting a regular audience of nearly 600 million people. When I was in Dhaka in Bangladesh recently, I turned on the television at 11 o’clock the night before I came back and on ESPN were live Arsenal and Manchester United games.

On a positive note, will the hon. Gentleman join me in congratulating the Football League on its partnership with Help for Heroes? It has fundraised for returning heroes and provided free and discounted football tickets for our armed forces.

I agree with the hon. Gentleman. I saw that work when I watched my local club at Aldershot, where perhaps it is understandable to see Help for Heroes, and Dagenham and Redbridge in recent months. I vouch for that being a tremendous initiative.

Those who do not subscribe to the obsession that we football fans share will perhaps fail to understand the passion and growing concern that many of us have about the game and its future. There are serious questions to be asked about the morality and values underpinning the game, particularly in the premier league. The people’s game has undergone a dramatic transformation over the past 18 years since the formation of the premier league and there is an unprecedented and probably unbridgeable gulf between the top clubs and the run-of-the-mill premiership teams, let alone clubs playing outside the top flight. I fear that is partly due to the lack of competition that has been referred to. It is the direct result of lax governance and an absence of effective regulation. There are no wage, squad size or registration restrictions—a state of affairs unknown in other sports around the world, from Aussie rules football to US baseball, as the hon. Gentleman for Manchester Central said.

Before discussing the potential reforms that could improve the situation, we must take a step back and consider how we got to this point. A key contributor to the radical change in English football is the huge revenue incomes of premier league clubs, in comparison with their Football League counterparts. To indicate the scale of that revenue, premiership clubs receive £2.8 billion, split between 20 teams over a three-year contract. In stark contrast, the Football League’s latest contract is worth £88 million annually, divided between 72 clubs.

Crystal Palace, here in London, are the latest club to enter administration. They join a host of clubs that have experienced that traumatic fate in recent years, including Leeds, Southampton, Rotherham United, AFC Bournemouth and Luton, which is no longer in the league. Premier league clubs have hitherto only flirted with that prospect and we all await the fate of Portsmouth today. The sole difference is that the premiership clubs, by virtue of the vast sums of TV money, tend to have a greater ability to attract some form of bail-out.

One of the few pieces of regulation that premier league clubs adopted from the Football League is the fit and proper persons test. However, that is more honoured in the breach and is in urgent need of attention. Half of premiership clubs are foreign owned, often involving dubious investment made by cagey consortiums. It seems that the need for immediate cash-flow relief renders the test optional rather than compulsory.

Even at home, it is noticeable how much money talks. Last month, David Gold and David Sullivan completed their takeover of West Ham United. Twenty years ago, a similar approach by the same duo was rejected out of hand because they were regarded as below the salt, their money having been made in soft porn publishing. Today, they are rightly perceived as transparent and legitimate investors in football and as preferable to the many foreign and shady owners.

They are fans.

Indeed, they are fans. Even Manchester United and Liverpool are saddled with the burden of foreign leveraged buy-outs.

How can we improve the state of the game? Football agents have been under intense scrutiny in recent years. Sadly, it has become fashionable for the media, clubs and football authorities to heap all the blame on agents. Although they are easy scapegoats and, as we are told frequently, leeches on the great game, the facts are less simple. Clubs, managers and owners have often colluded in the worst practices, furtively using agents to tap up players who are not on the move, with the agents feeding soccer journalists self-fulfilling stories about player unhappiness or club desire.

The core of the problem is the eternal conflict of interests in all agency relationships, which is made worse by the grubby antics of all too many football clubs. Essentially, agents are not instructed on many of the transactions in which they involve themselves. They claim, and are given, fees by players and by clubs, both at the buying and selling ends of the deal. Some have wider consultancy arrangements whereby clubs pay for their services, which can involve sabotaging transactions and tipping off journalists with misinformation.

It is time for a proper code for agents in the game. There must be clear, punitive sanctions, especially against clubs and their employees. Any fee for agency services should be paid by only one party to a transfer deal. It is all too easy to blame agents for what has happened in the game. There are also a number of underlying problems. Financial irregularities have become all too frequent in recent times and have gained high-profile exposure. Football is languishing in the lurid world of celebrity, increasingly appearing on tabloid front, rather than back pages.

I have painted a somewhat grim picture thus far, but there is some positive news. It relates to the Football League, which continues to lead the way in good governance of the national game. Over the past few years, the Football League has rolled out a number of measures to try to stabilise the financial health and future existence of its 72 clubs. We should highlight those measures and promote them to our top flight clubs.

In April 2003, the Football League clubs introduced a sporting sanction of 10 points for any club entering administration so that financial irresponsibility and unsustainable growth off the field is met with a real punishment on the pitch. The risk of losing points or a place in a certain league promotes responsible management and is surely factored into risk taking in the Football League, if not in the premiership.

I agree that losing 10 points is a bad sanction that encourages club owners not to go down that financial route. Unfortunately, it is the fans who lose out as a result of their club losing 10, 20 or 30 points.

It is the fans who lose out. To be brutally honest, when the Glazers first appeared on the scene in 2005, most Manchester United fans were entirely happy because they saw the huge amount of money coming into the club as a counterbalance to the influence of Roman Abramovich at Chelsea.

rose—

If the hon. Gentleman will excuse me, other hon. Members want to speak and I want to say just a couple more things.

Another positive step forward is the divisional pay clause in players’ contracts, which states what each player will earn regardless of relegation or promotion. As the hon. Member for Croydon, Central (Mr. Pelling) said, league two clubs have the obligation that only 60 per cent. of football revenue can be paid in wages. That is a sensible way forward.

My worry is that the game cannot remain split into the haves and have-nots. The community game mentioned by the hon. Member for Manchester, Central—it is very much a passion for him—has existed for the past 100 years, but is in great danger of drifting irreversibly towards a franchise structure that is more akin to that in American football, where only a small number of franchise clubs in just 10 or 12 of the biggest cities can play a part. We have already seen the first step in that direction, with the birth of the Milton Keynes Dons in 2004, which saw a south London club, Wimbledon, bought, relocated—notionally, at least—from south-west London to Buckinghamshire and given a new identity.

This is a timely and important debate. I hope that Members will gather that I have a lot of passion for football, as many other Members do, and I look forward to hearing their contributions.

I declare an interest as the honorary vice-president of Hayes and Yeading football club, which was created in a recent merger. We won 4-0 last night, although I was in the House debating alternative votes, but there you are.

We all share the passion for football. I come from Liverpool and I am a Liverpool supporter; indeed, my family is obsessive about the club. When my mum and dad got married after the second world war, their honeymoon was a home match and an away match, with a reserve match thrown in, my dad being the romantic that he is.

I share the analysis of my hon. Friend the Member for Manchester, Central (Tony Lloyd). What is happening in football mirrors what is happening in the wider economy, with the boom and bust, the speculation, the leveraged buy-outs and the unsustainable debt ratios. None the less, the Government had an excellent record before the credit crunch hit football and the wider economy, and I pay tribute to my right hon. Friend the Member for Sheffield, Central (Mr. Caborn) for the Football Trust report, the first stages of its implementation and the 5 per cent. that we got from TV levies to support football at the grass roots—all that was excellent. I also support UEFA’s plans for financial controls, because we need a Europe-wide approach, despite the criticism from some premier league clubs.

In the face of the crisis that has hit the football economy and the wider economy, however, we need to go much further, and I want to make a few brief points. First, on leveraged buy-outs, due diligence needs to be extended from directors to the sustainability of any bid proposal. Controls should be placed on debt ratios, and debt should be limited to reflect the realistic record of income levels, so that the debt and the club can be sustained in the future. Such issues should be assessed independently by a football financing commission, which could go in and prepare an independent and fully open and transparent report so that supporters and the wider public can see whether a buy-out or an investment is sustainable.

Secondly, my hon. Friend the Member for City of York (Hugh Bayley) mentioned stability, and I share his view. The best forms of stability are always secured when the supporters are fully involved, and we need look only at Barcelona. Germany has also been mentioned, and 50 per cent. of the clubs there are owned by the supporters, so there is a model. That is why I supported the Government’s promotion of supporters’ trusts, which is an excellent idea as far as it goes, although even some of the trusts are finding themselves in financial difficulties—Brentford is one example. We need to introduce regulations to reserve 20 per cent. of board membership for supporters’ representatives, who would be duly elected from the supporters clubs. In that way, those who actually love and support the club will have a more effective influence over the board.

Thirdly, there is the issue of wages, which is raised with me at every match. Players’ wages, particularly in the premiership, are obscene. Players earn in one year what many of my constituents fail to earn in their lifetime. I appreciate that a player’s footballing career can be short, but such high levels of pay are not sustainable, and I want to suggest an alternative. The Prime Minister has discussed a Tobin tax on banks and speculation, and I would support a Tobin tax—it has been renamed a Robin Hood tax—on players’ wages. If a player was earning more than, say, £2,000 a week, they could pay 5 per cent. in tax, and the money could go towards supporting the development of grass-roots football in the developing world. In a way, that will send a message to clubs that have paid so much for players.

I have listened with interest to some of the hon. Gentleman’s suggestions. It would be valuable and interesting to examine the one that he has just outlined, but it would surely work only if it was introduced on a European basis, because we cannot have even more of our best players ending up playing for Bayern Munich and Barcelona.

I fully agree, which is why we should ask UEFA to take the issue up. Actually, Hayes has just bought a Latvian player, but never mind.

The final issue that I want to raise relates to the various reports about corruption. Where money is available on such a scale, corruption will eventually come on the scene. There have been various reports about the level of betting fixing in youth football, and I would welcome news from the Minister about what has happened on that. A review was undertaken, and proposals were made for an integrity unit—it could be part of the Gambling Commission if we could make the commission more proactive. Again, I would welcome information on how far we have got with those proposals to staunch the possibility of corruption breaking out more widely in the sport.

I agree with everyone else that football is too important to be left to the market and to the greed of speculators and others. Returning football to the supporters, combined with a limited amount of regulation, will sustain football in this country in the long term. You never know, we may well win the World cup again.

rose—

Order. I make a plea. There are three Members who want to speak. We can go on for another 15 minutes before I ask the Front Benchers to start. It is a question of self-discipline; if one Member speaks for a long time, he will cut another Member out.

I spent a happy and productive afternoon at Macclesfield football club when I opened its centre for technology and development, which is still being used. I also represent Sheffield, which has the oldest football club in the world, so I have something of a vested interest in this issue.

On political intervention, I disagree with my hon. Friend the Member for Manchester, Central (Tony Lloyd), which I rarely do. In 2005, when I was Minister for Sport, this country had the presidency of the European Council. We held a meeting in Liverpool with members of the European Commission, Members of the European Parliament and Ministers for Sport from all member states to look at the state of football and how we could address something called the Nice protocol. Heads of Governments had said that sport was different from business and the commercial world, and that it had a specific value, and the question was how to translate that into practice, because there was no legal base in the European Union to help us do so. However, with the support of UEFA, we set up an independent European sports review, which produced the Arnaut report. That resulted in a European white paper and a number of moves from UEFA that I will describe a little later.

There was real concern about how we would tackle sport in the European Union, and that was particularly true of football because its regulations were being settled in the European courts and the Bosman and Charleroi rulings were having a profound effect on how football was being governed. We had to determine whether football was a business, because if it was not, the question was how it would be governed.

Interestingly, there was some political intervention, because Ministers for Sport were looking at the good governance of sport. Rugby league and cricket modernised their governance. Cycling, which was bankrupt, also did so, and its progress has been fantastic from then on in. A whole series of governing bodies looked at themselves and asked, “Are we fit for purpose as we move into the 21st century?”

The FA set up the Burns report and a structural review. Had the report been implemented—Terry Burns said that it was the absolute minimum that the FA would have to undertake to become a fit-for-purpose governing body—we would probably not be facing some of the problems before us. If I make one plea to the Government and sport in general, it is that football should modernise its governance, otherwise we will deal with the symptoms but not the cause, which is the problem that football does not have good governance and good regulation because it has not implemented the Burns report or something like it. Such modernisation will be fundamental if football is to be governed in the way in which many people want.

The right hon. Gentleman was intimately involved in the production of many of these reports. What aspects of the Burns report frightened the administrators in football and prevented them from making the changes?

Those people did not want to relinquish the power of football to independence. They wanted a board in relation to which there would be the professional game, the national game and good quality independence that could take an objective view and break the stalemate. That is effectively what we have got—the professional game on one side and the amateur game on the other. We have got the status quo, but that is not good enough. If hon. Members look at the Burns report—I do not have time to deal with it now—they will find that it is a very interesting read. They need to look at what Burns said and where we are now.

On the Arnaut report, I met all the chief executives of the premier league in 2006 and told them that there were excesses. I paid tribute to the premier league and told them that it was the most successful league in the world—it is, by any standards, the best in every conceivable way—but I also said that there were structural weaknesses and excesses. I told the chief executives that they must start to address those excesses in the light of good regulation, and that if they did not actually get into Europe and start influencing the way in which sport and football were regulated, there would be problems down the road. There were problems down the road and the chickens are coming home to roost. If the chief executives had taken action at that time, we would not be in the state we are now.

UEFA was also affected by Arnaut. I will talk briefly about the club licensing system and financial fair play, which will be implemented in Europe in the next two to three years. The six points in the specific objectives for the club licensing system are

“Introduce more discipline and rationality in the club football finances; encourage clubs to compete with their revenues; decrease pressure on player’s salaries and transfer fees and limit inflationary effect; ensure clubs settle their liabilities on a timely basis; encourage clubs’ long term investments (infrastructure, youth); protect long-term viability and sustainability of European club football.”

The proposed measures are the break-even rule, which relates to the financial fair play concept, as well as the

“enhanced overdue payable rule; cash flow analysis; guidance on salaries and transfer spending; guidance on level of debts; limit the number of professional players.”

Those measures will have to be implemented by clubs, and if they are not, those clubs cannot play in the European competitions.

I pay tribute to what UEFA has done at a European level. It is acting with more certainty now because, in the Lisbon treaty, sport has for the first time got a legal base. We can therefore, with some justification, go to the Commission and the Council and say that we want the matter to be considered much more effectively. UEFA has found a level of certainty in Europe. FIFA is applying the “six plus five” rule, so I believe that regulation, both internationally and at a European level, is finding its feet and being implemented. Finally, if the FA follows through and implements the Burns report, we will have the type of regulation that we need in this country. We have got such regulation through Europe, and we will get it again through FIFA.

It is a great pleasure to serve under your chairmanship again, Sir Nicholas. It is most apposite that the debate is a 90-minute game, but it is unfortunate that you do not have the discretion to add a few extra minutes, as would happen in an actual football match. It is also most apposite that the debate is being held now, given the problems facing Crystal Palace football club. In the four minutes that I have, I will discuss why that is an important concern.

I am running a petition with the right hon. Member for Croydon, North (Malcolm Wicks) on two issues relating to Crystal Palace. One issue is the 10-point deduction, which was introduced to stop clubs obtaining a competitive advantage by seeking protection from their creditors. That does not apply in Crystal Palace’s case, because it has been subject to an involuntary administration that has been imposed due to the actions of a hedge fund that owns Selhurst Park. Unfortunately, the history of Crystal Palace is such that Selhurst Park is held by another company that is also administration, which is partly owned by a hedge fund that does not necessarily have any sentimentality towards the club.

One must have a lot of sympathy with Simon Jordan, the chairman, who sunk £35 million into the club—he is obviously the club’s biggest creditor—at a time when play off prospects were sound and the amount of income that could be secured was hugely different. The prospect of the extra income from being in the premiership, compared with being in the championship, has had a distortive affect. It is unfair on players, club staff and the club itself—the fans—that the 10-point deduction is in place, so that is one of the issues raised by the petition that the right hon. Member for Croydon, North and I are running, which will be coming to Parliament.

Lloyds Banking Group is the main lead banker both to the club and the owners of the ground, who are in administration. We are concerned that, within the restrictions of Financial Service Authority rules, the Lloyds Banking Group should try to work to bring the two parts of the club back together. The fact that the group has been acting in a very positive way is encouraging. It has essentially worked to avoid the move into administration, and it has recognised that

“Crystal Palace occupies a special place in the affections of many in South London and if we can play our part in funding a sensible, commercial solution that enables Crystal Palace to have a sound future, then we would be both happy and proud to do so.”

That shows that Lloyds Banking Group has a very positive attitude, which is appropriate for a bank that is almost majority-owned by the taxpayer. I hope that supporters and the people involved with the ambassadors club and the fanzines of www.holmesdale.net can perhaps come and see the Minister to talk through some of the issues. I appreciate that he has only a limited amount of leverage, but I would be most grateful if that were possible.

I want to allow the hon. Member for City of York (Hugh Bayley) to contribute, so I shall be brief. I am wearing my Croydon football club tie, and we must not forget those who are in the lower leagues. There are 60 people who watch the matches of my local team and many of us have been disappointed that the local council has not been able to be supportive of the club. Tram construction meant that the practice ground was dumped on five years ago and it has not been possible to use it. Great promises of support were made by the council, but that has not really happened. Dickson Gill, the chairman, does excellent work to keep the club going, and we have great hope about what will happen. Although great promises are made by the council, as I said, nothing gets delivered. To return to Crystal Palace, there is tremendous support for the petition from 500 people who are very upset about how the club has been treated.

I am grateful to you, Sir Nicholas, and to colleagues for leaving some time for me to say a few words. I want to speak up for small clubs. My hon. Friend the Member for Manchester, Central (Tony Lloyd) said that Manchester United’s turnover in a year is some £280 million, which is enough money to keep York City going for 100 or 200 years. It will probably take us that time to repeat the success of 1995, when York City beat Manchester United 3-0 at Old Trafford, which he was generous enough to acknowledge. That illustrates what has happened to football in the past 10 years. Like the high street, it has split between small businesses at one end and huge multi-million pound enterprises at the other. The Government’s policy and the policies of sports’ bodies need to show that things have changed.

Some interest has been expressed during the debate in the supporters’ trust model, which was how York City football club was saved some 10 years ago. I pay tribute to the help that the club got from the Department and from my right hon. Friend the Member for Sheffield, Central (Mr. Caborn). There was a disastrous period when one chairman of the club split the club from the ground, so that if it went under, he would have a property development opportunity. The club was then taken over by John Batchelor. He was a motor racing entrepreneur who ran the club for a season and managed to attract sponsorship of £400,000, which matters to a small club such as York, but when it went into administration at the end of his period, the £400,000 was nowhere to be seen. It disappeared into some motor racing enterprise he had. The supporters’ trust rescued the club, and four years later, in 2006, they sold a majority of the club to one of their members, Jason McGill, the current chairman, whose family business had put enough money into the club to rescue it.

If the smaller clubs are to survive, nurture new talent at the grass roots and make an input to their communities—York City FC has been expanding its community programme over the past two years, providing healthy support and training to around 10,000 children and young people in York—the Government must ensure that supporters have a greater say within clubs, as I have said. The Government must look at the business structure of clubs. Perhaps we should follow a mutual model, more like those of building societies, or a co-operative model, rather than a plc model. If we look at how building societies operate, in comparison with the plc banks, we can see the advantages. Although I understand the reservations of someone who represents a large club that generates much income, we need to look at how revenues from television and other sources for this great game are shared to ensure that small clubs remain beautiful so that the whole game can remain beautiful.

I thank the hon. Gentleman for his brevity, following my request.

I congratulate the hon. Member for Manchester, Central (Tony Lloyd) on securing the debate, and all Members who have spoken on the support football has received. If the debate were taking place in the Chamber and could last a whole day, it would be full of Members equally committed to both the national sport and their local village, town or city team.

I have followed Portsmouth FC through the divisions when they were close to winning a third championship in the old first division, down to the fourth, all the way back and then into the premiership. The one common factor over those 50-odd years has been the loyalty of the fans. The one thing that has never been taken seriously in football anywhere is the role played by fans and the credibility they give the game. They have undying loyalty and the tribalism of supporting a club through thick and thin, standing on uncovered terraces in pouring rain in the middle of winter to support a team because they want to.

I remember when international footballers used to live down the same street and one would meet them going to the corner shop, and the next week they would be playing for England or Ireland, and Scotland in one case, and it was a pleasure to meet them. Now footballers live in a rarefied atmosphere and it is difficult to see them even on a team bus, let alone out in the street.

Obviously, we should not be jealous of the money that comes with the skills, but is not another effect of big money in the premiership that it undermines our national teams because we have fewer players playing in top-ranking football?

That point is as valid as those that have already been made about football administration. Some players have lost touch with the reality that gives football its strength—the fans. My own club is a classic example.

Much as I share the hon. Gentleman’s passion—I, too, am a long-standing supported of the game—I think that he might be seeing things through rose-tinted glasses. In the mid-1980s, football was at its lowest ebb, well before premiership money arrived, when hooliganism was rife and attendance was at an all-time low. Attendance has increased considerably since then, even though players are paid a lot more. I am not saying that there is not something in what he says, but we must be careful not to allow nostalgia to overtake what is otherwise a reasonable argument.

I do not doubt that football had problems, and Portsmouth had a notoriously bad record for away support troubles, which I would not disguise or deny or do anything other than apologise for, but the loyalty of the fans was always there. They have been, in many instances, totally disrespected by the situations that have arisen.

Portsmouth FC, to catalogue what has happened to it, has had four owners in the past six months. Owner three did not even know that he had lost ownership of the club to owner four, and we did not even know who owner four was. Owner three is now suing owner four to try to get the club back. In the High Court today we heard that we do not owe £7.5 million to Her Majesty’s Revenue and Customs, but in fact owe £11.5 million. We have been lucky enough to secure a seven-day or nine-day reprieve before having to go back to the High Court. To explain why, I will quote directly from the evidence given in court by the barrister representing the club:

“Two offers have been received from serious purchasers to buy the club to pay off the debt.”

One of them happens to be the Saudi ambassador to the United Kingdom and Ireland, and the other is a consortium, described as Irish-American, that is moving rapidly to try to buy out the present owner, who is facing legal challenge on whether he actually owns the club.

Where is the club going? What is happening to it? It is more than 100 years old and one of its founding members, the writer Conan Doyle, played in goal for the team. A famous bunch of footballers have played for Pompey over the decades, and one or two notorious players, too—their skill in the sliding tackle brought them notoriety—so we owe something to that team. Two years ago, a quarter of a million people lined the streets of Portsmouth to welcome back the successful FA cup winners, but virtually all that team have been sold. At one stage, 18 months ago, five of the England squad were Portsmouth players, but now we have only David James left. The likes of Crouch, Defoe, Johnson, Kranjcar, Diarra and others have all been sold, and the fans have not seen the benefits of that. There has been no return for the fans.

We have an owner, Mr. Gaydamak, who sold the club and is now virtually holding it to ransom, because he sold the stadium and the club. He did not sell all the land he had acquired around the club to build a new stadium, so he now holds that and is holding the club to ransom by demanding £30 million for it. The club cannot even develop the stadium, as the premiership is asking it to do, because he controls it. He virtually has a stranglehold on Portsmouth FC, and something has got to give.

The one thing we need, as Members have said, is a change in the way we regulate football. I do not know how easy it is to bring in new regulation, but if the Burns report’s proposals, to which the right hon. Member for Sheffield, Central (Mr. Caborn) referred, had been implemented, perhaps we would not be in the position we are in today. Portsmouth is the one domino on the slide at present, but if it goes, others will follow and the domino effect will be unstoppable, particularly in the premiership, because the consequences of one club going under will be horrendous for the others. They are all being looked at by their creditors, and people who are prepared to give the benefit of the doubt will no longer be prepared to do so. We need some action, and it is the responsibility of the Government because, whether we like it or not, football is more important than just a business, and that has been the trouble. Many of the people who owned Portsmouth FC, I genuinely believe, had no interest in football whatever. Many of them, far from being keen, saw it as a good way to make money out of property. That is why I have great admiration for Sullivan and Gold going to West Ham, because at least they are committed football fans. They might be led by their hearts rather than their heads, which could be a problem.

Does not that show the importance of the premiership seeing it as a corporate product? One can makes fun of the league system, but after all, Liverpool lost to Portsmouth, but Manchester United won five-nil, as I recall, so it can potentially change the result of who qualifies for the top four in European championship positions.

One of the reasons for the debate’s being fortuitous is that we should be looking to the premiership to put together some safety net for clubs in that position. The premiership cannot deny that it has some responsibility for what has happened, and I believe that it owes it to clubs such as Portsmouth—and more importantly, the people who pay week after week to watch the matches, whether on a big screen or live in a stadium—to show them some loyalty, perhaps by bailing out situations like the one in Portsmouth, just to keep the club in being.

As the Sky sports commentator said,

“the difference between administration and liquidation is the difference between intensive care and burial.”

Liquidation would mean the immediate end to Portsmouth’s season and the club, but administration might give it just enough time in intensive care to make a case to stay in existence. The premiership owes that to teams like Portsmouth, and it owes it to football to do something to protect the interests of the fans, which it has neglected since it has been involved.

I congratulate the hon. Member for Manchester, Central (Tony Lloyd) on securing the debate. Due to time constraints, I shall not go through all hon. Members’ contributions in turn, but they showed that he has hit a raw nerve, and the message to the football authorities and the Government is clear.

I have been thinking about this issue for some time. From an Opposition perspective, it comes down to three questions. First, does our party accept that there is a problem? Secondly, if so, what do we think should be done about it, and who is best placed to take that action? Thirdly, following on from that, what is the appropriate role of the Government?

To start at the beginning, is there a problem? The debate has clearly shown that the answer is yes, although opinion is divided about whether that is a natural consequence of the depth and severity of the recession, which was a point that the hon. Gentleman touched on, an inevitable consequence of a high-octane sports industry, or something altogether more serious and structural.

The hon. Gentleman mentioned the situation at Manchester United, and others have mentioned the finances of West Ham and Portsmouth, which have recently been in the news. In the Football League, the travails of Crystal Palace, Stockport County, Watford and Cardiff City, among others, have been well documented, and it is almost certain that we do not know the full extent of troubles elsewhere.

However, in trying to come to a fair and balanced judgment on the matter, which I suppose is in many ways the role of the Government, it is fair to say that there are a few mitigating factors. We are coming out of the longest and deepest recession since the 1930s. In such circumstances, it would be extraordinary if clubs were not facing real financial difficulties. Secondly, debt on its own is not a particularly useful measure to assess a situation unless it is allied to turnover. Thirdly, conventional measures can be meaningless, particularly for some of the premiership clubs that are owned by an extremely wealthy individual who stands behind it. That was demonstrated recently when the Chelsea owner simply converted the club’s debt into equity.

Finally, there is pressure from UEFA, which was mentioned by the former Minister for Sport, the right hon. Member for Sheffield, Central (Mr. Caborn), whom I think I can call my right hon. Friend. I strongly believe that sport is a national competency that should be regulated and governed here in England, but it would be wrong to ignore Europe as a factor. Our clubs are key to UEFA’s competitions, and we need its support if we are to bring home the 2018 World cup. Furthermore, its goal of ensuring good financial management of clubs is one with which we would all agree. The issue is whether a one-size-fits-all approach across the many different structures prevalent in European football is the best way forward.

Therefore, given the well-publicised troubles of several clubs and the external pressures on football, it is impossible to conclude that there is not a problem, although it is perhaps not as terminal as has been suggested. Having reached that conclusion and accepted that there is a problem, the second question is what we think should be done about it, and who is best placed to do it.

I absolutely agree with the many hon. Members who said that football is a great deal more than simply a business. It has always been a central tenet of my party’s sport policy—and indeed our wider approach to politics—that we should free up individuals and bodies to run and regulate themselves. The bodies in football that are responsible for governance and regulation are the Football League, the premier league and the Football Association, and the question is whether they are able to sort this out themselves.

I entirely agree with my hon. Friend the Member for Cities of London and Westminster (Mr. Field) when he says that the Football League has come a long way. Unsurprisingly, I pay tribute to my friend and former colleague, Lord Mawhinney, for his work in this area.

Among other things, the Football League has produced a 10-point sporting sanction, as Crystal Palace has just found out. It publishes agents’ fees, has a workable fit and proper persons test, and has introduced a salary cost management protocol. In governance terms—this point was picked up earlier—it also has at least two independents on its board. Despite the recession, the league’s attendance over the past five seasons has topped 60 million, and it is now at its highest level for that league for more than 50 years.

I ask the spokesman for the Opposition to continue his winding-up speech.

Thank you, Sir Nicholas—

Will the hon. Gentleman give way?

I have barely started, but I give way to the hon. Gentleman.

I want to follow on from what the hon. Gentleman was saying before the Divisions about the 10-point deduction for Crystal Palace. Could there be any exceptional circumstances in which those 10 points would be given back, bearing in mind that the club did not seek administration?

I suppose that the straightforward answer is that there will always be circumstances in which that could be considered, but that is a matter for the relevant authorities, which are much better placed to make that decision than politicians.

Before the break, I set out some improvements to governance and regulation that the Football League has made. By those actions, it has shown that it can be trusted to regulate its own affairs, at least for the moment.

Further up the football tree, the premier league is inevitably the centre of attention, as recent events—indeed, today’s events—have shown. However, we should balance the lurid headlines by remembering that it is the best league in the world, as well as the UK’s most successful sporting export. More than 13.5 million people—our constituents—attended its games last year, so the balance is that the premier league is a remarkable success story.

After listening to this debate, one might think that the premier league had done nothing in recent years. However, among other things, it has strengthened the fit and proper persons test and introduced new financial criteria, which are a step forward. In my view, on balance, the premier league deserves the chance to sort things out before we resort to direct intervention.

The hon. Gentleman’s comments about this matter are of great interest to hon. Members. However, rather like with the banks, there is always a danger in repeating the words, “It’ll be all right on the night.” I would caution the hon. Gentleman because debt is already embedded in a lot of premier league clubs. Were interest rates to go in a different direction, which is quite possible in the long term, those debts could prove to be unsustainable.

I do not disagree with anything that the hon. Gentleman says in any way, shape or form. I suppose that the issue at the centre of the debate is whether it is time for the Government to intervene and force the hand of football’s regulatory authorities by taking over, or whether we should trust those authorities to regulate their own sports. Should the Government apply pressure? The debate has shown the severity of the problem and the strength of feeling about it. Do we point those regulatory authorities in the right direction and give them one more chance to sort the situation out themselves?

The Government have written to the FA about strengthening its governance with the seven-point plan approved by the previous Secretary of State for Culture, Media and Sport, my right hon. Friend the Member for Leigh (Andy Burnham). Would the hon. Gentleman support that type of approach towards the FA? That would involve stronger regulation until it gets its house in order, which would make it stronger and better able to deal with any of the problems within football, whether in the premier league or elsewhere. It is important to get cross-party consensus on that.

Broadly speaking, the answer to that question is that I would support that approach. If the right hon. Gentleman will give me a moment, I will continue with my speech, which I think will give him some comfort, and then if there is a minute left, he can respond, should he wish to.

The final regulatory authority is, of course, the FA, and its board is made up of the constituent parts of the professional game—the Football League, the premier league, which we have already discussed, and the national game. Like other bodies, the FA has recently introduced a number of measures, such as Her Majesty’s Revenue and Customs debt reporting, and it uses its own financial advisory unit to provide a financial health check to all clubs below the premier league. Its grassroots programme is extraordinarily successful and will be familiar to all hon. Members. Like many others in the Chamber, I have been impressed by the way in which the FA has conducted itself of late. Therefore, I would like to give its new chief executive, Ian Watmore, the chance to make his mark in this area, albeit along with applying the sort of pressure that the right hon. Member for Sheffield, Central has mentioned.

Therefore, to answer my own question, I believe that the three main football regulatory authorities—the Football League, the premier league and the FA—should at least be given the chance to put their shop in order, and I urge them to make that a top priority for the coming year. They will be aware of the key areas that need attention such as the fit and proper persons test, the question of debt that is allied to turnover and, crucially, financial transparency, which was a point raised by many hon. Members. That is a challenge that they must not duck.

That brings me, finally, to the role of the Government.

rose—

Order. I cannot stop an intervention, but we must give the Minister time to reply to the debate. The Opposition spokesman’s time is virtually up.

Briefly, will the hon. Gentleman say something about the role of the supporter?

Time is ticking away, and I was going to say that it would be a positive and, in my view, overdue development if football started by sorting out its own corporate governance, and particularly the lack of independent directors—and, many would say, female directors—on many of its boards.

I am heading into the last minute, so I will conclude by saying four things. This has been an interesting and timely debate, so I congratulate the hon. Member for Manchester, Central on securing it. Secondly, as the contributions have shown, this is a serious issue that clearly needs addressing. Thirdly, I encourage in the strongest possible terms footballing bodies to come together and work out a proper solution as a matter of urgency. My final point is that if they do so, we will back them, but if they do not, Government intervention remains an option.

It is a great pleasure to serve under your chairmanship, Sir Nicholas, as I last did at great length on the 2008 Finance Bill Committee. On behalf of the Government, may I take the opportunity officially to congratulate and commend Macclesfield Town for its great works and successes, whatever they may have been?

I also congratulate my hon. Friend the Member for Manchester, Central (Tony Lloyd) on securing the debate and on setting the tone for what has been an erudite and informed discussion involving hon. Members on both sides of the Chamber who have been following the issue for years and who spoke, as he did, with great passion and lyricism, as well as erudition.

I apologise to you, Sir Nicholas, and to other hon. Members for not being the Minister for Sport—my hon. Friend the Member for Bradford, South (Mr. Sutcliffe) who is in charge of these matters for the Government would normally have been here. He is expected to take some important business in the main Chamber; otherwise he would certainly have been here, although I have begun to suspect, as his name and business have not yet appeared on the screens, that on my last afternoon in government, I may be the victim of an elaborate practical joke.

These are important matters and these are challenging times for football. As all hon. Members have said, this is a timely debate, with three clubs at different levels of the game in different courts in the land. It is fair to say that the game has come a long way since the 1970s and ’80s, which saw stadiums in decay, violence on the terraces and our clubs banned from European competition. With Government’s help, football has worked hard to ensure that we have growing grass-roots participation, new facilities at all levels, world-class stadiums, two of the most popular and best leagues in the world, success for our top teams in Europe and an improving national side that looks as though it might be ready to do better. Those positive changes have happened in great part because, although the clubs, leagues and associations may be imperfect—many of their imperfections have been noted this afternoon—they and the Government have worked hard together.

The future of the city of York’s football club depends on its being able to build a new financially viable, sustainable stadium. Will my hon. Friend the Minister speak to my hon. Friend the Minister for Sport and ask whether he will write to me after the debate to let me know what recent discussions Sport England, the Football Foundation and other bodies have had with the club and City of York council to take that project forward?

I will be delighted to do that. My hon. Friend is very concerned about doing everything that he can to help people and supporters in York to protect the future of their club.

Let me put a question to the Minister to prepare him for answering questions when he is mayor of Birmingham. Does he really think that it was appropriate that John Terry was sacked as captain of England?

As the hon. Gentleman mentions Birmingham, I can say on behalf of two soldier friends of mine that I am short of two tickets for the league cup final. As I am here, I thought that I might as well mention that.

The positive changes in the game have been a result of the work done by everyone concerned with the game, including the supporters, as has been said. However, that is not to say that football is immune to the problems that we all face in these difficult economic times. Although Deloitte’s well respected financial report tells us that the income into our top league remains healthy due to increased broadcasting, sponsorship and overseas rights revenues, the debt sometimes looks almost unsustainable, as many hon. Members have noted at length this afternoon. Clearly, one lesson of the global financial crisis is that models of business that look sustainable and solid at one moment can turn out to be precarious the next.

Of course we understand why fans are becoming increasingly concerned about the debt accumulated by some clubs. As hon. Members have said, clubs are valuable community assets and every care should be taken to protect their long-term financial future for the sake of not just the investors, but the supporters, future generations of supporters and the communities in which the clubs sit. The game today makes money because of the fierce, passionate loyalty of fans and the history of civic pride and local allegiance forged over decades and, indeed, centuries. Football, professional though it is now, has its roots deep in the community. It is an expression of personal, local—the word “tribal” has been used—and family identity. It is sport that has become big business, not vice versa. No one in the Government is in any doubt about that. That is why we are keen that supporters should have a bigger role in the financial accountability and governance of their clubs.

There are many examples of supporters’ trusts proving their value in recent years. They have prevented some 37 clubs from going out of business. They have proven their worth, and more should be done to acknowledge their significant contribution to the game. We are pleased that the football authorities have financially supported that work in the past. Hon. Members may recall that my Department was among those responsible for setting up Supporters Direct—an organisation that has been very successful over the past few years in encouraging supporters to take a greater share of ownership in their own clubs.

Order. May I say to the Minister—I want to be helpful—that he has only two minutes left? I am sorry about that, but these debates are timed and hon. Members have contributed to that problem. I would just like him to know that he has two minutes.

I am grateful, Sir Nicholas. Would that I had longer. My speech, unfortunately, would take considerably longer than that to deliver, and I am resigned to the fact that I will not be able to put on the record all the points that I would like to make this afternoon.

Of course, it is not for the Government, ultimately, to run football or to tell the businesses that make up the football community how they should go about regulating their affairs. It is for the clubs themselves to ensure that they manage their finances well, and for the football authorities, as their governing bodies, to run the game. However, the Government have a legitimate role to play—that of a critical friend of the game. Given our long-term strategic investment in safety and security, our promotion of grass-roots participation, our role in the bidding process for major championship events and our relationship with the European Union on sport issues, such as protecting TV deals from regulation, it is right that we take a view and help to frame the debate and to reflect the views and interests of supporters in particular.

We therefore have a legitimate expectation that those in the football world, including the associations, leagues and clubs, have the most effective governance and accountability arrangements in place and that they are working together for the long-term good of the game. That is why as far back as October 2008, the former Secretary of State for Culture, Media and Sport, my right hon. Friend the Member for Leigh (Andy Burnham) asked the football authorities in England to respond to seven key questions concerning football finance, fit and proper persons for owning clubs, the competitive balance within the game and the strength of the national side. Last September, the Minister for Sport—the real Minister for Sport—wrote to them again, following their responses to the challenges that we set down. In his letter—

Order. We have run out of time. I have allowed a little leeway. I apologise to hon. Members, but I have to carry out the rules relating to debate here. I am particularly sorry that the Minister was not able to complete what he wanted to say. We now move on to the next debate.

It is, as always, a pleasure to serve under your chairmanship, Sir Nicholas. I am grateful for the opportunity to debate this issue on behalf of a constituent of mine and I thank my hon. Friend the Minister for giving of her time to respond to the debate. My constituent does not wish to be personally identified in the public record, and I thank the Minister and her office for respecting that wish while at the same time looking into his case at my request.

The Child Support Agency website states on its home page:

“We make sure parents who live apart from their children contribute financially to their upkeep by paying child maintenance.”

I can assure hon. Members that my constituent would be the first to applaud that aim. He has two children by his former partner. He is the non-resident parent, but has always paid his child maintenance; he has never missed a payment since 2001.

My constituent is on what I might describe as CSA 1, which means that his child maintenance contribution is assessed under the original scheme, under the old system—for cases that commenced between 1993 and 2003. Following his retirement, his income reduced, so his payments reduced, but he was still assessed under the old system. His current payments, after essential outgoings, leave him with approximately £49 a month. He has given me a list of his monthly outgoings, which include various modest amounts that he allows himself, such as £3.22 a day for food or £3.22 a day for petrol—in my constituency, getting around without a car is difficult. His outgoings are modest, but nevertheless he is left merely with £49 a month.

If my constituent were assessed under the new system—for cases post-March 2003—his contribution would be substantially less, because he would be required to pay 20 per cent. of his net weekly income, which is income after tax and national insurance deductions. Under the new system, non-resident parents have to pay: for one child, 15 per cent. of net income; for two children, 20 per cent. of net income, and for three children, 25 per cent. of net income.

The Child Support Agency website helpfully contains information on moving between old and current schemes. The website claims that the justification for the new, current scheme is that it is simpler to manage, easier to understand and better suited to parents’ needs. The website does not explain something that is also not mentioned by the calculator available for working out likely child maintenance: for someone on the old scheme, the calculation is significantly different and can be up to 30 per cent. of net income.

Under the old, original scheme, different criteria were applied. Part of the justification for the new scheme, as stated in the website, was:

“We no longer take into account or need to know the income of the parent with care...We no longer take account of the cost of either parent’s housing, council tax, etc.”

Yes, that may be simpler, but it is of small consolation to my constituent, because his contribution is still being assessed under the old system. For example, we learn that his former partner’s housing costs are taken into account. She claims more than £23,000 per annum in housing costs—£442 per week—which is rather a lot for someone with a net income, I am told, of around £26,500 a year. Yet the CSA has simply accepted the figure by virtue of a letter from the resident parent, with no further documentation to confirm its accuracy.

As my constituent says:

“It is an insult to all honest payers like myself, who has never missed a payment since 2001, when a…parent with care can use tactics like this”.

That refers to his former partner’s offsetting her income with high housing costs to ensure that her income is exempt from the maintenance calculation. My constituent also states that his former partner’s new partner is a “high earner”, making a mockery of the scheme. CSA 1 needs to be abandoned now, so that everyone can pay a fair amount without deductions for housing costs and so on, which do not form any part of the calculation under the second system or current scheme—CSA 2—which is based on a percentage of the net income of the non-resident parent only.

I do not wish to get anyone at the CSA in Birkenhead into trouble—they are extremely helpful to me and my constituency office in the many cases with which they deal. They all do sterling work in difficult circumstances, but my constituent claims to have been told by a member of staff there that the two-tier system of CSA 1 and CSA 2—that is, the old and the current systems—is totally unfair and that rectification is long overdue. As my constituent points out, the move to CSA 2 for everyone would stop people making questionable—to say the least—claims for housing costs.

The problem is that the CSA will move a child maintenance case to the current scheme only when it becomes linked to a new child maintenance application, made on or after 3 March 2003, meaning that many non-resident parents, such as my constituent, who are being assessed on the old scheme, are paying more than non-resident parents in identical circumstances who are being assessed on the current scheme. That cannot be fair and I do not believe it was the intention when the new system was introduced. My constituent has been told that he cannot be moved to the current system because—as he claims of the message given to him—the computers will not cope. The only alternative is for the parent with care to withdraw her claim and reapply under CSA 2, which I understand in the circumstances is extremely unlikely.

An organisation called Child Support Solutions, which specialises in advising parents on CSA issues, claims to have cases that were started on the old system but which are being moved to the new or current system. It describes that as conversion. If so, why can my constituent not be thus converted? Or must he, as he fears, continue to meet his obligations to his children as dictated by the CSA under a now much derided system? That system leaves him with only £49 per month in his pocket until his children are past the age when maintenance applies, which in his case will be another eight years.

I hope the Minister will answer that question. I hope she will also tell us her plans to resolve the overall problem. I am told that there is now a third system—CSA 3. Could the Minister, in her response, explain how that works and whether my constituent will benefit? Why has it not been possible to move everyone from CSA 1 to CSA 2, and what is the justification for now introducing a third scheme?

In conclusion, as I said at the beginning, my constituent loves his children. He is only sorry that he no longer sees them as often as he would wish, but he has never sought to evade or avoid his obligations to pay maintenance. He and I, as his Member of Parliament, are simply questioning the operation of the various systems as they stand at the moment, and asking—indeed pleading—that something be done to make them fairer.

It is a pleasure to serve under your chairmanship, Sir Nicholas, and to recall that the last time I served under you was also in a Finance Bill Committee, although that was the 2007 Finance Bill.

I begin by congratulating my hon. Friend the Member for Rossendale and Darwen (Janet Anderson) on securing the debate. Child support is an important issue for many hon. Members—indeed, I have a strong personal conviction about getting the policy absolutely right. I very much welcome the opportunity to dispel some of the misunderstandings surrounding the child support issue, for which I thank my hon. Friend. I also thank her for raising the concerns of her individual constituent.

It is quite right that, from 2011 to 2014, three schemes will operate within child support: the old scheme, the current scheme and the future scheme. That period will represent a transition as we move from the cumbersome, inefficient older and current schemes towards our streamlined, simplified scheme for the future. Until the transition is complete, child support arrangements for some parents will be governed by the current scheme, while those for others will be governed by the older scheme.

Sir David Henshaw’s 2006 report on the issue called for a clean break from the past. One of the report’s conclusions was that the existing plans to convert cases from the old scheme to the current scheme would have been prohibitively challenging to administer. Past experience did not make a good case for such an approach, as I am sure that my hon. Friend knows better than me. The bulk transfer of cases between the old and current schemes would not have been possible because the kind of resources needed to facilitate such a transfer would mean diverting funds from where they were most needed—in other words, from supporting the ongoing improvements to the Child Support Agency.

Following the publication of that report, the Government decided to seek an alternative to the bulk transferring of cases and set out their proposals to reform the system in a White Paper. Those proposals were set down in statute in the Child Maintenance and Other Payments Act 2008, which provided for the Child Maintenance and Enforcement Commission to deliver the new child maintenance system and deliver that clean break.

My hon. Friend suggested that the decision not to transfer all existing old-scheme cases to the current scheme was unfair. Not transferring cases from the old to the current statutory maintenance scheme has inevitably had the result that some non-resident parents might be paying more under the old scheme than the current one. By the same token, other non-resident parents might be paying less. For every parent who believes that they could gain by moving their case to the current scheme, there is obviously another parent who might lose out. Clearly, to transfer a case to the current scheme on the basis of parental preference would be not only impractical but unfair.

Will the Minister tell us whether her Department has made an assessment of how many non-resident parents would be better off under the current system—that is, how many would be in the same position as my constituent?

I do not hold that information at the forefront of my mind, but if I am inspired before the end of the debate, I shall tell my hon. Friend, or otherwise write to her.

It must be stressed that, under the old scheme, the assessment formula was designed to reflect the ability of both parents to contribute to the maintenance of their children. If parents with care had sufficient income, they would be assessed on the same basis as non-resident parents. That could have the effect of reducing the amount of maintenance that non-resident parents were required to pay. I assure my hon. Friend that once Parliament has approved the necessary transition regulations and the future scheme is live and operational—we hope that that will be next year—we will begin to move the old and current cases, which will take three years.

It is essential that we devote our resources to the success of the future scheme. The current child maintenance system did not deliver what was expected of it. It was characterised by complexity, inefficiency and a wide lack of understanding. The new system will be simpler, and it will be supported by a fully functioning IT solution. That will enable us to overcome the systemic barriers that hindered past delivery. The future scheme will be faster, more accurate, and more transparent, thanks to a simplified maintenance assessment.

We are working in partnership with Her Majesty’s Revenue and Customs to build an IT system that will allow us to share information. That will allow us to trace non-resident parents and calculate maintenance payments based on their gross income. The gross income data cover a person’s income before tax is taken or tax credits are added. We believe that that data will provide a better measure of a person’s ability to pay. Working in partnership with HMRC, we will be able to avoid delays. That will enable us to put effective child maintenance arrangements in place more quickly.

The future scheme will enable us to build on the continued success and improvement that the CSA has seen over the last few years. However, it might interest my hon. Friend to know that in her constituency, by the end of December 2009, we saw an increase of 26 per cent. in the number of children benefiting from maintenance collected or arranged by the CSA since March 2005. The latest figures show that more than 800,000 children are now benefiting from child maintenance. In the years since 2005, we have seen a 12 per cent. rise in the number of parents meeting their maintenance liabilities, which puts the current figure for compliance at nearly 75 per cent.

Through CMEC, the Government have implemented a number of initiatives in the child support system. We have launched “Child Maintenance Options”, which is a free service that provides information and support to all parents on how to make child maintenance arrangements that best suit their needs. It is also open to friends and family so that other members of the family can seek advice on behalf of their relatives. We are embarking on a wider programme to change attitudes to child maintenance so that everyone understands that it is socially and morally unacceptable not to pay. In a few weeks, the Government will be introducing a full disregard so that parents with care who are claiming benefits can, for the first time, keep all their maintenance and benefits.

It is estimated that these measures, coupled with others made in October 2008, will lift about 100,000 more children out of poverty than would otherwise have been the case. The improvements and strategies laid out in the future scheme will empower us to do even more for children and give the best possible service to our customers.

Before I finish, I shall address a couple of the questions that my hon. Friend raised about her constituent’s case. Officials are still looking into whether appropriate documentation was provided by the parent with care with respect to costs, and I shall write to my hon. Friend about that.

My hon. Friend also asked why, in this instance, it was not possible to transfer when transfers can be made in some instances. Broadly speaking, transfers can be made in two situations. The first is when both parents agree that that should be done. As my hon. Friend said, that is unlikely to be so in this case. The second is if a significant change in circumstances has occurred. That does not mean that one person’s income has gone up or down; it could be that one parent has been re-partnered and new children have come into the equation. In the event of such a significant change, all the children would be assessed on the current scheme, because the calculations would interrelate between two or even three families, and then changes would be made.

My hon. Friend asked how many non-resident parents would be better off under the current scheme compared with the old scheme. I am sorry to have to tell her that CMEC officials say that they cannot make an estimate without going through all the cases. Although the information would be interesting, they believe that the cost of doing so would be disproportionate.

I thank my hon. Friend for raising this important matter. Although I realise that her constituent will probably not be satisfied by my answer in respect of his situation, I hope that I have explained why we took the course of action that we did.

May I say what a pleasure it is to take part in a debate presided over by you, Sir Nicholas? I am sure that you will be as fair as ever and, as you have demonstrated, dextrous in the way in which you conduct proceedings.

Although I am a member of the Intelligence and Security Committee, everything that I am about to say is drawn from open sources. I am an Anglican, but my particular interpretation of Christianity is personal rather than doctrinaire. As a politician, I have always believed in a clear distinction between matters of faith and that which is secular, although I recognise that many people’s political views are informed by their religious beliefs. My purpose in initiating this debate is twofold. First, I want to stress the common ground that undoubtedly exists between faiths of the Abrahamic tradition. Secondly, I want to highlight how those who follow Islamism should not be confused with mainstream Muslims, who, although devout in their beliefs, stand opposed to terrorist activity.

The Prophet Mohammed himself said:

“O People of the Book! Let us rally to a common formula to be binding on both us and you: That we worship none but God; that we associate no partners with Him; that we erect not, from among ourselves, Lords and patrons other than God.”

That is taken from Surah al-Imran, verse 64. A useful contemporary and authoritative source, Dr. Ali Gomaa, the Grand Mufti of Egypt, wrote in The Washington Post:

“The principles of freedom and human dignity for which liberal democracy stands are themselves part of the foundation for the Islamic worldview; it is the achievement of this freedom and dignity within a religious context that Islamic law strives for”.

In a joint statement on behalf of the C-l World Dialogue Foundation last year, following the tragic events in Gojra, Pakistan, Dr. Gomaa and the Bishop of London, Richard Chartres, emphasised mutual understanding and religious tolerance. As they put it:

“We call upon all pastors and imams in every mosque and church to speak out against these deeds and to spread the true message of cooperation, harmony and peace.”

That common understanding is shared across the Abrahamic traditions.

On meeting the former President of Iran, Seyed Mohammad Khatami, in 2006, the Archbishop of Canterbury, Dr Rowan Williams said:

“People of faith have much to contribute to the solving of the problems caused by mistrust and misunderstanding.”

We remember the deeply symbolic action of Pope John Paul II kissing the Koran back in 2006. It is worth briefly contrasting that coming together of faiths with the theological and political roots of Islamism. There are different views on the connections between the teachings of Mohammed Abdel-Wahab, often known as Wahabisms; Salafism, a more puritanical interpretation of Islam based on the interpretation of the early followers of Islam, and Islamism.

John Esposito in his book “Unholy War: Terror in the Name of Islam” makes the case that the connections between Wahabism and Islamist terrorism are often oversimplified, while a contrary view is given by Stephen Schwartz in “The Two Faces of Islam: The House of Saud from Tradition to Terror”. I am not an Islamic theologian and do not hold a position on the theological arguments here, but I make the observation that many people would identify themselves as Salafists or as followers of Wahab’s teachings, yet reject violence and terrorism.

The history of Islamist thought appears to be as much informed by revolutionary political thinking and advocates of violent struggle as it is by religious study. Sayyid Qutb, one of the founders of Islamism, rejected the free mixing of the sexes and individual freedoms, and in his later publications, which he wrote when he was incarcerated for the failed assassination attempt of President Nasser, advocated an armed vanguard movement that would engage in a “liberation struggle”. His radically anti-secular and anti-western interpretation of Islam owes as much to revolutionary politics as it does to theology.

There is a direct lineage from Qutb’s writings—through a fusion of Islamism and radical Wahabism—through to al-Qaeda as we know it in recent times, which is mediated by many including, most recently, Ayman al-Zawahiri and Osama Bin Laden. The reality is that al-Qaeda’s Islamist theology imagines an idealised future rather than a golden past. It is as much a revolutionary political position as a theology and becomes appealing to some, because it provides a totemic symbol that opposes all that is perceived to be wrong in both western and existing mainstream Islamic society.

Much of what I have said so far rests on the beliefs and words of leading figures in their respective faiths. They are an integral part of the call for better understanding and unity between faiths. Most importantly, that needs to translate into the conduct of everyday life. Britain has a long tradition in that regard, which goes back long before the rise of Islamism. Born in 1851, Liverpool solicitor William Henry Quilliam travelled throughout Algeria and Morocco, and converted to Islam. After returning to Liverpool as Sheikh Abdullah Quilliam, he founded Britain’s first mosque in 1889. His work helping the poor was widely recognised, though it is fair to say that local people did not all welcome the introduction of this new religion.

Times have moved on, and work to bridge understanding across religions goes on. Tony Blair’s Faith Foundation, which is dedicated to achieving understanding, action and reconciliation between the different faiths for the common good, is making progress in schools across the world, at universities, and with the public. We should acknowledge that the Government have led and encouraged initiatives as part of the Prevent strategy to stop people becoming or supporting terrorists and violent extremists. Yet it is, I think, fair to say that many young people in constituencies such as mine have little or no direct experience of the Muslim faith, other than what they may learn at school. Similarly, in places such as Blackburn—or at least in some parts of that town—it is possible for some young Muslims to grow up with little or no contact with people of other faiths or, for that matter, people of no faith.

Tufyal Choudhury compiled the report “The Role of Muslim Identity Politics in Radicalisation” for the Department for Communities and Local Government. In it, he stated:

“The appeal of radical groups reflects, in part, the failure of traditional religious institutions and organisations to connect with young people and address their questions and concerns.”

He is writing about young Muslims, but the same case could be made for other faiths. Marc Sageman’s book “Understanding Terror Networks” eloquently articulated the journey of radicalisation that often begins with unassimilated immigrants who come together to find that they share a common sense of alienation in an unwelcoming society.

The experience of so-called “home-grown” terrorists such as the 7/7 bombers can similarly be explained, at least in part, by a simultaneous rejection of the teachings of local Muslim leaders and of wider concepts of Britishness. The resultant loss of identity in turn creates a vacuum, which itself creates a psychological openness to radicalisation.

During the past decade, we have seen a marked increase in the number of Muslim organisations that are willing to speak out and firmly denounce terrorist activities, both through the mainstream media and through community channels. From the global inter-faith dialogue to the Quilliam Foundation, a counter-extremist think-tank, there is a tangible movement towards a more considered and peaceful approach to addressing differences and uniting on common ground.

We now need progress to the next level, and traditional media need to give a voice to these debates. That means moving beyond the observation that Islam means “peace” and that the majority of Muslims are peaceful. Although that is undoubtedly true and should be the basis for a dialogue, it should not be the means to close down discussion, because those who are engaging in violence have already rejected that belief on explicitly theological grounds.

We need to find out from young people who are at risk of radicalisation and from those who have already trodden that path how we can strengthen local and national Muslim communities to provide real and inclusive leadership, which spans generations and allows better integration in mainstream British society. No doubt, that will include uncomfortable discussions about where traditions such as arranged marriages fit; traditions that are neither consistent with “western values” nor, for that matter, with many strains of Islamic thought.

We should also ask how we can improve the integration of first and second-generation immigrants with the wider community. As Trevor Phillips pointed out in 2008, Britain is at risk of “sleepwalking towards segregation”, with racially divided ghettos.

We need to learn lessons from other areas of conflict, where peace has eventually prevailed following long periods of entrenched social division and non-engagement between communities. The obvious examples include Northern Ireland, Bosnia and South Africa. A key lesson from all those examples is the recognition by all parties of the validity of separate cultures, combined with a focus on winning peace.

We all need to understand what leads young Muslims to feel that neither their local Muslim community nor wider British society provides them with a satisfactory sense of identity. In the process, we may well hear painful home truths about our failings and we may be challenged to look beyond existing structures and rules. However, I believe that it is a journey that we all need to make if we are ever going to create alternatives to radicalisation and terror.

George Carey, who was the Archbishop of Canterbury back in 2000, said:

“I expect the Church of England one day to be disestablished.”

To be fair, he was talking in the context of the reform of the second Chamber, but his comments also have resonance here. I believe that having an established church gives primacy to the Church of England, which in turn does a disservice to other denominations and faiths. Ours is a multicultural society with many faiths and many denominations. In my view, disestablishment would give the Church of England more freedom and, into the bargain, leave it stronger. It would also send out a clear signal that this country values the right of all to follow their faith.

Put simply, my argument is that the faiths in the Abrahamic tradition have more common basic values than values that divide them. In fairness, that is equally true of many other religions that are not in the Abrahamic tradition and it is also true of many of those who have no faith at all. The key is respect and parity of esteem.

I finish with the words of Rabbi Jonathan Sacks, who has said:

“We need Jews, Christians and Muslims prepared to bring together what the winds of globalisation are driving apart.”

I am often referred to as “the late Ivan Lewis”, but I cannot be clear about whether I was late or early for this debate.

I am delighted to have the opportunity to respond to the debate. I thought that my right hon. Friend the Member for Knowsley, North and Sefton, East (Mr. Howarth) gave one of the most informative and interesting presentations that we have heard in Westminster Hall for a very long time. He has engaged in a debate that people are all too often afraid to engage with, and I hope that my response will do justice to his very thoughtful contribution.

May I also say that I am delighted that one of my very distinguished predecessors, my right hon. Friend the Member for Pontypridd (Dr. Howells), is in Westminster Hall? He served with distinction in many Government Departments, particularly in his role as Minister with responsibility for the middle east in the Foreign Office, and he will be a great loss to the House of Commons and to the parliamentary Labour party. He could probably respond to this debate more effectively than I can.

I will not announce today the disestablishment of the Church of England. Making such an announcement might not be an astute career move, and it could also be slightly above my pay grade. No doubt that debate will rage for some considerable time.

I want to begin by saying that we wholeheartedly endorse the view of my right hon. Friend the Member for Knowsley, North and Sefton, East about the common ground between the faiths of the Abrahamic tradition, and indeed between all those who share the values of a civilised society. The failed bombing over Detroit at Christmas reminds us that we face an unpredictable, global and evolving threat from terrorists. The universal condemnation of that terrible act by many Muslims throughout the world reminds us, as my right hon. Friend said, that increasing numbers of Muslims are willing to speak out against terrorism. The test of leadership, in any context, is the willingness to say difficult things to one’s own constituency. Therefore, it is very important that an increasing number of leaders in the Muslim community are willing to condemn such terrorist attacks and to make it clear that they do not represent, in any way, the promotion of Muslim ideals or values. That is very encouraging, because all too often in this country we hear people who seek to legitimise and explain away such terrorist attacks, rather than facing up to the fact that there is no basis on which we can negotiate with terrorists who have no reasonable expectations, no reasonable agenda and no reasonable manifesto. Therefore, the ability and willingness of leaders to step up to the mark is important, particularly when that means saying difficult things to one’s own constituents.

Violent extremism is a phenomenon that affects the whole world and it has resonance in the United Kingdom. Therefore, we must think and act both globally and locally. As our Prime Minister said recently:

“It is because we cannot win through a fortress Britain strategy—exclusively protecting our borders—that we have to take on extremists wherever they are based: in Afghanistan, Pakistan and all around the world, including here in Britain.”

However, at the recent conference on Afghanistan, the Prime Minister also said:

“We must seek to win the war against terrorism not just on the battle ground but in the hearts and minds of the people.”

That is very true of the approaches that we need to take, which I hope to discuss during my speech.

Countering the ideas underlying terrorism is a key element set out in the Prevent strand of Contest, which is our counter-terrorism strategy. That strategy gives clear direction to our objective to stop people becoming terrorists or supporting violent extremism at home and overseas. We need to undermine the ideologies used by terrorists to justify their actions. As my right hon. Friend said, many of those ideologies are based not on Islam, as practised peacefully by millions of people throughout the world, but on an extreme militant ideology that is sometimes described as Islamism. We need to highlight the damage that is done by this ideology and its terrorist exponents, including the damage that is done to the innocent Muslims whom, we should never forget, are the great majority of its victims, in places from Afghanistan to Somalia, and from Pakistan to the Sahel.

We are working to show this distorted ideology for what it is, to disrupt those who promote it and to support mainstream alternatives. We are helping to strengthen institutions, including religious and educational ones, against extremism. We support individuals who might be vulnerable to the message of extremism and we work to increase the resilience of communities against the extremist message. We also work to address the grievances that underlie individuals’ decisions to turn to violence.

Two key enablers underpin that work. The first is a research programme to increase our understanding of violent extremism and to explore who is attracted to it and why. We have undertaken original research that has given us an unprecedented understanding of the scale of the challenge. The second enabler is an effort across Government to improve our communication, especially with the vulnerable communities that extremists seek to exploit.

Over the past two years, the scale and impact of our work to counter violent extremism have grown. In the UK, the infrastructure for delivering the Prevent strategy at the national and local levels is established. The Prevent agenda is now part of day-to-day business for local government and all high-risk areas have specialist support. The programme of interventions is well-established and is beginning to show results. Just over 200 people have been through the police-led, multiagency Channel project. They have been referred mainly for non-law enforcement interventions, such as mentoring and pastoral support. None have so far gone on to commit a serious offence.

We have developed methods for sharing information on radicalisation with those involved in countering it more widely than has traditionally been the case. We are working with leading theologians and scholars to help to contextualise Islam in Britain. We have built support among communities. Community groups and individuals have become more engaged in Prevent and are more confident in standing up publicly against violent extremism.

In response to my right hon. Friend’s point about the separation or ghettoisation of communities, we often get mixed up in debates on these matters between the words “integration” and “assimilation”, but the two are very different. Of course people should be proud of their religion, faith and culture. They should be allowed to celebrate and pursue their religious and cultural beliefs freely within the law. Equally, surely people who are secure in their faith, identity and culture should be supported and enabled to integrate with people from different cultures and faiths who make up the community. That is not assimilation, which seeks to make everyone the same, but integration, which we should not be neutral about if we want to create the sort of cohesive society that is becoming increasingly important at the beginning of the 21st century.

If I gave the impression that I was arguing for assimilation, I make it clear that that was not the case I was making.

My right hon. Friend certainly did not give that impression. However, integration and assimilation are often mixed up in the debate. When integration is urged, people become defensive because the language used can suggest something very different. It is important that we are not woolly in our thinking or our language on this issue, and he was not in his speech.

Overseas, we are concentrating our work in the countries and regions that pose the most significant threat to the UK and our direct interests, which include Pakistan, Afghanistan, Yemen and Somalia. Our counter-terrorism spending has increased in each of the past three years and we plan to increase it again in the next financial year, despite the financial pressures of which Members are aware.

Through our counter-terrorism programme, we have supported more than 260 projects in Muslim-majority countries. We have worked with partners to strengthen mainstream religious foundations and civil society; on educational reform; to promote legal and human rights; against corruption; to strengthen parliamentary processes and support democracy; and on youth employment. Much of that work is in dangerous and sensitive areas.

I am sure that hon. Members will understand that we cannot always reveal great detail without risking the safety of those with whom we work, but perhaps some practical examples will help to show the nature of the work in which we are engaged. We have helped to develop the understanding of campus radicalisation among the university authorities in Pakistan. We have worked with a major centre of Islamic learning in the middle east on the training of British and foreign imams. We have taken groups of distinguished British Muslims to countries as diverse as Somaliland, Iran and Afghanistan to break down and dismantle al-Qaeda’s claim that the west and Islam are incompatible. In the programme led by my right hon. Friend the Foreign Secretary, Ministers such as myself, supported by senior officials, have taken part in a systematic programme of outreach to discuss foreign policy with a wide range of British communities.

Our programme overseas is complemented by the work of the Department for International Development, which addresses the long-term factors that can make communities vulnerable to radicalisation. We work closely with the British Council, which delivers some of our most innovative work overseas. Like my right hon. Friend, I pay tribute to the Tony Blair Faith Foundation, which is doing a tremendous job in many parts of the world to build bridges and break down barriers between different religions.

In all this work, measuring effect is crucial, so we have developed a rigorous system to assess the impact of our interventions on resilience to radicalisation in priority countries. That allows us to adjust our programmes to ensure that we reflect the changing nature of the threat and deliver value for money for the taxpayer. Countering violent extremism is a new area of activity for the Government and the agenda remains challenging. However, I am confident of two things: first, that the threat is real and persistent, and that the key to long-term success lies as much in defeating extremists in the battle of ideas, as I said earlier, as in arrests or increased security; and, secondly, that we are making progress across Government in our efforts to make a reality of our ambition of countering violent extremism.

I congratulate my right hon. Friend on initiating such an important debate and I hope we will have more debates of such quality.

This has been a most fascinating debate. I think we are all a little wiser as a result of the speech about terrorism and Islam made by the right hon. Member for Knowsley, North and Sefton, East and the Minister’s reply.

Question put and agreed to.